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Inside spending: super PACs, dark money groups dominated by political insiders

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By suppressing the speech of manifold corporations, both for-profit and nonprofit, the Government prevents their voices and viewpoints from reaching the public and advising voters on which persons or entities are hostile to their interests.

-- from the majority opinion in Citizens United v. Federal Election Commission

When the Supreme Court handed down its landmark decision in the Citizen United case three years ago this week, the majority's expressed intent was to allow corporations--both for-profits like Exxon-Mobil and nonprofits like the Sierra Club--to add their voices to the public debate. In practice, an analysis by Sunlight finds, it has created a new revolving door, giving longtime members of the political industrial class new and relatively untrammelled venues to exploit their contacts.

Of the more than $679 million spent by the biggest-spending super PACs and nonprofit groups (those that made more than $1 million in independent expenditures in the 2012 election), some $640 million, or 94 percent, came from groups staffed by former insiders from parties, campaigns, Congress and the executive branch. This morning, the Cato Institute is convening a discussion of the effects of the Citizen United decision featuring major players including Bob Bauer, President Barack Obama's campaign lawyer, and Lawrence Lessig, a prominent advocate for campaign finance reform.

Sunlight's analysis offers one insight for the panelists: Rather than triggering an explosion of previously suppressed voices and viewpoints, Citizens United has opened the door a new era of soft money bag men, while lavishly funding a small number of messaging outfits and political consultancies that were already well-supported by the two political parties and their candidates.

The five largest super PACs in terms of expenditures are Restore Our Future, American Crossroads, Priorities USA, the Majority PAC and the House Majority PAC. All are staffed by former officials from all six major party campaign committees: the Republican National Committee, the National Republican Senatorial Committee, the National Republican Congressional Committee, the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee. And--a first in the history of campaign finance--President Barack Obama is turning his presidential campaign committee into a nonprofit, social welfare organization, the kind of dark money group that can raise and spend unlimited amounts on political campaigns without disclosing its donors. Organizing for Action, as the reconfigured campaign is called, is billed as a vehicle to run a populist campaign on behalf of the president's initiatives but its prized voter lists and enormous trove of data could also serve to turn the Obama aides who run it into powerful political kingmakers.

The new committee is helmed by Jim Messina, who served as Obama's former campaign manager and his White House deputy chief of staff, a position in which he played a key role in passage of the health care law. Before that, Messina was a key aide to Sen. Max Baucus, D-Mont, the chairman of the powerful Senate Finance Committee. Jon Carson, who worked on Obama's 2008 campaign and more recently in the White House in the Office of Public Engagement, is the executive director of Organizing for Action, which, its website says, "...will pull together at the national level" to help Obama pass legislation. So Organizing for Action will be raising money in unlimited amounts while working with the White House to achieve the president's goals. A decade ago, that kind of cozy arrangement between donors, political organizations and politicians led Congress to pass the last major reform of the campaign finance system.

In 2002, lawmakers passed and then-President George W. Bush signed the Bipartisan Campaign Reform Act, better known as McCain-Feingold, which among other things banned political parties from accepting "soft money," essentially, contributions in unlimited amounts from individuals, corporations and labor unions that were used by parties for "nonfederal" activities. In part, this was a response to the 1996 campaign, when then-President Bill Clinton's campaign funded a spate of so-called "issue advertisements"--television commercials that attacked the record of then-Sen. Robert Dole, Clinton's presidential rival that year, without directly telling viewers to vote against the Kansas Republican. In a challenge to BCRA's ban on soft money brought by Sen. Mitch McConnell, R-Ky., and other plaintiffs, the Supreme Court upheld the ban on soft money, writing in part, "The evidence in the record shows that candidates and donors alike have in fact exploited the soft-money loophole, the former to increase their prospects of election and the latter to create debt on the part of officeholders, with the national parties serving as willing intermediaries."

The revolving door to outside spending groups

Now, some of those very intermediaries have moved from parties to "outside spending groups." Of the 49 super PACs that spent more than $1 million, 34 of them had connections to former party, campaign, congressional and executive branch insiders. They served as board members, executive directors, political directors, fundraisers and other strategic roles. Similarly, 11 of the 16 biggest spending dark money groups--those that do not disclose their donors--had former party insiders in their ranks, according to a Sunlight analysis of FEC disclosure reports, paperwork filed with the Internal Revenue Service, media accounts and our own reporting. For the analysis, we included only groups formed after McCain Feingold was passed in 2002; longstanding political players like the U.S. Chamber of Commerce and the AFL-CIO were excluded.

Our analysis may understate the size of the revolving door: Super PACs do not need to disclose the names of officials who make political decisions for the organizations--the name of a treasurer is all that is required. In many cases, Sunlight was unable to determine who exercised control over a super PAC or of newly formed nonprofit organizations that have yet to disclose their officers to the Internal Revenue Service. We excluded from our analysis treasurers who, though they may have worked for multiple campaigns and parties, were primarily compliance officers--essentially, individuals who filed paperwork with the FEC. We focused on political operatives who moved seamlessly from the world of campaigns and parties to super PACs.

Individuals like Harold Ickes, who served as president for Priorities USA Action Fund, the third most prolific super PAC in terms of spending. Ickes served as scapegoat for the Clinton soft money scandals of the 1996 election, when he all but ran the Democratic National Committee from the West Wing of the White House. After the 2002 McCain-Feingold ban on soft money contributions to parties was enacted, Ickes was instrumental in putting together a clandestine soft money operation to defeat President George W. Bush in the 2004 elections. The effort was illegal under campaign finance law at the time; in 2007, the Federal Election Commission fined Ickes' organization, the Media Fund, $580,000--a pittance compared to the $59 million it raised. In the 2012 campaign cycle, Ickes , who is still a member of the Democratic National Committee, spearheaded fundraising for Priorities USA, which supported Obama's reelection efforts, and also served as an adviser to Majority PAC, which aimed to elect Senate Democrats.

Another Majority PAC adviser, Jim Jordan, headed the Democratic Senatorial Campaign Committee in 2000 and served for a time as campaign manager for the 2004 Democratic presidential nominee, Sen. John Kerry, D-Mass., leaving in November 2003 to join the stealth soft money campaign for the rest of that year's campaign. He told campaign finance researcher David Magleby that he aggressively sought big donations. "Soft money was a key to this cycle," he said.

On the Republican side, Richard "Mike" Duncan, the chairman of American Crossroads, had that same title at the Republican National Committee during the GOP's flameouts in the 2006 and 2008 elections. One of his last acts as the head of the RNC was to launch a pair of lawsuits, filed less than two weeks after the 2008 election, that aimed to strike down the soft money ban. Duncan told the Washington Times that BRCA "prohibits us from spending over $84,000 in coordination with a candidate in a congressional race. That means we have to find some group to raise and spend money."

In American Crossroads, it seems he's found one.

Duncan's new-found enthusiasm for raising money through groups like American Crossroads stands in sharp contrast to what he told a group of conservative bloggers when he was trying to eliminate the ban on unlimited donations to politial parties. In a November 2008 conference call, Duncan said funneling money through outside groups "encourages corruption" and "eliminates. . . accountability" but cutting the political parties out of the process, according to the summary of the call by Ed Morrissey of Hotair.com.

Duncan's view runs counter to the Supreme Court's majority opinion in the Citizens United case, which held that groups making independent expenditures do not create an appearance of corruption, because, the theory went, there was no coordination between the donors of the money and the beneficiaries. But since the ruling, political insiders now run the vast majority of super PACs and dark money groups. The lengthy record established in McConnell v. FEC, the court case that upheld the ban on soft money contributions to federal party committees, showed how such officials ensured that big donors had access to elected officials. In her lengthy opinion upholding McCain-Feingold's soft money ban, District Court Judge Colleen Kollar-Kotelly found that "Party leaders facilitate direct communications on matters of policy between nonfederal money donors and officeholders," and provided multiple examples of the practice.

One donor's potential access

Does Kollar-Kotelly's analysis describe the situation today? The line between super PACs, parties and campaigns is already thin. Under FEC rules, party officials and candidates for federal office can raise money for super PACs, provided they do not solicit contributions from corporations or labor unions, and do not ask for donations of more than $5,000 (equivalent to the amount they could solicit for a traditional political action committee).

At least one super PAC included the candidate it supported in a fundraiser. Former Rep. Connie Mack, a Republican who tried unsuccessfully last year to oust Sen. Bill Nelson, D-Fla., was scheduled to headline an August 2012 fundraiser; the invitation clearly states that checks are to paid to Freedom PAC, an outside group that was backing Mack and, under FEC law, not allowed to coordinate with him. That same month, at the Republican National Convention in Tampa, top officials of American Crossroads, including co-founder Karl Rove, former RNC Chief Haley Barbour and president Steven Law, who served as executive director of the National Republican Senatorial Committee for the 1998 and 2000 elections, convened 70 top GOP donors to lay out their election strategy and raise more money, according to an account of the meeting by Bloomberg Businessweek's Sheelah Kolhatkar.

After critiquing both Citizens United and the new spending groups the decision ultimately spawned, Obama embraced them in February 2012. At least one administration official, senior adviser David Plouffe, appeared at a fundraising event for Priorities USA, as did Messina and Obama's senior campaign strategist, David Axelrod. Obama joked at a September fundraiser that if anyone had a spare $10 million, he knew where they should send it. And both Sens. Harry Reid, D-Nev., and John Kerry, D-Mass., solicited super PAC donations well before the FEC ruled it permissible.

Both parties adopted an open door policy to big donors, who were only too happy to oblige.

In the 2012 campaign cycle, casino mogul Sheldon Adelson and his wife Miriam contributed more than $90 million to 17 super PACs. Among those associated with the super PACs benefiting from Adelson's largesse were five former RNC officials, including four past chairmen, two top officials from both the NRCC and the NRSC, two former members of Congress, three former aides to House Majority Leader Eric Cantor, R-Va., and three former officials from the Republican Governors Association, the organization that raises money to help elect GOP gubernatorial candidates.

And that summary almost certainly understates the number of well-connected individuals that the Adelsons could encounter when donating. They contributed $5 million to Independence Virginia PAC, a group set up by Paul Bennecke, former political director of the Republican Governors Association, and dedicated to helping former Sen. George Allen, R-Va., defeat Tim Kaine for the an open Senate seat in the Old Dominion. Among the expenditures that Bennecke made was $120,000 to the Hahn Group, run by Paige Hahn, who also serves as finance director for the Republican Governors Association. Hahn also worked for the RNC, and served as the fundraiser for American Solutions for Winning the Future, part of Newt Gingrich's empire of nonprofits and the recipient of $7 million of Sheldon Adelson's money between 2006 and 2010. Independence Virginia paid Hahn's firm $120,000, more than twice the $57,500 it paid Bennecke's own firm, Red Clay Strategies.

The Adelsons gave $1 million to the Treasure Coast Jobs Coalition, a super PAC that ran ads attacking Democrat Patrick Murphy, who successfully challenged Florida Republican and Tea Party darling Rep. Allen West. While the Treasure Coast Jobs Coalition is one of 14 super PACs that spent more than $1 million in the 2012 election cycle that did not list an official with connections to federal parties, campaigns, Congress or the executive branch, it turns out not to be an exception to the new revolving door rule. That's becauseTreasure Coast paid more than $50,000 for fundraising, web development and other services to Mercury Public Affairs, a bipartisan firm that boasts former Sen. James Talent, R-Mo., $19,000 for survey research to SG Strategies whose president is Greg Strimple, a veteran of many campaigns including the 2008 presidential effort of John McCain, and $3,500 for research consulting to Berkowitz Public Affairs, whose principal, Jeff Berkowitz, served as research director of the Republican National Committee.

Moreover, in its  official filings, Treasure Coast listed as treasurer James E. Tyrell 3d, an associate with the well-connected law firm Clark Hill. Among the handful of other super PACs without federal insider connections was Make Us Great Again, which supported the presidential campaign of Texas Gov. Rick Perry. But it was founded by Mike Toomey, Perry's former chief of staff, a Texas lobbyist and an active participant in state politics. Tom Norris, an Ohio lobbyist and former aide to State Treasurer and Republican Senate candidate Josh Mandel called the shots for the Government Integrity Fund Action Network. The Independence USA super PAC is a vehicle for New York City Mayor Michael Bloomberg, while Stuart Sandler, the former executive director of the Michigan Republican Party, is the treasurer of the Hardworking Americans Committee.

What is not evident among the manifold super PACs and dark money organizations, including longtime players like the U.S. Chamber of Commerce and the League of Conservation Voters and newly formed organizations like the Government Integrity Fund or Americans for Responsible Leadership--both of which have ties to state level pols--are voices that previously were suppressed. While the Supreme Court might have intended to open the door to greater political participation by voices on the margins, in practice the ruling did little more than amplify, by providing unlimited funding, the same tired voices that voters have heard from before.