WASHINGTON -- An ad released Dec. 8 by the conservative nonprofit Crossroads GPS, which is linked to Karl Rove, paints Democratic Senate candidate Elizabeth Warren as a tool of Wall Street who failed in her role chairing the Congressional Oversight Panel tasked with overseeing the bank bailout. But viewers of the ad are not urged then to oppose Warren's candidacy. Instead, they are encouraged to call the Warren campaign and let her know, "We need jobs, not more bailouts and bigger government."
As 2011 winds down, the expected onslaught of direct advocacy spending by independent groups has not materialized in reports filed with the Federal Election Commission. What groups like Crossroads GPS have spent millions of dollars on are issue advertisements, such as the Warren spot, which link candidates to issues like job creation, the environment and government spending, while avoiding FEC disclosure requirements.
According to a Huffington Post review of Crossroads GPS press releases, the group has spent $26 million on issue ads in 2011, nearly matching the $26.4 million the group spent in 2010 on direct electoral ads.
This is the shape of the new campaign finance reality created by the Supreme Court's 2010 Citizens United decision. That ruling allowed corporations and unions to freely participate in elections by funding or running independent campaigns that support or oppose candidates. Nonprofits were freed to do the same with the added benefit of not having to disclose their donors to the public.
Nonprofits, however, were saddled with one requirement. To qualify for nonprofit status with the Internal Revenue Service, groups must spend more than 50 percent of their funds on non-electoral efforts. To help meet that 50 percent threshold, nonprofits like Crossroads GPS have been pouring money into issue ads aimed at lawmakers in contested districts.
"They are running what they characterize as issue ads now, and they are doing so largely to balance their books to make their best efforts to comply with IRS rules," said Paul Ryan, the FEC director at the Campaign Legal Center.
Issue ads in politics have long been controversial. From the 1988 Willie Horton spot hitting Massachusetts Gov. Michael Dukakis to the 1996 Democratic National Committee issue ads promoting President Bill Clinton, they have often looked like stealth electoral ads.
Crossroads GPS states that its issue ads fall within its mission to support "free enterprise, low taxes and limited government."
"We believe that advocating on public policy issues being considered in Washington is one of the most important rights guaranteed by the Constitution, and are thankful it has been upheld by the Supreme Court," Crossroads GPS communications director Jonathan Collegio said via email. "The most effective issue advocacy usually focuses on Members who are considered most likely to be swayed in an issue debate. Last summer, Crossroads GPS spent more than $15 million advocating for a debt limit solution that cut spending while not raising taxes, by running ads in states whose Representatives and Senators were thought to be persuadable. The result was a deal that achieved virtually all that we were advocating for, even though President Obama was pushing hard in the other direction."
Unlike the $15 million worth of issue ads designed to pressure lawmakers on the debt limit debate, about $3 million worth of ads purchased by Crossroads GPS feature more direct attacks on vulnerable incumbents and candidates. Some of the group's ads also target candidates who do not hold an office that can be lobbied. The anti-Warren ad falls into this category.
An issue ad normally promotes a vote or a viewpoint that requires action by the intended target. It is a grassroots lobbying tool aimed at the general public to pressure public officials, whether members of Congress or the president of the United States. But Warren holds no elected position, nor does she work in any governmental capacity with the ability to affect an issue.
"There's no way that a person who is not a member of a legislative body can be lobbied," the Campaign Legal Center's Ryan said. "You can't lobby someone who isn't an elected official. They're election ads, plain and simple, masquerading as issue ads."
"What it shows is the extent to which this is a ruse," said Kathleen Hall Jamieson, executive director of the Annenberg Public Policy Center. "The idea that you should call someone as the desired end of an ad, that doesn't make a great deal of sense if the person doesn't hold office."
Since November, Crossroads GPS has spent $407,022 on ads targeting Warren in the Boston media market alone, according to ad-buy data collected by Patch members based in Boston.
The Crossroads issue ads also appear to target only those candidates facing real opposition. The group has run more than one ad in contested Senate races in Florida, Massachusetts, Missouri, Montana, Nebraska and Ohio. Vulnerable freshmen Republicans like Reps. Sean Duffy (Wis.), Chip Cravaack (Minn.) and Quico Canseco (Texas) have received supportive issue ads, while vulnerable House Democrats like Reps. Ben Chandler (Ky.), Leonard Boswell (Iowa) and Tim Bishop (N.Y.) have been on the receiving end of negative issue ads.
Crossroads has revealed an explicit electoral consideration in aiming issue ads at Sen. Ben Nelson (D-Neb.). The National Journal quoted communications director Collegio saying, "We want Ben Nelson to recognize that 2012 will be an extraordinarily grueling proposition in the case he decides to run."
Crossroads GPS is not alone in spending its money on ads in contested districts. Americans United for Change, a progressive nonprofit group, has put ads in at least 14 different districts or states with only one or two run against lawmakers in uncontested races.
"The most important part of it is if they're on the side of an issue that is in contradiction to their district," explained Tom McMahon, executive director of Americans United for Change. "Sen. Scott Brown was an early target for us because he said he was going to go to Washington and not be beholden to the Republican leadership. He campaigned on one thing, on how he was going to be an independent-minded voice in Washington, but when he got here, he fell in line with what the Republican leadership wanted to do."
The Americans United for Change ads, unlike their Crossroads GPS counterparts, focus entirely on pressuring lawmakers on events and votes in Congress like the budget proposed by Rep. Paul Ryan (R-Wis.), the debt ceiling deal and the super committee deadline. The groups also differ in that Crossroads GPS spent $26.4 million on electoral ads in 2010 while Americans United for Change spent nothing. The progressive group is devoted to issue advocacy and said it has no plans to play an electoral role.
The League of Conservation Voters runs both electoral ads, through a super PAC, and issue ads, as a nonprofit. This year the environmental group has targeted Sen. Brown, Warren's opponent in Massachusetts, with at least $1.1 million in issue ads.
A conservative group, American Action Network, has the same dual strategy. Its issue ads, totaling at least $1.7 million in 2011, have largely supported vulnerable Republicans who voted for the Ryan budget in the House. It also spent $3.4 million on electoral ads in 2010.
Watchdog groups have been up in arms over the nonprofit status of groups that spend large amounts of money on campaign ads. That these groups also run issue ads, the watchdogs argue, should not be enough to qualify as a social welfare organization, a kind of nonprofit organized under section 501(c)(4) of the tax code.
"These ads are part of an effort to influence the 2012 elections," said Democracy 21 President Fred Wertheimer. "The IRS standard does not require express advocacy for a communication to directly or indirectly participate or involve the organization in a campaign activity. In our view, these ads clearly meet the IRS standards for being campaign-related ads."
Democracy 21 and the Campaign Legal Center are asking the IRS to deny nonprofit status to four groups that appear to have a primary function of influencing elections and have filed as nonprofits to hide their donors. These four nonprofits are Crossroads GPS, American Action Network, Priorities USA and Americans Elect.
"Political operatives are avoiding disclosure by claiming 501(c)(4) tax-exempt status for groups that are plainly dedicated to influencing the 2012 process," said the Campaign Legal Center's Ryan. "We believe that they're running sham issue ads. They have acknowledged that they are targeting battleground states. That to us strongly suggests or establishes that Crossroads' primary purpose is to influence the 2012 election. We think that they've improperly claimed 501(c)(4) status."
Crossroads GPS and its sister group, the super PAC American Crossroads, have set a goal of raising $300 million for the 2012 election. So far, the majority of the money they have raised has come through Crossroads GPS and has thus not been disclosed. According to the Center for Responsive Politics, the two groups have raised a combined $95 million, but American Crossroads has reported raising only $34.7 million to the FEC. That means Crossroads GPS has raised $60.3 million in undisclosed contributions, two-thirds of the total since the duo was founded in 2010.
The IRS has so far rebuffed calls to investigate or deny nonprofit status to these groups.
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