Political operatives, like Karl Rove, are misusing the tax laws to create organizations that allow for anonymous and unlimited donations from corporations and the super-rich in order to determine the outcome of the mid-term elections in violation of election and tax laws. See American Crossroads Watch.
Organizations are being set up under Section 501(c)(4) of the Internal Revenue Code to manipulate the outcome of the mid-term elections. A 501(c)(4) is a lobbying organization, not allowed to spend most of its time on electioneering. These new organizations are spending massively on advertising for and against candidates, developing data bases of voters, creating messages for candidates and planning get out the vote drives. These activities make them "political committees" that should obey election laws, including making the names of donors public.
As the New York Times reports "Crossroads Grassroots Policy Strategies would certainly seem to the casual observer to be a political organization: Karl Rove, a political adviser to President George W. Bush, helped raise money for it; the group is run by a cadre of experienced political hands; it has spent millions of dollars on television commercials attacking Democrats in key Senate races across the country."
The central legal issue is whether groups like Karl Rove's American
Crossroads are "political committees" under federal election laws. Federal law
defines a political committee as any group that receives and spends more than $1,000
"for the purpose of influencing any election for Federal office" See 2 U.S.C.
431(4), (8)(A) and (9)(A). In Buckley v. Valeo the Supreme Court
defined the term "political committee" to encompass organizations that are
either "under the control of a candidate or the major purpose of which is
the nomination or election of a candidate." [Emphasis added.]
American Crossroads and similar organizations were set up to influence the outcome of the mid-term elections and take advantage of Citizens United with unlimited, anonymous donations. They meet the two part test: (1) its "major purpose" is to influence candidate elections and (2) it receives and spends more than $1,000 for the purpose of influencing federal elections.
The New York Times describes the test as "The rule of thumb, in fact, is that more than 50 percent of a 501(c)(4)'s activities cannot be political. But that has not stopped Crossroads and a raft of other nonprofit advocacy groups like it -- mostly on the Republican side, so far -- from becoming some of the biggest players in this year's midterm elections, in part because of the anonymity they afford donors, prompting outcries from campaign finance watchdogs."
The wealthy using front groups for secret donations it not new. It is a strategy perfected by a variety groups that has been is on steroids in the post-Citizens United electoral world. The Chamber of Commerce is one of the leaders in this approach where they have focused a great deal in past years on affecting the outcome of state supreme court races. We've been highlighting this at StopTheChamber.com. In one case, the courts, after five years of litigation, required disclosure of campaign donors for a Chamber front group. In Citizens for a Strong Ohio the Ohio Elections Commission ruled that a Chamber of Commerce front group that attacked an Ohio Supreme Court Justice was required to disclose its donors under Ohio law. Three courts upheld that decision, and all the corporate donors were named. The Chamber is a major player in this year's election activity as well.
The New York Times highlighted the work of another front
group with a nice sounding name, American for Job Security. It reports
"'Americans for Job Security has no purpose other than to cover various money
trails all over the country,' the staff of the Alaska Public Offices Commission
said in a report last year." They spent $6 million in the primary season, and
are about to spend $4 million attacking Democratic candidates. The Times report
the close relationship between them and American Crossroads describing how they
sublet from the Republican "Crossroads Media, whose other clients include the
national Republican Party, the Republican Governors Association and American
Crossroads, a Karl Rove-backed group raising millions to support Republican
In the case of Karl Rove's American Crossroads, voters would very likely benefit from knowing what the sources of millions of dollars in contributions are. American Crossroads sister organization, a 527 political action committee, recently reported its sources of funds. The reports indicate that American Crossroads 527 is funded almost entirely by billionaires. As Salon reports, "In August, American Crossroads raised $2,639,052. Fully $2.4 million of that -- or 91 percent -- came in the form of gifts from just three billionaires." Open Secrets reports that these donors come from the insurance industry, military industrial complex and oil and gas industry.
These anonymous donor groups are swamping the Democrats. Bloomberg News reports, "Republican-leaning groups that
don't disclose their donors are raising and spending millions of dollars on the
congressional elections, helping make up for the party's fundraising deficit.
Five organizations alone reported spending more than $5 million since Aug. 1 on
so-called electioneering communications, compared with less than $200,000 for
Democratic-leaning groups, Federal Election Commission data show."
The Associated Press describes these groups as "The Republicans' shadow party" and because of the anonymous donors describes them as "basking in the shade," with American Crossroads' "two affiliated groups led by a blue-chip cast of Washington Republican strategists have raised a combined $32 million so far this year, using new freedom from fundraising restrictions to create a parallel and unofficial Republican campaign to defeat Democrats in November." It is obvious to anyone who looks at these groups that their primary purpose is electing candidates.
Efforts to solve these problems with legislation fell one vote short this week in the Senate,
with two Republicans not voting. The campaign finance bill would have required
nearly all organizations airing political ads to disclose their top donors and
the amounts they paid. It would have also banned a variety of political
activity by entities holding a government contract worth more than $10 million
and corporations where foreigners own more than a majority of voting shares.
Thus far, neither the Department of Justice, Federal Elections Commission nor the Internal Revenue Service has been willing to take action to hold these organizations accountable. So we, as concerned citizens, have taken the following steps: