The shrinkage will amount to 350K out of the Club for Growth bank account pursuant to a consent decree between it and the Federal Election Commission which will bring to a court battle to an end. At issue was CfG’s status as a 527 organization. Under rules which seemed to be in operation during the 2004 election and before, such groups were allowed to use soft money to promote their agenda during campaign season. However, FEC determined that much of the time purchased by this group and others advocated for the election and/or defeat of specific federal candidates, making it in fact a political action committee. A political action committee is subject to fundraising restrictions limiting individual contributions to 5K. FEC said it pulled in 10.78M in donations in excess of this amount.
RBR/TVBR observation: Along with other aspects of this we’ve pointed out recently, if CfG limits its message to issues, it can even mention specific politicians. In the recent Wisconsin Right to Life case which opened up the gates for such ads, which the Bipartisan Campaign Reform Act attempted to silence in the days leading up to an election. The plaintiff in that case had asked Wisconsin voters to contact both Democratic senators to discuss an issue which wasn’t on the congressional agenda at that time, and despite the fact that one of the senators was engaged in a re-election campaign. So we believe CfG and other would-be 527s can still spend all kinds of soft money as long as they are careful with their content.