Outspending peers, Club for Growth helps unseat Lugar
Sen. Richard Lugar's loss in yesterday's Indiana Republican primary — the third such primary loss for a Republican senator since 2010 — was a victory for state treasurer Richard Mourdock and the conservative wing of the Republican Party, which painted the six-term senator as too liberal. But, Lugar's loss may say more about the increasing role of outside money than either of the candidates in the race.
The primary battle was fueled in part by the biggest outside money dump of any congressional race thus far. Leading the money charge was the anti-tax group Club for Growth, which accounted for about 40 percent of all outside groups' spending.
The Club for Growth contributed about $2.2 million to defeat Lugar and promote his opponent, state treasurer Mourdock. That total includes spending on an anti-Lugar ad — unreported to the Federal Election Commission because it didn't expressly advocate for Lugar's defeat — that cost $500,000, according to a source with knowledge of the group's spending. The Club ran that ad in late March and early April.
The $2.2 million also includes about $1.7 million in direct vote-for or vote-against ads in the race, which are reported to the FEC and are known as independent expenditures. That money came from group's super PAC, its nonprofit 501c4 group and its traditional PAC.
On top of all that, the Club's PAC is working as a bundler, collecting about $330,000 in small donations from individuals to earmark directly to Mourdock's campaign, according to a Club for Growth press release. These contributions are subject to the $2,500 contribution cap by individuals per election—unlike the unlimited super PAC and 501c4 donations.
In all, the Club alone spent more than Mourdock himself disclosed spending in the race — about $2 million, as of a report he filed in mid-April.
Club spokesman Barney Keller downplayed the organization's role, praising the Mourdock campaign instead. “We were proud to play a role, but the credit really goes to Richard Mourdock, who ran a strong campaign that was focused on the issues," he wrote in an email.
Flood of outside money
The amount of outside money spent in the Lugar-Mourdock senate race — over $4.3 million — is more than double the amount spent in any other congressional contests around the country. About $3 million was spent on the pro-Mourdock side.
As for the campaigns themselves, Lugar outspent Mourdock by a 3-1 margin. Lugar reported $6.6 million in expenditures compared to Mourdock's $2 million, although all of those funds do not go towards advertising.
On the pro-Lugar side, one of the biggest outside spenders was the well-stocked political nonprofit American Action Network, chaired by former Sen. Norm Coleman, R-Minn. That group spent about $450,000. The Washington, D.C.-based nonprofit was set to spend more, but decided to pull money from the race in the final days. About the same amount was spent by the Indiana Values SuperPAC, which was formed by former Lugar staffers. A center-right super PAC called YG Action Fund formed by past staffers to Majority Leader Eric Cantor, R-Va., also joined the race with about $200,000 in mailers in late April.
On Mourdock's side, the super PAC of the Tea Party group FreedomWorks spent nearly $600,000. After the election, it hailed the win as a "victory over the establishment" and claimed that "conservative activists were out-spent by the establishment, but they weren't out-worked." It endorsed Mourdock back in October and started spending on his behalf in September. Since then, activists have distributed 15,000 yard signs, knocked on 125,000 doors and made 400,000 phone calls, the group wrote in a press release today.
The National Rifle Association's PAC—a traditional PAC that faces donor contribution limits—put up more than $500,000 to back Mourdock and attack Lugar with ads, mailings and phone calls.
For some of the ads placed, it's unknown how much they cost and who the donors behind them are—that's because they came from 501c4 "social welfare" groups that, unlike super PACs, do not have to disclose their donors. And, if these groups run "issue ads" that do not take place 30 days within the election, the cost does not have to be reported to the FEC either. And there was plenty of advertising before that 30-day window.
(MORE: Read about why many of these "issue ads" stay under the radar)
The Club for Growth's anti-Lugar "issue ad" knocked him for voting for the bank bailout, for raising gas and social security taxes, and for bucking his party. The Club ran the ad until April 7, the very last day it could run before being classified as an "electioneering communication," meaning the buy would have to be disclosed to the FEC.
That was just the latest in a series of ads. Last July, the Club hit the airwaves during the negotiations to raise the debt ceiling with a TV ad saying that Lugar has contributed to the nation's climbing debt.
There was also other mystery donor money backing the six-term senator. The nonprofit U.S. Chamber of Commerce, which dropped pro-Lugar mailings in the days before the race, placed an ad in February praising Lugar for supporting the construction of the Keystone pipeline in opposition to President Obama.
The Club's super PAC has relied on deep-pocketed donors from the investment world, with 81 percent of its money coming in chunks of $25,000 or more, according to a New York Times analysis. That includes $1 million from New Jersey investor Virginia James this year. In all, she has contributed about $2.2 million to various Club funds since 2007, most of it to the super PAC and a now-defunct 527 group called ClubforGrowth.net that used to run political ads, according to Influence Explorer.
Among the other top donors this cycle is Robert Arnott of Newport Beach, Calif., chairman of Research Affiliates, LLC, who has given more than $500,000 to the group since 2010. Another is John W. Childs, who sits on the Club's board and has given about $1.6 million to the group's various committees since 2005, including $125,000 to the super PAC this cycle. He is the chairman the Boston private equity firm J.W. Childs Associates.
Jackson T. Stephens, the son of the late billionaire Arkansas financier Jackson Stephens, gave $400,000 to the super PAC this cycle and $1.8 million to Club committees over the years. He is the chairman and CEO of a biotechnology firm called Exoxemis, Inc., and also serves on the Club for Growth's board of directors.
Jerry Hayden of Arizona, also on the board of directors, and his wife Marilyn, have given about $1 million to the Club's committees over the years. That includes Marilyn's $300,000 in donations to the super PAC this cycle. Jerry Hayden is the retired president of a food-packaging company.
In February, the super PAC also received a $500,000 gift from the leadership PAC of Sen. Jim DeMint, R-S.C, this election cycle.