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Campaign-Reform Loophole Closing

Regulators may strip a few cars from the election-year gravy train now delivering dollars to TV stations sales departments.

A Republican-generated bid to rein in the nonprofit interest group monies filling Democrats’ coffers got an endorsement from the Federal Election Commission Wednesday.

By a 4-2 vote, the FEC said issue advocacy groups cannot use unlimited amounts of unregulated "soft money" to pay for ads mentioning federal candidates. The groups, however, can use a mix of hard and soft money for that purpose.

A compromise written by FEC Vice Chair Ellen Weintraub binds the groups to the limits on soft money imposed by the 2002 campaign finance reform law, but only for ads that "promote, support, attack, or oppose" federal candidates.

While only considered informal guidance for most groups, the FEC will set permanent rules for so-called 527s next month, and Wednesday’s decision is expected to be made a formal rule.

Republicans have honed their skills at raising hard money—the direct-to-candidate contributions capped at $1,000 per donor—to build a war chest that far exceeds Democrats.

Campaign finance reform in 2002 hit Democrats hard because it banned donations of unlimited "soft money" to parties, which were later funneled to candidates.

To close the gap, Democrat-friendly fund-raisers like investor George Soros have set up ostensibly nonpartisan so-called 527 groups (after the section of the tax code) to pay for ads that frequently attack Republican candidates and endorse Democrats.

FEC Chairman Brad Smith said he was "disappointed" that his party backed the measure—engineered by another Republican on the commission—to gain the upper hand in this year’s elections. "If they think they’re going to win by silencing opponents, they deserve, in fact, to lose," he said.

A great irony of campaign reform has been the financial hit suffered by Democrats—the party most in favor of the law. Because of that support, Democrats on the FEC had little choice but to back Wednesday’s opinion despite the disproportionate damage it inflicts on their party.