The discussion about dark money in politics and the need for campaign finance reform often focuses on Super PACs and the Citizens United vs. FEC decision. But as the New York Times notes, much more dark money is getting to politicians via Section 501(c)(4) tax exempt “social welfare” groups which do not have to disclose donors. During the 2010 mid-term election cycle these tax exempt groups outspent super PACs by a 3-2 ratio, according to the Center for Responsive Politics.
Some of the biggest recipients of corporate money are organized under Section 501(c)(4) of the tax code, the federal designation for “social welfare” groups dedicated to advancing broad community interests. Because they are not technically political organizations, they do not have to register with or disclose their donors to the Federal Election Commission, potentially shielding corporate contributors from shareholders or others unhappy with their political positions.
“Companies want to be able to quietly push for their political agendas without being held accountable for it by their customers,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, which has filed complaints against issue groups. “I think the 501(c)(4)’s are likely to outweigh super PAC spending, because so many donors want to remain anonymous.”
Perhaps what is most alarming is that these tax exempt groups can begin fundraising before the IRS even finalizes their tax exempt status. Such is the case with Crossroads GPS, figureheaded by Karl Rove, which has yet to have its tax exemption finalized despite having already participated in swaying the 2010 election.
The 2012 campaign is under the influence of dark money with high levels of corporate cash flowing into the increasingly permeable political process. Representative Chris Van Hollen (D-MD) spoke out about the problem.
“These groups are being used as a conduit to hide from voters the identity of people and corporations who are bankrolling these television ads, which are designed to influence the outcome of elections.
While labor unions and other progressive organizations also participate in the now-legal Super PAC horse race, Right-leaning outfits appear to have the edge in terms of tax exempt social welfare (…warfare). This is resulting in once untouchable groups, such as the U.S. Chamber of Commerce (CoC), being more closely examined than ever.
The CoC helped to finance $33 million in political ads during the 2010 election and is estimated to spend $50 million in 2012. One of the CoC’s goals is in protecting the right to secretly participate in the political process. They aim to defeat the Disclose 2.0 Act, a revamp of the defeated 2010 bill that would force groups to disclose donors. Proposed by Rep. Van Hollen, the bill was lobbied against by 113 organizations including the Chamber of Commerce and their anti-union pals, the Associated Builders and Contractors.
In 2010, the Chamber was one of 113 organizations to lobby the bill and by far the largest. In 2010, it spent $100.2 million on lobbying. The 2012 bill hasn’t attracted nearly as much attention, due no doubt to its almost certain failure thanks to Republican opposition. The Chamber is again leading the fight. It sent a letter, signed by 124 organizations, to the Senate in May voicing its opposition.
Among the signers were the Associated Builders and Contractors and several of its local chapters, Edison Electric Institute and the Wichita Independent Business Association, whose board of directors includes Koch Industries’ vice president of government and public affairs, Mark Nichols.
The only silver lining in the extremity of the dark money influence we are under is the possibility that campaign finance reform will finally become a real topic of discussion in the United States. Possibility being the operative word…