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Are These Ads Legal?

The question is ever-present in the background of independent political groups, and this year is no different.

Federal campaign finance law is a veritable Tattersall plaid of criss-cross lines when it comes to the role of tax-exempt groups (our own FAQs on the subject are here). Now campaign finance reformer Fred Wertheimer argues that two tax-exempt groups are violating the law.

Democracy 21 says the American Issues Project and the American Leadership Project ought to be political action committees. That would restrict the contributions they could accept and would impose stronger rules for disclosing their finances.

AIP made its reputation with a $2-million ad buy, ominously questioning Barack Obama's ties to one-time radical Bill Ayers. The money came from a Texas businessman who had given financial backing to Swift Boat Veterans for Truth back in 2004.

A more recent ad by AIP conspicuously didn't name any candidates, but just said, "Liberals protect corruption." It arguably could have been aimed at one of the issues raised by Wertheimer.

Here's the deal: AIP is a 501(c)(4) advocacy group, and the law says its primary purpose has to be issue advocacy, not campaign politics. AIP is using the (c)(4) exemption originally granted by the IRS to another, defunct group; AIP itself showed up just a few weeks ago. The Ayers ad was its first. So the question is, when does its purpose get defined? Immediately, or some months, or years, down the road?

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Democracy 21 wants investigations by the Federal Election Commission and the Internal Revenue Service.

AIP's lawyer is Cleta Mitchell, one of Washington's most forceful speakers for less regulation of political money. She responded to Wertheimer in a letter rich with sarcasm, saying she thought Democracy 21 "would be applauding AIP" for connecting the Fannie Mae-Freddie Mac scandal with campaign contributions. She also challenges "you and Democracy 21 in your purported role as 'watchdogs' of 'money and politics.'"

And we'll get into the other group, the American Leadership Project, after the jump.

The American Leadership Project is a 527 organization. After energetically backing Hillary Clinton in the Democratic primaries, it's run a single anti-McCain radio ad briefly in one state.

The Democracy 21 complaint says that ALP's major purpose was to promote Clinton's candidacy, and so it should be a PAC.

California political consultant Roger Salazar, one of ALP's founders, said they took "all the steps and checked with our attorneys and everything.... We are on very solid legal ground."

Of course, that assumes the ground in campaign finance law is solid and not shifting.