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Known Unknowns: The Power of Secret Money in the 2010 Elections

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In January, when the Supreme Court issued its decision in Citizens United v. FEC, allowing corporations for the first time in decades to spend unlimited amounts of money to influence elections, nobody was quite sure how the new rules would play out in a real election. The justices in the Court's majority imagined some ideal world where all campaign spending was swiftly disclosed -- and where all voters had easy access to the disclosed information -- leading to an honest and prosperous marketplace of ideas. Critics of the decision (myself and my organization included) predicted something much less sunny -- corporations flooding money into elections to help elect pro-corporate candidates, unhindered by transparency or even honesty.

Our fears and expectations, unfortunately, turned out to be well founded. This year's midterm elections were the most expensive in history, and featured an unprecedented amount of spending from outside special interest groups, many of which ran misleading attack ads while concealing the sources of their funding. And corporate money made a difference. Outside groups, most prominently the big business-funded Chamber of Commerce, favored a new wave of pro-corporate Republican candidates 2-1...and met with astounding success for their agenda on Election Day.

Determining the impact money has on elections is difficult, but this year it was undeniably powerful. A Public Citizen report after the election found in 58 of the 74 races in which power changed hands on Nov. 2, the candidate who benefited from the most outside spending also won their election. Of course, the cause and effect can go both ways -- special interests often back shoe-in candidates just to be in their good graces once they're in office -- but outside money clearly made a difference in some very close races.

Take, for instance, the work of the American Future Fund, a Des Moines-based group that received its seed money from the CEO of a large ethanol company. Beyond that, we know very little about AFF's funders and agenda -- because it claims to spend more than half of its money on non-electoral work, it doesn't have to disclose its donors to the FEC...and visitors hoping to tour its headquarters will find not an office, but a mailbox.

The AFF's agenda was also less than clear. The group produced ads attacking congressional incumbents on issues including health care reform, the stimulus, and clean energy legislation. And, most notably, it hired the producer of the infamous Willie Horton ad to create an ad attacking Iowa congressman Bruce Braley for his refusal to condemn the so-called "Ground Zero Mosque," which introduced the absurd, and apparently catchy, concept of "victory mosques." But one clue to the group's true agenda suggests that its donors were not really all that concerned with Medicare or mosques: nearly all of its target incumbents were Democrats sitting on committees overseeing energy and agriculture policy.

But whatever the AFF was up to, it was enormously successful. A New York Times analysis found that it had the highest success rate among big-spending outside groups in last week's elections, winning 19 of the 25 races in which it invested. In the remaining races, like Braley's, it lost by razor-thin margins.

A similar dynamic was at play in the work of the secretive Karl Rove-founded group American Crossroads GPS. NBC's Michael Isikoff found this month that the secretive group was funded almost entirely by a group of wealthy Wall Street hedge fund and private equity moguls -- whose money Crossroads GPS directed toward running faux-populist ads slamming incumbent Democrats for their votes to bail out Wall Street.

This story repeated itself again and again this year -- from an oil and gas industry front group called the "First Amendment Alliance" creating an anti-Jack Conway ad about meth enforcement so false it was pulled off the airwaves in Kentucky to the U.S. Chamber of Commerce benefiting from contributions from foreign corporations and then attacking the opponents of candidates who push its pro-outsourcing agenda.

These groups are what you could call, in the famous words of former Defense Secretary Donald Rumsfeld, "known unknowns": we know that they're there...but we have know way of knowing what they're up to.

Contrast these powerful outside spenders with another well-moneyed group in American elections: self-financed candidates. On the whole, millionaire and billionaire candidates who bankrolled their own campaigns pretty much flopped in this month's elections. According to OpenSecrets.org, four out of five of the 58 federal-level candidates who spent more than $500,000 of their own money on their campaigns ended up losing in the primary or general election. Self-financed candidates generally have a fairly dismal track record of winning elections--partly because some lack the political experience to pull off a successful campaign, partly because voters reject the idea of a person buying themselves political office. (The Washington Post and the American Prospect both looked into the self-funding paradox earlier this year).

But why the huge disparity between the effectiveness of different kinds of money in the political process?

Polling shows that the vast majority of Americans really don't like the idea of corporations and interest groups pouring money into elections...and also really don't like it that outside groups don't have to reveal the major sources of their money.

But not liking the idea of wealthy people or corporations or powerful special interest groups trying to buy elections isn't much help when you're seeing a convincing ad on TV from a group with a name like the "Commission on Hope, Growth, and Opportunity" -- and have no way of finding out what the money and motivations behind the ad are.

Self-financed candidates are, to a large extent, "known knowns." When a candidate is bankrolling her own campaign, voters go into the polling place knowing full well who's most invested in that candidate's success and where the money comes from. Voters knew that Carly Fiorina made her fortune by sending jobs overseas, and Linda McMahon made hers by selling misogyny. But when a candidate is backed by millions of dollars from shadowy interest groups, the equation gets more difficult. The money's there, but it's difficult if not impossible to tell where the money comes from and what exactly it's meant to buy.

The system as it is hands a huge advantage to candidates who advance pro-corporate policies, and also rewards those who avoid wearing their corporate allegiances on their sleeves.

When the 112th Congress convenes, its members will include politicians who campaigned on radical pro-corporate policies -- eliminating health care reform, privatizing Social Security, deregulating Wall Street. Corporate America and the Tea Party movement have been closely linked since former Wall Street banker Rick Santelli issued his infamous battle cry on CNBC. But the unlimited, undisclosed corporate money poured into the campaigns of Tea Party candidates has made the union complete. We may not know exactly who our new Congress is indebted to, but we do know that that debt is enormous.

The Senate will have one last chance next month to pass the DISCLOSE Act, which simply requires outside groups on both the Right and Left to disclose the major sources of their income. There is no reason for any member of Congress to oppose the bill, except the fear of harming his or her own reelection campaign. We all need to ask our senators what their priorities are: the strength of their reelection efforts, or the strength of our democracy.

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