Sen. Carl Levin to Grill the IRS Over Dark Money

First some history on Dark Money.

A former Illinois congressional candidate and a government watchdog organization have teamed up to sue the Internal Revenue Service, claiming the agency should bar dark money groups from funding political ads. The lawsuit, filed by David Gill, his campaign committee and Citizens for Responsibility and Ethics in Washington, or CREW, is the first to challenge how the IRS regulates political spending by social welfare nonprofits, campaign-finance experts say. These nonprofits, often called dark money groups because they don't have to identify their donors, have increasingly become major players in politics since the Supreme Court's Citizens United ruling in early 2010.

Gill, an emergency room doctor who has advocated for health-care reform, including a single-payer plan, was the Democratic candidate for the 13th district in Illinois. After a tight race, Gill ended up losing to the Republican candidate by 1,002 votes, a loss the lawsuit blames "largely, if not exclusively," on spending by the American Action Network, a social welfare nonprofit.

American Action Network, launched in 2010 by former Minnesota Republican Sen. Norm Coleman, reported spending almost $1.5 million on three TV commercials and Internet ads opposing Gill, mainly in the weeks right before the election. That was more than any other outside group spent on the race, and more than Gill's principal campaign committee spent on the entire election, according to Federal Election Commission records.

The Gill lawsuit, filed in US District Court in the District of Columbia, alleges the IRS failed to properly regulate the American Action Network, citing seemingly contradictory definitions the agency has applied to such groups for years.

The statute governing social welfare nonprofits says they should be operated "exclusively" for promoting social welfare. But the IRS paved the way for political spending by these groups by interpreting "exclusively" as meaning the groups had to only be "primarily" engaged in promoting the public good. Some groups have taken this to mean they can spend up to 49 percent of their money on election ads. The lawsuit claims the IRS' interpretation of the law "is arbitrary, capricious, and contrary to law," and asks for an injunction prohibiting the agency from using it.

Melanie Sloan, CREW's executive director, blamed the IRS for sitting on its hands as social welfare nonprofits have been formed specifically to run negative ads paid for by anonymous donors. "Now the IRS can explain its deplorable inaction in federal court," she said. In filings to the IRS, the group said it spent $25.7 million in its 2010 tax year. In separate filings to the Federal Election Commission, it reported spending about $19.4 million over the same period on political ads, or about 76 percent of the total expenditures reported to the IRS.

Senator Lisa Murkowski (R-Alaska) joined Sen. Ron Wyden (D-Ore.) in offering a new plan to unmask secretive political groups and their dark-money donors. In a Washington Post op-ed, Murkowski and Wyden write, "At minimum, the American people deserve to know before they cast their ballots who is behind massive spending, who is funding people and organizations, and what their agendas are." More than $400 million in dark money was spent during the 2012 elections, mostly by conservative organizations, a fourfold increase from 2008. Leading dark-money groups included Karl Rove's Crossroads GPS, the US Chamber of Commerce, Americans for Prosperity, and Americans for Tax Reform, the anti-tax outfit run by Grover Norquist.

The Murkowski-Wyden plan would try to force politically-active nonprofits, big business trade groups, labor unions, and shell corporations to reveal the true source of their funds. In spirit, it's not all that different from the DISCLOSE Act of 2012.

Today, if a donor gives $10,000 or a $1 million to Rove's Crossroads GPS, a nonprofit, to spend on political activities, that donor stays secret. Murkowski and Wyden's plan would make Crossroads disclose that donor. To use a real example, a board member for the tea party-affiliated group FreedomWorks reportedly funneled more than $12 million in donations from him and his family through a pair of Tennessee corporations and then to FreedomWorks' super-PAC. The donor's identity was one of the biggest mysteries of the 2012 campaign, and it remained unsolved until the Washington Post reported six weeks after Election Day, that FreedomWorks board member Richard Stephenson and his family were behind the big donations. Under Murkowski-Wyden, Stephenson's name would have come out right away.

The two senators, in their outline for new disclosure legislation, try to anticipate the landmines on the road to 60 votes. They suggest raising the limit for donor disclosure from more than $200 to more than $500 to focus on larger donors. They also carve out an exemption so that dues-paying members of, say, the NRA or the Sierra Club who aren't giving money for political activities aren't disclosed like donors giving strictly to influence elections are.

So, sometime in the next few months, Senator Carl Levin's permanent subcommittee plans to call the Internal Revenue Service to task for allowing the political super PACs to be classified as tax-exempt 501(c)(4)s. "Tax-exempt 501(c)(4)s are not supposed to be engaged in politics," he said. "It is against the law to do so." Then he added, with a certain undeniable relish, "We're going to go after them."

Finally, someone in power plans to grill the IRS on why it is allowing hundreds of millions of dollars in secret dark money to flow through supposedly nonpartisan "social welfare organizations" and into our elections. Levin's comments aren't a complete surprise. In his retirement announcement, he will not run in 2014, Levin said his investigative subcommittee will "look into the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millions of secret dollars flowing into our elections, eroding public confidence in our democracy."










NYC Wins When Everyone Can Vote!

Michael H. Drucker
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Outside super Pacs and State Races

Whether you are for or against an issue or candidate, should an out-of-state super Pac be allowed to spend their money in your state, for or against the issue or candidate? The Supreme Court says YES. I might be for many of the issues and candidates supported by a super Pac, but I am against their influence. So lets look at one and their influence.

New York City Mayor Michael Bloomberg formed a super PAC to spend between $10 and $15 million on elections in 2012 in order to help moderate candidates and aid ballot referendums supporting gay marriage.

Bloomberg said in a statement that the candidates who will benefit from his super PAC will be moderates who support gun control and the market-driven education reform that Bloomberg has championed during his time as mayor.

According to The New York Times, Bloomberg's super PAC supported candidates including former Maine Gov. Angus King, who ran as an independent for Maine's open Senate seat and won; Democrat Gloria Negrete McLeod, the challenger to incumbent Democratic Rep. Joe Baca in California and won; and Republican Rep. Bob Dold in Illinois.

The effort is lead by New York City Deputy Mayor for Government Affairs and Communication Howard Wolfson, who is also the former spokesman for Hillary Clinton.

The super PAC effort is the biggest national push by Bloomberg, who is winding down his third term as mayor and will not seek reelection to a fourth term.

In 2013, Mayor Bloomberg scored a political knockout when he helped chase a pro-gun Democrat out of a special congressional election in Illinois.

Illinois state Sen. Toi Hutchinson abandoned her campaign yesterday, two days after Bloomberg’s political committee unleashed attack ads over her past opposition to tough gun restrictions. She cited the gun issue in her concession and threw her support behind Bloomberg’s candidate, former Democratic state Rep. Robin Kelly.

Bloomberg’s Independence USA political action committee has spent $1.4 million in the election to succeed former Rep. Jesse Jackson Jr. It is poised to spend up to $2 million for the Feb. 26 Democratic primary, more than any of the 17 candidates have raised.

The winner of the primary is almost guaranteed to take the seat in the overwhelmingly Democratic district.

Bloomberg also set his sights on another candidate in the race, Debbie Halvorson, a one-time congresswoman with an “A” rating from the National Rifle Association. She had been in the lead until Bloomberg began bombarding the air waves.

Please let me know how you feel about super Pac money.










NYC Wins When Everyone Can Vote!

Michael H. Drucker
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NYC to Regulate super PAC's

New York City campaign regulators, in 2013, will require disclosure of independent expenditures spending that is not coordinated with a campaign. It said its tracking of the finances of such groups, which it plans to post on the Web, would be among the most detailed anywhere, including not only contributions and spending, but also an archive of advertisements run by the groups and information about their backers.

New York City campaign finance officials said, however, that the Citizens United case and a related Supreme Court decision on Montana, both of which struck down limits on campaign spending by corporations and unions, made it clear that the city could only document, and not limit, independent spending on elections.

“The Citizens United decision started a sea change in the culture of money in politics that will ultimately affect every level of government all across the country,” said Amy M. Loprest, Executive Director of the New York City Campaign Finance Board. “Outside spending in city elections was increasing even before Citizens United, and we expect the trend will only accelerate in the 2013 elections.”









NYC Wins When Everyone Can Vote!

Michael H. Drucker
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2013 NYC Races and Super PACs

The growing prospects that Super PACs may enter the 2013 New York City races has enormous implications for the framework of the city’s politics, beginning with the fact that the timeline for the race has now been completely shaken up.

Under the Supreme Court’s Citizens United decision, Super PACs may collect unlimited donations for use in political campaigns as long as they do not coordinate their efforts with the candidates they are supporting.

This undermines the New York City’s campaign finance system, which uses taxpayers’ money to match small contributions, usually with a 6-1 ratio, while imposing strict limits on how much donors can give and caps on how much a candidate can spend.

Donations by businesses doing business with the city are even more stringently regulated, although labor unions aren’t similarly hamstrung. This means more well known politicians have an enormous advantage, as long as they can raise the maximum, which serious candidates do.

The only way for an outsider to challenge the system was the Bloomberg method, which calls for a wealthy individual spending as much as they need from their own resources on advertising to overcome the entrenched political establishment. Now, it is possible for someone who is not a billionaire or even a millionaire to run and raise some money within the city financing system and be backed by a Super PAC funded by a relatively few individuals. It wouldn’t take the $100 million plus that Mayor Michael Bloomberg spent last time; a more manageable $50 million would make such a canddiate viable.

It isn’t clear that the business leaders who could fund such a PAC are ready to commit such large sums. Nor is it clear who the candidates will be. But a Super PAC means a campaign could be launched as late as a next spring if the worry level rises and an alternative emerges to any existing candidates.









NYC Wins When Everyone Can Vote!

Michael H. Drucker
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The New Rules for Political Donations

Donating to political causes this presidential election season is different.

That's because recent court rulings and Federal Election Commission decisions have transformed federal election law, paving the way for new super political-action committees, or super PACs, and re-energized 501(c) organizations to vie for donor dollars with fewer constraints than candidates and political parties. The emergence of these groups has expanded the menu of ways you can support candidates. The choices you make will affect not only how your money is used, but also what sort of disclosure of your contributions you can expect.

Use the above link to read this article in The Wall Street Journal by Rachel Louse Ensign.









NYC Wins When Everyone Can Vote!

Michael H. Drucker
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How Congress Can Overrule Citizens United

This is from an article by Bruce Ackerman and Ian Ayres, professors of law at Yale, and the authors of Voting with Dollars: A New Paradigm for Campaign Reform.

The president should call upon Congress to pass a statute that forces the Supreme Court to reconsider its extreme position in Citizens United.

Justice Kennedy explicitly says that it "surely" would be a "cause for concern" if "elected officials succumb to improper influences from independent expenditures." He simply found that Congress hadn't established that improper influence was a real problem, and even suggested that he would give "due deference" to such a finding.

The president should call on the House and Senate to take up Kennedy's invitation. Congress no longer needs to speculate on how "independent" Super PACs, controlled by each candidate's loyalists, might degrade our politics. The latest figures already show Super PACs allied with Republican presidential candidates have collected $70 million -- almost half the $155 million the candidates have collected on their own. In the cases of Newt Gingrich and Rick Santorum, the "independent" Super-PAC is the dominant financial player. If Mitt Romney fails to win a clear majority by the time he gets to Tampa, the financial backers of these minority candidates will have real weight in defining the deal that puts Romney over the top. With Obama joining the fray, Super PACs will be playing a very large role in the general election as well.

While this is inevitable, the president should call for a statute that urges the Supreme Court to make this the last election that lurches toward plutocracy. Congress should pass a law that puts the Court on notice of emerging realities. After formally finding the facts, the statute should grant the Attorney General standing to urge the judiciary to issue a declaratory judgment repudiating Citizens United in the light of changed conditions.

Congress has used this strategy before. Section Ten of the Voting Rights Act of 1965 took aim at the Breedlove case, in which the Supreme Court had squarely upheld the poll tax in federal elections. Section Ten responded by finding, after lengthy hearings, that the tax "imposes unreasonable financial hardship" and "precludes persons of limited means from voting." It then directed the Attorney General to urge the Justices to overrule Breedlove in the light of its factual findings. On signing the act, President Johnson followed through, announcing that "tomorrow at 1 p.m., the Attorney General has been directed to file a lawsuit challenging the constitutionality of the poll tax."

The strategy proved remarkably successful. While lower courts generally treat Supreme Court precedent as binding, the Justice Department used the Congressional findings to convince the courts of appeal to ignore Breedlove and declare the poll tax unconstitutional. The Supreme Court then dealt the final blow by declaring all poll-taxes unconstitutional in its landmark decision of Harper v. Board of Elections. The Court announced its decision just as the Section ten cases were reaching its docket. But its great turnaround cannot be understood without recognizing the role of Congress and the president in shifting the terms of the constitutional debate.

Congress should take the same path today. Perhaps the five judge majority in Citizens United will be unimpressed by Congress' statement of real-world facts, and its assessment of the dangers of pervasive corruption that lie ahead.

But perhaps not. It is very likely that Justice Kennedy simply didn't predict the revolutionary implications of his decision. While constitutional revolutionaries like Clarence Thomas or Antonin Scalia might dismiss Congressional findings, Justice Kennedy is of a Burkean disposition -- attentive to the facts, and reluctant to endorse radical change. If given the opportunity, he may well lead the Court to rethink Citizen's United basic premises.

It is in nobody's interest to see the Court's legitimacy damaged as Super PACs increasingly erode Americans' fundamental commitment to democracy. The Court should be given a second-chance to engage in a collaborative effort with the president and Congress to define the meaning of free speech after confronting the hard truths of American politics.









NYC Wins When Everyone Can Vote!

Michael H. Drucker
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