Mr. WAXMAN. What if the grassroots lobbying is directed to discredit governmental agencies from adjudicating disputes? The hope would be that the public would be attuned to coming to the legislative body at some point and removing those powers from adjudicatory agencies? Mr. FANT. A certain number of these exhibits that are before this committee, specifically exhibits 11A and 11B, contain ads that are just of that sort. They talk about over regulation and the difficulties of doing business with the rules and regulations that have to be followed. In my analysis of the individual ads, I felt that those were attempts to influence the general public as to a legislative matter such as the sunset-on-regulations rule. There is general legislation designed to cut down upon the amount of regulations. Those types of ads, although somewhat general, relate directly to specific legislation. It is my view also that the IRS in auditing to determine whether those advertisements were deductible could probably find internal memorandums that would indicate what the business had in mind when it published the ad. It is normal within a corporation to justify a nonessential expenditure, and that justification might well shed some light on the question of whether the purpose was to influence the public as to a legislative matter. Mr. WAXMAN. Thank you, Mr. Chairman. [Mr. Shulman's prepared statement follows:] PREPARED STATEMENT OF HARVEY J. SHULMAN, EXECUTIVE DIRECTOR, MEDIA TABLE OF CONTENTS B. Improper Corporate Deductions for Expenses Associated With Attempts "To Influence The B. Failure On The Part of Organization Members to Know What Portion of Their C. Confusion Over the Issue of Whether A Membership Association Must Devote a Substantial Part of Its Activities to Section 162 (e) (2) Matters Before Non-Deductibility Can Be Attributed A. Adoption of Better Guidelines to Define Section 162 (e) (2) Advertising, Especially B. Amendment of Schedule M On the Tax Form To Provide a Specific Line for Section To: The Honorable Benjamin S. Rosenthal, Chairman, and My name is Harvey Shulman. I am presently Executive Director of Media Access Project, a public interest law firm in Washington, D.C. which specializes in communications law and First Amendment issues, including the financing of advertising. For purposes of the record, our address is 1609 Connecticut Avenue, N.W., Washington, D.C. In August, 1978, I will leave the firm to assume a teaching position on the faculty of the University of Oregon Law School in Eugene, Oregon, where I can be reached if further questions arise after this testimony. At the outset, I also wish to thank one of our firm's law student interns, Jeffrey Braff of the University of Pennsylvania Law School, who assisted in the preparation of this testimony. 1 Mr. Chairman and members of this Subcommittee, as our daily lives, for better or worse, come to be more and more affected by government actions, the public has a definite need to keep informed on a number of different issues. Health care, product liability, safety and health on the job, the environment, energy supplies and a myriad of other highly controversial matters deserve our attention. Unfortunately, much--if not most--of the information which we receive on these important issues has come from predominantly well-financed interests who naturally present only their viewpoints. Little, if any, effort at educating the public about contrasting opinions has been undertaken by the less-endowed interests. In most cases, this "informational gap" between the "haves" and the "have-nots" manifests itself in a struggle between business and industry, on one side, and consumer groups on the other. Occasionally, labor unions may enter the fray, sometimes siding with their corporate employers and other times supporting their members as consumers. Yet, the far more common situation is one in which great sums of money flow from the industry spigot in order to persuade the public |