January, 2012

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Politico: Super PAC takeover? Not so fast, campaigns say

Monday, January 30th, 2012

The big money outside groups best known for airing ruthless ads in the early state GOP primaries are elbowing their way onto the turf of presidential campaigns and parties — and some campaigns aren’t happy.

In the last few weeks, super PACs and other outside groups supporting Mitt Romney, Newt Gingrich, Rick Santorum, Ron Paul and President Barack Obama launched activities in Florida, other key states, and nationally — including phone banking, field organizing, direct mail, polling, state-of-the-race memos and even surrogate operations — that were once left mostly to the campaigns and parties.

Politico

The ambitious expansion is another example of a shift in political power away from the major parties and their candidates to deep-pocketed outsiders. But it’s left campaign operatives and even candidates grumbling about whether the super PACs are actually helping their favored candidates.

Campaigns generally are happy to let super PACs carpet bomb opponents with attack ads, but when it comes to direct-contact with voters and sensitive messaging, they fear that super PACs will muddle their framing, create confusion in the field and duplicate efforts — wasting cash rather than complementing their campaigns.

“It would be much better for the super PACs to just focus on running ads and not try to get into the ground game because that can get really confusing and reduplicative, and I think there can be some headaches,” said Jesse Benton, Ron Paul’s campaign manager.

While a handful of pro-Paul outside groups have spent about $3.4 million on television and internet ads boosting Paul’s insurgent campaign, Benton said their organizing efforts have sometimes conflicted with the campaign’s.

There have been complaints from voters who are getting duplicate calls — first from a PAC, then the campaign.

There’s also been some confusion on-the-ground at pivotal moments, like during the Iowa caucuses, where at least a couple campaign representatives dispatched to speak at targeted precincts on Paul’s behalf arrived to find PAC representatives who also wanted to address voters.

“Luckily, everybody was friendly and there wasn’t any friction, and they allowed the campaign’s reps to be the official speaker for Ron.” But, Benton said, “it just shows that when every single ounce of energy counts … phones and grassroots organizing is really best left to the campaign and the people that Ron’s picked to do that.”

Increasingly, though, outside groups are not always heeding that advice. And there’s not much the campaigns can do about it, because – even though the super PACs often are run by close allies of the candidate – outside groups and campaigns are legally barred from strategic coordination.

Since last week, Federal Election Commission records show, the super PAC supporting Romney’s presidential campaign, Restore Our Future, has spent about $215,000 on phone banking in Florida. That’s a departure for the juggernaut group, which has devoted the overwhelmingly majority of its $17 million (and counting) of spending to massive airtime buys for brutal negative ads like those that sunk Gingrich in Iowa.

The super PAC backing Santorum’s presidential campaign, Red White and Blue Fund, has reported spending more than $340,000 on a phone-banking operation it started during the South Carolina primary. It’s placed 1.5 million so-called “voter identification” calls in Florida, and is also targeting Florida voters with three direct mail pieces, touting him as – among other things – “the right choice for Florida Republicans.” And it’s planning to release a memo this week laying out a path through which Santorum, a former Pennsylvania senator who’s trailing Romney and Gingrich in polls, can compete for the nomination — precisely the kind of thing that campaigns often do to try to influence media coverage.

But the super PAC supporting Gingrich, Winning Our Future, has perhaps the most ambitious organizing plans. While it’s only reported spending about $240,000 on phone banking – a tiny fraction of the $6 million it’s spent mostly on ads attacking Romney – it has trumpeted its intention to build a shadow campaign of sorts to boost the former House Speaker. It plans to set up field operations and hire state directors in Florida, Nevada, Minnesota, Arizona and California, and has begun purchasing voter files and courting the state operations built by the now-aborted presidential campaign of Texas Gov. Rick Perry.

The idea is to fill a void in those states, where Gingrich’s campaign has very little in the way of on-the-ground organization, because it was focusing on South Carolina as a firewall and has struggled to raise cash, at least compared to Romney, a former Massachusetts governor. Winning Our Future, on the other hand, got a second $5 million check from Las Vegas casino mogul and longtime booster Sheldon Adelson after Gingrich’s surprisingly strong win in South Carolina.

“We’re prepared to do what’s necessary and do what it takes to achieve our goal, which is to get Newt Gingrich elected,” said Rick Tyler, a top Winning Our Future strategist, explaining the group is hiring grassroots organizers and planning more phone-banking in upcoming states. “We’re not going to leave any aspect, any tool of campaigning, on the shelf.”

But Dave Carney, who served as a top strategist for Gingrich’s campaign before jumping to Perry’s, said super PACs lack both the lead time and organizational muscle to build effective ground organizations. That’s in contrast to unions, which have worked for years to build and hone effective third party operations that are deployed for Democratic candidates.

“I just can’t see how that’s a very efficient use of resources, but it’s the Wild Wild West out there right now and these super PACs are raising lots of money and experimenting with new things,” said Carney.

The biggest of the super PACs that supported Perry, Make Us Great Again, which was run by a close Carney associate, spent nearly $4 million on ads and direct mail supporting Perry.

“I don’t think they made much difference one way or another,” he said. “We asked [big donors] not to give to any of the super PACs. We felt they would be a distraction,” pointing out that GOP presidential candidates have been asked to answer for controversial tactics from the super PACs supporting them.

Romney, in the days before the South Carolina primary, said “the whole idea of the PACs becoming larger than the campaigns themselves is a very bad idea.” And he and Gingrich have both distanced themselves from super PAC ads attacking the other, even as both have clearly benefited.

But the same plausible deniability actually hurts outside groups’ ability to set up ground operations, said a GOP super PAC operative who ran a group in 2010 that tried – and failed – to supplement its ads with robust grassroots organizing.

“No one is going to volunteer for you. They volunteer for candidates. They don’t volunteer for third party groups,” said the operative, who is active in the presidential race. “That means that you have to hire a lot of people, or, in the case of door to door stuff, you have to contract with a firm that hires a bunch of temp workers to go out and do it. I can tell you from my own experience that attempting to executive on-the-ground organizing is incredibly difficult as a third party group.”

It’s complicated further by the election rules barring coordination between the campaigns and outside groups, said Jason Torchinsky, a GOP election lawyer who was general counsel for Rudy Giuliani’s 2008 presidential campaign and is advising a super PAC backing a 2012 presidential candidate.

With advertising, campaigns and outside groups can figure out what one another are doing by consulting spending reports with details of buys that each is required to disclose in close to real time. With on-the-ground organizing, it’s tougher to determine quickly who’s doing what, while staying within the bounds of the rules, said Torchinsky.

And, he said “the lawyers have scared everybody into understanding the potential problems the coordination rules pose for the campaigns and the super PACs, and the donors. And I think they’ve done a pretty good job of getting everybody to respect the boundaries and the rules.”

Some campaign committees may be “frustrated” by super PACs “because they can’t control them or tell them what to do, conceded Abe Niederhauser, an official with Endorse Liberty, the biggest of the super PACs boosting Paul.

While Niederhauser said his group has tried to avoid stepping on the campaign’s toes “by occupying the digital space where they haven’t done a whole lot,” he conceded there’s no way to know if “we’re being complementary” to the Paul campaign’s strategy.

“I hope so,” Niederhauser said.

NPR: Gingrich Fights Against The Lobbyist Label

Saturday, January 28th, 2012

In the race for the Republican presidential nomination, former House Speaker Newt Gingrich continues to fend off accusations that he should wear the scarlet “L” — for “lobbyist.” This week, he released two of his consulting contracts and said they didn’t call for any lobbying

NPR

Like many other former lawmakers, Gingrich was advocating for paying clients, while not officially registering as a lobbyist.

The two contracts disclosed this week came from Gingrich’s work for Freddie Mac, the mortgage giant. Between 1999 and 2007, Freddie Mac paid his firm $1.6 million.

The contracts say he was advising and discussing, not lobbying — at least not in the legal sense of the word.

“There is no place in the contract that provides for lobbying. I have never done any lobbying,” Gingrich said at a debate Monday night.

Gingrich deliberately avoided registering as a lobbyist, which would make public his clients and their payments to him.

There is no place in the contract that provides for lobbying. I have never done any lobbying.

– Newt Gingrich

“In fact, we brought in an expert on lobbying law and trained all of our staff. And that expert is prepared to testify that he was brought in to say, ‘Here is the bright line,’ ” Gingrich said.

That expert is Thomas Susman, now the head lobbyist for the American Bar Association. He says his work for Gingrich is no secret.

“He said that I could go public with my representation back when I first worked for him,” Susman says.

But Susman’s version doesn’t quite match Gingrich’s. He’s sure he gave Gingrich some advice about the federal lobbying law, but not enough that he remembers doing so.

“I’m sure I would have, because that was what my expertise and involvement had been,” he says.

Besides, that really wasn’t Gingrich’s focus.

“He was involved with a number of clients of his group at the state level, with state legislators and state officials. And that was where he was most concerned,” Susman says.

Promoting Part D

Gingrich is also defending his advocacy of the Medicare drug benefit known as Part D.

On Thursday, rival Mitt Romney’s campaign brought out former New Hampshire Republican Rep. Jeb Bradley, who told reporters about a meeting with Gingrich before the congressional vote on Part D in 2003.

“I’ll tell you, that day that I met with Newt, he was lobbying,” Bradley said.

Gingrich says he promoted Part D as a citizen, not a paid lobbyist. He cited the need for better diabetes treatment as an example at Monday night’s debate.

“I publicly favored Medicare Part D for a practical reason. And that reason is simple: The U.S. government was not prepared to give people anything — insulin, for example — but they would pay for kidney dialysis,” he said.

But while Gingrich long supported the drug benefit, it’s also true that Novo Nordisk, a company that specializes in diabetes treatment, was a $200,000-a-year member of his Center for Health Transformation.

Lobbyist Loathing

This stance of “do no lobbying” has defined Gingrich’s post-Congress career.

If he wants to be the first president who’s a registered lobbyist, we’d love it.

– Howard Marlowe, president of the American League of Lobbyists

The assertion shows up on the website of the Center for Health Transformation and in one of the Freddie Mac contracts.

But lobbyists rarely use the L word in their contracts. Susman remembers the so-called engagement letters used by his old law firm.

“We’d use such terms as advocacy, including advice and counsel, including organizing. But probably not use the word lobbying in it,” he says.

Susman is active in a push to make the lobbying industry more transparent.

So is political scientist James Thurber, who heads up an institute on lobbying at American University. Thurber says there should be disclosure by so-called senior advisers — the former lawmakers, like Gingrich, who don’t formally register as lobbyists.

“They don’t have to be called lobbyists, but let’s find out who they are,” Thurber says.

And even some lobbyists want more transparency for their industry. An association called the American League of Lobbyists is working on a reform proposal.

The league’s president, Howard Marlowe, says he wishes Gingrich wouldn’t run away from the profession.

“If he wants to be the first president who’s a registered lobbyist, we’d love it,” Marlowe says.

But for now, Gingrich and other politicians seem pretty sure that a registered lobbyist is about the last candidate voters would want.

Seattle Post: Casino boss doubles down on Newt Gingrich

Tuesday, January 24th, 2012

The $10 million contribution, reportedly the largest single giver donation in the history of presidential politics, has revitalized Newt Gingrich’s campaign.

Seattle Post

The family of Las Vegas casino magnate Sheldon Adelson is putting its second $5 million cash infusion into a “SuperPAC” supporting former House Speaker Newt Gingrich for the Republican presidential nomination.

Jon Ralston of the Las Vegas Sun, who breaks most political stories in Nevada, reports that $5 million will come from Dr. Miriam Adelson.  Sheldon Adelson gave the first $5 million, a $3.4 million chunk of which was spent in the South Carolina primary.

The Adelsons have virtually dealt Gingrich back into the presidential race.

The $5 million donations — largest by a single giver in the history of presidential politics — were made possible by the U.S. Supreme Court’s 2010 corporations-are-people “Citizens United” ruling.

Under campaign rules, the Adelsons could legally give $5,000 to Gingrich, or perhaps hit up friends and “bundle” $100,000 or $200,000 in donations.  With the SuperPACs, supposedly independent of the candidate, they can made a thousand-times-greater donation.

The Gingrich SuperPAC is entitled Winning Our Future.  Mitt Romney’s SuperPAC has spent weeks advertising for the Jan. 31st Florida primary, where voters are already casting advance ballots.

Winning Our Future has shelled out $354,000 for a TV blitz in the Tampa area.

Sheldon Adelson became friends with Gingrich when he was building the Venetian, and trying (successfully) to keep the culinary workers union from organizing casino workers.

NY Times: Lobbyist Helps a Project He Financed in Congress

Monday, January 23rd, 2012

With nearly 400 former members of Congress hired as lobbyists or corporate “consultants” in the last decade, it has become commonplace for ex-members to work for groups or industries that they had helped get financing while in office.

New York Times

Soon after he retired last year as one of the leading liberals in Congress, former Representative William D. Delahunt of Massachusetts started his own lobbying firm with an office on the 16th floor of a Boston skyscraper. One of his first clients was a small coastal town that has agreed to pay him $15,000 a month for help in developing a wind energy project.

Amid the revolving door of congressmen-turned-lobbyists, there is nothing particularly remarkable about Mr. Delahunt’s transition, except for one thing. While in Congress, he personally earmarked $1.7 million for the same energy project.

So today, his firm, the Delahunt Group, stands to collect $90,000 or more for six months of work from the town of Hull, on Massachusetts Bay, with 80 percent of it coming from the pot of money he created through a pair of Energy Department grants in his final term in office, records and interviews show.

Experts in federal earmarking — a practice of financing pet projects that has been forsaken by many members of Congress as a toxic symbol of political abuse — said they could not recall a case in which a former lawmaker stood to benefit so directly from an earmark he had authorized. Mr. Delahunt’s firm is seeking a review of the arrangement from the Energy Department.

Mr. Delahunt’s work for the town raises legal and ethical questions, mainly because of federal restrictions on the use of federal funds for lobbying, several legal experts said.

Beyond the town of Hull, Mr. Delahunt’s clients include at least three others who received millions of dollars in federal aid with his direct assistance while he was in Congress, records show.

Mr. Delahunt declined repeated requests for an interview last week. In a statement released through his office on Friday, he also declined to respond to specific questions about his work, but said: “I want to be clear — I have no federal lobbying relationship with any past or current client. I have not lobbied anyone in Washington since leaving Congress.

“Further, while in Congress, I had no conversations with anybody regarding any future consulting contract,” he said, “and I am extremely proud of our work and the assistance we were able to bring to many communities throughout our district.” Federal law prohibits former congressmen from lobbying some ex-colleagues for one year after leaving office.

The Mashpee Wampanoag tribe, for instance, paid the Delahunt Group at least $40,000 to lobby for approval of a casino. Mr. Delahunt had secured Congressional earmarks for the tribe totaling $400,000 in 2008 and 2009 for a substance abuse program and other projects, the records show.

The city of Quincy, Mass., meanwhile, brought on Mr. Delahunt last year to help deal with federal officials on a downtown redevelopment program. In 2008, Mr. Delahunt secured nearly $2.4 million in earmarks for the city on a separate tidal restoration project.

And a fishermen’s group on the elbow of Cape Cod hired Mr. Delahunt to navigate regulatory issues; he had helped the group get a low-interest, $500,000 federal loan in 2010, records show. The group, which thanked Mr. Delahunt, then a congressman, for his help getting the loan, used the money to renovate a historic coastal home as its headquarters.

Questions include whether Mr. Delahunt knew that he might go work for the town at the time he requested the earmarks; whether federal funds were being used to “lobby” Congress in violation of federal restrictions; which federal officials Mr. Delahunt’s firm contacted as part of its work; and whether those contacts fell within the one-year “cooling off” period.

Barney Keller, communications director for the Club for Growth, an influential conservative group in Washington that tracks earmarks, said: “I cannot recall such an obvious example of a member of Congress allocating money that went directly into his own pocket. It speaks to why members of Congress shouldn’t be using earmarks.”

Mr. Delahunt, a former district attorney who was known in Congress for embracing liberal causes, also became known over his time in Washington for bringing home federal money. He was particularly active in 2009, ranking in the top fifth of all House members, with more than $46 million in earmarks, including the Hull and Mashpee tribe grants, according to data from the Center for Responsive Politics, a nonprofit research group in Washington.

On retiring in early 2011, he told home-state reporters that he was hesitant to go the typical route of lobbying. But within a few months he did just that, starting the Delahunt Group, where he serves as chairman. He brought in three top congressional aides to help lead it and set up four offices in Massachusetts and Washington, and joined with a national law firm and another lobbying shop as well.

“This is nowhere as stressful as being a congressman,” he told The Cape Cod Times last June as he showed off the firm’s new office on the cape.

But he rejected any suggestion that he was cashing in on his time in Congress. “To say that former members wouldn’t use the skill set they developed, particularly if they are passionate about the interests of their clients, I really think is wrong-headed,” he told the newspaper.

 

LA Times: ‘Super PACs’ dominate the political landscape

Thursday, January 19th, 2012

Even the GOP candidates whom the groups are supporting now denounce their expanded influence in South Carolina and beyond.

Los Angeles Times

Trevor Potter is an unlikely repeat guest for a late-night comedy show. As the former chairman of the Federal Election Commission, the courtly Washington lawyer is a leading expert on campaign finance law — not the kind of material that generates a lot of laughs.

So the fact that he’s appeared seven times on “The Colbert Report” in the last year, helping host Stephen Colbert set up his own “super PAC” as part of a mischievous political parody, underscores an unexpected development in the 2012 presidential race:

Super PACs have seized the zeitgeist.

An indirect outgrowth of the Supreme Court ruling in the 2010 Citizens United case, the independent political groups have mushroomed in the last year. They are now dominating not just the action in key primary states such as South Carolina, but the political conversation. In the last month, the number of Google searches for the term “super PAC” was about five times higher than the last year’s monthly average.

Spending by such organizations has exceeded $27 million already this year, according to the FEC, much of it going to biting television ads. Pummeled by super PACs aligned with their rivals, the Republican presidential contenders are now loudly denouncing their influence.

Former Massachusetts Gov. Mitt Romney said in recent days that all of the candidates wished the outside organizations would disappear and that their outsized sway was “a very bad idea.”

Former House Speaker Newt Gingrich was forced to disavow an error-riddled documentary aired by a super PAC run by his former aides, while he and former Pennsylvania Sen. Rick Santorum have had to defend themselves against attacks by Restore Our Future, a pro-Romney super PAC. At a campaign stop in Columbia, S.C., this week, Santorum accused Romney of sending “his henchmen” to spread disinformation.

The complaints mark a sharp turnabout for Republicans, who had largely heralded the Citizens United decision, which allowed unlimited corporate and union spending on campaigns. (The campaigns themselves remain under strict fundraising limits.)

The candidates are not opposed to unlimited fundraising but, once confronted with how the decision is playing out, have blamed one another, not the court.

“This particular approach, I think, has nothing to do with the Citizens United case,” Gingrich said on MSNBC this month. “It has to do with a bunch of millionaires getting together to run a negative campaign, and Gov. Romney refusing to call them off.”

Most of the major super PACs are run by longtime associates of the candidates, but their ostensible independence allows them access to the unlimited donations. That has led to eye-popping contributions by billionaires such as casino magnate Sheldon Adelson, a Gingrich backer, and mutual fund investor Foster Friess, who supports Santorum. Romney’s super PAC has been fueled in part by former colleagues from Bain Capital.

In South Carolina, super PACs have dropped $6.9 million on TV ads scheduled to run through Saturday’s primary, compared with $5.4 million spent on television by the candidates, according to a campaign source familiar with the buys.

“We have never seen anything like this in terms of the amount of money being raised and spent,” Potter said. “The scale of it is the surprise. They are spending more than the candidates are.”

Critics view the groups as essentially an end-run around campaign contribution limits. Colbert — Potter’s frequent host — highlighted the loopholes in the system last week when he declared his candidacy for “president of the United States of South Carolina.” With a figurative wink, he handed off control of his super PAC to fellow Comedy Central host Jon Stewart, renaming it the Definitely Not Coordinating With Stephen Colbert Super PAC.

The group is running an ad urging South Carolinians to vote for businessman Herman Cain — who dropped out of the race but is still on the ballot — as a proxy show of support for Colbert. Colbert, who is not on the ballot and separately called for the Cain strategy, suggested Tuesday that he and Stewart “have developed some kind of psychic-twin connection, where one feels what the other is experiencing.”

Outside groups played a role in political campaigns before Citizens United – perhaps most famously in 2004, when a group of Vietnam War-era Swift boat veterans financed largely by wealthy Texans ran ads questioning the military service of Democratic nominee Sen. John F. Kerry. But they operated as so-called 527 organizations — politically active tax-exempt groups that could not expressly advocate for the election or the defeat of a candidate. Groups that wanted to be more explicit in their support had to register as political action committees and could only accept donations of up to $5,000.

That changed two years ago, when a federal court of appeals ruled in a case called Speechnow.org vs. FEC that individual contributions to political advocacy groups could not be limited. The court cited the majority opinion in Citizens United, which concluded that independent spending does not give rise to corruption or the appearance of corruption.

After the Speechnow ruling, the FEC created a new category for such political groups, bestowing them with the ungainly handle “independent expenditure-only committees.” A reporter for Roll Call, Eliza Newlin Carney, dubbed them “super PACs” in an early write-up.

Election law attorney Michael Toner said the moniker had increased the spotlight on their activities.

“It’s certainly a cooler name” than 527 organization, Toner said. “‘Super PAC’ — who can’t be intrigued by that?”

David Keating, the president of Speechnow.org, the group that brought the case that triggered the creation of super PACs, is unfazed by the controversy that has raged around their proliferation.

“The 1st Amendment is written to protect speech, and it doesn’t say that everyone is going to have the same-size megaphone,” he said.

He does have one complaint, however: “I think it would have been much better to call them ‘Speechnow PACs.'”

ABC News: Super PACs: Super Powerful, Super Secret and Super Confusing

Saturday, January 14th, 2012

Super PACs – given the superlative for their ability to raise unlimited amounts of money and spend as much as they want – have become an element of the 2012 presidential race because of a Supreme Court ruling two years ago that allowed their creation.

Now they’re getting even more scrutiny because of faux right-wing super pundit Stephen Colbert, who is teasing some sort of presidential bid by relinquishing control of his own (real) super PAC.

ABC

Newt Gingrich blames them for his downfall. They’ve spent twice as much money on ads in South Carolina than the candidates have themselves. And they’re not going anywhere.

Super PACs – given the superlative for their ability to raise unlimited amounts of money and spend as much as they want – have become an element of the 2012 presidential race because of a Supreme Court ruling two years ago that allowed their creation. Now they’re getting even more scrutiny because of faux right-wing super pundit Stephen Colbert, who is teasing some sort of presidential bid by relinquishing control of his own (real) super PAC.

Colbert doesn’t have to try that hard to make fun of the role of money in politics. The rules that govern super PACs are hilarious.

Take the regulation that forbids candidates from “coordinating” with super PACs that support them, never mind that many of these super PACs are run by former aides and allies of the candidates themselves. Who’s to decide what constitutes coordination?

Mitt Romney explained in December: “I’m not allowed to communicate with a super PAC in any way, shape or form. My goodness, if we coordinate in any way whatsoever, we go to the big house.”

That’s not to say that Romney disavows the super PAC backing him, Restore Our Future. Thanks to the negative ads paid for by the group, Gingrich fell from first place in the polls before Iowa to fourth place in the vote.

For his part, Gingrich says that as long as he makes his message public, he knows his friends at the Winning Our Future PAC will hear it.

In a statement Friday, Gingrich said: “I am calling for the Winning Our Future Super-PAC supporting me to either edit its ‘King of Bain’ advertisement and movie to remove its inaccuracies, or to pull it off the air and off the internet entirely.”

So, message received? John Grimaldi, a spokesman for Winning Our Future, said Gingrich didn’t run afoul of the rule banning coordination because he was “making a specific comment” publicly, although he said the PAC is “standing by our premise” in the movie Gingrich cited, which is about Romney’s tenure at Bain Capital.

Confused yet?

It’s no surprise that Colbert is mocking these rules. In his Thursday-night show, Colbert cheekily signed over his PAC to his 11 p.m. counterpart, Jon Stewart, as they spoke with Trevor Potter – Colbert’s lawyer who is a former Federal Election Commission chairman – about how they can and can’t communicate.

Stewart asked Potter if he can hire Colbert’s super PAC staff to run ads against opponents. Yes, Potter said, “as long as they have no knowledge of Stephen’s plans.”

“From now on, I will just have to talk about my plans on my television show and just take the risk that you might watch it,” Colbert said.

Maybe it would be funnier if it weren’t entirely true.

Robert Maguire, a PAC researcher at the Center for Responsive Politics in Washington, D.C., said it’s unlikely that Colbert’s stunt will change the way super PACs try to influence the 2012 election, but that it’s a brilliant effort to educate the public about one of the shadier elements of campaign finance.

“He’s doing it in a way that’s entertaining, and I think that people will catch on and start to understand that there’s free speech, and then there’s this,” Maguire said.

The PACs have already spent $7 million in South Carolina, more than twice what the candidates have spent. Donors to campaigns are limited to how much they can give per cycle, while super PACs can take and spend as much as they want.

And the rich contributors who helped boost major super PACs, such as Restore Our Future (for Mitt Romney) or Make Us Great Again (Rick Perry), will be anonymous until the end of January, thanks to another weird trick that super PACs use to sway voters without revealing too much about themselves.

In an odd-numbered year (or a non-election year), the groups don’t have to report their fundraising totals and donors every month. Instead, they can do so once every three months. That might seem like an arbitrary difference, but it means that the public won’t know who contributed to which super PACs until the end of January, after voters pick a candidate in Iowa, New Hampshire, South Carolina and Florida.

“The people voting in these states won’t know by the time they’re voting who’s giving the money,” Maguire said.

Matt Taibbi: Revolving Door: From Top Futures Regulator to Top Futures Lobbyist

Thursday, January 12th, 2012

While America focused on New Hampshire, a classic example of revolving-door politics took place in Washington, going almost completely unnoticed.

It’s a move that ranks up there with the hire of Louisiana congressman Billy Tauzin to head the pharmaceutical lobbying conglomerate PhRMA — at a salary of over $2 million a year — immediately after Tauzin helped ram through the Medicare Prescription Drug Bill, a huge handout to the pharmaceutical industry

Rolling Stone

In this case, the hire involves Walter Lukken, who toward the end of the Bush years was the acting head of the Commodity Futures Trading Commission. As the chief regulator of the commodities markets, it was Lukken’s job to spot and combat speculative abuses and manipulations that might have led to artificial price hikes and other disruptions.

In 2008, the last full year of his tenure, Lukken presided over some of the worst chaos in the commodities markets in recent history, with major disruptions in the markets for food products like wheat, cotton, soybeans, and rice, and energy commodities like oil.

Most notoriously, 2008 saw a historic spike in the price of oil futures, an enormously destructive speculative bubble that peaked in July of that year at the lunatic high price of $146 per barrel (Goldman, Sachs at the height of the mania was telling investors oil might go to $200 a barrel).

It was Lukken’s job to spot the speculative abuses leading to disruptions like that bubble, but he didn’t do it. Instead, he repeatedly insisted that there was nothing untoward going on, most notoriously through testimony before the House and the Senate at the height of the oil boom.

In testimony that summer, Lukken continually insisted that the price surge was due to normal supply-and-demand forces, ignoring the far more obvious explanation of a massive inflow of cash from commodity index speculators.

Despite data showing that the amount of commodity index speculation had grown from $13 billion in 2003 to more than $260 billion as of March 2008 — in other words, the amount of money betting on a rise in commodity prices had risen by a factor of twenty during that time — Lukken on May 7, 2008 told the Senate that a more likely explanation for the surge could be found in the growth of industrial demand from places like China, and also, get this, in changes in the weather:

These are extraordinary times for our markets with commodity futures prices at unprecedented levels. In the last three months, the agricultural staples of wheat, corn, soybeans, rice and oats have hit all-time highs. We have also witnessed record prices in crude oil, gasoline and other related energy products. Broadly speaking, the falling dollar, strong demand from the emerging world economies, global political unrest, detrimental weather and ethanol mandates have driven up commodity futures prices across-the-board.

On top of these trends, the emergence of the sub-prime crisis last summer led investors to increasingly seek portfolio exposure in commodity futures. As the federal regulator of these products, the CFTC is closely monitoring these growing markets to ensure they are working properly for farmers, investors, and consumers. To date, CFTC staff analysis indicates that the current higher futures prices generally are not a result of manipulative forces.

By insisting that the spike was “not a result of manipulative forces,” Lukken helped Wall Street in its efforts to avoid reforms that might have prevented such abuses, like the closing of a series of loopholes and exemptions that allowed a handful of major speculators to play a lopsided role in the setting of commodity prices.

So what was Lukken’s reward for helping the financial services industry avoid such reforms? Well, Lukken has just been named to head the Futures Industry Association, or FIA, the chief lobbying arm of futures investors.

This follows the Tauzin pattern of revolving-door hires: a government official carries water for a powerful industry, then moves on to take the cushy job with the industry’s lobbying arm once he leaves office.

Among people who follow these markets for a living, the Lukken hire had an embarrassingly over-the-top quality, like a CEO who goes the appearances-be-damned route and puts his 23 year-old secretary/mistress on the board of directors.

Mike Masters is head of the Masters Capital Management hedge fund and also chairman of Better Markets, a new non-profit advocacy group that promotes the public interest in the labyrinthine vagaries of the financial markets, and especially the commodities markets. He describes the hiring of Lukken as an extreme example of revolving-door politics.

“It’s not the revolving door. It’s the express elevator,” he says.

Masters remembers Lukken because the two men both testified before the Senate in that summer of 2008; he recalls watching the CFTC chief, aghast, when the latter continued to insist that there was nothing abnormal going on in the commodities world, despite a historic series of disruptions.

“And it wasn’t just oil,” Masters says. “There was the debacle in the wheat markets, with cotton, with soybeans and corn, there were riots in the Phillipines over the rice markets. And Lukken was saying everything’s okay. It was crazy.”

It was a see-no-evil, hear-no-evil approach to government oversight, which had far-reaching consequences in that crisis year. The CFTC, remember, also has purview over derivatives, meaning the failure to prevent the disastrous swap positions accumulated by the likes of AIG also falls, in part anyway, at the CFTC’s doorstep.

A Dow Jones news story contained a hilarious summary of Lukken’s blase administrative style, in which he was described as having downplayed the whole being-a-stickler-for-rules aspect of regulation:

When Lukken headed the CFTC, he backed a more flexible, “principles-based” approach to regulation, different from what was seen as the prescriptive and “rule-based” methods employed by the Securities and Exchange Commission, which polices stock markets.

Obviously this kind of thing has been going on forever in Washington, but some revolving-door hires feel worse and more shameless than others, and this is one of those.  But really it’s the same old story: regulators keep falling down on the job, and keep getting rewarded for it by Wall Street, and nothing gets done about it.

Washington Examiner: Obama promotes lobbyist within White House

Wednesday, January 11th, 2012

“I am running to tell the lobbyists in Washington that their days of setting the agenda are over. They have not funded my campaign. They won’t work in my White House.”

That was candidate Obama. President Obama this week promoted former registered lobbyist Cecilia Muñoz to be director of the Domestic Policy Council.

Washington Examiner

She had been director of intergovernmental affairs at the White House. At the DPC, Muñoz replaces former registered K Street lobbyist Melody Barnes, who is “considering offers in the private sector,” but may or may not be returning to K Street.

Liberals say Muñoz doesn’t count as one of the bad lobbyists was rails against. “That’s weak sauce,” MSNBC host Chris Hayes tweeted at me yesterday. “She was a lobbyist for immigrant rights.”

Obama took this same line after falsely claiming in the State of the Union address, “we’ve excluded lobbyists from policymaking jobs.” He had, in fact, hired 50 such lobbyists. When confronted on this, Obama said, “For example, a doctor who ran Tobacco-Free Kids technically is a registered lobbyist, on the other hand, has more expertise than anybody in figuring out how kids don’t get hooked on cigarettes. So there have been a couple of instances like that. …”

It’s not a totally unreasonable line: Obama was identifying corporate lobbyists, not non-profit issue lobbyists, as the bad guys, so an anti-smoking lobbyists or a “immigrant rights,” lobbyist is a different thing, even if he or she is registered under the Lobbying Disclosure Act.

But if Obama makes that defense, he’s having it both ways, because he regularly counts as non-lobbyists people who really are corporate lobbyists, but they simply didn’t register as lobbyist. For instance, Google’s VP for global public policy and government affairs Andrew McLaughlin served in the White House working directly on policy affecting Google, but he hadn’t been registered as a Google lobbyist.

On Obama’s “ban” on lobbyist contributions, he walks the same line: accepting gifts from and employing as bundlers heads of lobbying firms and VPs of government affairs, but they’re not registered, so it’s fine.

According to Obama’s account, you don’t count as a lobbyist if you’re not registered, but even if you’re not registered, you might not count either. Maybe “lobbyist” just meant people with whom Obama disagrees.

Washington Post: Super PACs alter the dynamics of fundraising

Monday, January 9th, 2012
Well-established candidates have always had the edge in fundraising, but under the new rules governing money in politics, it looks as if the rich are just getting richer.

The vast majority of the $14 million in spending from “super PACs,” a new type of political group, has been spent on behalf of three candidates: Mitt Romney, Rick Perry and Jon Huntsman Jr., federal records show. Those are the same three candidates already most reliant on money from large donors.

Washington Post

“It’s just proven to be a vehicle for getting around contribution limits,” said Michael Malbin, a scholar at the Campaign Finance Institute, which advocates for regulations encouraging small donors. “It’s made for people who’ve already maxed out.

Two years after the Supreme Court decided the landmark Citizens United v. Federal Election Commission case, it is becoming clear that the super PACs created under the new rules will act as a counterweight to a rise in online grass-roots fundraising. The online efforts, which tend to attract small donations, have been driving unconventional contenders in the GOP field, including Rep. Ron Paul (Tex.) and Rep. Michele Bachmann (Minn.). (Bachmann dropped out of the race last week after a sixth-place finish in Iowa.)

By contrast, super PACs, because they can pull in donations well above the $2,500 limit on donations to campaigns, are boosting establishment candidates who already rely on rich donors.

The Citizens United decision created a cascade of lower-court rulings, allowing for the creation of super PACs that can accept huge donations from individuals and corporations. Several of the groups active in this year’s race have already accepted many donations over $1 million from one person.

The advantage is likely to grow as the candidates move to the next round of primaries and caucuses, where they will be competing in bigger states and relying more on television advertising to reach voters.

Spending on television ads by groups independent of the campaigns is already five times what it was during the entire Republican primary season four years ago, according to estimates from Kantar Media/CMAG.

Romney has received $5 million in help from the super PAC founded by three former aides from his 2008 bid.

A group aiding Perry has spent $3.8 million on ads backing him, and Huntsman has benefited from $2.5 million worth of ads from a super PAC.

Combined, those three candidates are receiving 80 percent of all super PAC spending.

The super PACs helping Romney and Perry have spent more on television ads than the candidates themselves in recent weeks, according to Kantar’s estimates. Huntsman’s campaign just launched his first ad.

Paul and Bachmann received more than 60 percent of their money from donors giving less than $200. A super PAC helping Paul has spent $735,000 on Internet advertising. And a group that initially announced it was helping Bachmann went on to run $500,000 in ads for Romney.

While Newt Gingrich’s campaign was struggling in the summer, he relied more on smaller donors. As he gained steam, he received help from a super PAC founded by former aides. But the group’s late start appears to have been a problem: It has reported $1 million in spending so far.

Rick Santorum has benefited from about $755,000 in spending from two super PACs backing him.

Just as the Internet allowed candidates to raise money from small donors faster than they had through direct mail, the same is true for super PACs.

“You make a phone call and get a million dollars,” Malbin said.

The new wave of spending has also allowed some candidates to benefit from negative advertising while avoiding the blame for attacking fellow Republicans.

Campaign finance regulations passed by Congress in 2002 have a “stand by your ad” provision requiring candidates to appear on screen stating their approval of the spot. But rules prevent super PACs from coordinating the campaign operations, allowing candidates to say the ads are out of their control.

“It changes the dynamic for candidates who are more reliant on small donors,” said a Paul strategist, who spoke on the condition of anonymity in order to talk freely. “You have two tiers of candidates: those with super PACs that can have negative messaging without having to take the heat for it, and those who have to do it themselves.”

LA Times: Super PACs’ are showing their power

Sunday, January 1st, 2012

The massive financial firepower employed in both Republican and Democratic races has clearly demonstrated that Super PACs are willing and able to spend without disclosing their financial backers.

Los Angeles Times

Political committees unfettered by donation limits are dominating the last weeks of the presidential nominating contests in Iowa and New Hampshire, funding aggressive attack campaigns that are swamping the efforts of the candidates themselves.

In Ohio, $3 million in ads funded by secret donors have already been aired against the state’s incumbent Democratic senator, Sherrod Brown — a year before the election.

In California, three of the committees financed by unlimited donations have formed in recent weeks to back Rep. Howard L. Berman of Valley Village, who has been forced by redistricting into a primary battle against fellow Democratic incumbent Brad Sherman of Sherman Oaks.

The early activity at all levels heralds a transformation across the country in the first presidential cycle since a 2010 Supreme Court decision lifted the limits on individual and corporate donations to independent political organizations, known as “super PACs.”

Super PACs are now outspending the GOP presidential candidates on ads in what could be a $6- or 7-billion election year for federal races, rendering obsolete the old system under which donations were strictly limited to candidates and party committees.

This is a radical change,” said Trevor Potter, a Republican election lawyer who advised Sen. John McCain (R-Ariz.) in his 2008 presidential bid.

If present trends continue, the 2012 election will reverse more than a century of efforts to curb the influence of big money on politics.

During his second term, President Theodore Roosevelt spoke with alarm about the ability of corporate and financial elite — “malefactors of great wealth” — to steer government decisions. In 1907, he signed legislation banning corporate contributions to federal candidates.

In future decades — including during Richard Nixon‘s presidency — Congress expanded campaign regulation, requiring disclosure of contributions and limiting the size of donations in federal races. Those restrictions have unraveled since the high court’s Citizens United decision.

Some conservatives have applauded the renewed freedom of corporations and the wealthy to finance election campaigns, countering what they see as a longtime advantage held by Democrats and their labor allies. Still, few deny that high-dollar donors are changing the nature of the race in the early presidential delegate selection states.

The highest-profile victim so far is Newt Gingrich, whose rapid descent in opinion polls correlates with the drubbing he received in negative ads produced by a super PAC aligned with Mitt Romney.

That group, Restore Our Future, has outspent the official Romney campaign on TV and radio in Iowa by more than 2 to 1, according to sources familiar with the ad buys. Ultimately, the independent committee will spend $3.1 million in the state, according to the organization’s director, Carl Forti.

The major super PACs supporting candidates Rick Perry and Jon Huntsman Jr. have also aggressively advocated for their candidates, spending at least $3.4 million and $2.2 million respectively on media in the key early states of Iowa, New Hampshire and South Carolina. Aside from Perry, the Texas governor who has spent $2 million more than his super PAC, the campaigns have been outspent by their independent counterparts.

Even as spending by these groups rises in the early primary and caucus states, their donors remain veiled because of a Federal Election Commission schedule that doesn’t require full disclosure until after the early contests are concluded.

Technically, the new rules permit donations only to independent political committees that do not coordinate their activities with a candidate’s official campaign. But in the presidential race the candidates and the super PACs are intertwined by personnel, if not legally.

Forti, who was political director of Romney’s first presidential bid in 2008, runs the pro-Romney group along with several other former Romney aides. Revolution PAC, the group backing Ron Paul, has on its advisory board two former staffers of Paul’s 2008 presidential bid. And Make Us Great Again, the largest of several groups supporting Perry, is run by his former chief of staff, Mike Toomey.

Rick Tyler, longtime aide and confidante to Gingrich, announced recently that he would join Winning Our Future, the new super PAC set up by another close Gingrich aide.

“Super PACs are headed by political people that know the campaign already,” said Fred Davis, a Republican strategist who left Huntsman’s presidential campaign this year to direct the super PAC benefiting the former Utah governor. “They know the candidate and they know the players.”

Davis estimated that about half of the group’s small staff used to work on Huntsman’s official campaign.

“You don’t have to cheat, you don’t have to break the law to know that Newt Gingrich needed to be taken down — that he was hurting Mitt Romney,” Davis said. “If you don’t know that, you have the wrong guy heading the PAC.” 

Reformers are especially alarmed by super PACs active in congressional races, because large sums of money they command can be even more influential in smaller elections than at the presidential level.

Their effects have been felt in Nebraska, where Democratic Sen. Ben Nelson was preparing for a $50-million reelection race before he announced his retirement last week. Although aides said the early spending by anonymous donors didn’t trigger his decision, Nelson knew that the 2012 budget would have doubled the state’s previous record — $25 million spent during his last reelection.

Nelson’s campaign manager, Paul Johnson, said the new flow of big money had changed the nature of state campaigns.

“A Senate race is now a national campaign in which you run in some ways as a surrogate for national groups with their own agenda,” Johnson said. “It means candidates run not just against their opponent but against all other Senate candidates competing for outside money.”

He said the new environment discouraged promising candidates from running: “They look at the cost of this race and say, how do I compete?”

At the House level, a former top aide to Majority Leader Eric Cantor (R-Va.) started a super PAC this fall named YG Action Fund for the “young guns,” the conservative Congress members whom Cantor helped recruit. Organizer John Murray hopes to raise $30 million between the super PAC and its nonprofit arms, whose donors do not have to be disclosed.

In 2010, the super PAC Crossroads and similar outside groups dumped more than $700,000 into an ad blitz against Rep. Maurice D. Hinchey, a New York Democrat.  Hinchey barely won reelection; the source of the money is still unknown.

“This is destructive of the democratic process,” Hinchey said. 

In California, where the super PACs are expected to try to sway the brewing Democratic primary between two incumbents, 30-year congressional veteran Berman said he was in no way encouraging the organizations set up on his behalf, but neither was he inclined to turn down the help.

In a recent interview, Berman said he knew from media reports about the three super PACs organized on his behalf, including one called the Valley-Israel Alliance. But he said he had no other details and did not plan to intervene other than asking supporters to give only to his official campaign.

His opponent, Sherman, takes a different view. He plans to formally challenge Berman in a debate this month to join him in pledging to return to the U.S. Treasury any amount spent by a super PAC in their race.

The offer is meant to send a message to any donor that “they should donate to the campaign and not the super PAC,” Sherman said.

If he doesn’t get an agreement, Sherman said, he may not be able to rule out his own super PAC support.