Political ads: Cash still king

When the Supreme Court upheld campaign finance reform last December, the hopes and fears of political observers ran high.

Many in the public hoped that, at last, the ban on so-called "soft money" to political parties would banish forever the distorting influence of big money from campaigns. Others predicted the crippling of political parties. Still others, such as the Supreme Court's most conservative justices, warned that freedom of speech and press could be in peril.

Nothing of the kind has happened. The parties, now unable to receive those large, unlimited donations, have been forced to expand their donor bases, and are wealthier than ever. The Democratic Party, which doomsayers predicted would die first, is in better financial shape than when soft money was king. And anyone paying attention to the media is seeing as lively a campaign as ever.

But nobody ever said that "lively" would equal "fair." To this electrified campaign environment, powered by the sharp partisan divide in the electorate, comes new emphasis on independent groups that are the recipients of the corporate and union soft money that parties may no longer accept.

As the Supreme Court majority itself noted in its campaign finance ruling on the McCain-Feingold law, "Money, like water, will always find an outlet."

Norman Ornstein, a scholar at the American Enterprise Institute and supporter of McCain-Feingold, put it this way: "No matter what set of laws we've ever had, the ability of individuals to spend whatever they've wanted as has always been there."

Thus has this campaign seen the rise of so-called 527 groups, named for the section of the tax code that governs them and which are now responsible for some of the most inflammatory ads on television, such as the Vietnam veterans' group trying to discredit Democratic nominee John Kerry's war record. The quantity of these groups, which existed long before McCain Feingold became law, has exploded, particularly on the Democratic side; suddenly they are the bogeyman of the 2004 campaign.

On Monday, President Bush avoided specifically condemning the ads by Swift Boat Veterans for Truth, instead issuing a blanket rejection of all the ads by such groups: "I'm denouncing all the stuff being on TV of the 527s," he told reporters at his Texas ranch.

But, observers of campaign finance note, the president has yet to propose any changes to the system that allows these groups to operate. And more important, the issue of negative ads by outside groups goes far beyond the 527 committees. In fact, the liberal group that Republicans blame most for nasty ads against Bush isn't even a 527. It is the Moveon political action committee (PAC) that is running ads taking on Bush for his avoidance of military service in Vietnam and his record in the Texas Air National Guard.

The Moveon 527, which receives major support from billionaires Peter Lewis and George Soros, is called the Moveon Voter Fund, and has not run any ads in four months, according to Trevor Fitzgibbon of Fenton Communications, which represents Moveon. A third entity, called Moveon.org, is a 501c4 committee and is allowed to do political advocacy work.

The complicated network that Moveon has become reflects the nature of how political advocacy shifts and morphs to conform to laws and regulations - and the desires of donors.

The bottom line is that attack ads won't necessarily stop 60 days before the general election on Nov. 2, even though McCain Feingold requires it. A 527 group, before the 60-day window, can use corporate, labor union, and individual contributions to fund ads. But if the group started a political action committee and raised its funds in the form "hard money" - dollars that are subjected to limits and don't come from union or corporate treasuries - they can continue to advertise through Election Day.

Another option is for a wealthy individual to advocate his point of view by hiring an ad firm himself, an action that has always been legal.

Ironically, the way the laws are written, outside groups are in fact encouraged to couch their messages in negative terms. Because they are barred from advocating for a candidate, they are safer legally by going negative.

But in the end, the quantities of money involved in these advocacy groups are the least of the candidates' problems. For less than $1 million, Swift Boat Veterans for Truth will have dominated political talk for two weeks before the Republican National Convention begins next week.

"The problem with the Swift Boat ad isn't how it's financed, it's its content, which is probably untrue and maybe libelous," says John Green, director of the Bliss Institute of Applied Politics at the University of Akron.

Mr. Ornstein of the American Enterprise Institute blames the media and not the new campaign finance structure for the huge play the Swift Boat allegations have received.

"What these guys have been able to tap into is the 'stop us before we kill - or report - again syndrome,' " says Ornstein. "They found they could put a story out there, get an ad up - they could have spent only $50,000 - get it on Drudge, Limbaugh, the New York Post, and then everyone follows like lemmings. No campaign finance system is going to change the norms of journalism."

Added to the mix is the role of the Federal Election Commission, which many reform advocates complain is too weak. In a ruling last Thursday, the FEC passed new rules aimed at making it harder for some independent groups to spend large sums of soft money in campaigns. Starting on Jan. 1, some 527 committees will be required to raise more small "hard money" contributions. This rule will not apply to the current campaign.