Academic journal article
By Peterson, David M.
Texas Law Review , Vol. 84, No. 3
"These 527 groups are not accused of paying off politicians, peddling influence or benefiting from corruption. Their chief sin is that they've mobilized citizens to contribute money to advance their political convictions. In a democracy, that should count as a good thing-if not for politicians, then certainly for the voting public."1
In the 2004 election, a number of groups, funded mainly by wealthy donors, launched massive advertising campaigns in support of both Democratic and Republican candidates. These "527" organizations (named after the section of the Internal Revenue Code under which they are organized) were quickly condemned by many as a loophole and an unintended consequence of recent campaign finance reform measures. But the 527s were already bound by campaign finance laws to reveal the source of their donations and to not coordinate with political campaigns. 527s provided a new voice to citizens, independent of political parties and candidates. There has been a reactionary movement to restrict 527s and to return the money to the control of politicians.
This Note argues that unrestricted contributions to 527s are a constitutional and beneficial consequence of campaign finance reform.2 Part I traces the history of campaign finance reform and § 527 of the Internal Revenue Code (I.R.C.). Part II discusses the role of 527s in the 2004 election and the controversy and criticism associated with the organizations. Part III counters the specific criticism that 527s are a loophole in the campaign finance scheme and then advances three main arguments as to the importance and necessity of unrestricted 527 organizations: (1) individuals have a First Amendment right of association in independent organizations; (2) a heightened standard of review should be applied to First Amendment claims of independent organizations and their individual contributors; and (3) 527s provide a vital outlet for citizens to participate in the democratic process by supporting fundamental democratic principles.
Part IV responds to proposals to limit 527s from legislators, legal scholars, and the Federal Election Commission (FEC) by arguing that 527s are different in kind from political parties and candidates and should therefore be addressed by a separate set of rules. Rather than attempting to fit 527s into the existing framework that focuses on political parties and candidates, a new set of rules embracing 527s is both the practical and constitutional solution.
I. The History of Campaign Finance Reform and § 527
A. Early Attempts at Reform
Limitations on campaign finance are not a novel idea; in fact, the tradition of campaign finance reform has deep roots in American political history. Career statesman and lawyer Elihu Root, one of the earliest proponents of campaign finance reform, worried about protecting the public against wealthy interests currying favor through political donations.3 President Theodore Roosevelt called for legislation to block all corporate contributions.4 The 1907 Tillman Act banned corporate contributions for federal elections and was quickly amended to require public disclosure of contributions and expenditures.5 Union contributions were restricted under the Hatch Act and later banned altogether.6
The Department of Justice (DOJ) was the sole organization responsible for the enforcement of campaign finance laws until 1974.7 Although a number of laws were enacted during this time period, the DOJ was ineffective in enforcing many of the laws.8 Lawmakers recognized the need for stronger enforcement, independent of the DOJ, and a more cohesive set of laws to replace the piecemeal acts.
B. The Federal Election Campaign Act; Buckley v. Valeo and Its Aftermath
The first major legislation in the modern campaign finance reform era came in 1972 with the passage of the Federal Election Campaign Act (FECA).9 The initial statute provided stronger disclosure requirements but failed to deter many fundraising problems and unsuitable campaign practices. …