Election donors: Who are they?

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Election donors: Who are they?
Sunday, May 29, 2011  03:15 AM
By Darrel Rowland

THE COLUMBUS DISPATCH
When Fred Wertheimer looks ahead to next year's election, he gets an uneasy feeling that he's already been there.

Wertheimer was a lawyer for public watchdog Common Cause during the Watergate scandal nearly four decades ago.

Now, he worries that America could be on the cusp of a similar debacle.

"Secret money and unlimited money were at the heart of the campaign-finance scandals that took place in Watergate," said Wertheimer, who's now with the Washington nonprofit Democracy 21.

Story continues belowAdvertisement Last year, no source was identified for a record $135million flowing into the midterm elections from outside groups, including some in Ohio. Wertheimer and others estimate that total could jump to $300million in 2012, since the groups can take in unlimited contributions from corporations, unions and individuals.

"They are operating in an area that history tells us has resulted in scandal and corruption in the past," Wertheimer said.

"Ohio, along with Florida, are likely to be targets one, two and three for spending by outside groups. Folks in Ohio ought to get used to watching campaign ads, with a little intermission in between for programming."

For years, campaign finances have gone through repeated cycles of abuse and reform.

But a consensus is forming among many experts that 2012 could witness the biggest collapse yet in the accountability and transparency of who bankrolls the campaigns of those seeking to be our elected officials.

In the 2010 election, almost three-fourths of the campaign spending by outside groups came from sources that would have been illegal just four years earlier, the nonpartisan Center for Responsive Politics found in a study this month. And those organizations spent 57 percent ($105 million) more on campaign ads than did political parties and candidates, who must disclose their donors and expenditures.

One party consultant described his frustration over the dominance of such groups in last year's election to Sheila Krumholz, the center's executive director, this way:

"The outside spending groups were in the driver's seat, the parties were riding shotgun and the candidates were in the back seat - being told to shut up."

Krumholz said voters should be concerned when they can't track campaign money back to the original source.

"It's going to be unrealistic for voters to have a sense of security of their ability to follow the money. It's an overused phrase, but as true today as in Watergate," she said.

"We are not allowed to see what money is behind these groups, what potential motivations are propelling the activity. We're not allowed, as targets of these messages, to consider the source."

The big shift stems from last year's U.S. Supreme Court ruling in the Citizens United case, which allowed corporations and unions for the first time to tap their treasuries to campaign overtly for or against a candidate. The presence of nonprofit corporations shelling out campaign cash without disclosing its source is growing as well.

Neither of Ohio's state political chairmen are fans of the current setup.

"I believe in a strong two-party system, and when the system empowers those outside the two parties, there's less transparency, there's less accountability, and I think at the end of the day that's not healthy for our democracy," said Kevin DeWine, Ohio GOP chairman.

But he said he expects the message of most Republican-oriented groups will be complementary to the state party's: "I'm not worried about the ORP (Ohio Republican Party) message being lost."

However, Chris Redfern, his Democratic counterpart, said, "In reality, the parties or the candidates often become an afterthought. ... The winners will be owners of TV stations; the losers will be the voters."

Redfern noted that Ohio corporations already are lining up to support a nonprofit organization set up to push GOP Gov. John Kasich's budget. One Ohio United has voluntarily made a limited disclosure of its contributors.

"It's perfectly legal, but it is something that will occur more and more frequently, that CEOs will be supporting candidates and issues," Redfern said. "In a world where the cost for campaigning increases every year dramatically, this will be viewed as the 'good old days' five to 10 years from now."

Bill Todd, a tax-law attorney who ran for Columbus mayor in 2007, is happy with the post-Citizens United World.

"I like to see groups be able to pool their money to make political statements," he said. "The politicians and the parties hate it - which probably means it's good for the public."

In fact, Todd is pushing an idea that likely would mean even less disclosure. Although Wertheimer questions its legality, Todd's plan envisions creating for-profit corporations set up for the sole purpose of getting a candidate elected.

This corporation could rake in unlimited campaign contributions. It would have no restrictions on how it could spend the money. And the public would never know where a dime came from or went.

Todd now represents Our Future Ohio, which plowed more than $3 million from undisclosed contributors toward a futile attempt to re-elect Democratic Gov. Ted Strickland last fall. The money was funneled through the nonprofit arm of the group, then spent by a Super PAC of the same name.

But now, Todd is exploring whether Our Future Ohio should withdraw its application to become a nonprofit and just simply form a corporation.

"The doors are kind of open to be somewhat creative after Citizens United," he said.

While the Supreme Court apparently has blocked trying to limit contributions from such groups, disclosure laws have consistently been upheld.

However, both Congress and the Ohio General Assembly failed to pass proposals requiring disclosure after the Citizens United ruling.

Former Democratic Secretary of State Jennifer Brunner tried to set up rules on her own before leaving office at the beginning of the year. But her successor, Republican Jon Husted, is dubious that they're enforceable - which is not to say he likes what he is seeing.

"The spirit of what we've all agreed (on how) we'd like to run elections in Ohio is being violated by different standards at the federal level," he said. "There is little we can do about it."

drowland@dispatch.com


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Five significant facts


The 2010 election established a modern landmark in the rise of outside groups influencing U.S. elections through campaign contributions that often are not limited or made public. A study released this month by the nonpartisan Center for Responsive Politics found:

   1. The percentage of spending coming from groups that do not disclose their donors has risen from 1 percent to 47 percent since the 2006 midterm elections.
   2. Campaign spending by 501c nonprofits increased from zero percent of total spending by outside groups in 2006 to 42 percent in 2010.
   3. For the first time in at least two decades, outside interest groups outspent political parties on campaign ads last year, $289 million to $184 million.
   4. The amount of independent expenditures and electioneering-communication spending by outside groups has quadrupled since 2006.
   5. Seventy-two percent of political-advertising spending by outside groups in 2010 came from sources that were prohibited from spending campaign money in 2006.

Campaign-finance glossary

--Citizens United v. Federal Election Commission: A 5-4 U.S. Supreme Court ruling in January 2010 allowing corporations and unions to use their general treasuries to pay for political ads expressly calling for the election or defeat of a candidate, also known as an independent expenditure. Such money still can't flow directly to a candidate or party.

-- 501c groups: Nonprofits registered under the IRS tax code 501c. Certain kinds - most notably, 501c(4), 501c(5) and 501c(6) organizations - can spend unlimited amounts on electioneering communications and independent expenditures. They do not have to reveal their donors. Influencing elections cannot, however, be their primary purpose. They cannot donate directly to political-campaign committees or party committees.

-- Super PACs: Technically known as independent-expenditure-only committees, Super   PACs can raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against (nonfederal) political candidates. The donors must be disclosed, unless the money comes from a 501d nonprofit. These sprang up in 2010 for the first time after the Citizens United ruling.

-- 527 groups: Political groups registered under section 527 of the federal tax code. They can raise unlimited amounts of money from individuals and corporations and could spend unlimited amounts of money on what are generally electioneering communications; during the 2010 cycle, they began independent expenditures as well. These groups cannot donate directly to candidates or parties and eventually must disclose all donors and expenditures to the IRS.

Source: Center for Responsive Politics


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The big-time players affecting Ohio
 
REPUBLICAN GOVERNORS ASSOCIATION/DEMOCRATIC GOVERNORS ASSOCIATION
These 527 groups set up PACs in Ohio to plow money into the 2010 governor's race. The RGA, which also poured large amounts into electioneering communications, far outspent its Democratic counterpart. While contributions are reported, the secretary of state's office isn't given enough information to trace the donations.

OUR FUTURE OHIO
Both a Super PAC and a 501c (4). Within a couple of weeks of its formation in October, the group spent more than $3 million on behalf of Gov. Ted Strickland's campaign. This hybrid didn't have to reveal where it got its money because the Super PAC received all its funds from the nonprofit, which doesn't have to disclose donors. 

AMERICAN CROSSROADS
Organized by Karl Rove and Ed Gillespie, the 501c(4) spent $21 million last year - including some in Ohio - and has a goal of shelling out $120 million to elect Republicans next year.

PRIORITIES USA
Despite President Barack Obama's harsh criticism of groups such as American Crossroads, some of his former staffers, the SEIU and a Hollywood producer have set up this 501c(4) as a Democratic counterweight to the Rove effort.

REPUBLICAN SUPER PAC, JAMES BOPP JR.
A fledgling Super PAC already facing legal challenges because of its fundraising plan. Indiana lawyer James Bopp Jr., who brought the Citizens   United case, wants to raise money by having candidates, officeholders and parties direct contributors who've already given them the maximum amount to plow additional cash into the Super PAC - which then will give the money back to the candidates and parties who helped generate the funds. Critics say this violates the federal ban on direct coordination between independent-expenditure groups and candidates or parties, as well as the bar against candidates or parties raising unlimited sums.

ONE OHIO UNITED
A 501c(4) corporation set up to campaign for Gov. John Kasich's budget plan. It has voluntarily disclosed some donors but provided no amounts or expenditures.
Source: Dispatch research