From Capitol Hill

Swiftboating The Election – Shadowy Tax-Exempt Groups Will Be Heard

By Eleanor Clift

Everybody remembers the Swiftboat Veterans for Truth and their impact on the 2004 presidential election. They seemed to come out of nowhere, dominating the cable news shows and denigrating Sen. John Kerry’s service in Vietnam. Kerry was slow to respond and the attacks made on him, even if untrue, gained traction with the voters and contributed to his defeat.
 
In turning down public funding for his presidential campaign, Barack Obama said he needs more money than the federal treasury provides to counter spending by an array of groups like the Swiftboat Veterans that operate in a gray area of campaign finance law. They’re called 527s after a loophole in the tax code. Fundraising is up for Section 527s on the liberal side and on the Right compared to ’04. While no one group can yet claim notoriety comparable to the Swiftboat Veterans, Obama expects an onslaught of negative advertising mounted by 527s sympathetic to Sen. John McCain, who has neither the appetite nor the money to wage such attacks himself.     
      
“They’re unpredictable; they can pop up at any time,” says Massie Ritsch, communications director for the Center for Responsive Politics, a non-partisan organization that tracks campaign money. Subject to few regulations other than periodic disclosure of contributions and expenditures to the IRS, 527s are remarkably agile. “A campaign is like a freight train; it takes a while to get up and going. 527s are like a rocket,” says Ritsch. “There’s no limit on contributions. They can raise money from just about anyone and have a very quick effect and then disappear. And maybe two years later, the FEC will fine them. There is no reason to think 527s will be any less active in this election cycle.”
 
McCain has been a critic of 527s, saying they have a corrosive effect on politics, but he seems to have tempered his rhetoric recently. Asked early this summer if he would actively discourage their formation, he said his campaign could not be expected to “referee” such groups.

The Obama campaign saw that as a signal that McCain would stand aside and condone attacks from outside parties that he could not make himself. “We know what kind of campaign they’re going to run,” Obama said, justifying his decision to withdraw from the public finance system. “They’re going to try to make you afraid. They’re going to try to make you afraid of me. ‘He’s young and inexperienced and he’s got a funny name. And did I mention he’s black?’”
 
Obama can tap his online donor network of 3.2 million people for far more than the $84 million he would receive in public funds. After losing one presidential election in the U.S. Supreme Court and another by a narrow margin in Ohio, the party’s future is in Obama’s hands. He has discouraged 527’s on the liberal side in part out of principle, but mainly because he wants to control the message.

Campaigns are forbidden by law to coordinate with 527s. Progressive Media USA, which was gearing up to do television ads, is one of several groups that have shut down. It’s not that Obama is so much more reform-minded than McCain. He has ample resources to do his own advertising and doesn’t want to risk outside groups confusing his message.

The 527s most visible at this early stage in advancing McCain’s message are Let Freedom Ring and Veterans for Freedom. When the Veterans group upped its ad buy in battleground states, the McCain campaign dropped back, raising questions of possible coordination, which is illegal.

Let Freedom Ring is funded by Sheldon Adelson, a Las Vegas real estate developer and gambling tycoon who popped up this election season as the Right’s answer to liberal financier and philanthropist George Soros. The law bars advocacy for a specific candidate, but there’s no mystery about where these billionaires stand -- only how much money they’re willing to spend.    

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Eleanor Clift is a contributing editor for Newsweek magazine. Her column, “Capitol Letter” is posted each week on Newsweek.com and MSNBC. She is a regular political panelist on the nationally syndicated show The McLaughlin Group, which she has compared to “a televised food fight.” She is also a political contributor for the Fox News Channel.