“Dark Money And Our Looming Oligarchy”: At Some Point Soon, Untraceable ‘Dark Money’ Will Likely Overtake The System
There is something obscene in looking at the raw numbers, is there not? More than $500 million being spent on House races, and north of $300 million on Senate contests. A half-billion dollars! In the House! Where, as of yesterday, the Cook Political Report was counting a mere 17 contests as toss-ups, with 19 others as vaguely competitive. [This paragraph originally said $300 billion, which was incorrect.]
But the gross (double entendre intended) amounts aren’t the money story of this campaign. The money story of this campaign is that undisclosed money is starting to overtake the system and overtake our politics, and that at the heart of this corruption sits a lie peddled to us by the Supreme Court when it handed down the Citizens United decision. Whether it did so naively or cynically, I honestly do not know. But let’s just say that if it was naïve, it was almost too naïve to believe, Steve.
Here’s the situation. Outside spending—that is, the spending not by candidates’ own committees—may possibly surpass total candidate spending, at least in the competitive races, for the first time. And of that outside spending, an increasing amount is the category they call “dark” money, which is money whose sources and donors don’t have to be disclosed. I mean, don’t have to be disclosed. At all. That’s because these aren’t SuperPACs, which at least do have to disclose their donor lists, but are 501c4 “social welfare” (!) groups that don’t have to file anything with the Federal Elections Commission.
You’ve heard a lot about how bad SuperPACs are, and they are, but they’re not even the main problem these days. Most SuperPAC money has to be disclosed. But social welfare money does not. This recent study by the Brennan Center tells the tale. It totaled up the outside money being spent in the nine most competitive Senate races and found that 33 percent of these outside dollars weren’t subject to disclosure requirements. This includes the aforementioned social welfare organizations along with trade associations, the 501c6’s, like the U.S. Chamber of Commerce, which is one of 2014’s biggest spenders, possibly spending more this cycle than it did even in the presidential year of 2012.
A further 23 percent is subject only to partial disclosure. So more than half of this outside money is now spread around behind either partial or total secrecy. That percentage is assuredly going to grow. Almost all of the Koch Brothers’ money—they earlier announced a goal of spending $300 million on these elections, just $100 million less than they spent in the presidential year of 2012—is dark, and if they succeed, others will surely follow their example.
Oh yes, there are Democratic dark money groups too. Interestingly, the League of Conservation Voters is a big player here. But overall there isn’t as much Democratic dark money coursing around out there. For example, in the nine key Senate races, GOP dark money tops Democratic dark money in eight of nine of them (Louisiana is the exception), and in many cases not by two-to-one but three, six, 10, 12 to one. The disparities are highest in Kentucky and Georgia—not coincidentally, the two races considered most of the year to be the best chances for Democratic pickups, and therefore the two races where someone deemed it vital that the most unaccountable money possible be used to finance attack ads.
Okay. So what’s this mean? Well, it means this. Under the quaint old corrupt system, at least you and I could in theory learn the names of nearly every donor to a candidate or committee. And yes, there were 501c4’s then, and c6’s, but they simply didn’t spend much money on electoral politics back then. Karl Rove and others figured out that there’s nothing stopping a c4 from doing almost pure electoral work (even though the law says it’s not supposed to be its “primary purpose”), and from there it proliferated, because they knew the IRS couldn’t enforce it. (And they went after the IRS, claiming to be victims of Lois Lerner, just to make sure.) And so it’s come to pass that people whose names you and I will never have a chance to know donate vastly more amounts of cash.
Of course, someone knows them: the candidates. If and when Iowa Republican Joni Ernst (roughly $7 million in dark money so far) and David Perdue in Georgia (a little more than Ernst) make it to the United States Senate, we can be sure they’ll remember who wrote the checks.
And now, to the Supreme Court. Anthony Kennedy wrote the majority opinion, which opened the sluices to corporate money. But as you might recall, Kennedy insisted that there should be no problem with this. Why? Because there would be no more secret money: “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
Kennedy describes a good-government Valhalla here, where campaigns and committees get a check in the mail and instantly scan it and send it along to the FEC, and bam, Bob’s your uncle, it’s there for the whole world to see. Of course, few citizens are going to go poring through FEC tables, but at least they’d be there for timely public review for reporters. That would be…tolerable, maybe.
But that is not remotely where things are headed. One of our parties is against full disclosure. They used to be for it, the Republicans did. But then they saw which way the post-Citizens United wind was blowing and became anti-disclosure. McConnell, the little Satan on his party’s shoulder on these matters, made the switch in 2012.
So that’s what this election marks: The routinization, in all contested races, of undisclosed money coming to dominate these campaigns, and the clear majority of it on the corporate, pro-Republican side. And yep, it can get worse.
By: Michael Tomasky, The Daily Beast, October 22, 2014
“Being Rich In America Is Tough”: The Continuing Agonies Of The Super-Rich
As we well know by now, being rich in America is tough. Imagine driving your Porsche out the Goldman Sachs garage, intent on a relaxing weekend at your Hamptons retreat, only to find some wretched Occupy sympathizer giving you a dirty look through the haze of patchouli and resentment that surrounds him. Who could endure it? No wonder they keep comparing their fearful existence to that of the Jews of late-1930s Germany.
But now, according to the Washington Examiner, America’s plutocrats have a new worry:
Democratic super PACs have outraised their Republican counterparts by millions, a factor attributed in part to GOP donors’ fear of being targeted by the Internal Revenue Service—or “getting Koch’ed.”
Republican political operatives concede that there are multiple reasons for the Democrats’ advantage in super PAC money raised.
Among them: Labor unions have become among their largest and most consistent donors. But this election cycle, two new challenges have chilled GOP super PACs’ effort to raise cash from wealthy individuals and corporate donors: anxiety that they could get slapped with an IRS audit and unease that donating could lead to public demonization.
Not to let facts intrude on their paranoid fantasies, but let’s not forget what the IRS scandalette actually involved. There’s never been any credible allegation that anyone was audited because of their political beliefs. There’s never been any allegation that the IRS “targeted” donors to Republican super PACs. The worst thing that happened was that some Tea Party groups that had applied for 501(c)(4) status—claiming, utterly falsely, that they were charitable, non-political organizations, I might add—had to wait longer than they should have to get approval on their applications. (And, I have to repeat, when you’re waiting for your approval, you’re permitted under the law to act as though you’ve gotten your approval. You can raise and spend money, which they did.)
On the second point, I suppose one might be concerned that Harry Reid would go to the Senate floor and denounce you for undermining our democracy with your donations, even if those donations are perfectly legal. But in order for that to happen, you’re really going to have to get into the first rank of donors. A couple hundred thousand dollars isn’t going to do it; in order to be “demonized,” your contributions are going to have to reach at least eight figures.
Nevertheless, I’m sure it’s unpleasant for the Kochs to get criticized by politicians. But being criticized—even vigorously, and even sometimes unfairly—is the price you pay for certain choices you make. If you decide to do anything that puts your efforts in front of the public—running for office, becoming an actor, or being a writer, among other things—people who don’t like that work are going to tell you so. They may even say rude things, like “You’re an idiot” or “You suck,” or whatever other insults their limited creativity can produce. People track me down to tell me things like that all the time. It certainly isn’t fun to hear, but since I’ve chosen a profession where my work is public, it’s just part of the deal.
Spending large amounts of money on politics is both a right and a privilege. Some rights, like the right to practice your religion, are available to everyone. The right to spend significant political money is technically available to everyone, but in practice is only open to those who have large amounts of money to spend. In the same way, Lebron James and I are both free to dunk basketballs, but because the cruel genetic lottery left me a couple of ticks under six feet, I can’t actually exercise that freedom.
Obviously, the IRS shouldn’t audit anyone because of their political beliefs, and fortunately, we have no reason to think it does. Part of me suspects that a lot of conservative donors are using the fear of “demonization” and audits as an excuse to brush off requests for contributions, since once you become a big donor, you’re going to get besieged by candidates and organizations asking you for money. But if super-rich conservatives are sincerely afraid of the fallout from giving, they have two choices: they can make contributions that don’t put them quite on par with the Kochs, and thereby be ignored, or they can just decide to suffer the slings and arrows bravely in the cause of liberty. It’s up to them.
By: Paul Waldman, Contributing Editor, The American Prospect, July 16, 2014
“A Corrosive Effect On Public Confidence”: The ‘Sheldon Primary’ Is One Reason Americans Distrust The Political System
Several prospective Republican presidential candidates have gathered in Las Vegas for the opening round of what has been dubbed “the Sheldon Primary,” an event emblematic of how warped the system for financing presidential elections has become.
The Sheldon Primary is named for Sheldon Adelson, the wealthy casino owner who, with his wife, poured more than $92 million into the 2012 elections. Despite all that money, Adelson made some bad bets in the last election, first on former House speaker Newt Gingrich to win the Republican nomination and then on Mitt Romney to defeat President Obama in the general election.
He is now looking toward 2016 with a fresh eye, determined, according to The Post’s Matea Gold and Philip Rucker, to find a non-extremist candidate who can actually win the presidency. Those who are looking at running would be happy to have that kind of financial support. Some of them have come to Las Vegas on Friday for a meeting of the Republican Jewish Coalition, but also to meet privately with Adelson.
Adelson has become a symbol of the new system of financing presidential elections. He and others play under legal rules. But this new financing structure has had a corrosive effect on public confidence in government and politicians. It is why so many Americans feel shut out of the process.
Many people have had a role in bringing the system to this point — the courts, special interests, incredibly wealthy individuals with their own agendas and candidates seeking to gain political advantage in the fierce competition that is presidential politics.
A series of court decisions, the most prominent being the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission, has hastened the rise of super PACs. These political action committees are the new behemoths in political campaigns. They are allowed to take unlimited contributions from corporations, unions and individuals. They can openly advocate for individual candidates, and candidates can help raise money for them. But they are supposed to operate independent of those candidates.
Court decisions also helped usher in a new era of shadowy financing of political activity by so-called “social welfare” groups. Like super PACs, these groups also take huge individual donations — $10 million, $20 million, $30 million — but they are not required to disclose their contributions. They can engage in political activity within limits, but those limits have done little to slow their growth.
Meanwhile, the system of public financing for presidential candidates that came into being after the Watergate scandal and that once was universally accepted and respected by those seeking the presidency has been systematically shredded over the course of the last four presidential campaigns.
In 2000, George W. Bush opted out of public financing in his nomination campaign because money was flowing so freely into his campaign war chest and he was worried about rival Steve Forbes’s ability to fund his own campaign out of his private fortune. John F. Kerry and Howard Dean followed suit four years later in their nomination battle. That effectively destroyed the use of public money in pursuit of the nomination.
Then in 2008, Obama took it a step further. Fueled by nearly half a billion dollars in online donations alone, candidate Obama decided to forgo public financing in the general election after suggesting that he would stay within the system if his Republican rival did, too. His opponent, Sen. John McCain, was one of the most ardent advocates of campaign finance reform who was left to chastise Obama for turning his back on a general election public financing structure designed to level the playing field. Having seen what happened in 2008, Romney in 2012 followed Obama out the door of public financing.
All of these candidates who pulled out of public financing put political need ahead of public interest. They chose to quit the system because by doing so they could spend well beyond the limits of what the law allowed if they accepted federal matching funds. Meanwhile, some of their rivals were constrained by the limits imposed by the acceptance of public money.
What is left now is an arms race in presidential campaign fundraising by the candidates and a new power base, the quasi-independent force of the super PACs, which have eclipsed the political parties as powerbrokers in the campaign process.
Courting wealthy people will always be an essential part of running for president. But the outsize influences of people who are prepared to give tens of millions to a super PAC or the contributor who can bundle hundreds of thousands of dollars in donations have changed the game.
The ability to raise huge amounts of money has become an even more important attribute for those seeking the presidency, a yardstick to stratify the field of candidates long before the voters have taken a serious look at the field.
Dark horse candidates still can break through in one of the early states, as former senator Rick Santorum did in 2012. But anyone thinking of running for president today would be urged by those who shape this inside game not even to think about taking public funds to help finance their campaign and to build a financial foundation designed to go the distance.
Obama was initially critical of super PACs, but there is no longer any hesitation among Democrats to play in this new world. Hillary Rodham Clinton already has a super PAC organizing on her behalf, though she is far from making an announcement about whether she will run in 2016. Priorities USA, which supported Obama in 2012, has reconstituted itself more aggressively than ever in preparation of her candidacy.
Republican politicians know that whomever Adelson and his wife decide to support in 2016 will have what is now a required asset of any campaign—a well-funded super PAC that can provide additional armor against the inevitable attacks from opponents and which can lead the attacks against rivals who threaten their path to victory. Those who lose the Sheldon Primary will look to other rich people to fund other super PACs dedicated solely to the promotion and protection of their candidacies.
Super PACs have yet to prove they can decide the outcome of elections. Romney lost the general election despite having a clear advantage in the amount of outside money on his side. But the super PACs’ role in the GOP nominating process was more significant. Without Adelson at his side, Gingrich might not have lasted as long as he did. Without the support of his own super PAC, Romney might have had a more difficult time fending off Gingrich and later Santorum. That knowledge is what has brought several prospective candidates to Las Vegas.
When W. Clement Stone, an insurance magnate and philanthropist, gave $2 million to Richard M. Nixon’s 1972 campaign, it caused public outrage and contributed to a movement that produced the post-Watergate reforms in campaign financing. Accounting for inflation, that $2 million would equal about $11 million in today’s dollars. If not exactly commonplace, contributions of that size or larger are now an accepted part of the presidential campaign process, in some cases without real transparency. Is it any wonder that the public has a cynical view of how the system works?
By: Dan Baltz, Opinion Writer, The Washington Post, March 28, 2014
“Rove’s Republican Rivals Step Up”: With The Bloom Off The Rose, Struggle Over Money And Influence Is Roiling The Republican Party
About a year ago at this time, Karl Rove found himself in a fairly awkward position. While maintaining a prominent media role as a campaign analyst, the Republican strategist was also raising truckloads full of cash for his Crossroads operation, which was trying to buy victories for the candidates Rove was covering.
The result was a rather striking fiasco. Rove burned through several hundred million dollars, but lost nearly every race he targeted, culminating in an unfortunate on-air tantrum. Conservative activist Richard Viguerie said at the time that “in any logical universe,” Rove “would never be hired to run or consult on a national campaign again.”
Indeed, a Republican operative told the Huffington Post, “The billionaire donors I hear are livid…. There is some holy hell to pay.”
A year later, on a superficial level, much of the landscape appears similar – Rove still enjoys his media perches, still leads the Crossroads attack operation, and still hopes wealthy far-right donors will finance his election plans. But Nick Confessore reports that there’s one important difference: Rove has more intra-party rivals, hoping to take advantage of his record of failure.
A quiet but intense struggle over money and influence is roiling the Republican Party just as the 2014 election season is getting underway.
At least a dozen “super PACs” are setting up to back individual Republican candidates for the United States Senate, challenging the strategic and financial dominance that Karl Rove and the group he co-founded, American Crossroads, have enjoyed ever since the Supreme Court’s Citizens United decision in 2010 cleared the way for unlimited independent spending.
In wooing donors, the new groups – in states like Texas, Iowa, West Virginia and Louisiana – are exploiting Crossroads’ poor showing in 2012, when $300 million spent by the super PAC and a sister nonprofit group yielded few victories. Some are suggesting that Crossroads’ deep ties to the Republican establishment and recent clashes with conservative activists are a potential liability for Republican incumbents facing Tea Party challengers.
It wasn’t too long ago that Rove’s name carried almost mythical weight in Republican circles, which no doubt made a difference when Crossroads approached donors for checks. But after 2012, the bloom is off the rose. Rove’s reputation took a hit and it hasn’t recovered.
In some respects, this is overdue. In 2000, it was Rove’s idea to keep George W. Bush in California in the campaign’s waning days, instead of stumping in key battleground states. Bush lost California by a wide margin, and Rove’s strategy practically cost his candidate the election.
In 2006, after nearly getting indicted, Rove’s sole responsibility was overseeing the Republican Party’s 2006 election strategy. At the time, he told NPR in late October that he’d found a secret math that gave him insights that mere mortals can’t comprehend, and soon after, Democrats won back both the House and Senate in a historic victory.
And then in 2012, Rove managed to strike out in ignominious fashion with other people’s money, raising questions anew about whether his reputation was ever fully deserved.
The result is skeptical GOP donors who not only see Rove as someone who can’t deliver victories, but also part of a tired Republican Beltway establishment that’s lost perspective. With the proliferation of groups similar to Crossroads, Rove has to worry about competition within his own party in ways he’s not accustomed to.
By: Steve Benen, the Maddow Blog, December 26, 2013
“The IRS And The Real Scandal”: Enabling America’s Financial Elite To Further Entrench Their Wealth And Power
“This systematic abuse cannot be fixed with just one resignation, or two,” said David Camp, the Republican chairman of the House tax-writing committee, at an oversight hearing Friday morning dealing with the IRS. “This is not a personnel problem. This is a problem of the IRS being too large, too intrusive, too abusive.”
David Camp has it wrong. There has been a “systematic” abuse of power, but it’s not what Camp has in mind. The real scandal is that:
The IRS has interpreted our tax laws to allow big corporations and wealthy individuals to make unlimited secret campaign donations through sham political fronts called “social welfare organizations,” like Karl Rove’s “Crossroads,” the U.S. Chamber of Commerce, and “Priorites USA.”
This campaign money has been used to bribe Congress to keep in place tax loopholes like the “carried interest” rule that allows the managers of hedge funds and private equity funds to treat their income as capital gains, subject only to low capital gains taxes rather than ordinary income taxes, and other loopholes that allow CEOs to get special tax treatment on giant compensation packages that now average $10 million a year.
Despite a growing number of billionaires and multi-millionaires using every tax dodge imaginable – laundering their money through phantom corporations and tax havens — the IRS’s budget has been cut by 17 percent since 2002, adjusted for inflation. To manage the $594.5 million in additional cuts required by the sequester, the agency will furlough each of its more than 89,000 employees for at least five days this year.
Finally, all of this, coming at a time when the Supreme Court has deemed corporations “people” under the First Amendment and when income and wealth are more concentrated at the top than they’ve been in over a hundred years, has enabled America’s financial elite to further entrench their wealth and power and thereby take over much of American democracy.
This is the real scandal and the real abuse, Congressman Camp. Your indignation over the IRS’s alleged “targeting” of conservative groups is a distraction from the main event.
By: Robert Reich, The Robert Reich Blog, May 17, 2013
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