“What Happened In Iowa Won’t Stay In Iowa”: Super PACs Are A Dangerous New Weapon
The barrage of commercials tells the story: This is a presidential election without meaningful contribution limits or timely disclosure, outsourced to political action committees whose spending often dwarfs that of the candidates they support.
The PACs’ benign, intentionally uninformative names belie the brutal nature of their attack ads and the closeness of their relationships with the candidates, despite the requirement that they operate independently.
The leading example, in terms of financial firepower and ferocity of assault, is “Restore Our Future,” the Mitt Romney-supporting super PAC that has unleashed a $4 million barrage against Newt Gingrich. (It worked. Gingrich complained of being “Romney-boated,” a reference to the Swift boat attacks on John Kerry in 2004.)
The committee is run by Carl Forti, political director of Romney’s 2008 campaign. Its treasurer is Charles Spies, the Romney 2008 general counsel. Its fundraiser, Steve Roche, headed the Romney 2012 finance team until jumping to the super PAC last summer. And to underscore the flimsiness of the PAC’s supposed independence, Romney himself has spoken at “Restore Our Future” events.
Yet up-to-date information about who is bankrolling this effort will not be available until the end of January, by which point four states will have voted and Romney may have the nomination wrapped up.
The last time “Restore Our Future” disclosed its donors to the Federal Election Commission was six months ago, when it reported raising $12 million. The committee would have had to update the information by Jan. 15 but — as have several other super PACs — it managed to postpone that two more weeks by changing its filing status from quarterly to monthly.
Of course, “Restore Our Future” isn’t alone — nor is the super PAC a Republican phenomenon. Rick Perry supporters have formed the “Make Us Great Again” PAC. Gingrich has “Winning Our Future.”
In New Hampshire, the “Our Destiny” PAC backing Jon Huntsman, and reportedly funded by the candidate’s wealthy father, has a new ad calling on voters to “stop the chameleon.” (That would be Romney.) On the Democratic side, Bill Burton and Sean Sweeney, former aides to President Obama, launched “Priorities USA,” which has already aired anti-Romney ads.
The rise of these groups erodes the twin pillars of a functional campaign finance system: limits on the size of contributions and timely information about who is writing the checks.
“The establishment of the candidate-specific super PAC is a vehicle to completely destroy candidate contribution limits,” says Fred Wertheimer, president of the campaign finance reform group Democracy 21, which is releasing a report on the phenomenon. “It is a vehicle that will spread to Congress and it will lead us back to a system of pure legalized bribery, because you will be back, pre-Watergate, to unlimited contributions that are going for all practical purposes directly to candidates.”
Bonus points: The super PAC funds the dirty work of attack ads while the candidate gets to remain above the fray, not required to appear on camera to say that he or she approved this message.
“I view the super PAC as the evil twin of the candidate’s campaign committee,” Federal Election Commission member Ellen Weintraub told me.
The emergence of these entities is the unanticipated but logical outgrowth of the Supreme Court’s ruling in Citizens United v. FEC. The uproar over the opinion involved the justices giving the all-clear to unlimited corporate independent expenditures on behalf of candidates, and this is still a potential problem.
But as a practical matter, most publicly held corporations are squeamish about being associated with such direct advocacy. Instead, the real-world impact of Citizens United, in combination with lower-court rulings, was to usher in the era of the super PAC.
“By definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate,” Justice Anthony M. Kennedy wrote in the majority opinion, dismissing the notion that such spending could be corrosive.
Did he really mean to clear the path for independent expenditure committees backing a particular candidate — and bankrolled by the candidate’s father or run by his former top aides?
“How can it possibly be true that to give more than $2,500 to a candidate is potentially corrupting but to give millions to an outside group that is acting on the candidate’s behalf is not?” Weintraub asked.
Absent legislative intervention (unlikely) or regulatory action (even less likely), the super PAC is a dangerous new force in American politics. What happened in Iowa won’t stay in Iowa.
By: Ruth Marcus, Opinion Writer, The Washington Post, January 3, 2012
Bank Of America Cuts Off Credit To Some Small Businesses
Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.
The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can’t pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.
Business owners complain that BofA’s credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can’t seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.
One such customer, Babak Zahabizadeh, was told in a letter that the $96,000 debt carried by his Burbank messenger service must be repaid Jan. 25. A loan officer offered multiple alternatives over the phone that Zahabizadeh called unaffordable, including paying off the debt at 12% interest over two years. That’s about $4,500 a month, nearly 10 times his current interest-only payment.
Zahabizadeh, known as Bobby Zahabi to his customers, said he has cut the staff of his Messengers & Distribution Inc. to 80 from 200 to nurse his business through tough times.
“I was like, ‘Dude, you’re calling a guy who’s barely surviving!’ ” he said. “My final word was that I can double my payment — but not triple or quadruple it. I told them if they apply too much pressure they’re going to push me into bankruptcy.”
The capped credit lines stem from a corporate overhaul launched by Brian Moynihan, who became Bank of America’s chief executive in 2010. He promised to address losses caused by loose lending and rapid expansion by reining in risks and shedding investments deemed non-core.
BofA spokesman Jefferson George said a “very small percentage” of small-business customers have been affected by the changes. He would not provide exact numbers except to say it wasn’t in the hundreds of thousands. Some of the affected businesses had been customers of other banks that Bank of America acquired, but most were BofA customers from the start, George said.
“These changes were explained in letters to customers, and they were necessary for Bank of America to continue prudent lending to viable businesses across the U.S.,” he said.
The bank still has 3.5 million non-mortgage loans to small businesses on its books. The affected business owners were notified a year in advance that their credit lines were being called, George said, although Zahabi and several others said they had not received the early warnings.
The changes also include added annual reviews of borrowers and annual fees, and often reductions in the maximum amount of credit. George said the aim was to reduce Bank of America’s risks and to bring the loan terms in line with more stringent standards imposed after the 2007 mortgage meltdown and 2008 credit crisis.
Scott Hauge, president of the advocacy group Small Business California, called the credit cuts “a tragedy” for longtime BofA clients left vulnerable by years of struggle in a sour economy.
“If small businesses are going to lead the way out of the economic doldrums we now face in this country, they must have access to capital, not only to hire more people but to protect the jobs they are currently providing,” Hauge said.
Bank of America was a leader in the banking industry’s abortive attempt to impose debit card fees. But it appears to be a laggard in tightening business lending standards. Most other banks, having tightened lending standards in the aftermath of the financial crisis, had eased credit last year as competition for small-business customers heats up, bank analysts say.
“Everyone … is targeting commercial and particularly small-business lending as the real focus area for growth,” said Joe Morford, an analyst in San Francisco for RBC Capital Markets.
While Bank of America is advertising its own commitment to small businesses, it needs to send another message to its government supervisors because it has less of a capital cushion against losses than major rivals, said FBR Capital Markets bank analyst Paul Miller.
Restricting credit lines “is a way to show the regulators they are serious about addressing risks,” Miller said. “Bank of America is under great pressure, especially with another round of [Federal Reserve] bank stress tests coming up, as the regulators say: ‘We want you to tighten up.’ ”
The analysts said all banks monitor business customers and restrict credit on a case-by-case basis. But they said they were unaware of any other large bank systematically capping credit at this time.
Customers interviewed by The Times said they could understand how the turbulent economy might result in some restrictions. But they complained that the credit cutoffs threatened to undo businesses they shepherded through the downturn by slashing costs, hoping to expand when brighter days return.
Several small-business owners indicated that they had nearly used up all the available credit on their Bank of America lines. However, George said maxing out the lines wasn’t a major factor in the bank’s reevaluation of the credit terms.
Kathleen Caid’s Antique Artistry Studio in Glendale sells elaborately beaded, Victorian-style shades that she makes for lamps, chandeliers and sconces. She said she had understood that her $85,000 credit line would remain in place “as long as I wasn’t in default,” and she hadn’t missed any payments.
Caid and her husband, Tim Melchior, a video producer with a Burbank media company, insist they are not in serious financial trouble despite having laid off her eight full-time employees and downsized her business space by two-thirds during the recession.
Yet Bank of America says that her credit-line debt, totaling $80,000, is due in May.
“I wouldn’t have run it up if I knew what was in store,” she said, adding that she would be speaking to an attorney and other banks about her options.
By: E. Scott Reckard, Los Angeles Times, Jamuary 3, 2012
“Going, Going, Gone”: The Presidential Auction Of 2012
The conservative radio host Michael Savage this week presented an unusual offer to Newt Gingrich.
“Newt Gingrich is unelectable,” Savage said of the improbable new front-runner for the Republican presidential nomination. “Therefore, I am offering Newt Gingrich 1 million dollars to drop out of the presidential race for the sake of the nation.”
A million bucks? Come on, man.
Gingrich got $1.6 million being a lobbyi—, er, historian for Freddie Mac. He gets $60,000 a pop for speeches, by his own boastful account. He reportedly has generated $100 million in revenues by trading on his Washington connections.
Offering him $1 million to drop out of the presidential race is the political equivalent of Dr. Evil’s plan to hold the world hostage for — ONE MILLION DOLLARS!
But if Savage was a few zeros short on Gingrich’s price tag, his instincts were correct: Gingrich and his rivals are most definitely for sale. The Republican nominating contest resembles nothing so much as a Christie’s wine auction, as candidates accept, and toss about, dollar figures beyond the comprehension of the people they would serve.
“Tell ya what. Ten thousand bucks? Ten-thousand-dollar bet?” Mitt Romney proposed to Rick Perry in his now-infamous attempt at Saturday’s debate to resolve a dispute over health care.
Criticized for that high wager, Romney went on Fox News to say that Gingrich should return the $1.6 million from Freddie Mac. That led Gingrich, just days into his vow to stay “relentlessly positive,” to suggest that Romney should “give back all the money he’s earned on bankrupting companies and laying off employees.”
The positive front-runner also took a gratuitous pop at Perry, saying of the longtime public servant: “I couldn’t imagine he could cover a bet like that.”
To most Americans, lacking a spare $10,000 wouldn’t be considered a character flaw. But Gingrich is different: a member of Donald Trump’s Trump National Golf Club, he boasted on the campaign trail recently that he didn’t have to be a lobbyist because he was getting rich on the celebrity speaking circuit.
Romney can’t exploit Gingrich’s $100 million in revenues, nor his $500,000 line of credit at Tiffany’s, because his own net worth is $264 million and his own speeches bring in up to $68,000. If corporations are people, as Romney says, he is a man among boys — and his vast campaign stash is the main reason he still has a good chance to beat Gingrich.
President Obama (worth: as much as $11 million) would no doubt enjoy taking on either man, although the fun will be tempered by his own struggle to bring in $1 billion for his campaign, up from $750 million last time. For now, the task of taking on the plutocrats falls to GOP candidate Jon Huntsman, whose new Web site, www.10kbet.com, features a photo of Romney and his Bain Capital colleagues playing with cash.
For Huntsman to pursue this attack is a bit rich (his net worth: between $16 million and $71 million). But the problem is not the candidates’ net worth or their campaign cash. It’s the impression they are giving that corporate interests are receiving something in exchange for the worth they’re helping to build and the cash they’re providing.
Even the relative pauper Perry got in trouble earlier in the campaign for supporting mandatory HPV vaccination after the vaccine’s maker, Merck, gave money to his campaign. “If you’re saying that I can be bought for $5,000, I’m offended,” he said.
But could he be bought for the $28,000 he actually got from Merck? And could the billions now regularly generated in campaign contributions — nearly $4 billion in the 2010 elections alone — have something to do with all the goodies for pet corporations?
Though it’s difficult to trace specific government actions to contributions, there is no doubt in the aggregate that corporate interests can buy candidates for a modest investment.
Compared to $4 billion, Michael Savage’s $1 million won’t buy much: maybe a new, better-fitting suit for Ron Paul, a nice Christmas present for Herman Cain’s wife or enough cushion so that Sarah Palin doesn’t need to pitch another reality show.
In recent days, the gadfly Sen. Bernie Sanders, a Vermont independent, proposed a way out of this mess: a constitutional amendment that would outlaw corporate campaign contributions, overturning the Supreme Court’s Citizens United decision.
Ten thousand bucks says the idea goes nowhere.
By: Dana Milbamk, Opinion Writer, The Washington Post, December 13, 2011
The Occupy Protests: A Timely Call For Justice
Occupy Wall Street and its kindred protests around the country are inept, incoherent and hopelessly quixotic. God, I love ’em.
I love every little thing about these gloriously amateurish sit-ins. I love that they are spontaneous, leaderless and open-ended. I love that the protesters refuse to issue specific demands beyond a forceful call for economic justice. I also love that in Chicago — uniquely, thus far — demonstrators have ignored the rule about vagueness and are being ultra-specific about their goals. I love that there are no rules, just tendencies.
I love that when Occupy Wall Street was denied permission to use bullhorns, demonstrators came up with an alternative straight out of Monty Python, or maybe “The Flintstones”: Have everyone within earshot repeat a speaker’s words, verbatim and in unison, so the whole crowd can hear. It works — and sounds tremendously silly. Protest movements that grow into something important tend to have a sense of humor.
I can’t help but love that House Majority Leader Eric Cantor called the protests “growing mobs” and complained about fellow travelers who “have actually condoned the pitting of Americans against Americans.” This would be the same Eric Cantor who praised the Tea Party movement in its raucous, confrontational, foaming-at-the-mouth infancy as “an organic movement” that was “about the people.” The man’s hypocrisy belongs in the Smithsonian.
Most of all, I love that the Occupy protests arise at just the right moment and are aimed at just the right target. This could be the start of something big and important.
“Economic justice” may mean different things to different people, but it’s not an empty phrase. It captures the sense that somehow, when we weren’t looking, the concept of fairness was deleted from our economic system — and our political lexicon. Economic injustice became the norm.
Revolutionary advances in technology and globalization are the forces most responsible for the hollowing-out of the American economy. But our policymakers responded in ways that tended to accentuate, rather than ameliorate, the most damaging effects of these worldwide trends.
The result is clear: a nation where the rich have become the mega-rich while the middle class has steadily lost ground, where unemployment is stuck at levels once considered unbearable, and where our political system is too dysfunctional to take the kind of bold action that would make a real difference. Eventually, the economy will limp out of this slump, and things will seem better. Fundamentally, however, nothing will have changed.
Does that sound broad and unfocused? Yes, but it’s true.
The Occupy Wall Street protesters saw this broad, unfocused truth — and also understood that the place to begin this movement was at the epicenter of the financial system.
For most of our history, it was understood that the financial sector was supposed to perform a vital service for the economy: channeling capital to the companies where it could be most effectively used. But the rapid technological, economic and political change the world has witnessed in recent decades created myriad opportunities for Wall Street to channel capital to itself, often by inventing exotic new securities whose underpinnings may not exist. The 2008 financial crisis demonstrated the urgent need for reform.
It’s not that investment bankers should be held responsible for all the ills of the world. It’s that Wall Street is emblematic of an entire economic and political system that no longer seems to have the best interests of most Americans at heart.
So a ragtag group — not huge, but idealistic and determined — camps out in Lower Manhattan. A similar thing happens in two dozen other cities. And maybe a movement is born.
Already, after less than a month, commentators are asking whether the Occupy protests can be transformed into a coherent political force. For now, at least, I hope not.
We have no shortage of politicians in this country. What we need is more passion and energy in the service of justice. We need to be forced to answer questions that sound simplistic or naive — questions about ethics and values. Detailed policy positions can wait.
At some point, these protest encampments will disappear — and, since the nation and the world will not have changed, they’ll be judged a failure. But I’ve got a hunch that this likely judgment will be wrong. I think the seed of progressive activism in the Occupy protests may grow into something very big indeed.
By: Eugene Robinson, Opinion Writer, The Washington Post, October 10, 2011
“We Are The 99%” But The 1% Buy Elections
As the “Occupy” protests spread across the country with the slogan “we are the ninety-nine percent,” two reports released this week demonstrate how the top one percent are playing an increasingly outsized role in American elections.
The New Yorker reports on a conservative multimillionaire’s successful efforts to buy North Carolina’s elections, and a report from campaign finance reform groups describe how an elite group of donors have laundered unlimited contributions to presidential campaigns. Much of this influence was made possible by the U.S. Supreme Court’s <a title="reference on Citizens United” href=”http://www.sourcewatch.org/index.php?title=Citizens_United” target=”_self”>Citizens United decision, and anger over corporate influence in politics is helping fuel the populist uprisings in Manhattan, D.C., and around the country.
Dimestore Donor Dominates North Carolina Elections
James Arthur “Art” Pope, chairman and CEO of the Variety Wholesalers dimestore discount chain, has created a “singular influence machine” in North Carolina, using his family’s wealth to influence that state’s elections and promote right-wing ideology, according to a report by Jane Mayer in this week’s New Yorker magazine.
“The Republican agenda in North Carolina is really Art Pope’s agenda. He sets it, he funds it, and he directs the efforts to achieve it. The candidates are just fronting for him. There are so many people in North Carolina beholden to Art Pope—it undermines the democratic process,” says Marc Farinella, a Democratic political consultant.
Like the Koch brothers (whom Meyer profiled in the New Yorker last year), Pope grew up wealthy, inherited his family dimestore business, and has spent massive amounts of money funding organizations and candidates opposing environmental regulations, taxes, minimum wage laws, unions, and campaign-spending limits. In addition to their sizable personal fortunes, the Kochs and Pope can spend millions in corporate funds because their companies are privately held. Pope regards Charles and David Koch as friends, and is one of the four directors of the Koch-funded-and-founded Americans for Prosperity, to which he has donated over $2 million.
John Snow, a centrist Democrat who was defeated by Art Pope-funded attacks after three terms in state Senate, told the New Yorker, “[i]t’s getting to the point where, in politics, money is the most important thing.” Snow was expected to easily win reelection, but his Tea Party-affiliated candidate with no experience had a seemingly endless flow of money. “A lot of it was from corporations and outside groups related to Art Pope. He was their sugar daddy.”
Chris Heagerty was another Democratic candidate defeated by a flood of Pope-connected money. One ad depicted Heagerty, who is caucasian but has dark hair and complexion, as Hispanic. “They slapped a sombrero on a photo of me, and wrote, ‘Mucho Taxo! Adios, Señor!’” Heagerty told the magazine. “If you put all of the Pope groups together, they and the North Carolina G.O.P. spent more to defeat me than the guy who actually won.” According to the article, he fell silent, then added, “For an individual to have so much power is frightening. The government of North Carolina is for sale.”
“We didn’t have that before 2010,” said Bob Phillips, head of Common Cause North Carolina. “Citizens United opened up the door. Now a candidate can literally be outspent by independent groups. We saw it in North Carolina, and a lot of the money was traced back to Art Pope.”
According to an analysis by the Institute for Southern Studies, Pope, his family, and their organizations targeted twenty-two legislative races and won eighteen. The wins placed both chambers of North Carolina’s General Assembly under Republican majorities for the first time since 1870. Three-quarters of “independent expenditures” in North Carolina’s 2010 state races — spending made independently of a candidate or their committee — came from accounts linked to Pope.
Wealthy Elites’ Influence on Elections Grows, Post Citizens United
In the post Citizens United era, the outsize influence of a small group of wealthy donors making “independent” expenditures is not limited to North Carolina, according to a report released this week by Democracy 21, the Campaign Legal Center, and the Center for Responsive Politics. A handful of elite donors are capitalizing on the lawless campaign finance environment to exceed federal candidate contribution limits. Individuals have spent as much as a million dollars supporting Mitt Romney’s bid for president, and two million to support President Obama’s reelection.
“Super PACs” emerged in the wake of the Citizens United decision, which struck down limits on corporate independent expenditures. Super PACs can now raise unlimited amounts of money from individuals, corporations, and unions, and use it on political ads for or against federal candidates. They are not allowed to donate directly to candidates or coordinate with their campaigns.
In striking down corporate independent expenditure limits, the U.S. Supreme Court upheld limits on individual contributions to candidates reasoning that “the potential for quid pro quo corruption distinguished direct contributions to candidates from independent expenditures.” The majority opinion stated “[t]he absence of prearrangement and coordination of an expenditure with the candidate or his agent not only undermines the value of the expenditure to the candidate, but also alleviates the danger that expenditures will be given as a quid pro quo for improper commitments.”
The first presidential race after Citizens United, though, reveals that the distinction between direct campaign contributions and “independent” expenditures has been eliminated — and with it, the idea that corruption follows one but not the other.
In the second quarter of 2011, over 50 individuals donated the legal maximum to Romney’s campaign ($2,500), then made around $6.4 million in additional contributions to Romney’s “Restore Our Future” Super PAC. Almost half of these individuals gave between $100,000 and $500,000 to the Super PAC, and one person donated $1 million. These donations made up half of the “Restore Our Future” funds.
Nine individuals donated to both President Obama’s reelection campaign and his “Priorities USA Action” Super PAC. The nine donors collectively gave $2.6 million to Obama’s Super PAC, primarily from Dreamworks CEO Jeffrey Katzenberg, who donated $2 million, and Chicago media mogul Fred Eychaner, who gave $500,000.
“This analysis offers yet more proof that these candidate-specific Super PACs are nothing more than an end-run around existing contribution limits,” said Paul S. Ryan, FEC Program Director at the Campaign Legal Center. “The Super PACs are simply shadow candidate committees. Million-dollar contributions to the Super PACs pose just as big a threat of corruption as would million-dollar contributions directly to candidates.”
In addition to Super PAC spending, corporations and corporate executives can also launder campaign spending through non-profit “social welfare” groups organized under section 501(c) of the tax code. Non-profits are not required to disclose their donors, preventing the public from knowing the source of a particular message. Last week, certain business leaders denounced this secret spending, and Democracy 21 and the Campaign Legal Center asked the Internal Revenue Service to investigate this alleged abuse of the tax code.
Ninety-Nine Percent: Money Out of Politics
The Citizens United decision affirmed that “money is speech,” and declared that spending limits violate the 1st Amendment rights of corporations and the uber-wealthy. As the 2012 presidential election heats up and election spending ramps up, corporations and the top 1% will speak louder than everyone else. The money that flows into the 2012 elections will come overwhelmingly from the top one percent — only a tiny sliver of Americans donate to political campaigns, and the bottom ninety-nine percent who can afford to contribute will have their dollars drowned out by the million-dollar contributions made possible by Citizens United.
And money matters. In modern elections, 9 out of 10 races are decided by who raises more campaign cash. Given this reality, it stretches the imagination to believe elected officials won’t be indebted to those deep-pocketed donors who help them get the edge over their opponent.
With average Americans — the ninety nine percent — sidelined by a political process and an economy that increasingly benefits only those at the top, they have taken to the streets. It is little wonder, then, that as the nascent Occupy protests grow and gain shape, at least one message is becoming clear: get corporate money out of politics.
By: Brendan Fischer, Center For Media and Democracy, October 7, 2011
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