Fate Is Uncertain for House GOP’s Campaign Finance Riders

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By Kenneth P. Doyle

The House and Senate will negotiate several provisions curbing federal powers on campaign finance that were tacked onto the House’s $1.2 trillion spending package earlier this month.

The Senate is not expected to pass the bill in its current form, however, and lawmakers and aides have said appropriations talks will likely be on hold as appropriators await bipartisan budget talks that will give them better numbers to fund favored programs. A bicameral appropriations deal must be reached and signed by the president before Dec. 8, when government funds are set to expire.

Before the House spending package cleared the chamber Sept. 14, Republican leaders attached a handful of money-in-politics riders onto a measure funding the Internal Revenue Service, Federal Election Commission, and Securities and Exchange Commission. The package (H.R. 3354) passed on a mostly party-line, 211-198 vote Sept. 14.

Fred Wertheimer, president of nonprofit Democracy 21, told Bloomberg BNA in a phone interview he hopes grassroots opposition to some of the campaign finance riders would encourage Senate Democrats to fight against the riders.

Free Speech or Subsidy?

The spending package’s riders include a provision to lift or ease the IRS’s longstanding ban on politicking by churches, called the Johnson Amendment.

Wertheimer pointed to a letter recently sent to lawmakers and signed by more than 5,500 charitable nonprofits, religious organizations and foundations as an example of widespread opposition. The letter strongly opposed weakening the tax code provision that prohibits Section 501(c)(3) charitable and religious organizations from intervening in campaigns.

Religious conservatives have supported the rollback effort on First Amendment grounds. Religious leaders currently face threat of IRS action if they express views on politics and elections, opponents of the Johnson Amendment say. They point to the IRS’s actions during the Obama administration when Tea Party and other politically oriented nonprofits were targeted for extra scrutiny.

But Wertheimer said rolling back the Johnson Amendment would amount to a subsidy for political spending because churches and other charities are funded by tax deductible contributions.

IRS, SEC, FEC Restrictions

Also included in the spending package were provisions to extend restrictions on the IRS and the SEC from making political spending more transparent.

Under the riders, the IRS would continue to be barred for another year from writing new rules to clarify how much political spending is allowed by so-called Section 501(c)(4) nonprofits; the SEC would remain barred from writing new rules requiring disclosure of corporate political spending.

A new provision in the appropriations bill would restrict the FEC’s enforcement of fundraising rules for political action committees linked to trade associations. Trade association PACs currently must ask permission from member companies to solicit money from company executives and other eligible contributors. A company belonging to multiple associations—as many do—may designate only one association PAC per year that is allowed to solicit employees for money.

Both supporters and opponents of the provision to ease restrictions on trade association PACs say it could greatly expand the pool of potential PAC donors, as corporate executives would be permitted to give contributions to multiple association PACs. Opponents say rolling back restrictions on these PACs would increase the disparity between large political donors and most Americans.

Associations: Prior Approval Unfair

Supporters of eliminating restrictions on association PACs say it would put them on a level playing field with other types of PACs. A June 20 memo to lawmakers by the Prior Approval Reform Coalition, signed by more than 100 associations, urged eliminating the FEC restriction on their PACs.

“This requirement discriminates against these associations by making their PACs the only political committees that must first obtain exclusive permission from member corporations before soliciting eligible employees for support,” the memo said.

A recent analysis by law firm Covington & Burling noted that, if the provision regarding association PACs is adopted, these PACs would be able to solicit funds more freely from executives, administrative staff, and stockholders of all member companies and families.

“This should come as welcome news to trade associations, but will be less exciting to member company executives who could face an onslaught of new solicitations,” the analysis said.

Some problems might remain for the PACs as well, the analysis said. Simply barring the FEC from spending money for a year prior to the provision’s approval wouldn’t eliminate the provision from law, and the Department of Justice might still be able to bring criminal charges for knowing and willful violations.

“Even if this provision remains in the final bill, it would be prudent to seek advice of counsel before making a solicitation that violates the fundraising restrictions,” the analysis said.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

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