The Senate voted overwhelmingly Monday to debate a proposed constitutional amendment that would let Congress and the states put caps on political spending. But that’s probably the high-water mark for the amendment. When Sen. Joe Donnelly (D-Ind.) called the vote tally, it looked like a big win for advocates of the constitutional amendment: 79 ayes, 18 nays. That’s a dozen votes more than the 67-vote majority needed to actually move the amendment out of the Senate and over to the House. But it was a strategic move as 25 of the Senate’s 45 Republicans voted aye. It allows the GOP to prolong the debate and spend less time on other measures that Democrats want to vote on before the midterm elections – measures such as equal pay for women and college affordability. Democrats pretty much ignored the stalling tactic and insisted this is an important vote. Sen. Elizabeth Warren (D-Mass.) said, “There are times when action is required to defend our great democracy against those who would see it converted into one more rigged game where the rich and the powerful always win. This is the time to amend the Constitution.” But setting the political gamesmanship aside, one question lingers. When pollsters ask Americans about the political money system, overwhelming percentages basically say they hate it. So why doesn’t Congress do something?
In a 124-15 vote, the Vermont House passed S.82, a contentious campaign finance bill rolled over from last session. The bill limits how much money individuals can donate to political campaigns in the state. Vermont hasn’t had a campaign finance law since 2006, when courts struck down the 1997 campaign finance law. Rep. Debbie Evans (D-Essex) says that was because the limits were too low and didn’t adjust for inflation. Since then, Sen. Jeanette White (D-Windham) says some state leaders reverted back to the 1981 law, which limited donors to $2,000 per candidate. “We didn’t actually re-adopt that,” White said about the 1981 law. “So whether we have any limits now, or any law at all is up in the air.” The new campaign finance bill passed in the Senate in 2013, then was amended by the House. It went to a conference committee made up of three House members and three Senate members, chaired by Rep. Evans. On the House floor Thursday, Rep. Evans said “We’re living in a sort of Wild West situation.”
As the report of the IRS Inspector General shows, the agency’s scrutiny of conservative groups applying for non-profit status was, more than anything, a clumsy response to a task the IRS is ill-equipped to carry out – monitoring an accidental corner of campaign finance law, a corner that was relatively quiet until about 2010. That corner is the 501(c)(4) tax-exempt organization, belonging to what are sometimes called “social welfare” groups, which enjoy the triple privilege of tax exemption (though not for their donors), freedom to engage in some limited election activity, and, unlike other political committees (PACs, SuperPACs, parties, etc.), freedom from any requirement to disclose information about donors or spending. The use of (c)(4)s as campaign vehicles didn’t originate with the Citizens United decision in 2010 (Citizens United, the organization that brought the case, was already a (c)(4)), but the decision seems to have created a sense that the rules had changed, and even small groups – especially, apparently, local Tea Party organizations — rushed to create (c)(4)s.
There’s a new stimulus plan underway in America: $5.8 billion is being injected into the U.S. economy, particularly in states like Ohio, Virginia, Colorado and Florida. We’re talking of course about campaign spending, and this year’s elections will be the most expensive in history. In fact, by the time we all head to the voting booth on Election Day, nearly $6 billion will have been spent on campaigns — big and small — all across America. Much of that money will come from superPACs and other outside groups free to spend as much as they want, mostly on Obama and Romney ads. Pro-Republican groups are way ahead of pro-Democratic ones in raising that money, thanks in part to wealthy donors. According to New Yorker writer Jane Mayer, that has been President Obama’s Achilles’ heel — his aversion to cultivating wealthy donors for his campaign.
The revelation last week that Joe Ricketts, the founder of TDAmeritrade, was considering spending $10 million on slashing personal attacks against President Barack Obama seemed the latest evidence of the flood of new money entering politics. Within hours of the New York Times’s scoop of a proposed ad, however, the lesson that emerged was a very different one: How dangerous and embarrassing it can be for corporate figures to play in partisan politics. Ricketts found himself frantically distancing himself from a proposal from adman Fred Davis while he scrambled to insulate his business interests — the brokerage he founded, a hyperlocal New York news group he owns, the Chicago Cubs — from potential fallout from livid liberal customers. It was the highest-profile of a handful of recent squalls revealing some of the natural, political limits to direct corporate influence in electoral politics. “I shall have no further comment on this or any other election year political issue,” a chastened Ricketts said in a statement Thursday.
The latest deadline for the presidential candidates and the major superPACs to disclose their finances was Sunday night. The public and the media can find out who has been giving to the candidates, and how that money was spent. But there’s a lot of political spending that isn’t being reported. Outside money groups are spending millions of dollars, and the donors remain anonymous. Two recent court rulings could force those groups to file public disclosures, but there already seems to be a way around that. Unlike superPACs, these big-spending groups don’t disclose their donors. They operate mostly as tax-exempt advocacy organizations under section 501(c)(4) of the tax code. It’s a status that lets them hide the sources of their money.
No doubt about it, large unlimited donations are flowing into SuperPACs from rich individuals and corporations aimed at influencing who is elected at all levels of government in 2012. With the SuperPACs and other forms of political committees regulated by the federal and state election agencies, or by the IRS under section 527, at least we know who the donors are. But when political campaign expenditures are made by various forms of nonprofit, tax-exempt organizations, such as 501(c)(4) social welfare groups (like Crossroads GPS) or 501(c)(6) business associations (like the US Chamber of Commerce), there is no general law requiring their donors to be identified. So secret money in the millions, once again, flows in. A number of Senators and members of the House of Representatives have proposed a new DISCLOSE 2012 Act to force public disclosure of secret donors in federal elections. A similar bill failed by one vote in 2010. If the new Act passes, will it solve the problem? It might help, but it wouldn’t be enough. In 29 pages, the Act is cumbersome at best.
With 300-plus super PACs and counting, it would be easy to miss CREEP. But last Thursday, a new super PAC ingeniously named the Committee for the Re-Election of the President registered with the Federal Election Commission. The committee is based out of a post office box at the Watergate Complex—an homage, of course, to the other Committee for the Re-Election of the President, the fundraising committee for President Richard Nixon that became embroiled in the Watergate scandal. It’s an inside joke with a serious punchline. The old CREEP (which used the acronym CRP and at one point was called the Committee to Re-Elect the President) helped spur the creation of the FEC. The website for CREEP Super PAC says it’s committed “to raising voices not dollars” and advocates disclosure. “It’s an excellent chance for people to step back and say, ‘Are we happy with 40 years of campaign finance and the lack of disclosure?’” said Robert Lucas, 22, founder of the new CREEP and a graduate student in public policy at Georgetown University. “There’s a lot of irony, with the 40th anniversary of Watergate and where we are now.”
Yesterday the long-developing ties between two Republican super PACs and Mitt Romney’s campaign grew stronger when the campaign announced that veteran GOP strategist Ed Gillespie would come aboard as a senior adviser. Gillespie is a founder of and adviser to American Crossroads, which has stockpiled $26.9 million so far this election cycle, much of which is expected to be spent helping the Republican nominee; it’s increasingly likely that will be Romney. Another Crossroads adviser is Carl Forti, who is also president of the pro-Romney Restore Our Future super PAC. But that’s just the tip of the iceberg. The two super PACs, awash in money, share a number of benefactors. Many of the largest donors to Crossroads are also major donors to Restore Our Future, and vice versa. And many have maxed out to the Romney campaign itself, which has been struggling, relatively speaking, to raise cash.
THE video begins like this: wispy clouds drift over the great American outdoors. Cranes build an office block. Trucks roar down the highway. ”Capitalism made America great,” says a gravelly voice. ”The free market. Hard work. The building blocks of the American dream.” A family walks through a wheat field, where the Stars and Stripes waves briskly. ”But in the wrong hands, those dreams can turn into nightmares.” And storm clouds gather over the wheat field. The attack ad goes on to paint Republican presidential candidate Mitt Romney as a corporate raider of the worst ilk, making his millions through stripping assets and staff from honest American businesses. It was exquisitely timed to upset Romney, as rival Republican Newt Gingrich accelerated his run towards his South Carolina primary win on January 21. But Gingrich’s name was not mentioned, nor did he endorse the ad (or later accept responsibility for its errors and exaggerations). It was paid for by a group called Winning Our Future.
One of the political ads airing in the run-up to the April 3 Wisconsin primary accuses Rick Santorum of voting with former Senator Hillary Clinton in favor of granting voting rights to violent convicted felons. Santorum’s campaign says the commercial is untrue, yet that hasn’t stopped Restore Our Future, a so-called super-political action committee supporting Mitt Romney, from running it and another attack ad more than 1,647 times on Wisconsin television stations, according to New York-based Kantar Media’s CMAG, a firm that tracks advertising.
The International Monetary Fund’s former chief economist recently described one of the world’s leading economies as fundamentally unsound because the political process is captured by financial firms. But he wasn’t talking about just any banana republic. He was talking about the U.S.A. In the article “Why Some Countries Go Bust”, Adam Davidson discusses a new book in which economist Daron Acemoglu argues that “the wealth of a country is most closely correlated with the degree to which the average person shares in the overall growth of its economy”. In other words, economic inequality is itself predictive of economic decline. The book includes historical studies showing how “fairly open and prosperous societies can revert to closed and impoverished autocracies.”
William R. Smith is the invisible candidate. No one has seen him; no one has heard him speak. Outside of his home county of Pike, there is probably no Democrat who could recognize him on sight. Tuesday, the Waverly resident won – barely – the popular vote in the 2nd District’s Democratic primary, while Brad Wenstrup was busy in the Republican primary upending a GOP incumbent member of Congress, Jean Schmidt. He came out ahead of Madeira’s David Krikorian, who ran against Schmidt as an independent in 2008, by a scant 59 votes out of slightly over 20,000 cast. Once the official count is done later this month, there may well be an automatic recount. “I have never seen. I don’t know him,” Krikorian said Wednesday. He blamed his loss on a mysterious SuperPAC that may have paid for calls for Smith and other Democrats.
There’s no mystery about why a business or industry group might be shy about how it spends money on election campaigns. Just ask department store chain Target. In 2010, Target, which had been known for its progressive employment policies, faced a customer and shareholder backlash after it donated $150,000 to a pro-business PAC in Minnesota that was backing a gubernatorial candidate who opposed gay rights. Target eventually quelled the furor with a policy change prohibiting trade groups from using its contributions to intervene in elections, but it stopped short of disclosing all its political donations. Yet had it made its Minnesota donation through a nonprofit organization known as a 501(c)4, it might have avoided all that hassle. That’s because such organizations don’t have to disclose who their donors are.