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The Loophole Peddlers

September 22, 2004

There's no money more slippery than campaign donations. That's partly because the people who are supposed to restrict such funds are ladling out the grease. The Federal Election Commission, which sounds as if it ought to regulate something, is actually controlled by the Democratic and Republican parties. Its mission seems to be to undermine rather than apply campaign finance laws.

The FEC's sham was called this week by a federal judge in Washington who savaged the agency for deliberately building loopholes into its regulations for enforcing the 2002 McCain-Feingold campaign reform law.

The ruling was in a lawsuit brought by supporters of the reforms. It's probably too late for the decision to affect the Nov. 2 presidential election, but it's clear that the FEC eventually will have to rewrite campaign regulations to reflect the intent of Congress.

Congress may want to scrap the notoriously flawed agency and create a more independent referee for the political process.

The crux of the problem is, as always, unregulated campaign donations. These are funds that fall outside curbs on an individual's gifts to a candidate (currently set at $2,000) or to a party. They go, in the hundreds of thousands, to organizations that are technically separate from candidates.

Attempts to restrain this soft money (as opposed to "hard" campaign donations) began in the 1980s. Loopholes allowed political parties to collect unlimited funds for "party activities." What began as get-out-the-vote activities transformed into political action committees saying anything short of "Vote for Stan." McCain-Feingold aimed to halt such unrestricted donations to parties and PACs.

Of course, campaign funding controls will never be loophole-proof. Opponents of the McCain-Feingold law argued all along that trying to impose limits on political advocacy in a free society was inherently futile and that the law should merely require instant disclosure of who was giving money to whom. This would allow the parties and candidates to exert more control over money spent on their behalf, and we'd at least know more quickly who was slinging the mud. This reasoning downplays some of the rampant abuses that led to the enactment of McCain-Feingold (and the Supreme Court's blessing of the law).

In any case, no federal regulatory agency should be in the business of undoing reforms already in place. The FEC's laughable exclusion of the Internet from its regulated sphere of campaign communications and its permissive nonchalance about supposedly independent "527 groups" like Swift Boat Veterans for Truth are inexcusable. Such fecklessness led Judge Colleen Kollar-Kotelly to not only strike down 15 FEC regulations but to also accuse the agency of enabling corruption. Her decision would make a fitting obituary for an agency that deserves to die.

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