Big Money and the 2012 Race for the White House
THE sun beat down on the crowd outside the Federal Election Commission headquarters, but the scores of assembled people seemed unfazed. Instead, they stared transfixed at the man they had been waiting for hours to see.
“Some people have cynically asked, ‘Is this some kind of joke?’” comedian Steven Colbert told the crowd. “Well I for one don’t think that participating in a democracy is a joke. I don’t think that wanting to know what the rules are is a joke.”
“But I do have one federal election law joke if you’d like to hear it,” he added. “Knock, knock?”
“Who’s there?” the crowd dutifully replied.
“Unlimited union and corporate campaign contributions,” Colbert said.
“Unlimited union and corporate campaign contributions who?” called back the crowd.
“That’s the thing,” Colbert answered slyly, “I don’t think I should have to tell you.”
Whether or not Colbert’s FEC meeting was in fact a joke, it addressed one of the most consequential political issues in recent memory: the impact of so-called “Super PACs” (one of which Colbert successfully formed this summer). Super PACs, entities that may solicit unlimited sums from often-anonymous individuals and other groups, have changed the campaign landscape entirely and have done so largely without the knowledge of most Americans. According to the New York Times, however, Super PACs are “by far the most noxious weed yet to emerge in the lawless new jungle of campaign finance.”
“For the first time,” the Times continued in an editorial, “[a] campaign will be dominated by political action committees that exist solely to promote specific candidates. While a candidate’s campaign is limited to $2,500 per election from each donor, the PACs can collect unlimited amounts… and they plan to.”
So what exactly is a Super PAC?
Citizens United vs. Federal Election Commission, the landmark 2010 Supreme Court decision, drastically altered political campaigning. Thanks to the ruling, which upended campaign finance precedent dating back to the 1970s, corporations and unions can now spend unlimited amounts from their treasuries. And if they contribute through a 501(c)(4) organization — more on that in a moment — such contributions can be made anonymously.
Nationwide, there are nearly 5,000 PACs (political action committees), which are private groups organized to advance or inhibit legislation, a political issue or political candidate. PACs may not, however, coordinate with a candidate or political party. The two types of PACs in this country are connected PACs — organizations founded by businesses or unions that can only collect funds from shareholders and members — and non-connected PACs — groups with an ideological or political mission that can accept funds from any person or organization.
The Citizens United ruling, however, allowed for a third type of political action committee — the “Super PAC.” Super PACs are allowed to directly attack political candidates, a luxury not afforded to regular political action committees. Also unlike other PACs, which are bound by contribution limits, Super PACs may raise unlimited amounts of money from individuals and other organizations. Not even a year after the Citizens United decision, right-leaning Super PACs had raised $35 million and left-leaning Super PACs had raised $28 million for the 2010 midterm elections.
Yet Super PACs still must disclose their donors, a fact that dissuaded many potential contributors, who feared public harassment and solicitations for more funds. One of the first post-Citizens United Super PACs, American Crossroads, an organization started by GOP strategist Karl Rove, initially lauded Super PACs’ transparency. The group’s fundraising, however, sputtered as donors hesitated to give large sums of money sans anonymity. Indeed, within a month, a sister group called Crossroads Grassroots Policy Strategies (Crossroads GPS, for short) was created and registered under a different section of the tax code — 501(c)(4) — that does not require donor disclosure.
501(c)(4) groups, which by definition exist for the promotion of social wefare, are not bound by the same transparency requirements that plague other fundraising apparati. To qualify for such a designation, however, more than half of the money such a group raises must go toward activities that do not regard specific candidates (such as issue advocacy). But 501(c)(4)s are tax-exempt and have proven to be a shockingly effective tools for raising large sums of money.
Following the advent of Crossroads GPS, Rove’s organization proceeded to raise some $70 million for the 2010 election. But American Crossroads and Crossroads GPS are apparently far from done.
“It’s a bigger prize in 2012, and that’s changing the White House,” Robert Duncan, the chairman of American Crossroads said to the New York Times. “We’ve planted the flag for permanence, and we believe that we will play a major role for 2012.”
Who’s winning the Super PAC cash?
According to a 2010 analysis by the Washington Post, “Groups favoring GOP candidates have outspent Democratic supporters by more than 3 to 1, mirroring an overall surge in spending by the Republican Party and its allies.” Indeed, in 2010, Democrats campaigned against Super PACs and the influx of shadowy campaign cash. President Obama famously declared that anonymously funded conservative PACs are “a threat to our democracy.” In the wake of the Democrats’ midterm “shellacking,” however, left-leaning groups have largely rethought their position on outside campaign funds.
Democrats “don’t have a choice, because the other side is doing it — would you send David to fight Goliath without a slingshot?” asked Erica Payne, who helped begin the Democracy Alliance, a partnership of major liberal donors.
Disclosures this year reveal that GOP-oriented Super PACs are once again outpacing their Democratic-leaning rivals. A study released midway through 2011 by the Center for Responsive Politics found that conservative Super PACs received $17.6 million in the first half of the year — roughly 80 percent of the money came from 35 donors — while liberal Super PACs had received $7.6 million in the same time — about 80 percent of the money came from just 23 donors. Republican positions on taxation and regulation, it seems, has allowed right-leaning Super PACs to appeal to wealthy donors more easily. An oil magnate, after all, is more likely to give to a candidate who has vowed to fight to preserve the tax breaks the industry enjoys.
Super PACs that campaign on behalf of Republicans raise money from a diverse groups of individuals and organizations, including many Wall Street firms, oil and gas companies and a number of wealthy individuals, including Texas real estate magnate Bob Perry and the often-villified Koch brothers. Democratic Super PACs, however, have thus far been heavily dependent on labor unions. Under the leadership of Democratic power players such as former White House Counsel Bill Burton — who works for Priorities USA, a left-leaning Super PAC — several wealthy donors have begun to contribute large sums of money. Among these people are Jeffrey Katzenberg, the CEO of DreamWorks Animation, Steve Bing, a businessman and film producer, and Leo Hindery, an investor.
Indeed, both sides are sure to be more and more dependent on outside campaign outfits — such as Super PACs — in 2012 and in years to come.
Impact on the 2012 race
If the 2012 election were only funded by traditional fundraising apparati, such as Party campaign organizations and the candidates themselves, the Democrats would be winning the cash race by a landslide. But this is certainly not the case. Even as President Obama and the established campaign outfits — like the Democratic National Committee, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee — continue to outpace their Republican counterparts, liberal activists and Democratic Party officials worry that the outside cash on the other side of the aisle may be their undoing.
According to ABC, seven of the eight leading GOP Presidential contenders have at least one Super PAC providing considerable financial support. The Mitt Romney-allied Restore Our Future Super PAC, for example, brought in more than $12 million in the first half of 2011 from just 90 donors. According to Politico, “Not a single check was under four figures and most were in the five and six-figure range.” Rove’s American Crossroads, on the other hand, recently doubled its 2012 fundraising goal from $120 million to $240 million.
“As has been the case with independent groups in past elections, Super PACs will likely target presidential swing states and close federal and state elections, ignoring other states and elections,” said election law expert Lloyd Mayer of Notre Dame law school in an interview. “In the targeted states and elections, they will tend to run more negative ads than either the candidates or the political parties, since doing so will generally not hurt the image of the candidate they support (as it might if the candidate ran the ad him or herself).”
Super PACs, however, are not simply providing candidates with financial muscle. Non-traditional candidates such as former pizza mogul Herman Cain may lack serious campaign experience and know-how, but Super PACs can now fill these gaps. The Americans for Herman Cain Super PAC has been working overtime the last few months making phone calls, recruiting supporters and organizing campaign operations in the early primary states. “We’re operating with people with a lot of experience,” said Americans for Herman Cain Super PAC treasurer Scott Mackenzie to the Washington Times. “I don’t know what kind of experience some of his campaign staff has had.”
Nonetheless, thanks in large part to Super PACs, 2012 will undoubtedly be the most expensive election in history. The 2008 Presidential race broke records with its $1 billion price tag, but the Washington-based Center for Responsive Politics estimates that all 2012 campaigns could cost close to six billion dollars.
“I would estimate the total spending [of Super PACs] in the 2012 election will be in the hundreds of millions of dollars,” added Mayer. “This total is dwarfed by the total amount spent by candidates and political parties — each major party Presidential candidate alone will spend in the hundreds of millions of dollars — but because the Super PAC spending will be more concentrated on swing states and [closer] races than candidate and political party spending, it will have a disproportionate impact.”
To infinity and beyond
Super PACs, it appears, have no intention of slowing up. And despite the unprecedented fundraising power of Super PACs and 501(c)(4) organizations, some political operatives are eager for more. Earlier this year, James Bopp, who argued Citizens United before the Supreme Court, asked the FEC to allow political candidates to coordinate with PACs. Campaign finance regulations, Bopp argued, “only [apply] to spending, not to the fundraising.” Bopp’s plan for an even more powerful Super PAC — a “Super Duper PAC” according to Mother Jones — was defeated by the FEC in late June. Bopp and his allies, however, do not plan on dropping the matter.
“Campaign finance laws inhibit free speech,” said Sean Parnell, President of the Center for Competitive Politics, which opposes nearly all campaign finance laws. “The First Amendment is not a guarantee that all voices will be heard as often or as effectively as all other voices. It’s just a guarantee that the government won’t step in and say, ‘OK, you’ve spoken enough.’” Indeed, with the friendliest Supreme Court toward lax campaign finance laws in generations, it is not out of the realm of possibility that Bopp may get his Super Duper PAC in the end.
According to Mayer, it is likely that campaign finance laws will become even looser in the future. “First, the current political stalemate in Washington makes it highly unlikely that any of the current efforts to tighten the rules through, for example, increased disclosure or prohibiting election-related spending by federal contractors, will become law. Second, emboldened by the Citizens United decision, there are numerous pending court challenges to the remaining laws. It is possible, probably likely, that at least some of those challenges will succeed.”
Nonetheless, as some Democratic and Republican operatives stress, Super PACs can’t do everything. “I don’t think these Super PACs will recruit. I don’t think that the Super PACs will decide the kind of inside information that is necessary of how to talk to a candidate and prepare them for what’s ahead,” National Republican Congressional Committee Chairman Pete Sessions said on C-Span. “In a marketplace that changes so rapidly, it will be up to the [traditional party campaign] committees and me to make sure we have top flight candidates, blue-chip candidates all across the country who are able to thoughtfully articulate what they’re after.”
That fact doesn’t seem to be dissuadung Super PACs, however, which continue to raise tremendous globs of money from wealthy individuals, unions and corporations. Indeed, donations are pouring in at record pace, from American Crossroads to Priorities USA and even to Colbert’s Making a Better Tomorrow, Tomorrow Super PAC.
The comedian’s political action committee has received donations from more than 165,000 people in the last six months. The money it raises will not simply be used to address political issues, Colbter noted, but also “normal administrative expenses, including but not limited to, luxury hotel stays, private jet travel, and PAC mementos from Saks Fifth Avenue and Neiman Marcus.”
All of this, of course, is perfectly legal.
Eric Stern is a freshman in Pierson College.