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Republicans subpoena 527s - but not the Club for Growth

by Sam Dealey, Mary Lynn F. Jones Thursday, Nov. 20, 2003 at 2:06 AM
202-628-8517 or 703-244-2368

Republican Bob Ney is threatening to subpoena six top Democratic 527s (political action committees named for a section of the federal tax code). But the 8th largest 527, "The Club for Growth," is ignored because it is a GOP financing juggernaut.

Dems to Skip 527 Hearing; Ney Threatens Subpoena

Sam Dealey, Mary Lynn F. Jones, The Hill, 11/18/03

WASHINGTON -- Rep. Bob Ney is threatening to subpoena six top Democratic fundraisers who have said they will not appear at a House Administration Committee hearing later this week, Sam Dealey reports in the Nov. 19 issue of The Hill. As Dealey writes: Citing First Amendment and partisan concerns, five of the six Democrats asked to appear sent a letter to Ney saying, "we respectfully decline your invitation." The fundraisers' refusal to testify -- and Ney's threat to subpoena them -- raises to a new level the partisan standoff over how money can be legitimately raised and spent following last year's campaign finance reforms.


Dems to skip 527 hearing; Ney threatens subpoena

By Sam Dealey

House Administration Chairman Robert Ney (R-Ohio) is threatening to subpoena six top fundraisers for Democrat-aligned interest groups who yesterday refused to testify at a hearing scheduled for tomorrow.

Citing First Amendment and partisan concerns, five of the six Democrats asked to appear sent a letter to Ney saying, "we respectfully decline your invitation."

The fundraisers' refusal to testify -- and Ney's threat to subpoena them -- raises to a new level the partisan standoff over how money can be legitimately raised and spent following last year's campaign finance reforms.

The fundraisers' letter said: "Your invitation asks that we appear before a congressional committee in a public session and open the whole range of our political programs and strategies to committee scrutiny. A congressional committee may not simply call political organizations to answer under oath to whatever questions, however politically sensitive, members may have an interest in asking."

It was signed by Ellen Malcolm of America Coming Together (ACT), Cecile Richards of America Votes, Steve Rosenthal of Partnership for America's Familes, Marc Farinella of the Democratic Senate Majority Fund (DSMF), and Howard Wolfson of the New House PAC. Gerald McEntee of Voices For Working Families did not sign, and did not return calls for comment.

Ney vowed to continue his inquiry and compel their testimony.

"We're going to have a hearing," the chairman said. "If in fact witnesses do not show up, I'll hold open every option available to me to have these individuals talk to Congress. They've been more than willing to talk to everyone else."

Ney's spokesman, Brian Walsh, confirmed that Ney "is considering subpoenaing the six."

Earlier, Beth Belizzi, a spokeswoman for Rep. John Larson (D-Conn.), ranking member of the committee, allowed that the minority was considering its "options."

"There's all kinds of theories kicking around in terms of the hearing," Belizzi said. "As you can imagine, everyone's board-gaming and b-gaming and looking at all the little chess maneuvers."

Democrats consider the hearing a partisan witch-hunt intended to chill their party's fundraising abilities, and point to the lopsided witness list as evidence.

"The dangers of such an inquiry are particularly acute when six of the eight organizations that we understand to have been asked to testify share political views and objectives opposed to those of many, if not most, of the committee majority," wrote the fundraisers.

"The fact is that the Democrats on our committee were given ample opportunity to call their own witnesses," said Walsh. "If they felt the structure of the hearing was imbalanced, they were welcome to call more Democratic or Republican groups. They chose not to exercise that option as afforded by the chairman."

While Democrats were largely more vocal than Republicans in pushing for stricter campaign finance laws, it is Democratic-aligned groups that are more active in pushing the fundraising envelope.

Of particular concern to Republicans are so-called 527s, political action committees named for a section of the federal tax code. Although campaign finance legislation enacted last year banned soft money -- large, unregulated contributions to national parties and federal campaign committees -- such a stricture does not apply to 527s.

The groups may accept unlimited donations from anonymous donors for political purposes, so long as they do not expressly advocate the election or defeat of a candidate, and do not act in concert with any lawmaker or party committee.

But those prohibitions are increasingly ignored by Democratic 527s, Ney alleged. "It just seems right now from all the media accounts I've read that there seems to be some coordination and political ties to the 527s, and mainly on the Democratic side," he said.

The website of ACT, for example, lists "mobilizing voters to defeat George W. Bush and elect progressive candidates all across America" as its chief objective. Two weeks ago, 60 Democratic lawmakers, including much of the party's leadership, attended and contributed to a fundraiser jointly held by DSMF and the New House PAC.

Soft money has traditionally benefited the Democratic Party more than the GOP, and recent years have seen a proliferation of Democratic 527 groups. A recent Center for Public Integrity study noted that in the last election cycle, Democratic 527 fundraising outpaced that of Republican groups by a ratio of more than two to one, collecting 5 million to the GOP's million.

With the GOP's traditional edge in hard-money contributions, and the enormous fundraising prowess of President Bush, high-profile Democratic 527s have mushroomed this election cycle. Financier George Soros -- once a leading advocate of campaign finance reform -- recently pledged million to two such groups.

Republicans, too, have their 527 groups, but their base of big money donors, mainly from corporations and K Street, are loath to jump in on innovative fundraising methods until the Federal Election Commission has signaled its approval.

One of the most effective 527 organizations on the right, the Club for Growth, targets centrist Republicans.

On Monday, Republican National Committee chairman Ed Gillespie chastised prominent campaign finance watchdogs, many of whom are Democrats themselves, for not being more critical of 527 fundraising practices.

See: http://releases.usnewswire.com/GetRelease.asp?id=169-11182003

Background: GOP Targets Dems Soft Money

...Democrats charge the hearing is biased because the invited Republican aligned groups have shown little activity this year, in contrast to their Democratic counterparts. For example, the Leadership Forum had not raised any money through the first six months of the year, according to reports filed with the IRS.

Republicans did not call on more active conservative groups, such as the Club for Growth, which has raised over .6 million, mostly in unregulated soft money, between January and September...

See: http://releases.usnewswire.com/GetRelease.asp?id=173-11172003

Background: Republicans On Right Target Party Moderates

...The (Club for Growth's) contributions come, Krumholz said, from an elite class of donors - managing partners, CEOs, investment analysts. Of the more than .2 million collected last year, only 2,000 came from donations to be given directly to candidates. The remainder was counted as part of the unlimited amount groups such as the Club for Growth can collect and spend on issue ads, get-out-the-vote efforts, or any other political effort short of a direct contribution. It's in that realm of unlimited donations that the club swings the big bat.

"They're huge," said Craig Holman of Public Citizen, who has reviewed the club's IRS filings, under which it is registered as a "527 group" - tax-exempt and chartered by the IRS to influence elections. "They are the eighth-largest section 527 group that's filed with the IRS," Holman said, "and very clearly they're going to become a major, major powerhouse if campaign finance laws are changed."...

See: http://www.ctnow.com/news/custom/newsat3/hc-gop0509.artmay09,0,7864522.story
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