Federal election lawyers have concluded tax-exempt political groups cannot spend donations from businesses, unions and people who write big checks to promote federal candidates, threatening a strategy Democrats hoped would keep them competitive with the GOP.
The Federal Election Commission is expected to consider the attorneys’ recommendation next week.
At issue is how the nation’s new campaign finance law broadly banning the use of corporate, union and unlimited “soft money” contributions on federal election activity affects the plans of partisan groups that want to defeat or re-elect President Bush.
Several Democratic activists believe that though national party committees and federal candidates cannot collect soft money, special tax-exempt political groups known as 527s can.
Democrats hoped to use 527s to funnel soft money that would overwhelm Bush’s hard money support. The IRS, however, defines 527s as groups that participate in state or federal elections for or against a candidate. FEC rules prohibit organizations that support or oppose a federal candidate from using soft money.
If you are a 527 participating in a federal election, you will now be subject to FEC regulations. A lot of the soft money you’ve collected from George Soros will now be off limits to you for attack ads against Bush.