Over the weekend, the New York Times published a sobering interview with the head of the Federal Election Commission, who confirmed that she had largely given up on the agency playing a meaningful role in restraining fundraising and spending abuses in the 2016 campaign. The commissioners are deadlocked, FEC chair Ann Ravel said, because Republican members of the commission think the FEC should exercise less robust oversight, meaning the agency has become “worse than dysfunctional” at a time when outside money is poised to play an even larger role than it did in the last two cycles.
When Republican Representative Cory Gardner of Colorado announced in March that he would run for the U.S. Senate, he knew he could count on backing from national Republican groups, including so-called super PACs. But he wasn’t allowed to talk to them directly. Federal election law prohibits campaigns from having contact with the super PACs and advocacy organizations that have come to dominate political spending since the U.S. Supreme Court’s 2010 Citizens United v. Federal Election Commission decision. Those rules were intended to put a wall between candidates, whose fundraising is constrained by federal limits, and special interest groups allowed to spend unlimited amounts of money promoting candidates and issues. In practice, campaigns have found ways to talk to super PACs while staying on the right side of the law. Gardner’s race illustrates how the system works. Within weeks of his declaring his Senate run, Americans for Prosperity, backed by billionaire brothers Charles and David Koch, told the Washington Post it would spend $970,000 on three weeks of television, radio, and online ads attacking incumbent Democratic Senator Mark Udall. That news was a signal that Gardner, who was unopposed in the primary, could hang back and focus on raising money—even as Democratic groups began running their own ads attacking him.
National: Republican FEC Commissioners Go Public With Complaints About Mystery Redaction | National Journal
The Republican commissioners of the Federal Election Commission have broken their silence about the mysterious 76-page document that was redacted against their wishes in the deadlocked decision over whether Crossroads GPS was a legitimate nonprofit. In a statement posted to the FEC’s website late Tuesday, the commission’s three Republicans pulled back the curtain a bit on the missing document. “We do not believe that these redactions are necessary,” they wrote, saying they had sought to release the documents in a closed-door commission meeting but “the vote failed.” National Journal first reported the existence of the massive redaction and the behind-the-scenes controversy earlier this month.
A conflict—the latest in the series—has broken out among FEC Commissioners about whether they have made public all relevant material on the General Counsel’s view of Crossroads GPS and whether it is a “political committee.” In one report, the GC concluded that the evidence supported further investigation of the question, but the Commission deadlocked, and now a private lawsuit is looming. Republicans seem to believe that the public record is incomplete and that the missing GC analysis would have a bearing on the legal merits of Crossroads’ position. Whatever the facts of the matter, this ruckus reminds readers once again of the troubled condition of the Commission’s “case-by-case,” fact-specific approach to determining “political committee” status. In 2007, the Commission adopted this approach because the alternative—a rulemaking with bright lines—could not attract the four votes needed to pass. Instead the agency, with nowhere else to turn, had to decide cases on unique facts after comprehensive inquiry, or invite organizations unwilling to gamble on the outcome to seek an Advisory Opinion before spending their money and running the legal risk of becoming a fully regulated “political committee.” Political Committee Status, 72 Fed. Reg. 5,595-02 (Feb. 7, 2007). In litigation challenging its failure to promulgate a rule, the Commission defended itself by saying that a rulemaking was “inadvisable.” See Shays v. Federal Election Commission, 424 F.Supp.2d 100, 112 (2006). But it was not inadvisable. It was simply impossible, for lack of a majority position on the Commission on the shape of the law.
If you’re concerned about “dark money” in politics and the tsunami of cash from the super-wealthy and corporations pouring into the political system, or if you were outraged by the recent “scandal” involving the IRS’s clumsy assessment of 501(c)(4) groups, your ears probably perked up when you heard that the Internal Revenue Service has issued draft regulations to “provide clarity” to the rules that govern so-called “social welfare” organizations. Yet the new regs will do almost nothing to fix the things you think are broken and may, in fact, do some real damage to the ability of everyday Americans to have an impact on the political process. The proposed rules cover 501(c)(4) groups, named for the section of the tax code that governs them. Although this is the segment of the nonprofit world best known for notorious organizations like Karl Rove’s Crossroads GPS, it is actually made up of over 86,000 mostly small organizations nationwide, some of which are almost certainly active participants in your own community’s civic life. They weren’t invented in the last election cycle; they’ve been around for generations. Their purpose isn’t to hide donors but to advance policies. The big, famous guys and the shady newcomers get all the attention, but they aren’t typical of the sector, any more than Lady Gaga and Justin Bieber reflect the experience of the bulk of the people making a living in the music industry.
For all its signature dysfunction, the Federal Election Commission has a staff of professionals working to track big money and shady behavior in the nation’s congressional and presidential campaigns. A dramatic — and until now overlooked — example of good staff work surfaced this month in a finding that Crossroads GPS, the shadowy, money-raising monolith of Karl Rove and other Republican strategists, probably broke the election law in 2010 when it claimed that much of its blatantly partisan campaign activities were “social welfare” initiatives.
Campaign-finance activists vowed to take the Federal Election Commission to court Thursday after it disregarded a finding by its staff that Crossroads GPS, conservative nonprofit backed by Karl Rove, likely broke campaign laws during the 2010 elections. On Friday, the FEC quietly released a legal opinion by its staff lawyers that found that the “major purpose” of Crossroads GPS was to elect federal candidates, despite being registered as a “social-welfare” nonprofit group. The FEC’s general counsel recommended holding a formal investigation into the group. However, the FEC decided not to take any action after a deadlocked 3-3 vote by its commissioners along party lines. On Thursday, that decision drew sharp criticism from campaign-finance activists.
National: New IRS rules add both clarity and confusion about the role of advocacy groups in politics | The Washington Post
For the first time since 1959, nonprofit advocacy groups face new Internal Revenue Service rules governing their political activities, an area of the tax code that has been crying out for greater clarity. A proposed regulation unveiled Tuesday by the Treasury Department draws the boundaries more clearly — but instantly kicked off intense debate about whether the lines are in the right place. One phrase in the official notice summed up the imperfect nature of the exercise. The new rules, the department said, “may be both more restrictive and more permissive than the current approach.” That seemingly contradictory statement reflects the muddy zone now occupied by “social welfare” organizations set up under section 501(c)(4) of the tax code. Originally a designation used by civic leagues and homeowner associations, social welfare groups emerged in the past decade as the go-to vehicles for political operatives seeking to influence campaigns without revealing their donors.
Let’s not make excuses for the IRS. The agency shouldn’t have subjected conservative groups to special scrutiny. Campaign finance reform groups should have immediately called for hearings when this scandal broke: Imagine the hue and cry if the IRS during the Bush administration had singled out “progressive” groups for special tax scrutiny and sent themunprecedented questions about their contributors and activities. Given the danger going back to President Richard Nixon of using the IRS against political enemies, the agency has to be scrupulously nonpartisan and fair. Congressional investigations and the Department of Justicecriminal investigation announced Tuesday are inevitable and warranted. But the larger picture here shows why the IRS felt itself forced into the role of campaign finance regulator, and why people also are calling for the Securities and Exchange Commissionand state attorneys general to regulate campaign contributions. This is all about the failure of Congress to require the disclosure of donors who bankroll groups designed to influence elections.
News that employees at the Internal Revenue Service targeted groups with “Tea Party” or “patriot” in their name for special scrutiny has raised pious alarms among some lawmakers and editorial writers. Yes, the I.R.S. may have been worse than clumsy in considering an avalanche of applications for nonprofit status under the tax code, and that deserves scrutiny whether or not the agency’s employees were spurred by partisan motives. After all, some of these “tea party” groups are most likely not innocent nonprofit organizations devoted to the cultural significance of hot beverages — or to other, more civic, virtues. Rather, they and others are groups that may be illegally spending a majority of their resources on political activity while manipulating the tax code to hide their donors and evade taxes (the unwritten rule being that no more than 49 percent of a group’s resources can be used for political purposes).
The Internal Revenue Service was absolutely correct to look into the abuse of the tax code by political organizations masquerading as “social welfare” groups over the last three years. The agency’s mistake — and it was a serious one — was focusing on groups with “Tea Party” in their name or those criticizing how the country is run. The I.R.S. should have used a neutral test to scrutinize every group seeking a tax exemption for “social welfare” activity — Democrat or Republican, conservative or liberal. Any group claiming tax-exempt status under Section 501(c)(4) of the internal revenue code can collect unlimited and undisclosed contributions, and many took in tens of millions. They are not supposed to spend the majority of their money on political activities, but the I.R.S. has rarely stopped the big ones from polluting the political system with unaccountable cash.
Federal Election Commissioner Caroline Hunter’s term expired on April 30. This wouldn’t be newsworthy except for one thing: It means that as of now, all the members of the agency that enforces the nation’s campaign laws—and is supposed to oversee the flood of money candidates and their allies spend—are working on borrowed time. President Obama hasn’t nominated anyone to succeed them. So the current commissioners are simply lingering in their expired seats. To say the FEC is broken is a parody of understatement. The agency’s structure—three Democratic commissioners and three Republicans, serving single six-year terms—means it often deadlocks along party lines. That’s what happened when it tried to update its own regulations in the aftermath of the 2010 Supreme Court decision in Citizens United, the case that helped open the door to unlimited political spending. The commission’s three Democrats wanted to consider tightening disclosure requirements; the Republicans insisted on reviewing only those rules that conflicted with the court’s ruling. That put the commissioners on the sidelines when spending by independent groups tripled to $1 billion in 2012, up from $300 million in 2008, according to the Center for Responsive Politics, a research group that tracks campaign spending.
It is an open scandal in Washington that the Federal Election Commission is completely ossified as the referee and penalizer of abuses in national politics. Karl Rove’s powerful Crossroads GPS money machine cruelly underlined the agency’s impotence last week with a snippy rebuff of a legitimate inquiry from the commission staff about the shadowy sources of the group’s war chest. Crossroads GPS archly replied that continued inquiries on the matter “are unnecessary,” but that if they keep coming, it will offer the same unrevealing response.
Conservative groups pumping hundreds of millions of dollars into the 2012 campaign won a reprieve Tuesday when the U.S. Court of Appeals in Washington overturned a decision requiring organizations that run election-related television ads to reveal their donors. In an unsigned decision, a three-judge panel said a lower court erred in finding that Congress intended to require such disclosure. It sent a case brought by Rep. Chris Van Hollen (D-Md.) against the Federal Election Commission back to the district court and called on the FEC to defend its regulations or issue new ones. Practically, the ruling changes little in the short term: Nonprofit organizations such as the U.S. Chamber of Commerce, Americans for Prosperity and Crossroads GPS changed the type of ads they were running this summer in order to sidestep the lower-court ruling and keep their donors secret.
Two conservative nonprofits, Crossroads GPS and Americans for Prosperity, have poured almost $60 million into TV ads to influence the presidential race so far, outgunning all super PACs put together, new spending estimates show. These nonprofits, also known as 501(c)(4)s or c4s for their section of the tax code, don’t have to disclose their donors to the public. The two nonprofits had outspent all other types of outside spending groups in this election cycle, including political parties, unions, trade associations and political action committees, a ProPublica analysis of data provided by Kantar Media’s Campaign Media Analysis Group, or CMAG, found. Super PACs, which do have to report their donors, spent an estimated $55.7 million on TV ads mentioning a presidential candidate, CMAG data shows. Parties spent $22.5 million.