The root of all evil will rule mid-term elections

Come Tuesday, Nov. 2, it will not matter whether you vote Democratic, Republican, Independent, Green, Tea, or write-in. That’s because the winning entity will not be on the ballot — and hasn’t been for a very long time.

Come Wednesday, Nov. 3, anchors and pundits alike will announce, pronounce, anoint, or castigate individuals wearing the colors of the Red or Blue parties. Few, if any, will comment on the real winner. The newly elected or re-elected will mouth platitudes such as “the people have spoken” or “we’re here to do the work of the American people.”

Nope. The winners will have been chosen, as they have been on average for half a century by less than half of the voting-age population, to serve the corporate dollar.

That’s because come Nov. 3, the winner of the mid-term elections — and statewide races across the nation — will have been well-hidden corporate and billionaire money.

From 2005 until Jan. 21, I wrote frequently about campaign finance here and at earlier iterations of this blog. I learned how to maneuver through the Federal Election Commission website to track who gave what money to what candidates. The early versions of, created by the Committee for Responsive Politics, and its interface of FEC data proved incredibly useful. Most of those posts were designed to teach others how to track political money. So much for my delusions of enabling the public.

In December 2009, using data gathered or aggregated by the FEC, state election commissions, CRP, and the National Institute for Money in State Politics, I determined that $45 billion had been spent on political giving and influence peddling over that 10 years. That’s all the money that had been spent on all federal and statewide races.

I stopped writing such posts in January after the Supreme Court’s Citizens United v. FEC decision. That’s when I realized that for five years, I had only been tracking money I could identify from specific donors.

That’s hard money that federal law requires be tracked by the FEC and be subject to contribution limits. But missing from my $45 billion estimate, I think, is the bulk of the soft money, political donations carefully crafted to avoid FEC regulations that would make the money identifiable, tricks such as donating to a party organization rather than to a particular candidate or campaign.

Money has always been the most effective grease that decreases the friction between government and business. Money can defeat or rewrite a bill it does not like. It can even write a bill from scratch, hand it to Congress, and mandate its passage. But money does not like to be the visible hand on the lever of legislation.

Money has found new hiding places. Take, for example, the 501(c)(4) designation of the IRS. According to IRS Publication 557, such “an organization must be devoted only to charitable, educational, or recreational purposes. … Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies.” These organizations should “operate primarily to further (in some way) the common good and general welfare of the people of the community …”

And therein lies the loophole money has found. Report Michael Luo and Stephanie Strom of The New York Times:

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.

“Crossroads” is Crossroads Grassroots Policy Strategies, a 501(c)(4) “social welfare organization” run by experienced political organizers. Karl Rove raises money for it. Unlike 527 groups, which these days are to political fundraising as rotary dial phones are to cell phones, “501(c) groups have the advantage of usually not having to disclose their donors’ identity,” reports The Times.

Because the Republican National Committee has done poorly in fundraising under chairman Michael Steele, a “shadow RNC” has developed.

The best example is the “Shadow RNC” American Crossroads, a Republican 527 and American Crossroads, GPS, a sister 501(c)(4) organization. These organizations are being run by Karl Rove, Ed Gillespie and Michael Duncan. … American Crossroads will be doing the functions normally done by the RNC. This includes the nuts and bolts of political campaigns: advertising for and against candidates, polling, opposition research, data base acquisition and management as well as get out the vote efforts. …

American Crossroads is like the RNC except, unlike political parties where there are limits to the amount of money political parties can take from individuals and are required to report their donors; American Crossroads is not limited on the size of the donations and in many cases do not have to report the names of the donors. American Crossroads can also take money directly from corporations which under Citizens United can spend as much as they want on elections. [emphasis added]

Reading my tea leaves, however, suggests that public corporations are not diving into politics as feared by liberal pundits in the wake of Citizens United. But I never fully knew about the roles of privately held companies in moving money into politics when I calculated that $45 billion decade total. Then came Aug. 30 and publication of “Covert Operations: The billionaire brothers who are waging a war against Obama” by Jane Mayer in The New Yorker.

Through the Americans for Prosperity, a 501(c)(4) group, money can hide. From Mayer’s piece about the billionaire Koch brothers:

An advertisement cast the event [a summit called Texas Defending the American Dream] as a populist uprising against vested corporate power. “Today, the voices of average Americans are being drowned out by lobbyists and special interests,” it said. “But you can do something about it.” The pitch made no mention of its corporate funders. The White House has expressed frustration that such sponsors have largely eluded public notice. David Axelrod, Obama’s senior adviser, said, “What they don’t say is that, in part, this is a grassroots citizens’ movement brought to you by a bunch of oil billionaires.”

In today’s Times, Paul Krugman notes billionaires’ secrecy in funding “grassroots” groups isn’t just about politics.

Perhaps the most important thing to realize is that when billionaires put their might behind “grass roots” right-wing action, it’s not just about ideology: it’s also about business. What the Koch brothers have bought with their huge political outlays is, above all, freedom to pollute. What [Rupert] Murdoch is acquiring with his expanded political role is the kind of influence that lets his media empire make its own rules. [emphasis added]

The Kochs aren’t alone in giving money hiding places in which to work. From The Times:

Interviews with a half-dozen campaign finance lawyers yielded an anecdotal portrait of corporate political spending since the Citizens United decision. They agreed that most prominent, publicly traded companies are staying on the sidelines.

But other companies, mostly privately held, and often small to medium size, are jumping in, mainly on the Republican side. Almost all of them are doing so through 501(c) organizations, as opposed to directly sponsoring advertisements themselves, the lawyers said.

“I can tell you from personal experience, the money’s flowing,” said Michael E. Toner, a former Republican F.E.C. commissioner, now in private practice at the firm Bryan Cave.

Money can also hide in the U.S. Chamber of Commerce, a 501(c)(6) organization. That IRS designation is reserved for business leagues, chambers of commerce, boards of trade, or other similar organizations. It has already spent $190 million on lobbying after President Obama’s election. It has pledged another $75 million for the mid-term elections. Reports Associated Press writer Jim Kuhnhenn:

Those numbers alone, together with what chamber officials say is a network of online backers that can amplify the pro-business message, give the group clout as a virtual third party and a powerful voice in what laws are made and who’s elected to write them. …

This expanded entry into politics comes as legal restraints on the political activities of corporations and unions are eased. As a result, the chamber is not operating in a void. …

Supreme Court and lower court decisions have not altered the chamber’s political approach. It does not have to disclose its donors, many of them large corporate contributors, because its ads don’t specifically call for the defeat or election of candidates. Rather, the ads admonish candidates or salute them for their stands on issues. [emphasis added]

So money has plenty of places to hide, thanks to a changed legal environment post-Citizens United. Money also benefits from regulatory confusion over 501(c) groups. From The Times‘ Luo and Strom:

Neither the Internal Revenue Service, which has jurisdiction over nonprofits, nor the Federal Election Commission, which regulates the financing of federal races, appears likely to examine them closely, according to campaign finance watchdogs, lawyers who specialize in the field and current and former federal officials.

And money has many parents. I’m sure others who track 501(c) groups more competently can name the sources of money, but not necessarily where that money goes. Nondisclosure is the new game. (Yes, yes, unions can play this game after Citizens United. But they have only money, not MONEY.)

In years past, as elections neared, I’ve tried to predict the amount of money that would be donated to campaigns. Now, what’s the point of doing that? Even as I made predictions in the past, I was focused only on money that had to be legally identified and accounted for. I could do that now, I suppose, but it’s a fair wager that the hidden money spent on the coming midterms would dwarf the identifiable money.

I haven’t written about political money since January. I’m not sure I’ll return to it, because I haven’t the time or the expertise to find the hidden money and pin it to the names. I hope there are enough competent investigative journalists left after the purge of newsrooms over the past decade to dig deeply into the 501(c) hidey-holes.

But with a mere month to go before the mid-terms, the outcome — control of the House and Senate — is immaterial.

As Krugman argues, modern politics is about a few seeking advantage over the many:

Modern American conservatism is, in large part, a movement shaped by billionaires and their bank accounts, and assured paychecks for the ideologically loyal are an important part of the system. Scientists willing to deny the existence of man-made climate change, economists willing to declare that tax cuts for the rich are essential to growth, strategic thinkers willing to provide rationales for wars of choice, lawyers willing to provide defenses of torture, all can count on support from a network of organizations that may seem independent on the surface but are largely financed by a handful of ultrawealthy families. [emphasis added]

Come Nov. 3, big, big political money will have won, because the law of the land allows so much of it to be hidden from the public. Granting anonymity to that much money is just plain wrong. But I can guarantee a Congress willing to change that will not be elected in November.

6 replies »

  1. Crossroads is interesting (and scary) because of its reach, benign-sounding name, and relative anonymity. The first article I read about it was in May in Rolling Stone, Rove Rides Again:

    And here’s the thing: there has been talk about campaign finance reform aimed at getting corporate or union leaders to take credit/blame (“I’m so-and-s and I approved this message”) for their Citizens United ads. But the serious money, as you point out, has been skirting the whole issue.

    We nearly had a ballot measure in Ohio bought and paid for by a single out-of-state funding source that would not disclose its donors. A court recently found that Ohio Secretary of State Jennifer Brunner can subpoena records from “LetOhioVote” to investigate its funding origins (story here: Similar story in CA about Prop 8.