TIME Campaign Finance

If Campaign Ads Told the Truth, They Would Sound Like This

Meet "Honest Gil", a satirical candidate in Kentucky's senate race


Ever wonder what politicians would say if they had to always speak the unvarnished truth?

Meet Gil Fulbright, (Or Phil Gulbright. Or Bill Fulbright. Or Phillip Mimouf-Wifarts. You’ll understand once you’ve watched the ad).

“Honest Gil” is a satirical candidate for the U.S. Senate in the Kentucky race between Senate Minority Leader Mitch McConnell and his Democratic challenger Alison Lundergan Grimes. Gil plans to rent a campaign bus, take out billboard and TV ads and show up at campaign events in order to make a spectacle of what is poised to be the most expensive Senate election in American history.

Fulbright will be the face of Represent.Us, a non-partisan movement claiming 450,000 supporters that wants to pass campaign finance and anti-corruption laws to limit the influence of money on Washington. With 26 days left in its Indiegogo campaign to raise money for Fulbright’s shenanigans, the group has already busted through its fundraising goal of $20,000.

The effort is reminiscent of the Mayday PAC, Lawrence Lessig’s new crowd-funded cannibal Super PAC to destroy all Super PACs.

Whatever your position on campaign finance, Fulbright’s commercial is at the very least a funny/tragically spot-on commentary on the state of political discourse in the U.S.

TIME Campaign Finance

IRS to Rubber-Stamp Tax-Exempt Status for Most Charities After Scandal

Internal Revenue Service Commissioner John Koskinen testifies during a hearing before the Government Operations Subcommittee of the House Oversight and Government Reform Committee July 9, 2014 on Capitol Hill in Washington, D.C.
Internal Revenue Service Commissioner John Koskinen testifies during a hearing before the Government Operations Subcommittee of the House Oversight and Government Reform Committee July 9, 2014 on Capitol Hill in Washington, D.C. Alex Wong—Getty Images

IRS head touts "efficiencies," but some groups fear fraud

Amid ongoing controversy over its scrutiny of nonprofits, the Internal Revenue Service has decided it will no longer screen approximately 80% of the organizations seeking tax-exempt charitable status each year, a change that will ease the creation of small charities while doing away with a review intended to counter fraud and prevent political and other noncharitable groups from misusing the tax code.

As of July 1, any group that pays a $400 fee and declares on a three-page online form that it has annual income of less than $50,000, total assets of less than $250,000 and is in compliance with the tax-code requirements of a charity will automatically be allowed to accept donations that are tax-deductible for the donors. Previously the groups had to fill out a detailed 26-page form, submit multiple supporting documents and provide a narrative description of their intended activities.

In an interview with TIME, IRS commissioner John Koskinen said the change would result in “efficiencies [that] will translate into a faster and better review” of bigger nonprofits, while clearing a 66,000-application backlog that has resulted in yearlong waits for groups seeking to start a charity. He said the new short form comes with 20 pages of instructions that make clear the requirements and limitations of being a charitable organization. Koskinen said that on the new short form, “people certify that they’ve gone through the instructions” under penalty of perjury.

The IRS rejected the idea of the new Form 1023-EZ in 2012, but using an expedited process this year, adopted the new procedure on the recommendation of a small team composed largely of frontline workers from the scandal-plagued division of exempt organizations, according to the IRS.

Some charitable groups worry the IRS has opened the door to abuse of tax-exempt status that will undermine the credibility of legitimate nonprofits, which are allowed to accept deductible donations under section 501(c)(3) of the tax code. “The Form 1023-EZ will increase opportunity for fraud,” said Alissa Hecht Gardenswartz, president of the National Association of State Charity Officials, and will make it harder “to protect charitable assets from fraud and abuse and to ensure that charitable assets are used for the purposes represented to the public.”

Others worry that charities, nominally barred from political activity, will come to serve the same purpose as the powerful nonprofit organizations known as 501(c)(4)s, whose donations cannot be deducted from taxes. This could give an added tax benefit to donors who have recently funneled hundreds of millions of dollars into independent political campaign spending. “What we’ll see is the so-called dark political money that flowed into the (c)(4) world is going to begin to flow into the (c)(3) world,” says Marcus Owens, who was the director of the exempt-organizations division at the IRS from 1990 to 2000, and is now in private practice at the law firm of Caplin & Drysdale.

The change will result in approximately 40,000 to 50,000 fewer (c)(3) applications for the exempt-organizations division to review each year, Koskinen says. The division, whose main office is in Cincinnati, has been at the center of the IRS scandal over alleged political scrutiny of right-wing 501(c)(4) groups under then-head Lois Lerner. That scandal centers on shortcuts the office developed to identify (c)(4) groups for further screening, including screens for groups with the names that suggested an association with the Tea Party movement.

The current legal interpretation of tax regulations allows so-called (c)(4)s to engage in political activities as long as they don’t spend more than 50% of their money on politics. In the 2010 Citizens United ruling by the Supreme Court, those same groups earned the ability to buy campaign ads in federal elections, and tax laws allowed them to conceal the identity of their donors. Since the ruling, the number of applications to become a (c)(4) has doubled, to around 1,000 per year, Koskinen says. In the 2012 campaign, (c)(4)s spent approximately $300 million dollars on politics, according to the Center for Responsive Politics.

Much of that money was spent attempting to motivate voters by advertising positions on specific issues that divide candidates. Owens, the former IRS official, says such activity can be cast under the mission of a (c)(3) devoted to educational, religious or other permitted activities, opening the possibility of deductible dark money. “The candidate links to the issue, and then the tax-exempt organization’s job is to find the voters and make sure they know the message and hear it loud and clear up to election day,” says Owens. “That’s what the (c)(4)s were doing, but that kind of activity could be just as easily in a (c)(3), but it would have the added advantage of having tax deductibility attached to it,” Owens says.

Democratic defenders of the IRS and the exempt-organizations office say both have been deprived of resources, as the overall IRS budget was cut by nearly $950 million, or around 7.8%, from 2010 to 2013, according to the nonpartisan Government Accountability Office. In an April 2014 report, the GAO found the cuts had been offset through savings and efficiencies, and by reducing, delaying or eliminating services. Koskinen says budget cuts didn’t play a role in the change in charity rules. “Obviously we are resource-constrained everywhere across the agency,” he says, but “we would want to do this anyway.”

While charity groups agree the old process for receiving tax-exempt status was too cumbersome, they and others worry that now organizations with no true charitable purpose will seek to become charities. “It’s easier to get tax-exempt status under 1023-EZ than it is to get a library card,” says Tim Delaney, president and CEO of the Council of Nonprofits. As a result, Delaney says, bad actors “will be able to operate in the name of the charity, and the IRS will never be the wiser because they’re not looking at the underlying documentation.”

Koskinen says such worries are overblown. “There’s a faith that if someone has been forced to do more paperwork they’re going to be less nefarious,” he says. He says that to prevent potential abuse, the IRS will take samples of applications to see what percentage are being filled out incorrectly, and will monitor the number of applications to see if it spikes suspiciously as a result of the new rules.

Owens says the IRS may not be able to differentiate between truly small charities and those that knowingly plan to grow beyond $50,000 in annual income. “I haven’t seen any mechanism where the IRS would be legally able to go after an organization that applied within the EZ process but then fortune shined on them,” Owens says. He also says that because of outdated software, the IRS won’t be able to track active charities back from its master file to their originating documents. An IRS official speaking on background acknowledged the software problem.

Charities complain that the change was made with little consultation from their representative lobbying organizations. The IRS sped its enactment this year by routing the change through the White House’s Office of Management and Budget for public comment under the Paperwork Reduction Act, rather than through the normal public-comment process at the IRS, nonprofit officials contend. “I just wish the IRS had used a more inclusive process from the beginning,” says Delaney of the Council of Nonprofits.

The IRS studied a simplified tax-exempt form in 2012 but rejected the idea. The group that looked at the idea, made up of outside lawyers and experts in tax-exempt organizations, said that filling out the longer form forced groups to better understand the requirements of being a charity. The group said it “may also be easier to embezzle from a small charity,” so they should be subject to more, not less, oversight.

TIME Newsmaker Interview

Lawrence Lessig on His Super PAC to End Super PACs

18th Annual Webby Awards - Arrivals
Lawrence Lessig attends 18th Annual Webby Awards on May 19, 2014 in New York, United States. Brad Barket—Getty Images

The election reformer talks about getting jilted by Comedy Central and why he’s probably not coming after Mitch McConnell. Yet

Law professor Lawrence Lessig’s plan to reform campaign finance in America by blowing the system up from the inside has always been such a longshot that even he is astonished by its fundraising success so far.

The Mayday PAC project launched in May with an initial fundraising goal of $1 million, followed by a $ 5 million goal, all raised through Kickstarter-like pledges. The PAC would then use the money to support five candidates in 2014 committed to serious campaign finance reform—a Super PAC to destroy Super PACs.

The goal was still distant as the July 4 deadline approached, but in its final hours supporters rallied: More than 50,000 people have donated $7.6 million to date. And unlike most Kickstarter campaigns, that’s without offering any swag.

“We attracted this money without offering any t-shirts or any buttons or any anything,” Lessig told TIME.

A matching donation of $5 million still to come should push Mayday PAC’s unexpectedly brimming war chest over $12 million, giving it more than $2 million to spend apiece on five elections.

Lessig spoke with TIME about the PAC’s unlikely success, the challenges it still faces and how it’s choosing which candidates to support.

TIME: That was an ambitious fundraising goal—how are you feeling?

Lawrence Lessig: It was an insane fundraising goal and I’m incredibly surprised and happy that people rallied the way they did. It was really extraordinary.

Were you worried toward the end?

Yeah, I was of course worried at the end. Our plan was we would do the first round and that would attract the attention of somebody like Comedy Central, which would get us the exposure we needed to win on the second round. Because what we knew is if we got before enough people’s eyeballs we would get the support we needed. But as time wore on it was clear Comedy Central was not going to jump into the breach, so we needed to rely on just plain old peer-to-peer, Internet activism. And that in the end seemed to work.

In reforming campaign finance you face not just the institutional impediment of Congress but precedent set by the Supreme Court. What’s the plan?

I actually don’t think there’s any constitutional impediments to the first step reforms that we’ve talked about. We want to change the way campaigns are funded and the Supreme Court has been quite clear that Congress has the power to change the way campaigns are funded through voluntary public funding. Now, what we support is not the traditional public funding—where the government writes a check to fund your campaigns—but bottom up public funding, where it’s matching funds like John Sarbanes Government By the People Act, or a voucher program. Either way this is a public funding program that would help people by creating small dollar systems that they could fund winning campaigns with. That’s completely constitutional and would create the first step toward building a Congress that might address any constitutional problems.

In picking candidates will there be a litmus test beyond a commitment to substantial campaign finance reform.

No. There’s no litmus test for them beyond substantial reform, fundamental reform and the reform we’ve been talking about: changing the way campaigns are funded.

Now, in picking the first five though. that’s a necessary condition but not sufficient. We need to pick races that are exciting enough, difficult enough, challenging, so that when we win people will say it’s amazing they won and that they won on this issue. So, for example, Mitch McConnell’s race would be fun to win but it wouldn’t be clear why anybody won because there are a thousand reasons why Mitch McConnell might be defeated. So that wouldn’t be an interesting race for us but we’re looking for races where when we win people will say it’s extraordinary that they won on the basis of this issue in that district.

You’d support a viable candidate of any political stripe, assuming they’re not too far off the mainstream?

I’m not so concerned about mainstream. I’m concerned about viability and commitment to fundamental reform. Those two elements are the driving factors initially. Next cycle, assuming we’re successful and we create excitement around this issue and can begin to recruit the kind of support we need to win in 2016, it’s about winning in every district we need to get a majority in Congress, but this time it’s about picking those victories in a way that is generative for this more ambitious task in 2016.

TIME Campaign Finance

‘PAC to End PACs’ Hits $5 Million Funding Goal

Lawrence Lessig
Lawrence Lessig, professor at Harvard Law School, speaks during the 2014 WIRED Business Conference (BizCon) in New York, U.S., on Tuesday, May 13, 2014. Bloomberg—Bloomberg via Getty Images

The upstart Mayday PAC that seeks to reduce the influence of money in politics has crossed its fundraising goal of $5 million, according to a Friday email from founder and academic Lawrence Lessig.

Mayday PAC, which seeks to fund politicians that will pass restrictions on campaign funding, had raised just $75,000 by the beginning of May, but has been expanding rapidly. A total of 49,490 people have contributed to the Mayday PAC, reflecting a large number of smaller-sized contributions averaging around $100 each.

The group has also received endorsements from several notable figures, including actors Jason Alexander and Joseph Gordon-Levitt.

The group arises amidst much frustration over the prevalence of money in political campaigns, with a small percentage of donors holding an increasing share of the influence over elections. Just 196 people (that’s 0.000063 percent of the country’s population) donated 80 percent of the total Super PAC money raised in 2012, according to Lessig.

“The frustration with the mess we call Congress is palpable, and the desperate urge to do something about it is raw,” said Lessig in his email Friday.

Mayday PAC still has an uphill battle to fight despite its fundraising success. Few members of Congress have expressed the political will to tackle campaign finance reform, leading many observers to be skeptical about the PAC’s chances of changing Capitol Hill.

TIME Campaign Finance

Scott Walker’s Legal Battle Could Change Federal Elections

Wisconsin Governor Scott Walker makes a stop at the Republican Party of Wisconsin Appleton Headquarters Saturday, June 21, 2014 in Appleton, Wis.
Wisconsin Governor Scott Walker makes a stop at the Republican Party of Wisconsin Appleton Headquarters Saturday, June 21, 2014 in Appleton, Wis. Sharon Cekada—AP

A case in Wisconsin has national implications

Wisconsin has hosted perhaps the nation’s best political circus in recent years, full of recall elections, lawmakers crossing state lines to avoid votes, and angry mobs of protesters occupying the capitol. But the latest attraction contains the seeds of a legal argument that could reverberate far beyond Madison.

Local prosecutors been building a case around the possibility that Wisconsin Gov. Scott Walker was part of a “criminal scheme” to illegally coordinate spending with conservative groups that helped him survive those recall attempts. Walker has not yet been charged, and he may never be. In recent months, the conservative groups have fought back by arguing in court that the prosecutors are politically-motivated and basing their case on a flawed reading of the law. A state and a federal judge have so far agreed, stopping the investigation as appellate courts review the matter.

What comes next could have big consequences for how candidates behave in the rest of the country. That’s because in his May 6 decision blocking the probe, federal judge Rudolph Randa ruled that the U.S. Constitution gives candidates and outside groups a First Amendment right to coordinate spending on advertising, unless the money is used to expressly advocate for the election or defeat of a candidate. “Only limited intrusions into the First Amendment are permitted to advance the government’s narrow interest in preventing quid pro quo corruption and then only as it relates to express advocacy speech,” Randa wrote. “As other histories tell us, attempts to purify the public square lead to places like the Guillotine and the Gulag.”

This constitutional argument could have big implications for federal campaign finance law, which currently does not follow Randa’s reading of the constitution. The Federal Election Commission currently bans coordination between candidates and outside groups on ads that just mention candidates in the weeks before election, even if the ads do not explicitly call for their election or defeat. This is the reason why President Barack Obama did not coordinate his advertising with labor unions or Super PACs backed by wealthy liberals in the last campaign, and why Mitt Romney did not huddle with Sheldon Adelson during his campaign to discuss strategy.

“There is the potential here for the 7th Circuit to confront what is federal coordination,” says election law attorney Trevor Potter, who is critical of the Randa decision. “That sounds like a Supreme Court case.”

And the Supreme Court has not been kind to campaign finance restrictions in recent years. The justices have tossed individual contribution limits and undone rules limiting the political spending of corporations, unions and the wealthy. Should the court take up the Wisconsin case, the next step could be allowing lawmakers to plan campaign strategy with the Sierra Club or the U.S. Chamber of Commerce. No middleman required.

For many conservative campaign finance experts, this is an obvious next step, given the current direction of Constitutional law. They argue that the current FEC regulations, which arise out of 2002 campaign finance reform legislation, will not withstand constitutional scrutiny. “They can try to enforce that,” says Hans van Spakovsky, a former FEC commissioner who supports the Randa ruling. “But if they end up in court they are going to lose that case.”

Coordination cases in campaign finance law are rare, since they require clear evidence of discussions that happen in back rooms. The case in Wisconsin is further complicated by the fact that state law is far less precise than federal law when it comes to what kinds of coordination are allowed.

But the 7th Circuit now clearly has an opportunity to test the federal law. And candidates for federal office, who increasingly rely on outside groups they cannot strategize with directly to get them elected, have reason to hope that the rules will someday change.

TIME States

Wisconsin Governor Dismisses Reports of ‘Criminal Scheme’

Scott Walker
Wisconsin Gov. Scott Walker speaks at the Republican party of Wisconsin State Convention in Milwaukee on May 3, 2014. Jeffrey Phelps—AP

“No charges—case over”

Wisconsin Gov. Scott Walker on Friday dismissed reports of his involvement in a “criminal scheme” as a partisan prosecutorial witch hunt, saying a secret probe of his fundraising activities has already been “resolved.”

“No charges—case over,” Walker said on Fox News. Walker, a potential 2016 Republican presidential candidate, was responding to documents unsealed Thursday by a federal judge that allege Walker was involved in a “criminal scheme” to coordinate fundraising activities with outside conservative groups during a recall election he faced. No charges have been filed and Walker hasn’t been formally been accused of any wrongdoing.

On Friday, Walker said he was going to have to “counter” partisan attacks “all over again,” and that he’d rely on the grassroots support that helped Wisconsin Republicans hold onto the state Senate in recall elections in 2011 and 2012 after supporting legislation that ended collective bargaining for public employees.

“This is a prime example of what happens when you take on the big government special interests,” Walker said. “They’re looking for ways to come at us. They’ll continue to do it. They did it two years ago in the recall election, they’re going to do it again now. We’ve got another tough election this fall and so they’re going to come at it with just about everything out there and the media—at least many in the media—are willing accomplices to this. But the facts of the case are pretty clear.”

TIME Congress

Eric Cantor’s Departure a Bummer for Business Lobby

Eric Cantor listening to a speaker during a press conference following a Republican Conference meeting at the US Capitol in Washington. Mandel Ngan—AFP/Getty Images

Lobbying firms representing corporations and industry associations have spent years pouring money into Cantor’s campaigns

When Eric Cantor went down in flames Tuesday night, he took with him the hopes and dreams of a big chunk of the corporate lobby on K Street—along with a hefty wad of their cash.

Lobbying firms representing corporations, Wall Street, and industry trade associations have spent years pouring money into Cantor’s campaigns, hiring his former staffers, and otherwise investing in access to the former House Majority Leader, who was, until somewhere around dinner time on Tuesday, widely considered to be not only a shoe-in for reelection but also the next-in-line for Speaker of the House.

So far this election cycle, Cantor had raised more than $1.2 million from the financial services industry alone, according to the Center for Responsive Politics. His ability to extract cash from Wall Street was surpassed by only four other lawmakers, including Speaker of the House John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY).

Cantor also accepted support this cycle—mainly in check-form—from nearly 400 PACs representing corporations and trade associations from every sector of the economy, from Oracle and Blue Cross Blue Shield to Verizon. In addition to the Wall Street banks, the list also includes the U.S. Chamber of Commerce and a healthy portion of the Fortune 500 list.

Cantor’s unexpected departure upsets the power dynamic on K Street, where recent hires, whose rising stock was linked to their connections to the presumed Speaker-to-be, have lost their ace in the hole. Cantor’s longtime senior counselor and former chief of staff Kyle Nevins and Cantor’s former “Young Gun” colleague on the National Republican Congressional Committee Jeff Burton, among many others, are now both without their most powerful connection on the Hill.

Wall Street will also feel the loss. Cantor, who proved himself a valiant defender of the banks since his first committee assignment on the Financial Services Committee, has often sided with the industry on key issues. In 2007, he refused to support a tax overhaul that would have increased tax rates for private-equity managers. In the wake of the financial crisis, he was an unflagging supporter of bailouts and other measures to under gird the biggest banks, including Goldman Sachs, where his wife used to work and which has been one of his most loyal donors. So far this election cycle, the investment bank’s PAC and its employees contributed $125,000 to Cantor’s campaign.

In 2012, Cantor went to bat over a provision in the Stock Act that would have required financial institutions to disclose who feeds them information about policy changes on the Hill. As a result of Cantor’s efforts, the identities of these so-called political intelligence purveyors remain secret—a point that Brat was not shy to point out on the campaign trail this spring.

While Cantor himself has not announced his next career move, one likely option is—what else?—a plum spot on K Street. On Wednesday, when a Politico reporter asked the head of a big lobbying firm if the firm might hire Cantor, the executive responded: “We’re always looking for talent.”

TIME 2014 Election

Democrats Induce Panic To Raise Money Before 2014 Election: “All Hope Is Lost”

House Minority Leader Nancy Pelosi meets with reporters on Capitol Hill in Washington, D.C. on Jan. 29, 2014.
House Minority Leader Nancy Pelosi meets with reporters on Capitol Hill in Washington, D.C. on Jan. 29, 2014. Pablo Martinez Monsivais—AP

Prospects are grim for Democrats in the 2014 House elections, but not quite as horribly, terribly, no-good, awfully grim as Democratic fundraisers would have their marks believe.

The right has Benghazi, the Veterans Affairs scandal, Dr. Ben Carson and Obamacare. Democrats may have something even more powerful: liberal fear and self-loathing.

As the end of the May fundraising month approaches, emails to supporters from the Democratic Congressional Campaign Committee have gone from gentle concern to Defcon 1, apocalyptic panic. It’s a time-honored tactic to get supporters to open an email, and their wallets, but rarely has it been employed at this level of alarm. “All hope is lost,” reads the subject line of a fundraising email sent Friday morning. “Quick Reminder: the Kochs are beating us — BADLY,” the email begins.

In 2012, one of the Obama campaign’s most successful emails was one from campaign officials warning “We could lose,” breaking through a barrier of invincibility that had developed among Obama supporters as the Republican Primary dragged on.

For the DCCC the challenge may be the opposite. While it’s better funded than Republicans’ National Republican Congressional Committee, few believe Democrats have any chance of retaking the House of Representatives this fall given midterm turnout patterns and redistricting. So Democratic fundraisers have been doing their best to install a near suicidal sense of foreboding in the liberal ranks.

And it’s working — already the DCCC has raised more money online than it did in the entire 2012 cycle.

“With Congressional Republicans prioritizing their special interest backers over the American people, the stakes of this election are high for middle-class families,” DCCC spokesman Josh Schwerin said. “We rely on our grassroots supporters to keep pace with the millions of dollars we face from the likes of the Koch brothers.”

Below is a sampling of the emails from the past week with their heart-stopping subject lines meant to drive open rates:

All Hope is Lost

Screen Shot 2014-05-30 at 10.15.42 AM


Screen Shot 2014-05-30 at 9.50.23 AM


Screen Shot 2014-05-30 at 9.50.18 AM

We know…SORRY!

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Screen Shot 2014-05-30 at 9.49.48 AM

throw in the towel

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Screen Shot 2014-05-30 at 9.49.34 AM

bad news

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Screen Shot 2014-05-30 at 9.49.07 AM


Screen Shot 2014-05-30 at 9.48.59 AM

Painful Defeat

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TIME Campaign Finance

Reid Calls for Constitutional Amendment to Limit Campaign Spending

“There should be no million-dollar entry fee for participation in our democracy,” Reid said on the Senate floor Thursday

Correction appended, May 15

Senate Majority Leader Harry Reid said Thursday he’ll seek a constitutional amendment giving Congress the authority to limit campaign spending by outside groups that can now raise and spend unlimited sums of money to influence elections.

“There should be no million-dollar entry fee for participation in our democracy,” Reid said on the Senate floor.

With the announcement, Reid threw his support behind a proposed constitutional amendment originally put forward by Sens. Tom Udall (D-N.M.) and Michael Bennet (D-Colo.) that would override recent Supreme Court rulings equating political spending with speech protected under the First Amendment. Spending on elections by outside groups, including super PACs but also nonprofit groups that spend heavily on political messaging, has skyrocketed in recent years as the courts have effectively prohibited Congress from limiting political spending.

“The Constitution does not give corporations a vote, and the constitution does not give dollar bills a vote,” Reid said. “Republicans seem to think billionaires, corporations and special interests should be allowed to drown out the voices of all Americans. That’s wrong and it should end.”

The Nevada Democrat has promised to bring the amendment before the Senate Judiciary Committee in the coming weeks and to a vote on the Senate floor shortly after that. Needless to say, the effort to pass a constitutional amendment limiting campaign spending faces extremely long odds. Not only must it be approved by two-thirds of both houses of Congress, it would also have to be ratified by three-fourths of state legislatures.

Reid’s support for the amendment marks an escalation in the Democrats’ political strategy moving into the 2014 midterm elections, as they seek to cast Republicans as beholden to big money and special interests, even as Democrats outpace the GOP in Super PAC fundraising.

Correction: The original version of this story misstated the proportion of state legislatures needed to ratify a constitutional amendment.

TIME Campaign Finance

PACs Can Take Bitcoin, Regulator Says

Regulators said political action committees can accept small amounts of donations in bitcoin, a digital currency that's increasingly popular despite turbulent valuation fluctuations. PACs will have to convert bitcoin into cash before spending it, though

Political candidates and committees can accept contributions in the form of bitcoin, a regulator said Thursday, the first time the digital currency has been formally blessed for political spending.

The Federal Election Commission unanimously agreed that political committees can legally accept bitcoin donations under $100, acknowledging that the digital currency counted as a broadly defined “contribution.” Responding to an inquiry from the Make Your Laws PAC, the commission said political committees could accept a limited bitcoin donation as long as it could identify the donor. In the opinion, which amounts to a guideline but not a law, the FEC also said political action committees could invest in bitcoin as they might stocks.

But the FEC stopped short of allowing PACs to spend bitcoin, requiring instead that PACs convert them into dollars first first. The FEC is notorious for its gridlock and lax enforcement of existing campaign finance regulations, and its decision doesn’t necessarily mean political committees won’t test and stretch the limits by using bitcoin for more political spending.

Commissioner Ellen Weintraub, a Democratic appointee, told the Washington Post that the $100 limit—a figured proposed in the Make Your Laws inquiry—facilitated the decision.

“The $100 limit was really important to us,” said said. “We have to balance a desire to accommodate innovation, which is a good thing, with a concern that we continue to protect transparency in the system and ensure that foreign money doesn’t seep in.”

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