Daily Media Updates 12/18: Campaign Legal Center agrees with CCP: IRS regulations are not about tax policy, but regulating political speech, New FEC Chairman Chosen to Lead Agency During Election Year, and more…


Campaign Legal Center agrees with CCP: IRS regulations are not about tax policy, but regulating political speech

By Brad Smith

…Ryan concludes by agreeing with the core point of my editorial. “What’s really at stake here,” he writes, “is disclosure of money spent by tax-exempt groups on candidate-related election activity.” Which was exactly my point. This is not about collecting tax revenue, but about using the IRS for campaign finance regulation. Which is why I asked the question, “Why is the IRS regulating political activity at all?” In 350 words, Ryan makes no attempt to answer that question, except to say that he wants more regulation of political speech. Well, so do many others. But why is the IRS doing it? The answer, again, is to finesse limits that the Supreme Court has placed on compulsory disclosure.

Of course, Ryan can’t resist one more little exaggeration when he writes that “the Center sides with the Supreme Court” in supporting disclosure. Of course, the Supreme Court has upheld as Constitutional a good deal of campaign finance disclosure. But it has, as CLC knows, but rarely, if ever, admits, also held a good deal of  campaign finance disclosure to be unconstitutional, especially disclosure of funders and members of organizations that do not have a primary purpose of political activity, except to the extent that those funders have given money for the purpose of political activity. Ryan seeks to give the impression that the Supreme Court has ruled that the types of disclosure that CLC seeks – disclosure unprecedented in American history, and disclosure with which CLC itself does not currently comply – has been determined to be constitutional. He knows that that is not true. Nor of course, does that go to the policy rationale at all. Ryan just wants to steal a bit of credibility from the same Court he regularly savages for its other campaign finance decisions.

Thus, in the end, we find CLC’s letter rather satisfying: CLC admits that 501(c)(4) organizations are not charities, and should not be confused with charities; he implicitly admits that there is no revenue impact to these regulations, and he explicitly admits that what is motivating this use of the IRS is not tax policy, but campaign finance policy. Using the IRS for political regulation has always been a bad idea, always subject to the possibility of abuse, and we saw that come true this spring with Inspector General’s report of improper (and possibly illegal) targeting of conservative 501(c)(4) organizations by the IRS. We understand that CLC thinks it is really, really important to regulate political speech, but no matter how you cut it, using the IRS to do so is simply bad government.

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The IRS, “Political Activity,” and “Disclosure:” A Brief Rejoinder to Mr. Ryan

By Allen Dickerson

The quotes are accurate. But Mr. Ryan’s conflation of the statute and the regulation is misleading. No one disputes that 501(c)(4) organizations must be operated “exclusively for the promotion of social welfare.” What is disputed is what qualifies as social welfare—a term that Congress has never defined.

It is difficult to define the line between advocacy for social welfare and political activity. The IRS, to date, has used a “facts and circumstances” test to determine whether a particular activity is “direct or indirect participation or intervention in political campaigns.” That test, with its innate vagueness, poses an inherent danger of mistaken, ignorant, or partisan judgment calls by non-expert staff. But that danger has been somewhat mitigated by the fact that 501c4s have been permitted—under the same regulations Mr. Ryan cites—to engage in “political campaigns” provided that doing so is not the organization’s “primary purpose.”

All of this is, admittedly, pretty technical. But, in essence, the IRS has long believed that an organization is operated “exclusively for the promotion of social welfare” (as Congress required) even if it does some political activity. Just not too much.

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In the News

WFB: Center for America-Iran Progress

By Alana Goodman

David Keating, president of the Center for Competitive Politics, argued that it is “definitely hypocritical” for CAP to argue in favor of stronger disclosure laws in campaign finance while failing to disclose all of its financial interests.

“If new disclosure laws are such a great idea, they should disclose all their activity now,” said Keating. “The fact they don’t and won’t proves their proposals harm speech rights.”

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Independent Groups

Campaigns and Elections: Continuing the deregulatory trend?

By Neil Reiff

During the 1990s and early 2000s, many states began to pass campaign finance reform legislation, including lower contribution limits, new prohibitions on corporate and union contributions, and expanded disclosure for issue advocacy communications. In the last few years, we’ve seen the exact opposite happening—state contribution limits are rising, or disappearing altogether.

It is not clear whether this deregulatory turn is a response toCitizens United, or more a reflection of the fact that Republicans have taken control of a majority of state legislatures. While it may appear as though Republican control was instrumental in the repeal of certain contribution limits in Alabama and Florida, the Maryland legislature, with a Democratic majority, also raised its contribution limits. Connecticut has effectively doubled its limits, and Arizona has attempted to nearly quadruple them, depending on the outcome of ongoing litigation. Legislatures in both of those states are controlled by Democrats.

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Politico: FEC closes Crossroads GPS probe

By Byron tau

The initial complaint was filed against Crossroads GPS in 2010 by the watchdog groups Public Citizen and Protect Our Elections. It alleged that the 501(c)(4) nonprofit organization was actually operating as a political committee — like a PAC or super PAC instead of a tax-exempt nonprofit group. The complaint also claimed that Crossroads GPS should be forced to disclose its donors and list its expenditures — just like PACs, super PACs, campaigns and political parties.

Tom Josefiak, general counsel for Crossroads GPS and former chairman of the FEC, said Tuesday he wasn’t shocked by the result.

“I am not surprised that the commission lacked the votes to find that Crossroads GPS is a political committee, because the law, court decisions and commission precedent are clear, and we were careful to comply with those standards,” he said.

“Frankly, if the case had dealt with any other organization besides GPS, the commission would have unanimously dismissed the complaint a long time ago. Still, I’m pleased that the commission decided that GPS is not a political committee, and now we can move on from this politically motivated complaint,” Josefiak added.

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Candidates, Politicians, Campaigns, and Parties

National Journal: Republican Look-Alike Sites Mocking Democrats May Violate Rules

By Shane Goldmacher

Each site follows a similar model of a URL (nickrahallforcongress.com, for example) that looks just like a candidate’s, a headline suggesting it is an official site (“Nick Rahall for Congress”), biting attacks against the candidate (“Rahall’s budget was so far left of the mainstream … “) and then a donate button—with funds directed to the NRCC.

Andrea Bozek, a spokeswoman for the NRCC, defended the sites as “100 percent” legal.

“The real reason Democrats are whining about these websites is because the web traffic has been off the charts and as a result voters are learning the truth about their candidates’ disastrous records,” she said. “Not only are these sites extremely effective but they are l00 percent legal—it’s no surprise that Democrats are running scared.”

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Lobbying and Ethics

Politico: Lobbyists: ‘Misunderstood’ in poll

By Tal Kopan

“Politicians in general just like to blame things on somebody rather than looking at themselves in the mirror a little bit, and so I think members of Congress like to blame the lobbyists out there,” Ward said. “Lobbyists are on both sides of every issue and they’re out there educating on issues, but at the end of the day it’s the lawmakers that take the vote.”

Gold also pointed to the Obama administration as an example of what can go wrong without adequate lobbying, as well as a source of the misconceptions about it.

“Any time the government becomes insulated from what’s going on out there in the real world, the caliber of decisions that the government makes and implements is not consistent with best practices,” Gold said. “This administration has gotten very insulated over the last year, some would say longer than that, and part of that has been their disparaging and unwillingness to deal with lobbyists in town. … I’m pretty confident that part of what you’re seeing in the polling is the result of the president bashing lobbyists for the last five years.”

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CPI: Incoming FEC bosses pledge to work together following blistering Center report

By Dave Levinthal

Both Lee Goodman, a Republican who becomes chairman in 2014, and Ann Ravel, a Democrat and incoming vice chairman, say fixing the bipartisan agency’s information technology systems is a top priority.

They vowed to hire new IT security specialists during the next two months. Agency funds will also be diverted to bolster internal system security. A long-term plan to enhance public portions of its digital offerings will also be completed in 2014, they said.

In addition, at a meeting Tuesday morning, commissioners voted unanimously to formally ask Congress for permission to accept “gifts that will assist the commission in carrying out its functions,” particularly those that would help update the agency’s technology.

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CPI: How Washington starves its election watchdog: FEC hamstrung by political bickering, case backlogs, staff departures — even Chinese hackers

By Dave Levinthal

The FEC’s early years were hardly placid. The commission had few resources. Election law changed regularly during the late 1970s. An untested staff didn’t always perform efficiently. And unlike most federal agencies, the FEC featured three commissioners from each political party — a lineup that frequently made quick action on politically sensitive issues difficult.

“Congress created the agency to be structurally deadlocked,” said Ralph Nader, the consumer rights advocate who ran for president multiple times. “Congress is content to defer to the FEC’s paralysis. It never wanted an agency that would pinch both parties.”

But during the 1990s, as political parties injected unlimited “soft money” into campaigns and elections grew more and more expensive, the FEC’s stature soared and so did its budgets, about doubling between 1992 and 1999. The agency started posting campaign finance disclosures online, and legions of Americans outside the Beltway began using its resources for the first time. Commissioners steadily assessed more fines against non-compliant candidates and committees as commissioners, despite their philosophical differences, did often find agreement on whether someone broke a law.

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Roll Call: New FEC Chairman Chosen to Lead Agency During Election Year

By Kent Cooper

The members of the Federal Election Commission elect their chairman each year and usually rotate the chairmanship between the two major parties. Today, the Commission elected Republican Lee Goodman as the chairman for 2014, to succeed the 2013 chairman, Democrat Ellen L. Weintraub. Democrat Ann Ravel was elected Vice Chairman. Both Goodman and Ravel came to the Commission in October of 2013.

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State and Local

Texas –– Dallas Morning News: Watchdog: Get ready! Corporate super PACs now allowed in all Texas elections

By Dave Lieber

Saxe tells The Watchdog: “I’m for free speech. It may be unfair, but the First Amendment doesn’t talk about fairness. It talks about freedom, and that’s what the case is based on. In our society, everybody is trying to be fair and make everybody equal. … Money is not fair. But as long as people earn their money honestly and legally, I have no quarrel with it.” 

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The Center for Competitive Politics is now the Institute for Free Speech.