Notably absent in all of President Obama’s recent can-do talk about executive action has been a pledge to clean up campaign finance. But that doesn’t mean his administration has been ignoring the issue.
Rather, the question is whether the White House will have the guts to see the effort through that’s already underway.
The Treasury Department has been advancing a new rule that could radically constrain the actions of 501(c)(4) groups — organizations that are the bane of progressive reformers because they often blur the line between education and outright political advocacy and because they don’t have to disclose their donors.
The proposed rule has Republicans on Capitol Hill at battle stations, while advocacy groups on both the left and the right besiege the Internal Revenue Service with objections and put pressure on the Obama administration to modify or suspend it. In particular, conservatives charge that the IRS now wants to legitimize the sort of screening activity that led them to accuse the agency last year of targeting tea-party groups and other grassroots advocates.
“Right now, the Obama administration is getting ready to codify the same kind of intimidation and harassment of its political opponents that stunned the nation last year,” Mitch McConnell, the Senate’s Republican leader, said on the floor last week. “And hardly anybody’s talking about it.”
That includes the White House, which has been silent about whether it favors the IRS rule change — leading some in the reform community to accuse the administration of standing idly by. Obama didn’t even mention campaign finance reform in his State of the Union address last month, and inquiries to the White House on the matter were routed to Treasury.
For its part, Treasury says the rule, which remains in its early draft stages, is an attempt to overhaul the 501(c)(4) procedures that sparked last year’s uproar. While the department would not address McConnell’s criticisms, the proposed rule is written in a way that would affect liberal and conservative groups equally.
That’s little tonic to Republicans. Last month, at the behest of Rep. Harold Rogers of Kentucky, the chairman of the House Appropriations Committee, the GOP inserted a provision in the House omnibus spending bill that would nullify the IRS rule’s implementation. But Senate Democrats wouldn’t agree — exacerbating conservatives’ fears that the IRS measure targets them — and the language was stricken.
That has left the reform measure still in play at Treasury. Under current law, groups that qualify for nonprofit status under section 501(c)(4) of the IRS code must, as their main purpose, promote “social welfare” and may not be predominantly dedicated to political activity. Longtime Washington organizations such as the National Rifle Association, the Sierra Club, AARP, and the League of Women Voters are organized under the section.
But the rise in groups with overt political aims setting up nonprofit arms, such as Priorities USA Action and Crossroads GPS, along with the bevy of smaller groups formed in advance of the 2012 elections, has made enforcement of the rule more difficult. The new rule would expand the agency’s definition of what is considered “political activity” and would limit that activity to a set period close to Election Day.
The operational effect would be to knock scores of groups out of their cozy category. Moreover, Treasury is also considering whether to expand the new rule’s limits on politicking to other entities, such as the U.S. Chamber of Commerce, organized under different sections of the code.
Conservatives and liberals may be treated the same under the rule, but groups on the right are acting as if they have more to lose. Heritage Action for America, the advocacy arm of the Heritage Foundation, last month sent a letter to Congress signed by tea-party and social-conservative groups urging it to stop the “IRS power grab” and arguing that advocacy on health care, the budget, and other policy issues is “part of a social-welfare mission.”
Some trade groups also see the rule as going too far. “They’re trying to limit contributions from the super PACs and, in the process, they’re catching a lot of innocent folks,” says Wayne Allard, the former senator from Colorado who directs government relations at the American Motorcyclist Association. He says the rule would inhibit the group’s ability to communicate with its members.
The IRS is still taking public comments on the rule and likely will rewrite it in response. The groundswell of opposition from entrenched interests has reformers worried that the administration will do little. At the very least, don’t expect the rule to be finalized in time to affect the 2014 midterm elections — despite the GOP’s fears to the contrary.
There’s a precedent. Three years ago, the White House floated the idea of an executive order that would require federal contractors — including some of the nation’s largest companies — to disclose their campaign activities. After an outcry from Republicans and big business, the administration junked the order just in time for the 2012 elections. “Quite frankly, the president stopped pushing it,” says Craig Holman, a lobbyist for Public Citizen.
Despite all the talk about the president’s “pen and phone,” the White House hasn’t shown any interest in reviving that order. And it hasn’t done anything to embrace the IRS proposal — although, given that many Republicans view Obama as engaged in a conspiracy to destroy the conservative grassroots network, that neglect might be a good thing, Holman says.
That’s where the president sits today with regard to campaign finance reform: Reviled on the left because he hasn’t gone far enough and on the right because they’re afraid of what he might do. All in all, it’s a recipe for inaction in Obama’s “Year of Action” — which may be, on this particular issue, how the White House likes it.
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