See Spots Run - Broadcasting & Cable

See Spots Run

Dems, GOP find way to exploit new finance rules
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Full of fire and indignation, Republican Party Chairman Ed Gillespie recently declared that Democrats are trashing campaign-finance laws by relying on tax-exempt groups. They purport to be independent, he charges, but their goal is to provide hundreds of millions of dollars for TV spots to bash President Bush. What? Dirty politics in a presidential race?

Gillespie wants nothing better than to short-circuit the Democrats' 2004 money machine. Two weeks ago, he asked federal judges to do just that.

If the GOP fails to stop Democrats' end run around campaign-finance restrictions, it can tap a similar source of new money. The latest godsend to political campaigns is the tax-exempt groups known in political circles as "527s," named after the section of the tax code on which they are based.

"Ed Gillespie has made no secret of the Republican Party's plan to ramp up their own groups should his legal complaint fail," says Sarah Leonard, spokeswoman for the Media Fund and American's Coming Together, two Democratic-leaning groups that hope to raise almost $175 million.

The GOP, though, in a legal complaint, claims that "Democratic special-interest groups have created an illegal conspiracy with the stated intent of injecting more than $300 million of banned soft money into the 2004 election for the purpose of defeating President Bush and electing John Kerry."

Republican National Committee spokeswoman Christina Iverson argues that it's not the existence of the groups that's the problem but their use as a soft-money machine for Kerry's presidential campaign. "We're not saying these groups should not exist, only that they should abide by campaign-finance law. If they want to use soft money where it's legal, like mayor's and governor's races, that's fine."

Not to be outbid, the most active GOP 527 is the Club for Growth, which works House and Senate races and relies on "hard" donations from individuals, which are capped at $2,000. Another 527, Americans for a Better Country, exists only on paper. Other tax-exempt Republican groups are active only at the local level, Iverson says. But, as the TV political season heats up, so should the organizations.

Given the close presidential race, the GOP is determined to eliminate the liberals' campaign game. The Kerry camp is now receiving huge, unlimited "soft" money donations from wealthy individuals, unions, and activist groups that were once the primary source of TV money for the Democratic Party.

With backers like financier George Soros and Progressive Corp. Chairman Peter Lewis committing tens of millions of dollars, some estimate the Democratic groups may generate $300 million for anti-Bush TV spots.

Republicans compensated for the soft-money decline by aggressively soliciting hard contributions. Democrats predict that the GOP legal strategy will fail. When that happens, the GOP will tap into its own fabulously wealthy allies to fund anti-Kerry TV spots.

Yet Iverson says she has no idea what approach the GOP-friendly 527s would take. "We're not allowed to coordinate with them. And, unlike the Democrats, we aren't trying."

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