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navigation, see below Issue Ads:A primer on the explosion of these unregulated ads, how they skirt election laws and why they're corrupting our democracy

During 1996 the Triad -controlled nonprofit, Citizens for the Republic Education Fund, spent more than $1.3 million on ads, radio and direct mail targeting 13 races - including an ad (view video below) opposing Jill Dockings' Senate candidacy in Kansas. It was supposedly an "issue ad" - meaning an ad not supporting or attacking any specific candidate. However, if this Docking ad looks indeed like a political advertisement to you, consider it your introduction to one of the most popular loopholes in our current campaign finance system - the "issue ads."

Click here for FRONTLINE's glossary of other campaign abuses.

What is an issue ad?

Click to view this 'issue ad' An issue ad is, by definition, supposed to discuss broad political issues rather than specific candidates. In the landmark 1976 decision, Buckley v. Valeo, the Supreme Court created two broad categories of political advertising: express advocacy and issue advocacy. Express advocacy, as the name suggests, is advertising that explicitly recommends the election or defeat of a candidate. According to the Court's decision, express advocacy ads are subject to federal campaign regulations. That means organizations sponsoring express advocacy have to abide by federal laws restricting the size of individual donations, barring corporate and union contributions, and requiring public disclosure of their contributors. But in the case of issue advocacy, the Court ruled that ads intended to educate the public on broader issues are protected by First Amendment guarantees of free speech and are outside the reach of federal election laws. This means that the sponsors of issue ads are not required to publicly disclose the sources of their funding - and there is no limit on the amount of money any individual, union or corporation can contribute to an issue ad campaign. These important differences in how the two types of ads can be funded makes the distinction between them crucial.

In a footnote to the Buckley decision, the Court tried to provide some guidance on the dividing line between express and issue advocacy. According to this footnote, express advocacy is any advertising containing such clear expressions of support or opposition as "vote for," "elect," "support," "vote against," "defeat," or "reject." These phrases, originally intended as general guidance, have become widely accepted as the defining test of express advocacy. While extensive legal and political debate continues, most lower courts have ruled that ads which avoid Buckley's "magic words" cannot be considered express advocacy. So under the present law, such ads are considered issue ads - no matter how critical or supportive of a given candidate they may be.

A growing loophole

In 1996, a variety of groups took advantage of this loophole in the law. Political parties, labor unions, and a host of nonprofit and corporate-funded advocacy groups launched an unprecedented barrage of issue advocacy ads. Together they spent an estimated $135-150 million on ads which were completely unregulated by federal election laws. The most comprehensive study of this explosion of issue ads is the Annenberg Public Policy Center's Issue Advocacy During the 1996 Campaign: A Catalog. Click here to download a copy of this report at the Annenberg site.

The Annenberg report found that 90 percent of the so-called "issue ads" run in 1996 named a specific candidate, and the majority of them were attacks on the sponsoring groups' political opponents. Although these ads were clearly intended to influence voters, because they avoided Buckley's "magic words," they were legally "issue ads."

Judge for yourself if the following ad is 'issue advocacy' or express
advocacy... The danger of this loophole is clear. By carefully constructing ads to avoid Buckley's magic words, corporations, labor unions and wealthy individuals can funnel unlimited amounts of money into the electoral process - purchasing millions of dollars of ads without any obligation to disclose their involvement to the voters. It is now legally possible for groups representing neither candidate in a race to spend more money on political advertising than the candidates themselves. As one critic has said, this could reduce candidates for federal office to "bit players" in their own campaigns. More importantly, it leaves voters in the dark about the source of the political messages they are receiving.

Will current reform proposals plug this loophole?

The Shays-Meehan bill passed by the U.S. House of Representatives and the McCain-Feingold bill which, as of October 6 1998, is blocked in the Senate both impose some limitations on issue advocacy which do not currently exist. Both bills would require anyone who runs an ad mentioning a specific candidate within two months of the election to play by the rules and pay for those ads with money legal under the campaign finance laws. Under this legislation, the bulk of the advertising done by both of Triad's nonprofit arms - and much of the "issue advertising" done by the DNC and RNC on behalf of their presidential candidates - would have been illegal in 1996.

While debate continues about the legality of the issue ad loophole - and of the proposals to plug it - other legal questions have been raised about the activities of organizations like Triad's Citizens for the Republic Education Fund and Citizens for Reform, and the Republican National Committee-founded Coalition for our Children's Future.

Legal limitations on nonprofit political activity

Nonprofit organizations are not bound by the federal election laws which govern the behavior of political parties and candidates. Nonprofits are not required to disclose their donors to the public, and there are no legal limits on the amount of money they can accept from any given source. And while political parties and individual candidates are barred from taking money from particular sources - such as unions or corporations - nonprofits face no such restrictions.

But that freedom from regulation comes with a price. Nonprofit organizations are granted their tax-exempt status in exchange for an understanding they will have little or no direct involvement in political campaigns. As the IRS code on nonprofit groups states, "the promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office."

Yet in 1996, a number of organizations which won tax exempt status from the IRS as "social welfare" organizations seemed to exist solely for the purpose of political advertising. The records subpoenaed by Senate investigators from the Coalition for our Children's Future, and the two Triad nonprofits show those organizations performed no education or social welfare function beyond running ads, direct mail campaigns and phone banks intended to influence particular races. Nevertheless, these groups used their nonprofit status to shield the identity of their donors - from whom they accepted unlimited contributions. Thus their partisan political activities went on below the radar screen of campaign disclosure laws - and was subsidized by American taxpayers.

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