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July 22, 2014
It’s been a promising year for Republican women who have set out to fix their party’s “woman problem,” but not good enough for their bank accounts.
Republicans launched a new crop of super PACs, recruitment programs and messaging campaigns to boost the GOP’s female candidates and win over women who vote. The latest such effort, an unrestricted super PAC unveiled in June by former Hewlett-Packard CEO Carly Fiorina, cleared $1 million in its first four weeks.
“We cannot permit liberal orthodoxy to marginalize women or suppress their enthusiasm for our candidates,” declared Fiorina, chairwoman of the American Conservative Union Foundation, in the mission statement for her new Unlocking Potential Project. The Unlocking Potential PAC’s top donors last month were Marmik Oil Co. President Michael Murphy and his wife, Arkansas designer Sydney Murphy, who each gave $500,000. Full story
July 16, 2014
Opponents of big money in politics celebrated some small victories lately: A constitutional amendment to curb campaign spending cleared a key Senate committee and was introduced in the House. And a new “super PAC to end all super PACs” raised $5 million in a matter of weeks.
At first glance, such long-shot causes look inevitably doomed to fail. No one really expects two-thirds of Congress and three-quarters of the states to amend the Constitution in an area as disputed as campaign financing. And numerous super PACs bent on banning unrestricted money have come and gone in recent years, most of them now terminated.
But the latest campaign finance push, however impractical or constitutionally suspect, has tapped a well of voter anger that politicians ignore at their peril. Public disgust with Congress, which according to Gallup now enjoys a record-low 7 percent approval rating, may not impact this fall’s midterm elections. But as erstwhile House Majority Leader Eric Cantor discovered in his stunning loss in Virginia’s GOP primary, voter wrath over big money can exact a political price. Cantor’s primary opponent, tea party Republican Dave Brat, had made the majority leader’s cozy Wall Street and special interest ties a central campaign theme. Brat is now trumpeting the $400,000 he’s raised from small donors as evidence that he’s running a “campaign of the people.”
“People think you can’t win on the basis of this issue, and we want to say, ‘Actually, you can,’ ” said Lawrence Lessig, a Harvard Law School professor who on May 1 founded the Mayday PAC, a crowdfunded super PAC that will back congressional candidates committed to campaign finance changes. “And we want to do it in a way that surprises Washington, inside the Beltway.”
Lessig has already surprised himself and others by pulling in $1 million in the PAC’s first 13 days, then another $5 million by July 4. In an interview with CQ Roll Call, Lessig said he developed his own open source software to raise the money, since the popular Kickstarter crowdfunding tool lacked a platform for political donations. Mayday PAC has now raised $7.7 million of an anticipated $12 million once matching funds from large donors roll in, probably by the end of this month.
If Lessig hits his $12 million target, Mayday PAC will be among the top five highest-grossing super PACs in this midterm. The American Crossroads super PAC organized by GOP operative Karl Rove, for example, raised just $11 million through June 30 of this year, Federal Election Commission records show. Granted, the conservative super PAC’s social welfare affiliate, known as Crossroads GPS, appears to be raising and spending the largest share of the operation’s money in this election.
Still, Lessig’s anticipated $12 million haul is all the more noteworthy given how many super PACs formed with the aim of ending super PACs have fallen flat in recent years. A whole slew of do-gooder super PACs, many of them inspired by comedian Stephen Colbert’s super PAC contests and spoofs, sprung up in 2012. But virtually all of them, from Citizens Against Super PACs to No Dirty Money Elections, raised virtually no money and closed up shop within a year.
An exception is Friends of Democracy, a super PAC headed by David Donnelly, executive director of the Public Campaign Action Fund. That PAC raised and spent about $2.5 million in the 2012 elections, and managed to oust eight of the nine candidates it targeted for defeat. In this cycle, Friends of Democracy had raised $2.5 million through the second quarter, and will announce by the end of this month a new slate of state and federal candidates.
“There’s a tremendous amount of interest in it, and we’re very excited about the work that Mayday PAC and Larry Lessig are doing,” Donnelly said, noting the two PACs do not compete for donors and will coordinate their efforts. “There’s clearly an appetite for expanding this type of work.”
Lessig has generated media buzz and checks thanks in part to his public persona and promotional savvy. An author, progressive organizer and advocate of Internet deregulation, Lessig’s won backing from such Silicon Valley heavyweights as Apple co-founder Steve Wozniak and PayPal co-founder Peter Thiel. His crowdfunding model — donors were told they would get their money back if the PAC didn’t meet its targets in time — went viral to draw in 53,000 contributors.
The constitutional amendment push has also fueled surprising popular support. The amendment proposed by New Mexico Democrat Tom Udall in the Senate and introduced this week in the House by Rep. John B. Larson, D-Conn., flies in the face of more than one landmark Supreme Court ruling. Republicans deride it as a blatant First Amendment violation.
Some campaign finance experts cast the uphill amendment drive as an ill-advised distraction from more pragmatic changes. Lessig’s Mayday PAC, for one, is focused not on amending the Constitution but on such changes as matching small-dollar donations with public funding. Yet proposals to amend the Constitution are now backed by 16 states and 550 municipalities.
“People are really angry about what’s happening in our democracy,” said Margrete Strand, executive vice president of Public Citizen. The push for an amendment is something that average voters can “understand” and “grab onto,” she added.
To be sure, voters are notoriously fickle when it comes to campaign financing. Gallup’s latest polls on the topic found that half of voters support government funding of elections, and 79 percent support limiting campaign receipts and spending. But Democrats’ perennial assaults on big money have repeatedly failed to help them at the polls.
Lessig has set out to prove the issue can fire up voters as well as donors, and Mayday PAC will announce a slate of at least five federal candidates on July 21. Whatever the merits and demerits of various campaign finance schemes, voters will ultimately have the last word.
“The only way to prove this is to do it,” said Lessig. “We can have all sorts of polling and science and focus groups. But the thing that counts in Washington is victory.”
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
July 8, 2014
A trove of new public records recently opened up by the Federal Communications Commission sheds light on the ways undisclosed political ads are creating an underground midterm election that’s increasingly hidden from view.
It’s already well known that unreported political spending is rising, thanks in part to Supreme Court rulings that have nullified campaign finance limits on several fronts. As of April 30, undisclosed political spending was three times higher than at the same point in 2012, according to the Center for Responsive Politics.
But new FCC records, which on July 1 vastly expanded the number of TV stations that must post their political ad files online, offer concrete metrics to document what the Sunlight Foundation’s Kathy Kiely calls the nation’s “gross political product.”
“It really has demonstrated how incessant the advertising is, and how much ‘off-the-radar’ political advertising has been spent,” said Kiely, Sunlight’s managing editor.
The Sunlight Foundation played a lead role in urging the FCC to require full online disclosure of political ad buys. Long required on paper, the political ad files were first made available online in 2012 by the four major broadcast affiliates in the nation’s top 50 markets, about 230 stations. Now 2,000 stations are filing disclosures online, virtually a tenfold increase.
With the help of a new tracking tool, researchers at Sunlight and other investigative outfits have started poring over the disclosures. These show for the first time just how much political air time is being bought by organizations that don’t report their activities to the Federal Election Commission — typically tax-exempt social welfare and trade groups that need not reveal their donors.
Among Sunlight’s findings: In the North Carolina Senate contest between incumbent Democrat Kay Hagan and her GOP challenger Thom Tillis, 65 percent of the ads supporting Tillis or attacking Hagan were not reported to the FEC. That’s because the ads, aired on WBTV Channel 3 in the state’s most costly media market, consisted of “issue” messages that didn’t directly advocate for a candidate’s election or defeat.
“Here is one station in one race,” said Kiely. “And if that is indicative, it’s telling us that almost all the early money spent so far is outside money, and that the FEC — the agency set up to create campaign accountability after Watergate — is not seeing half the money that is going into the political system.”
It’s a measure of the trend toward underground political spending that the Crossroads operation launched by GOP strategist Karl Rove is heavily lopsided in this cycle toward its non-disclosing tax-exempt arm. The group’s American Crossroads super PAC and its social welfare arm, known as Crossroads GPS, have together spent and reserved air time for about $23 million worth of political ads over the summer and into the fall, according to news reports and to sources familiar with the organization.
But less than a third of that — $6.5 million — is being spent by American Crossroads, which reports its activities to the FEC. The majority, some $17.3 million, is being spent by Crossroads GPS, which is exempt from disclosure rules.
It’s all legal, because Crossroads GPS and other politically active tax-exempt groups are airing “issue” messages that ostensibly constitute advocacy, not election activity. But such ads can be awfully hard to tell from campaign ads.
One North Carolina spot by Concerned Veterans for America, a social welfare group heavily funded by the billionaire industrialists Charles and David Koch, spotlighted the scandal involving health care delays at the Department of Veterans Affairs. (Hagan has said she supports a bill to address the delays.)
The ad featured an ominous soundtrack, unflattering black-and-white images of Hagan and of President Barack Obama, and a voice-over intoning that Obama “won’t hold the VA accountable,” and that Hagan “can, but she’s done nothing, putting her loyalty to her party and the president ahead of America’s veterans.”
Advocates of the First Amendment argue that such ads are a form of constitutionally protected public education, and the donors behind them have a right to remain anonymous. Outspoken Republicans on Capitol Hill opposed the FCC’s move toward greater disclosure and regard the push for transparency as a move to silence political adversaries and tread on free speech.
But Kiely says the disclosures offer valuable information about the increasingly obscure world of election spending: “I think we know a little bit more about what we didn’t know. There are still too many obstacles between voters and the information they need to make informed decisions at the polls. But this is progress.”
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
July 2, 2014
In its recent ruling to confer religious liberties on closely held corporations, the Supreme Court makes no mention of its 2010 Citizens United v. Federal Election Commission ruling.
Yet the high court’s Burwell v. Hobby Lobby Stores ruling grows directly out of its Citizens United decision to reject limits on independent corporate political spending. And the 5-4 Hobby Lobby ruling deepens the rift on Capitol Hill between liberals agitating for limits on corporate power and conservatives railing against government intrusions on free speech.
Senate Democrats have already scheduled a vote on a constitutional amendment that would give Congress and the states the power to restrict political spending. Such an amendment directly challenges both Citizens United and the court’s landmark Buckley v. Valeo ruling, which in 1976 upheld limits on campaign contributions but found caps on political spending unconstitutional.
The Hobby Lobby ruling has stoked liberal anger over the court’s expanding “corporate personhood” doctrine, which critics on the left argue threatens a host of environmental, civil rights and consumer safety laws. Now some Democrats on Capitol Hill are considering additional amendments that go beyond campaign financing to more explicitly spell out that corporations are not people. Full story
June 24, 2014
Senate Democrats broadened their assault on unrestricted political money Tuesday, introducing a campaign finance disclosure bill that its authors said will be voted on this year.
Senate Majority Leader Harry Reid had already promised a vote on a constitutional amendment that would let Congress and the states curb political spending. Democrats now plan to also vote on the disclosure bill known as the DISCLOSE Act, which Republicans blocked via filibuster in 2010 and 2012.
“Since the Supreme Court’s disastrous Citizens United decision, a torrent of dark money has swept through our political system, giving corporations and billionaires the ability to buy and sell elections,” said Sen. Sheldon Whitehouse, D-R.I., at a Capitol Hill news conference. Whitehouse was joined by Senate Rules Chairman Charles E. Schumer, D-N.Y., and by Democratic Sens. Michael Bennet of Colorado, Richard Blumenthal of Connecticut and Elizabeth Warren of Massachusetts.
Whitehouse’s reintroduction of the DISCLOSE Act coincides with a multi-pronged push by Democrats and their allies off Capitol Hill to score political points by attacking unrestricted, “secret” political money. Reid levels assaults virtually daily on the billionaire industrialists Charles and David Koch, who have helped underwrite tens of millions in political spending by conservative tax-exempt groups that don’t publicly report their donors.
Senate Democrats are also holding a series of hearings on undisclosed political money and on New Mexico Sen. Tom Udall’s proposal for a constitutional amendment, which would challenge a string of Supreme Court rulings, including the 2010 Citizens United v. FEC ruling to overturn limits on independent political spending.
Republicans have rejected Democrats’ proposed constitutional amendment as a blatant free speech violation, and have launched their own public relations campaign to equate campaign finance disclosure with political intimidation. Asked about allegations that disclosure invites harassment, Whitehouse scoffed that “someone who has the capacity to spend tens of millions of dollars in an election to get their way” need not be “worried about being taunted.”
But Democrats’ first version of the DISCLOSE Act, introduced in 2010, drew fire not just from conservatives but from liberal activists who complained that it would curb constitutionally protected lobbying activities. Democrats narrowed the bill considerably in 2012, and that more-limited version of the DISCLOSE Act was the one reintroduced today.
Asked about Democrats’ own unrestricted political spending Tuesday, Whitehouse said “everyone should follow as much transparency as possible,” but that Democrats can’t “unilaterally disarm.” He added that liberal outside spending might actually help spur GOP support for disclosure.
Democrats at the news conference displayed on a poster board a list of Republican senators who have endorsed disclosure in the past, including Sens. Lamar Alexander of Tennessee; John McCain of Arizona; Mitch McConnell of Kentucky, the Senate GOP leader; Lisa Murkowski of Alaska; and Jeff Sessions of Alabama. Whitehouse also quoted aloud several pro-transparency comments from Republicans, including McConnell.
But the likelihood that Democrats will win GOP support for either their constitutional amendment or the recently-reintroduced DISCLOSE Act remain virtually nil. Tuesday’s press conference came on the heels of yet another politically charged hearing in the GOP controlled House, at which Republicans continued their attacks on IRS officials for mishandling IRS attempts to curb political activities by non-disclosing tax-exempt groups.
Mississippi’s bruising GOP Senate primary, which voters will decide Tuesday in a runoff (get live results here!), has come at great cost — more than $17 million — to Republicans.
More than 30 Republican-friendly outside groups, from Club for Growth Action to the U.S. Chamber of Commerce, have lavished in excess of $11.3 million on the race, according to the Center for Responsive Politics. That’s almost twice the $6.1 million spent by Sen. Thad Cochran and his tea party challenger, state Sen. Chris McDaniel.
Liberal groups have essentially sat out the Mississippi primary, rated a Safe Republican contest by the Rothenberg Political Report/Roll Call. As of early May, conservative groups had spent three times more attacking one another in primaries around the country than they had against Democratic candidates, according to an analysis by the Center for Public Integrity.
June 10, 2014
As Senate Democrats gear up for their third in a series of public hearings on the state of campaign finance, Capitol Hill can expect another made-for-TV performance that’s long on political theatrics and short on policy.
If last week’s Senate Judiciary Committee hearing is any indication, lawmakers and witnesses testifying Wednesday at the Judiciary Subcommittee on the Constitution, Civil Rights and Human Rights will put on quite a show.
At last week’s hearing, which focused as this week’s will on whether Congress should amend the Constitution to permit tighter campaign spending limits, Senate Majority Leader Harry Reid, D-Nev., predictably assailed the billionaire industrialists Charles and David Koch for what he called their “phony organizations.”
Sen. Ted Cruz, R-Texas, countered in ringing tones that the proposed amendment “would give Congress the power to ban books and to ban movies.” He promptly posted his public comments to YouTube in a video titled “Sen. Cruz speaks in opposition to repealing the First Amendment” that has more than 26,000 views.
Sen. Charles E. Schumer, D-N.Y., deplored Cruz’s “overheated rhetoric” and “hyperbole,” but the Texas senator and possible 2016 GOP presidential contender will only have a bigger megaphone this week. He’s the ranking Republican on the subcommittee that’s holding Wednesday’s hearing.
And as Senate Majority Leader Mitch McConnell noted in his rare joint appearance with Reid before the full Judiciary Committee last week, Democrats know full well that a constitutional amendment — which would require approval by two-thirds of both chambers of Congress and three-quarters of state legislatures — is dead on arrival.
“This is a political exercise, and that’s all it is,” McConnell told the Judiciary panel. “The goal here is to stir up one party’s political base so they’ll show up in November, and it’s to do it by complaining loudly about certain Americans exercising their free speech and associational rights, while being perfectly happy that other Americans, those who agree with the sponsors of this amendment, are doing the same thing.”
Indeed, Democrats are as much to blame as Republicans for the triumph of symbolism over substance in the increasingly polarized campaign finance debate. Both sides have staked out positions on either extreme in the long-running dispute over how to balance anti-corruption limits with First Amendment rights.
Having once endorsed full disclosure and even their own constitutional amendment — albeit one more limited than what Democrats now propose — Republicans have mounted a court challenge to one of the few remaining rules left in place, namely the cap on contributions to the political parties. GOP leaders and their conservative allies off Capitol Hill have also launched an aggressive campaign to discredit both the IRS and the Federal Election Commission, and to equate political disclosure with harassment and intimidation.
Democrats, for their part, have embraced an amendment that would dramatically reorder the campaign finance system and raises legitimate constitutional questions. On the surface, the amendment proposed by Sens. Tom Udall, D-N.M., and Michael Bennet, D-Colo., looks simple enough: It would authorize Congress and the states to limit contributions to candidates — something existing campaign finance laws already do.
But the amendment would also empower Congress to limit “the amount of funds that may be spent by, in support of, or in opposition to such candidates.” This flies in the face of the Supreme Court’s landmark 1976 Buckley v. Valeo ruling, which concluded that caps on campaign contributions are constitutional, but that limits on candidate political spending violate the First Amendment.
Lost in the grandstanding by lawmakers on both sides of the aisle is the opportunity to find middle ground on any number of common-sense campaign finance changes that would require no constitutional tinkering.
These include settling tough questions about how aggressively tax-exempt groups may engage in advocacy before they stray into political territory, an area that’s confounded the IRS and where the agency could clearly use some congressional guidance. Congress could also tackle whether the dysfunctional FEC should be overhauled or replaced with a new type of agency that might actually enforce the rules. Or members could work together to free up the state and national political parties to more effectively compete with unregulated outside groups.
Of course, no one expects either Republicans or Democrats to seriously tackle any of these issues. As Election Day approaches, the tit-for-tat over campaign spending versus free speech will only become more politicized. So far, at least, voters aren’t paying much attention. But if and when they ever do, Congress will have two choices: take action on meaningful fixes, or risk paying a political price.
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
June 3, 2014
The Senate’s Majority Leader, Harry Reid, and its GOP leader, Mitch McConnell, delivered sharply clashing views of the campaign finance system Tuesday, at a Senate hearing on a proposed constitutional amendment to allow Congress to restrict political money.
“I am here because the flood of dark money into our nation’s political system poses the greatest threat to our democracy that I have witnessed during my tenure in public service,” Reid said during testimony before the Senate Judiciary Committee. “The decisions by the Supreme Court have left the American people with a status quo in which one side’s billionaires are pitted against the other side’s billionaires.”
McConnell, a staunch and longtime opponent of campaign finance restrictions, countered that the Senate resolution on the table is “embarrassingly bad.” Amending the Constitution as proposed would not only “allow the government to favor certain speakers over others, it would guarantee such preferential treatment,” McConnell told the panel. “It contains a provision, not found in prior proposals, which expressly provides that Congress cannot ‘abridge the freedom of the press.’ That’s really great if you’re a corporation that owns a newspaper. It is not so great for everyone else. The media wins and everyone else loses.” Full story
May 28, 2014
House and Senate candidates are stockpiling campaign cash for the costliest midterms on record by making good use of the multi-politician war chests known as joint fundraising committees.
Since the Supreme Court’s April 2 McCutcheon v. Federal Election Commission ruling to overturn aggregate campaign contribution limits, 37 federal candidates have set up joint committees to raise campaign cash. The total number of joint fundraising accounts registered with the FEC now tops 450, according to the Center for Responsive Politics.
- Amid a $12 million ad blitz leveled by GOP outside groups, Sen. Kay Hagan, D-N.C., has helped launch no fewer than 17 joint committees that have collectively netted more than $1 million.
- Senate Minority Leader Mitch McConnell of Kentucky, whose race could attract as much as $100 million in spending, has a hand in four joint campaign accounts that have raised $3.4 million between them.
- More recently, Republicans created a new joint committee that will raise money collectively for 10 GOP House challengers and the National Republican Congressional Committee.
May 20, 2014
Candidates testing the waters of bitcoin fundraising are following different sets of rules as they go along, a function of both the freewheeling culture of the digital currency world and of mixed signals from the Federal Election Commission.
The FEC approved bitcoin fundraising in a unanimous advisory opinion on May 8, but the agency’s six commissioners immediately began a public dispute over what that decision actually means. At issue is whether digital currency contributions must be capped at $100 per election per donor, or whether candidates, political action committees and parties may accept the virtual currency in larger amounts.
The commission’s three Democrats maintain that they approved of bitcoin fundraising only to the $100 cap, and in a statement cited “serious concerns” about the potential difficulty verifying virtual transactions.
But the commission’s GOP chairman, Lee E. Goodman, countered in his own statement that bitcoins are in-kind donations, and must therefore be capped only at existing contribution limits — $2,600 for a candidate and $5,000 for a PAC per election. “Innovation and technology should not and will not stand idly by while the commission dithers,” he declared.
The upshot is that some political players say they’ll collect large, even unlimited, virtual contributions, and others will be capping bitcoins at $100. The political action committee known as Bit PAC, for one, will take donations well over $100, said its treasurer, GOP election lawyer Dan Backer. Bit PAC operates both a conventional PAC and an unrestricted super PAC, and will therefore take bitcoins donations up to $5,000 in one account, and unlimited virtual donations in another.
“The whole purpose of Bit PAC is to push the envelope” and “to move the ball on the full normalization of bitcoins in campaign finance,” Backer said in an interview with CQ Roll Call. Backer was the first to ask the FEC about bitcoin fundraising last fall. At that time, the commission deadlocked 3-3 and took no action.
By contrast, GOP House candidate Paul Dietzel, a technology entrepreneur running for an open seat in Louisiana’s 6th District, will cap his bitcoin contributions at $100, “just to stay safe.” Dietzel, a free market conservative, posted a neon yellow “Donate Now With Bitcoins!” banner on his website as soon as the FEC issued its May 8 opinion — even though, as Dietzel put it, “it’s still slightly unclear” exactly how bitcoin fundraising will play out.
Rep. Jared Polis, D-Colo., also lost no time collecting bitcoins, and like Dietzel, he will be capping contributions at $100. Other federal candidates accepting bitcoins include Libertarian Jim Fulner, who’s running for Senate in Michigan, and Blaine Richardson, who’s running as an independent in Maine’s 2nd District.
Rep. Steve Stockman, R-Texas, who lost his primary challenge to Sen. John Cornyn in March, was one of several candidates who accepted bitcoins prior to the FEC’s approval. Other bitcoin pioneers include the national Libertarian Party; Darryl W. Perry, a fringe presidential candidate from Alabama; and eight state legislative candidates in California, Maine, Michigan, New Hampshire and Texas.
“The doors are opening instead of closing for the use of bitcoin in order to support candidates,” said Sinclair Skinner, treasurer of the 1911 United Political Action Committee, the first super PAC to accept bitcoins. Skinner called the FEC’s move a “positive step forward in using crypto currency in America.”
“The important thing here is that the FEC actually agreed on the process,” concurred David Mitrani, an associate at Sandler Reiff Lamb Rosenstein and Birkenstock. But Mitrani acknowledged that the FEC’s frequent internal disputes can leave things hazy for political players: “When the commission votes 3-3, what does it mean?”
Goodman downplayed the FEC’s clash over bitcoins, saying it was “like a lot of other areas where there appears to be some philosophical disagreement, or policy disagreement among commissioners.” But Democratic Commissioner Ellen L. Weintraub didn’t mince words: “I think our ability to provide clear guidance is undermined when commissioners take an advisory opinion and say it means something other than what it does.”
Election law blogger Rick Hasen, who teaches law at the University of California, Irvine, summed it up on the day the dispute erupted: “You can bet your bottom bitcoin that Democratic and Republican Commissioners will continue to clash on just about anything controversial coming before the Commission.”
May 8, 2014
The Federal Election Commission has unanimously ruled to permit the use of bitcoins for political contributions, a move that lends legitimacy to the virtual currency but leaves unclear how valuable or useful bitcoins will prove to be in elections.
The commission approved bitcoin campaign contributions 6-0 Thursday in response to an advisory opinion request from the Make Your Laws PAC, which promotes direct citizen participation in the legislative process. The FEC had deadlocked on a previous, similar request submitted last year. Full story
May 6, 2014
The Supreme Court’s recent ruling to overturn limits on aggregate campaign contributions has revived a long-running debate over the demise of the nation’s political parties, and what could bring them back to life.
In McCutcheon v. Federal Election Commission, the high court may have done the parties a favor by eliminating the $123,200 cap on what individuals may give to candidates and parties as a group in one election cycle. Parties are now free to solicit much larger checks through so-called joint fundraising committees, a type of collective account that divvies up money between parties and candidates.
Watchdogs warn that such joint campaign funds will effectively bring back the unlimited soft money contributions to the parties that Congress banned in 2002, legislation best known as the McCain-Feingold law after its Senate authors. But conservatives hail the McCutcheon ruling as the first step toward repairing the damage that they say was done by that ban.
That law “has succeeded in profoundly altering the state of American politics by severely weakening American political parties to the benefit of outside spending groups who may raise and spend unlimited funds in connection with federal elections,” testified election lawyers Neil Reiff, a Democrat, and Donald McGahn, a Republican, before the Senate Rules and Administration Committee last week.
Reiff, the former deputy general counsel at the Democratic National Committee, and McGahn, a former FEC chairman, aren’t the only McCain-Feingold critics to vent their frustration with the soft money ban in recent weeks. If only Congress hadn’t outlawed soft money, the ban’s detractors imply, a host of political ills would never have come to pass.
It’s easy to see why party organizers and advocates of campaign finance deregulation chafe at the current regime. After all, if unrestricted super PACs and non-disclosing tax-exempt groups can spend millions in elections with no limits, why can’t the parties? A wave of commentary has enumerated the parties’ salutary role promoting robust competition, and moderating partisan polarization by appealing to the voters in the center.
But the parties’ demise goes way beyond McCain-Feingold. And eliminating the cap on “base” contributions to candidates and parties, which many conservatives now endorse, would not necessarily strengthen the parties. While the McCain-Feingold law put $591 million in soft money that the parties had raised in 2002 out of reach, they quickly made up for that loss. In the 2004 elections, the parties collected more in “hard” money subject to contribution limits — $1.5 billion — than they had in hard and soft money combined ($1.1 billion) before the ban took effect.
Outside spending did increase — the so-called 527 groups came that came into vogue following the ban boosted their receipts to $424 million, an increase of some $273 million, according to the Campaign Finance Institute. But the big non-party spending jump didn’t come until after the 2010 Citizens United v. FEC ruling to deregulate independent campaign spending. In 2012, the first presidential race to follow that ruling, outside spending topped $1 billion.
If the parties had really spent their unrestricted money on get-out-the-vote activities and party building before the McCain-Feingold law took effect, soft money nostalgia might be more compelling. But a parade of former and current elected officials who defended that ban in court testified that the money was spent not on grass-roots activity or state and local elections, but on high-dollar ads; in 2000, 92 percent of those ads did not even identify the parties.
The former members of Congress testified that they “were expected to raise significant amounts of money for their party committees, were given incentives to do so, and could face sanctions if they did not.” They also detailed how party officials relied on lawmakers to net big donors and described “an inseverable link between the national political parties, their congressional fundraising committees and federal candidates.”
That real-world account contrasts sharply with the Supreme Court’s conclusion in McCutcheon that the parties act as a “buffer” that protects lawmakers from the corrupting influence of large contributions. Soft money gave the parties plenty of money to spend on ads, but it also gave them a black eye in the form of foreign money scandals, White House coffees and Lincoln Bedroom sleepovers.
Unrestricted money would strengthen the parties’ bottom line, but it may arguably weaken them institutionally in the long run. Parties succeed over time on the strength of their ideas, and on their ability to appeal to a broad base of voters, reflected materially in the support of small donors.
Notes former FEC chairman Trevor Potter, who heads the Campaign Legal Center and the political activity law practice at Caplin & Drysdale: “A couple of people writing big checks leaves you a hollowed-out party structure.”
April 30, 2014
Federal Election Commission Vice Chairwoman Ann Ravel went to Capitol Hill on Wednesday to testify about undisclosed political money in California, but she ended up answering questions about an FEC employee’s violation of the Hatch Act.
Shortly before the Senate Rules Committee’s hearing Wednesday morning on campaign finance disclosure problems, the federal Office of Special Counsel announced that an unnamed FEC lawyer had resigned after admitting to Hatch Act violations. The Hatch Act bars federal employees from political activity in the government workplace.
Sen. Pat Roberts of Kansas, the Rules panel’s ranking Republican, zeroed in on the resignation following Ravel’s testimony. Ravel attended the hearing not in her capacity as an FEC commissioner, but as the former chairwoman of California’s Fair Political Practices Commission, which last year fined two tax-exempt groups a record $1 million for violating that state’s public disclosure laws. Full story
April 29, 2014
In the Supreme Court’s recent McCutcheon v. Federal Election Commission ruling to strike aggregate campaign contribution limits, Chief Justice John G. Roberts Jr. took the unusual step of proscribing how Congress might react.
Congress has “multiple alternatives available” to prevent unlimited contributions from making their way directly to candidates, Roberts wrote in his plurality opinion. These include “targeted restrictions on transfers among candidates and political committees,” the chief justice suggested helpfully, or creating “separate, nontransferable accounts” spent “only by their recipients.”
No one actually expects this polarized Congress, which can barely agree on a federal budget, to suddenly wade back into the thorny thicket of campaign finance changes. But the McCutcheon ruling may dramatically impact political fundraising and invites several basic legislative fixes, concludes a recent Congressional Research Service report. Full story
April 20, 2014
White House officials like to trumpet Organizing for Action as a “grass-roots-funded organization,” but the six-figure donors to President Barack Obama’s tax-exempt advocacy group keep adding up, and it just snagged its first million-dollar contributor.
Hedge fund founder and biotechnology entrepreneur David Shaw became the first OFA donor to clear $1 million, thanks to his $500,000 contribution to the organization in the first quarter of this year. Other top donors include author and philanthropist Amy Goldman Fowler, who’s given $750,000 since OFA’s inception in January of last year, and Fred Eychaner, president of News Web Corp., who gave $500,000 to help get the group off the ground.
More than half of OFA’s $32 million in receipts so far still come from small donors of $250 or less. In this quarter, OFA collected $5.9 million from 124,000 donors and the average contribution was $38.68, officials announced. Still, close to two dozen high-dollar donors have now given $100,000 or more. The top 10 donors have contributed $3.9 million collectively so far.
This inner circle includes such top Obama presidential campaign bundlers as Eychaner and Shaw, along with Wall Street investors, CEOs and executives in the real estate, entertainment, pharmaceutical and insurance industries. Ten donors have given $200,000 or more, including California philanthropist John Goldman; Utah venture capitalist Ryan Smith; New York City philanthropist and composer Philip Munger, and investor Mark Gallogly.
Obama administration officials have rejected suggestions that six-figure donors enjoy special access to the White House, and have ignored calls from watchdogs that Obama shut the group down.
As a tax-exempt advocacy group barred from spending most of its money on politics, OFA has also ignored complaints from congressional Democrats that it’s sitting out elections. The group has focused instead on the president’s policy agenda, including promoting enrollment in the Affordable Care Act, and advocating for immigration and gun safety legislation.
OFA takes no lobbyist or corporate money and voluntarily discloses donors of $250 or more every quarter. Shaw, OFA’s first million-dollar contributor, is worth $3.5 billion, according to Forbes magazine, and has served on the President’s Council of Advisors on Science and Technology under both Bill Clinton and Obama. OFA’s top 10 donors are:
- David Shaw, co-founder D.E. Shaw: $1 million
- Amy Goldman Fowler, New York author and philanthropist: $750,000
- Fred Eychaner, president, News Web Corp., Chicago, Ill.: $500,000
- Ryan Smith, Salt Lake City, Utah, venture capitalist: $351,260
- Philip Munger, New York City philanthropist: $250,000
- John Goldman, Atherton, Calif., philanthropist: $225,000
- Mark Gallogly, co-founder, Centerbridge Partners: $200,000
- Kenneth Levine, senior vice president, McAfee: $200,000
- Olan Mills II, chairman emeritus, Olan Mills, Inc.: $200,000
- Jon Stryker, New York City architect, philanthropist: $200,000