June, 2012

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Los Angeles Times: After winning right to spend, political groups fight for secrecy

Wednesday, June 27th, 2012

Conservatives who said disclosure of donors would prevent corruption now are attacking such rules, citing fears of harassment

Los Angeles Times

During their long campaign to loosen rules on campaign money, conservatives argued that there was a simpler way to prevent corruption: transparency. Get rid of limits on contributions and spending, they said, but make sure voters know where the money is coming from.

Today, with those fundraising restrictions largely removed, many conservatives have changed their tune. They now say disclosure could be an enemy of free speech.

High-profile donors could face bullying and harassment from liberals out to “muzzle” their opponents, Sen. Minority Leader Mitch McConnell (R-Ky.) said in a recent speech.

Corporations could be subject to boycotts and pickets, warned the Wall Street Journal editorial page this spring.

Democrats “want to intimidate people into not giving to these conservative efforts,” said Republican strategist Karl Rove on Fox News. “I think it’s shameful.”

Rove helped found American Crossroads, a “super PAC,” and Crossroads GPS, a nonprofit group that does not reveal its donors.

“Disclosure is the one area where [conservatives] haven’t won,” said Richard Briffault, an election law professor at Columbia Law School. “This is the next frontier for them.”

A handful of conservative foundations, themselves financed with millions in anonymous funding, have been fighting legal battles from Maine to Hawaii to dismantle disclosure rules and other limits on campaign spending.

One group, the Center for Individual Freedom based in Alexandria, Va., has spent millions on attack ads against Democratic congressmen and state judicial candidates. It also has sued to block laws and court rulings that would have required disclosure of the source of the money for the ads.

Jeffrey Mazzella, the center’s president, declined to comment on the lawsuits or discuss the group’s donors, saying the center lays out its positions in detail on its website and in news releases.

Bradley A. Smith, a Republican and former chairman of the Federal Election Commission, is among those whose views have changed on disclosure. In 2003, he endorsed disclosing donors as a way to discourage corruption by “exposing potential or actual conflicts of interest.”

But later, he said, he concluded that disclosure requirements could be burdensome for citizen groups. And now that campaign reports are posted online, he added, people can easily identify and target their opponents.

The business community began fighting disclosure in 2000, when the U.S. Chamber of Commerce, after buying ads supporting candidates for the Mississippi Supreme Court, successfully challenged the state’s requirements on revealing donors.

The anti-disclosure campaign was joined by libertarian legal advocacy centers, such as the Institute for Justice, founded in 1991 with seed money from trusts controlled by billionaire brothers Charles andDavid H. Koch. Starting in 2005, the institute began sponsoring studies that argued disclosure laws were ensnaring ordinary citizens in red tape and inviting reprisals.

Then came California’s Proposition 8, which banned same-sex marriage. After the initiative passed in 2008, some same-sex marriage advocates used the state’s campaign finance data to publicly identify donors who supported the ban. Proposition 8 supporters claimed they were subject to harassing phone calls and e-mails, vandalism and protests.

In arguing against disclosure rules, conservatives even reach back to the civil rights era, when authorities in Alabama tried to identify members of the National Assn. for the Advancement of Colored People. In 1958, the Supreme Court ruled those names could remain secret.

A leader of the crusade against disclosure has been James Bopp Jr., a libertarian lawyer based in Terre Haute, Ind. The original lawyer in the Citizens United case, in which the Supreme Court eased restrictions on independent political spending, he has brought suits to attack campaign rules in at least 30 states. In one of those suits, the Supreme Court on Monday ruled in Bopp’s favor and eliminated a Montana ban on corporate contributions.

Bopp and others say there’s nothing wrong with forcing candidates and political parties to reveal their donors, at least the larger ones. But for private citizens and independent groups, “the price of disclosure is too high,” he said.

So far, the anti-disclosure arguments haven’t won much support on the Supreme Court.

Starting with a key decision in 1976, the court has stood behind the principle that such rules help prevent corruption and keep voters informed. In the 2010 Citizens United case, an 8-1 majority affirmed disclosure rules. And later that year, conservative Justice Antonin Scalia was even more forceful in backing transparency.

Washington Post: Post-Watergate campaign finance limits undercut by changes

Sunday, June 17th, 2012

In 1984, President Ronald Reagan ran for reelection without holding a single campaign fundraiser because he and Democratic challenger Walter Mondale each accepted $40 million in public funds.

President Obama and Republican challenger Mitt Romney spend much of their time crisscrossing the country to collect as much cash as possible, while political groups run by their former aides solicit donations of seven — and eight — figures from sympathetic billionaires.

Washington Post

The money poured into Richard M. Nixon’s reelection campaign from all corners: Six-figure checks flown by corporate jet from Texas; bundles of payments handed over at an Illinois game preserve; a battered brown attaché case stuffed with $200,000 in cash from a New Jersey investor hoping to fend off a fraud investigation.

During four pivotal weeks in spring 1972, the president brought in as much as $20 million — about $110 million in today’s dollars — much of it in the form of illegal corporate donations and all of it raised to avoid disclosure rules that went into effect that April.

“The decision was made that it was time to put the hay in,” John Dean, Nixon’s counsel at the time, recalled in an interview last week. “A lot of us believe Watergate might never have happened without all that money sloshing around.”

Four decades later, there’s little need for furtive fundraising or secret handoffs of cash. Many of the corporate executives convicted of campaign-finance crimes during Watergate could now simply write a check to their favorite super PAC or, if they want to keep it secret, to a compliant nonprofit group. Corporations can spend as much as they want to help their favored candidates, no longer prohibited by law from spending company cash on elections.

The political world has, in many respects, come full circle since a botched burglary funded by illicit campaign cash brought down an administration. The excesses of the Nixon era ushered in a series of wide-ranging restrictions on the use of money in campaigns, including limits on individual campaign contributions that remain in force today.

But the intervening decades have also brought changes that have undercut many of the political financing rules put in place in response to the Watergate scandal, including a Supreme Court case that freed corporations and unions to spend unlimited money on elections and a public-financing regime that has collapsed into irrelevance.

‘Money corrupts’

The result is a frenzied rush to raise money, with echoes of that spring 40 years ago: President Obama and Republican challenger Mitt Romney spend much of their time crisscrossing the country to collect as much cash as possible, while political groups run by their former aides solicit donations of seven — and eight — figures from sympathetic billionaires.

Last week, Las Vegas casino magnate Sheldon Adelson contributed $10 million to Restore Our Future, a super PAC dedicated to helping Romney win in November. Adelson, one of the richest men in the world, and his relatives have spent more than $35 million to help Republicans in the 2012 elections.

“I think we’re in the middle of a scandal that hasn’t quite gelled yet,” said Roger M. Witten, who worked in the Watergate special prosecutor’s office and now handles campaign-finance cases at WilmerHale in New York. “A tremendous amount of ground has been lost. We’ll have to relearn the lessons of Watergate — that money corrupts the system.”

Many conservatives and civil-liberties advocates take a different lesson, however, saying stricter rules would have done little to stop Nixon political operatives intent on breaking the law. Bradley J. Smith, a former Federal Election Commission chairman who is one of the leading voices for deregulating the campaign finance system, said many of the limits enacted after Watergate were ineffective and intruded on First Amendment rights.

“It’s not bad or good in and of itself to spend more money in politics,” Smith said. “We’ve got to shake off the bugaboo, the ghost of Watergate, that somehow justifies never-ending regulation of people’s free-speech rights.”

At the dawn of 1972, Nixon campaign aides, fueled by their boss’s legendary paranoia and scheming, set out to ensure his reelection by taking advantage of a window of opportunity — a loophole that let them raise unlimited, secret funds for about a month between the expiration of one election law and the enactment of a new one. The frenzy began March 10 and lasted until April 7, when legislation went into effect requiring disclosure of political donors.

In the months and years that followed, prosecutors and journalists unraveled a mind-boggling array of bank accounts and revolving political committees used to launder the money. Overseen by Nixon’s finance director, Maurice Stans, the effort featured a half-dozen “pickup men” roaming the country gathering checks and cash.

The volume was so great that some donations that had been offered went uncollected, while others came in late. One New Jersey lawmaker showed up in Washington on April 10 with a briefcase filled with $200,000 in $100 bills, money eventually traced to indicted financier Robert L. Vesco; the contributions were treated as if they had been received prior to the deadline.

Overall, Nixon’s 1972 reelection effort raised an estimated $60 million — “the largest amount of money ever spent in a political campaign,” as Stans later bragged.

By 1975, prosecutors reported that 32 individuals and 19 corporations were convicted or had pleaded guilty to violations of campaign-contribution laws, including household names such as Goodyear, Minnesota Mining and Manufacturing, Northrop, American Airlines, Gulf Oil and Phillips Petroleum, records show.

Former Watergate prosecutor Frank Tuerkheimer, who now teaches law at the University of Wisconsin, said he and his colleagues viewed the cases as the beginning of a crackdown on campaign-finance violations.

‘We were wrong’

“Unfortunately, that didn’t happen,” Tuerkheimer said. “We thought it would result in serious enforcement. We were wrong.”

Congress responded to Watergate by amending the Federal Election Campaign Act in 1974, which implemented contribution and spending limits, created the FEC and provided a system of public financing for presidential contests. The Supreme Court soon struck down the spending limits and other restrictions on free-speech grounds in Buckley v. Valeo.

But donation limits and public financing remained, and, for a time, money seemed to play a smaller role in national politics. In 1984, President Ronald Reagan ran for reelection without holding a single campaign fundraiser because he and Democratic challenger Walter Mondale each accepted $40 million in public funds.

The next crack in the wall constructed by reformers came in the 1990s, after a series of FEC rulings led to the rise of unlimited “soft money” donations to parties, an atmosphere that spurred several major financing scandals during Bill Clinton’s presidency. Reformers pushed back again in 2002 with a major campaign finance law sponsored by Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.), which banned unlimited donations to parties, imposed new restrictions on ads and attempted to limit the impact of self-funding millionaire candidates.

Many of the McCain-Feingold provisions, however, were struck down in a series of decisions culminating in the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission , which jettisoned a long-standing ban on corporate and union spending on elections. The court ruled 5 to 4 that corporations had the same rights as people when it comes to political speech, upending restrictions on election spending by businesses that stretched back a century.

‘Brought back to life’

The rulings have led to a proliferation of super PACs and other groups and have made it easier for wealthy individuals to spend unlimited money on politics.

“The pieces that created the Watergate scandal — secret money, unlimited donations — have been brought back to life by the Citizens United decision,” argues longtime activist Fred Wertheimer, who helped draft many of the reforms put in place in the 1970s. “The Supreme Court’s idea that you can let all this money into the system without leading to corruption is absurd.”

The long-running debate has been complicated by shifting politics and allegiances. Those in favor of more restrictions on campaign spending now tend to be Democrats, who have been pushing unsuccessfully to enact new disclosure laws for secretive nonprofits and other reforms. Leading Republicans, meanwhile, have adopted a no-regulation posture: Senate Minority Leader Mitch McConnell (Ky.) said last week that Obama’s push for broader disclosures amounted to a “Nixonian” attempt to intimidate conservatives.

But 40 years ago, the lines were scrambled, and many proponents of fewer restrictions came from the left. Joel M. Gora, now a professor at Brooklyn Law School, worked with the American Civil Liberties Union to help advocacy groups resist donor disclosure requirements and was on the legal team that rolled back many restrictions in Buckley.

Gora views Citizens United and other anti-regulation decisions as victories for free speech and says that many regulations are part of an “incumbent protection racket” aimed at quashing dissent. One of the plaintiffs in Buckley was Eugene McCarthy, whose insurgent Democratic presidential bid in 1968 was heavily funded by six-figure donations from antiwar donors.

“These laws are restricting outsiders, whether liberal or left-wing outsiders or conservative and right-wing outsiders,” Gora said. “The difference between the Adelsons of today and the people who wanted to support Gene McCarthy is really just a matter of the amount.”

 

Research editor Alice Crites contributed to this report.

© The Washington Post Company

Los Angeles Times: Justices may take up Montana campaign finance case addressing two-track system

Wednesday, June 13th, 2012
Citizens United and an appeals court ruling created a two-track campaign funding system favoring the wealthy. Now the Supreme Court is being asked to hear a Montana case to address some of the issues.

Los Angeles Times

When the Supreme Court ruled that corporations had the right to political free speech, it set loose a tidal wave of campaign money that helped elect a new Congress in 2010 and is now reshaping the presidential race.

But the impact of the Citizens United decision has been as surprising and controversial as the ruling itself. Although the high court’s 5-4 decision is best known for saying that corporations may spend freely on campaign ads, the gusher of money pouring into this year’s campaigns has mostly not involved corporate funds. And some of the practices that critics of the decision decry actually stem from a separate case decided by a U.S. Court of Appeals after the Citizens United ruling.

The rise of “super PACs,” which may raise and spend unlimited amounts so long as they do so independently of a candidate, has allowed close aides to candidates to set up supposedly independent committees that have raised huge amounts, primarily from wealthy individuals. The PACs have spent most of their money on negative ads attacking the opposition. That unlimited fundraising was set in motion by Citizens United, but came to full flower after the subsequent Court of Appeals decision.

By design or happenstance, a two-track campaign funding system has been created: One features small donors and strict regulation; the other exists for the very wealthy, who are largely freed from regulation.

Exasperated defenders of the campaign funding laws see the Citizens United decision as a historic blunder that has all but destroyed not just the 1940s limits on campaign spending by corporations and unions, but the post-Watergate reforms as well. This week, which marks the 40th anniversary of the Watergate break-in, they are asking the justices to reconsider the Citizens United ruling by taking up a case from Montana that raises some of the same issues.

Fred Wertheimer, a champion of the campaign funding laws, says the Citizens United decision has “fundamentally undermined our democracy and is taking the nation back to the system of ‘legalized bribery’ that existed in the robber baron and Watergate eras.”

The Supreme Court meets behind closed doors Thursday to discuss the Montana case. But the five justices who supported Citizens United, led by Justice Anthony M. Kennedy, are not likely to agree with the critics. They believe the 1st Amendment fully protects independent spending on campaigns and that more public speech and debate on politics is a plus, not a minus.

But they may be concerned over how political spending has shifted away from candidates and political parties and toward new outside groups.

Before 2010, political action committees were common. They allowed like-minded people — including a company’s employees — to contribute as much as $5,000 each to spend on candidates or campaigns. But in March of 2010, two months after the Citizens United ruling, the contribution lid was lifted.

The U.S. Court of Appeals in Washington, citing the 5-4 opinion, reasoned that since the 1st Amendment guaranteed the right to unrestricted “independent” spending on politics, PACs should have the right to collect unlimited sums, so long as they too were independent.

Thus, the parallel system was born.

Congress had set limits on individual contributions after the Watergate scandal, and they remain in effect today. A person who wants to contribute to the campaigns of President Obama or Mitt Romney, his Republican challenger, may give no more than $5,000 this election cycle. But those who have a million dollars to spend can send their money to a super PAC supporting Obama or Romney. Restore Our Future, a super PAC supporting Romney, has at least 16 donors who have given more than $1 million.

“The real impact of Citizens United,” said Columbia University law professor Richard Briffault, has been to legalize “the unlimited use of private wealth in elections…. You haven’t seen nearly as much business or corporate money as people expected. Most corporations are not eager to be involved in an obvious ways.”

Super PACs must disclose their donors, but those who wish to maintain their anonymity can do so through the not-for-profit groups and trade associations that do not disclose their donors. “More than $120 million in anonymous funds was spent to influence the 2010 elections,” the Campaign Legal Center reported. That number is expected to be far higher in 2012, the group said.

Most companies that have given directly from their corporate treasuries to super PACs are privately held.

The Citizens United issue returned to the high court because of an unusual rebellion in the West.

The Montana Supreme Court refused to strike down its state ban on election spending by corporations. Its judges cited Montana’s history of “copper kings” who bribed legislators.

Indiana attorney James Bopp, who started the Citizens United case, appealed and urged the justices to straighten out the recalcitrant state judges. Defenders of campaign funding laws, including Sen. John McCain, launched their own attack on what they say are errors and “faulty assumptions” in the Citizens United opinion.

Although the high court turns down 99% of appeals, no one expects the Montana appeal to be denied.

The justices could write a summary opinion this month explaining why Citizens United was right — or hear the case in the fall and reconsider whether indeed a mistake was made.