“Giving The Rich Even More Influence”: More Money Coming To An Election Near You
After the 2010 Citizens United ruling, which allowed corporations and unions to overwhelm federal elections with unlimited “independent” expenditures, the courts began overturning reasonable state-specific campaign finance rules — in Montana, for instance. Now it is New York’s turn.
A federal appeals court panel on Thursday said New York State’s long standing $150,000 cap on contributions to independent political groups was probably unconstitutional. The ruling came less than two weeks before New York City’s mayoral election on Nov.5. It might be too late for wealthy conservative groups to gin up support for Republican Joe Lhota in his uphill battle against Democrat Bill de Blasio. But the ruling could have a significant impact on elections starting next year.
New York State already has extremely lax campaign financing laws which allow unlimited donations to political parties for “housekeeping” purposes. Other contribution limits are scandalously high and some crafty donors have even found a way around those by creating multiple limited liability corporations that can each give the maximum to a candidate. For example, one real estate developer, Leonard Litwin, has used this dodge to contribute hundreds of thousands of dollars to Governor Andrew Cuomo’s campaigns.
New York’s Attorney General Eric Schneiderman will have to decide whether to appeal the decision. But he and others have suggested that there are possible alternatives.
He has argued that if the courts keep getting rid of the ceilings on contributions, one good option for New York State would be to raise the floor. By that he means that Albany’s politicians should create a public campaign financing system much like the one in New York City
For more almost 25 years, New York City has enjoyed the best and fairest campaign financing operation in the country. Candidates receive $6 in public funds for every $1 in contributions up to $175 per person. That matching system means more people can afford to run for office. Donors who write small checks know they can make a bigger difference. And voters have more choices, which might be the reason too many state legislators really oppose this way forward.
States that suddenly find big money flooding into their local elections could also fight back by demanding to know who’s writing those checks.
Shaun McCutcheon, who is at the center of a Supreme Court case challenging limits on campaign donations, issued a statement Thursday that said he is “very pleased that another court has decided to rule in favor of free speech.”
Actually it ruled in favor of giving the rich more influence than they already have over who wins public elections.
By: Eleanor Randolph, Editors Blog, The New York Times, October 25, 2013
“Be Careful What You Wish For”: Citizens United Created A Path For A Legislative Strategy Of The GOP’s Most Aggressive Funders
It’s no secret that the corporate class is being eclipsed by Tea Party libertarians and is increasingly unable to exert influence on the Republican Party, despite the generous donations the top 1 percent has long showered on Republicans.
But isn’t the Republican Party in the business of serving Big Business? And didn’t the Supreme Court ruling in Citizens United open the floodgates of corporate campaign cash? How is all that corporate campaign cash failing to buy Big Business sway over the GOP?
Well, here’s the thing: Citizens United didn’t save the Republican Party. Citizens United broke the Republican Party.
Yes, Citizens United was what Republicans and their corporate patrons wanted. Corporations are people. Money is speech. Spend what you want, and no one needs to know who wrote the check.
But as conservative columnist Tim Carney explains in a criminally overlooked Washington Examiner column from last month, what Citizens United meant in practice is this: It “spawned super PACs that offset the power of the political parties and K Street.”
Carney specifically credits the newly created Senate Conservatives Fund and Heritage Action groups for using the new post–Citizens United rules to fund right-wing challengers who have triumphed over Republican establishment favorites, whipping up conservative grassroots fervor behind extremist positions and forcefully shaming any Republican who hints at compromise. They have their own informal “whip operation” that robs Speaker John Boehner and Senate Minority Leader Mitch McConnell of their traditional institutional power. And they have been squarely behind the plot to defund ObamaCare by forcing a government shutdown.
Carney says this Citizens United–fueled dynamic has led to a “Republican leadership vacuum.” I would go a step further: It has broken the Republican Party in two.
Both the ascendant Senate Conservatives Fund and Heritage Action groups are financially backed by the libertarian billionaire Koch brothers, leaders of a single corporation that appears to be trying to surpass the Chamber of Commerce as the dominant funder and power center of the Republican Party.
In the 2012 elections, the Chamber of Commerce and the Koch-backed Americans for Prosperity each spent roughly $35 million. But since then, the Kochs have used another group they created, Freedom Partners Chamber of Commerce, to spend $200 million supporting an array of organizations determined to destroy ObamaCare.
According to Open Secrets, Freedom Partners Chamber of Commerce spending now “dwarfs” the old Chamber, which has been urging Republicans to keep the government open and increase the debt limit, to no avail. The establishment Chamber has become so frustrated with being ignored, it is preparing an effort to donate money to Republican congresspeople who face primary challenges from the right, a direct challenge to the Senate Conservatives Fund and its allies.
The Republican Party is stuck with two major corporate funders vying for influence and pulling the party apart. Yet the organization with the broader business base and more rational political outlook is being out-organized and out-spent by a narrow band of ideological extremists who have figured out how to best exploit a Citizens United world. Recent research has found that Citizens United did not entice corporate America en masse to increase its election spending, but as The New York Times’s Eduardo Porter noted, “Big, frequent donors are particularly extreme.”
The end result is a party compelled to carry out a doomed legislative strategy concocted by the party’s most aggressive funders. If fully carried out to its apocalyptic conclusion, the strategy risks obliterating the Republican Party’s brand for a generation.
Just one year ago, Democrats were terrified that Citizens United would not only drown Barack Obama in a flood of GOP-friendly corporate cash, but also make it impossible for liberal Democrats to ever have a chance at winning national elections.
But the reverse may end up being Citizens United‘s true political legacy.
Obama used the specter of freshly legalized super PACs to rev up his donor base, and raised more money than any presidential candidate in history, neutralizing the Republican super PACs. He kept his party unified, turned out his base, and won decisively. In the election’s aftermath, well-funded but strategically inept right-wing super PACs are financing deep intraparty discord, threatening the ability of Republicans to be competitive in national elections.
Turns out the upholding of the Affordable Care Act isn’t the only gift Chief Justice John Roberts gave to President Obama.
By: Bill Scher, The Week, October 11, 2013
“Where There’s Smoke, There’s Money”: Tobacco Giant Reynolds American Inc Funded Conservative Nonprofits
Tobacco giant Reynolds American Inc. last year helped fund several of the nation’s most politically active — and secretive — nonprofit organizations, according to a company document reviewed by the Center for Public Integrity.
Reynolds American’s contributions include $175,000 to Americans for Tax Reform, a nonprofit led by anti-tax activist Grover Norquist, and $50,000 to Americans for Prosperity, a free-market advocacy outfit heavily backed by billionaire brothers Charles and David Koch.
The tobacco company’s donations are just a fraction of the nearly $50 million that those two groups reported spending on political advocacy ads during the 2012 election cycle, almost exclusively on negative advertising. Federal records show that Americans for Prosperity alone sponsored more than $33 million in attack ads that directly targeted President Barack Obama.
But the money, which Reynolds American says it disclosed in a corporate governance document at the behest of an unnamed shareholder, provides rare insight into how some of the most powerful politically active 501(c)(4) “social welfare” nonprofits are bankrolled.
Reynolds American is the parent company of R.J. Reynolds Tobacco, which makes Camel and Winston brand cigarettes.
“The shareholder specifically requested that we disclose information about 501(c)(4)s, and in the interests of greater transparency, we agreed,” Reynolds American spokeswoman Jane Seccombe said.
Large corporations — tobacco companies or otherwise — almost never release information about their giving to such groups, and it’s most unusual for the groups themselves to voluntarily disclose who donates to them.
These groups, which obtain their nonprofit status because they say their “primary purpose” is not political activity, are generally under no legal obligation to detail their funding sources. Super PACs and other recognized political committees, by contrast, must report the names of their contributors who give more than $200 and the amounts they give.
Yet during the 2012 election cycle, various social welfare nonprofit organizations, emboldened by the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in January 2010, spent more than $250 million to promote or attack federal political candidates, according to the nonpartisan Center for Responsive Politics. The source of most of that money remains a mystery.
Reynolds American’s other contributions last year to 501(c)(4) groups include $100,000 to the Partnership for Ohio’s Future, an organization run by the Ohio Chamber of Commerce that spent several million dollars in a failed 2012 ballot initiative campaign to uphold a law limiting public workers’ collective bargaining rights. It also gave $12,500 to the National Taxpayers Union, a 501(c)(4) group that backed Republican candidates last year with modest expenditures.
Ohio Chamber of Commerce Executive Vice President Linda Woggon told the Center for Public Integrity she wasn’t aware that Reynolds American planned to disclose its donation to Partnership for Ohio’s Future.
But Woggon said she did not have a problem with officials there doing so, adding that “the decision is up to the company.”
Americans for Prosperity, which in 2011 reported to the IRS it received more than $25.4 million in contributions and grants, “leaves it up to our supporters” to decide whether to reveal their donations,” spokesman Levi Russell said.
“It’s their right, and we respect it,” he said.
Officials at Americans for Tax Reform, which in 2011 reported to the IRS that it received nearly $4 million in contributions and grants, did not reply to several requests for comment.
Within the tobacco industry, Reynolds American competitor Lorillard, which manufactures Newport brand cigarettes, has no nonprofit donation disclosure policy in place.
Ronald Whitford, the company’s associate general counsel, said Lorillard “could look at possibly enhancing disclosure in the future.”
Altria, the world’s largest tobacco company, does make contributions to politically active nonprofit organizations, spokesman Bill Phelps said — but he would not name any beneficiaries.
Altria’s corporate policy only requires it disclose its contributions to 501(c)(4) nonprofits in narrow circumstances, none of which applied to its 2012 donations, Phelps said.
For example, Altria, which makes Marlboros, the top-selling cigarettes, would publicly disclose a contribution if a nonprofit used at least $50,000 specifically for “political activities” as defined by the Internal Revenue Service — but only if the nonprofit informed Altria of this fact.
The IRS considers political activity to be the “participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office.”
Therefore, by its own rules, Altria would not disclose contributions that a 501(c)(4) used to fund so-called “issue advertisements” that are sometimes barely distinguishable from ads that directly advocate for or against a politician.
Politically active nonprofit groups such as Americans for Prosperity and Crossroads GPS, which was co-founded by GOP strategist Karl Rove, together spent millions of dollars on these kinds of communications last year.
Reynolds American’s written corporate policy on nonprofit donation disclosure is similar to that of Altria. But the policy “represents the minimum disclosure threshold,” said Seccombe, the company spokeswoman.
Reynolds American specifically acknowledged its donation to Americans for Tax Reform “because of expected stakeholder interest, not because the contributions were intended to be used or were in fact used for ‘political activity’ as that term is meant for purposes of the Internal Revenue Code,” Seccombe added.
She declined to speculate on which 501(c)(4) organizations Reynolds American will donate to this year. But officials will release information on its 2013 donations early next year, she said.
The company’s actions, although limited and hardly in real time, “set a precedent” and are “to be commended,” said Bruce Freed, president of the Center for Political Accountability, which tracks and advocates for political transparency by corporations.
“We just haven’t seen this with other companies related to their giving to (c)(4)’s,” Freed said.
By: David Levinthal, The Center for Public Integrity, May 31, 2013
“The Real IRS Problem”: The Post Citizens United Explosion Of Undisclosed Political Campaign Spending
Americans of all political stripes should be outraged at the recent revelation that the Tea Party was unfairly targeted by the IRS before last year’s election. The IRS should never base its decisions on political preferences or ideological code words, regardless of what bureaucratic challenges it may face. But the lesson that the right is drawing from the IRS’s misdeeds — the lesson that threatens to dominate the public conversation about the news — is wrong.
We’re seeing a knee-jerk reaction, particularly from the Tea Party and their allies in Congress, that is threatening to turn the IRS’s mistakes into an indictment of “big government” writ large. Some are already trying to tie the scandal to the Right’s favorite target, Obamacare, and to the Benghazi conspiracy theory.
The danger of this frame is that it will discourage the IRS from fully investigating all nonprofit groups spending money to influence elections. And it will distract from the core problem behind the IRS’s mess: the post-Citizens United explosion of undisclosed electoral spending.
Before the Supreme Court’s decision in Citizens United, only a limited number of nonprofit 501c(4) groups could spend money to influence elections — those who did not take contributions from corporations or unions. But Citizens United lifted restrictions on corporate spending in elections, setting the stage for individuals and companies to funnel unlimited money through all corporations, including c(4)s and super PACs in an effort to help elect the candidates of their choice. Spending by c(4)s has exploded since Citizens United, since the decision allowed any c(4) nonprofit corporation that didn’t spend the majority of its money on electoral work to run ads and campaign for and against candidates. And c(4)s, as long as they follow this rule, don’t have to disclose their donors under the laws currently in place.
The IRS, then, was forced to play a new and critical role in policing this onslaught of electoral spending. IRS officials clearly made poor choices in how to confront this sudden sea change and those mistakes should be investigated and properly addressed. But strong oversight of this new wave of spending remains critically important and clearlywithin the IRS’s purview.
If we let understandable concerns about bad decisions by the IRS lead to weakening of campaign finance oversight, our democracy will be the worse off for it. Instead, we should insist that the government strengthen its oversight of electoral spending — equally across the political spectrum. We should pass strong disclosure laws that cover all political spenders, including c(4)s. And we should redouble our efforts to overturn Citizens United by constitutional amendment and reel back the flood of corporate money that led the IRS to be in this business in the first place.
By: Michael B. Keegan, The Blog, The Huffington Post, May 15, 2013
“Scamming The Taxpayers”: The IRS Controversy And The Tax-Exempt Charade
As we’re learning more about the IRS giving heightened scrutiny to conservative groups filing for tax-exempt status, we should make one thing clear: If what we’ve heard so far holds up, the people involved should probably get fired, and new safeguards should be put in place to make sure nothing like it happens again. And let it be noted that liberal publications, at least the ones I’ve seen, have all taken that position and have been discussing this story at length.
Now, let’s see if we can understand the context in which this happened. There’s an irony at work here, which is that it may well be that the IRS employees involved were trying to obey the spirit of the law but ended up violating the letter of the law, while for the organizations in question it was the opposite: they were trying to violate the spirit of the law, but probably didn’t violate the letter of the law.
Let’s take the first part, the IRS employees. When a group files for tax-exempt status, the IRS investigates it, asks it some questions, and determines whether it qualifies under section 501(c)(3) or 501(c)(4). The difference between them is that a 501(c)(3) is supposed to be a genuine charity, like your local food bank or Institute for the Study of Foot Fungus, while a 501(c)(4) is still primarily devoted to “social welfare” but is allowed more leeway to engage in some political activities like lobbying and participation in elections, so long as the political activities make up a minority of its time. The biggest practical difference is that donations to (c)(3) groups are tax-deductible, while donations to (c)(4) groups are not.
Once the Supreme Court said in the 2010 Citizens United decision that (c)(4) groups could engage in “express advocacy” (i.e. explicitly saying “Vote for Smith!”), the IRS got flooded with new applications for (c)(4) groups, and its job was to determine if these groups were actually “social-welfare” organizations that also did some politicking on the side, or if they were groups whose main purpose was actually political, in which case, according to the law, they should be denied (c)(4) status. We know very little at this point about what the IRS employees in Cincinnati did and why, but the generous interpretation is that since so many of the applications they were getting in 2010 and 2011 were from Tea Party groups that looked a lot like their sole purpose was to elect Republicans, they looked for some way to handle them all together, so they searched for applications with words like “Tea Party” and “Patriot” in their names and subjected them to extra scrutiny.
Even if their motivations were innocent and they were just struggling to find ways to wade through all these applications and do their jobs properly—in other words, if there was no violation of the spirit of the law—it was still improper for them to sort the applications this way, because it could mean in practice that an ideological test was being applied to which groups got heightened scrutiny. But now let’s look at the other half of the story, the groups applying for tax-exempt status.
The truth is that a great many of the groups that request 501(c)(3) and 501(c)(4) status, of all ideological stripes, are basically pulling a scam on the taxpayers. Maybe that’s a bit harsh, but at the very least they’re engaged in a charade in which they pretend to be “nonpartisan” when in fact they are very, very partisan. For instance, nobody actually believes that groups like the Center for American Progress on the left or the Heritage Foundation on the right aren’t partisan. When there’s an election coming, they mobilize substantial resources to influence it. They blog about how the other side’s candidate is a jerk, they issue reports on how his plans will destroy America, and they do all sorts of things whose unambiguous intent is to make the election come out the way they want it to. CAP and Heritage, along with many other organizations like them, are 501(c)(3) charities, meaning as long as they never issue a formal endorsement and are careful to avoid any express advocacy, they can maintain the fiction that they’re nonpartisan (keep getting tax-deductible contributions, which are easier to obtain than those that aren’t tax-deductible).
And that fiction is even more exaggerated when you get to the (c)(4) groups, particularly the new ones. For instance, when Karl Rove’s Crossroads GPS applied for 501(c)(4) status, it explained to the IRS that it was a social-welfare organization for whom influencing elections wouldn’t be its primary purpose. Instead, the group said “Through issue research, public communications, events with policymakers, and outreach to interested citizens, Crossroads GPS seeks to elevate understanding of consequential national policy issues, and to build grassroots support for legislative and policy changes that promote private sector economic growth, reduce needless government regulations, impose stronger financial discipline, and accountability in government, and strengthen America’s national security.” It claimed that 50 percent of its activities would be “public education,” 20 percent would be “research,” and the remaining 30 percent would be “activity to influence legislation and policymaking.” On the section of the form where the group has to state whether it plans to spend any money to influence elections, it wrote that it “may, in the future” do so, but “Any such activity will be limited in amount, and will not constitute the organization’s primary purpose.”
As everyone knows, this is a joke. Crossroads GPS was created for one purpose and one purpose only: to get Republicans elected. Maybe they found a way to stay within the letter of the law, but there’s no question they were violating its spirit. And the same is true of Priorities USA, the pro-Obama group created in advance of the 2012 election by a couple of former White House staffers. Both are actually twin groups, a (c)(4) and a super PAC, which allows the people running them to keep within the letter of the law by moving spending around between the two. (Stephen Colbert and Trevor Potter memorably explained how all this can be done.)
Without knowing anything about the particular Tea Party groups that were subjected to heightened scrutiny (we’ve only heard about a few so far), the broader context is that you have a lot of groups of all political persuasions that are essentially trying to pull a fast one on the IRS, and through them, the American taxpayer. Keep in mind that tax-exempt status is a gift that we give to groups that can demonstrate they deserve it. Perhaps this part of the tax code should be made stricter, or perhaps it should be made looser so all these charades can stop. But either way, this wouldn’t be a bad time to start that discussion.
By: Paul Waldman, Contributing Editor, The American Prospect, May 13, 2013
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