In this first post-Citizens United election, voters are the victims of a democracy crime that the government seems unable, or unwilling, to stop despite it occurring right before our eyes.
Political operatives, like Karl Rove, are misusing the tax laws to create organizations that allow for anonymous and unlimited donations from corporations and the super-rich in order to determine the outcome of the mid-term elections in violation of election and tax laws. See American Crossroads Watch.
Organizations are being set up under Section 501(c)(4) of the Internal Revenue Code to manipulate the outcome of the mid-term elections. A 501(c)(4) is a lobbying organization, not allowed to spend most of its time on electioneering. These new organizations are spending massively on advertising for and against candidates, developing data bases of voters, creating messages for candidates and planning get out the vote drives. These activities make them "political committees" that should obey election laws, including making the names of donors public.
As the New York Times reports "Crossroads Grassroots Policy Strategies would certainly seem to the casual observer to be a political organization: Karl Rove, a political adviser to President George W. Bush, helped raise money for it; the group is run by a cadre of experienced political hands; it has spent millions of dollars on television commercials attacking Democrats in key Senate races across the country."
The central legal issue is whether groups like Karl Rove's American Crossroads are "political committees" under federal election laws. Federal law defines a political committee as any group that receives and spends more than $1,000 "for the purpose of influencing any election for Federal office" See 2 U.S.C. §§431(4), (8)(A) and (9)(A). In Buckley v. Valeo the Supreme Court defined the term "political committee" to encompass organizations that are either "under the control of a candidate or the major purpose of which is the nomination or election of a candidate." [Emphasis added.]
American Crossroads and similar organizations were set up to influence the outcome of the mid-term elections and take advantage of Citizens United with unlimited, anonymous donations. They meet the two part test: (1) its "major purpose" is to influence candidate elections and (2) it receives and spends more than $1,000 for the purpose of influencing federal elections.
The New York Times describes the test as "The rule of thumb, in fact, is that more than 50 percent of a 501(c)(4)'s activities cannot be political. But that has not stopped Crossroads and a raft of other nonprofit advocacy groups like it -- mostly on the Republican side, so far -- from becoming some of the biggest players in this year's midterm elections, in part because of the anonymity they afford donors, prompting outcries from campaign finance watchdogs."
In the Citizens United decision, the Supreme Court upheld election law provisions that required disclosure of the source of electoral-related funding. Justice Scalia, writing for the majority, described the benefits of such disclosure to shareholders of the corporation as well as to voters writing: "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. The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages. ..."
The wealthy using front groups for secret donations is not new. It is a strategy perfected by a variety groups that has been is on steroids in the post-Citizens United electoral world. The Chamber of Commerce is one of the leaders in this approach where they have focused a great deal in past years on affecting the outcome of state supreme court races. We've been highlighting this at StopTheChamber.com. In one case, the courts, after five years of litigation, required disclosure of campaign donors for a Chamber front group. In Citizens for a Strong Ohio the Ohio Elections Commission ruled that a Chamber of Commerce front group that attacked an Ohio Supreme Court Justice was required to disclose its donors under Ohio law. Three courts upheld that decision, and all the corporate donors were named. The Chamber is a major player in this year's election activity as well.
The New York Times highlighted the work of another front group with a nice sounding name, Americans for Job Security. It reports "'Americans for Job Security has no purpose other than to cover various money trails all over the country,' the staff of the Alaska Public Offices Commission said in a report last year." They spent $6 million in the primary season, and are about to spend $4 million attacking Democratic candidates. The Times report the close relationship between them and American Crossroads describing how they sublet from the Republican "Crossroads Media, whose other clients include the national Republican Party, the Republican Governors Association and American Crossroads, a Karl Rove-backed group raising millions to support Republican candidates."
In the case of Karl Rove's American Crossroads, voters would very likely benefit from knowing what the sources of millions of dollars in contributions are. American Crossroads' sister organization, a 527 political action committee, recently reported its sources of funds. The reports indicate that American Crossroads 527 is funded almost entirely by billionaires. As Salon reports, "In August, American Crossroads raised $2,639,052. Fully $2.4 million of that -- or 91 percent -- came in the form of gifts from just three billionaires." Open Secrets reports that these donors come from the insurance industry, military industrial complex and oil and gas industry.
These anonymous donor groups are swamping the Democrats. Bloomberg News reports, "Republican-leaning groups that don't disclose their donors are raising and spending millions of dollars on the US congressional elections, helping make up for the party's fundraising deficit. Five organizations alone reported spending more than $5 million since Aug. 1 on so-called electioneering communications, compared with less than $200,000 for Democratic-leaning groups, Federal Election Commission data show."
The Associated Press describes these groups as "The Republicans' shadow party" and because of the anonymous donors describes them as "basking in the shade," with American Crossroads' "two affiliated groups led by a blue-chip cast of Washington Republican strategists have raised a combined $32 million so far this year, using new freedom from fundraising restrictions to create a parallel and unofficial Republican campaign to defeat Democrats in November." It is obvious to anyone who looks at these groups that their primary purpose is electing candidates.
Politico describes American Crossroads as "part of a wave of big-donor-funded groups on the right that have either launched or ramped up this year in an effort to boost expected Republican gains in the critical midterm elections." Again, their obvious purpose is to elect candidates. Politico points to "the groups -- including American Action Network, which shares a downtown Washington office with the Crossroads groups, as well as Americans for Prosperity and the U.S. Chamber of Commerce -- aim to capitalize on voter dissatisfaction with President Barack Obama and the Democratic Congress. Some of the groups also intend to take advantage of a January Supreme Court decision that loosened laws governing what types of contributions can be used to air election ads directly targeting candidates."
Efforts to solve these problems with legislation fell one vote short this week in the Senate, with two Republicans not voting. The campaign finance bill would have required nearly all organizations airing political ads to disclose their top donors and the amounts they paid. It would have also banned a variety of political activity by entities holding a government contract worth more than $10 million and corporations where foreigners own more than a majority of voting shares.
Thus far, neither the Department of Justice, Federal Elections Commission nor the Internal Revenue Service has been willing to take action to hold these organizations accountable. So we, as concerned citizens, have taken the following steps:
- Our watchdog campaign, Protect Our Elections, has put out rewards of $100,000 for information leading to the arrest and conviction of Karl Rove and Tom Donohue, the CEO of the Chamber of Commerce.
- On August 4, 2010, we received a letter from a purported Chamber of Commerce insider who compares Tom Donohue to Jack Abramoff, Michael Scanlon and Bernie Maddoff, alleges fraud, campaign finance violations and financial impropriety. In a letter on behalf of our coalition I urged the FBI and DOJ to conduct an investigation of Tom Donohue and the Chamber based on this letter.
- We have also requested the Department of Justice investigate the "shadow RNC", American Crossroads. In a letter on behalf of the coalition, I suggest formation of a campaign finance task force that investigates these groups, sets up a tip line to encourage information on violations of law, requires preservation of records and monitors their activities.
- We have also urged the Federal Elections Commission to find that these groups are doing the work of a political party and issue an opinion that applies campaign finance limits to their actions.
- We have gotten the grassroots involved asking them to write the DOJ to investigate American Crossroads and similar groups and to write their legislators urging an investigation. Thousands have responded.
For now, the best antidote to this democracy crime is for voters to be alert. "Voter beware" needs to be the thought when advertisements are seen from advocacy groups during this election season. And voters should warn other voters that there is an ongoing crime against democracy and they should be wary of political advertising.