Texas contributors' millions were key in financing issue ads by so-called 527sBy Laylan Copelin, Austin American-Statesman
Sunday, December 19, 2004
Unregulated political committees that dominated the presidential election, such as Swift Boat Veterans for Truth, raised and spent a half-billion dollars during the 2003-04 election cycle, according to a report by the Center for Public Integrity.
Texans, including Austin high-tech entrepreneur Jonathan McHale, played a key role in providing the money.
Houston home builder Bob Perry grabbed the headlines by underwriting the initial TV commercials by Swift Boat Veterans for Truth that questioned the war record of Democratic presidential hopeful John Kerry. He gave a total of $9.6 million to various committees.
On the other side, McHale, who last week sold his company, TippingPoint Technologies Inc., gave $3.1 million, almost all to Media Fund, a so-called 527 committee that supported Kerry's campaign.
The 527s, named for the section of the tax code that created them, have been around for the past three election cycles. But they emerged as decisive players in this presidential election, spending a record amount of money as a response to tighter spending restrictions under the McCain-Feingold campaign finance law, according to the study.
That law, among other things, was to curtail unregulated "soft money," mostly from corporations and unions, that political parties used to finance thinly veiled issue ads praising or attacking politicians without directly calling for their election or defeat. Taking up that role this year were the 527s.
"In the 21st century in the United States of America, it is astonishingly easy to assassinate a political opponent's character with little or no accountability or basis in fact," said Charles Lewis, executive director of the Washington-based nonpartisan research center that issued the report Thursday.
The 527 committees spent $550 million on elections. Fifty-three committees that focused almost exclusively on the presidential election raised $246 million.
In all, six Texans were among the top 25 individual donors to 527 committees: Perry (fifth), $9.6 million; Hyatt hotel heiress Linda Pritzker of Houston (sixth), $7.6 million; Dallas businessman T. Boone Pickens (seventh), $5.1 million; Dallas businessman
Harold Simmons (13th), $3.7 million; McHale (16th), $3.1 million; and Wal-Mart heiress Alice Walton, who lives on a ranch near Mineral Wells (22nd), $2.6 million.
Perry is no stranger to Texas politicians as a donor. In recent years he has eclipsed James Leininger, a San Antonio businessman, as the state's biggest individual donor, mostly to Republicans and pro-business causes.
McHale has no track record in state elections. He declined to discuss why he gave so generously on the national level this year.
He is an entrepreneur with a successful record with startups. McHale's share of TippingPoint, which provides network security technology and was bought by 3Com Corp., is worth $89.2 million.
In Washington, there will be debate in Congress and at the Federal Election Commission on the future role of 527s.
The Texas Legislature also is expected to consider changes in its campaign finance system.
Craig McDonald, executive director of Texans for Public Justice, a group that studies campaign finance, said 527s have not played a significant role in state elections so far.
Unlike federal law, the state campaign finance law does not limit how much money individuals or political action committees can give to candidates or spend on their behalf.
"The 527 loophole (unlimited donations) is the law here," McDonald said.
That's not to say the 527s won't play a future role, especially if the Legislature were to limit campaign donations or bar the anonymous spending of money on issue ads targeting a candidate and his voters in the final days of a campaign.
Fred Lewis of Campaigns for People, another Austin-based campaign finance group, said there's a lesson that state lawmakers should learn from the 527 example at the federal level:
"As Texas fixes its system, we have to apply the same rules to everybody."