WASHINGTON - Senator Joseph Lieberman, D-Conn., delivered the following statement Friday, April 7, 2000, at a press conference to release a Common Cause report on the newest campaign finance loophole: the 527 organization:
In 1997, I spent almost an entire year with my colleagues on the Governmental Affairs Committee investigating the campaign finance abuses of the 1996 elections. As a result, I should be beyond being surprised by the discovery of new endruns around the clear intent of our election laws. But the 527 loophole we are here to talk about today has surprised me. It is wrong and should be closed as soon as possible.
Section 527 of the tax code confers tax exempt status on groups organized for the primary purpose of influencing Federal elections. Given that definition, you would logically conclude that a 527 group would also be covered by the Federal Election Campaign Act (FECA), which defines political committees as groups spending money for the purpose of influencing Federal elections - almost the precise language used in Section 527 of the Internal Revenue Code.
But logic is not at work here. What we have instead is a new breed of political organization that seeks tax exemption from the IRS because it IS trying to influence elections, then tells the FEC it won't disclose its contributor list because it IS NOT trying to influence elections. In other words, these groups clearly sponsor campaign ads but refuse to disclose who they are or where they get their money. AND, to top it off, they benefit from the public subsidy of tax exemption. Does anyone feel as if we've fallen down a rabbit hole and are in Wonderland with Alice again?
One of the bedrock principles of our election laws is that the American people have a right to know who is trying to influence their votes. The 527 loophole violates this principle in a most outrageous way.
So, within the next couple of weeks, I will join with Senators Daschle, Levin and I hope many other colleagues of both parties in introducing two bills to close the 527 loophole. The first one Ð which might be called our Òaspirational billÓ Ð would require 527s trying to influence federal elections to register under, and comply with, the FECA. That would completely close the 527 loophole by requiring these groups either to acknowledge they are political committees under FECA or to stop claiming tax exemption under Section 527.
At the same time, because we are all too familiar with the hurdles thrown up against campaign finance reform, we plan to offer a second bill Ð our Òpragmatic billÓ Ð that would ensure that, if 527 groups continue, they will be required to notify the IRS of their existence, to disclose information about their contributors and expenditures, and also Ð like other tax-exempt groups Ð to file tax returns and make them public.
This will at least take these organizations out of the shadowy zone of secret donors and pull them above the rabbit hole, into the bright light of public scrutiny. Thank you.
