WASHINGTON — President Clinton signed legislation Saturday to close a loophole that permitted unlimited secret contributions to groups trying to exert anonymous influence over the nation's political and policy agenda.
The law "will help clean up the system by forcing organizations to come clean about their donors," the president said.
Speaking on the White House's South Lawn, Clinton welcomed the disclosure law as the first new restriction on political money in 20 years. Congress should move quickly to use it as a building block for comprehensive campaign-finance reform, he said.
Until now, Clinton said, private-interest organizations, such as pharmaceutical companies out to influence the debate over a prescription drug benefit for older Americans, could simply tap a reservoir of anonymous donors to "pour millions of dollars into these efforts while keeping citizens in the dark."
The law addressed an increasingly popular provision of the U.S. Tax Code known as Section 527, which permitted tax-exempt groups to use hidden, undisclosed donors to pay for advertising campaigns.
Giving an example, Clinton said an organization called Citizens for Better Medicare "has flooded the airwaves with negative ads" against an administration effort to provide a Medicare prescription benefit.
The group spent tens of millions of dollars in what he called misleading advertising, "all to the benefit of drug companies," Clinton asserted.
"The American people have no earthly idea who Citizens for Better Medicare is, who is paying for the ads," he said. "The bill I just signed lifts the curtain. It makes groups like this reveal the sources of all future funding."
The White House contends that some Political Action Committees whose money normally is regulated, have claimed immunity from disclosure under Section 527.
Despite initial opposition from Republican leaders, the legislation was approved by huge majorities in each chamber of Congress. It passed the Senate Thursday by a vote of 92-6.
But campaign reform advocates say there are still ways to avoid disclosure. For example, groups affected by the law may reorganize themselves under the tax code.