Watchdog groups keep an eye on anti-Daschle effort

By Denise Ross, Journal Staff Writer

The Sioux Falls-based Rushmore Policy Council could be endangering its tax-exempt status when it targets Sen. Tom Daschle, D-S.D., for defeat in 2004, leaders of campaign-finance watchdog groups said Tuesday.

Because the group is organized as a nonprofit 501(c)(4) under the Internal Revenue Service, the Rushmore Policy Council is bound by federal tax laws that limit what it can do to influence political campaigns and elections.

"It's not clear to me how they will remain a 501(c)(4) if they are going to do what is being reported," Larry Noble, executive director and general counsel for the Washington, D.C.-based Center for Responsive Politics, said. "I'm hard-pressed to see how what they're doing comports with being a 501(c)(4)."

Rushmore Policy Council Executive Director Rob Regier and Sioux Falls businessman Paul Erickson are trying to raise money to pay for a year-long TV ad campaign featuring two deadpan characters with a "slightly detectable hint of a Scandinavian accent" who would use "low-key Hee-Haw-like" humor to convince South Dakota voters that Daschle is out of step with the state.

"This is a portion of our plan to help neutralize Daschle's attacks and to ultimately help end his public career in 2004," reads a memo from the group titled "Daschle Accountability Project."

Regier said he believes his group has plenty of latitude to conduct its campaign.

"There are many different opinions on the law. As a 501(c)(4), you're allowed to even endorse candidates if you want. But we don't and don't plan on doing that," Regier said. "What we are doing is no problem at all, because they're issue ads."

Many nonprofit groups

organized as 501(c)(3)s form a partner 501(c)(4) group. The IRS prohibits 501(c)(3) groups from engaging in any political activity, but 501(c)(4) groups are allowed to do lobbying and issues advocacy as long as those things are not their primary activity.

The Rushmore Policy Council is the companion 501(c)(4) to the South Dakota Family Policy Council, a 501(c)(3). The Family Policy Council is a socially conservative advocacy group.

An IRS spokesman said he cannot comment on individual cases.

According to the IRS Web site, a 501(c)(4) "must be operated exclusively for the promotion of social welfare. ... The promotion of public welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate."

Regier said he is surprised by the recent publicity over the group's tentative plans to mount a television-ad campaign because the council

already has run ads that target Daschle. For example, the group ran the newspaper ads that compared Daschle to Saddam Hussein and ads about cloning and the pending confirmations of potential federal judges.

"These would be nothing new," Regier, who objects to calling the ads political, said. "We don't do any political campaigning. We've done none. I don't foresee us doing any. It's all issue advocacy, not candidate advocacy. That is key to the argument."

Don Simon, general counsel for the national watchdog group Common Cause, said such explanations mean more campaign-finance reform is probably coming.

"There's a problem, and it has been a problem for a while, with groups running what are in fact campaign ads but don't use words like 'vote for' or 'vote against,' and they claim the ads are just an issue discussion," Simon said. "That's a problem that Congress tried to address in the campaign-reform law they passed last year."

The new laws prohibit 501(c)(4) groups from running ads 30 days before a primary election and 60 days before a general election, but Regier said he expects those provisions to be struck down in court before the 2004 election dates arrive.

"We're going to operate as if it's not" on the books, Regier said.

Simon said the windows in the new law don't solve what he believes is a problem.

"Once you're outside those windows, you still have the problem of groups running sham-issue ads, what any reasonable person is going to understand as a campaign ad," he said.

The IRS will judge the 16-month-old Rushmore Policy Council based on all of its activities, Simon said. The big test will be whether its primary purpose is political activity or not, he said.

"Ultimately, something the IRS would look at is how much it spends on different activities. 501(c)(4)s can do some political activities, but it can't be its principal or primary purpose," Simon said.

Fred Wertheimer, president of the campaign-finance reform group Democracy 21, said he expects scrutiny to continue.

"The group's activities need to be carefully watched in the coming months to see if, in fact, they are breaking tax laws and campaign-finance laws," Wertheimer said. "It's clear they want to defeat Sen. Daschle. It certainly sounds like they want to use their 501(c)(4) to accomplish that purpose. There doesn't seem to be any question they want to use this for a goal and purpose, that a 501(c)(4) is not supposed to engage in."

Regier said his group's purpose is to promote its issues and to hold politicians' feet to the fire on those matters.

"The stated purpose isn't to defeat him. It's to soften him up on our issues. That's reading too much into it," he said. "The Rushmore Policy Council's mission is to hold politicians accountable. Everything we do is issue-oriented. I can't overstate that enough."

Contact Denise Ross at 394-8438 or denise.ross@rapidcityjournal.com