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Super PACs And Secret Money: The Unregulated Shadow Campaign

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First Posted: 09/26/2011 10:40 am Updated: 11/26/2011 4:12 am

This article is part of a collaboration with MSNBC's The Dylan Ratigan Show for the series "Mad As Hell: Get Money Out," airing Monday and Tuesday at 4 p.m. EST.

WASHINGTON -- In the span of a week in September, two independent political committees announced unheard-of fundraising plans for the coming campaign season. The Karl Rove-linked American Crossroads, along with its sister nonprofit, Crossroads GPS, announced a plan to raise and spend $240 million in 2012. Make Us Great Again, a group solely dedicated to electing Texas Gov. Rick Perry the 45th President of the United States, revealed a plan to spend $55 million in the Republican primary alone. Both of these multimillion dollar plans would break all reported records for spending by an independent political committee, and offer a sign of how campaign finance rules have been upended.

The federal system of campaign finance is in the midst of a sea change following the Supreme Court's decision in Citizens United v. Federal Election Commission (FEC), which undid a host of regulations covering the use of corporate and union money by independent groups in elections. Those independent groups are forming a shadow campaign apparatus fueled by unlimited and often undisclosed contributions, without the same accountability required of political parties or candidates' own political action committees.

American Crossroads and Make Us Great Again represent one of the two new kinds of groups playing in the shadow campaign: super PACs, independent political committees filed with the FEC that can accept unlimited funds from corporations, unions and individuals.

In their debut election cycle in 2010, super PACs, like American Crossroads, spent a combined $65.3 million, according to the Center for Responsive Politics. This was part of a huge surge in spending by non-party groups, whose spending hit $304 million in 2010, a record for any election cycle -- presidential or midterm.

If the fundraising goals of American Crossroads and Make Us Great Again are any indication, the 2012 elections will shatter this record.

Super PACs weren't solely responsible for the surge in outside spending in 2010. Nonprofit groups organized under section 501(c)(4) of the tax code were also finally allowed to spend money on express advocacy -- calling for the election or defeat of a candidate -- thanks to the Citizens United ruling. Unlike super PACs, these nonprofits, including Crossroads GPS, are not required to disclose the source of their funds.

While overall outside spending surged, undisclosed spending by nonprofits, or "dark money," exploded. According to the Center for Responsive Politics, the source of only 51 percent of non-party outside spending was disclosed to the public in 2010.

"In the case of the tax-exempt groups, citizens have absolutely no idea what's going on here," Democracy 21 President Fred Wertheimer, a long-time campaign finance watchdog, explained to HuffPost. "They have no way of knowing how groups are trying to influence their votes."

The explosion of unlimited money and secret money is expected to continue unabated in 2012. It is already taking different forms and creating new headaches for those concerned about the increasing role of money in politics. The new campaign finance system is now a two-tiered one: candidates and parties governed by tight regulations and shadow groups that operate with little to no rules.

* * * * *

Justice Anthony Kennedy wrote the majority opinion in the Citizens United ruling, offering the main argument underlying the decision. "Independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption," he wrote.

That statement led to an immediate trickle-down effect on a lower court case, v. FEC. Months after the Citizens United ruling, the U.S. Court of Appeals for the District of Columbia Circuit ruled that, a nonprofit, could accept not only the unlimited individual contributions that it had requested, but also unlimited contributions from corporations and unions. The end result, after the FEC approved the ruling, was the creation of super PACs. was founded by David Keating, the executive director of the Club for Growth, a free-market conservative group that has long played a role as an independent spender in elections.

"I really believe in the First Amendment and I wanted to start a PAC that supported candidates who supported the First Amendment," Keating told HuffPost. "Part of the inspiration I got for this is that it's perfectly okay for someone who's rich to speak out all they want, and there have been cases where rich individuals have run their own independent expenditures. If it's John Doe funding the independent expenditure, it says, 'Paid for by John Doe.' If it's okay for one person to spend $1 million, I thought, 'Why can't a few of us get together to pool our money.' It turned out that was illegal."

The changes to the existing structure of the campaign finance system happened almost instantaneously following the ruling. Before the 2010 midterms even happened, just five months after ruling, there were 65 super PACs registered with the FEC. Now, more than a year later these groups are emerging with the sole intent of backing presidential candidates, and they are raising huge sums to do so.

Make Us Great Again is one of 11 super PACs backing a specific candidate in the Republican presidential primary. Another super PAC, Priorities USA Action, supports President Barack Obama's reelection bid. These groups are routinely run by former staffers or close associates of the candidates they're supporting and have been targeted by campaign finance watchdogs who consider them a means to subvert the campaign finance system's limits on contributions to candidates.

"The reason why supporters of a particular candidate start a super PAC is pretty obvious," said Bill Allison, editorial director of the Sunlight Foundation, a pro-transparency nonprofit that tracks outside spending in elections. "You can raise tons of money without campaign finance limitation and then support or attack in the same way as traditional committees."

Paul S. Ryan, a lawyer with the campaign finance watchdog Campaign Legal Center, concurred. "As long as contribution limits have been in existence, specifically since the 1970s, candidates have felt inconvenienced by them and would like to run without them," he said. "It's easier to raise money in $1 million chunks than in $2,500 chunks."

Super PACs are technically not allowed to coordinate with campaigns or parties, but candidates can get involved in the fundraising. The FEC ruled in July that candidates can appear at a fundraiser for a super PAC, with just one restriction: They personally cannot solicit money in excess of the federally-mandated candidate contribution limit of $2,500 per election or $5,000 per election cycle.

"It's fully permissible for the candidates to go to a fundraising event for these super PACs and have a super PAC spokesperson ask the crowd for money before introducing the candidate, who then speaks about the campaign strategy," said Ryan.

According to iWatch News, former Massachusetts Gov. Mitt Romney appeared at a fundraiser for the super PAC supporting his presidential bid, Restore Our Future, to address the crowd, but left promptly before organizers asked the audience for donations.

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