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Money in Politics This Week

A roundup with the latest news highlighting the corrosive nature of money in New York State politics — and the need for public financing and robust campaign finance reform.

  • Syed Zaidi
August 18, 2012

Crossposted at ReformNY

Every Friday, the Brennan Center will be compiling the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

New York Campaign Finance and Ethics News

1. Last month, Reform NY applauded New York State Attorney General Eric Schneiderman’s promise to investigate non-profit “social welfare” organizations that are overtly active in politics. Fundraising groups can legally operate as tax-exempt 501(c)(4) organizations as long as they spend less than 50 percent of their budget on political activities. Schneiderman has launched a probe into two dozen non-profits, requesting that the organizations disclose their revenues and expenditures. These organizations include conservative ones such as Crossroads GPS, American Action Network, and American Future Fund, as well as their liberal counterparts like Priorities USA, American Bridge and America Votes. According to Bloomberg News, America Votes is the only group that has responded to Schneiderman’s request thus far. Schneiderman may revoke a non-profit’s ability to operate in the state if it makes a false claim about its functions or refer the group to the IRS. 

National Campaign Finance and Ethics News

1. In picking Paul Ryan, Mitt Romney seems to be trying not only to rally the Republican base, but also to further boost campaign fundraising numbers. After the Romney campaign publicly declared Paul Ryan as his running mate, it raised over $ 2 million by the end of the day. Paul Ryan is one of the top political fundraisers in Congress with a war chest of $ 5.4 million, $ 2 million more than the next House member. Donations from banks, insurance companies and energy conglomerates populate his FEC forms and inform his policy positions. Ryan is a fervent opponent of Dodd-Frank and has called for its repeal. He has received more than $ 10,000 from Wells Fargo and Goldman Sachs each for his 2012 Congressional election campaign. Ryan’s budget plan, popular among House Republicans, would replace traditional Medicare with a voucher based system that would benefit private insurers. Insurance employees and their families have donated $ 815,328 to Ryan’s reelection efforts over the span of his career. Lastly Ryan has been an ardent critic of environmental regulations. Campaign finance records reveal that he has raised $ 41,750 from several sources including the PAC of ConocoPhillips, Exelon Corp., and Wisconsin Energy Corp just as of this week, and $ 65,000 from Koch Industries over his tenure in Congress. Top contributors to Ryan’s Prosperity PAC are outlined by the Fiscal Times.

2. TV stations will soon have to disclose purchases of air time by groups jockeying over political ads. A Federal Communications Commission ruling requires[g1]  affiliates of ABC, CBS, Fox and NBC in the top 50 U.S media markets to upload agreements with political advertisers onto an online database. Advertising agreements are already available to the public upon request in the form of hard copies at local stations. However the new ruling modernizes the process and ensures greater access. The rule is now in effect despite complaints and lawsuits to halt the effort by the National Association of Broadcasters. The agency should revamp its website to make it searchable by groups buying advertising time, rather than solely by individual TV stations to make the compilation of records less tedious.

3. The principle that everyone whether rich, poor, weak or powerful is equal before the law is a keystone of American democracy, but judicial elections for state courts continue to undermine the promise of judicial impartiality and fairness. Ninety-five percent of all cases in the U.S. are heard before state courts, whereas only 5 percent are decided by federal courts. Thirty-nine states elect their high court judges. A Center for American Progress report indicates that judicial campaigns now involve enormous sums. In 1990 candidates for state Supreme Courts raised $ 3 million, whereas in 2000 these very same races raised more than $ 45 million. From 2001 to 2003 the U.S. Chamber of Commerce spent heavily on state judicial elections, with its preferred candidate winning 87 percent of the time. Conservative groups spent $ 8.9 million on state Supreme Court elections in 2010, compared to $ 2.5 million spent by liberal organizations. This injection of campaign funds into the courtroom is eroding justice as well. The report examines 403 cases where individuals sued corporations in six states, and concludes that the courts ruled in favor of corporations 71 percent of the time. The high courts that have seen the most campaign spending are much more likely to rule in favor of big businesses and against individuals who have been injured, scammed, or subjected to discrimination.

4. In 2010 voters were understandably dissatisfied with the Washington establishment, and choose to elect 89 new members to the House of Representatives. Unfortunately analysis by the Sunlight Foundation demonstrates that the freshman have become just as cozy with special interests as their experienced colleagues. Although the freshmen project an image of being political outsiders, more than half have served in political offices, and a disproportionate number are millionaires, similar to the rest of Congress. In 2010, business PACs with lobbying staff donated $ 14.89 million to these Representatives who were challenging incumbents at that stage. This cycle, the same PACs have contributed over $ 26.66 million to their campaigns. Leadership PACs–PACs associated with high-ranking members of Congress—have propped up some of the candidates to the tune of $ 9.59 million. Furthermore outside groups such as Super PACs, nonprofits, labor groups and party committees have spent $ 1.78 million in the districts of these 89 incumbents. Representative Diane Black (R-Tennessee) is emblematic of her class. She touts her background as a small business owner and registered nurse, when in reality she is a veteran Tennessee state legislator and a millionaire with a net worth of $ 49 million. Her assignment to the powerful Ways and Means Committee, and House Budget Committee has brought in donations from the healthcare industry, hospitals and insurance companies. In total she has received $ 566,000 from PACs thus far in 2012.

5. Super PACs have dominated the news since the Citizens United decision, but non-profit “social welfare” organizations are also wielding excessive influence over the political process. The two richest non-profits, Crossroads GPS and Americans for Prosperity, headed by Karl Rove and the Koch brothers respectively, have surpassed spending by all Super PACs combined. Non-profits are a popular outlet for wealthy donors that hope to elect their preferred candidate and remain hidden from public view. ProPublica’s analysis of spending data demonstrates that these two conservative non-profits also outspent political parties, unions, trade associations and political action committees. Crossroads GPS has poured $ 41.7 million, while Americans for Prosperity has spent $ 18.2 million on TV ads in favor of Republican presidential candidates. “First of all, it shows how much desire there is for secrecy among huge donors who want to be able to spend money to influence this election without leaving any fingerprints,” Fred Wertheimer of Democracy 21 asserts. “Secondly, it shows that so far, there is an enormous advantage being played in this election by just two groups that are exercising undue influence in the elections.”

6. Many Super PACs have also paired up with non-profits, in an effort to keep their donors anonymous. The Las Vegas-based It’s Now or Never Super PAC has raised $ 171,900 thus far for Utah and Nevada state political offices, with $ 160,900 from the It’s Now or Never 501(c)(4) non-profit. Although the Super PAC and non-profit share the same leadership, location and even name, the key difference is that the non-profit does not have to disclose its donors, so the source of the Super PAC funds cannot be tracked. The Fight for the Dream Super PAC, which is active in Pennsylvania GOP primary races, has a similar set-up, deriving donations from an affiliated non-profit called Restore the Dream. According to Paul Ryan, senior counsel at the Campaign Legal Center, the use of 501(c)(4) groups as “straw donors” may run afoul of federal prohibitions on non-profits engaging in electoral politics as their primary purpose. “If the (c)(4) is only serving the purpose of being a conduit for funds to the super PAC, then the (c)(4) is breaking federal tax law,” he stated. Furthermore both groups have also failed to file their July quarterly reports electronically with the FEC.