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Profile: Democracy 21

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The progressive campaign watchdog organization Democracy 21 releases a report that questions the legality of the “super PACs” (see March 26, 2010, June 23, 2011, November 23, 2011, and January 4, 2012) currently dominating the US elections process. The report predicts “that unless candidate-specific super PACs are stopped, the country is headed back to the system of legalized bribery that existed in the pre-Watergate era.” Democracy 21 president Fred Wertheimer says of the report: “The leading presidential candidate-specific super PACs are serving as vehicles for candidates and donors to massively evade and circumvent candidate contribution restrictions. These restrictions have been enacted over a period covering more than a century to prevent the corruption of federal officeholders and government decisions—in other words to prevent the corruption of our democracy. Each presidential candidate-specific super PAC is raising unlimited contributions from individuals and/or from corporations and unions for the explicit purpose of being spent by the super PAC to directly support its favored presidential candidate. Such contributions would be illegal if given directly to the presidential candidate, so they are instead being given to super PACs controlled by close political and personal associates of the presidential candidate and which are directly serving the campaign interests of the presidential candidate. In essence, the unlimited contributions are being given by the wealthy supporters of each presidential candidate to a super PAC dedicated to supporting that candidate. The donors know that their contributions will be spent to directly support that presidential candidate. The super PAC is spending the contributions only to directly support the associated presidential candidate. The presidential candidate knows (or will know) the identity of the donors who are providing huge contributions to the super PAC supporting the candidate’s campaign. For all practical purposes, these unlimited, corrupting contributions are being given to the presidential candidates. As such, candidate-specific super PACS are eviscerating candidate contribution limits and restoring the system of legalized bribery that existed in our country in the pre-Watergate era.” Democracy 21 finds: “Candidate-specific super PACs are the most dangerous vehicles for corruption in American politics today. They are a monstrosity and the logical extension of the Citizens United decision given to the nation by five Supreme Court justices who have done enormous damage to our democracy. Unless stopped, candidate-specific super PACs will continue to eviscerate the contribution restrictions enacted by Congress, signed into law by presidents, and repeatedly upheld by the Supreme Court as constitutional because they are necessary to prevent corruption. And these super PACs will engulf not just our presidential elections but also our elections for Congress to which they will spread like wildfire.” [Democracy 21, 1/4/2012]

Entity Tags: Fred Wertheimer, Democracy 21

Timeline Tags: Civil Liberties, 2012 Elections

The Washington Post reports that an anonymous donor gave the political advocacy organization Crossroads GPS $10 million to run television ads attacking President Obama and Democratic policies, part of the almost $77 million in secret donations the group has received. It also received another $10 million from an anonymous donor to use during the 2010 midterm elections. The Post says the donations are emblematic of “the money race that is defining the 2012 presidential campaign.” According to data provided by the Center for Public Integrity, $76.8 million of the money raised in 2010 and 2011—62 percent—was secretly contributed to Crossroads GPS. The money came from fewer than 100 individual donors, which works out as an average donation of over $750,000; 90 percent of its donors gave over $1 million in individual donations. Crossroads GPS is a conservative nonprofit 501(c)(4) group co-founded by former Bush administration political advisor Karl Rove. The information about the donations comes from draft tax returns that provide a limited insight into the donations received by the group. Under the law (see January 21, 2010 and March 26, 2010), Crossroads GPS is not required to identify its donors. The Post says it is possible both donations came from the same source, but it has no way to confirm that supposition.
Explanations and Criticisms - Crossroads GPS is the sister organization of American Crossroads, the super PAC also co-founded by Rove. The two groups share the same president (Steven Law), the same spokesperson, the same staffers, and the same mailing address. Together, they have raised $100 million for the 2012 election cycle and have already run millions of dollars of television ads. Crossroads GPS spokesperson Jonathan Collegio says that the organization “advocates for free markets, free trade, limited government, and personal responsibility.” The group’s donors are “individuals and businesses that support our vision of lower taxes and smaller government. We believe President Obama’s tax and regulatory policies are strangling economic growth through excessive regulation and government spending that is crowding out private investment.” Bill Allison of the Sunlight Foundation, which advocates for transparency in government and politics, says that the two groups are “certainly not a grassroots movement.… These donors can have a very disproportionate effect on politics, and the fact that we don’t know who they are and what kind of favors they will ask for is very troubling.” Allison speculates that some of the anonymous Crossroads GPS donors may be large public corporations, which according to the Post have “for the most part… not donated to super PACs or other groups that disclose donors.” American Crossroads is required to disclose its donors, which include Texas billionaire Harold Simmons ($12 million) and Texas home builder Bob Perry ($2.5 million). The Republican Jewish Coalition has identified itself on its tax returns as a donor to Crossroads GPS, having given $4 million to the organization. (Crossroads GPS donated back $250,000.) Sunlight and other critics have questioned Crossroads GPS’s status as a nonprofit “social welfare” group. Under IRS regulations, such groups cannot have as their primary purpose influencing elections, but they can spend up to half their money on political campaigning. The group has asked the IRS to grant it tax-exempt status. Critics have asked the IRS to revoke the group’s nonprofit status, saying that it is patently a political organization. A complaint filed by the Campaign Law Center and Democracy 21 in December 2011 said in part, “We are deeply concerned about the failure of the IRS to take any public steps to show that the agency is prepared to enforce the tax laws.” Crossroads GPS claims it has spent $17 million on direct election activities and $27 million on “grassroots issue advocacy,” including a $16 million expenditure in the summer of 2011 on ads pushing against tax increases during debate on raising the debt ceiling (see August 5, 2011). It has also given some $16 million to a network of conservative advocacy groups, including $4 million to Americans for Tax Reform (ATR), $3.7 million to the National Federation of Independent Business, and $2 million to the National Right to Life Committee. According to Crossroads GPS, all of its donation recipients are instructed to use the funds “only for exempt purposes and not for political expenditures.” In 2010, ATR spent $4 million—almost exactly the amount it received from Crossroads GPS—on political ads in 2010. Melanie Sloan of Citizens for Responsibility and Ethics in Washington (CREW) says that even if ATR did not spend the Crossroads GPS money on ads, the donation allowed it to divert $4 million of its own money to election ads. “It’s the same amount—does that seem likely to be a coincidence to you?” she asks a reporter. An ATR spokesperson says the Crossroads GPS donation was “in support of our work fighting tax hikes.” [Washington Post, 4/13/2012; iWatch News, 4/20/2012; Think Progress, 4/20/2012]
High Compensation - Steven Law, the former deputy secretary of labor under President Bush and the former general counsel for the US Chamber of Commerce who serves as the president of both organizations, pulled down $1.1 million in salaries and bonuses for the two groups. Collegio explains the high compensation to a reporter, saying: “Crossroads is a serious organization. Free market conservative donors know that hiring top CEO talent requires real compensation.” [iWatch News, 4/20/2012]

Entity Tags: American Crossroads, National Right to Life Committee, Karl C. Rove, Barack Obama, American Crossroads GPS, Washington Post, National Federation of Independent Business, Americans for Tax Reform, Melanie Sloan, Campaign Law Center, Bill Allison, Jonathan Collegio, Steven Law, Harold Simmons, Center for Public Integrity, Democracy 21, Republican Jewish Coalition, Bobby Jack Perry

Timeline Tags: Civil Liberties, 2012 Elections

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