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Tax-exempt groups, which can spend big money in politics, are reassessing what to do in the next election, now that the Treasury Department and the Internal Revenue Service have proposed new rules to limit the political activity of groups that qualify as 501(c)4 tax-exempt status under the tax code.
To influence the 2012 election, groups such as the conservative Crossroads GPS and the liberal Priorities USA raised tens of millions of dollars from donors whose names they weren’t required to disclose. The IRS has been under investigation for inappropriately scrutinizing Tea Party groups in the last election.
Here & Now’s Jeremy Hobson speaks with Dean Clancy, who leads the public policy team of FreedomWorks, the tea-party aligned 501(c)4 that advocates for small government, and to Fred Wertheimer, founder and president of Democracy 21, the campaign finance watchdog group.
Fred Wertheimer on political donations in 2012
“We had more than $250 million spent in campaigns by 501(c)4 groups in the 2012 elections without a single dollar being disclosed of the people who were putting up the money to pay for those ads and expenditures. That’s wrong in our view; the American people are entitled to know who is financing campaign activity.”
Dean Clancy on why political donors should be anonymous
“Donor anonymity is part of our democratic process, similar to the secret ballot. And it’s true that the Supreme Court declined to knock down the disclosure provisions of McCain-Feingold in the Citizens United case, but we at Freedom Works would agree with Justice Thomas that they should have done so. Donor anonymity is an important principal for preventing intimidation of political speech.”
Clancy on what Freedom Works will do next to fight the proposed rules
“We are going to educate our members across the country that this is a direct threat and a continuation of the intimidation tactics that were used in the last election. This is not simply sunlight legislation; this is about suppressing the free speech rights of kitchen table patriots.”
JEREMY HOBSON, HOST:
It's HERE AND NOW.
We're still about a year away from the midterm congressional elections, but a new rule proposal from the IRS and the Treasury Department is already causing some angst among nonprofit groups that will try to influence the outcome of those elections. The groups are called 501(c)(4)s. They are tax-exempt social welfare organizations, and they don't have to disclose their donors.
They include groups which raise tens of millions of dollars in the last election cycle, including the liberal group Priorities USA, the conservative group Crossroads GPS, which ran this ad last year.
(SOUNDBITE OF POLITICAL ADVERTISEMENT)
UNIDENTIFIED MAN: Every second, growing our debt faster than our economy. Tell Obama: stop the spending. Support the new majority agenda...
HOBSON: Well, the new rules would, among other things, block ads that expressly advocate for a political candidate within 60 days of an election. It would also limit voter registration efforts. We're going to hear two perspectives now; one from Dean Clancy, who leads the public policy team of FreedomWorks. That's the Tea party-aligned 501(c)(4). And the other view from Fred Wertheimer, the founder and president of Democracy 21, the campaign finance watchdog group. And, Dean Clancy, let me go to you first. What's your reaction to this proposal?
DEAN CLANCY: Well, it's really just a continuation of the scandalous targeting by the IRS of conservative political groups that we saw in the lead-up to the 2012 election, except now the IRS wants to go one step further and institutionalize the intimidation and punishment of nonprofit groups, you know, kitchen table patriots, who want to hold their elected officials accountable and candidates for office, kind of suppress their First Amendment free speech rights. So we're very disturbed by these new rules.
FRED WERTHEIMER: If I could respond to that. Democracy 21, along with the Campaign Legal Center, filed a petition more than two years ago with the IRS asking them to adopt new rules. This occurred way before any issues arose about targeting conservative groups. Secondly, for 40 years now, the Supreme Court has made very clear that disclosure requirements for groups that are spending money on campaigns is constitutional and more than appropriate.
The latest time it was upheld was in the Citizens United decision in January of 2010, where the court said that it was constitutional to apply disclosure to nonprofit groups making expenditures to influence campaigns. We had more than $250 million spent in campaigns by 501(c)(4) groups in the 2012 elections without a single dollar being disclosed of the people who were putting up the money to pay for those ads and expenditures. That's just wrong in our view. The American people are entitled to know who is financing campaign activity.
HOBSON: Well, Dean Clancy, what about that? Shouldn't the people know who is spending money on these elections?
CLANCY: Well, you know, donor anonymity is an important part of our democratic process similar to the secret ballot. And it's true that the Supreme Court declined to knock down the disclosure provisions of McCain-Feingold in the Citizens United case, but we at FreedomWorks would agree with Justice Thomas that they should have done so. Donor anonymity is an important principle for preventing intimidation of political speech.
WERTHEIMER: Justice Thomas was the single vote against disclosure. There were eight other justices who voted in support of disclosure. Let me give you the view of a justice who no one would consider on the liberal side of the equation. This is what Justice Scalia had to say about disclosure in a concurring opinion in a case called Doe v. Reed: Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.
HOBSON: Fred, this would also impact mainstream groups like the NAACP, the AARP, the League of Women Voters. These are also social welfare organizations. How would this affect their operations, do you think?
WERTHEIMER: Well, it depends on whether they're doing campaign finance activities or not. Now, certainly a number of those groups don't do campaign finance activities, and it would be irrelevant to them. Our view is there is a section in the tax code that's designed for people who want to do campaign finance activity. It's called Section 527, and we think that any (c)(4) organizations that want to do campaign finance activity should go ahead and do it. They should just do it under the proper section of the tax code, which requires that these groups disclose their contributions and expenditures.
HOBSON: Well, Dean Clancy, why not do that then? Why not just do things with FreedomWorks for America, which is your 527 group?
CLANCY: Well, here's my question for Fred Wertheimer and the advocates of centralized control of political speech. What about someone like Becky Gerritson? She is a home schooling mom in Wetumpka, Alabama who decided to get together with some of her fellow citizens to form a Tea Party group to educate themselves about public issues and to do things like voter education, voter registration, voter comparison, you know, comparing the records of candidates for office?
And all of that would be impacted by these new rules which, for example, say you can't mention the name of a candidate in a communication within 60 days of an election. And even including something you've mentioned on your website from the past, which you will now have to scrub off of your website during the run up to an election, where in the First Amendment does it say that 60 days before an election your free speech rights are diminished? And what are these kitchen table patriots doing that's worthy of all this regulation from Washington?
WERTHEIMER: Well, no one is prohibited from doing anything by these rules. But if they do want to engage in campaign activities, they ought to be willing, as Justice Scalia said, to stand up and be publicly identified.
HOBSON: Dean Clancy, what are you going to do next? What is FreedomWorks going to do next, it sounds like, to fight these new rule proposals?
CLANCY: Well, we're going to educate our members across the country that this is a direct threat and a continuation of the intimidation tactics that were used in the last election. This is not simply sunlight legislation. This is about suppressing the free speech rights of kitchen table patriots.
HOBSON: Dean Clancy leads the public policy team of FreedomWorks, the Tea Party-aligned 501(c)(4) that advocates for small government. And Fred Wertheimer is founder and president of the campaign finance watchdog group Democracy 21. Thanks to both of you.
WERTHEIMER: Thank you.
CLANCY: Thank you.
HOBSON: So two very different views. You can let us know what you think about this at our website, hereandnow.org. This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.
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