Last fall, James Ross, a New York City resident and a donor to several Democratic organizations, received an unusual letter. "Your name has been put in our database," Ross was told. "We are monitoring all reports of a wide variety of leftist organizations. As your name appears in subsequent reports, it is our intent to publicize your involvement in your local community. Should any of these organizations be found to be engaged in illegal or questionable activity, it is our intent to publicize your involvement with those activities."

The letter was signed by Howard Rich, a publicity-shy New York real-estate investor and the founder of the conservative activist group Americans for Limited Government. Rich and his group were accused by the Democratic Senatorial Campaign Committee of illegally using Federal Election Commission disclosure reports to obtain the names and addresses of political donors in order to discourage them from making contributions -- a violation of election law. In April, three of the FEC's six commissioners voted to open an investigation into the matter. But the commission's three Republicans opposed a probe. The FEC deadlocked 3-3, and no action was taken against Rich.

That's happened with increasing frequency at the FEC lately. Election-law experts, supporters of campaign-finance regulations, and even some members of the commission itself are expressing growing concern about a string of cases in which the three Republicans on the commission -- led by Tom DeLay's former ethics lawyer -- have voted as a block against enforcement, preventing the commission from carrying out its basic regulatory function. As the normally mild-mannered Washington Post editorial board wrote recently: "The three Republican appointees are turning the commission into The Little Agency That Wouldn't: wouldn't launch investigations, wouldn't bring cases, wouldn't even accept settlements that the staff had already negotiated."

Craig Holman of Public Citizen told TPMmuckraker the commission is currently "defunct." (The FEC's press office declined to make any of the commissioners available for interviews.)

FEC watchers say the commission's three Republicans -- Donald McGahn, Matthew Petersen, and Caroline Hunter, each nominated by President Bush -- are acting out of philosophical opposition to the very idea of regulating campaign money. "It's the Republican caucus that actually believes there shouldn't be campaign-finance regulation," said Holman. "It is ideological. They are ideologically opposed to the purpose of the Federal Election Commission."

It may also have become personal. At an open meeting of the commission last week, there was barely concealed animosity between the Republican and Democratic commissioners, according to one attendee.

The result of this dysfunction -- along with the growing likelihood that the Supreme Court will soon strike down key aspects of campaign-finance law -- could be to dramatically increase the influence of money in political campaigns going forward. "The severe ideological split on the Commission raises the question of whether it will be able to function effectively as an enforcement agency in the upcoming election year," Brett Kappel, an election lawyer with Vorys, Sater, Seymour, and Pease told TPMmuckraker via email.

Rick Hasen, an election-law expert and a professor at Loyola Law School in Los Angeles, was blunter. "If things remain the way they're going, the campaign-finance rules come 2010, come 2012, are going to be much looser," he told TPMmuckraker. "Money's going to be able to play a much larger role than it has in the past."

Hasen continued: "If we don't fix the FEC very soon, we're going to go into the next election cycle with everyone knowing they can do whatever they want to do, and the Federal Election Commission won't clamp down on them."

"A Glorified Congressional Committee"
How did we get to this point?

At the root of the problem is the fact that, although officially the president nominates commissioners, in practice the job has been left to the relevant party leader in the Senate -- which means responsibility for picking Republican commissioners falls to GOP Senate leader Mitch McConnell, the long-time point man for his party's opposition to campaign-finance regulation.

Things originally reached an impasse in December 2007, when the tenure of GOP recess appointee Hans Von Spakovsky, as well as two other recess appointments, expired. But McConnell -- whose office did not respond to TPMmuckraker's request for comment for this story -- refused to confirm any replacements unless Spakovsky, a prominent supporter of efforts to create obstacles to voting for poor people and minorities, was confirmed.

That left the commission with only two members -- it needs four to take action -- which was fine with McConnell, since it meant the commission was hamstrung. Eventually, in May, the impasse was broken when Spakovsky withdrew his nomination, and a full slate of replacement commissioners -- including McGahn -- was nominated.*

McGahn had been general counsel for the National Republican Congressional Committee, before serving as a legal adviser on campaign finance for Tom DeLay, both during the Jack Abramoff affair and when The Hammer was indicted for campaign-finance violations in Texas. Judging by comments McGahn has made about the role of the commission, he doesn't appear to conceive of it as the kind of powerful, independent enforcement agency that supporters of regulation think we need: "You're gonna appoint your guys to make sure you are taken care of." McGahn told the author of a 2003 academic study of the commission, as reported at the time by Roll Call (via Nexis). "The original intent was for it to be a glorified Congressional committee. That's the way I see it."

In other words, he's just McConnell's kind of guy. "Don McGahn was appointed to approve [public funds for McCain], and has since essentially shut down the agency," said Holman. The FEC, he said, has been made "ineffective" -- and not by accident. "This is what McConnell had in mind."

David Donnelly of Public Campaign agreed. "Clearly the commission has been road-blocked," Donnelly told TPMmuckraker. "There's a bloc on the commission led by Don McGahn that wants to take campaign-finance law in the wrong direction."

Indeed, since McGahn's appointment, the FEC's three Republicans have voted in a string of cases against enforcement, blocking the commission from taking action -- and often provoking unusually outraged responses from the commission's Democrats.

"A Refusal To Enforce The Law"
In addition to the Howard Rich case, here are a few more examples:

• A case in which the Chamber of Commerce was accused of illegally contributing $3 million in 2004 to bankroll the November Fund, a 527 group that had failed to register as a political action committee, despite having no advertised purpose other than to attack then vice-presidential candidate John Edwards over his past as a trial lawyer. In their Statement of Reasons after the vote against enforcement, Democratic commissioners Ellen Weintraub and Cynthia Bauerly wrote (pdf): "Our colleagues' refusal to accept the signed conciliation agreement with the November Fund amounts to a refusal to enforce the law."
• A case in which Wal-Mart was accused of having managers give presentations informing employees that the Employee Free Choice Act, if passed, would hurt Wal-Mart and its employees, and that the law would be passed if Democrats won Congress and the White House in 2008. As the Wall Street Journal revealed (sub req.) in August 2008, some presenters went off-script to attack EFCA and Barack Obama directly. In a report to commissioners, FEC employees said Wal-Mart later acknowledged "even more egregious" violations than those exposed by the Journal. But the commission's Republicans voted against opening an investigation even to determine whether violations of law had occurred.
• A case in which George Soros was accused of failing to report $272,000 associated with sending brochures to advertise an anti-Bush book during the 2004 presidential campaign. The Republican commissioners argued that the cost of the mailing list Soros used was not an independent expenditure. In response, Democratic commissioner Ellen Weintraub wrote (pdf): "One cannot do a mailing without a mailing list. It seems obvious to me that the distribution list is part of the distribution cost."
• A case in which Mitt Romney's presidential campaign and Kem Gardner, a Utah real estate developer, were accused of violating campaign-finance law after Gardner chartered a plane for $150,000 to fly about 200 Romney supporters from Utah to Boston to make fund-raising phone calls. The commission's Republicans claimed there was no proof that the Romney campaign had asked Gardner to charter the flight, and thus it wasn't certain that this was a campaign expense. But Democratic commissioners Weintraub and Cynthia Bauerly maintained that the flight was an obvious campaign contribution. "This was not a difficult case," they wrote.

"The President Has To Decide"
Of course, the one person who could do the most to get the commission back on track is President Obama. To do so, experts say, he could push to change the commission's structure -- perhaps by moving to a single commissioner -- making it more difficult for an anti-enforcement faction to block action.

But in early May, reformers' hopes that Obama is committed to a more pro-enforcement commission took a hit when he nominated John Sullivan to replace Weintraub, whose term has expired. "By nominating Sullivan, [Obama] basically sent the signal that at this point he's willing to go along with the status quo," said Hasen. Sullivan is a labor lawyer who has in the past argued against campaign-finance regulations on behalf of the SEIU.

Most experts believe that the White House supports stronger campaign-finance laws as a goal, but, with a host of other issues on its plate, is reluctant to pick a fight with the GOP Senate leader. "They're picking their priorities, and they don't want to take on Mitch McConnell right now," said Hasen. "I consider that unfortunate."

Holman agreed. McGahn's term, abridged by the Spakovsky holdup, has now expired as well, and Holman suggested that Obama could play a more active role in nominating McGahn's replacement -- as the president would be within his rights to do -- rather than leaving it to McConnell. "The president has to decide," said Holman. "He's either going to go with Mitch McConnell's appointee and render the FEC functionless, or he's going to break tradition and bring the FEC back to life."

The choice the president makes will likely help determine the level of influence that big money wields in electoral politics into the future. That seems like an issue worth spending some political capital on.

*The preceding two paragraphs have been corrected from an earlier version.