It’s the scam of the 2004 presidential campaign. The emergence of new political groups this election cycle — such as the Republican-funded Swift Boat Veterans for Truth and the Democratic-bankrolled America Coming Together and the Media Fund — showcases how political money, like water running downhill, finds loopholes to exploit in federal election and tax laws.
These organizations were spawned specifically by Democratic and Republican activists to influence the November election, mainly through advertising.
By pretending to be independent non-party entities, rather than advocates to elect either the Republican incumbent President Bush or Sen. John Kerry, the Democratic nominee, these groups get out of complying with a bunch of rules designed to drain some money out of politics.
On Monday, Bush said these organizations are “bad for the system,” with his comments coming after Kerry accused the Bush campaign last week of using the anti-Kerry veterans group as a front to attack his combat record. The Bush campaign denied the charge.
Kerry’s campaign filed a complaint Monday with the toothless Federal Election Commission alleging the Swift Boat group is a “sham organization” funded by brazen “Republican operatives who are helping to finance and run Bush’s campaign.”
This year marks the significant emergence of these political groups that are not officially part of the Democratic or Republican parties or formally associated with the Bush and Kerry campaigns.
They are often referred to as “527s,” a shorthand that evolved because it is section 527 of the Internal Revenue Service code that governs how these groups operate.
These outfits exist to fill the void created when new campaign finance laws became effective for this election, the result of legislation championed by Sen. John McCain (R-Ariz.) and Sen. Russ Feingold (D-Wis.)
When Bush signed McCain-Feingold into law in 2002, political parties were banned from taking what is called soft money, unlimited donations from labor unions, corporations and wealthy individuals. What is known as hard money can be contributed by individuals only in limited amounts and cannot be given by companies and unions.
Democrats first understood the potential of using 527s to collect soft money. A lot of heat was generated by Republicans when it became known that ACT and the Media Fund were financed in the beginning by millions of dollars from Democrat George Soros, the financier.