The Return Of Secret Money
In this Reality Check, CBS News Correspondent Eric Engberg says some political operatives are able to spend freely thanks to a giant loophole in the campaign finance laws.
It was at the Watergate building 26 years ago that the country learned just how dangerous secret money in politics had become. Much of the dirty business was financed by secret contributions. The public demanded a clean up.
The key was creation of a Federal Election Commission (FEC), set up by Congress to prevent the kind of abuses uncovered by Watergate. The commission would enforce laws limiting the size of contributions and requiring that the names of givers be made public.
The rules also covered non-party groups working for or against a candidate. But that regulatory structure is now near collapse, thanks to clever exploitation of loopholes by political operators.
The Republican Majority Issues Committee has been in business a few months. Its plan is to pump $25 million into close House races to keep the GOP majority in the House of Representatives.
The committee's director is Karl Gallant, a longtime aide to Majority Whip Tom DeLay, R-Texas. DeLay will help raise that money.
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Gallant is operating under section 527 of the federal tax code. In recent years, the IRS has given such groups wide political leeway. They can organize, buy advertising, denounce or praise a candidate. They don't even have to register with the FEC. Contributors can give without limit, in secret. It's all legal as long as the group doesn't coordinate its actions with candidates or parties.
And Gallant insisted, "I will not be coordinating my activities with Tom DeLay."
It's not just the conservatives who are going secret. The Sierra Club is using a 527 group to slam the Republicans. A recent commercial from the environmental group states, "Under Gov. George Bush, Texas leads the nation in air pollution."
The Sierra Club's Carl Pope said, "We've got some donors who want privacy, and as long as everybody else's donors have privacy, we're going to give it to them. But actually we think it should all be disclosed."
On Wednesday, Sen. Joseph Lieberman (D-N.J.), will begin a drive to get Congress to pass legislation closing the 527 loophole. Its chances are considered slim at best. The act is, many politicians like the idea of fund-raising, pre-Watergate style.