dark money

Karl Rove’s IRS Problem

Thanks to some tax-return digging, ProPublica found this week that the Karl Rove-connected Crossroads GPS actually spent at least $11 million more on political activities last year than they told the IRS. ProPublica’s Kim Barker reported:

New tax documents, made public last Tuesday, indicate that at least $11.2 million of the grant money given to the group Americans for Tax Reform was spent on political activities expressly advocating for or against candidates. This means Crossroads spent at least $85.7 million on political activities in 2012, not the $74.5 million reported to the Internal Revenue Service.

But what’s an extra $11 million spent on political activities, right?  Wrong. Tax-exempt 501(c)(4) social welfare groups are limited in the amount of political spending they can do while maintaining their exempt status. And these developments about Crossroads GPS only underscore the need for more robust government oversight of political spending. 

Unfortunately, this is an effort that has been made much more difficult in the wake of recent Supreme Court rulings. As Michael Keegan noted in May, the 2010 Citizens United v. FEC decision opened the door to an explosion of spending by c(4) groups like Crossroads GPS because it allowed  them to run political ads as long as they weren’t using the majority of their money for electoral work.

Moreover, dark money groups sometimes attempt to underreport the political spending that they do undertake, which has not been helped by the IRS’s past reluctance to issue “bright lines” around what must be counted as political spending.

But that may change soon. The Treasury Department and the IRS are expected to issue guidance today specifying what “candidate-related political activity” entails and how much of it 501(c)(4) social welfare groups are allowed to do.

PFAW

To Understand GOP Government Shutdown Threats, Follow the Money

If you’re curious why many House Republicans are on board with an unhinged plan to threaten a government shutdown or default over demands to “defund” Obamacare, you should follow the money.  That’s what the New York Times editorial board argued in a compelling op-ed Tuesday. 

Far-right groups such as the Club for Growth are striking out at Republicans who refuse to take this reckless stance, wielding their considerable funds to “inflict political pain” on those who do not share their extremist position. And they are titillating their Tea Party supporters with political fantasies in order to get them to send in even more money, so they can ramp up their attack on Republicans who don’t toe the line. In “The Money Behind the Shutdown Crisis,” the editorial board wrote:

These groups, all financed with secret and unlimited money, feed on chaos and would like nothing better than to claim credit for pushing Washington into another crisis. Winning an ideological victory is far more important to them than the severe economic effects of a shutdown or, worse, a default, which could shatter the credit markets.

[…] Brian Walsh, a longtime Republican operative, recently noted in U.S. News and World Report that the right is now spending more money attacking Republicans than the Democrats are. “Money begets TV ads, which begets even more money for these groups’ personal coffers,” he wrote. “Pointing fingers and attacking Republicans is apparently a very profitable fund-raising business.”

And as more money pours into these shadowy groups, their influence – and thus their potential for inflicting further damage on our democracy – grows.  With fewer effective campaign finance regulations left standing in the post-Citizens United landscape, there is little that can stop these groups from using their money to bully elected officials.

But the functioning of our government is not a game.  And though for these fringe groups making an ideological point may seem more important than keeping our government from shutting down or defaulting, Americans are tired of having our basic economic security called into question over political posturing.

As the Times editorial board put it:

It may be good for their bank accounts, but the combination of unlimited money and rigid ideology is proving toxic for the most basic functioning of government.

PFAW

The Most Important Conservative Funder You’ve Never Heard Of

It was a big week for lifting the veil – at least a little – on the secretive world of conservative groups funding political campaigns. On Wednesday we wrote about new reports on two of the Right’s shadowy front groups which have been able to disguise the transfer of large sums of money to organizations supporting Republican causes and candidates. 

Then Politico brought us a look inside what they call “the Koch brothers’ secret bank,” a previously unknown group called Freedom Partners which gave a quarter billion dollars in 2012 to sway public debate further to the right. Mike Allen and Jim VandeHei report:

The group, Freedom Partners, and its president, Marc Short, serve as an outlet for the ideas and funds of the mysterious Koch brothers, cutting checks as large as $63 million to groups promoting conservative causes, according to an IRS document to be filed shortly…

The group has about 200 donors, each paying at least $100,000 in annual dues. It raised $256 million in the year after its creation in November 2011, the document shows. And it made grants of $236 million — meaning a totally unknown group was the largest sugar daddy for conservative groups in the last election, second in total spending only to Karl Rove’s American Crossroads and Crossroads GPS, which together spent about $300 million. [emphasis added]

Though you likely have not heard of Freedom Partners before, you’ve heard of the groups it funds – including the NRA, Americans for Prosperity, Heritage Action for America, and Tea Party Patriots. According to their newly-launched website, Freedom Partners is “promoting the principles of a free market and free society” by advocating against scourges like “cronyism in America.” 

This, from one of the biggest spenders in the last election.

Other than the Koch brothers, who are the donors behind this massively influential group?  At this point, it’s hard to know. Despite the group’s president’s insistence that “our members are proud to be part of [the organization],” Freedom Partner’s membership page does not list a single one.  It’s yet another example of the need for legislation like the DISCLOSE Act, which would shed light on the major donors behind the secretive outside groups attempting to shape our elections – and our country.
 

PFAW

New Insights Into the Right’s Big Money Shell Game Highlight Need for the DISCLOSE Act

In today’s legal landscape, “following the money” is tricky – but a new report released yesterday shows why this work is critical to anyone who cares about progressive change. The latest digging from the Center for Responsive Politics’ Open Secrets blog has uncovered new information about a multi-tiered money laundering operation through which tax-exempt groups funnel millions to groups supporting right-wing causes and candidates. 

Operating behind a thick veil of secrecy, groups like TC4 Trust and the Center to Protect Patient Rights – which Open Secrets describes as “‘shadow money mailboxes’ – groups that do virtually nothing but pass grants through to other politically active 501(c)(4) organizations” – are able to hide both their donors and their recipients.  By funneling grants through “sub-units,” which are owned by the larger groups but have different names, groups like TC4 Trust put millions into the pockets of 501(c)4 organizations supporting Republican causes in the 2012 elections, such as the advocacy arm of Focus on the Family.

As Open Secrets reports,

[T]heir financial ties run far deeper than previously known.  The groups, TC4 Trust and the Center to Protect Patient Rights – both of which have connections to the billionaire industrialist Koch brothers – have been playing a high-stakes game of hide-the-ball, disguising transfers of millions of dollars from one to the other behind a veil of Delaware limited liability corporations.

The source of political advocacy matters.  This latest example of dark money donor groups obscuring the links of their money trail underscores the urgent need for legislation like the DISCLOSE Act.  This act would bring some basic transparency to the electoral system and require outside groups spending money in elections to disclose their donors – including the original source of donations.  The measure, which was blocked by Senate Republicans in both 2010 and 2012, is a common-sense solution that would help the American people understand who is trying to influence their political opinions and their votes.

PFAW