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Republican Wisconsin Gov. Scott Walker’s political organization is opening a campaign office for him in Iowa. Ex-Florida Gov. Jeb Bush is meeting with major donors and hosting dozens of fundraisers around the country. Hillary Rodham Clinton, former senator, secretary of State and first lady, is quietly hand-picking a team of high-level advisers to run her anticipated White House bid.
Yet none of these presidential hopefuls has officially declared their candidacy or even announced plans to test the waters of a White House run. That’s given them free rein to raise money through a crazy quilt of campaign-style committees, from tax-exempt issue groups to personal leadership political action committees, unrestricted super PACs, foundations and political organizations. Oversight is scant and disclosure spotty.
With only a couple of exceptions, the nearly 20 hopefuls eyeing the Oval Office are “likely violating” Federal Election Commission regulations that impose strict limits on candidates testing the waters of a White House bid, said Paul Ryan, senior counsel at the Campaign Legal Center and no relation to the congressman. Ryan recently published a white paper dubbed, “’Testing the Waters’ and the Big Lie: How Prospective Presidential Candidates Evade Candidate Contributions While the FEC Looks the Other Way.”
FEC guidelines state clearly that candidates testing the viability of a presidential bid may not collect corporate or union money, and must cap donations at $2,700 per election. Money used to test the presidential waters must also be publicly reported once a candidate officially declares. “They are ignoring federal campaign finance laws,” Ryan said of Walker, Bush and a long list of other candidates.
Until they officially declare their candidacies, the presidential hopefuls in the field run little risk of drawing attention from the FEC, which is stalemated by partisan divisions and has done little to enforce the rules lately. The candidates have said they are complying with campaign finance regulations.
Still, from Bush’s unrestricted super PAC, which reportedly has set out to raise $100 million by March 31, to the nonprofit advocacy group backing Republican Rick Santorum, the former senator from Pennsylvania, the diverse committees operated by this election’s 2016 White House hopefuls raise myriad legal and regulatory questions.
Take the global foundation set up by former President Bill Clinton. The charity’s work fighting AIDS, hunger and poverty has been overshadowed by recent reports it has accepted millions in contributions from corporations and foreign governments. The foundation halted most foreign contributions while Hillary Rodham Clinton served as secretary of State, to avoid the appearance of corruption and conflicts of interest. Should it do the same as she mulls a White House bid?
For all the bad press its foreign contributions have generated, the Clinton Foundation has voluntarily disclosed its contributions. The same cannot be said of the tax-exempt advocacy groups backing such presidential hopefuls as Santorum and former Arkansas Gov. Mike Huckabee, another Republican.
The nonprofit backing Santorum has the same name — Patriot Voices — as his leadership PAC. It was ostensibly set up to advance issues Santorum cares about, but is run by his former aides and largely promotes and publicizes his activities. America Takes Action, a tax-exempt social welfare group, similarly promotes Huckabee’s issues and agenda. Both groups may collect contributions of any size from any source, and operate outside the campaign disclosure rules.
And what about the unrestricted super PAC launched by Bush when he first signaled interest in a presidential campaign? Such PACs may collect unlimited donations as long as they don’t coordinate with the candidates they back. Bush is not yet a declared candidate, which explains why he is reportedly raising money for the group. But in the event Bush announces a candidacy, Ryan argues the PAC should be barred from spending money on his behalf.
As for Walker, his aides told U.S. News & World Report that his political organization, Our American Revival, is promoting “an issue environment and platform” for 2016 candidates, not testing the waters for Walker’s potential presidential bid. The organization, while it does disclose its receipts to the IRS, may accept unlimited contributions from any source.
GOP Sen. Marco Rubio of Florida is on a promotional tour sponsored by Sentinel, the Penguin Books subsidiary that published his book, “American Dreams.” The tour includes stops to sign books in Iowa and New Hampshire — a schedule that might raise questions if Rubio were a declared candidate.
In 2013, the Office of Congressional Ethics asked the full Ethics Committee to investigate whether then-Rep. Michele Bachmann’s book tour, paid for by the publisher of her book “Core of Conviction,” constituted an illegal in-kind contribution to her presidential campaign. The Ethics panel dropped the matter, but Bachmann remains under federal investigation amid various campaign finance allegations.
Only two White House hopefuls — Sen. Lindsey Graham, R-S.C., and former Sen. Jim Webb, D-Va. — have set up legitimate “testing the waters” committees that comply with FEC regulations, Ryan said. Graham’s “Security Through Strength” organization and Webb’s 2016 “Exploratory Committee” both accept contributions no larger than $2,700 per election.
“Sen. Graham and Sen. Webb appear to be complying with that requirement,” Ryan said. “And more than a dozen prospective presidential candidates appear to be ignoring it.”
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
Both Republicans on Capitol Hill and the Obama administration have brought fresh artillery to their war over the IRS and its policing of politically active tax-exempt groups.
GOP leaders are taking advantage of their new Senate majority and expanded House ranks to step up ongoing probes into IRS targeting of 501(c)4 social welfare groups, including tea party organizations. Republicans in both chambers have also introduced legislation that would block the IRS from issuing any new regulations to constrain political activity by tax-exempt groups until early 2017. Full story
At a private gathering of conservative political donors last year, Senate Majority Leader Mitch McConnell applauded the state of American elections today, which he described as more deregulated than at any point in recent memory.
“We now have, I think, the most free and open system we’ve had in modern times,” McConnell, then the Senate Republican leader, told donors gathered at the annual retreat organized by the billionaire industrialists Charles and David Koch.
McConnell’s assessment should have been music to the ears of conservatives who oppose campaign finance restrictions. But it stands in stark contrast to the daily drumbeat of warnings from conservative bloggers, opinion writers, activists and lawmakers that free speech is under assault from dangerously aggressive government regulators.
“I wish that political speech were not under attack from so many elected officials,” declared Sen. John Cornyn, R-Texas, at a program last month hosted by the U.S. Chamber of Commerce Foundation titled, “Protecting Free Speech for American Business.” Having once championed full deregulation and disclosure as the solution to campaign financing, GOP leaders now equate political transparency with government censorship and political intimidation.
The conservative backlash against disclosure is among the most important outcomes of the Supreme Court’s Citizens United v. Federal Election Commission ruling, which five years ago lifted all limits on independent political spending. The ruling has disproportionately boosted political spending by groups that fail to publicly report their donors. It has also spawned a conservative campaign to discredit political transparency, forestall new reporting restrictions and challenge disclosure regulations in court.
It’s a risky gambit. Republicans remain justifiably outraged at the IRS for, by its own admission, targeting the tea party and other groups seeking tax exemptions. And the IRS scandal points out the dangers inherent in government regulations aimed at curtailing speech surrounding policies and issues, which can inadvertently sweep up average citizens along with millionaire donors. But some Republicans argue that the GOP crusade against disclosure is a poor political bet, saying such arguments threaten Main Street business interests and will run aground in the courts.
GOP strategist Mark McKinnon worries “Republicans have ceded this whole idea of reform of money in politics to Democrats.” McKinnon teamed up with several other GOP luminaries, including conservative political consultant John Pudner, to launch a new Republican campaign finance group dubbed Take Back Our Republic. Among other goals, the group will look for ways to bring small donors back into the political process.
“As conservatives, we believe in market forces,” McKinnon said. “We believe in free markets. The problem is, the system we have today is no longer a free marketplace of ideas or policies. All the public policies in Washington today are dictated by money.”
Similar concerns have prompted a long list of blue chip companies, from JP Morgan Chase to Exelon, Merck, Microsoft and Lockheed Martin, to voluntarily disclose their political expenditures via an annual index spearheaded in part by the Center for Political Accountability. The center’s president, Bruce Freed, recently joined with Charles E.M. Kolb, former president of the Committee for Economic Development, to challenge allegations that the center is waging a “war” on corporate political speech.
“This not only enhances disclosure; it also reflects a greater appreciation of the unnecessary harm and risks posed to a corporate brand that can come from focusing on political campaigns rather than on marketplace challenges,” Kolb and Freed wrote in a recent Washington Post op-ed.
The shakiest ground for transparency opponents is in the courts. The most widely quoted line from Citizens United ruling is Justice Anthony M. Kennedy’s statement, writing for the majority, that “prompt disclosure of expenditures” permits shareholders to “determine whether their corporation’s political speech advances the corporation’s interest in making profits,” and citizens to “see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
That helps explain why a Colorado gun group’s recent bid to challenge the state’s disclosure rules fell flat. In Rocky Mountain Gun Owners v. Gessler, the U.S. District Court for the District of Colorado denied the group’s request that judges block enforcement of state disclosure rules that apply to issue advertisements that run on the eve of an election.
“As the Supreme Court has repeatedly affirmed, the electorate has a keen informational interest in knowing who is speaking about candidates shortly before an election,” wrote Megan P. McAllen, an associate counsel with the Campaign Legal Center, at the time of the ruling. “Courts nationwide have recognized the same, and have overwhelmingly rejected similar legal challenges from ‘dark money’ groups seeking to influence voters without revealing the sources of their funding.”
The conservative assault on political disclosure will continue. It remains to be seen, however, how successful it proves in the long term.
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
When Congress moved quietly late last year to permit much larger contributions to the political parties, some experts cast the rules change as, at best, an improvement on the old system, and, at worst, inconsequential.
“This isn’t going to be a game changer for big money in politics,” Jonathan Bernstein, political scientist and columnist, said of the higher limits. The limits now allow an individual to give as much as $1.7 million to the parties in one election cycle — an exponential increase over the previous per-cycle cap of $64,800.
“For those who want more transparency, this means more accountability in political fundraising,” Republican National Committee Chairman Reince Priebus declared in USA Today. The rule’s cheerleaders enthuse that strengthening parties tempers partisanship and frees parties to better compete with unrestricted and increasingly influential outside groups that often operate outside the disclosure rules.
It remains to be seen whether such sunny predictions come true, or whether the watchdogs’ dire warnings — that the new rules will usher in a new era of soft-money abuses — will prove closer to the mark. Either way, there’s little question that party officials will test the new regulations to the fullest, exploring every possible legal avenue to fatten their coffers.
True, the new limits do not free the parties to raise unrestricted money for just any purpose. Under the campaign finance provisions inserted into the eleventh-hour “cromnibus” spending package, the party committees may raise larger amounts only for separate accounts to pay for their conventions; for buildings and facilities, and for election recounts and other legal matters.
But the broad wording of the campaign finance changes, and the backdoor way in which Senate leaders slipped them into budget legislation, leave plenty of room for interpretation. In the 1990s, a single Federal Election Commission regulation that approved soft money for “party building” ultimately led the parties to round up unlimited corporate checks to pay for campaign ads cast as “issue ads.”
This time, look for the parties to use funds set aside for building, legal and convention costs in equally creative ways. Of particular interest will be funds ostensibly raised for “the construction, purchase, renovation, operation and furnishings of one or more headquarters buildings of the party,” as the statute describes it. The term “party operations,” for one, could be interpreted to include “activities such as data mining and modeling projects or opposition research centers,” noted election lawyers at Covington & Burling in a recent client memo.
The new party convention accounts could also become “a route to tickets and passes to the national conventions,” the memo adds. The reference to “headquarters buildings of the party” is also open to interpretation. It could mean one national party headquarters building in Washington, D.C., for example, or buildings in states all over the country, noted Robert Lenhard, a Covington & Burling partner who coauthored the memo with four colleagues.
Having been approved with no public notice or comment, the new rules raise some tough questions said Lenhard, a former chairman of the FEC: “This is a statute that was passed without any committee hearings, without any statutory definitions, without any legislative history whatsoever.”
Legal funds, for example, could potentially be spent in any number of ways — and as yet, campaign finance lawyers don’t have ready answers. The new rules specify that parties may raise additional funds in accounts “to defray expenses incurred with respect to the preparation for and the conduct of election recounts and contests and other legal proceedings.”
But what is meant by legal proceedings? Could it, for example, be interpreted to include the Republican Party’s legal challenge to the Obama administration’s alleged abuses of executive power? Or to help pay for additional legal challenges to the Affordable Care Act?
“I don’t know,” said Trevor Potter, another former chairman of the FEC and president of the Campaign Legal Center. “None of us know.” He added, “I haven’t seen any legislative history. I’ve just seen these provisions. They’re pretty broadly drafted.”
It falls naturally to the FEC to step in and help answer the many regulatory questions raised by the new party fundraising rules. But the commission, divided evenly between Republicans and Democrats, has stalemated repeatedly on key policy matters in recent years. And few expect the FEC, which helped usher in the first round of soft money, to offer party officials much guidance.
In the meantime, even experts who applaud the infusion of fresh funds into the political parties have little doubt the parties will leverage them to the fullest. Lenhard noted, “I think politics is very entrepreneurial. And history has shown us that people are very creative and thoughtful in looking for ways they can succeed in a competitive environment.”
The IRS faces growing pressure from critics on both sides of the aisle to come to grips with the role that tax-exempt “dark money” groups play in elections.
The challenge for the beleaguered IRS, which is bracing for a fresh round of controversies early in 2015, is that Republicans and Democrats regard both the problem and the solution in starkly opposing terms.
To Republicans, the problem is that the IRS has policed tax-exempt groups, particularly those run by conservative activists, too aggressively. Republicans on Capitol Hill are poised to redouble their investigation into the agency’s self-admitted targeting of tea party groups and others seeking tax-exempt status. Full story
As House members finalize their senior leadership and committee posts, money is playing a decisive role in who occupies — and retains — the chamber’s seats of power.
Once determined by seniority alone, chairmanships and leadership spots are now just as much a function of which member can raise the most money for colleagues and party committees. Chairmen and leaders also scoop up the most contributions, often from lobbyists with business before them, cementing their seniority. The upshot is a system that’s remarkably resistant to change.
“Money begets power, and power begets more money, and that then begets more power,” said Kathy Kiely, managing editor for the Sunlight Foundation, which recently released a tally of which House members most generously supported their respective party committees.
Not surprisingly, senior players such as Speaker John A. Boehner of Ohio and Minority Leader Nancy Pelosi of California tend to top the list. Boehner doled out $8.3 million to the National Republican Congressional Committee from his campaign committee alone. Pelosi gave $1 million to the Democratic Congressional Campaign Committee through her campaign arm.
Both also hosted fundraisers all over for the country for their colleagues, hit up donors through email blasts and doled out millions through their leadership PACs and so-called joint fundraising committees. It’s a drill now familiar to any lawmaker hoping to climb the leadership ladder. For Boehner, this translated to $102 million donated to and raised on behalf of GOP candidates and committees. Pelosi’s haul for Democrats reportedly totaled $101.3 million, including $65.2 million for the DCCC.
All this helps explain why recent leadership and committee elections are yielding virtually no turnover. Conservatives publicly pledged to oust Boehner more than once this year, but all that talk faded after Election Day. Pelosi, despite having presided over crushing losses for her party in the House, faced no challenge to her post.
It also sheds light on why soon-to-be Minority Leader Harry Reid of Nevada faces no insurgency, despite some grumbling. Reid donated $100,000 to the Democratic Senatorial Campaign Committee through his campaign committee, and gave $289,550 to 32 candidates through his leadership PAC, according to Political MoneyLine. He also reportedly held 116 events in 14 cities to help raise money for the leading Democratic super PAC, Senate Majority Fund.
And what of Sen. Elizabeth Warren, the fiery progressive elevated by Reid to a newly created Senate leadership post, to the bafflement of some of her Democratic colleagues? Warren’s swift rise coincides with her emergence as a fundraising powerhouse. The Massachusetts Democrat barnstormed nationwide this cycle, including in “red” states that President Barack Obama did not visit, and raised $2.3 million on behalf of 28 Democratic candidates, according to Real Clear Politics.
“There’s no question that the role of money has been elevated,” said Christopher J. Deering, a professor of political science at George Washington University. The trend began a few decades ago, but sped up after House Republicans imposed term limits on committee chairmen in 1994, he said.
The emphasis on money over seniority has intensified polarization on Capitol Hill, said Eleanor Neff Powell, an assistant professor of political science at the University of Wisconsin-Madison.
“It substantially benefits members from safe districts — essentially members who don’t have to spend any money on their re-election campaigns,” said Powell, who is writing a book on the topic. “Members who face close races are disadvantaged, both formally and informally, in the leadership race process.”
That rankles some House members. The issue came to the fore in the contest between New Jersey’s Frank Pallone Jr. and California’s Anna G. Eshoo to be ranking member on the Energy and Commerce Committee, a post held by retiring Democrat Henry A. Waxman. Pallone is the more senior of the two. Both he and Eshoo have donated several hundred thousand dollars to dozens of Democratic House members and candidates through their campaign committees and leadership PACs.
Last week, members of the Congressional Black Caucus wrote to colleagues that “those who through years of service have gained significant expertise and knowledge should be given priority to lead our committees and subcommittees.” Several CBC members are in line to serve as ranking members in the 114th Congress, the letter noted. As a group, CBC members tend to represent districts less populated by wealthy donors.
Even prolific fundraisers face a high bar to advancement. Rep. Kevin Brady, R-Texas, doled out $4.6 million, directly and indirectly, to GOP candidates and party committees, determined to shine as a rainmaker in his bid to be chairman of the powerful Ways and Means Committee.
But Brady’s haul was no match for the $12.3 million that Budget Chairman Paul D. Ryan, handed out and raised for Republicans. Ryan is on track to be chairman of Ways and Means — though under a new House rule he may have to give the post up if he runs for president. That is, unless he receives a waiver from that term limit, as he did after six years as Budget chairman. The final call will no doubt rest heavily on how much money Ryan ponies up for his colleagues this time around.
The Senate candidate warned that voters’ voices are being “drowned out” by “third-party special interest groups with unlimited spending capability,” and called on his opponent to help him bar big outside spenders from the race.
Another Democrat parroting Senate Majority Leader Harry Reid’s attacks on secret campaign spending? Actually, the Senate hopeful railing against political money was Republican Dan Sullivan of Alaska, who sought — without success — to convince incumbent Democrat Mark Begich to sign a pledge to stop the outside money flooding in.
Sullivan is one of more than half a dozen Republican congressional candidates who have made assaults on big money in politics an important campaign theme. Until now, the issue was almost exclusively a Democratic talking point.
It’s a curious twist that reflects growing voter focus on political money, which has drawn news coverage as midterm spending approaches a record $4 billion, and fresh GOP interest in populist anti-corruption messages that resonate with the tea party.
Leading the way has been none other than GOP Senate Leader Mitch McConnell, of Kentucky, who asserted that “no one in the history of American politics has ever won or lost a campaign on the subject of campaign finance reform.”
McConnell’s campaign has leveled a long list money- and ethics-related attacks against Democrat Alison Lundergan Grimes. These include her invitation to “Obama billionaire” Warren Buffett to join a campaign fundraising event via conference call; her attendance at a “luxurious fundraiser” with Democratic Senator Elizabeth Warren of Massachusetts at the home of a controversial Kentucky businessman, and her alleged “sweetheart deal” to rent a campaign bus at less than market value.
“By his actions, he is recognizing that money in politics is a powerful issue to win elections,” said David Donnelly, president of Every Voice, an advocacy group with an affiliated super PAC that promotes political money limits.
Democrats have rejected these attacks and hammered on unrestricted secret GOP spending, as they did in 2010, with a special focus this time on the billionaire industrialists Charles and David Koch. In the previous midterm, voters collectively shrugged and handed the House majority to Republicans. In this election, polls suggest voters have trouble even identifying the Koch brothers.
But Republicans are now leveling their own assaults on billionaires, special interests and lobbyists. In addition to Sullivan, Republican House candidates Mark Greenberg, who’s challenging incumbent Elizabeth Esty in Connecticut’s 5th District, and Evan Jenkins, running against Rep. Nick J. Rahall II in West Virginia’s 3rd District, have called on their Democratic opponents to sign a “people’s pledge” to discourage outside spending. Not surprisingly, given the success of Democratic super PACs in these midterms, Esty, Rahall and other Democrats presented with such pledges have largely declined.
Republicans have leveled their attacks in fundraising appeals, ads and during debates. In North Carolina, Republican Thom Tillis charged in an ad that Senate Democrat Kay Hagan missed an Armed Services Committee hearing “while ISIS grew” because “she prioritized a cocktail party to benefit her campaign.”
In Iowa’s Senate contest, Republican Joni Ernst accused Democratic Rep. Bruce Braley of “being supported by [a] California billionaire extreme environmentalist who opposes the Keystone pipeline,” a reference to billionaire environmentalist Tom Steyer and his multi-million dollar super PAC, NextGen Climate Action.
The Republican-friendly super PAC American Crossroads also attacked Braley over Steyer’s high-dollar backing. In one Crossroads ad, spiced up with images of hundred-dollar bills, a narrator intones: “Bruce Braley; he’s on the side of billionaire special interests, not Iowa workers.”
Republican House hopeful Richard Tisei charged in a recent debate that 6th district incumbent Democrat Seth Moulton has “raised more money in New York City on Wall Street than he has in the congressional district.” In New York’s 18th district, Republican Nan Hayworth, who is seeking to recapture her House seat from Democrat Sean Patrick Maloney, charged that biomass executive Jim Taylor has “lined the congressman’s pockets” with at least $100,000 in bundled contributions.
Even GOP Sen. Ted Cruz, the conservative Texan who’s railed against campaign finance limits almost as vigorously as McConnell, recently proposed in his list of GOP priorities for 2015 “a lifetime ban on members of Congress becoming lobbyists” as one way to “stop the Washington corruption.”
Similarly, Republican National Committee Chairman Reince Priebus suggested in this month in his “Principles for American Renewal” that “bureaucrats, lobbyists and out-of-touch politicians need to get out of the way, and give American workers and businesses the freedom to create jobs.”
“They know that the role of money in politics is part and parcel of why Washington isn’t working,” said Donnelly, of the GOP messaging. Donnelly’s Every Voice super PAC, and another even better-funded super PAC dubbed MayDay PAC, are spending their own unrestricted money to back candidates that support campaign restrictions, helping move the issue front and center.
It’s an open question whether attacks on big money will resonate with voters in the end. The only Republican so far to make the issue central to his campaign — Senate hopeful Jim Rubens, in New Hampshire — lost his primary bid to former Massachusetts Sen. Scott Brown, despite backing from MayDay PAC, which remains more than $1 million shy of its $12 million fundraising goal.
With few exceptions, Republicans remain as staunchly opposed as ever to campaign finance limits. Still, Republicans are developing an appetite for big money as a campaign issue. As Tillis put it in a recent fundraising appeal: “It looks like money may be the deciding factor in this campaign, just as the pundits predicted.”
Is the Federal Election Commission a dysfunctional agency deaf to voters fed up with loophole-riddled campaign finance rules? Or is it a newly revived organization making unprecedented moves to invite a wide-ranging public debate over its regulations?
The answer may be both. In a fit of productivity on Oct. 9, the FEC managed to outrage its critics, thrill political party leaders, send election lawyers scrambling and break out once again into public bickering. It was an abrupt departure from the months and even years of partisan deadlock that have rendered the FEC incapable of settling even the most routine enforcement disputes. Full story
Veterans organizations with overtly partisan messages and agendas have spent millions promoting candidates in tight Senate races in this election cycle, prompting criticism from veterans and established vet groups on both sides of the aisle.
Concerned Veterans for America, a conservative advocacy group with ties to the billionaire industrialists Charles and David Koch, has spent more than $2 million blasting Democratic Senate candidates, Center for Responsive Politics data show, largely for failing to fix problems at the Department of Veterans Affairs. The veterans group has both stoked and capitalized on outrage over the VA scandal involving long wait times for medical care and the agency’s cover-up of those delays.
On the liberal side, the progressive group VoteVets.org has set out to spend some $7 million to help Democrats in the midterms, according to its organizers. The VoteVets political action committee has delivered more than $1 million to candidates both in direct donations and in bundled contributions since its founding in 2006.
The explosion in veteran-focused campaign spending alarms some veterans and longtime vets organizations. Membership-focused veterans associations, such as the American Legion, have long enjoyed special tax protections coupled with strict limits on their political activities. Some vets associated with the “old guard” worry politics will swallow the best interests of veterans.
“Most mainstream veterans groups are required to be nonpartisan, and it concerns me that we do have groups on both extremes that are very partisan in their approach and very calculating in what they want to accomplish,” said Joe Violante, national legislative director of Disabled American Veterans, established in 1920 and congressionally chartered in 1932.
Violante voiced particular concern over attacks by Concerned Veterans for America against the VA. The conservative group has challenged VA funding increases and supports partially privatizing veterans’ health care. Such steps could make fewer veterans eligible for more limited services, Violante warned.
Concerned Veterans of America is run by and champions veterans, countered Dan Caldwell, the group’s issues and campaign manager, a veteran himself. The group fills a void in the veterans’ community, he said, by advocating VA changes, deficit reduction and national security. Caldwell acknowledged the VA scandal “changed the whole dynamic of our organization,” but denied that the group’s high-dollar attacks on such Democrats as North Carolina incumbent Kay Hagan and Bruce Braley in Iowa for failing to help veterans are political.
“These ads we consider issue advocacy,” Caldwell said. “They are based out of our VA reform efforts. We are not just a fly-by-night 501(c)(4) trying to use the VA scandal as an election-year issue. We have a long history on these issues. We have a real agenda on VA reform.”
But Concerned Veterans for America’s frequent attacks on the Affordable Care Act align it squarely with other Koch-affiliated groups. Freedom Partners Chamber of Commerce, a trade association at the heart of the Koch donor network, gave $5.2 million to Concerned Veterans for America, 2012 tax records show.
Freedom Partners also purchased extensive airtime in Iowa and North Carolina earlier this summer, according to the Sunlight Foundation — valuable spots that were eventually used by Concerned Veterans for America. Caldwell said his group paid for the spots, and Freedom Partners had simply canceled its reservations, which freed up ad space.
VoteVets Chairman Jon Soltz rejected any comparison between Concerned Veterans for America and his organization, which claims 450,000 members and was founded in 2006.
“I’m hesitant to say they’re anywhere equivalent to what we’ve built over eight years,” Soltz said. But VoteVets.org has also taken heat for its campaign advertising, recently drawing public criticism from a prominent Kentucky veteran over an ad assailing Senate Minority Leader Mitch McConnell for failing to back a bill that would have boosted VA funding by $21 billion. The ad was part of a $600,000 ad campaign against McConnell by VoteVets, which operates both a PAC and a social welfare arm known as VoteVets Action Fund.
McConnell “has been a vocal advocate about the urgent need for reform at the VA and was instrumental in helping ensure Senate passage of the important bipartisan veterans bill that was signed into law last month,” declared Karl Kaelin, vice chairman of a Kentucky committee of the Veterans of Foreign Wars, in a statement released by the McConnell campaign.
McConnell’s camp also dismissed VoteVets as a front “funded by environmental activists.” The VoteVets Action Fund has received more than $6 million in grants from a long list of environmental, labor and other progressive groups since 2010, according to the CRP. The group has also doled out grants to such Democrat-friendly allies as the American Bridge 21st Century Foundation and America Votes, an umbrella group for progressive activists, according to IRS records.
“We’re progressive, period,” acknowledged Soltz. “There are a lot of veterans out there who don’t feel veterans organizations represent them.”
Veterans’ issues have always resonated powerfully with voters, and that is particularly true in this election. The number of veteran-themed ads, by both outside organizations and candidates themselves, hit 34,000 nationwide as of the end of August, according to Kantar Media Ad Intelligence.
“Veterans are great messengers, because they don’t look political,” said Soltz. “And these are mom-and-apple pie issues: taking care of our veterans.”
But as veterans’ organizations become increasingly politicized, their credibility may be at risk.
Eliza Newlin Carney is a senior staff writer covering political money and election law for CQ Roll Call.
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.
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
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
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.”
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.”
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.