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Expert Brief

Dark Money Groups Dominate Independent Spending in House Toss-Up Races

A new Brennan Center analysis finds that a majority of spending in this election cycle’s most competitive House districts comes from dark money sources and single-candidate super PACs.

Published: July 30, 2014

[View this analysis as a PDF]

Already in 2014, it is fairly well docu­mented that there has been “an explo­sion of spend­ing on polit­ical advert­ising” by outside groups. A Bren­nan Center analysis through this year’s second quarter finds two import­ant facts about such “inde­pend­ent spend­ing” in the most compet­it­ive House districts. First, the vast major­ity of this spend­ing has come from dark money sources, which do not reveal some or all of their original funders, and second, large amounts are coming from single-candid­ate super PACs, which can offer big donors a way of evad­ing federal contri­bu­tion limits.

Our analysis of compet­it­ive House districts finds:

  • Across all 13 House districts with toss-up races (as determ­ined by the Cook Polit­ical Report), outside spend­ing through June 30 totaled $5.3 million (this total reflects heavy spend­ing on primar­ies in these districts). This made up a signi­fic­ant chunk of the total $26.3 million spent by candid­ates and outside groups combined. For every $4 of candid­ate spend­ing, there was slightly more than $1 of outside spend­ing.
  • In two races, NY-21 and WV –03, inde­pend­ent expendit­ures made up around half of all spend­ing.
     
  • Since outside spend­ing tends to peak shortly before an elec­tion, the total is likely to rise signi­fic­antly. We saw this in primar­ies in our sample: 81 percent of the outside spend­ing in NY-21 occurred in the last three weeks before the primary, and 70 percent in CA-52.
  • The great major­ity, 86 percent, of total outside spend­ing in these 13 districts comes from dark money groups that keep some or all of their donors’ iden­tit­ies hidden.
  • In seven of the districts in our sample, virtu­ally all inde­pend­ent expendit­ures—98 percent or more—­come from dark money groups.
  • Candid­ate-specific super PACs, which can offer big donors a way of evad­ing contri­bu­tion limits, domin­ate outside spend­ing in two races, CA-52 (75 percent) and NH-01 (100 percent), and make up 32 percent of outside spend­ing in NY-21.
  • Like all analyses based on FEC data, our totals under­es­tim­ate the magnitude of outside spend­ing because some ads inten­ded to influ­ence elec­tions are not required to be repor­ted to the FEC at all. We found evid­ence of signi­fic­ant unre­por­ted ad spend­ing in four of the 13 districts in our sample—all districts where even the repor­ted outside spend­ing was by groups that hide their donors.

Our analysis covers all candid­ates who raised more than $200,000 in primary or general elec­tions in the 13 most compet­it­ive House districts.[1] We used FEC data collec­ted by the Center for Respons­ive Polit­ics to exam­ine candid­ate spend­ing through the end of the second quarter, as well as data from the Sunlight Found­a­tion to exam­ine outside spend­ing for the same period. While our first quarter analysis focused on races where the candid­ates had together raised more than $2 million, here we focus on an entirely differ­ent sample: races in districts where the general elec­tion is likely to be highly compet­it­ive.

Spend­ing Totals

Total outside spend­ing in the 13 most compet­it­ive House districts added up to $5.3 million through June 30, mean­ing slightly more than $1 of outside spend­ing for every $4 spent by candid­ates. Inde­pend­ent expendit­ures were highest in WV-03: At $1.3 million, outside spend­ing was greater than candid­ate spend­ing, which has only hit $1.2 million. A close second is NY-21, with $1.2 million in inde­pend­ent expendit­ures, not far below the race’s $1.7 million in candid­ate spend­ing.

Across all 13 races, candid­ates spent a total of $21 million. Primary spend­ing comprises a signi­fic­ant portion of that spend­ing total. Most primar­ies are over, but there are still active nomin­a­tion contests in five of these races: two each in Arizona and Flor­ida, as well as New Hamp­shire’s 1st District. Outside spend­ing in these toss-up districts consti­tutes roughly 20 percent of all spend­ing through June 30th.

Since outside spend­ing tends to peak close to the elec­tion, the $5.3 million we find in these districts so far is likely only the tip of the iceberg. Nation­wide, super PAC spend­ing is on track to match 2012, a pres­id­en­tial elec­tion year. Much of the inde­pend­ent spend­ing we found in our sample was also focused on primar­ies. For example, 81 percent of the outside spend­ing in NY-21 occurred in the last three weeks before the primary, and in CA-52, it was 70 percent. General elec­tion expendit­ures in toss-up races are likely to be higher than primary spend­ing, so the full extent of outside spend­ing’s rise will only be meas­ur­able after Elec­tion Day.

Election Spending - Toss up House Races

Dark Money

Dark money groups  — those that keep some or all of their donors’ iden­tit­ies hidden from the public — made about 86 percent, or $4.6 million, of the inde­pend­ent expendit­ures in the 13 toss-up districts. In seven of them, 98 percent or more of the outside money came from dark money groups: AZ-01, AZ-02, CA-07, CO-06, FL-26, IL-10, and WV-03. The great major­ity of dark money we iden­ti­fied came from just two groups: the U.S. Cham­ber of Commerce, support­ing Repub­lic­ans, and House Major­ity PAC, support­ing Demo­crats.

The Cham­ber of Commerce, a nonprofit trade asso­ci­ation that does not disclose its donors, has spent $17 million on the midterms so far, and about $1.5 million support­ing Repub­lic­ans in four of our 13 districts. These expendit­ures ranged from $200,000 in West Virgini­a’s 3rd District to $500,000 in Illinois’ 10th District, where the Cham­ber is the only outside spender so far.

But the biggest spender in our sample is on the Demo­crats’ side. The House Major­ity PAC’s spend­ing patterns closely follow those of the Demo­cratic Congres­sional Campaign Commit­tee. House Major­ity PAC falls into the category of groups that only partially disclose their donors because it accepts money from corpor­a­tions and unions without disclos­ing the original source of those funds. The group spent more than $2 million support­ing six of the 13 Demo­cratic congres­sional candid­ates included in this analysis. This includes the vast major­ity of inde­pend­ent spend­ing in West Virgini­a’s 3rd District, $1 million in support of the Demo­cratic incum­bent. The group spent an addi­tional $1 million across five other districts, and accounts for virtu­ally all of the outside spend­ing so far in AZ-01, AZ-02, and FL-26, where it is help­ing fresh­man Demo­cratic incum­bents.

Election Spending - Toss Up House Races

Single-Candid­ate Super PACs

Single-candid­ate super PACs are a major factor in House races this cycle, and are on track to exceed their 2012 spend­ing levels, when single-candid­ate groups heav­ily influ­enced the pres­id­en­tial race. These groups allow donors to make an end run around contri­bu­tion limits. A wealthy friend—or someone who hopes to become a friend—can make the maximum contri­bu­tion of $2,600 directly to a candid­ate, then give an unlim­ited amount to a super PAC devoted to elect­ing the same candid­ate.  Three of the 13 toss-up districts have seen signi­fic­ant amounts of this type of spend­ing, in each case focused on a primary elec­tion.

One candid­ate in the upcom­ing Repub­lican primary for New Hamp­shire’s 1st District, Dan Innis, has been suppor­ted by $226,000 in spend­ing by a candid­ate-specific super PAC, which accounts for all the inde­pend­ent spend­ing in the race. The group, New Hamp­shire Prior­it­ies, receives the vast major­ity of its fund­ing from a single indi­vidual, Peter T. Paul, who counts the candid­ate as a friend and formerly served on his finance team. Paul hit the legal limit on direct contri­bu­tions to Innis’s primary and general campaigns in Octo­ber, before found­ing the super PAC.

The Repub­lican primary for Cali­for­ni­a’s 52nd District ended in the begin­ning of June. Defeated Tea Party candid­ate Kirk Jorgensen was the bene­fi­ciary of $180,000 in inde­pend­ent spend­ing, 60 percent of which came from a single-candid­ate super PAC, Respons­ible Lead­er­ship for Amer­ica. The group received $150,000 from the Caster Family Trust in San Diego, which is reportedly funded by self-stor­age magnate Terrence Caster and his family. Caster and his wife each gave up to the $2,600 limit to Jorgensen’s primary and general campaigns.

The case of Elise Stefanik, who won the Repub­lican primary for New York’s 21st District in June, shows how a wealthy indi­vidual can use multiple aven­ues to support a favored candid­ate without being hindered by campaign finance regu­la­tion. Hedge-fund founder Paul Singer gave $4.8 million to vari­ous groups, making him the fourth-most-gener­ous super PAC donor in the coun­try this cycle. He joined a hand­ful of others from the finan­cial industry to fund a single-candid­ate super PAC, New York 2014, which has spent $372,000 in support of Stefanik. Some of the super PAC’s donors, includ­ing one who put up $150,000, have also given Stefanik maximum direct contri­bu­tions. In addi­tion, Singer, his employ­ees and other donors with whom he has ties collect­ively fund a commit­tee dedic­ated to elect­ing Repub­lican women, Winning Women, which provided 41 percent of Stefanik’s fundrais­ing from contri­bu­tions in the first quarter.

Unre­por­ted Spend­ing

Unfor­tu­nately, it is a near certainty that the FEC data on inde­pend­ent spend­ing we used for this analysis under­es­tim­ates the amount of outside money spent, because sham issue ads that attack or praise a candid­ate without expli­citly call­ing for a vote are not required to be repor­ted unless they are aired close to an elec­tion. This is distinct from the dark money prob­lem. Dark money spend­ing obscures the original source of the money, but for sham issue ads, it’s not even clear how much money is being spent, or where. Some groups issue press releases on their issue ad spend­ing, and the Federal Commu­nic­a­tions Commis­sion has begun to require that files relat­ing to polit­ical ad buys be posted online, but accur­ate totals are not avail­able. Simply put, no one knows how much is being spent on sham issue ads.

In four of the districts we analyzed, we found evid­ence of outside spend­ing that is not included in FEC data. One of the biggest play­ers is Amer­ic­ans for Prosper­ity, a conser­vat­ive dark money power­house that bought half of the elec­tion ad spend­ing in the coun­try in 2013 and the first quarter of 2014. Amer­ic­ans for Prosper­ity has announced big ad buys to attack vulner­able incum­bents in AZ-01, AZ-02, and WV-03. The Libre Initi­at­ive, a conser­vat­ive nonprofit that focuses on Latino-Amer­ic­ans, has also attacked incum­bents in Arizona, as well as the incum­bent in FL-26. On the liberal side, the dark money group Patriot Major­ity USA pumped money into ads prais­ing AZ-01 incum­bent Ann Kirk­patrick.

Adding together the amounts from these groups’ public state­ments suggests that unre­por­ted ad spend­ing in these four districts is at least $2.7 million. But with no way to confirm organ­iz­a­tions’ claims about their own spend­ing, it’s impossible to determ­ine how accur­ate that total is.

*          *          *

At this point in the midterm elec­tions, most primar­ies are over and the general elec­tion has yet to heat up. Even so, we find signi­fic­ant inde­pend­ent spend­ing in districts where the seat may change hands, and that is likely to rise dramat­ic­ally in the run up to the general elec­tion. It is clear that since the Supreme Court decided Citizens United, outside spend­ing has become an incred­ibly power­ful force in Amer­ican elec­tions.

Regard­less of whether inde­pend­ent spend­ing is harm­ful per se, there is clearly reason to be concerned with the lack of mean­ing­ful regu­la­tion surround­ing it. The Amer­ican public deserves inform­a­tion about attempts to influ­ence their vote. But outside money largely escapes the trans­par­ency require­ments that are essen­tial to a well-func­tion­ing campaign finance system. And beyond concerns about trans­par­ency, candid­ate-specific groups allow wealthy interests to support their favored candid­ates with dona­tions many times larger than federal limits on direct contri­bu­tions allow. There should be mean­ing­ful rules to ensure that inde­pend­ent expendit­ures are truly inde­pend­ent, rather than a mech­an­ism for evad­ing contri­bu­tion limits.

The Bren­nan Center will continue to monitor trends in inde­pend­ent spend­ing as the midterm elec­tions heat up.

 


[1] In our first quarter analysis of primary spend­ing, we defined viable candid­ates as those who raised at least $100,000 by the end of the first quarter. This defin­i­tion was based on the Sunlight Found­a­tion’s defin­i­tion of a “viable” candid­ate, avail­able here: http://real­time.influ­ence­ex­plorer.com/compet­it­ive-primar­ies/. For this analysis, we increased this threshold to $200,000, to account for the added time that candid­ates have had to raise funds in the second quarter, as primar­ies have heated up or been completed, and the general elec­tion approaches. The total raised by candid­ates who did not meet the threshold of $200,000 (in total amount raised) is $ 950,157. The total raised by viable candid­ates who met the threshold (raised above $200,000 in total amount raised) is $ 51,481,366. The elim­in­ated candid­ates account for just 1.8 percent of the total money raised by all candid­ates, and includ­ing their funds would not have signi­fic­antly impacted our analysis.

 

(Photo: Flickr)