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New Powers For Super PACs

2011-10-06T16:15:00Z

WASHINGTON -- The Federal Election Commission announced new rules Wednesday allowing traditional political action committees to open a segregated account for a super PAC, which can accept unlimited contributions from corporations, unions and individuals to spend directly on elections.

The new rules came about after the FEC lost the court case Carey v. FEC. That ruling stipulates that PACs can operate two banks accounts, one for the unlimited super PAC money and another for the limited traditional PAC money, and use money from each account to pay for administrative functions in amounts proportional to the activity of each account.

National Defense PAC had originally petitioned the FEC for an advisory opinion on the spending mechanism, but after FEC did not give an opinion, the PAC took its case to court -- and won.

Traditional PACs are mostly used to make contributions to elected officials or to other PACs. Super PACs cannot make these contributions, but can spend money on electoral efforts, including advertising, direct mail and grassroots mobilization.

“This is a fantastic opportunity for grassroots & citizens PACs ... to significantly enhance their electoral & political advocacy, and they’d be nuts not to hire a campaign finance lawyer to help them navigate through this," Dan Backer, National Defense PAC's counsel and the principal attorney for DB Capitol Strategies, said by email. “I think folks have so far radically underestimated the profound changes that Carey v FEC will have on the entire PAC landscape.”

The new FEC rules give guidance on how to register and disclose contributions for a hybrid PAC. This guidance includes a new form letter to be appended to PAC registrations announcing the intention of forming a PAC and super PAC under the same umbrella and new directions on how to use the current disclosure forms to differentiate unlimited contributions from limited contributions.

This new guidance is one of many directions from the FEC on how to use the current disclosure forms in new ways that they weren’t originally intended.

The Campaign Legal Center’s Paul S. Ryan told HuffPost, “Even before this stipulation there was confusion about how to use the FEC’s registration forms. The forms are very out of date now.”

“The FEC is trying to fit the new rules into their old reporting system,” Backer told HuffPost. “An update will be needed soon if the FEC hopes to continue providing understandable transparency for PAC activities.”

There is currently already one hybrid PAC in operation. Efficient America PAC formed after the Carey v. FEC ruling was handed down, but before the new FEC rules were issued. This committee plans to use its hybrid activities to reach out to voters to educate them about energy efficiency legislation and contribute to supportive lawmakers.

New Powers For Super PACs

2011-10-06T16:15:00Z

National Defense PAC had originally petitioned the FEC for an advisory opinion on the spending mechanism, but after FEC did not give an opinion, the PAC took its case to court -- and won.

This new guidance is one of many directions from the FEC on how to use the current disclosure forms in new ways that they weren’t originally intended.

The Campaign Legal Center’s Paul S. Ryan told HuffPost, “Even before this stipulation there was confusion about how to use the FEC’s registration forms. The forms are very out of date now.”

Early GOP Primary Could Mean Super Secret Money

2011-10-05T15:25:00Z

WASHINGTON -- With the Republican primary campaign moving up into January, voters in the early voting states could be left in the dark about who is funding the millions of dollars expected to be spent by the independent groups backing individual candidates.

Super PACs, the new type of political committee created after two court rulings allowed independent political groups to raise unlimited contributions from corporations, unions and individuals, could use a loophole in current Federal Election Commission rules to keep their donors hidden until after early voting states have already chosen a GOP presidential candidate.

Under FEC rules, super PACs can choose to disclose their fundraising on either quarterly or monthly schedules. Nearly all super PACs are currently registered as quarterly filers, which allows them to only disclose twice in election off-years.

If super PACs remained registered as quarterly filers, they would be required to disclose their donors before the primaries. But if the groups switched to a monthly filing schedule, which they are allowed to do at any point in time, they would not required to file pre- or post-primary disclosure reports for each individual state primary or caucus. And if these Super PACs switched to monthly filing in December or January, they would be able to avoid any disclosure until after early state GOP primaries, as currently scheduled.

“I can’t think of anything that makes a better case for more frequent campaign finance disclosure,” said Bill Allison, the editorial director at the Sunlight Foundation, a pro-transparency nonprofit that supports real-time campaign contribution disclosure.

After spending more than $60 million in the 2010 election cycle and working to elect a broad range of candidates, super PACs have begun to form with the sole intention of supporting individual candidates for the 2012 presidential election. There are 12 candidate super PACs operating in the Republican primary and at least one with the sole intention of supporting the reelection of President Barack Obama. The fundraising plans for these groups are expected to swamp all previous records for independent political committee spending in the next election.

Only a few of these groups have disclosed any contributions this year. Restore Our Future, a pro-Mitt Romney group, reported raising $12.2 million in the first half of the year, and Priorities USA Action, a pro-Obama group, reported $3.1 million in contributions. A report released on Tuesday by Democracy 21, the Campaign Legal Center and the Center for Responsive Politics examined the close ties between the candidates' campaigns and the super PACs supporting them. The report showed that the donors to these super PACs are more-often-than-not donors who have contributed the maximum allowed to their desired candidate’s campaign committee.

In a statement on the report Democracy 21 President Fred Wertheimer said, “The presidential candidate Super PAC exists for one reason: to serve as an arm of the presidential campaign for big-money donors to launder unlimited contributions to support the presidential candidate and thereby evade and eviscerate the contribution limits for a presidential candidate enacted to prevent corruption."

While candidate-specific super PACs are new to the election scene, this type of disclosure evasion is not.

In the 2004 Democratic primary an independent group registered under the section 527 of the tax code was used to run vicious ads against the insurgent candidacy of Vermont Gov. Howard Dean. The most famous of the ads, run by Americans for Jobs, Health Care and Progressive Values, featured a close-up of Osama Bin Laden with a voice-over explaining that Dean lacked the military and foreign policy experience necessary to deal with terrorists intent on destroying western civilization.

WATCH the anti-Dean ad:

During the 2000 Republican primary between George W. Bush and Sen. John McCain (R-Ariz.), a group calling itself Republicans for Clean Air spent $2.5 million on ads attacking McCain’s environmental record in California, Ohio and New York. The group was formed so quickly that no one knew anything about it. It even misspelled the word “Republican” on its letterhead. After McCain effectively lost the nomination bid, the donors, the millionaire, Bush-backing Wyly brothers, step forward to the public.

On Friday, Florida announced that it was jumping ahead of the early primary states of Iowa, New Hampshire, South Carolina, and Nevada to hold their primary on January 31. South Carolina has already announced a new date of January 21 for their primary, and Nevada announced a move to a date that is contingent on the yet-to-be-determined new date selected by New Hampshire.

Earlier on HuffPost:

Early GOP Primary Could Mean Super Secret Money

2011-10-05T15:25:00Z

While candidate-specific super PACs are new to the election scene, this type of disclosure evasion is not.

WATCH the anti-Dean ad:

Earlier on HuffPost:

Eric Cantor Staffer Creating Leadership Super PAC

2011-10-05T15:23:51Z

WASHINGTON -- The deputy chief of staff to House Majority Leader Eric Cantor (R-Va.) is leaving the congressman's office to start a leadership super PAC designed to help retain and expand the Republican majority in the House and enhance Cantor's standing within his caucus.

According to reports from Politico and National Journal, John Murray, Cantor's deputy chief of staff, is set to head a new super PAC that will focus on supporting candidates who fit within the “Young Guns” program run by Cantor, Majority Whip Kevin McCarthy (R-Calif.), and Rep. Paul Ryan (R-Wis.) and espoused in their 2010 book titled "Young Guns: A New Generation of Conservative Leaders."

Cantor, McCarthy and Ryan started the “Young Guns” program before the 2008 elections in attempt to play offense and flip Democratic seats into the Republican column. The program was incredibly successful in the 2010 midterm elections and freshman lawmakers find Cantor to be more receptive than other members of GOP leadership.

Super PACs are independent political committees that can accept unlimited contributions from corporations, unions, and individuals. A leadership Super PAC would bring these benefits to bear in the internal race for power within party caucuses.

“The office-holder super PAC represents the first time since 1974 that big money donors can provide unlimited contributions to support the efforts of elected office-holders,” said Fred Wertheimer, president of Democracy 21, a campaign finance reform non-profit organization. “This is going to spread like wildfire with members of Congress.”

“It marks the beginning of a new trend that we are seeing,” said Craig Holman of the public interest group Public Citizen. “It is expected that anyone who has a political action committee is going to turn these into super PACs or create a separate super PAC.”

If previous trends in congressional fundraising are any indication, the rise of leadership super PACs will likely spark an arms race among members of Congress to raise unlimited money. A similar fundraising push accompanied the rise of traditional leadership PACs.

Almost half of all current members of Congress currently have a leadership PAC. These committees enable them to raise extra money that they use to help fund the campaigns of fellow lawmakers, raising their own profiles in the process. Leadership PACs, unlike super PACs, are restricted by contribution limits, although those limits are higher than the ones imposed on candidate campaign committees. Money raised by leadership PACs cannot be spent on campaign advertisements or other election-related expenditures; it can only be donated to a fellow lawmaker or candidate's campaign. The lawmaker operating the PAC may also use the money for non-election related activities.

Lawmakers have used leadership PACs to rise within the party ranks since 1979, when Rep. Henry Waxman (D-Calif.) used his PAC to contribute to Democratic members of the House Commerce Committee as he sought to leapfrog over more senior members into the chairmanship of the Health Subcommittee. Most members who received Waxman’s financial support voted for him, though some ultimately returned the money. Waxman won the chairmanship and leadership PACs became a necessary device for lawmakers seeking to rise in Congress. There are currently at least 237 active leadership PACs.

Now, more congressmen than ever are starting leadership PACs. Freshmen lawmakers have started 31 leadership PACs this year alone, the highest number of new committees started in at least the past decade. By early October in previous post-election years, the highest number of freshmen leadership PACs created was 11 in 2009; four of these were started before the member was even elected to a full term.

Super PACs have rapidly evolved since Citizens United, the Supreme Court case that paved the way for their formation, was decided in January 2010. At first they were largely committees operated by party insiders or interest groups working to elect broad swathes of candidates. Earlier this year, however, former aides of presidential candidates began to start super PACs intended to support specific presidential candidates. The first was Restore Our Future, a super PAC that backs former Massachusetts Gov. Mitt Romney. Then came Priorities USA Action, which supports President Barack Obama. There are currently at least 12 operating super PACs that support various Republican primary candidates.

Lawmakers and candidates are also allowed to raise money for super PACs so long as the candidate does not specifically ask for unlimited contributions. A lawmaker could, however, speak at a fundraiser for a super PAC and be followed by another individual soliciting unlimited donations.

WATCH Paul Blumenthal discuss leadership super PACs on MSNBC's "The Dylan Ratigan Show":

Visit msnbc.com for breaking news, world news, and news about the economy

Perry Supporters Start New Secret Money Group

2011-09-28T22:36:49Z

WASHINGTON -- Supporters of Texas Gov. Rick Perry's presidential bid have organized a non-profit under the 501(c)(4) section of the tax code to aid his candidacy, according to a report from the Center for Public Integrity's iWatch News.

The group, Citizens for a Greater America, will be able to accept unlimited contributions from corporations, unions and individuals without having to publicly disclose those donations. A fact sheet obtained by iWatch News highlights this feature to donors. The new non-profit was revealed to iWatch News by a person who raises funds for both Perry and the pro-Perry super PAC, Make Us Great Again.

The fundraiser said he obtained information about Citizens for a Greater America from Mike Toomey, the head of the Make Us Great Again super PAC. The address listed for the non-profit is the same as that of Make Us Great Again's treasurer, Paul Kilgore.

Toomey is one of the top lobbyists in Austin, Texas, and previously served as Perry's chief of staff during the governor's first term. Toomey was not alone in moving from the governor's mansion to the lobbying profession -- at least 39 other Perry staffers spun through the revolving door, a previous HuffPost report found. One of those revolving-door lobbyists, Dan Shelley, runs two pro-Perry super PACs, Jobs for Vets and Veterans for Rick Perry.

Make Us Great Again is one of five super PACs supporting Perry in the Republican primary and has plans to raise $55 million to help him get the nomination.

The use of the 501(c)(4) section of the tax code is meant for non-profit entities operating as social welfare organizations, and the use of 501(c)(4) designation for organizations that engage in political activities has raised serious questions. Two campaign finance watchdogs, Democracy 21 and the Campaign Legal Center, recently called on the Internal Revenue Service (IRS) to investigate four non-profits that are alleged to primarily act as political organizations. These groups include Crossroads GPS, Priorities USA, American Action Network and Americans Elect.

According to a letter Democracy 21 and the Campaign Legal Center filed with the IRS, "Court decisions have established that in order to meet this requirement, section 501(c)(4) organizations cannot engage in more than an insubstantial amount of any non-social welfare activity, such as directly or indirectly participating or intervening in elections."

The social welfare service offered by 501(c)(4) organizations can include educating the public about an issue. Citizens for a Greater America states it was founded to "promote conservative leadership and values and to educate the public and policy makers about conservative issues and principles," according to the fact sheet obtained by iWatch News.

Perry Supporters Start New Secret Money Group

2011-09-28T22:36:49Z

Make Us Great Again is one of five super PACs supporting Perry in the Republican primary and has plans to raise $55 million to help him get the nomination.

The Counter-Reformation: The Fall of Campaign Finance Reform

2011-09-27T07:01:01Z

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

WASHINGTON -- In the first two weeks of January 2006, the Senate Judiciary Committee held confirmation hearings for President George W. Bush's second nominee to the Supreme Court, Samuel Alito. By replacing Justice Sandra Day O'Connor with Alito, Bush was replacing the Court's swing vote with a reliable conservative. This move would affect countless issues, but one that never came up during those confirmation hearings, campaign finance reform, would wind up the defining issue of Alito's early years on the Court.

In decision after decision with Alito on board, the Supreme Court has gutted a large part of the campaign finance regulation system set up in the 1970s. The 2007 Wisconsin Right to Life v. Federal Election Commission (FEC) created a loophole in the 2002 campaign finance reform law known as McCain-Feingold allowing corporations and unions to run certain types of election ads, but that decision stopped short of allowing unlimited spending to go toward what is known as express advocacy, calls for the election or defeat of an opponent.

This loophole was blown open by the 2010 ruling in the Citizens United v. FEC case, essentially creating a separate, deregulated sphere for non-party and non-candidate groups to spend and raise money from corporations, unions and individuals as they saw fit.

In 2011, the Court invalidated a public financing law in Arizona that provided matching funds to candidates whose opponents were spending their own money.

Other lower court cases are percolating up and could provide other opportunities for further gutting of the campaign finance regulation system.

The Court isn't the only body responsible for the current state of campaign finance reform. The FEC has deadlocked on two important votes on implementing rules to govern the groups now spending money freely post-Citizens United and mundane subject matter including enforcement fines against campaigns. Congress, too, is intractably gridlocked. Democrats and Republicans are now further apart on the issue of what to do about money in politics than ever before.

For those who want to remove money from the political equation, this may be their bleakest moment.

"We're in a very rough patch right now," campaign finance reform advocate Fred Wertheimer, President of Democracy 21, a nonpartisan nonprofit, told HuffPost. "We have a very hostile Supreme Court. We have a highly partisan, gridlocked legislative process which makes it exceptionally difficult to put together bipartisan reform legislation."

The more than a dozen campaign finance reformers, election lawyers and supporters of campaign finance deregulation who spoke with HuffPost agreed one man has put campaign finance reform on the ropes: Justice Samuel Alito.

"We got here because Justice O'Connor retired," said Campaign Legal Center President and CEO Trevor Potter, a former chairman of the FEC and counsel to Sen. John McCain's (R-Ariz.) 2008 presidential bid.

Election law professor Rick Hasen, author of the Election Law Blog, echoed that sentiment. "The reason this took off and changed in the last few years can be explained very simply by the retirement of Justice O'Connor and her replacement with Justice Alito. That changed the court to a 5-4 majority that is hostile to all regulation of money in politics aside from disclosure laws. Citizens United was one of series of attempts to get the courts to strike down major campaign finance laws. It wasn't the first successful one, it was just a nail in the coffin."

Citizens United was just one of many legal challenges to campaign finance regulation that have rapidly increased in recent years. These challenges have been intentional efforts to bring ideal cases before the Court to gain expansive rulings that would roll back the current system of campaign finance regulation. They have been aided by a growing apparatus in Washington and elsewhere of counter-reformers who support the deregulation of campaign finance.

"Six years ago, there was no known entity to get an opinion that is different from the [pro-campaign finance reform] Common Cause and League of Women Voters line," explained Brad Smith, the Chairman and Co-Founder of the Center for Competitive Politics (CCP) and a former FEC chairman.

CCP was founded in 2005 to bring an alternative viewpoint to campaign finance in Washington: Tere is nothing wrong with money in politics. The group has helped to disseminate research, provided professional testimony in Congress and state legislatures, and submitted amicus curiae briefs for court cases contesting campaign finance regulation.

"In legislatures, for example, we get calls all the time," Smith said. "Just six years ago they didn't know where to get witnesses to express a critical view on reform, particularly at the state level. That has slowly been changing public opinion."

CCP and other groups have been laying the foundation for a counter-campaign finance reform establishment. Yet much of the success seen by the counter-reformers has come from one man's quest to end campaign finance regulation through litigation.

Jim Bopp operates the James Madison Center for Free Speech and has devised a strategy to attack campaign finance regulation through the courts. Bopp's position is based on a simple argument: The First Amendment, he says, "is written in strong terms as a protection for speech generally and political speech specifically." Cases brought to the Supreme Court by Bopp include Citizens United v. FEC, FEC v. Wisconsin Right to Life, and Doe v. Reed. Bopp is also leading challenges in lower courts to disclosure requirements for corporations and independent groups and direct corporate contributions to candidates.

"Jim Bopp has always been very active, but it has seemed that since Citizens United, or even before, in 2009, there's been a big push to eliminate as broad a swath of campaign finance laws as possible," Campaign Legal Center lawyer Tara Malloy told HuffPost. "It doesn't seem like this litigation offensive is going to cool down anytime soon."

Campaign finance regulation "is way too complicated, confusing, difficult and is not serving the public interest of accountability and transparency," Bopp told HuffPost. "The biggest problem, which is the fountainhead for all of this, is contribution limits."

Bopp explained that limits on that amount an individual can contribute to a candidate, which were enacted under the original Federal Elections Campaign Act of 1971 and upheld by the Supreme Court's ruling in Buckley v. Valeo, are the real root of the current rush of money into independent political committees filed as nonprofits or trade groups.

"As you regulate and restrict candidates, people went to advocacy groups and parties, then they went off to 527s or LLCs," Bopp said. "When Congress is taxing and regulating you and passing around a lot of money people want to participate. That’s just perfectly natural."

Recently, the counter-reformers have run up a string of losses in court on the issue of disclosure. One thing that the Supreme Court's Citizens United ruling did protect was disclosure provisions for all political spending, a decision that is leading lower courts to reject the multiple attempts to gut state disclosure requirements.

Despite the Court's upholding of disclosure laws, counter-reformers like CCP's Smith oppose the recent focus on campaign finance disclosure. "I think there's a disclosure craze going on," Smith said. "It's a way to limit speech."

"I'm not a big fan of disclosure of contributions," said David Keating, Club for Growth Executive Director and founder of SpeechNow.org. "A lot of people are justifiably worried about retribution by politicians."

"I don’t object to disclosure of contributions or expenditures of political actors, candidates, political parties, or PACs," Bopp said. "Those are appropriate. When you’re talking about advocacy groups or for-profit corporations disclosure can be real detrimental."

The Supreme Court, however, has issued fairly strong statements in support of disclosure from participants in politics. In Doe v. Reed, a case brought by Bopp, the Court ruled that the state of Washington's disclosure of ballot signatures is constitutional. The ruling featured a marker for how the Court may view other disclosure challenges in the future in the form of a scathing rebuke by Justive Antonin Scalia, a noted conservative voice on the Court, to opponents of disclosure.

"Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed," he wrote. "For my part, I do not look forward to a society which, thanks to the Supreme Court, campaigns anonymously and even exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism. This does not resemble the Home of the Brave."

Rulings in favor of disclosure are currently the only bright spots among efforts to expose, reduce or eliminate money in politics. The makeup of the Court and the partisanship on Capitol Hill has led some reformers to look beyond the legislative path for ways to ferret money and influence out of politics.

"What Public Citizen or other groups are doing is important, laying down markers, but doing anything through the legislative or constitutional route is going to be impossible," said Bruce Freed, President of the Center for Political Accountability. "That's just recognizing reality. this is something where you have to be innovative."

The Center for Political Accountability, Freed explained, works through shareholders to pressure companies to adopt disclosure policies for their political spending.

"Early on, the [Center for Political Accountability] made the case that political spending by corporations does pose a risk to companies," Freed said. "By posing a risk, companies need to address that risk. Working with a group of shareholder partners, we have used the whole shareholder route to get 88 boards to adopt oversight and disclosure policies."

Efforts to gain disclosure and oversight of corporate political spending extend beyond the Center for Political Accountability. The Committee for Economic Development is calling on companies to forgo political spending, and a group of law professors has called on the Securities and Exchange Commission (SEC) to develop rules to require the disclosure of political spending by corporations. All three of these efforts are what Ciara Torres-Spelliscy, assistant professor at Stetson University College of Law, recently dubbed "a growing consensus among shareholders, corporate leaders and corporate law experts."

Others are looking at lobbying reform to try to tackle the campaign finance issue from a different angle.

"Lobbying laws are part of where reform attention is going to go towards," said Emory University law professor Michael Kang, the author of a forthcoming paper titled "The End of Campaign Finance Law." "The speech interests are different and the Court's thinking isn't as entrenched in how they think about lobbying laws. I would suggest that there's reason for the Court to view that type of regulation a little bit differently."

Others efforts focus on a constitutional solution. Groups like Free Speech for People and individuals like MSNBC host Dylan Ratigan support the adoption of a constitutional amendment to get money out of politics.

Democracy 21's Wertheimer explained that efforts to obtain a constitutional amendment are coming as a response to the makeup of the Supreme Court. "I think people are doing that in part because of the Supreme Court we have now, and no one knows how far this Supreme Court is prepared to go," Wertheimer said. "If, down the road, the Supreme Court makes it impossible to deal with the role of money in politics, then I think a lot of people will look at a constitutional amendment."

"If the Court was 7-2 or 6-3 [opposed to getting money out of politics] a constitutional amendment would rise to top of demands," said Nick Nyhart, the executive director of Public Campaign, a public financing advocate.

Despite the grim state of campaign finance reform, organizing around getting money out of politics is ramping up.

"As bad as it is right now, the darkest moment is when you can see some change," said Robert Greenwald, the president of the liberal film, research and activist group Brave New Foundation. Greenwald's operation runs a website called KochBrothersExposed.com that seeks to bring awareness to the role that Charles and David Koch, the owners of Koch Industries, play in financing conservative politics.

In the past year, liberal activists have targeted the Koch brothers as the face of undue corporate influence in politics. The duo has reportedly funded efforts to gut public employee unions and privatize public education, blocked efforts to control climate change and supported Tea Party groups that were vital to energizing limited government activists during the first two years of President Barack Obama's term. The Koch brothers were targeted in the union protests against Republican Wisconsin Governor Scott Walker, with perhaps the most famous episode being a recorded prank phone call by a David Koch impersonator to Walker thanking the governor for his anti-public employee union stance. Protests were also held at the Kochs' annual conference in California.

Public Campaign's Nyhart explained that money-in-politics critiques are now being sought by issue-based groups. "Increasingly we're seeing issue-based organizations bringing in money-in-politics research into their fight on their day-to-day issues," said Nyhart. "It shows the public why they're not getting what they're asking for."

"Clearly we need to drive the money out of politics," Greenwald said. "There's such a general disgust in the corruption in the way the system works."

READ the first article in this series: "Super PACs And Secret Money: The Unregulated Shadow Campaign"