Their names roll off the tongue with a patriotic cadence: Freedom’s Watch, Democracy Alliance, Citizens United, Progress for America, Foundation for a Secure and Prosperous America. These are the new giants of American politics, the well-funded groups organized behind a veil of secrecy to influence the voters’ choice for president of the United States in 2008.
Financed by many of the nation’s wealthiest investors and business leaders, as well as millions of small donors, these organizations are responsible for a flood of political attack advertising. Their work threatens to drown out the traditional voices of the Republican and Democratic parties and undercut the presidential candidates’ efforts to control their own messages.
These include flag-waving conservative organizations responsible for television ads such as one in which a U.S. marine recently returned from Iraq assails unnamed members of “Congress [who] talk about surrendering.” They include the cheeky liberals who wanted to change the name of General Petraeus to General Betray Us. They include the single-minded activists who obsessed on the alleged misdeeds of Senator Hillary Clinton. Yet while they were quick to delve into any real or imagined political scandal that might change the course of the campaign in their favored direction, there was one thing that most of these groups refused to make public: the names of their funders.
Behind the patriotic gloss and high-quality production values of their advertising, these organizations were operating as renegades along the untested margins of the law that purports to control spending in presidential elections. With their identities hidden under stunningly misleading names and legal technicalities, many offered questionable facts and unproven charges intended to confuse voters or appeal to their worst prejudices.
The result, veteran Democratic pollster Peter Hart told the Center for Public Integrity, was “democracy run amok.”
The irony is that all this negative advertising was unleashed by the Bipartisan Campaign Finance Reform Act of 2002, which was intended to limit political contributions and improve the electoral process. The goal was to control “soft money,” which in the patois of political insiders means money given with political intent but not specifically in support of a candidate; this contrasts with “hard money,” the tightly controlled and limited direct contributions to candidates’ campaigns and to parties.
Senators Russ Feingold and John McCain, lead backers of the Bipartisan Campaign Reform Act of 2002 (Office of Senator Russ Feingold)
The 2002 law prohibited parties from taking soft money, but political money is insistent in finding a productive channel. Very quickly it was flowing into the coffers of independent groups that have become such a force that they are changing the political landscape. In the 2004 presidential campaign, they found their voice, and major groups in support of both parties found themselves defending charges of corrupt collusion – and paying fines to the Federal Election Commission.
Critics of the reform were obviously wrong when they predicted that it would stifle free speech. But Senate Minority Leader Mitch McConnell of Kentucky, the leading GOP opponent of the legislation, did foresee one of the law’s biggest drawbacks. “McCain-Feingold does not take the money out of politics,” he said. “It takes the parties out of politics.” Even though the Democratic and Republican parties were raising record amounts of hard money, they found that the upstarts were even better funded and the parties’ voices struggled to compete with the independent groups’ aggressive advertising.
In the 2004 election, it was a pro-Republican group, the Swift Boat Veterans for Truth, that had the biggest impact by producing an ad that smeared the military record of Democratic nominee John Kerry, a Vietnam veteran. By 2008, the technique of “swift-boating,” as it came to be called, had become so widespread that it was considered an integral part of the presidential selection process. These groups were technically independent of the candidates and parties, but there was seldom — if ever — any mystery about the politicians who would benefit from their negative advertising.
Hart said the proliferation of independent advertising groups with hidden motivations made it difficult for voters to assess the information they received from broadcast advertising. “In the end,” he said in an interview, “all it means is voters are getting bombarded with a message they don’t know where it’s coming from, and there’s no accountability.” He said the real beneficiaries of this “boondoggle” were the media consulting firms that made millions of dollars creating and placing the ads on broadcast outlets, as well as the broadcasters themselves. According to the Center for Responsive Politics, independent groups reported spending more than $200 million on the 2006 elections and more than $440 million on the last presidential election, in 2004. And those numbers only include one type of independent organizations: 527 committees.
Some of these groups publicly identify only a few, if any, of their big funders. The most generous donors include billionaire investor George Soros, a contributor to liberal Democratic organizations; Bob Perry, a conservative Republican who has made millions building housing developments in Texas; and Las Vegas casino owner Sheldon Adelson, also a contributor to Jewish and Israeli causes, who is focused on the threat posed by Iran. In the past, wealthy donors such as these were the source of soft money contributions that went directly to organizations controlled by the Democratic and Republican parties.
Joe Sandler, a lawyer whose clients include the Democratic National Committee as well as some independent groups, said he worries that these groups will eventually sap the vitality from the party organization. “Long term, it’s not in the institutional interest of the party to have [independent groups] be big players in the presidential campaign,” Sandler said. “It diverts some resources and control from the party.”
But suspicions abound that behind all the secrecy the independent groups may not be so independent. During the 2004 presidential election, a Washington Post reporter witnessed what seemed to be evidence of collusion between a nonprofit independent group, Americans for Tax Reform, and the Bush-Cheney campaign. As reported in the newspaper, she saw ATR’s founder, Grover Norquist, give Bush campaign manager Ken Mehlman a confidential list of conservative activists in 37 states. When a watchdog group filed charges against ATR based on the Post story, the Federal Election Commission found “reason to believe” that the transfer constituted an illegal contribution from a corporation (ATR) but declined to take further action. ATR and the Bush-Cheney campaign maintained that the list had no monetary value because the information in it was publicly available, a premise the FEC did not accept.
The moral of this story: It is almost impossible to prove cooperation between candidates and independent groups, even though everyone assumes that it happens on a daily basis. And even violations that could be proven would likely not be punished.
Also in the 2004 campaign, a number of consultants worked both for a presidential campaign as well as an allied independent group. Washington attorney Ben Ginsburg was forced to resign when it was learned that he was serving as counsel to both the Bush campaign and the Swift Boat Veterans organization. Ginsberg also was counsel for Progress for America during 2004. Tony Feather, a former political director of Bush-Cheney 2000 and a good friend of White House adviser Karl Rove, was the founder of PFA. Originally, the group’s purpose was to support Bush’s agenda. When the group began running independent issue ads supporting Bush’s reelection, Feather left PFA. But his firm, Feather Larson Synhorst-DCI, went on to do campaign work for Bush-Cheney 2004 and the Republican National Committee. When then-Federal Election Commissioner Bradley Smith was asked on MSNBC whether Ginsberg had violated the law, he replied: “Clearly, a lawyer can advise two clients. What he can’t do is transfer inside information from one to another.”
Houston homebuilder Bob Perry, posing at the sales center at one of his Houston developments. (AP Photo/Houston Chronicle/Melissa Phillip, File)
Democratic lawyer Sandler explained that it was common for lawyers and consultants to work for campaigns as well as independent groups in the same election cycle. “It’s possible to establish a firewall where there really is not a transmission of inside information,” he said. “But it’s harder to do with a media firm” than with pollsters and some other consultants. And GOP media strategist Mike Murphy, a former McCain adviser, told the Center for Public Integrity that there is “very little direct coordination” between campaign offices and independent groups but that consultants for the two organizations can sometimes communicate with a “wink, blink, and nod.”
Dealing with the federal tax code is another shadowy area. Both Freedom Watch and MoveOn.org, the leading left-leaning independent group, are actually a collection of closely related organizations, each one organized to satisfy the unique requirements of a different exemption category under the U.S. tax code. MoveOn.org had a political action committee, or PAC, which must disclose the names of its contributors and thus is free to directly endorse candidates. PACs are tax-exempt, but its donors’ contributions are not tax-deductible. MoveOn.org also included a 501(c)(4) tax-exempt organization that can collect unlimited contributions without disclosing the names of the donors. Freedom’s Watch operated as a 501(c)(4) organization for purposes of advertising, with a 501(c)(3) as its “educational arm” — neither of which are required to disclose the source of their money. A 501(c)(4) is the designation of most social welfare organizations, which are tax-exempt but do not allow donors to take a tax break on their contributions. “As a 501(c)(4) I can’t suggest to our constituents who they should vote for,” said Bradley Blakeman, until recently president of Freedom’s Watch, “but I can define the issues that we believe to be important. And that’s what we seek to do.”
Efforts by the Federal Election Commission to force independent groups to reveal the names of their donors have been easily circumvented. In the 2000 election cycle, more and more organizations were created under section 527 of the tax code, and they were then exempt from disclosure. When Congress in 2001 required 527 groups to file public reports naming donors, however, organizers of new groups began seeking refuge in sections 501(c)(3) and 501(c)(4) so their donors could remain anonymous. Fearing the FEC might eventually catch up to the 501(c)(3) and 501(c)(4) groups, too, some newer organizations even began creating for-profit companies that would assist them in the buildup to 2008. For-profit status guaranteed them increased secrecy because they could not claim a tax exemption.
Blakeman said he decided to organize Freedom’s Watch as a group that would stay in business for many years, and that meant it would not be a 527. “A 527 is really an organization that is short lived,” he explained. “[If] we form a 527, it’s extremely well-funded, and then Election Day is over and it disbands. We have lost all of that brain trust, that organization, the fundraising. It all disappears. And what I said was: ‘Why are we losing all of that talent? We should have a never-ending campaign that is engaged 365 days a year, so that we can influence issues over time.’”
Your support is crucial!
Our newsroom needs to raise $121,000 by end of the year so we can hold the power accountable and strengthen our democracy in 2024. Public Integrity doesn’t have paywalls and doesn’t accept advertising. We depend on individuals like you to sustain quality journalism.