The flooding of the IRS with criticisms of the proposed rulemaking has shown that, on this issue at least, Washington is experiencing unity across party and ideological lines. The basic complaint, of course, is that the draft rule is too broad, chilling or preventing or just burdening legitimate political speech or activity.  It is a remarkable proceeding.  Activities that have been the targets of soft money reform for years—issue advertising and various other voter education activities—are now being vigorously defended against government regulation. In  the short run, the result may be a rulemaking indefinitely delayed or, in content, much changed.

But, apart from the question of whether or how this draft might be revised to address these critiques, the hostile reception to the proposals may influence the course of the campaign finance debate in other ways.   Here are two:

The IRS and the Federal Election Commission: Commentators are troubled, as they reasonably might be, by a role for the tax agency in policing political activity. But the issues addressed here overlap with ones being fought over elsewhere, before the FEC and the Courts, on campaign finance issues overall.  And, indeed, there is no doubt that the IRS is being asked by some in the reform community to take up the enforcement of disclosure and other requirements because the FEC is now incapable of doing so. In fact, two FEC Commissioners have told the IRS just that: they have stated, more or less directly, that while disclosure by third party or outside groups is essential, their agency is hopelessly divided on these issues and the IRS must assert itself if anything is to be done.

If the FEC battle can cross over into IRS territory, there is every reason to suppose that the effects will operate in the other direction—that the outcome of the IRS proceeding will have an effect on the debates before the FEC.  And in galvanizing opposition to government controls on certain forms of political spending, and raising the visibility of a range of First Amendment and other objections to regulating what the IRS calls “candidate-related activity,” the IRS controversy is weakening the position of those advocating for more aggressive enforcement of the Federal Election Campaign Act.

In short, the strategy of pushing the IRS into an active regulatory program because the FEC cannot carry it may prove to be self-defeating.

“Negative Speech”:  Candidate-related advertising has always been a topic for the reform debate, in part because of the toxicity attributed to much of the independent speech content on the airwaves—“negative ads.” And the Federal Election Campaign Act was specifically amended in a couple of respects to staunch the flow of paid attack speech: through the limits on candidate-related advertising within a certain number of days before an election, when negative advertising is often at its peak (see Scalia’s review of the legislative history in his dissent in McConnell v. FEC), and through requirements that candidates accept personal responsibility for the statements made on their behalf, through the “stand by your ad” disclaimer.  These considerations are usually, but not always, brought with care into the debate, for even the sponsors of these measures are reluctant to suggest too plainly that government should claim power to steer speech into healthier, “positive” channels.

The IRS proceeding has presented opportunities for this objective to come up once again for critical evaluation.  By defining as “candidate-related” any speech within defined periods before elections, the IRS is tuning its rules to the same frequency established by McCain-Feingold with its own 30 and 60-day pre-election advertising limits.  The rules also would test for the functional equivalent of express advocacy, by examining whether a communication expresses a “view” of a candidate that indicates a purpose of influencing an election.  That key supporters of a strong IRS rule have among their objectives a cleansing of political speech is evident from  what they have said on the subject so far.  The Campaign Legal Center, for example, is troubled that too much candidate-related activity would be permitted outside these 30 and 60-day periods, because it is so often in the form of “attack ads”:

As the comments explain, this “express advocacy” test is too narrow, and allows sham issue ads to be used to attack candidates without being treated as campaign ads.  Such ads, which skirt words of express advocacy or their functional equivalent, are a common form of campaign attack ads.  Under the proposed IRS rule, social welfare organizations could spend an unlimited amount of their money to run such campaign attack ads without jeopardizing their status under section 501(c)(4). (emphasis added).

The New York Times editorial board has also focused on the role of the rulemaking in curbing negative political speech:

The problem of secret money began in 2010, with the loosening of rules that was prompted in part by the Supreme Court’s Citizens United decision. Political operatives like Karl Rove realized that “social welfare” groups were allowed by the tax code to accept unlimited donations that did not have to be disclosed. They could then use that money to run political attack ads. (emphasis added).

But the IRS is facing a barrage of objections that it should stay out of this business altogether. While this is happening, the Supreme Court is hearing a case that tests the power of the state to punish false campaign speech—usually speech alleged to be both false and negative—and the law is not expected to survive. Independent spending most associated with “attack ads,” at least in the most handsomely financed volumes, is on the rise.  The “stand by your ad” disclaimer has not discouraged candidates from standing by nasty ads.  These developments could end the program, years in the making, to regulate speech to make it better.