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Money in Politics This Week: Rep. Van Hollen Files Suit Against IRS

The Brennan Center regularly compiles 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.

  • Syed Zaidi
August 23, 2013

Crossposted at ReformNY

The Brennan Center regularly compiles 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           

Lobbying Groups Seek Exemption from Donor Disclosure Rules

The New York State Joint Commission on Public Ethics recently granted an exemption to Naral Pro-Choice New York from regulations requiring tax-exempt organizations that participate in political activities to disclose their major donors. The law allows exemptions for groups whose donors might face “harm, threats, harassment or reprisals.” Naral Pro-Choice points to past threats as evidence of the danger that disclosure would create: disturbing handwritten letters and Facebook posts by a man who was later convicted of participating what he thought was a plot to bomb an abortion clinic. Many groups from across the political spectrum are now seeking the same exemption, arguing that publicly disclosing their donors could endanger them. New York’s broad definition of lobbying includes spending on advertisements for or against legislation. Groups that devote a substantial amount of their resources to lobbying have to disclose all donors that contribute more than $5,000. According to Kelly Williams, corporate general counsel at the Brennan Center, exemption from disclosure should only be granted in instances of credible threats or harassment, not for fear of economic harm, such as boycotts. The New York Times concurs, stating in a Wednesday editorial that “Otherwise, big-money partisan lobbying via hidden backers will only proliferate as the public heads deeper into the dark, and the ethics law itself will begin to unravel, thread by thread.”

Super PACs Active in New York City Elections

Super PACs, independent political action committees with no restrictions on campaign spending, are shelling out cash for flyers, robocalls and TV ads in New York City elections. Forward NY is one of six Super PACs active in the city. It recently sent thousands of emails attacking the former governor Elliot Spitzer for his attempted comeback into politics. Jobs for New York, a group backed by the Real Estate Board of New York, has spent $314,000 on City Council races. Three former aids to Rudy Giuliani are also forming a Super PAC to support Republican mayoral candidate Joe Lhota. Government watchdog groups have criticized the independent expenditures because they undermine the city’s public financing system, which imposes contribution and spending caps on candidates. “Skewing by big donors is a serious matter,” according to Eric Lane, the dean of Hofstra University Law School, who helped write the city’s campaign finance law. The only check on Super PACs in the city is a state election law barring an individual from making more than $150,000 in annual contributions to all state and local campaigns combined.

City Comptroller Candidates Discuss Campaign Finance

The candidates for New York City Comptroller traded shots at each other over how their campaigns are financed in a debate last week. The debate was the first in a series administered by the New York City Campaign Finance Board (CFB). Manhattan Borough President Scott Stringer is participating in the CFB matching funds program, which provides him with a $6-to-$1 match for every donation he raises up to $175. Consequently Stringer also has to abide by strict contribution limits and a spending cap of $6 million. Spitzer joined the race after the CFB deadline and is self-financing his campaign. Stringer accused Spitzer of “trying to destroy one of the best campaign finance systems in the country” at the debate. Spitzer fired back saying that Stringer had benefited from independent expenditures from a coalition of women’s advocates, business and labor leaders.



Rep. Van Hollen Files Suit Against IRS

Representative Chris Van Hollen (D-MD) has filed suit in Federal District Court to overturn an Internal Revenue Service ruling on tax-exempt “social welfare” organizations that engage in overtly political activities. Three government watchdog groups, Democracy 21, Public Citizen and the Campaign Legal Center, are joining the suit. The tax statute confers 501(c)(4) tax-exempt status only to groups that “exclusively” engage in non-political social welfare work. For decades, however, the IRS has only required 501(c)(4)s to make social welfare their “primary” purpose, allowing significant political activity. “The point here is that the law is clear,” Representative Van Hollen said. “What do you want us to do — put an exclamation point after exclusively?” As opposed to traditional PACs and Super PACs which fall under Section 527 of the IRS Code, the concern arises over the ability of the 501(c)(4)s to spend on politics without disclosing their major donors. Following the Supreme Court’s Citizen United decision, $256 million was pumped into political ads in the 2012 presidential election cycle, three times more than the amount spent in 2008.

In August Recess, Congressmen Globe-trot on Privately Financed Trips

While many Americans are concerned about making ends meet this summer amid oncoming sequestration cuts, Congressmen are using the summer recess to travel around the globe on privately financed tours, some paid for by lobbyists. Congress clamped down on such travel in 2007 when a scandal involving lobbyist Jack Abramoff and free trips was exposed. Abramoff was later sentenced to prison on corruption charges, which also engulfed former Representative Bob Ney (R-OH) and some Congressional aides. But the trips haven’t stopped; expeditions to Turkey and Israel, paid by private groups and foreign government have been especially popular. Four House Republicans and a Democrat who are members of the “Friends of Scotland Congressional Caucus” are headed to Scotland this month, on the Scottish government’s tab. Bill Allison, editorial director of the Sunlight Foundation, is concerned that the trips may make lawmakers feel indebted to the sponsors, especially when they include free food, hotels, tours and transportation. There have been 1,363 trips at a cost of $3.2 million to hosts so far this year.

Race for Governor in Virginia Invites Super PACs

The race for governor in Virginia is heating up as the candidates attract massive contributions. In the month of July, DGA Action, a Super PAC of the Democratic Governors Association, contributed $1.2 million to Terry McAuliffe, a Democratic candidate for governor, one of the largest single political donations for the office in recent history. Virginia has no limits on contributions for candidates to state offices.  McAuliffe’s Republican opponent, Virginia Attorney General Kenneth T. Cuccinelli II has received several large donations including $5.6 million from the Republican Governors Association. And the race has turned extremely partisan and bitter with each candidate accusing the other of ethical lapses. McAuliffe has attacked Cuccinelli in a television ad criticizing $18,000 in gifts Cuccinelli received from a prominent GOP donor, Star Scientific CEO Jonnie R. Williams, Sr. Cuccinelli has penned an op-ed accusing GreenTech Automotive, an electric car company founded by McAuliffe, of dubious practices to attract foreign investors.

Small Business Leaders Ask SEC to Adopt Disclosure Rule

Aimee McQuilkin, a leader in the Montana Small Business Alliance, and Freddy Castiblanco, a leader of Small Business United New York, have authored an op-ed in The Hill arguing for the Securities and Exchange Commission to establish a rule regarding disclosure of political spending by corporations. Currently public companies that spend money on politics are not obligated to report such spending to investors or the government. Several small business trade groups have signed onto a letter urging the SEC to adopt the proposed disclosure rule, in an effort to generate greater transparency. “Under current rules, money from the general treasury of a public company can be disbursed to fund political activities without the owners (the shareholders) having any way to know about it.” Hardworking small business owners understand that success in the marketplace should be determined by innovation and healthy competition, not pay-to-play politics or secret back-room politicking.