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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

Emory Wheel: Media and Super PACs Dominate Our Political Discourse

Wednesday, March 28th, 2012

In our time, the best advice to give someone looking to make a difference in the nation’s political discourse would be to not seek elected office and stay out of politics. With the advent of Super PACs and a 24-hour news cycle, pundits and political agencies have more influence than Congress itself.

Emory Wheel

In the words of comedian Robin Williams: “Politicians should wear uniforms like NASCAR drivers so we can identify their corporate sponsors.”

Gallup.com has consistently rated congressional approval around 12 percent for the past several months and for good reason — it doesn’t get anything done. Last summer’s debt ceiling debate, stalling the American Jobs Act and preventing members of Congress from participating in insider trading are only a few examples of the impotence of the legislative branch.

Even in the 111th Congress, which passed the American Recovery and Reinvestment Act of 2009, the Lilly Ledbetter Fair Pay Act of 2009 and the Patient Protection and Affordable Care Act (PPACA), required 60 votes in the Senate to even debate the passage of a bill.
This is certainly not a recent development, but what has become increasingly relevant are the rise of political organizations that lack transparency, as they are fueled by anonymous donors, as a result of the disastrous Supreme Court’s Citizens United decision.

Although Super PACs are prohibited by law from aligning with a particular candidate, it is no secret that there is a definite connection between candidates and the innocuous-sounding money machines that put our nation’s interests in the hands of the wealthy few.

Winning Our Future supports the imminent bust of Newt Gingrich’s candidacy, Restore Our Future is the Super PAC funding Mitt Romney’s future “restoration” of his ever-changing political opinions, the Red White and Blue Fund pulls in the green for Santorum and Revolution PAC appears to back Ron Paul’s ash heap candidacy.

The irony of Super PACs in the Republican primaries is that with as much money and power they control, they prop up a band of misfits who are clearly unable, with the potential exception of Romney, to make the White House their next place of residence. If the Republican National Convention is split in Tampa this August, it will likely be because of the many nameless individuals controlling Super PACs.

Following the theme of centralized power and individuals pulling the political strings from behind the curtain are people like Grover Norquist who is unfamiliar to most Americans despite being called, by many, the most powerful man in Washington. His often-overlooked role is his so-called Taxpayer Protection Pledge, which binds 238 Representatives and 41 Senators, and in effect, the rest of Congress from ever raising taxes despite support from the majority of Americans to do so. The punishment for breaking the pledge is conservative uproar, but the consequence for following through with it is fiscal irresponsibility and denying the reality that taxes occasionally need to be raised.

The problem exists not only for conservative causes, but also with people like George Soros funding liberal organizations and several democratic congressmen across the nation. Organizations like the Human Rights Campaign that fights for gay rights, though a noble cause, have gained considerable influence in recent years.

And if controlling the money in elections isn’t enough, the media is also drastically more powerful than Congress. Although they use completely different tactics, Fox News and people like Jon Stewart or Stephen Colbert do more to shape public opinion than just about anyone in the country, and their viewers have more trust in them than their elected officials.

Fox News, in particular, has done a fantastic job to blur the line between quasi-pundits and quasi-politicians with Sarah Palin, Mike Huckabee and Karl Rove as contributors. This is particularly troubling considering that the rule of thumb for these talking heads is to make the most outlandish statements in order to have better ratings.

If the argument that individuals who do not hold public office have more power than those on Capitol Hill is not clear enough, consider the last time any lawmaker received more attention for legislating than did Rush Limbaugh’s recent comments about Georgetown Law student Sandra Fluke or the last time a lawmaker received more attention for legislative efforts than for controversy.

In the current political system, money and the media have managed to tilt power in favor of the few and the result is a Washington that works for special interests, rather than special interests working for Washington, let alone Washington working for its constituents.

New York Times: Loose Border of ‘Super PAC’ and Campaign

Saturday, February 25th, 2012

The fantasy that candidates and their campaigns are not effectively coordinating with SuperPACs should be very clear from this NY Times report.

Both parties are spending record amounts of money, from disclosed and undisclosed donors as they hide behind an impotent Federal Elections Commission.

New York Times

When Mitt Romney’s presidential campaign needs advice on direct mail strategies for reaching voters, it looks to TargetPoint Consulting. And when the independent “super PAC” supporting him needs voter research, it, too, goes to TargetPoint.

Sharing a consultant would seem to be an embodiment of coordination between a candidate and an independent group, something prohibited under federal law. But TargetPoint is just one of a handful of interconnected firms in the same office suite in Alexandria, Va., working for either the Romney campaign or the super PAC Restore Our Future.

Elsewhere in the same suite is WWP Strategies, whose co-founder is married to TargetPoint’s chief executive and works for the Romney campaign. Across the conference room is the Black Rock Group, whose co-founder — a top Romney campaign official in 2008 — now helps run both Restore Our Future and American Crossroads, another independent group that spoke up in defense of Mr. Romney’s candidacy in January. Finally, there is Crossroads Media, a media placement firm that works for American Crossroads and other Republican groups.

The overlapping roles and relationships of the consultants in Suite 555 at 66 Canal Center Plaza offer a case study in the fluidity and ineffectual enforcement of rules intended to prevent candidates from coordinating their activities with outside groups. And there has been a rising debate over the ascendancy of super PACs, which operate free of the contribution limits imposed on the candidates but are supposed to remain independent of them.

In practice, super PACs have become a way for candidates to bypass the limits by steering rich donors to these ostensibly independent groups, which function almost as adjuncts of the campaigns.

While insisting that the tangle of connections does not violate any laws, Alexander Gage, TargetPoint’s founder, said he understood how it could look “ridiculous.” His own firm had taken steps, he said, to prevent improprieties, including erecting “a fire wall” separating employees who work for the Romney campaign and the super PAC.

“We go to great lengths to make sure that we meet all legal requirements,” he said. “I have removed myself personally from working on either Restore Our Future or Romney stuff because of this sort of potential conflict of interest.”

The prohibition against candidates working in concert with independent political committees has its roots in Watergate-era reforms intended to prevent large donors from gaining improper influence over elected officials. But it has taken on added significance in the wake of recent court decisions that opened the spigot for unlimited contributions to the independent groups.

Super PACs have collected more than $100 million so far, much of it from a relatively small collection of well-heeled individuals or companies who are free to give millions to these outside groups but no more than a few thousand dollars to a candidate’s own committees. Those unlimited contributions are fueling a barrage of negative advertising in the Republican primaries.

But while the Federal Election Commission has established elaborate, though narrow, guidelines for determining whether the creation of a specific campaign advertisement violates the coordination ban, it has not focused on other kinds of activities between all PACs and candidates. Rules the commission adopted in 2003, still on the books, allow for regulation of this gray area, but they have been largely ignored.

“Most of the focus so far has been on the ads, but there may be a lot of other activity that is being coordinated between the campaigns and the super PACs that could be seen as resulting in a benefit to the campaign,” said Lawrence M. Noble, a campaign-finance lawyer at Skadden, Arps and a former general counsel for the election commission.

The regulations on coordination include a general prohibition on expenditures “made in cooperation, consultation or concert with, or at the request or suggestion” of candidates and their representatives. The commission’s records show that when devising this rule, it turned aside pleas from political groups to limit enforcement only to ads, saying such a narrow focus was not what Congress intended.

Nine years later, however, there is little evidence that the commission has followed through on this intent.

The commission, made up of three Republicans and three Democrats, has long been divided along partisan lines on how far to go in enforcing rules on coordinated expenditures, often resulting in paralysis.

Last fall, the commission was asked by American Crossroads if it could broadcast certain ads, “fully coordinated” with a candidate, who would be consulted about the script and appear in the advertisement. The group argued that it would not be improper as long as the ad ran outside of a time window established by the commission for “electioneering communications.”

The commission deadlocked and could reach no conclusion.

“The campaigns know the F.E.C. isn’t going to enforce the law, and so they’ve decided to do whatever they want,” said Fred Wertheimer, whose watchdog group, Democracy 21, has complained to the Justice Department about the lack of enforcement. “What is going on is just absurd.”

The commission declined to comment for this article.

From the start, there has been no doubt that the super PACs are closely entwined with the candidates they support.

Priorities USA Action, which supports President Obama, was formed by two former White House aides, and Obama administration officials are helping it raise money. A former top aide to Newt Gingrich helps run a pro-Gingrich super PAC, Winning Our Future. And Foster S. Friess, a major donor to Rick Santorum’s super PAC, often travels with the candidate.Mr. Romney has often blurred the distinction between his campaign and Restore Our Future. Last summer, discussing a large donation to the super PAC by one of his former business partners, Mr. Romney characterized it as a donation to himself. He appeared at a fund-raiser for Restore Our Future and has publicly encouraged people to donate to it.

Campaign spending reports filed by both the super PAC and the Romney campaign shed additional light on just how closely interconnected the two entities are.

Restore Our Future, for example, has paid TargetPoint Consulting nearly $350,000 for survey research. Meanwhile, the Romney campaign has paid TargetPoint nearly $200,000 for direct mail consulting. In one instance, the campaign and the super PAC paid TargetPoint on the same day.

Mr. Gage, a senior strategist in Mr. Romney’s 2008 campaign, is married to Katie Packer Gage, a deputy campaign manager of the current Romney campaign. The campaign has paid her firm, WWP Strategies, nearly $250,000 for strategy consulting.

Both of their companies share an office suite with the Black Rock Group, a political consulting firm co-founded by Carl Forti, who worked as political director for Mr. Romney’s 2008 campaign and helps direct Restore Our Future. The super PAC has paid Black Rock about $21,000 for communications consulting.

Mr. Forti declined to comment. Mr. Gage said that his firm had a separate work space from Black Rock, divided by a conference room. “It’s not like we’re a commingled office,” he said.

His wife’s office for WWP Strategies is in the same area as TargetPoint’s, he said, but she has been working out of the Romney headquarters in Boston for the most part. Mr. Gage said they do not discuss the campaign.

Gail Gitcho, a spokeswoman for the Romney campaign, said the campaign followed both the letter and the spirit of the law on coordination.

“We know the law,” she said, “and we abide by it scrupulously.”

The spending reports suggest that the Romney campaign and the super PAC, if not coordinating, have been closely following each other’s fund-raising events, though Ms. Gitcho emphasized that no joint fund-raisers had been held.

Last summer, the super PAC and the Romney campaign employed Creative Edge Parties, a New York catering company, and each sent it a payment on the same day: the super PAC gave a check for $1,676 for a “fund-raising event,” while the Romney campaign sent $1,584 for “facility rental/catering services.”

On another occasion, Restore Our Future paid $1,500 as a fund-raising expense to the Waldorf Astoria in New York, where the Romney campaign held a fund-raiser in December. Around the same time, the Romney campaign paid the Waldorf $19,000 for “facility rental/catering services” and lodging.

And in mid-July, Restore Our Future wrote two checks to Sandie Tillotson, a cosmetics executive and a friend of Mr. Romney, reimbursing her for “event costs,” which appear to be associated with a fund-raiser held in her apartment on the top floor of the north tower of the Time Warner Center in Manhattan. Several weeks later, the Romney campaign also sent a check to the residential board of Ms. Tillotson’s building, which is home as well to the Mandarin Oriental hotel, for “facility rental/catering services.” (The campaign had a fund-raiser at the hotel on July 19.)

The overlapping connections of American Crossroads, the independent group tied to Karl Rove, with the Alexandria office suite are likely to draw more scrutiny in the general election, should Mr. Romney win the nomination. Mr. Forti is the group’s political director, and Crossroads is expected to be a big player in November.

While American Crossroads has not officially endorsed a candidate, it has been seen by some as tacitly supporting Mr. Romney. It issued a memorandum last month defending his electability in the face of attacks by the Obama campaign. That was soon followed by another, saying its earlier note “probably should have been clearer” that the group remained neutral in the Republican primaries.

Fox News: Battle of the billionaires — Super PACs offer chance for high rollers to sway 2012 race

Sunday, February 12th, 2012

Fox News joins the mainstream media in recognizing the flow of campaign money from a select group of wealthy individuals.

Fox News

If the American presidential system were boiled down into a Las Vegas casino game, “Super PAC” betting would be placed exclusively in the high-stakes room. 

The Super PAC system, a product of recent Supreme Court rulings, allows unlimited donations for political causes. And recent federal disclosure forms reveal the people behind them are the whales of the campaign trail — putting up donations frequently in excess of a quarter-million dollars. 

For the first time, voters are getting a glimpse at who’s funding the previously opaque organizations boosting the presidential candidates’ campaigns with outside spending. 

Mitt Romney, not surprisingly, has a slew of investment titans — including former colleagues at Bain Capital — pumping money into the Super PAC supporting his campaign. Newt Gingrich enjoys high-powered support out of Vegas. Ron Paul is being indirectly funded by the co-founder of PayPal. Rick Santorum’s Super PAC is backed mostly by two people. And President Obama’s Super PAC is kept well-heeled by Hollywood and union support

The nature of the donations is a world apart from the traditional campaign finance of presidential campaigns themselves — for which individual donations are capped at $2,500. 

In the world of Super PACs, $2,500 makes for a modest starting point. Donors routinely put up $100,000 and up in support of the campaign committee of their choice. And a relatively small number of high-dollar contributors are involved. 

No Super PAC better exemplifies the unbound financial potential of the new system than Romney’s group Restore Our Future

According to end-of-year filings with Federal Election Commission, the pro-Romney committee has raised more than $30 million, from just 282 donors. The average donation tops $100,000, and the fund is backed by plenty of high-rollers. 

At the top are donors like Robert Mercer, an executive at hedge fund firm Renaissance Technologies; John Paulson, president of hedge fund Paulson and Co.; Julian Robertson, founder of hedge fund Tiger Management; Paul Singer, founder of Elliott Management Corp.; and Edward Conard, a former Bain colleague. All put up $1 million apiece. 

J.W. Marriott Jr., chairman of Marriott International, also contributed $500,000, as did Richard Marriott, chief of Marriott offshoot Host Hotels & Resorts. 

By law, these campaign committees cannot coordinate with the presidential campaigns themselves or directly fund them. This catch explains why, when Romney and other candidates are challenged on Super PAC-funded ads, they note that their campaigns had nothing to do with the production. 

But they are surely aware, and the Super PACs serve a blunt purpose. 

According to a study by the Center for Responsive Politics, Restore Our Future has spent $17 million in opposition to Gingrich – in large part through advertising. 

The other Super PACs don’t have nearly as much money, but nevertheless serve as a potent tool for the candidates. 

Winning Our Future, a pro-Gingrich group, has been backed by Texas businessman Harold Simmons. The group reported raising over $2 million at the end of the year, from just 18 people

More recently, and subsequent to the 2011 filing period, Las Vegas casino magnate Sheldon Adelson drew headlines for putting up $5 million for the Gingrich Super PAC. His wife reportedly followed suit with another $5 million. 

In Paul’s corner is the Endorse Liberty group, which reported about $1 million raised for 2011. The group is supported almost exclusively by Peter Thiel, a hedge fund manager who co-founded PayPal. 

Santorum’s Red White and Blue Fund has raised slightly less than Paul’s Super PAC. That, too, is backed by a handful of supporters, including wealthy investor Foster Friess and John Templeton Jr., son of philanthropist John Templeton. 

And the pro-Obama Priorities USA Super PAC has raised a total of $4.4 million as of the end of 2011. About half of that came in the form of a $2 million donation from DreamWorks Animation CEO Jeffrey Katzenberg. Steven Spielberg also threw in $100,000

Those five groups are just a slice of the national Super PAC pie, though they account for much of the money raised. According to the Center for Responsive Politics, 318 groups have raised nearly $99 million as of early February. They’ve spent nearly $47 million in the 2012 cycle. 

The campaign finance free-for-all has raised pressing questions all along about whether the new system is a boon for free speech — speech, that is, in the form of monetary donations and ads — or a barrier for candidates who might not have the behind-the-scenes support of such wealth

Gingrich, despite the support of his Las Vegas benefactors, has complained that the glut of negative advertising by Romney’s supporters has damaged his candidacy. 

In Congress, House Democratic Leader Nancy Pelosi and others are pushing for a new bill that would, among other provisions, require TV ads to name top donors. 

Yet Obama’s campaign this past week seemed to embrace the new Super PAC reality. The campaign said Obama officials would speak at Priorities USA events. 

Romney reportedly has sanctioned the same kind of interaction.

Huff Post: ‘Campaign Finance Scandal’ At FEC: Reform Groups Call For Obama To Step Up

Monday, November 7th, 2011

President Barack Obama has been criticized before for failing to live up to promises made in his 2008 campaign on such issues as pharmaceutical prices, climate change and medical marijuana. On Thursday, campaign finance reform advocates jumped in with another unfulfilled promise.

Huffington Post

Six organizations that support campaign finance regulation — Democracy 21, Campaign Legal Center, Public Citizen, Common Cause, League of Women Voters and U.S. PIRG — held a Capitol Hill press conference to urge the president to appoint new commissioners to fill the seats of five Federal Election Commission members whose terms have expired. The commissioners continue to serve until new appointees are confirmed by the Senate, even when their terms have officially expired. The groups also sent a letter to the White House.

“The FEC is itself a national campaign finance scandal,” said Democracy 21 President Fred Wertheimer at the press conference. “The FEC is a dysfunctional agency that refuses to enforce the campaign finance laws. We call on Obama to nominate new commissioners.”

In recent years, the six-member commission has grown increasingly polarized and gridlocked, according to data provided by the reform groups. At least four commissioners must vote to approve a new rule. If the FEC splits 3-3, no rule is adopted. Tied votes accounted for nearly 30 percent of all rule-setting votes in 2010, up from 11 percent in 2003.

Tied votes have prevented the commission from adopting rules to govern spending and disclosure by independent groups in the wake of the Supreme Court’s 2010 ruling Citizens United v. FEC, which opened the door to unlimited corporate and union spending on independent election activities. The FEC has also enacted regulations that opened holes in disclosure laws. In a 2007 advisory opinion, the commission allowed independent groups running election ads to hide the identity of the donors behind the ads.

The 2007 ruling led undisclosed campaign spending by independent groups to jump from 1 percent of outside-group spending in 2006 to 25 percent in 2008, according to the Center for Responsive Politics. The failure of the FEC to issue rules on disclosure by independent groups following the Citizens United decision led that number to jump to 43 percent of all independent spending.

“The Supreme Court has made our campaign finance system bad, but the FEC has made it much, much worse,” said Paul S. Ryan, counsel for the Campaign Legal Center. “The president should follow through on his promise and appoint FEC commissioners who will enforce the law.”

Wertheimer pointed out that candidate Obama stated in 2007, “As president, I will appoint nominees to the commission who are committed to enforcing our nation’s election laws.”

“President Obama has failed to meet his public commitment,” Wertheimer said. “[He] can no longer sit on the sidelines as the FEC scandal continues to grow.”

Craig Holman, legislative representative for Public Citizen, explained that the current FEC gridlock stems from the opposition to campaign finance laws by Senate Minority Leader Mitch McConnell (R-Ky.). The FEC is a bipartisan commission with three Democratic and three Republican members. McConnell, as the Republican leader in the Senate, is accorded the privilege of picking the Republican commissioners.

“[McConnell] has figured out that the way he can [block campaign finance law] is by appointing people to the FEC who will not enforce the law,” Holman said.

Holman further argued that the president should end the deference given to the leaders of the Senate in appointing commissioners and should himself name all five nominees for the seats held by commissioners serving expired terms. “I’d ask the president to fix this and go back to the constitutional process,” Holman said.

Even if Obama were to submit five nominees to the Senate for confirmation, McConnell could still stand in the way if those appointments were not to his liking.

“That’s a battle that has to be fought out. You just can’t sit here and let a national scandal grow and grow and grow,” Wertheimer said. “The American people should know that the Senate and Sen. McConnell will not let this national scandal be solved.”

 

Bloomberg: Secret Cash Baiting Officials Leaves No Trace in U.S. Attack Ads

Monday, October 24th, 2011

We have oceans of cash entering the campaigns with no accountability.  All in the name of free speech.  And tax free to boot!

Bloomberg

Spending Climbs

The outside groups operate independently of individual candidates’ campaigns and of the Democratic and Republican parties. At the same time, they are often set up and run by people with close ties to the political organizations.

Spending reported to the FEC by independent committees rose four-fold to $305 million during the 2009-2010 election cycle from the 2005-2006 period, about half of it from secret donors. That was almost a 10th of the total of $3.7 billion spent on the election, according to the Center for Responsive Politics, a Washington nonprofit that tracks data reported to the campaign monitoring agency.

That amount may understate the organizations’ impact on the last election by 50 percent or more. Media purchases by independent groups exceeded $450 million, estimated Kenneth Goldstein, president of Arlington, Virginia-based Campaign Media Analysis Group, a unit the advertising company WPP Plc. (WPP) The total may have been as high as $560 million, according to the Campaign Finance Institute, a Washington nonprofit.

Disclosure Gaps

The figures differ because a significant portion of these groups’ ad purchases didn’t count as political under the rules of the FEC. The agency requires that independent committees report as campaign spending those ads that explicitly urge a vote for or against a particular candidate. They also have to disclose buying commercials that identify a candidate and run within 60 days of a general election or within 30 days of a primary. This means many ads about policy issues that are critical of candidates don’t have to be reported.

The flood of secret cash buying politically oriented advertising will only increase and will lead to scandal, said the Committee for Economic Development, a group of business leaders and university professors, in a report last month. Spending normally jumps in a presidential election year.

‘Most Expensive Campaign’

“This will be the most expensive campaign in American history,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California in Los Angeles. The independent groups “are going to be funded at greater levels than the candidates’ own campaign committees. That means the candidates’ voices, particularly in campaigns for Congress, are going to be drowned out.”

The fundraising goals of two of the biggest committees backing Republicans have surged. Crossroads GPS and its sister group, American Crossroads, doubled their initial target to $240 million, after raising $71 million last year. The organizations were founded by Karl Rove, the White House political adviser to President George W. Bush, and Ed Gillespie, a former chairman of the Republican National Committee.

While it’s too soon to project the impact on voting in 2012, research shows negative commercials have staying power, said John Petrocik, a political science professor at the University of Missouri in Columbia. Attack ads now, he said, are “creating a backdrop, a drumbeat that is simply going to get louder.”

‘Long-Range Artillery’

“That’s your long-range artillery, the preparatory barrage that’s raising the salience of something you are going to come back to,” Petrocik said. “People are going to remember it because it’s been around so long.”

The independent groups say the broadcast messages are part of their mission to inform voters about public issues or hold elected officials accountable. For example, Crossroads GPS, organized as a tax-free “social welfare” group under the U.S. tax code, said its mission is educating Americans on “critical economic and legislative issues,” according to its website.

Many of the ads this year have been by nonprofits that back Republicans, including the Crossroads groups, the Iowa-based American Future Fund and 60 Plus Association, an advocate for the elderly that favors privatizing Social Security, ending traditional Medicare and repealing the estate tax.

Some tax-exempt groups that favor Democrats have broadcast ads attacking Republican House members this year. Washington- based Americans United for Change aired a television spot in April criticizing Republican Representative Chip Cravaack of Minnesota for voting “to end Medicare.”

‘Way Ahead’

In July during the debt ceiling debate, Moveon.org Civic Action ran radio ads in three Republican districts. With a siren in the background, the spot depicted the members “holed up” inside, “holding the economy hostage.”

“By expenditures, we can see conservative groups are ahead,” said Sheila Krumholz, executive director of the Center for Responsive Politics. “By news reports, we hear that conservative groups are in fact way ahead.

“But in the end we don’t really know,” Krumholz said. “We just know that there’s spending happening now, aimed at elections, and a lot of it will never be reported.”

Crossroads GPS, American Future Fund, Americans United and Moveon.org Civic Action are all set up as tax-exempt “social welfare organizations” under Section 501(c)(4) of the Internal Revenue Code. The U.S. Chamber of Commerce, which also supports conservative candidates, is a tax-free nonprofit trade association under Section 501(c)(6). Groups in both categories can raise unlimited amounts from companies, unions and individuals without identifying donors.

Super PACs

American Crossroads is covered by a different provision of the tax code, Section 527, applying to tax-exempt political organizations. It is now known as a super PAC, for political action committee, and can accept unlimited donations from any source. Super PACs have to disclose the names of donors to the FEC. Supporters of Obama and several Republican presidential candidates also started super PACs.

While Crossroads GPS founder Rove declined to be interviewed for this story, he appeared on Fox television in June to discuss the start of a $20 million ad campaign on Obama’s economic record. The messages blamed the president for increases in unemployment, national debt and gasoline prices.

Interviewer Juan Williams asked Rove whether the group’s supporters could ‘live with” a Republican nominee like Representative Michelle Bachmann of Minnesota.

‘Primary Activity’ Rule

“Look, we’re focused on doing what we can to hold the Republican House, to create a Republican Senate and to replace President Obama,” Rove said. Primary voters will pick the nominee, he said. “It’s our job to lay the foundation for a Republican victory in the fall of 2012.”

Jonathan Collegio, a spokesman for Crossroads GPS, said Rove’s comment doesn’t conflict with the group’s tax-exempt status. Rove “informally advises” American Crossroads and Crossroads GPS and was responding to a political question, Collegio said.

Nonprofits under Sections 501(c)(4) and 501(c)(6) can’t have political campaigning as their “primary activity,” according to the tax code.

To keep its tax-exempt status and avoid penalties, Crossroads GPS needs to spend more than half its resources on “issue and policy advocacy” that isn’t “political intervention” under IRS rules, according to an Oct. 10, 2010, legal memo prepared for the organization by Tom Josefiak, a former FEC chairman. Crossroads GPS intends to allocate “much more” than that to “a sustained advocacy effort in furtherance of its ‘social welfare’ purpose,” according to the memo, which Crossroads GPS provided to Bloomberg.

IRS Enforcement

The IRS declines to say what it does to enforce the rule. In September, the campaign watchdog groups Democracy 21 and Campaign Legal Center asked the IRS to investigate the tax- exempt status of four groups that can accept unlimited donations without naming the givers. They include Crossroads GPS and Priorities USA, run by former Obama aides to back his re- election.

“These groups have little if anything to do with promoting social welfare and everything to do with electing and defeating candidates,” said Fred Wertheimer, president of Democracy 21. Spokesmen for the groups dismissed the complaint as frivolous.

Bloomberg: Secret Campaign Money Will Lead to Political Scandal, Group Says

Wednesday, September 28th, 2011

Executives from major corporations to unions expect that the unfettered flow of cash into elections will eventually lead to scandal.  They’re right.

Bloomberg

Undisclosed campaign money that began pouring into political groups during last year’s congressional elections will, without reform, only grow and lead to scandal, a group of business leaders and university professors said yesterday.

An estimated $500 million was spent to influence congressional elections in 2010 by non-profit groups, trade associations, labor unions and corporations with no trace of where the money came from or how it was used, according to the report by the Committee for Economic Development.
This lack of transparency poses a grave threat to our democracy,” concluded the report, which was signed by 32 business leaders and university professors, including representatives from Citigroup Inc., Avaya Inc. and Prudential Financial Inc.
The group says the Federal Election Commission watered down disclosure rules against the advice of the U.S. Supreme Court, opening new routes for secret money to get into elections. It is calling on Congress to pass legislation to require disclosure of all money spent to influence elections and discouraging its members from giving to such groups.
“The system we have now takes good men and women who are elected and corrupts them,” said Edward Kangas, the former chairman and chief executive officer of Deloitte Touche Tohmatsu, at a panel discussion yesterday about the committee’s reform proposal.
Executives from pharmaceutical companies Merck & Co. and Pfizer Inc., and from American Electric Power Co., also spoke at the event in support of more disclosure.
Citizens United
The Supreme Court, in a 2010 case known as Citizens United, allowed corporations and unions for the first time to spend unlimited money on ads advocating the election or defeat of a candidate.
In the decision, the high court expressed confidence that interested voters could easily discern the identities of those paying for campaign ads.
“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” Justice Anthony Kennedy wrote for the 5-4 majority.
Disclosure Requirements
The FEC, however, loosened requirements for disclosure of donors, making groups report the names of contributors only if they are paying for a particular ad, the group said.
The FEC, the agency responsible for implementing campaign finance law, has eviscerated the disclosure regulations applied to campaign advertising,” the report said. “Instead of promoting transparency, the agency has added a new element of secrecy in campaign finance.”
The risks to companies of publicly supporting a political candidate became clear immediately after Citizens United when Target Corp. made a $150,000 donation to MN Forward, a business advocacy group which in turn ran ads supporting a gubernatorial candidate who opposed gay marriage. Gay rights groups boycotted the company and Target CEO Gregg Steinhafel apologized.


That incident showed that “there’s a big risk for companies to go out and be so public politically,” said Barbara Bonfiglio, senior corporate counsel at Pfizer. “It’s just not a place that too many companies are going to be comfortable playing in.”
However, they may be comfortable if their donations aren’t made public, said Fred Wertheimer, president of Democracy 21, a Washington-based group that advocates for limits to money in campaigns.

Electioneering Communications
In the 2010 election cycle, 308 non-party groups reported spending money to influence voters, and only 166 of those reported where the money came from. The U.S. Chamber of Commerce, which reported $31 million in “electioneering communications” spending to the FEC, won’t name any of the companies or individuals who gave it the money.
Independent groups are already raising money for the 2012 elections, with their sights set even higher.
American Crossroads and Crossroads Grassroots Policy Strategies — created with support from Karl Rove and Ed Gillespie, former aides to President George W. Bush — set an initial goal to raise $120 million for 2012 and then doubled that target earlier this month.
They gathered $71 million in 2010, according to spokesman Jonathan Collegio. Crossroads GPS keeps its donor list secret.
Priorities USA and Priorities USA Action, two groups founded by Bill Burton and Sean Sweeney, former aides to President Barack Obama, are trying to raise $100 million to help keep the president in the White House.

Los Angeles Times: New GOP ‘super PAC’ tests limits of campaign finance laws

Tuesday, May 17th, 2011

James Bopp Jr., one of the lawyers who brought the watershed Citizens United case before the Supreme Court is taking his fundraising techniques to a new level

Los Angeles Times

As an independent expenditure-only committee, the group can raise unlimited funds from individuals and corporations to advocate for or against candidates.  These “super PACs” are banned from coordinating with candidates or parties.

But in a twist, Republican Super PAC will rely on candidates, elected officials and state and national parties to be the group’s fundraisers, asking them to tell donors who want to give more than the federally limited contributions to direct additional funds to the PAC. The PAC would then use the money to campaign on behalf of the candidates or parties that solicited the funds

Despite the questions that raises about the PAC’s independence, Bopp said the tactic was “perfectly legal.”

“It’s a legal outlet to raise money,” Bopp said. “Even though [candidates] cannot participate in [the PAC’s] spending of money in any way, the people that run the super PAC will use it to help advance candidates that Republicans support.”

Bopp created the PAC with two other members of the Republican National Committee, Roger Villere and Solomon Yue. They are presenting details of the project Wednesday to members of the committee, who are in Dallas for a party meeting.

Election law attorneys and campaign finance reform advocates said Bopp is treading onto legally shaky ground – a familiar position for the GOP attorney, one of the most zealous challengers of campaign finance restrictions.

A recent string of campaign finance court cases, including Citizens United, struck down parts of the landmark McCain-Feingold bill of 2002, which bans unlimited “soft money” contributions to political parties and prohibited federal officials and candidates from soliciting unrestricted funds.

The solicitation ban remains on the books, but now exists in a post-Citizens United gray zone.

Under McCain-Feingold, “a federal officeholder cannot solicit contributions in connection to federal elections unless the funds are subject to the limitations, prohibitions and reporting requirement of act,” said Lawrence Noble, former counsel to the Federal Election Commission.  “Now, contributions to independent expenditure committees are not subject to those limitations. That leaves the question of whether or not the federal officeholder is free to raise money for those committees.

“The FEC has not done anything to explain now what’s happened,” Noble added.  “We need someone to come out and interpret this.”

Bopp expressed no such uncertainty, opting not to seek an advisory opinion from the commission on the legality of his proposal.

“Money for a federal PAC is hard money. This is a federal PAC, so this is hard money,” Bopp said. “We don’t need to get permission of the FEC.”

Follett Library Resources: Publisher’s Pick

Wednesday, March 16th, 2011

The Follett Library Resources, the largest supplier of books, eBooks, and audiovisual materials to PreK-12 schools, has named “The Best Government Money Can Buy?” as one of their Publisher’s Picks.

Follett Library Resources

 

Los Angeles Times: Secret campaign ad financing in offing as FEC is deadlocked

Monday, February 28th, 2011

Senator Mitch McConnell (R – KY) doesn’t believe that campaign donors should be identified.  The Federal Election Commission is split 3-3 so there will be no enforcement of the disclosure laws already on the books and upheld within the Supreme Court’s Citizen’s United decision.

The 2012 Presidential campaign is going to be a wild one.

Los Angeles Times

Last year, in a landmark ruling, the Supreme Court said for the first time that corporations and unions had a constitutional right to spend unlimited sums on campaign advertising so long as it was independent of candidates or parties. At the same time, the court reaffirmed an existing federal law, which says that “all contributors” of $1,000 or more to an “electioneering communications” fund must disclose their identities to the FEC.

The justices said they foresaw a new era of corporate-funded ads combined with “effective disclosure” so citizens and shareholders would know who was paying for the messages. “This transparency enables the electorate to make informed decisions,” Justice Anthony M. Kennedy said.

But many independent political groups, especially those dedicated to electing conservative candidates, have taken the position that the disclosure law does not apply to them because their donors are unaware of exactly how their money will be spent. Last year, outside groups that were separate from candidates and political parties spent $294 million on campaign ads, four times more than in 2006.

Their interpretation has been challenged before the FEC. By law, the agency is governed by a six-member board with three Republicans and three Democrats. The commission is deadlocked, casting the disclosure provision into limbo as it applies to independent political groups.

Last month, Democrats on the commission proposed stricter disclosure rules, but the commission split 3 to 3.

Defenders of tight campaign finance laws are sounding an alarm.

Last year was a practice run. Enforcement of the disclosure rules has collapsed. And unless the FEC is fixed, the American public will be in the dark as to who is buying the White House and Congress,” said Craig Holman, a lobbyist for Public Citizen.

Several liberal advocacy groups sent a letter to Congress recently saying the FEC should be investigated as a “broken agency.” They also sent a letter to President Obama calling on him to fire the FEC commissioners and appoint new ones who will “break the deadlock” and enforce the law.

Obama’s options, however, may be limited. Senate Minority Leader Mitch McConnell (R-Ky.), a fierce critic of campaign finance laws, has insisted on GOP commissioners who share his views. Theoretically, critics could take the FEC to court, but such a case would be difficult and probably drag on for years.

The three Republicans on the commission dispute the need for new disclosure rules. They argue that Democrats in Congress failed to win passage last year of the so-called Disclose Act, which would have forced groups such as the U.S. Chamber of Commerce to name top donors behind political ads.

“It’s not the job of an unelected bureaucracy to write a new law,” said Commissioner Donald McGahn, formerly a lawyer for the National Republican Congressional Committee.

On the other side of the issue, Commissioner Ellen Weintraub, a Democrat, said the FEC had a duty to enforce the disclosure law already on the books. “People have the right to know who is paying for these messages,” she said. “Eight justices of the Supreme Court upheld that part of the law.”

The deadlock over disclosure marks an ironic twist for the agency, considering its history. The downfall of President Nixon revealed not just political dirty tricks but also how the flow of secret cash had bought favors in Washington. In 1974, a reform-minded Congress adopted strict limits on the funding of campaigns, along with disclosure requirements. Congress created the FEC to enforce the new law.

Fred Wertheimer, an advocate of tight election laws who played a role in creating the FEC, said he despaired of what it had become. “This is the worst I’ve ever seen it. It is by far the most dysfunctional and inoperative agency in Washington,” he said.