Net Election

McCain-Feingold’s Internet Loophole

Tell George Soros! Three reasons to spend campaign cash online.

Hey, George Soros! You’re sending sackloads of cash to all sorts of groups dedicated to defeating President Bush this November. But by so ruthlessly exploiting one loophole in campaign-finance law—the one that allows unlimited donations to the political nonprofits known as 527 committees—you’re ignoring a different, equally large loophole. And it’s one that affects a medium no one seems to be taking advantage of yet: the Internet.

The Bipartisan Campaign Finance Reform Act of 2002, popularly known as McCain-Feingold, had two big goals: stopping the flow of unlimited soft-money donations from corporations, individuals, and unions to political parties; and preventing corporations and unions (and groups funded by corporations and unions) from broadcasting so-called “issue ads” on television and radio within 30 days of a primary and 60 days of the general election. The Internet makes it possible to subvert both goals, however, and that’s where you come in, Mr. Soros.

Here are three reasons why a liberal plutocrat like yourself ought to spend at least a sackload or two online before the 2004 campaign is over. In the interest of bipartisanship, this advice is freely available to conservative plutocrats, too, as well as any politically minded corporations and labor unions that feel muzzled by McCain-Feingold. (A disclosure: Microsoft, Slate’s parent, helps sponsor the E-Voter Institute, a trade association that’s devoted to convincing campaigns and political groups to spend their money online. Slate publisher Cyrus Krohn is an adviser to the group.)

1. The Internet is the only place where political parties can still spend soft money on the presidential election. This one’s the biggie. The sponsors of McCain-Feingold tried to plug every possible crack in the soft-money ban, but the Federal Election Commission ruled in 2002 that they overlooked a canyon. The law provides that state and local political parties can raise unlimited soft-money donations for state and local races, but they’re prohibited from using those soft-money dollars to engage in “public communications” that refer to candidates for federal office (representatives, senators, and presidents). Here’s how the law defines a “public communication”: “a communication by means of any broadcast, cable or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing or telephone bank to the general public, or any other form of general public political advertising.”

Because the Internet was not specifically included in that list—despite the catch-all phrase at the end—the FEC ruled that communications over the Internet aren’t included in the definition. The FEC also cited the Internet’s two-way nature as a reason for the exemption: “Congress did not include other forms of two-way dialogue such as candidate forums, rallies, debates or other events that are open to the public.” Which means, Mr. Soros, that there are 50 state parties ready for your checks and able to spend that money freely online for the presidential campaign—on Web sites, on e-mails, on advertisements, or whatever you like, even on Google AdWords. (Though, you should know, there’s a problem with those, and it cropped up four years ago with Yahoo!, too.)

According to Fred Wertheimer, a reform advocate and the president of Democracy 21, the FEC did more than exempt the Internet from the definition of “public communication.” “They appear to have exempted any Internet communications from the definition of ‘coordination,’ thereby in theory allowing campaigns and parties to coordinate on communications,” Wertheimer says. But the FEC’s rulings are being challenged in federal court. So, you’d better hurry up! (And keep in mind, the FEC may rule in the next couple of months that donations to 527 groups should be limited, too, so you need to keep your options open.)

2. On the Internet, you can run things that look like TV ads. As long as you and other wealthy individuals are able to give million-dollar checks to groups like the Media Fund that are airing TV “issue ads” this campaign, this may not matter that much to you. But if the FEC rules that donations to 527 committees are subject to the $2,000 contribution limit, the Internet’s video capabilities, in concert with the soft-money loophole, will become increasingly important.

It’s already important to one group that accepts money from corporations and therefore won’t be able to use its general-treasury funds on TV ads this fall: the National Rifle Association. NRA spokesman Wayne LaPierre told the Boston Globe this past December, “We’re going to do full-scale news programming on the Internet.” (See The group also plans to run TV ads stating that the feds won’t let the NRA tell you what you need to know about certain candidates, so viewers should visit its Web site to find out.

Plus, President Bush has already taken advantage of the fact that McCain-Feingold doesn’t apply to the Internet. The Bush campaign’s very first advertisement this election was a Web-based video sent out via e-mail. Notably, it didn’t include the “I approved this message” tagline from the candidate that TV commercials are required to insert.

Sure, corporations and unions can spend money in lots of places that aren’t covered by McCain-Feingold: billboards, phone calls, direct mail, newspaper and magazine ads. But only on the Internet can they broadcast something that looks like a TV ad. (They could deliver DVDs door-to-door, but that’s considerably more expensive.)

3. There are fewer disclosure requirements. Under McCain-Feingold, anyone who broadcasts an issue ad on radio or television within 60 days of the general election must disclose the expenditure and the contributions within 24 hours. That’s not true on the Internet or with other forms of political advertising, such as print ads, telephone calls, and direct mail. Combined with the fact that the Internet allows you to broadcast TV-like advertisements, it seems like the logical place to start if you want to engage in the sort of mischief that the Wyly brothers created in 2000 when they formed a phony group named “Republicans for Clean Air” and paid for some anti-McCain TV ads.

So, let’s get a move on! Heck, even some campaign-reform advocates are open to the idea. “What you don’t just want to sort of stomp on are interesting, innovative ways of engaging the American people in discussions about politics,” Celia Wexler, vice president for advocacy at Common Cause, told me when I asked if her group was worried about the Internet campaign-finance loopholes. “It’s hard to know what we’re talking about, what it is that would bother us as reformers.” Sounds like a challenge. How about it, George?

Net Election thanks Federal Election Commission spokesman Bob Biersack and former FEC Chairman Trevor Potter for helping to explain the law.