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Decades-old law opened doors for big-money donors
Question of the Day
Despite sentiment that court rulings in 2010 gave rise to revolutionized super PAC campaign financing, three-quarters of the $86 million in ads this election cycle could have been purchased under a little-noticed, decades-old law.
Contrary to fears about introducing corporate money into politics, the super PACs' primary funders have been people who — under a decades-old right almost never exercised — were already able to purchase the independent political ads now popularized by the super PACs themselves.
That kind of unusual expenditure, which experts say allows the wealthy to finance original political speech as long as they put their names behind it, is what Lawrence F. DeGeorge, a technology executive whose father earned billions in telecommunications, did, disclosing Friday to the Federal Election Commission (FEC) that he bought a $25,000 pro-Mitt Romney billboard in Times Square, as opposed to making a donation to a pro-Romney super PAC.
In recent weeks, Foster Friess, the man who for months single-handedly funded the super PAC that propped up the presidential candidacy of former Sen. Rick Santorum, Pennsylvania Republican, has also cut out the middleman and personally written checks to radio stations and newspapers.
The right of wealthy people to spend unlimited amounts on political ads has been unquestioned, if unused, since a 1976 Supreme Court ruling. Subtract that money and the biggest beneficiaries of the 2010 Citizens United v. FEC case, which led to super PACs, have been unions and people using new rules permitting corporate money as a way to hide their expenditures from the public eye.
Yet Mr. DeGeorge and Mr. Friess are among only 200 people since 1988 who have acted as human super PACs, daring to put their own names behind political advertisements, an analysis by The Washington Times of FEC records showed.
The fact that the wealthy businessmen now funding independent ads have long been permitted to do so, yet rarely did, indicates an extraordinary desire to remain behind the scenes.
"The thing with individuals buying an ad themselves is you're putting yourself out there as the person behind it. You'd have to have a message saying, 'This ad is brought to you by Bob Smith,'" explained Bill Allison, an expert in money in politics at the Sunlight Foundation.
Super PACs were created after courts said that though a person can donate only $2,500 to a politician, and corporations and unions cannot donate at all, any of those can bankroll groups that, on their own, get out a message for or against a candidate. The AFL-CIO labor federation filed a friend-of-the-court brief supporting Citizens United, but in the time since, the ruling has been painted as a wildly game-changing tool allowing wealthy Republican businessmen to increase their political influence.
Essentially one man
To view it as bestowing new rights across the board, however, is to neglect the people who were functioning as super PACs long before super PACs were cool.
The most well-known among them is George Soros, who in 2004 spent $4 million on Internet ads attacking President Bush, putting his name on them rather than routing the money though an organization, as some Bush supporters did.
Also in the group is school president Barbara Alice Baker, whose 2010 radio ad on behalf of a Utah Republican House candidate included the disclaimer that the candidate "didn't know about this ad and he didn't pay for it. I did. My name is Alice, and I'm 79 years old."
It even includes people making small buys, such as those by Texas real estate developer Michael Short, who spent $9,402 on an ad in the Waco Tribune Herald in 2010 supporting Republican Bill Flores in his successful bid to win a House seat in Texas.
To be sure, especially now that there are no longer rules against spending money collectively, there are disadvantages to wealthy citizens making political speech with their wallet the same way they vote, as individuals with names attached.
"Even if you don't know anything about the organization, it's human nature to give more credibility to an organization. It's not just like 'This is what Bob thinks about politics,'" Mr. Allison said.
Commercials brought to you by names such as Winning Our Future evoke established organizations with broad support, said Paul S. Ryan, campaign finance lawyer at the Campaign Legal Center.
Advocating individually also eliminates opportunities to take advantage of economies of scale, with each spender having to produce his or her own commercial and unable to coordinate with others to avoid duplication.
The fact is, however, that some of the largest super PACs are essentially one man.
Winning Our Future, the PAC responsible for $17 million in advertising on behalf of former House Speaker Newt Gingrich, for example, has gotten more than 80 percent of its funds from Sheldon Adelson, a Las Vegas casino magnate, and his family.
Mr. Friess, who has provided nearly one-third of pro-Santorum super PAC Red, White and Blue Fund's $5.7 million, said the $72,000 he spent on his own in recent weeks was purely a matter of practicality: He met with some hometown neighbors over breakfast in a diner and decided to place some targeted ads.
"For [Red, White and Blue] to do so for such small amounts when they are straining to get big TV buys into place made no sense," Mr. Friess said by email.
"I think the reason more people of wealth don't do direct efforts is the same reason they don't do their own tax returns: It takes a lot of skill to craft the ad, buy time, file reports. Too much hassle."
Mr. Ryan said the effort was one reason many wealthy people are doing through small groups what they wouldn't do alone: That they cared enough to write a check, but not enough to articulate an opinion.
"It was more buying access than speaking. They didn't want to be bothered to actually communicate a message," Mr. Ryan said.
Still, because they can hire a political consultant to produce and manage the efforts, it is surprising that the technique was not more common in pre-Citizens United days, given the lengths to which executives have gone to find ways to influence politics. For much of the time since the 1976 Supreme Court case Buckley v. Valeo gave people the right to spend unlimited amounts advocating for the election or defeat of candidates, though, there were other ways to do so.
Until 2002, they could give any amount to the national parties, who would then distribute it to candidates. Donors could get in the good graces of particular incumbents by handing the check, made out to the party, directly to them at fundraising events.
After that was prohibited, the desire to affect politics behind the scenes seemed so strong that they were willing to risk legal trouble to advocate under the banner of groups. Independent advocacy got its rise after the 2002 ban with donors giving to groups known as 527s, after the eponymous section of the tax code. The legal ability of those groups to engage in wholehearted politicking was always questionable, and many wound up paying millions of dollars in fines.
Another advantage to having several wealthy people pool resources — as nine million-dollar donors have done with the pro-Romney super PAC Restore Our Future — is that the consultants managing candidate-specific PACs are not just any ad buyers. The presidential super PACs are run by former aides to the candidates, people who lend an air of official status to the efforts.
Rules prevent multiple wealthy people from individually hiring the same consultant so the consultant can use his knowledge across clients to come up with a streamlined strategy.
The vast majority of companies have been reticent to engage in direct political advocacy for fear of alienating customers. Most of the companies that have given to super PACs, then, have been privately held companies at the behest of their openly political owners, who could have just as easily given themselves, or limited liability companies that appear to exist mainly on paper to keep the names of the people behind them out of donor records.
Among the companies giving to the pro-Romney super PAC were W. Spann LLC and Glenbrook LLC — obscure companies formed, it turned out, to mask the identity of former Romney colleagues.
Mr. Ryan said even under the new rules, setting up such shell companies is illegal. But what's not illegal is more established groups who don't disclose contributors — specifically, nonprofits — turning up as major donors in disclosures of political groups who do.
People have given three-quarters of super PACs' funds since 2011; of the remainder, unions have given $7.5 million, while nonprofit quasi-political groups with secret donors have given $2 million. Businesses, including cryptic LLCs, have given $20 million, The Times' analysis showed.
Those giving as individuals have their names released in periodic disclosures on the FEC website, but spenders are aware that most viewers aren't that engaged, making spending through super PACs more attractive.
"They're not putting their reputations on the line in the same way," Mr. Ryan said.
Legislation introduced in the House and Senate proposes making donors to super PACs nearly as obvious to viewers as those behind personally funded ads. The so-called Disclose Act, which lacks Republican support, would require the top five donors to be named in advertisements.
But while the pre-Citizens United rules allowed unlimited money while forcing accountability by requiring names, those top five could still include companies who can dissolve overnight, unlike a person.
"As long as organizations can give to other organizations, it becomes very difficult to write laws that penetrate an infinite number of transactions," Mr. Ryan said.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Luke Rosiak is a projects reporter on The Washington Times’ investigative team. He formerly covered lobbying and campaign finance for two watchdog groups as well as transportation for The Washington Post. Luke can be reached at firstname.lastname@example.org.
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