“A Corrupting Influence On Politics”: Will Influence Of Big Money Be A Big Issue In 2016?
For many years, Democrats have wanted more restrictive campaign finance rules, while Republicans have wanted to loosen restrictions. But it’s likely that the 2016 campaign will feature more outside money than ever before, as millionaires and billionaires take advantage of an almost-anything-goes environment to buy themselves candidates and shift the race in their favored direction. The Koch brothers alone plan to spend nearly a billion dollars (with the help of some friends) on the election.
Nevertheless, the consensus on the campaign finance issue has long been that while voters are generally in favor of reform, it isn’t a motivating issue for many of them. They care more about the economy or health care or foreign policy, and while they might shake their head at the influence of money in politics, in the end the issue won’t make much of a difference in the campaign’s outcome.
But is it possible that 2016 will be the year it finally does? Matea Gold has a piece in today’s paper arguing that it might:
At almost the same time last week that a Florida mailman was landing a gyrocopter in front of the U.S. Capitol to protest the influence of the wealthy on politics, New Jersey Gov. Chris Christie was getting pressed about the same topic at a town hall meeting in Londonderry, N.H.
“I think what is corrupting in this potentially is we don’t know where the money is coming from,” Christie (R) told Valerie Roman of Windham, N.H.
The two moments, occurring 466 miles apart, crystallized how money in politics is unexpectedly a rising issue in the 2016 campaign.
Hillary Rodham Clinton announced last week that one of the top planks of her bid for the Democratic presidential nomination will be reforming a “dysfunctional” campaign finance system. And several of her GOP rivals — quizzed by voters in town hall meetings — have begun lodging their own criticisms of how big-money interests dominate politics.
It’s the last part that’s really a surprise. Republicans have usually put the emphasis on maximal liberty, arguing that restrictions on contributions and outside spending infringe upon the First Amendment. Democrats counter that a liberty that’s available only to the super-wealthy isn’t much of a liberty at all, and all this money, particularly when it’s so hard to know where it comes from, inevitably has a corrupting influence on politics. But now even Republicans seem to be saying things have gone too far.
Of course, it’s easy to just shake your head and say, “Yeah, it’s gotten really bad,” before you head off to your next fundraiser or meeting with Sheldon Adelson. And that’s how lots of candidates have handled the issue in the past: some general words of agreement or a vaguely worded position that doesn’t lock them in to doing much of anything about the problem.
But even if most voters don’t put campaign finance at the top of their priority list, there’s an opening for a candidate who can connect disgust over the political situation in Washington (which has become almost universal) with displeasure over the funding of campaigns to devise a broad reform agenda.
There are already ideas out there. For instance, Rep. John Sarbanes has a bill that would provide refundable tax credits for political contributions and give significant matching funds for small-dollar contributions in an attempt to amplify the voices of ordinary people who can only give a limited amount. That might not put the billionaires out of the politics business, but a candidate could use that idea or something like it to demonstrate his or her commitment to specific policy change, as opposed to just saying they wish the system were cleaner.
Clinton could be that candidate — though she hasn’t yet said anything specific about what she would change. But a Republican could as well. For the last couple of decades, presidential candidates have been saying they’ll change Washington by bringing Democrats and Republicans together to transcend partisanship, something no one believes anymore. But if (nearly) everyone thinks there’s too much money in the system and too much of it is unaccountable, there’s a political opportunity here. Will any candidate seize it?
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, April 20, 2015
“How John Roberts Made Hillary Clinton President”: The Irony Is So Rich, Thank You Citizens United!
During Hillary Clinton’s first campaign event in Iowa, the (finally) announced presidential candidate laid out the four main goals of her campaign, including the need to fix our “dysfunctional” political system and to get “unaccountable” money out of politics, even if it requires a constitutional amendment. And thus we have the latest chapter in Clinton’s unique and evolving relationship with Citizens United v. Federal Exchange Commission.
It may be easy to forget that the basis for the claim that led to the controversial Supreme Court decision in Citizens United v. FEC was a barely watchable film titled Hillary: The Movie, featuring prominent conservatives such as Dick Morris and Ann Coulter that was trying to damage Hillary Clinton on eve of the January 2008 Democratic presidential primaries. The film was produced by Citizens United, a D.C.-based conservative nonprofit organization.
The film was supposed to be distributed on cable television and video on demand, but the federal government blocked the airing of the film because it violated the McCain-Feingold Bipartisan Campaign Reform Act of 2002 that prohibited corporate and nonprofit funded advocacy ads that mentioned a candidate’s name within 30 days of a primary or caucus, or 60 days of a general election.
At the time, no one could have predicted that Clinton would finish third in the Iowa caucuses behind Barack Obama and John Edwards, so many conservatives thought that more than just attack ads would be needed to defeat her eventual rise to the presidency: Attack movies were the new and necessary medium.
Well, roughly a year into President Obama’s first term, the Supreme Court made its decision on Citizens United v. FEC, saying that certain provisions in the McCain-Feingold BCRA were unconstitutional, and this brought us into the modern era of a nearly unrestricted and confusing flow of cash into our electoral process through various 501(c)(4)s, PACs, and Super PACs.
Stephen Colbert may have actually best explained how this absurd network of constantly flowing political money works when he announced on his show that he was officially forming an exploratory committee for his potential candidacy for President of the United States of South Carolina, and therefore could no longer run his Super PAC. See the videos here and here.
And here we are today. Less than a week into Clinton’s second official presidential bid, she has already done two things that may completely alter Citizens United v. FEC and our electoral process. Her support of a constitutional amendment limiting or regulating campaign finance is a smart and popular decision among liberal voters, but her campaign’s announcement that it intends to raise a staggering $2.5 billion combined by the official campaign, Hillary for America, and various unaffiliated 501(c)(4)s, PACs, and Super PACs has completely altered our political landscape.
Roughly eight months before the Iowa caucuses, the fundraising machine that will drive or greatly influence Clinton’s campaign has set goals that dwarf those of Obama’s in 2012, and may scare away potential Democratic challengers.
The 2012 presidential election between President Obama and challenger Mitt Romney was the most expensive campaign in history, with each candidate’s election team and supporting groups raising $1.123 and $1.019 billion respectively. Clinton’s campaign intends to surpass that entire amount on its own, and she is allowed to do so because of a case brought to the Supreme Court because a conservative group wanted to have a larger impact on hopefully preventing her from winning the presidency in 2008. The irony is so rich.
Who knows if Clinton will be able to defeat the GOP and Republicans at the game they insisted on creating, but she most likely will at least be able to match them dollar-for-dollar in the general election.
The brilliance surrounding all of this is the fact that Clinton has steadfastly been against this sort of external influence into politics. She articulated her objections on her first day of campaigning in Iowa, and the main reason why campaign finance laws have changed in recent years was due to her objection to the previously unlawful attempt to disseminate a campaign attack video denouncing her in 2008.
Clearly, her campaign’s $2.5 billion fundraising estimate may point to the contrary, but the fundraising strategy of her campaign is actually based around small donations. Additionally, she has not named a finance chair for her campaign.
According to an internal campaign memo obtained by Politico, Hillary for America intends to have a “flat fundraising structure” and a “grassroots donor base and a merit-based finance organization.”
“The campaign will have the resources needed to compete,” continued the memo. “Initially fundraising will be a challenge—with lower limits and a smaller list than Obama in 2011.”
The campaign has moved away from her 2008 strategy of seeking mega-donors, but it also knows that it has the support of unaffiliated organizations such as Ready PAC, formerly Ready for Hillary, that desperately want a Hillary Clinton presidency. (According to FEC regulations, Ready for Hillary was forced to change its name once Clinton officially announced her candidacy.)
Arguably against the wishes of many Clinton supporters, two Clinton 2008 volunteers launched Ready for Hillary in 2013 and have raised more than $15 million for Clinton’s campaign and amassed a 4 million strong grassroots fundraising list that will be given to Hillary for America. Clinton’s campaign has already hired six Ready for Hillary staffers, including co-founder Adam Parkhomenko. These former staffers can no longer coordinate with remaining staffers, and Ready PAC intend to shut down completely in the coming days.
Essentially, Hillary Clinton’s campaign can develop only the fundraising strategy that the candidate supports, but the numerous other political groups that independently support her can fundraise how they see fit. Independent of each other they all collectively believe that these various efforts should enhance candidate Clinton’s chances of moving back into 1600 Pennsylvania Avenue.
All told these fundraising efforts may make her the unstoppable, inevitable candidate that she wanted to be in 2008. The big difference now is that she did not have Citizens United v. FEC to support her campaign.
If Hillary Clinton becomes the 45th president of the United States, the GOP may want to give themselves a nice pat on the back for all the hard work they indirectly have done to fund her presidential campaign.
By: Barrett Holmes Pitner, The Daily Beast, April 16, 2015
“Awwwwwkward”: Meet Ted Cruz’s Tax-Dodging Sugar Daddy
Hedge fund CEO Robert Mercer is all in for the conservative Texas Republican Ted Cruz, and the billionaire will have unusually substantial influence in how his contributions get spent.
But the billionaire also has some baggage—like, the avoiding billions in taxes kind of baggage.
His alleged failure to pay those taxes led to substantial congressional scrutiny in 2014—and it’s not clear the investigation is over.
This, and some of Mercer’s side projects, could present interesting challenges for Cruz’s campaign. Especially since Cruz has been a vocal opponent of those who “give favors to Wall Street” and engage in “crony capitalism.”
On the one hand, Mercer’s support is fantastic for Cruz for all the obvious reasons (having a billionaire in your corner is nice). On the other hand, Mercer’s hedge fund—Renaissance Technologies—recently faced an unflattering congressional investigation, the results of which indicated that it used complex and unorthodox financial structures to dramatically lower its tax burden.This drew scorching bipartisan criticism from investigators on the Senate Permanent Subcommittee on Investigations.
“Renaissance profited from this tax treatment by insisting on the fiction that it didn’t really own the stocks it traded—that the banks that Renaissance dealt with, did,” said Sen. John McCain during a hearing on the issue, per Mother Jones. “But, the fact is that Renaissance did all the trading, maintained full control over the account…and reaped all of the profits.”
In his opening statement for that hearing, then-subcommittee chair Sen. Carl Levin, a Michigan Democrat, said that Mercer’s business avoided paying more than $6 billion in taxes between 2000 and 2013.
Since then, Levin has retired from the Senate and Republican Sen. Rob Portman has taken his place as subcommittee chair. When I called the subcommittee’s Capitol Hill office to see if any investigation into Renaissance was still underway, the person who answered the phone said he couldn’t comment on active investigations. I then asked if that meant the investigation was in fact active.
“I can’t say whether it’s active, I can’t say whether it’s inactive, I can’t even say whether we’ve investigated them,” he said.
Later, Portman’s spokeswoman, Caitlin Conant, emailed to say that the committee doesn’t comment on its work beyond what’s in the public record. Renaissance Technologies didn’t respond to a request for comment on whether they’re currently being investigated.
Given this probe into his company’s books, it’s no surprise Mercer has invested heavily in keeping financial industry watchdogs from gaining political power. However, you’d think this might conflict with his candidate’s populist zeal.
“[M]y criticism with Washington is they engage in crony capitalism,” Cruz told Bloomberg Politics. “They give favors to Wall Street and big business and that’s why I’ve been an outspoken opponent of crony capitalism, taking on leaders in both parties.”
But the Cruz campaign doesn’t seem to see any problems with the arrangement. When I asked Rick Tyler, the campaign’s senior communications adviser, if he was worried about potential conflicts, he said, “No way.”
Mercer has long backed conservative candidates, and he’s spending heavily on Cruz through a new breed of super PACs started by the super rich.
An anonymous Cruz source told Bloomberg on Wednesday that a franchise of pro-Cruz super PACs—formed just this week—will have raised $31 million by end of the day on Friday. There are four super PACs, called Keep the Promise, Keep the Promise I, Keep the Promise II, and Keep the Promise III.
This is not normal; presidential candidates usually give their imprimatur to one such group, which then rakes in contributions and makes independent expenditures to help the candidate. After all, there are legal limits on how much donors can give to presidential candidates, but no limits on how much they can give to these PACs.
One longtime campaign lawyer said the widespread Republican donor buyer’s remorse exists from the 2012 general elections—when a few powerful super PACs spent massive sums of money to get Mitt Romney elected, and were left empty-handed on Election Night. As a result, billionaires are starting their own PACs to fund political campaigns to have more control on how their money gets spent.
It’s worth noting that this explanation doesn’t make sense to everyone. Dan Backer, an attorney who’s worked extensively with Republican and Tea Party groups on campaign finance issues, said he thought having multiple super PACs could make life unnecessarily difficult for everyone involved.
“All you’re doing is multiplying your reporting and compliance burden for no good reason,” he said. “At first blush, it just strikes me as a little weird.”
Regardless, the operating assumption seems to be that having a cadre of super PACs will give mega-donors like Mercer more power over the dynamics of the presidential election. Saul Anuzis, a Michigan Republican operative who started a Mercer-funded super PAC in the 2014 midterms, indicated as much in an interview with Mother Jones. He told the magazine that he expected to see “more and more super-PACs starting that are donor-centric or district-centric.” In Cruz and Mercer’s case, that prediction seems remarkably prescient.
In 2010, 2012, and 2014 the billionaire spent significant money trying (unsuccessfully) to take out Oregon Democratic Representative Peter DeFazio, who has made his support of higher Wall Street taxes a signature issue. And DeFazio has used the fact that he’s a Mercer target to burnish his fiscal-progressive bona fides.
Mercer helped Lee Zeldin defeat former Securities and Exchange Commission prosecutor George Demos in a 2014 Republican House race primary. Mercer also helped Zeldin win the general election, where he defeated a Democratic incumbent who was a vociferous defender of Dodd-Frank.
But his areas of interest are broader than just elections. He singlehandedly paid for a $1 million TV ad campaign opposing the so-called Ground Zero Mosque. And his affinity for conservative causes seems to go back to his early days doing research for the Kirtland Air Force Base’s weapons lab in New Mexico.
Mercer hinted at his political evolution in a 2014 speech he gave to accept the Association for Computational Linguistics lifetime achievement award. He described rewriting a computer program so that it worked more efficiently, and then said that his bosses at the lab decided to just make the program do more complicated computations.
“I took this as an indication that one of the most important goals of government-financed research is not so much to get answers as it is to consume the computer budget, which has left me ever since with a jaundiced view of government-financed research,” he said.
Excepting Zeldin, Mercer’s chosen candidates haven’t fared particularly well. The billionaire spent $1 million to help pay for the 2012 Republican National Convention, and also gave Karl Rove’s Crossroads GPS significant funds to try to boost Republicans’ fortunes. And he spent $200,000 on Wendy Long’s Senate race. Who’s Wendy Long, you ask? Right.
There’s a kind of funny flip in the media narrative here, too. After Cruz announced that he would run, a Politico sub-hed blared that he was “months behind his competitors in recruiting mega-donors and bundlers.” If the storied $31 million materializes, then those concerns were probably meritless.
But, to paraphrase the poet, with new money comes new problems. And it remains to be seen how a cozy alliance with a guy whose hedge fund allegedly dodged $6 billion in taxes could play out for the senator.
By: Betsy Woodruff, The Daily Beast, April 10, 2015
“Super-Wacko-Birds”: Another Step In The Evolution Of Super-PACs As Instruments For Donor Control Of Politicians
Ted Cruz has managed to distract attention from Rand Paul’s campaign launch by letting it be known that four Super-PACs have been set up to support his own candidacy, with commitments already in for a cool $31 million. If you boil off all the chattering about the size of the contributions (not really all that much in the larger scheme of things) and the amnesia about the role Super-PACs played in 2012, two things seem to make this noteworthy: how early the money came in, and the structure of the Cruz Super-PACS, which suggest an unprecedented degree of specialization and micro-managing of Grandee dollars.
This latter dimension was explored at Bloomberg Politics (which broke the story on the Cruz Super-PACs) by Julie Bykowicz and Heidi Przybyla:
One of the constellation of committees first reported Wednesday by Bloomberg appears to be underwritten by Republican mega-donor Robert Mercer and his family. Campaign lawyers said the arrangement is unlike anything they’ve ever seen before.
“It’s something to watch,” said Jason Abel of Steptoe & Johnson, who is not involved with the super-PACs. Abel and other lawyers speculated that multiple committees, all of which are named some form of “Keep the Promise,” were created to satisfy the whims of individual donors.
“It appears that setting up multiple super-PACs would allow maximum flexibility for certain donors to push their issues,” Abel said. The Campaign Legal Center’s Paul Ryan suggested that the arrangement creates “different pots of money for donors to fund different things.”
A strategist involved with the committees, who asked not to be named because he’s not authorized to speak publicly, corroborated those theories. Each of the super-PACs—Keep the Promise and three “sub-super-PACs” dubbed Keep the Promise I, Keep the Promise II and Keep the Promise III—will be controlled by a different donor family, and will likely develop different specialities, such as data mining, television advertising and polling, the strategist said.
If that’s accurate, it means another step in the evolution of Super-PACs as instruments for donor control of politicians. The 2012 versions were organizations set up by candidates to serve as conduits for big donor dollars that didn’t just go into the hungry maw of the campaign, much less national “issue organizations,” but went directly into ads or other tangible products. It seems the Cruz Super-PACs will allow even greater targeting of dollars beyond the control of the candidate and his dollar-hungry consultants. Add in the early timing, and it’s plausible that these Super-Wacko-Birds feel they are steering rather than simply maintaining the Cruz campaign. I guess that’s how these people want to roll.
By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, April 9, 2015
“The Supreme Court’s Extreme Faith”: The Menendez Case Proves The Supreme Court Was Naive About Campaign Finance Laws
No cameras are allowed inside the main Supreme Court chamber, but on Wednesday, a group of activists—for the second time this year—evaded tight security controls and snuck one in to record themselves causing disorder in the court. Their goal: Decry two of the court’s most controversial rulings on campaign finance, Citizens United v. FEC and McCutcheon v. FEC, which have paved the way for powerful donors and corporations to influence elections.
“Justices, is it not your duty to protect our right to self-government?” a protester is heard yelling in a video posted on YouTube. “Reverse McCutcheon. Overturn Citizens United. One person, one vote.” Court police escorted her out, followed by other protesters, including a man chanting, “We who believe in freedom shall not rest.”
Chief Justice John Roberts was not impressed. SCOTUSblog’s Lyle Denniston, one of the few reporters at the scene, noted he grew impatient and later said, “Oh please,” on top of threatening contempt sanctions against the protesters.
Say what you will of the activists’ stunt or the chief’s reaction—because really, no protest in the world will ever overturn a Supreme Court precedent. But consider what Roberts himself proclaimed in McCutcheon, which turned one year old today: “Spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder’s duties, does not give rise to quid pro quo corruption. Nor does the possibility that an individual who spends large sums may garner influence over or access to elected officials.”
McCutcheon invalidated something very specific—the limit on the total amount a person can give to all federal candidates during a two-year election cycle—but Roberts didn’t stop there. Time and again he kept singling out blatant quid pro quo arrangements as the only thing Congress could regulate. Not so with meager attempts to “prevent corruption” or curbing “the appearance of mere influence and access.” Those things aren’t as big a deal under the Constitution. Only tit-for-tat corruption is.
Compare that to the other case the protesters targeted, 2010’s Citizens United, a ruling as grand as it was shocking for the dearth of evidence on which it rested: “We now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” The court went on: “The appearance of influence or access … will not cause the electorate to lose faith in our democratic order.”
But it turns out corruption, appearances, and influence-peddling are all at the crux of federal charges against New Jersey Senator Bob Menendez. He was indicted Wednesday on several counts of bribery and other offenses, stemming from an allegedly cozy relationship with Salomon Melgen, a Florida ophthalmologist and longtime friend who is accused of giving lavish gifts to the senator. These included a trip to a luxury hotel in Paris, a stay at an upscale villa in the Dominican Republic, contributions to a legal-defense fund, and more than $1 million in donations to various political action groups supporting Democratic candidates—all in exchange for political favors for Melgen, his business interests, and his numerous girlfriends.
Whether these salacious allegations stick or lead to some kind of plea deal will soon be decided; Menendez pled “not guilty” on all charges Thursday. But a sizeable contribution listed in the indictment calls into question the Supreme Court’s extreme faith that large sums of money not directly given to a candidate fail to amount to corruption.
According to prosecutors, Melgen, through his own company, contributed $600,000 to a political action committee aimed at helping Democrats retain control of the Senate. That’s all well and good under Citizens United,except Melgen allegedly earmarked the money so it went directly to the Menendez re-election campaign. That’s also kosher under campaign regulations, except the indictment alleges Menendez “sought and received” the donation—comprised of two checks for $300,000 each, sent to the super PAC in exchange for Menendez’s assistance in resolving a Medicare-related dispute. Interestingly, the indictment notes that Melgen cut one of the checks on the same day he attended an annual fundraiser Menendez hosted.
The legal process will determine the extent to which the alleged favors and contributions are related. But even if they weren’t and the case went away, the Menendez indictment undermines the Supreme Court’s facile conclusion that merely spending large sums of money—absent a clear showing of quid pro quo—isn’t enough to prove that corruption has taken hold. Or the notion that the mere appearance of influence and access to elected leaders fails to be an interest compelling enough to require strong campaign-finance laws—the kind that governs how big donors and big money behave each election cycle.
Chief Justice Roberts may not be too pleased with the recent protests and security breaches at the Supreme Court, but the Menendez case opens the door for some introspection on how recent campaign-finance rulings are reshaping who calls the shots in our democratic order.
By: Cristian Farias, The New Republic, April 2, 2015
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