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September 22, 2014

Posts in "Rules of the Game"

September 18, 2014

McDonnell Appeal Begs Question: What Is Corruption?

mcdonnell 049 110612 445x296 McDonnell Appeal Begs Question: What Is Corruption?

McDonnell is appealing his conviction of 11 counts of bribery, conspiracy and extortion. (Bill Clark/CQ Roll Call File Photo)

As Bob McDonnell’s lawyers gear up to appeal the former Virginia Governor’s conviction on 11 counts of bribery, conspiracy and extortion, federal prosecutors, legal experts and elected officials around the country are all watching closely.

The McDonnell case hinges on a question that goes to the heart of the national campaign finance debate, namely: What is corruption? Must it involve out-and-out bribery — the deliberate exchange of money or favors for official acts? Or can corruption take the form of ingratiation, influence and distortions of public policy?

McDonnell’s lawyers argued during his dramatic public trial that businessman Jonnie Williams Sr. received nothing beyond routine courtesies in exchange for his $177,000 in gifts and loans to the McDonnells. Some experts argue that McDonnell has strong grounds for an appeal, and that his indictment effectively criminalizes politics and constituent service.

But a Virginia jury lost no time indicting McDonnell on 11 criminal counts and his wife, Maureen, on nine, after hearing descriptions of the designer clothes, $6,500 engraved Rolex watch, lakeside vacation, free golf outings, wedding catering and a low-interest loan that the McDonnells received from Williams. Particularly damning was an email McDonnell sent to an aide to discuss Anatabloc, the dietary supplement Williams sought to promote, just six minutes after McDonnell spoke with Williams about a $50,000 loan.

McDonnell’s official appeal must wait until his sentencing in January. The appeals process is likely to drag on for months as it wends through the courts — possibly reaching as high as the Supreme Court. Though the McDonnells were indicted under ethics and not campaign finance laws, the question of what constitutes corruption cuts across both sets of rules. And the Supreme Court has defined campaign finance corruption increasingly narrowly.

In April, McCutcheon v. Federal Election Commission struck the aggregate campaign contribution limits, a court plurality concluded that election laws may only target ‘quid pro quo’ corruption in the form of official acts exchanged for money.

But in a strongly-worded dissent, Justice Stephen Breyer and three other justices objected that McCutcheon flies in the face of previous court rulings, including the high court’s 2002 McConnell v. FEC ruling. That ruling, which upheld the soft money ban enacted with the McCain-Feingold law, concluded that Congress had an interest in preventing more than “simple cash-for-votes corruption,” wrote Breyer. He quoted that 2002 ruling as follows:

“Just as troubling to a functioning democracy as classic quid pro quo corruption is the danger that officeholders will decide issues not on the merits or the desires of their constituencies, but according to the wishes of those who have made large financial contributions valued by the officeholder.”

Indeed, many on Capitol Hill – mostly Democrats but some Republicans, too – complain that the pressure to constantly raise money has contributed to partisanship, gridlock and a sense of disconnect from average constituents.

“It is a very rare exception where there is a quid pro quo – a donation for an action,” Sen. Christopher S. Murphy, D-Conn., recently told CQ Roll Call. “But when you are spending a lot of time with people who believe a certain set of things, it’s hard not to be influenced by that viewpoint.”

Colorado Democrat Michael Bennet sounded a similar note during debate last week on the constitutional amendment that he introduced with Sen. Tom Udall, D-N.M. Turned back on a procedural vote, the amendment would have authorized Congress and the states to limit political spending, contrary to prior Supreme Court rulings.

“The court imagined a world where people with bags of money are wandering around Capitol Hill and only then could you regulate it, trying to get people to do something for them,” Bennet said on the Senate floor. “Ninety-nine percent [of] what happens around here is people trying to keep you from doing something, trying to keep things the same. Trying to keep the incumbent interests embedded in our tax code, in our regulatory code, in our statute book. The Supreme Court was silent completely on that corruption, and I would argue that is at the core of our dysfunction as a Congress.”

Republicans denounced the proposed amendment as a violation of the First Amendment, and as an election year ploy by Democrats, who have railed against large, unrestricted contributions throughout the midterm.

Such anti-big money attacks have failed to resonate much in the past, partly because voters tend to regard both parties as equally reliant on special interests. But there are signs that voters are beginning to pay attention. Advocates of the constitutional amendment delivered thousands of petitions to Capitol Hill and staged events at congressional offices around the country last week.

Virginia voters, too, are taking notice. State legislators may or may not toughen up Virginia’s historically lax ethics rules in response to the McDonnell indictments. (Virginia also imposes no limits on campaign contributions.)

But the scandal has reportedly sent a chill through the legislature, prompting state officials to think twice before taking the lavish gifts that had become routine to doing business in the Old Dominion. Judges and prosecutors will continue to haggle over what constitutes corruption. But jurors — and voters — have a tendency to know it when they see it.

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September 8, 2014

Constitutional Amendment Debate Roils ACLU | Rules of the Game

The emotional debate over free speech versus free political spending, which erupted onto the Senate floor this week, exposes a deep rift on Capitol Hill and at the nation’s leading civil rights group, the American Civil Liberties Union.

“There is a very, very significant divide within the ACLU on this,” said New York University law professor Burt Neuborne, one of six prominent former ACLU officials who wrote to members of the Senate Judiciary Committee on Sept. 4 to publicly denounce the national ACLU’s campaign finance position. The letter was released as the Senate prepared to take up a resolution authored by New Mexico Democrat Tom Udall to amend the Constitution to permit political spending limits, something the Supreme Court has ruled violates the First Amendment.

“While, as present and former leaders at the ACLU, we take no position in this letter on whether a constitutional amendment is the most appropriate way to pursue campaign finance reform, we believe that the current leadership of the national ACLU has endorsed a deeply contested and incorrect reading of the First Amendment as a rigid deregulatory straitjacket that threatens the integrity of American democracy,” read the letter, which was signed by Neuborne, the ACLU’s former national legal director, and by its former executive director, Aryeh Neier, and its onetime general counsel, Norman Dorsen, among others.

In an interview with CQ Roll Call, Neuborne said he spearheaded the letter in response both to a June ACLU letter to the Judiciary panel strongly opposing a constitutional amendment, and to conservative leaders’ tendency to invoke the ACLU in denouncing the amendment. Full story

July 22, 2014

GOP Struggles With Fundraising for Women’s Initiatives | Rules of the Game

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Capito raised more than her opponent in the race for Senate in West Virginia. (Bill Clark/CQ Roll Call File Photo)

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

Reforms May Fade, but Voter Anger Won’t | Rules of the Game

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

New FCC Disclosures Reveal Underground Election | Rules of the Game

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.

June 24, 2014

Mississippi Runoff Takes Financial Toll on GOP (Video)

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In the Mississippi runoff, McDaniel, above, is seeking the GOP nod over Cochran. (Tom Williams/CQ Roll Call File Photo)

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.

Full story

June 10, 2014

Campaign Finance Hearings Showcase Extremes | Rules of the Game

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.

May 6, 2014

Did Soft Money Ban Kill Political Parties? | Rules of the Game

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.”

Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.

April 2, 2014

Will McCutcheon Ruling Boost Political Parties?

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Priebus voiced his excitement on the ruling Wednesday. (Bill Clark/CQ Roll Call File Photo)

Republican National Committee Chairman Reince Priebus could hardly contain his glee during a conference call with reporters shortly after the Supreme Court ruled to strike the aggregate limit on campaign contributions.

“We are excited about the outcome of this case,” exulted Priebus, noting that the RNC bankrolled the constitutional challenge brought by businessman Shaun McCutcheon from beginning to end. In McCutcheon v. FEC, the court ruled 5-4 to overturn the overall limit on what an individual may donate collectively to parties, candidates and PACs in one election cycle, which was capped at $123,200 total.

The ruling “allows us to go to our donors and say: Look instead of being able to give to only nine Senate candidates, you can now give to the 14 that are most in play,” Priebus told reporters. “And you can give to the Senate committee, the congressional committee and the RNC, and you can max out to all three.”

Priebus wasn’t the only party official rejoicing in the wake of the high court’s Wednesday ruling. One Democratic campaign committee operative confided that he was “happy as a pig in shit.” While advocates of campaign finance limits on and off Capitol Hill assailed the ruling as an invitation to corruption and campaign finance abuses, party officials welcomed the decision. Full story

Supreme Court Rejects Aggregate Contribution Limits

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Campaign finance reform advocate Fred Wertheimer speaks at the Supreme Court after McCutcheon v. Federal Election Commission arguments last year. (Bill Clark/CQ Roll Call)

Updated, 11:45 a.m. | In a long-awaited ruling in the case known as McCutcheon v. Federal Election Commission, the Supreme Court today struck the aggregate limit on campaign contributions as an unconstitutional infringement on free speech.

Significantly, the high court left in place the base limit on how much individuals and political action committees may give to candidates and political parties. But today’s ruling makes a challenge to that direct contribution limit, which stands at $2,600 per election for an individual, all but inevitable in the near future.

What the court overturned today was the overall limit on the amount that one individual may give to candidates, parties and PACs in a two-year election cycle, a cap that now stands at $123,000. Republican businessman Shaun McCutcheon had challenged the aggregate limit on the grounds that giving the same amount to a larger number of candidates would not invite corruption. Full story

April 1, 2014

Christie’s Contractors: Backers Barred From Donating Found Loophole

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(Bill Clark/CQ Roll Call File Photo)

New Jersey Gov. Chris Christie may manage to put the George Washington Bridge scandal behind him, but even if he does, his ethics troubles won’t be over.

Christie’s complicated relationship with campaign contributors and state contractors, in particular, will draw scrutiny as he continues to mull a 2016 presidential bid. Christie’s donors have a history of gravitating to secretive and little-regulated political groups to promote the GOP governor and his agenda.

These include tax-exempt organizations that spent millions on Christie’s gubernatorial election and re-election campaigns, and that operate outside the disclosure rules. Political activity by nonprofits has become commonplace these days, and Christie’s opponents run their own non-disclosing tax exempt groups.

But Christie’s big backers, who have bankrolled several pro-Christie operations, stand out because many of them are state contractors otherwise barred from contributing to his campaign. New Jersey “pay-to-play” laws, considered the strictest in the nation, bar large state contractors, utilities and financial services firms that manage state pension funds from donating to state candidates.

Yet a long list of New Jersey contractors and pension fund managers have given generously to groups that either back or are closely linked with Christie. Such contributions have repeatedly raised questions as to whether Christie supporters are skirting the state’s pay-to-play laws — a suggestion that the state Treasury Department, which enforces those statutes, has rejected.

Full story

March 25, 2014

Democrats’ Anti-Koch Attacks Have a Familiar Ring

There is an oddly familiar ring to Democrats’ escalating attacks on the conservative billionaire Koch brothers.

In 2010, then-White House adviser David Axelrod decried the undisclosed, unrestricted money bankrolling outside conservative groups as “a threat to our democracy.” This year, Senate Majority Leader Harry Reid has been blasting the Kochs as “un-American” and accusing them of “trying to buy America.”

The comparison bodes poorly for Democrats now dumping millions into their campaign to demonize the Kochs in what appears to be a central piece of their midterm elections strategy. In 2010, unrestricted conservative outside groups funded by industrialists Charles and David Koch helped knock House Democrats out of power in a historic GOP upset. This time around, the Koch-funded Americans for Prosperity has already spent some $27 million attacking Democrats, focusing squarely on the party’s most vulnerable Senate incumbents.

But it’s unclear how much Democrats have learned from the last midterms. Yes, Democrats have established their own network of unrestricted super PACs, casting off any pretense of taking the political-money high road. This election’s top-spending super PAC so far is the pro-Democrat Senate Majority PAC, according to the Center for Responsive Politics, and liberal super PACs have spent almost double that of their conservative counterparts.

The anti-Koch attacks are now the subject of a $3 million Senate Majority PAC ad campaign — essentially a retread of liberal assaults on big money in 2010. In those elections, the first to follow the Supreme Court’s ruling in early 2010 to lift all limits on independent political spending, Democratic National Committee spokesman Brad Woodhouse bemoaned the “growing and pernicious effects of secret, special interest money being used to determine the outcome of our elections.”

This time, the Democrats’ attacks on big money are being leveled more personally at the Kochs and their Koch Industries Inc. conglomerate. The Democratic Senatorial Campaign Committee portrays Republicans as “addicted to Koch.” A Web ad by American Bridge 21st Century, the Democratic super PAC and tracking organization, calls the Koch agenda “bad for the middle class.”

Officials for Koch Industries have criticized the attacks as an intimidation campaign designed to deflect attention from Democrats’ own agenda. Organizers for Americans for Prosperity, a social welfare group that operates outside the disclosure rules, maintain that their objective is to repeal the Affordable Care Act.

But the group’s ads hammer on vulnerable Democrats in states such as Arkansas, Louisiana and North Carolina, and they are expanding into campaign-style organizing, door-knocking and voter mobilization. Some speculate that the anti-Koch attacks leveled by Reid and his allies are a distress signal to liberal donors.

Democrats say their complaints against the Kochs are rooted in their policy differences with Republicans. The anti-Koch campaign hammers on populist themes such as economic equity and entitlements for seniors, and portrays Republicans as the party of moneyed interests.

As American Bridge spokeswoman Gwen Rocco put it: “The real reason the Kochs have already spent tens of millions on attacks this cycle is to undermine voters’ confidence in government and drive their conservative agenda that enriches the wealthiest Americans at the expense of the middle and working class.”

In Arkansas, where GOP Rep. Tom Cotton is challenging incumbent Democratic Sen. Mark Pryor, Pryor campaign officials estimate that Americans for Prosperity has spent $2.2 million on ads opposing the senator. Total outside spending against Pryor tops $5 million. Pryor accuses Cotton of being in the pocket of wealthy interests and argues that the representative’s votes against the farm bill and the Violence Against Women Act, for example, put him and the conservative groups that back him out of step with Arkansas voters.

“Obviously the outside money from these Republican groups is going to be large, and it’s likely that we will be outspent on TV,” Arkansas Democratic Party spokesman Patrick Burgwinkle said. “But what’s important for us is getting the message across that Congressman Cotton and these outside groups are just too reckless for Arkansas.”

In North Carolina, Democratic Sen. Kay Hagan has launched a digital media campaign showing her GOP opponent, state House Speaker Thom Tillis, as aligned with the Kochs’ “bad-for-the-middle-class” policies. Americans for Prosperity has spent $8.3 million on ads opposing Hagan, according to numbers released by Hagan’s campaign.

Republicans dismiss the anti-Koch attacks as a sign of Democratic desperation. In 2010, voters largely ignored Democrats’ assaults on secret, unrestricted campaign money and delivered the House to Republicans in a 68-seat sweep. Democrats’ recent anti-Koch assaults are more rooted in substantive differences with Republicans on issues such as Medicare and the minimum wage. Still, it remains to be seen whether their campaign against moneyed interests will resonate any better with voters in the 2014 midterm elections than it did four years ago.

February 18, 2014

Firewall Between Candidates and Super PACs Breaking Down | Rules of the Game

When the Supreme Court deregulated independent political spending four years ago, the court reasoned that unrestricted money posed no corruption risk because a firewall separates candidates from their outside benefactors.

As Justice Anthony M. Kennedy wrote for the majority in Citizens United v. Federal Election Commission: “By definition, an independent expenditure is political speech presented to the electorate that is not in coordination with a candidate.” Such expenditures, the court concluded, “including those made by corporations, do not give rise to corruption or the appearance of corruption.”

Four years after that ruling, the supposed barrier between candidates and unrestricted super PACs is flimsier than ever. As midterm elections approach, complaints are rolling into the FEC from both parties about super PACs that share vendors, fundraisers and video footage with the politicians they support.

Not that anyone expects much response from the FEC. The agency has been fighting in court for years to defend its definition of illegal coordination, which watchdogs allege is too narrow and contradicts campaign finance law. Indeed, FEC rules explicitly permit quite an array of candidate-super-PAC interactions.

Politicians may raise money for super PACs and even appear at their events, for example, as long as they never ask for checks larger than the amounts donors may write directly to their campaigns — $5,000 for a political action committee and $2,600 for an individual per election.

Super PACs launched by the close advisers and top aides of the candidates they end up backing do not necessarily run afoul of the law. Nor does the candidate’s sharing of consultants, fundraisers or media buyers with the PAC.

Even under these anything-goes rules, however, politicians and their backers are inviting fresh coordination allegations. Last month the Arizona Republican Party complained to the FEC that an ad paid for by House Majority PAC violated coordination rules because the Democratic super PAC had captured and broadcast video footage first posted by Rep. Ann Kirkpatrick, D-Ariz.

The state GOP accused Democrats of “stepping over the legal line to try to sway voters” for Kirkpatrick. A House Majority PAC spokesman called the complaint “absolutely, 100 percent without merit” and noted that the FEC closed the books without action on two previous complaints that ran along the same lines.

Several other Democrats have posted conveniently placed video footage on their websites, including House member and Senate candidate Bruce Braley of Iowa and Sens. Kay Hagan of North Carolina and Mark Begich of Alaska. Last year, several House Democrats sang the praises of House Majority PAC in a video testimonial aimed at donors.

Sen. Mark Pryor, D-Ark., recently created a website that features scripted attacks on his GOP challenger, Rep. Tom Cotton, some of which resurfaced close to verbatim in an anti-Cotton ad run by the Democrat-friendly outside group Patriot Majority USA.

In the meantime, Democrats in Michigan have called on the FEC to investigate GOP Senate candidate Terri Lynn Land’s apparent acknowledgment that her campaign had communicated with super PACs. Land reportedly said at a public forum that her campaign “had talked to a lot of those folks. They’re committed to Michigan.” A Land aide has denied any coordination.

Sharing video footage between candidates and super PACs may not violate the FEC’s coordination rules, said Paul Ryan, senior counsel at the Campaign Legal Center, but it runs afoul of another FEC law — one that treats dissemination of campaign materials as an in-kind political contribution. Such contributions are illegal for super PACs, Ryan noted.

“I think that political players are likely emboldened by the lack of enforcement action by the FEC in recent years,” said Ryan. The super PAC American Crossroads explicitly asked the FEC in 2011 for permission to work directly with candidates to produce issue ads, but the agency deadlocked and took no action.

The Campaign Legal Center has yet to hear back from the FEC following its complaint in 2012 that the super PAC backing Mitt Romney illegally coordinated with the GOP nominee when it rebroadcast an entire ad produced by the Romney campaign in 2007, during his previous presidential run.

The challenge for those lodging coordination complaints, said former Republican FEC Chairman Bradley Smith, is that they are tough to prove unless super PAC organizers and candidates engage in direct or face-to-face communications — the kind that could facilitate quid pro quo corruption. Telling super PACs they can’t pick up b-roll footage from candidate websites is both questionable and futile, he argued.

“I just don’t see how you are going to realistically tell people that you can’t use material that’s out there that everybody knows about,” said Smith, currently the chairman of the pro-deregulation Center for Competitive Politics. “It creates inherent line-drawing problems.”

Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.

January 28, 2014

Will McCutcheon Replay Citizens United? | Rules of the Game

Four years after the Supreme Court deregulated independent campaign spending in Citizens United v. Federal Election Commission, the high court is poised to yet again turn American elections upside down.

The court is expected to rule any day now on McCutcheon v. FEC, another potentially landmark constitutional challenge that could shake up campaign financing as dramatically as Citizens United did in 2010. While no one can predict how the court will rule, oral arguments in October suggest that conservatives in the majority remain as eager as ever to dismantle money limits.

At issue in McCutcheon is the constitutionality of existing overall limits on how much a contributor may give to candidates and political parties in a single election cycle. Alabama businessman Shaun McCutcheon, who brought the challenge, argues that the $123,200 cap on total contributions per cycle violates his First Amendment rights.

The limit’s defenders say that tossing it out will bring back the “soft money” days when donors freely wrote large, unrestricted checks to the political parties. That soft money, banned by the 2002 law known as McCain-Feingold, was raised by the elected officials who ran the parties — and wrote the bills that the big donors lobbied for and against. It was an invitation to abuse, a parade of lawmakers and donors told the court when it took up McConnell v. FEC, the constitutional challenge that upheld the soft money ban in 2003.

But the Supreme Court has partially changed hands since then, and today’s right-leaning justices appear to have forgotten that unrestricted, multimillion-dollar contributions to the political parties ever drew fire. In Citizens United, the high court concluded that unlimited campaign spending by unions and corporations (including incorporated nonprofits) can’t corrupt anybody when the spending is independent — not coordinated with candidates or parties.

Now some on the court argue that big money should be legal for political parties as well. As Justice Antonin Scalia told Solicitor General Donald B. Verrilli Jr., during the McCutcheon oral arguments: “It seems to me fanciful to think that the sense of gratitude that an individual Senator or Congressman is going to feel because of a substantial contribution to the Republican National Committee or Democratic National Committee is any greater than the sense of gratitude that that Senator or Congressman will feel to a PAC which is spending enormous amounts of money in his district or in his state for his election.”

Never mind that this argument undercuts the court’s own conclusion in Citizens United: that independent spending poses no corruption risk because politicians are not involved. A ruling in McCutcheon’s favor might well free up elected officials to collect unrestricted soft money for the political parties once again. That’s because without the aggregate limits, politicians in charge of joint fundraising committees could ask donors to write checks of as much as $2.5 million or more at a pop, advocates of campaign restrictions argue.

A ruling for McCutcheon would also weaken the “base” contribution limit, a cornerstone of the remaining campaign finance rules. That limit bars an individual, for example, from giving a candidate more than $2,600 per election. Historically, the court has held that limits on contributions are less of a First Amendment burden than restrictions on spending. The McCutcheon challenge argues, in part, that contribution and spending limits should be treated as equally onerous. If the court agrees, a successful challenge to the base limits could be next.

“This case not only threatens to have a broad impact on laws limiting aggregate contributions, but could also, depending on the scope of the ruling, jeopardize even the longstanding ‘base’ limits on contributions to candidates and political parties at every level of government — municipal, state and federal,” warns a background memo circulated by the Campaign Legal Center.

The center is one of several watchdog groups bracing for a McCutcheon ruling that may well deal another blow to campaign finance restrictions. Public Citizen has also released a two-part “prebuttal” to the pending McCutcheon ruling titled: “Beware of a Naïve Perspective.”

When Justice Anthony M. Kennedy wrote the majority opinion in Citizens United four years ago, he asserted blithely that the Internet age would ensure enough “prompt disclosure” to hold corporations and politicians accountable. Nonprofits exempt from the disclosure rules, such as social welfare and trade groups, went on to spend more than $300 million on the 2012 elections, all without disclosing a single donor.

The question now is whether the high court, having freed outside groups to spend record sums of unrestricted soft money in campaigns, will also extend that invitation to political parties — and the politicians who run them.

December 18, 2013

The Year in Political Money: Less Transparency, More Deregulation | Rules of the Game

Campaign spending trends were not as sensational this year as in 2012, when super PACs and other outside groups pumped more than $1 billion into politics, three times what they spent in the previous presidential election cycle.

Still, 2013 marked several important political money milestones that signal where campaigns are headed next. Perhaps invariably, elections continue to march toward less transparency and more deregulation, and lawmakers and federal agencies remain too paralyzed by discord to respond.

It was a bad year for disclosure, both on the legislative and regulatory fronts. Congressional Democrats lost no time reintroducing the transparency bill known as the DISCLOSE Act, which had come close to passing in the previous Congress. But the bill was quickly overwhelmed on Capitol Hill by politically charged disputes over immigration, health care and the federal budget.

Advocates of campaign finance limits managed to generate more than 600,000 public comments urging the Securities and Exchange Commission to require corporations to more fully report their political spending. Both the SEC plan and the DISCLOSE Act had set out to shed light on unreported political spending in the wake of the Supreme Court’s 2010 Citizens United v. Federal Election Commission ruling, which deregulated independent campaign spending, including by social welfare and trade groups exempt from disclosure rules.

But the SEC backed away from its public disclosure agenda, omitting from its to-do list for 2014 any mention of a corporate disclosure rule that the agency had once flagged as a priority for this year.

Disclosure fared somewhat better in the states, where legislators and election officials in California, New York and elsewhere moved to pull back the curtain on politically active tax-exempt groups, which as a whole spent more than $300 million in the previous election. California’s Fair Political Practices Commission slapped a record $1 million fine on two Arizona nonprofits with ties to the billionaire conservative donors Charles and David Koch for failing to disclose the donors behind a multimillion-dollar ballot initiative campaign.

At the same time, more than a half-dozen states where unrestricted super PACs have flourished moved to relax limits on contribution to candidates, in part to put them on a more level playing field with outside groups.  Advocates of easing the campaign finance rules also continued their push for federal deregulation, mounting a constitutional challenge to the overall limit on what one individual may give to political parties and candidates in a single election cycle.

Known as McCutcheon v. FEC, the challenge received a receptive audience at the Supreme Court during oral arguments in October. The court’s conservative justices, who continue to hold the majority, cast the aggregate limit as a burden on donors, and some argued that political parties should not face stricter limits than outside groups. If the high court rules that aggregate contribution limits are unconstitutional, watchdogs warn that it would weaken the current ban on unrestricted “soft” money donations to the political parties, and set the stage for yet another challenge to the limits on contributions made directly to candidates.

Politically active nonprofits dominated the headlines in 2013, both because of the scandal over the Internal Revenue Service’s targeting of tea-party-affiliated groups, and because tax documents filed in November shed long-overdue light on how such groups moved money around last year. Three congressional committees launched IRS investigations this year, which are still ongoing, and several top tax agency officials were ousted or left under pressure.

The agency responded with draft rules aimed at more consistently regulating political activity by tax-exempt groups, but these just dragged the IRS further into controversy. Advocacy groups on both the left and right argue that the IRS restrictions will squelch constitutionally protected voter mobilization and pre-election issue advertising campaigns. Democrats say the rules are long overdue and should probably go further.

The FEC, in the meantime, had another roller-coaster year. In April the agency, down one commissioner, earned a dubious distinction: All five of its remaining commissioners were serving expired terms. The Senate confirmed two new commissioners this fall, a Democrat and a Republican, who came in with pledges to work together and issue long-overdue FEC regulations for the post-Citizens United campaign world. But so far there’s no sign that FEC deadlocks or backlogs have disappeared.

It all sets the stage for yet another round of highly contentious campaign finance fights in 2014, which is already shaping up as a high-stakes midterm that will feature plenty of undisclosed, unrestricted money. If 2013 is any indication, the next wave of big money will draw plenty of headlines but little regulatory response.

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