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Local News for Sunday 3/28/04
Group with Houghton ties raised money from Bush critic
- Funds go to entities created by Main Street Partnership that raise soft money.
By JOHN MACHACEK
Star-Gazette Washington Bureau
WASHINGTON -- A group supporting moderate Republicans, led by New York Rep. Amo Houghton, has pocketed $50,000 from George Soros -- one of President Bush's harshest critics -- even as the GOP tries to stop the liberal billionaire from helping Democratic-leaning groups pay for anti-Bush ads.
The Soros connection has put Houghton on the spot at home. Conservative Mark Assini, a Rochester-area county legislator hoping to challenge the veteran congressman in a GOP primary this fall, accuses Houghton of betraying Bush and the Republican Party by "partnering" with Soros.
But there are also questions about whether groups such as the Republican Main Street Partnership, the organization that Houghton helped establish and now finances, should use different entities to raise "soft money," unlimited amounts of unregulated cash from corporations, labor unions and wealthy individuals like Soros.
Another issue is whether these fund-raising entities create an appearance that federal lawmakers are illegally raising soft money to help elect candidates.
"There is always that worry," Houghton said in an interview.
The Corning-based Republican, who will announce in April whether to seek an 10th term, said he asked Soros last year before his attacks on Bush to support the Partnership. But Houghton said he wasn't aware that any of Soros' money had ended up in an independent soft money account.
"George Soros is a very controversial person ... and I don't like what he is doing against Bush," Houghton said.
"As far as his contribution to Main Street goes, anything he can do to help Republicans is fine, too. It's not a lot of money and, frankly, we haven't asked for a lot of money from people."
The new campaign finance law bars members of Congress and political parties from raising soft money, but exempts independent political organizations from that restriction.
Such a loophole has enabled activists in both parties to create a new set of groups, known as 527s, to raise and spend soft money for campaign advertising and voter turnout drives. The groups derive their name from the section of the tax code that gives them tax-exempt status.
The campaign finance law took effect in November 2002. Before that time, the Republican Main Street Partnership raised soft money through a 527 committee controlled by its board of directors, which included Houghton and six other members of Congress.
Houghton said he fought for a total ban on soft money when Congress debated campaign finance reform, but he is now willing to have it used to help moderate Republicans fend off conservative GOP attacks.
To comply with the law, the Partnership abolished its original 527 controlled by members of Congress and dumped about $178,000 of remaining funds in late 2002 into new independent soft money entities.
They are the Main Street Fund, which solicits groups, unions and businesses for donations, and the Main Street Individual Fund, which raises money from wealthy individuals aimed at helping specific candidates.
The two funds are legally independent from the Partnership's board of directors.
By the end of last year, the two funds had raised a combined $562,389 in soft money from donors that included a few New York investment bankers, high-tech CEOs, groups such as the National Education Association and Soros. Houghton also contributed $25,000.
Meanwhile, the Club for Growth, a rival conservative GOP group targeting moderate Republicans, has raised $3.2 million in soft money, according to reports filed with the Internal Revenue Service.
Larry Noble, a former FEC general counsel, said these independent groups should be regulated by the Federal Election Commission and required to raise a limited amount of money from its sources.
"It is clear that the 527 groups were set up with the express purpose of electing Democratic or Republican candidates for federal office, and as such they cannot be used to funnel soft money back into the election," Noble, of the Center for Responsive Politics, recently told a Senate committee.
The FEC is debating which 527 committees it should regulate and how much soft money they should be permitted to raise and spend.
Although Houghton and the other members of Congress don't control the Main Street groups, their mere presence on the Partnership's board of directors could create an appearance of soliciting soft money, say some campaign finance experts.
Noble said contributors blur the lines of the committees' legal structures.
"It clearly raises the issue of whether or not it is putting federal officeholders back in the business of at least appearing like they are soliciting soft money," he said.
"The real question is whether or not their names are being thrown around in the solicitation of soft money."
Main Street connections
The two Main Street funds and the Partnership's board of directors use the same staff and have the same lawyer, former FEC chairman Trevor Potter.
The Partnership's former chairman, former Maine governor and congressman John "Jock" McKernan Jr., also was chairman and a director of the two Main Street soft-money funds. Business commitments forced him to step down from his fund activities late last year, Partnership officials said.
But McKernan was still listed as a consultant "exercising control" over the Main Street Individual Fund, according to a fund-raising report it filed with the FEC in February. Some of the soft-money donors in that report also contributed to the Partnership's original, now-defunct 527 operation.
McKernan's wife, Sen. Olympia Snowe, R-Maine, remains on the Partnership's board along with Houghton. Sen. Susan Collins of Maine and Reps. Mike Castle of Delaware, Tom Davis of Virginia, Doug Ose of California and Fred Upton of Michigan also serve on the board.
Other current directors of the two Main Street Funds are Sarah Chamberlain Resnick, the Partnership's executive director, and Bob Duke, previously a Partnership consultant. Resnick says she works on her own time as a paid "custodian of records and contact person" for the two Main Street Funds.
Resnick said the members of Congress on the Partnership's board do not make fund-raising decisions for the two Main Street funds.
She said she takes her fund-raising direction from Duke, a Staunton, Va., resident, who has raised money for the Metropolitan Museum of Art in New York City and is a past contributor to Houghton's congressional campaigns.
Potter believes the legal walls he built between the Partnership and the soft money fund-raising committees are thick enough to guard against any appearance of impropriety.
"There is no question that moderate Republicans are involved with these soft money groups, but they aren't members of Congress," he said.
Resnick said "Bob Duke solely runs the individual fund and raises money from his friends."
Enter Soros, whose attacks on Bush's policies on fighting terrorism and the war in Iraq last summer drew national attention and infuriated many Republican leaders.
Soros, one of the world's wealthiest men, has contributed mostly to Democratic candidates and groups over the last few years.
But he has also supported Sen. John McCain, R-Ariz., and moderate Republicans in addition to the Republican Main Street Partnership, according to campaign finance disclosures.
"George Soros believes that the Republican Party has been captured by the extremist wing of the party and that's why he would support moderate Republicans," said Michael Vachon, a Soros spokesman.
Soros gave $50,000 to the Main Street Individual Fund in April 2002, several months before he attacked Bush and pledged to give $10 million to independent committees allied with Democrats for anti-Bush TV ads.
Resnick said Soros also offered a "seven-figure contribution" to the policy side of the Republican Main Street Partnership, which promotes the "moderate Republican agenda."
But she said the Partnership board "didn't care for any of his money at that point." Houghton said he was unaware of that offer from Soros.
Houghton and his supporters do not believe Soros will be a factor in a race for the GOP nomination in New York's 29th District.
Assini, who is backed by the Rochester area's Conservative Party, is making it an issue and wants to force Houghton into a primary fight if the congressman decides to run again.
Assini, 44, charged that the Soros contribution is another indicator of how Houghton has opposed the conservative course that Bush and the national Republican Party have charted on major fiscal and social issues.
"A partnership between George Soros and Amo Houghton is an unholy partnership," Assini said.
But Houghton noted that top New York Republican officials and a leading Bush adviser have both publicly and privately urged him to run.
"Apparently, this guy (Assini) has his own ideas that aren't in sync with any of the Republican leaders in New York state or Washington," said Robert Van Wicklin, Houghton's chief of staff.
"It seems strange to me that if Amo is such a problem for the Republican Party that they would want him to stay around."
A group of moderate Republicans created the Main Street Individual Fund and Main Street Fund at the end of 2002 to raise "soft money," largely unregulated and unlimited funds from groups, corporations and wealthy donors.
The two independent fund-raising committees have raised a total of $562,389. Here are the top donors to the two committees since their creation:
National Education Association, nation's largest teachers' union, $100,000.
George Soros, financier and philanthropist, $50,000.
Sidney V. Weinberg Jr., Goldman Sachs investment banker, $50,000.
John C. Whitehead, AEA Investors, $25,000.
Laurence S. Rockefeller, philanthropist, $25,000.
Rep. Amo Houghton, R-Corning, $25,000.
Donald Kendall, former PepsiCo Inc. chairman and chief executive, $25,000.
James R. Houghton, Corning Inc. chairman and chief executive and Amo Houghton's brother, $15,000.
John Chambers, Cisco Systems chief executive, $10,000.
Campaign finance law primer
A new campaign finance law that took effect after the 2002 elections prohibits national political parties and federal candidates and officeholders from raising unlimited amounts of unregulated cash, known as "soft money."
To fill the void, supporters of lawmakers and political parties are establishing groups to raise these funds under section 527 of the Internal Revenue Code, which grants them tax-exempt status.
Using a loophole in the new campaign finance law, these so-called 527 groups -- independent political and special-interest organizations -- can skirt federal contribution limits to legally raise unlimited amounts of money from corporations, unions and wealthy individuals.
These fund-raising committees can spend the money for campaign advertising and voter turnout drives as long as they do so independently of the candidates they are supporting.
Gannett News Service