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Campaign Cash: How Are Political Donations Being Spent This Year?

September 21, 2010 at 5:10 PM EDT
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A new report shows that official Democratic organizations have raised more than Republicans so far this year. But those figures don't reflect money coming from undisclosed and outside sources. Gwen Ifill gets two views on how fundraising could change the political landscape this year.

GWEN IFILL: With the fall campaigns in full swing, new reports out today show official Democratic Party organizations have outraised their Republicans counterparts this year. Their current cash on hand, $75 million to $55 million, reflects that.

But those numbers only skim the surface, as outside groups begin pouring unlimited amounts of money into critical races, without always disclosing where it comes from. That includes two nonprofit groups headed by former White House aide Karl Rove, which alone have already raised $32 million.

Joining us now to explain how the political money landscape has changed this year are Kenneth Gross, an elections law specialist and attorney in private practice in Washington, and Bill Allison, editorial director for The Sunlight Foundation, a nonprofit group that promotes government transparency.

It seems that there’s more money coming out, but less transparency, but less knowledge of where it’s coming from. Am I correct in that?

KENNETH GROSS, former FEC official: You are correct. What is happening in the landscape, the way it’s changing, is we’re seeing more 501(c) organizations, nonprofits…

GWEN IFILL: Meaning nonprofit.

KENNETH GROSS: Exactly, C-4s, issue advocacy groups that are not required to disclose their donors in most cases, and, in a number of instances, don’t even have to disclose their expenditures, if it’s an issue advocacy type of expenditure.

GWEN IFILL: Bill Allison, in the past, we have seen a lot of groups who pour money into campaigns. They’re not necessarily nonprofit groups, so they have to disclose that. The distinction?

BILL ALLISON, editorial director, The Sunlight Foundation: There are Section 527 organizations which are nonprofits, but political nonprofits.

GWEN IFILL: Like, say, the Swift Boat Veterans For Truth that we talked about so much.

BILL ALLISON: Exactly. Right. And there were several. was another one that was a 527. They have to disclose their donors to the IRS. And they file electioneering communications, independent expenditure reports with the Federal Election Commission.


But we are seeing — we are seeing a lot of groups that have been taking advantage of different loopholes in the system or holes in the system. To give one example, just after the Pennsylvania primaries were over, a group called the Emergency Committee for Israel started running ads against Joe Sestak, because it was more than 60 days away from the general election.

GWEN IFILL: Who is the Democratic nominee.

BILL ALLISON: The Democratic nominee, right, for the Pennsylvania Senate.


BILL ALLISON: They’re more than 60 days away from the general election. They can run those ads without filing anything with the Federal Election Commission.

GWEN IFILL: Where is the Federal Election Commission in this? You used to work at the Federal Election Commission. Are they supposed to be bird-dogging this, watchdogging this, making sure that we know where the money comes from and where it’s going?

KENNETH GROSS: The Federal Election Commission has made it fairly clear, at least that there is not a majority of votes on the commission to delve deeply into the activity of not-for-profits, particularly these 501(c)(4)s.

They’re giving wide to the C-4 activity. And one of the keys of the expenditures that we’re seeing now as a result of the Supreme Court decision Citizens United is that the expenditures have to be independent expenditures.

And whether they’re independent gets into this issue of whether there’s any kind of coordination between these groups and the campaigns. And the FEC has struggled mightily to try to even define what coordination is. So, it’s a tough issue for them.

GWEN IFILL: Ken Gross mentioned the Citizens United decision, where the Supreme Court basically kind of opened some of the floodgates, some people think. But it wasn’t about disclosure. It was about who can give how much money. Have we been able to measure yet whether there’s been any impact of that decision?

BILL ALLISON: The one thing that we can say is that, if you compare where we were in the midterms in 2006 and the midterms now, it’s around $57 million, I think, based on FEC figures that we have so far been able to count in 2010 cycle. This is from January to the present.

In 2006, it was around — it was about $20 million less, around $37 million. So, clearly, we’re seeing a lot more money being spent on these types of ads. Now, to the extent that we have seen corporations jumping in and actually running ads on their own, that hasn’t really happened yet. But…

GWEN IFILL: There was one example where Target Corporation put money into a Minnesota race.


GWEN IFILL: And it backfired on them just publicity-wise.

BILL ALLISON: Right. But if you think about it, though, corporations have always been able to give to some of the types of organizations, the 501(c)(4)s, the 527 groups.

And, certainly, the U.S. Chamber of Commerce, which is one of the biggest players in terms of electioneering communications, they’re the top spender of electioneering communications so far in 2010. And, you know, none of that money has to be disclosed. That’s another one of the 501(c) groups, a C-6 actually.

GWEN IFILL: OK, flip side. You mentioned the Chamber of Commerce. With about the unions? We have always heard — that’s what the Republicans say when the finger is pointed at them. They say, well, there are the unions who Democrats — who benefit the Democrats.

KENNETH GROSS: The unions, after this decision came down, the Supreme Court decision back in January, actually jumped into the fray a lot quicker than the corporate community.

They went in with both feet, because one thing that this opinion does allow is for unions to directly make independent expenditures. Previously, they had to go through the security of giving to third parties themselves. And they have the flexibility of spending the money, the dues money that was on hand. And it will be interesting to see the numbers at the final analysis, but the unions might be matching the corporations.

GWEN IFILL: Well, that’s the question. Who is benefiting more from this — these new kinds of fund-raising? Are the Republicans benefiting because they’re getting money raised and donated from groups like Karl Rove’s, or are the Democrats benefiting because they have always had this institutionalized benefit from the pro-Democratic labor movement?

BILL ALLISON: Boy, I hate to say it. I think the answer is yes.

GWEN IFILL: Hard to say.


GWEN IFILL: I set you up.

BILL ALLISON: Both sides are clearly benefiting. And when you get to the labor unions, too, they can do express advocacy. They are running ads in Arkansas saying, vote against this candidate or vote for this candidate in the Arkansas Senate race with Bill Halter and Blanche Lincoln, who ultimately prevailed.

It is — we are seeing just an unprecedented flood of corporate money — or corporate and — I’m sorry — labor union money, corporate money, and outside money influencing elections.

GWEN IFILL: So, if you’re a candidate or you’re someone who is interested in supporting a candidate, and you — or you’re just a voter who is not involved in this at all and is trying to decide who do you believe, how can you find out, when the situation is so murky right now?

KENNETH GROSS: It’s very difficult, particularly to determine who is spending what in a timely fashion.

When it comes to the candidate spending itself, yes, you can look that up on the FEC reports. But when it comes to trying to figure out what a 527 is expending, you have to go to the IRS, whether it’s a C-4. You may not see it at all, if it’s just issue advocacy.

This is very tough for any average citizen, not to mention a member of the press trying to write about it. And I don’t know that we’re getting the kind of disclosure that we would like to see.

GWEN IFILL: The name of your organization is The Sunlight Organization. Tell me, how is it going, the sunlight?


BILL ALLISON: Not as well as we would like.

One of the things that we’re trying to do — we have a Web site called where we’re asking people to report on the ads that they see, so they can at least track it. When you do put an ad on television or the radio, there’s some basic information the station has to track on it, so at least you can find out sponsors.

And I think that one of our big concerns that goes kind of beyond the federal level is that there were 20-some state laws that were wiped out as well by Citizens United. A lot of states don’t have disclosure mechanisms in place. When you think about judicial elections in some of the state races, you know, there can be a flood of corporate or labor union money, with no tracking, particularly like proposition money, ballot measures and things like that.

So, this is a big concern. What we have done is create this Web site where people can report that they’re seeing something, so at least a reporter can go back and say, well, gee, I can go to that TV station, radio station and find out what’s happening.

GWEN IFILL: Today, there was a Tea Party group that had a press conference down at the National Press Club here in Washington. They announced they have been given a million dollars from an anonymous donor and that this was going to go into campaigns between now and November.

Is that an example of what we’re talking about? Because there’s not just one Tea Party organization. Can several of them just get these kinds of donations and do what they want with it, and we don’t necessarily know?

KENNETH GROSS: That would be kind of tough. If they’re actually putting money directly into campaigns, they become a political committee under the election laws. They could possibly do it as an independent expenditure effort.

And, even there, depending on how they do it, they might have to disclose their donors. But this is an area where you really need to get into the weeds of the law, because, generally speaking, if they’re going to be trying to turn money right into a campaign, they’re going to have to disclose that.

GWEN IFILL: And most people are not going to be getting very deeply into those weeds. But thank you for helping us with that, Bill Allison, Ken Gross.