It's About the Money (Blake Rutherford On Politics)

by Blake Rutherford  on Wednesday, Apr. 23, 2014 2:43 pm  

Blake Rutherford

The late William F. Buckley summed up the motivations to spend money on political activities this way: "As long as Congress has the taxing authority, combined with the right to tax progressively, there is a need to fight back."

In 1974 Congress passed the Federal Election Campaign Act over President Gerald Ford’s veto. It was the first comprehensive effort to regulate private spending in American politics. In the aftermath of Watergate, the public yearned to rid the system of Nixonian corruption, so the Congress instituted limits on contributions, donor disclosure requirements, and provided for the public financing of presidential elections, among other reforms.

That law remained in place until 2002 when Congress passed the Bipartisan Campaign Finance Reform Act, otherwise known as McCain-Feingold, which sought to restrict corporate spending on elections, including nonprofit issue organizations, as well as advertising at specific times during the primary and the general elections.(1)

That law withstood legal challenge until 2010 when the Supreme Court, in Citizens United vs. FEC, held that the government was prohibited from restricting independent political expenditures by corporations, unions and associations on the basis that doing so violated the free speech clause in the First Amendment.

As a result, key provisions of McCain-Feingold in place to preserve undue influence by special interests were struck down, and unlimited spending by individuals and corporations became permissible.

Other decisions followed on the heels of Citizens United, including v. FEC. In that case the DC Circuit Court of Appeals determined that contribution limits to third-party entities, namely Super PACs and 501(c)(4) "social welfare" organizations, were unconstitutional. "Contributions to groups that make only independent expenditures cannot corrupt or create the appearance of corruption," that court stated.

I suppose we’ll find out.

Big Spenders

In 2012, Sheldon Adelson, a Las Vegas hotel magnate, contributed nearly $100 million -- $63 million directly to Republican Super PACs closely aligned but technically separate from Newt Gingrich and Mitt Romney -- to defeat President Barack Obama, according to a report compiled by Pro Publica. That is the equivalent of 19,230 donors contributing the maximum amount allowed to one candidate – more than enough to fill Bud Walton Arena.(2)

Relying on permissible avenues other than direct contributions to Super PACs, Charles and David Koch were able to develop, through 501(c)(4) entities, an "operation of unrivaled complexity, built around a maze of groups that cloaks its donors," according to a report by The Washington Post and the Center for Responsive Politics. According to that report, their operation was responsible for $407 million in spending during the 2012 election.(3

For wealthy donors particularly, and issue-driven advocates, independent expenditure committees provide greater autonomy, strategic control, and, anonymity, at least in certain instances.(4) Their engagement and influence, as measured by dollars, has grown considerably in a short time. In 2006, for example, outside groups spent $37.4 million, but in 2010 they spent $205.5 million. That same year, overall election spending eclipsed $3.6 billion, a record.

This year, more than $1 billion has already been raised by independent expenditure committees alone for political purposes, and overall spending limits are expected to exceed 2010 by a substantial margin.

In Arkansas, that money is already at work. In the fiercely contested Senate race between Sen. Mark Pryor and Rep. Tom Cotton, independent expenditure committees are responsible for 88 percent of the money spent on television advertising to-date. In the governor’s race, outside groups began airing negative television ads not too long ago. Independent spending on those races and many others will only increase in the months ahead.

Two weeks ago, in a companion case focused on contributions to candidates and political parties, the Supreme Court, in McCutcheon v. FEC, declared aggregate limits on those contributions an unconstitutional restriction of free speech. "Money in politics may at times seem repugnant to some, but so, too, does much of what the First Amendment vigorously protects," Chief Justice John Robert wrote in the majority opinion.

In Citizens United, McCutcheon and its progeny, the Supreme Court has effectively deregulated campaign finance, which has improved political fundraising considerably. But time will tell whether these decisions do anything to improve our political discourse and promote parity and integrity within our system.


(1) The primary motivation of McCain-Feingold was to address the influence of "soft money" and the proliferation of issue advertising, both of which had become very important components of the modern political campaign. The law withstood legal challenge. In a 5-4 decision in 2003 the US Supreme Court, in McConnell v. FEC, held that the restrictions on political activities and advertising did not violate the right to free speech. Justice Anthony Kennedy, siding with the minority, opined that the law required "speakers to abandon their own preference for speaking through parties and organizations." 

(2) Republican groups and donors have traditionally commanded the Super PAC world. They were responsible for spending three out of every five Super PAC dollars in 2010 and two out of every three dollars in 2012. In 2014 that may be different, although we won’t know until the end of the cycle. Of the five largest individual donors to Super PACs this cycle to-date, the top two are supporting Democratic-led efforts aimed at the House and Senate.

(3) Last year, the IRS proposed new rules that would explicitly define which kind of activities are political. Under the proposed regulation "candidate-related political activities" would include running ads that mention candidates, preparing voter guides or holding voter registration drives. As expected there was public outcry, so last week the IRS Commissioner John Koskinen told USA Today it intended to “re-propose a redefined rule.” Perhaps that is a nice of way of saying it's DOA?

(4) Paul Wilson of Wilson-Grand Communications told Campaigns & Elections, "Candidates tend to stall, perseverate, angst over what is the best commercial, whereas the people at independent expenditure committees appear more decisive and confident in what needs to be said." So it is not at all surprising that Karl Rove, the architect of President George W. Bush's successful campaigns, chose to dedicate his post-White House years to the growth of American Crossroads, a GOP-focused Super PAC, rather than pounding the pavement raising money for candidates.   


(Blake Rutherford is vice president of The McLarty Companies and previously was chief of staff to the Arkansas attorney general. You can follow him on Twitter at BlakeRutherford. His column appears every other Wednesday in the weekly Government & Politics e-newsletter. You can subscribe for free here.)



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