A whole new world of campaign finance

Last modified: 8/7/2011 12:00:00 AM
Three years ago, when then-Sen. Barack Obama raised $747 million in private money, it was considered historic, not just because the sheer amount of money was hard to fathom, but because he was the first presidential candidate in the history of public financing not to take government money for his general election.

On top of that, individuals, parties and groups spent $168.8 million advocating for or against a presidential candidate that year.

But because of a U.S. Supreme Court decision handed down about two years after Obama's inauguration, it seems likely that the sums spent on the presidential race are going to be even greater than those in years past.

In Citizens United, the court said that the free speech rights that apply to individuals also apply to groups of individuals, including unions and corporations. Since the government cannot limit the amount of money individuals spend on political speech in campaigns, it also cannot limit what unions and corporations spend.

In the 2010 congressional elections, such groups spent about $88 million, and because of a lack of clarity from the courts, some of that money cannot be traced back to its donors.

"My sense is the roof is off, and there are going to be all sorts of inventions that we're going to see over the year or so," Dante Scala, a political science professor at the University of New Hampshire, said of the limits and innovations in campaign finance.

But even before Citizens United, political scientists and advocates said, the campaign finance system was less than desirable.

"Does the average citizen think they're getting a fair deal in Congress? Do they think that large amounts of political money are providing influence for people getting benefits while they're getting the short end of the stick?" asked Fred Wertheimer, president of Democracy 21, a Washington D.C.-based nonprofit that works to "eliminate the undue influence of big money in American politics."

But even before the Citizens United decision, a series of lesser-known lawsuits and federal regulations made it difficult for the average citizen to track who was spending what on which candidate and how.

 No more Weiners

Consider, for example, the recent case of a California voter who didn't like a New York congressman and wanted to buy an ad to tell people about it.

To the thousands receiving it, the advertisement at the top of the email might have looked like any run-of-the-mill attack ad.

"HOW MANY WEINERS DO WE WANT IN CONGRESS? VOTE OUT BARNEY FRANK," said the ad, flanked by unflattering photos of Frank, the Democrat from Massachusetts, and Anthony Weiner, the disgraced former New York congressman.

But the lawsuit that led to the $10,000 ad, which was paid for by National Defense PAC and first appeared in June in conservative e-newsletters, illustrates how complex campaign finance regulations have become.

By the beginning of this year, about 5,400 traditional PACs were registered with the Federal Election Commission. Together, by the end 2010, they raised about $1.2 billion, according to figures provided by the Federal Election Commission. Those figures do not include the roughly $88 million raised by "Super PACs."

Those numbers dwarf the $10,600 that the group that ran the anti-Barney Frank ad reported in its most recent filings with the FEC, but the group nevertheless is one of many trying to force the FEC to change the way political money is accounted for.

James Carey, a retired Navy rear admiral who lives in Virginia, founded the National Defense PAC in 2000 with a group of veterans who wanted "to promote shared patriot values in government," according to its federal lawsuit. They support candidates, none yet from New Hampshire, who are military veterans and complete a 15-question survey about national defense issues to their satisfaction.

For more than a decade, the National Defense PAC operated as what might now be considered a traditional PAC, which could donate up to $5,000 directly to candidates and could spend as much money as it wanted advocating for or against candidates or issues.

But because of federal regulations, their supporters couldn't give more than $5,000 to the PAC. That limit was at the heart of Carey's January 2011 lawsuit against the Federal Election Commission.

 Gift versus speech

The regulations around what individuals and groups can give to candidates and PACs hangs on what seems like a simple distinction: What is a gift and what is free speech?

Direct donations to a candidate, if too large, can be considered a gift with the expectation of something in return, but the courts have held that advertisements for or against a candidate or ballot measure is political speech and therefore protected by the First Amendment.

"We have this twisted idea that a little money is okay, but a lot of money is bad," said Andrew Smith, director of the Survey Center at the University of New Hampshire. "But nobody knows what that line is."

A series of court decisions, culminating in Citizens United, found that individuals and corporations cannot be limited in how much they spend on political advertising. That led to the rise of a new type of PAC, formally known as "independent expenditure-only committees," but quickly termed "Super PACs" by the press, which debuted in the 2010 congressional elections are already making their presence felt in the 2012 presidential race.

"You should be looking at all these Super PACs, that's the big story of this election," said Democracy 21's Wertheimer.

His group filed a complaint with the FEC on Friday over allegations that a company called W Spann LLC was actually a sham to illegally funnel $1 million to the pro-Mitt Romney Super PAC, Restore Our Future.

In 2010, Kelly Eustis, a resident of Sacramento, Calif., wanted to donate $10,000 to National Defense PAC, which would then run a series of attack ads against Weiner.

But National Defense PAC was a traditional PAC, not a Super PAC, so he couldn't give it more than $5,000, the federal regulations held.

The result of the legal battle that ensued, in which National Defense PAC argued it shouldn't have to create an entire new legal entity to exercise its constitutional rights, was that an individual, Eustis, contributed more than the $5,000 legal limit to a traditional PAC.

So National Defense PAC sued the FEC, arguing they shouldn't have to create an entirely new Super PAC to do what is a constitutional right: donate to a candidate and ask for money to spend on political speech.

"It is a very big burden to comply with the law," said Dan Backer, attorney for National Defense PAC.

Instead, Backer and other attorneys argued that National Defense PAC should be allowed to create two separate bank accounts.

One account would be for donations that could be used to be given to political candidates. The other account would allow for unlimited spending on independent expenditures. It would be less burdensome for citizens to use different back accounts than to create an entire new PAC, Backer said.

"It's a burden on people to have to create a new organization," he said.

In a June 14 preliminary injunction, a U.S. District Court sided with National Defense PAC, as long as the PAC can "proportionately pay" its administrative costs.

Lawyers for the FEC and National Defense PAC are working out what exactly "proportionately pay" means.

 Even more complicated

The "HOW MANY WEINERS DO WE NEED IN CONGRESS?" ad has run twice, Backer said, and it could run as many as 10.

Shortly after it first ran, Backer said, the FEC notified the group that the ad was illegal, and the groups are negotiating terms. He expects a resolution by the end of August.

A spokeswoman for the FEC declined to comment, citing pending litigation.

Seem complicated? It is. And it doesn't even address political spending by groups named after their tax-code designations, such as 527 groups and 501(c) groups such as labor unions and chambers of commerce.

Some groups, such as the pro-Romney Super PAC Restore Our Future, have disclosed who their donors are. It has raised about $12.2 million. But others have not, and the FEC has not yet determined whether or not Super PACs must disclose their donors.

"We've got all of these ways to try to restrict money because we think money in campaigns is a bad thing," Smith said. "But the more we try to restrict it, the more the money's going to flow in through a different porthole, and that's what's going on right now."

Ironically, political action committees were created as a way to try to clean up the system of political finance.

Corporations have not been able to donate directly to candidates since the early 1900s, and PACs developed in the 1970s. It was believed they would minimize the amount of money given by wealthy individuals to candidates, Smith said.

The laws were tweaked a few times, then the "Bipartisan Campaign Finance" Act, or McCain-Feingold bill, was passed in 2002, ushering a new series of campaign limits and loopholes. But much of the law has been left in tatters, advocates say, as courts pick away at certain aspects. A new series of laws might be in order, some say.

"They're going to inevitably break the law," Smith said of politicians. "There's almost no way they cannot break the law when they're running their campaigns."

(Molly A.K. Connors can be reached at 369-3319 or mconnors@cmonitor.com.)




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