The Shadow Campaign

"President Bush. Remember the American dream? It's about hope, not fear. It's about more jobs at home, not tax breaks for shipping jobs overseas. It's about giving our children their chance, not our debt. It's about providing health care for people, not just profits. It's about fighting for the middle class, not special interests...."

"It's time to take our country back from corporate greed and make America work for every American."

The above is from a political ad that's part of a $5 million media buy focused on 17 states and funded by a Democratic advocacy group called the Media Fund. In terms of message, the ad is hardly exceptional in an election year. But it goes to the heart of the battle over political spending in the post-McCain-Feingold world. The Media Fund is one of the now-famous 527 organizations (named after their IRS designation) that, while barred by law from coordinating with the Democratic party, are mounting a kind of "shadow campaign" to take down George W. Bush

Many of the 527s involved in this latest push are staffed by big-name ghosts of past presidential and congressional campaigns. For instance, Jim Jordan, Kerry’s former campaign manager, is now a consultant to the Media Fund, and Harold Ickes, Clinton's former deputy chief of staff, heads it.

The rise of the 527 is a byproduct of the McCain-Feingold reform law, which put limits on the amount of soft money—money from corporations and unions—that could be donated to political parties. The groups can, and do, run almost all the elements of a political campaign. The Washington Post reports that liberal 527s have created a political machine that is essentially a parallel party, running expensive political ads, get-the-vote out campaigns, polling, research, rapid response, and fundraising.

The Post reports:

"Beyond the Media Fund, the entities include Americans Coming Together (ACT), which is responsible for get-out-the-vote efforts; America Votes, the umbrella organization that will stitch together the activities of various progressive organizations; the Thunder Road Group, which will concentrate on research and rapid response; and the Joint Victory Campaign 2004, a combined fundraising committee."

As long as the groups don’t actually contribute money to, or coordinate with, a campaign, they’re free to do pretty much whatever else they want, with no restrictions on how much soft money they get. In practice, analysts say, there is a lot of wink-wink coordination that goes on between 527s and parties.

Democrats are the main beneficiaries of the loophole in the McCain-Feingold Act that allows 527s to operate like this. While Republican 527s do exist, they aren't as well developed as the Democratic ones; they don't need to be, so great is Bush’s fundraising edge.

Republican groups say that if 527s are ruled legal, they'll begin to match the opposition, and a new "arms race" will begin. But there’s another reason they may not want to start up too many 527s: past corporate soft-money donors to the RNC are reluctant to risk legal repercussions while the status of 527s remains in limbo. In the meantime, they’ve been pretty successful -- as Republicans traditionally are -- at raising hard money

Newsday writes of Kerry’s predicament:

"Once he is officially nominated at that convention, he will receive $74 million in public funds to finance the rest of his campaign, as will Bush.

But until then, the Kerry camp must survive off what it and its allies can raise. And, no matter how successful they are, they are certain to be outgunned by the cash-rich Bush campaign, which last week began a TV ad campaign, costing as much as $10 million, in at least 16 states and on national cable channels.

The danger for Kerry is that Bush will use his war chest to paint a highly unflattering portrait of the Massachusetts senator for voters who are just beginning to tune in to the contest - and that Kerry may not be able to answer in time because of limited resources."

The 527s are in danger of becoming much more strictly regulated. President Bush's re-election campaign on Tuesday asked the Federal Election Commission to investigate the Media Fund for airing the anti-Bush TV ads, which the campaign calls illegal. Terry Holt, Bush campaign spokesman said yesterday:

"We believe this is illegal. We believe that the FEC would look at this and say this is a violation" of campaign finance laws.

In fact, the FEC is already examining whether 527 groups violate campaign finance laws, and plans to decide whether new rules will be necessary before the 2004 election. But the new 527 rules will not be effective until late July at the earliest. In the meantime, Democrats will try to get as much as they can out of the organizations.

It's possible the FEC will force 527s, like the parties, to accept only "hard money" (individual contributions that max out at $2000). Wealthy and famous liberal backers, like George Soros, who has donated $10 million to America Coming Together, another 527, would have to close their wallets.

Backers of 527s argue that the organizations are legal. Harold Ickes says:
"They are entirely legal. We are advised by a battery of legal experts who have no reservations about the legality."

"Politically, we are trying to really highlight, underscore and push into sharp focus the policies of the Republicans. That may have a certain effect on the Bush or the Kerry campaign, but we are not involved in electing or defeating people. We are raising issues."

The first round of ads make no mention of the Democratic party, or Kerry, but clearly reference Bush. Future ads, Ickes says, will likely name Kerry.
"We feel confident we can name Kerry. It has to be in the context of issues, and that's what we're going to do. We think that the Republican lawyers and Ed Gillespie either can't read the law or are just making it up. I think that they want to divert attention."

But one school of thought says the 527s could actually harm Democrats. A Kerry advisor told the New York Times:

"If their first flight of TV ads goes up and they are terrible and off-message, that would be a problem. But it's a problem we can't do anything about."

If the number and calibre of past campaign bigwigs now working for 527s -- not to mention the ease with which 527s and parties can surreptitiously coordinate -- are any indication, it's not likely to be a problem.