Newspaper article The Florida Times Union

House to Debate Exposing 'Stealth Funds' Political Groups Keep Donors Secret

Newspaper article The Florida Times Union

House to Debate Exposing 'Stealth Funds' Political Groups Keep Donors Secret

Article excerpt

WASHINGTON -- This year they began slipping under the political radar screen, groups with innocuous names such as Shape the Debate and Americans for Economic Growth, dropping millions of dollars of secret money on slick TV ads to influence elections.

Now Congress may be about to force disclosure on what one member called the "political super-weapon of the 2000 elections."

The House this week plans to debate a wide-ranging bill that would force tax-exempt organizations to reveal their sources of funds and where the money goes. Using an obscure provision of the tax code, these "stealth funds" and the people behind them don't have to disclose anything, so long as their "issue advocacy" ads don't say "vote for" or "vote against" and they don't coordinate their plans with candidates or parties.

On Capitol Hill the groups are known as "527s" after that section of the tax code. But their obscurity ends when they hit your TV with a barrage of sharply focused ads designed to influence your vote.

Frances Hill, a University of Miami professor of tax law, has studied the rise of the 527 funds, which have flourished because the IRS regards them as political and exempt from taxation. Because the Federal Election Commission does not force them to disclose donors, they flourish all the more.

"These are secret bank accounts that voters know nothing about," said Hill, who testified on the issue last week. "They're sucking money, oxygen and legitimacy away from older organizations."

Rep. Lloyd Doggett, a Texas Democrat who is pushing for disclosure, said: "The ability to raise unlimited, undisclosed, unaccountable amounts of money has made [the groups] the political super-weapon of the 2000 elections."

Sen. John McCain, who made campaign finance reform a centerpiece of his presidential campaign, said the funds were "an outrageous, obscene distortion of everything the American people believe in."

But the executive director of one of the groups said much of this criticism is simplistic and unfair.

"To go to full disclosure would have a chilling effect on people's ability to criticize government," said Steve Moore of the Club for Growth, which has attacked several incumbents. …

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