As soon as the Senate passed campaign finance reform, the House started to undo it.

In a little-noticed measure, just as the Senate was moving toward final passage of the McCain-Feingold bill, House Ways and Means Committee chairman Bill Thomas (R-California) pushed through a provision to exempt certain political-action committees (PACs) from reporting requirements imposed on them some 20 months ago. The irony of the move was doubled when President Bush announced he would sign the larger reform legislation even though what he really favored was full and complete disclosure of all political activity.

The groups in question are a certain category of so-called "stealth PACs" that operate under Section 527 of the IRS code. Under Thomas's ploy, political groups concentrating on state and local campaigns would be exempted from federal reporting requirements, even though these groups can influence elections. Because state reporting requirements are notoriously poor, this could result in a complete skirting of PAC disclosure and a proliferation of stealth PACs at the state and local level. Considering that McCain-Feingold allows such groups to still raise and spend soft money, this can only create a huge downstream channel of cash.

So why the need for the exemption? The current regulations are "too burdensome and unnecessary," Thomas has commented.

The origin of the 527 committees dates back to 1974, when Congress decided that campaigns, party committees, and PACs shouldn't pay taxes on received contributions and exempted these groups from federal income tax and gift tax requirements. Because of this favorable treatment and because they could operate in the dark, beginning in 1996 these committees proliferated, becoming hugely important players in the electoral arena.

But lawmakers, who were often the targets of their efforts (as John McCain was in the 2000 New York Republican primary), were outraged by the lack of information available about the committees themselves. Because these "stealth PACS" filed no registration statements, no one knew who contributed to them or who sat on their boards of directors. So on July 1, 2000, President Clinton signed a law that required political groups organized under Section 527 to adhere to strict disclosure requirements. Even though it was subsequently modified, this law was viewed as an important breakthrough in campaign finance disclosure.

Thomas's cynical attempts at "streamlining" these disclosure rules, coupled with a new campaign finance law that will drive soft money to the states anyway, could take us back to the bad old days of campaign finance. Before the ink has even dried on McCain-Feingold, it's already starting to fade.