More groups to disclose funding

By Laura Meckler, Associated Press, 6/9/2000

ASHINGTON - The Senate voted yesterday to force a new generation of secretive political groups to disclose their donors and spending.

The measure was added to an unrelated defense spending bill on a voice vote after Republican leaders tried to kill the measure. Fourteen Republicans and most Democrats rejected that effort, 57-42.

Supporters - led by Senator John McCain, a Republican of Arizona - argued that the public should know who is behind these increasingly popular groups.

The amendment would force disclosure on groups that have organized under the once-obscure section 527 of the tax code.

Section 527 was created in 1975 to establish tax rules for political organizations, such as the national political parties and political action committees. But unlike these new, sometimes secretive groups, parties and PACs register with the Federal Election Commission, which requires them to disclose their donors and spending.

The new 527 groups tell the Internal Revenue Service that they are political organizations, but they maintain that as far as the Federal Election Commission is concerned, they are engaged in issues, not politics.

This year's presidential and congressional campaigns have seen a proliferation of these groups supporting Democrats and Republicans.

''Just when you think that our campaign system couldn't possibly get any worse, along comes the discovery of this new loophole,'' said Senator Charles Schumer, a Democrat of New York. ''

Opponents argued that the amendment would doom the underlying legislation funding defense operations. The Constitution requires tax bills to originate in the House, and opponents said that would cover this measure because it changes the tax code.

If the defense bill includes this provision, opponents said, the House would refuse to vote on it.

McCain offered a way around those arguments: Remove the measure from the defense bill if the other side agreed to attach it to the next appropriate legislation. Opponents objected.

Opponents also argued that the measure should cover other nonprofit organizations that engage in issue ads. Under current law, they also are not required to name their donors. But unlike 527s, they must release their tax returns to the public, and they face limits on their political activity.

''We ought to do it in a comprehensive way and not leave out some of the major players on the American political scene,'' said Senator Mitch McConnell, a Republican of Kentucky.

Opponents offered to consider a ''sense of the Senate'' resolution supporting disclosure. Backers dismissed that as meaningless.

The Federal Election Commission is also considering a proposal to force section 527 and other groups to register with the commission and meet its disclosure rules. Democrats on the panel welcomed the initiative, but Republican response ranged from wary to outright opposed.