Terry McAuliffe's successful political campaign for governor in Virginia was richly funded by billionaire Tom Steyer. (AP Photo/Bristol Herald Courier, Earl Neikirk)
Telecom Giants Paid Millions to ‘Honor’ Minority Lawmakers Before the Merger → When the Senate Judiciary Committee meets on March 26, it will hear representatives from Time Warner Cable and Comcast answer questions about their planned $45.2 billion merger. While legislators are all promising a careful antitrust review, Huffington Post’s Paul Blumenthal reveals how an army of lobbyists have been working for years to grease the skids for mega-merger success. The two telecom giants have contributed millions of dollars to “honor” members of Congress and congressional caucuses by contributing to their causes. Blumenthal writes: “The biggest recipients of this money have been nonprofits linked to minority lawmakers, traditionally some of the most progressive members of Congress.”
The Pro-Money Court: How the Roberts Supreme Court Dismantled Campaign Finance Law → The Supreme Court decision in McCutcheon v. FEC is expected any day now and the Brennan Center Center for Justice has published a detailed backgrounder explaining how this decision will fit into a string of campaign finance decisions that allow moneyed interests to eclipse those of average American voters. In McCutcheon v. FEC, aggregate contribution limits — the total amount that one contributor can give in a federal election to all candidates, political parties and PACs, combined – are at risk. David Earley and Avram Billig write, “McCutcheon threatens to exponentially worsen the political spending arms race — and to create risks of government corruption unlike anything the country has seen since the Gilded Age.”
The Brown Grad Student Who Chased the NRA Out of Rhode Island → Sam Bell is a graduate student in geology at Brown University. He’s also the state coordinator of the Rhode Island Progressive Democrats. No, he didn’t chase the National Rifle Association out by throwing rocks, but he did do some digging. He and his group unearthed serious campaign finance violations by the NRA’s state and national PACs. In an interview with Talking Points Memo, Bell explains that suspicions arose after a popular assault weapons ban failed to pass in Rhode Island’s Democratically controlled House and Senate. He learned that the NRA was taking money from its federal PAC, laundering it through its state PAC and giving thousands of dollars to Rhode Island’s top four lawmakers, which is illegal under state law. The complaint from Bell’s group resulted in the NRA paying a large fine and shutting down its Rhode Island PAC.
What Makes a Good US Ambassador? American Foreign Service Association offers advice as Obama faces criticism → The American Foreign Service Association, a group of former ambassadors, just released a new report detailing the essential qualifications to be a successful diplomat. And not a moment too soon. Earlier this month the press slammed President Obama for offering ambassadorships as political plums. Sitting before the Senate Foreign Relations Committee, some of the nominees had to admit they had never even visited the countries to which they’d been appointed. According to an analysis by the Center for Public Integrity, 48 of the 85 ambassadors Obama nominated in the last year have been political appointees, rather than career diplomats. According to CPI’s Michael Beckel, that’s 56 percent compared to some 30 percent under Presidents George W. Bush and Bill Clinton.
The Steyer Brothers: “We’re Fearless” →Politico’s Stephanie Simon and Caitlin Emma profile Tom and Jim Steyer, two wealthy brothers aiming to be major political players and inviting comparisons to the Koch brothers. Billionaire Tom Steyer already made headlines when he poured money into the Virginia governor’s race to help Democrat Terry McAuliffe eke out a victory. He’s now promising to spend at least $100 million this fall backing candidates who will combat global warming. Now his older brother Jim – a children’s advocate focused on education, technology, poverty and privacy – is promising to raise millions of dollars to stock his war chest in order to enter the political fray. As he told Politico, “you don’t bring a squirt gun to a fight where the other guys have AK-47s.”
This post first appeared on the Institute for Policy Studies blog.
If you love Harry Potter, zombies, European art house films or thumbing your nose at the big banks, you’ll love the new video promoting a Wall Street tax.
This is the first time, in my recollection, that major celebrities have ever showed a united front against the mighty financial industry lobby. The director is David Yates, who made the last four Harry Potter movies. Andrew Lincoln, the star of the hit zombie series The Walking Dead, and Bill Nighy, of The Best Exotic Marigold Hotel and Love, Actually, are among the actors.
Wall Street lobbyists will hate the film because it portrays a newscast 10 years from now in which a panel of bankers rave about the multitudinous benefits their countries have enjoyed as a result of a small tax on trades of stock and derivatives. The only panelist who’s decidedly not over the moon is Nighy, who plays a banker from the UK, which did not adopt the tax.
The viral video is one more setback for the financial industry lobbyists who have been madly trying to block progress on such taxes. In Europe, they seem to be losing the battle.
At a February 19 press conference in Paris, German Chancellor Angela Merkel and French President Hollande confirmed that a coalition of 11 EU governments are on track to finalize a coordinated financial transaction tax before May. European elections are that month, and this is considered a sure vote-getter. The latest Euro-barometer survey shows 82 percent of German and 72 percent of French citizens support it.
There have been hints, however, that the tax could be a watered-down version of the initial European Commission proposal. That original plan would place a tax of 0.1 percent on stock and bond trades and 0.01 percent on derivatives. Expected revenues: 31 billion euros ($US 42 billion) per year.
In a recent speech, EU Tax Commissioner Algirdas Šemeta indicated that negotiators are considering a graduated approach as a compromise. In the first phase, the tax would apply only to stock trades. In subsequent phases, it would be expanded to cover other instruments, including derivatives and possibly foreign exchange spot transactions.
German activist Peter Wahl feels this would be a bit of a setback but not the end of the world. “We could live with a two-step approach as a compromise under the condition that there is a binding timetable for the second step and that derivatives are included in the end,” he said.
Wahl, an analyst with the German group WEED, is one of the leaders of a diverse international campaign made up of labor, global health, climate and other groups that has driven the financial transaction tax (aka Robin Hood Tax) from the fringe to the center of global debates.
At her joint press conference with Hollande, Merkel predicted that “the minute things start to move forward other countries may be less reluctant and it could be expanded.”
European progress is likely to change the dynamic in the United States as well. The Obama administration is not yet supportive, but there is growing support in the US Congress.
Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) have proposed a 0.03 percent tax on stock, bond and derivative trades, with a tax credit offset for contributions to qualified tax-favored accounts, such as 401(k) retirement funds. Rep. Keith Ellison (D-MN) has introduced the Inclusive Prosperity Act, which proposes tax rates of 0.5 percent on stock, 0.1 percent on bond and 0.005 percent on derivative trades, with an offset for taxpayers who make less than $50,000 per year.
The Joint Committee on Taxation estimates the Harkin-DeFazio proposal could raise $350 billion over 10 years.
There is also growing support among financial industry professionals who believe the small tax would be good for market stability. In a joint letter, more than 50 financial professionals wrote that “these taxes will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets.”
RoseAnn DeMoro on the Robin Hood Tax
At a time when financial markets are dominated by computer-driven high frequency trading that has little benefit for the real economy, a tax of even a fraction of a percent could encourage longer-term sustainable investment.
At the end of the satirical video, the humiliated British banker lamely resorts to boasting about other occasions in which the Brits were not behind the curve, namely the Beatles and soccer. I suppose American bankers could come up with a few examples of their own. A better response to the growing momentum behind the financial transaction tax would be to just get on board.
For a brief, giddy moment, Sean Noble — a little-known former aide to an Arizona congressman — became one of the most important people in American politics.
Plucked from obscurity by libertarian billionaire brothers Charles and David Koch, Noble was tasked with distributing a torrent of political money raised by the Koch network, a complex web of nonprofits nicknamed the Kochtopus, into conservative causes in the 2010 and 2012 elections.
Noble handed out almost $137 million in 2012 alone — all of it so-called dark money from unnamed donors — from his perch atop the Center to Protect Patient Rights, a group run out of an Arizona post office box.
Much of it was channeled to obvious destinations: Groups supporting Republican presidential candidate Mitt Romney, for example.
But with Noble as ringmaster, Koch money also poured into efforts that didn’t surface until long after Election Day: To a political committee backing Wisconsin Gov. Scott Walker against a recall attempt; to a group blaming President Obama for high gas prices; even to a legal challenge to Arizona’s redistricting plan.
“I must tell you that Sean Noble from your group has been immensely helpful in our efforts,” a California multimillionaire wrote to Charles Koch in October 2012, asking Koch to give several million to support an anti-union initiative in the state. “Thanks for any consideration.”
Noble appears to have lost his central position in the Koch empire, undone by poor election results and a California investigation that shined an unwelcome light on some of the Center’s inner workings, insiders say.
But his story shows how the Supreme Court’s landmark 2010 Citizens United ruling has given rise to a new breed of power brokers who control a growing pool of money raised in secret and spent to influence politics in ways that voters can’t always trace.
Much of Noble’s work in 2012 remained invisible to the public until the Center and dozens of other Koch-backed nonprofits released their tax returns late last year.
An examination of those tax returns, along with court records and filings with the Federal Election Commission, shows that the Center to Protect Patient Rights bent state election laws and federal tax rules governing how such groups are supposed to operate.
Millions of dollars the Center told the Internal Revenue Service it gave to other groups only for “tax exempt education and social welfare purposes” were actually spent on election ads and other political activities. Experts on nonprofit law said it’s the donor’s responsibility to follow up on grants if they were not spent as required.
One of the biggest beneficiaries of the Koch network’s money was Sean Noble himself, tax documents show. The Center paid three firms owned by Noble almost $24 million for consulting and other services in 2012 — or more than $1 of every $6 it spent.
Sheila Krumholz, the executive director of the Center for Responsive Politics, a nonpartisan watchdog group that has written extensively about the Kochnetwork, said disclosures from nonprofits come far too late to help voters and regulators.
“What we’re ending up with is information which is almost entirely useless to the voters,” she said. “Because it’s come so far after the election, so far after the fact that voters can barely remember what these organizations were doing and on behalf of which candidates or parties.”
There’s no indication that Noble or the Center are under scrutiny by authorities for violating tax or election laws.
For this story, ProPublica interviewed dozens of people about Noble, from his high school science teacher to fellow Republican operatives, most of whom spoke on condition of anonymity, fearing possible backlash from fellow conservatives or the Kochs.
Noble did not respond to questions from ProPublica.
In an email, Rob Tappan, spokesman for Koch Industries, did not respond to specific questions from ProPublica about Noble or the Center, but acknowledged Noble “was a consultant for Koch in the past and attended Koch seminars.” Tappan likened Noble to Jim Messina, who was Obama’s campaign manager, and Paul Begala, a chief strategist for Bill Clinton in his first presidential run. Tappan said Noble was a consultant for “many other groups and issues.” (Read his entire response here.)
Most who know Noble, 43, saw him as an unlikely candidate to become the Kochs’ money man.
“There were plenty of people who had a lot more actual campaign experience,” said a Democratic operative who knew Noble in Arizona. “That’s a pretty big step up from Triple A to the majors, maybe Double A to the majors.”
An affable, handsome man with graying temples who favors jeans and eschews ties, Noble had an aw-shucks demeanor. He liked watching Little League baseball games with his family, leading his local Mormon ward and working tirelessly behind the scenes on campaigns for minor politicians.
Even if Noble’s role in the Koch network is over, his story illuminates larger truths about how money changes both politics and the people who handle it.
“I think Sean at the end of the day is an anecdotal story of something that’s happening much bigger in the American electorate,” said a Republican consultant who knows Noble. “Mr. Noble goes to Washington.”
The Kochs are known for valuing discretion and control.
Noble’s main credential was working for Rep. John Shadegg (R-AZ) for more than 13 years, eventually becoming his in-state chief of staff. Though hardly a household name, Shadegg was influential in the conservative wing of the Republican Party.
“It’s important to understand the influence that John Shadegg had within Republican and conservative circles at the time,” a Democratic operative in Arizona told ProPublica. “That was his in.”
At some point, Noble met Randy Kendrick, a lawyer by training who was on the board of the Goldwater Institute, a bastion of libertarian thought in the West. Kendrick and her husband, an owner of the Arizona Diamondbacks, were big Shadegg donors. (The Huffington Postwrote about Kendrick and Noble in 2013.)
In spring 2009, when it became clear that Obama was pursuing a national health care law, Kendrick turned to Noble for help defeating it. Noble had recently left Shadegg’s office to launch a consulting firm, Noble Associates, out of his Phoenix home.
“Sean got hooked up with Randy,” a prominent Arizona Republican said in an interview. “He became her local guy to manage everything. He became her political consultant.”
Kendrick was also close to the Koch brothers. “Randy Kendrick is in the inner circle of the Koch brothers’ network,” a Republican consultant told ProPublica, adding that she pushed the Kochs to back a new group targeting Obama’s health care plan. As for Noble, “I think they liked the fact that he hadn’t been a political consultant before.”
Noble was no slick Washington insider. A self-described “hick from Show Low,” Ariz., a town of about 11,000, Noble married a woman he had met on his Mormon mission in Indiana and became a devoted father of five. He had tried living in the nation’s capital once, moving his family there for two years in the 1990s, only to move back to work in Shadegg’s Phoenix district again. He was the type of guy who said “good grief”and meant it.
Noble also had the right ideological background: He quoted Barry Goldwater, Ronald Reagan and libertarian icon Ayn Rand. His first political memory was from 1976, when Jimmy Carter was elected president and his mother started to cry, saying, “We’re going to be beaten by the Soviets now.”
For years, Charles and David Koch, two of the richest men in America, had helped form and support a network of conservative think tanks, foundations and social welfare nonprofits that pursued a libertarian agenda. They seeded the ground for the Tea Party, and then cultivated the various groups that sprouted. In the 1980s, the Koch brothers helped form the group that split into two of the most influential conservative nonprofits now operating, Americans for Prosperity and FreedomWorks.
The Kochs raised money for their network in part at secretive semi-annual retreats. The media wasn’t invited and attendees weren’t supposed to talk about them, a kind of “Fight Club” for like-minded billionaires.
One donor who has attended the retreats told ProPublica in an email that he had only a sketchy idea of how money raised at the events was disbursed. He responded to questions on condition of anonymity, saying he feared backlash from the Obama administration and the IRS and adding that the Kochs resented any information from the events being disclosed.
“The people who attend these events have ultimate respect for the Founding Fathers and the Constitution,” he wrote. “The over-riding theme is that nothing worthwhile is achieved without hard work, coupled with integrity and humility. … And the Kochs are not in this for any personal gain whatsoever as all they seem to get is vilification.”
By spring 2009, Noble had landed a job within the Koch network. On April 16, the Center to Protect Patient Rights was incorporated by a lawyer in Maryland who went on to work with other groups tied to the Kochs. Noble was its executive director, documents show. According to the group’s tax filings, he was paid no salary; his firm received $30,000 a month, he said in a sworn deposition in 2013.
Heather Higgins, a longtime Koch ally, was the group’s initial secretary, and Dr. Eric Novack, who had led the fight for a health care proposition backed by Kendrick in Arizona in 2008, was the treasurer. Novack acknowledged he didn’t know much about the group’s activities. “My only involvement was, we were starting something,” he said in an interview. “They asked me because I was a body. I had no decision-making power.… I left very quickly.”
In the 2013 deposition, Noble wouldn’t even say who hired him because of confidentiality agreements. “I can’t tell you who I do work for,” he responded to a lawyer’s question.
“Wait a minute,” the lawyer said. “I asked how your salary got set, and you’re telling me that you had a discussion with some people in 2009 and you’re refusing to tell me who?”
“I am,” Noble replied.
* * *
If not for the Supreme Court’s ruling on Citizens United, Noble’s work for the Koch network might have ended as soon as the fight over the health care law was decided.
The decision helped to clear the way for corporations and unions to contribute unlimited amounts of money to outside groups — groups that operated independently from candidates’ campaigns and parties, but were free to buy direct political ads or pay for a broad spectrum of political activities.
“This is a total game-changer for federal politics,” Noble blogged about the decision, adding that he believed races later that year would likely be decided by outside interests. “Some will claim that this makes politics more dirty. I don’t. Politics has always been pretty messy.”
“Seriously, this will change campaigns in a big, big way,” he added.
In the Citizens United opinion, Justice Anthony M. Kennedy said the influx of union or corporate cash would not corrupt elections because of laws requiring outside groups to disclose their donors. Voters could give appropriate weight to messages paid for by special interests.
But those laws didn’t apply to groups like the Center to Protect Patient Rights. As social welfare nonprofits, they didn’t have to name their donors. And they could spend as much as they wanted on politics, as long as, in the IRS’s view, social welfare remained their primary purpose.
After the Affordable Care Act became law in March 2010, the Center’s lobbying workrelated to health care ended, leaving Noble free to take on new challenges. As it happened, a key job was open in the Kochs’ network. Matt Schlapp, a former political director to President George W. Bush who had led the Kochs’ election efforts as vice president of federal affairs for Koch Industries’ lobbying arm, had recently left to form his own consulting firm.
Noble stepped in to fill the gap.
“My impression of the environment he found himself in, with the changes in the federal law, it created enormous opportunities,” said another Republican consultant who knows Noble. “He was in the right time, right place.”
Noble began attending twice-a-month strategy meetings in Washington, as one of the people representing the Koch network alongside other conservative powerbrokers, including top GOP strategist Karl Rove’s people, Politico later reported.
One national conservative operative said he heard about Noble and the Center in conversations in early 2010 about who was doing what that year. “They were going to be the primary vehicle for the Koch money, for the Koch network,” the operative told ProPublica.
In late June, Noble attended the semi-annual Koch retreat at the St. Regis resort in Aspen, Colo., along with Randy Kendrick and her husband, an event later described in stories by ThinkProgress and The New York Times.
Noble spoke on a panel called “Mobilizing Citizens for November” with Tim Phillips from Americans for Prosperity, Mark Mix from the anti-union nonprofit National Right to Work, and Karl Crow from Themis Trust, a voter database group. Noble was the only panelist of the four listed without an affiliation — there was no mention of his role at the Center to Protect Patient Rights.
The year brought huge gains for Republicans. The GOP recaptured the majority in the House, gaining 63 seats, and added six seats in the Senate. The party’s conservative wing did especially well: Almost one-third of Tea Party candidates in the House and half in the Senate won. Conservative dark money groups outspent liberal ones by about 10-to-1, research by the Center for Responsive Politics shows.
At the top of the network were groups such as the Freedom Partners Chamber of Commerce, a trade association formed in late 2011, and the TC4 Trust, a social welfare nonprofit that said in a filing to the IRS it would “focus on the advancement of free markets, liberty and individual freedoms.” As is typical with such groups, the identities of donors did not need to be disclosed.
Money flowed from them to the Center, which acted as a sort of clearinghouse, distributing grants to dozens of smaller groups. Many of these nonprofits spent directly on politics, including election ads. Some also made grants to yet another layer of groups. Not all of Freedom Partners and TC4′s money flowed through the Center; they also gave some money to smaller groups directly.
For reasons that are not entirely clear, the Kochs then added another level of complexity to this already opaque set-up.
A dozen of the Koch-affiliated nonprofits included limited liability corporations — LLCs — called “disregarded entities” that were considered part of the nonprofits for tax purposes. Many of the 20 disregarded entities in the Koch network had strings of letters for names: STN, POFN, SLAH, ORRA. Noble was the first person consulting for the Kochs to create a disregarded entity that was linked to one of the nonprofits. He called it SDN. Eventually, Noble changed the name to Meridian Edition, one of two disregarded entities of the Center to Protect Patient Rights.
This additional layer made it even harder to follow the flow of cash through the Kochtopus, political operatives and tax experts said. When the TC4 Trust, for example, passed money to the disregarded entity of another Koch network group — say, Americans for Prosperity — tax records showed the funds going to a company called PRDIST, rather than to the much better known Americans for Prosperity.
“I think it’s being used to disguise the source of their money,” said Marcus Owens, who ran the Exempt Organizations division for the IRS from 1990 to 2000.
The Koch network moved more than $204 million through disregarded entities in the last half of 2011 and before the 2012 election, according to tax documents filed last year. That included almost $115 million in grants from Freedom Partners, the trade association, to Corner Table, the Center’s second disregarded entity.
Noble helped to dispense this river of cash, sometimes with a knowing wink. The Center gave $320,000 – all from undisclosed contributors, of course — to a Colorado group called the Arioch Project. The project’s original name? Patefacere – the present infinitive of the Latin verb that means “to disclose.”
The tangle of groups made it seem as though Koch money was being diffused broadly, but tax records show it flowed into many smaller groups at a high level of concentration. At least 20 nonprofits across the country received at least half of their revenue from the Center, Freedom Partners or both.
Noble helped to run or incorporate no less than three groups named American Commitment at one point or another. One of them got almost 97 percent of its $11.7 million in revenue in 2012 from the Center, Freedom Partners and Americans for Responsible Leadership.
Yet, in fact, more than $30 million funneled through these groups ended up paying for political activities. According to tax and FEC records, the American Future Fund poured at least $19.8 million from the Center and Freedom Partners into elections. Americans for Responsible Leadership spent at least $9.3 million received from the Center. American Commitment spent at least $1.1 million of its grants from Freedom Partners and the Center on politics.
No one from Freedom Partners, Americans for Responsible Leadership or the American Future Fund returned calls and emails asking for comment.
Phil Kerpen, the president of American Commitment, told ProPublica that the allegation that American Commitment had spent grant money earmarked for social welfare purposes on politics was “false.” He described what the Center and Freedom Partners had said on their tax returns as “general characterizations” of their grants.
“All our political expenditures were out of our organization’s general treasury,” Kerpen said.
Nonprofit experts said groups like the Center are supposed to make sure their money is used as earmarked.
“The grantor is responsible for how the grants are used because it’s the grantor’s money,” said Lloyd Hitoshi Mayer, a law professor and associate dean at the University of Notre Dame who specializes in nonprofits and campaign finance.
If a grant is improperly administered, the group that gave it could become the subject of an IRS audit.
In some cases, voters had no way to know for more than a year after the election that the Koch network, aided by the Center, was behind particular political initiatives or messages — an outcome that underscored campaign-finance watchdogs’ worst fears about the corrosive effects of dark money.
It wasn’t until this year, for example, that Citizens for Responsibility and Ethics in Washington, a watchdog group, reported that Noble’s Center supplied all of the $80,000 raised in 2012 by All Votes Matter. During the election, the group had worked to change rules governing Pennsylvania’s electoral votes in ways that would benefit Republicans.
The Center’s involvement in a contentious Arizona redistricting fight was also not known — until now. It provided $150,000 to a group called FAIR Trust — described as the “Fair AZ Independent Redistrict” on the Center’s tax return — which hired lawyers to sue Arizona’s redistricting commission in April 2012 to challenge new legislative and congressional districts. The Trust, which also sent lawyers to commission meetings, has repeatedly refused to identify its backers.
“Without knowing who they were representing, you couldn’t really fairly evaluate what they were saying,” said Linda C. McNulty, a Democratic member of the commission. “They clearly were doing somebody’s bidding, but they wouldn’t say whose it was.”
David Cantelme, one of the lawyers who represents the Trust, said he couldn’t talk about who hired him and had no information about the grant from the Center.
Voters in Wisconsin also had no idea the extent to which Koch network money fueled election ads urging them to oppose the recall of Gov. Scott Walker.
Until late 2013, when the Center filed its tax return, voters had no way of knowing that Noble’s group suppliedvirtually all of the $510,230 raised in 2012 by the Coalition for American Values Action, another social-welfare nonprofit. The Coalition then donated more than three-quarters of that money to the PAC that paid for the ads. The PAC received no contributions other than the Coalition’s.
The day of the recall vote, Noble’s blog linked to one of the ads, calling it “a fascinating approach to a unique situation.” “If the good people of Wisconsin think like the folks in this ad, it’s going to be Walker by double digits,” he wrote.
He didn’t mention the Center’s role in funding the effort.
* * *
A hefty chunk of the Koch network money that flowed through the Center in 2012 went to Noble’s firms.
Noble’s earnings had risen swiftly as his ties to the Koch brothers grew, tax filings and other records show. In 2008, the year before he joined the Center, Noble earned almost $205,000, according to a later court filing, from consulting and his work for Shadegg.
By 2010, the year of the midterms, he earned almost $640,000, the filing said. He and his wife bought an investment property a couple miles from their Phoenix home, according to the filing and property records.
At the end of 2010, Noble established a second firm, DC London, to do “consulting and governmental affairs,” according to incorporation documents. Its name was largely aspirational; on Twitter, Noble noted that he’d never been to London. DC London opened an office in downtown Washington and went on to hire almost 30 staff members in a little more than two years.
Noble personally earned almost $2.3 million in 2011, court records show, impressive for a non-election year. Much of his income seems to have derived from having the Center to Protect Patient Rights hire his firms. The Center paid more than $6.3 million to DC London and Noble Associates for consulting, management and reimbursement for “consulting expenses paid to consultants without markup.” Free Enterprise America, another nonprofit run by Noble, paid DC London almost $400,000 for consulting as well. (Noble did not disclose that he partly owned DC London on that tax return, as required by the IRS.)
Noble Associates bought a condo in Washington, DC, in 2011 for $665,000, property records show. The Nobles also bought a half-acre of land in Hurricane, Utah, then built a 9,000-square-foot house on it, a gabled concoction with eight bedrooms, eight bathrooms and five fireplaces.
Then came 2012, a record-setter for spending by dark money groups and Noble’s consulting businesses.
The Center paid a whopping $20.7 million to DC London for “consulting & other services,” according to its tax return. Of that, $15.8 million was for costs “reimbursed to DC London for the Center’s program expenses without markup.” What costs DC London could have incurred remain a mystery: The Center’s work mostly consisted of directing grants to other nonprofits, and it doesn’t appear to have offered any programs. (The Center also spent $50,000 on what its tax return described as “occupancy,” a term usually used to mean rent, even though the Center’s lawyer told ProPublica in an email that the group had no office.)
In addition, the Center paid consulting and management fees of $270,000 to Noble Associates and $2.8 million for “survey and phone programs” to Angler, a company incorporated in October 2011 and run out of DC London’s office. Noble was the president.
The Center disclosed its transactions with Noble’s firms on its tax returns, as required.
After the disappointing 2012 election results, many questioned how effectively the Koch network and other conservative organizations had deployed their resources. Filings with the FEC showed that conservative dark money groups had outspent liberal ones by at least $276 million to $29 million, to little apparent effect.
One Koch donor, who wanted to remain anonymous because he feared possible retribution from the IRS, said he had attended one Koch retreat and had given to the Koch network for several years. He said he remained impressed by the organization’s accomplishments in states such as Indiana, Michigan and Wisconsin. He also said he didn’t think the Koch brothers would tolerate a consultant steering such a large amount of money to himself.
“My guess is he’d be cut off pretty damn quickly,” the donor told ProPublica.
The payments to Noble’s firms were unusual, campaign finance experts said.
An analysis of tax returns filed by 100 other politically active nonprofits, including all the groups funded by the Koch network that have made their 2012 tax returns available, showed just 19 hired consulting firms owned by employees or board members.
For those 19 groups, the median payment to an employee-affiliated firm for consulting or other services was $108,000, a tiny fraction of the millions paid to Noble’s firms. For instance, the Republican Jewish Coalition paid $60,000 for consulting to the firm of then-board member and former White House spokesman Ari Fleischer.
Most social-welfare nonprofits avoid insider transactions and pay their leaders fixed salaries instead. GOP strategist Karl Rove’s Crossroads GPS, one of the largest politically active dark money groups, raised almost $180 million in 2012 and paid its top executive a salary of $538,000.
Owens, the former IRS official, said social welfare nonprofits are not allowed to pay “excessive” benefits to people who control the organization or to companies they run.
“That’s probably an excessive private benefit right there,” Owens said, after ProPublica told him how much Noble’s firms earned in 2012. “That’s a huge amount of contracts for someone in charge to hand out to contractors he controls.”
Groups given grants by the Center to Protect Patient Rights also started hiring Noble’s companies. The Center gave grants to 25 nonprofits that reported political spending to the FEC or state authorities during the 2012 election cycle. Of those groups, 10 hired Angler, the company that operated from DC London’s office. The American Future Fund, for instance, paid Angler $5.3 million, mainly for social media advertisements. It’s possible that much of this money went to companies such as Facebook and Twitter, with Angler keeping a smaller commission.
American Commitment — which Noble was a board member of until June 2012 — paid Angler $168,000 in 2012 for “media production.” Kerpen, who Noble hired at American Commitment, said he picked the group’s vendors based on merit, not because of Noble. “We’ve actually never received a contribution from any donor that asked for a particular vendor to be used,” Kerpen said.
Two groups that received grants from the Center appear to have paid Angler hundreds of thousands of dollars just to use a phone system to make calls to voters. The calls themselves were made by temps hired separately through an agency.
It’s not clear how much Noble personally earned in 2012, but his wife, Julie, estimated it was at least $3 million, according to court filings.
She said Noble received other perks as well. Noble Associates paid for his cell phone and his Washington, DC, mortgage. He charged most meals in Washington to Noble Associates.
In the 2013 sworn deposition, Noble said the election year was unprecedented.
“The way that 2012 went, we’re never going to see anything like that again,” he said.
* * *
Noble’s prime position in the Koch network took a hit at the end of the 2012 campaign, when he and the Center circumvented California election laws in an attempt to influence two state ballot measures.
Noble first met California political strategist Tony Russo in Las Vegas in October 2011, according to a recorded interview Russo later gave to California investigators. Russo wanted Koch money for an effort to fight unions. Noble agreed to help, paying hundreds of thousands of dollars to run focus groups, develop ads and reach out to voters, Russo said.
Russo hoped the Koch network would do even more. Russo later said he and Noble spoke more than 18 times in the run-up to the election, meeting once in Washington.
Meanwhile, Russo and Jeff Miller, another California consultant, raised $29 million from about 150 confidential donors to fight a proposition to raise taxes and to support another one limiting unions’ political power. They transferred the money to a Virginia-based trade association that had agreed to spend it on ads related to the initiatives. But as Election Day drew closer, the association, Americans for Job Security, balked at buying ads, worried that under California law, it would be required to disclose who had donated the funds for them.
Russo said he approached Noble and offered to transfer money from the Virginia group to the Center. In return, he asked Noble to tap separate resources to help in California. Noble thought he had groups that could help, Russo recalled.
“He said, you know, get me your money,” Russo said in his interview.
Americans for Job Security transferred about $4 million to the Center on Sept. 10. On Sept. 13, American Future Fund gave about $4 million to a California affiliate, the California Future Fund for Free Markets, which was spending money on the anti-union proposition.
Americans for Job Security sent another $14 million to the Center on Oct. 11. The Center then gave most of that money to Americans for Responsible Leadership, run by Kirk Adams, a friend and former client of Noble’s. On Oct. 15, Americans for Responsible Leadership sent $11 million to the Small Business Action Committee, a PAC spending on the initiatives.
Within days, a good governance group demanded a state inquiry into the contribution.
Still, Americans for Job Security gave another $6.5 million to the Center on Oct. 22. But no additional money from Koch-funded groups flowed back into the California initiatives fight — at Noble’s direction, Russo said.
California had launched an investigation.
“The explanation was, your regulatory guys are going crazy and I just don’t think we can do it,” Russo said.
California’s Fair Political Practices Commission sued Americans for Responsible Leadership on Oct. 25, 2012, seeking to force the group to reveal its donors. Six days later, a Sacramento Superior Court judge ordered that the group turn over the records to the state for an audit, saying that voters could suffer “irreparable harm” if they didn’t know who was behind the group before the election. Americans for Responsible Leadership appealed. The case made its way to the California Supreme Court, which on Nov. 4 unanimously ordered Americans for Responsible Leadership to turn over its records.
The next day, just before the election, Noble and Adams sent letters to the Small Business Action Committee as part of a settlement with regulators, admitting they had funneled money from Americans for Job Security to the Small Business Action Committee.
The state then accused the groups of money laundering based on their efforts to disguise the original source of the $11 million transferred to the Small Business Action Committee in October.
In his interview with investigators, Russo said he was “shocked” by the admission from Noble, because he believed that the money came from a pool of money unrelated to the funds Americans for Job Security passed to the Center.
Miller said he felt “just completely screwed” by Noble’s admission.
“I’m not sure how their network works, to be perfectly frank,” Miller later told investigators in a recorded interview. “But when he, when he started to get in the shit storm, he panicked and lied to you all about how it was done to protect his organizations. That’s what I think happened. I don’t know that, though. That’s what I think happened. I think that he panicked and to prevent your agency from opening up his books, he made, he lied.”
In total, the Virginia trade association had sent $24.5 million to the Center. Only $15 million ended up going to California for the propositions, which conservatives ended up losing by a large margin.
Individual donors to the effort were never disclosed, although the redaction was so poor, it was possible to determine that they included financier Charles Schwab, California philanthropist Eli Broad and Gap Chairman Bob Fisher, but not the Kochs or their companies.
Initially, it appeared that the California Attorney General’s office might open a criminal investigation into the donations. But the investigation never moved forward; Noble was never interviewed in the case.
As part of an agreement with the state, Adams and Noble were able to write off the $11 million transferred through their organizations to the Small Business Action Committee as a simple mistake. The failure to disclose the original source of the funds “was inadvertent, or at worst negligent,” their stipulation with California’s attorney general and campaign finance regulators said.
Yet Noble and the lawyers he worked with were hardly new to campaign finance. Attorneys at Holtzman Vogel Josefiak, based on the East Coast, were national experts in dark money groups and election law, representing everyone from Crossroads GPS to the American Future Fund.
A lawyer and a paralegal there had helped incorporate two of Noble’s consulting firms and several Koch-connected social-welfare nonprofits, as well as handling the Center’s application for tax-exempt status to the IRS. Another Holtzman Vogel lawyer had even helped incorporate and dissolve the California Future Fund for Free Markets, the nonprofit that spent money on the anti-union measure.
“I would assume, given the high skill level at Holtzman Vogel, that their lawyers were familiar with California’s campaign finance law requirements,” said Paul S. Ryan, senior counsel at the Campaign Legal Center in Washington. “They’re good lawyers.”
* * *
The California investigation, coupled with poor election results, weakened Noble’s influence on the Koch network and shrank the Center’s role within it.
“There were growing rumors, frustration, through 2010, 2011 and 2012, that Sean was controlling everything, that it was too insular, that it was all about who Sean liked and knew,” a top national conservative operative familiar with the Koch network told ProPublica.
In April 2013, Noble filed for divorce. Though his wife of more than 20 years was a homemaker raising their five children, he argued in filings that she deserved no spousal maintenance. After they separated, he bought a condo in Phoenix for himself for $510,000 and another for his parents for $181,500.
Noble had become involved with Elissa Scannell, a former scheduler for Shadegg who was his partner at DC London, records filed as part of the divorce case show. Just before the 2012 election, the two flew to see the World Series. According to documents submitted by his wife, Noble spent more than $7,700 for a vacation for himself and Scannell in the Bahamas over New Year’s 2013. That March, he paid more than $3,600 for a trip for him and Scannell to Hawaii, records show.
The Koch network was changing, too. In 2013, it gave greater prominence to Freedom Partners, which has supplanted the Center as its primary distributor of cash to other groups.
Because Freedom Partners is a trade association, this move also helped the network sidestep IRS proposed limits on political activity by social welfare nonprofits. Those would define political spending as expenditures reported to the FEC and grants to other tax-exempt groups involved in elections, unless they specifically say the money won’t be spent on politics.
The dark money strategies Noble helped pioneer at the Center are likely to play a substantial role in the upcoming midterms. Targeted blasts of spending by outside groups could have far more effect on this year’s smaller slate of congressional and local races than they had on 2012′s megabuck national and statewide contests, campaign finance experts said.
The Kochs convened their first 2014 retreat for big donors at a resort near Palm Springs, Calif., in late January. On the agenda: Centralizing control and creating a more coordinated approach to winning elections, as opposed to the piecemeal one from past years, according to Politico. The Kochs plan to back candidates in primaries, to make sure that Republicans that agree with their philosophy make it to the general election.
Noble was not among the consultants listed on a one-page agenda for the meeting obtained by Mother Jones. Short and others from Freedom Partners were.
Noble’s biggest known client in recent months has been Arizona’s largest electric utility, Arizona Public Service, which DC London worked for in a contentious fight over solar energy. In a strange twist, the face of the pro-solar side was Barry Goldwater Jr., the son of Noble’s idol.
Last September, at a panel for a Republican conference in Michigan, Noble, wearing jeans, a light blue button-down shirt and a dark suit jacket, talked about the failures of the 2012 election. He said the Obama campaign won because of having so many people on the ground, knocking on doors and personally talking to people.
In the future, Noble said, conservative candidates needed to work harder to connect with voters, particularly young ones. Candidates also needed to face their critics.
“Ultimately, I think what we have to teach our candidates — and this is why I will never be a candidate — is that you just have to — you have to deal with it, I mean you have to take the arrows, you got to have thick enough skin that you can get in the game, you know, and do that kind of thing,” Noble said. “I would never do that because I’ve watched it up close.”
Kim Barker has been a reporter at ProPublica since 2010, writing stories on campaign finance and the aftermath of the BP oil spill that have run in outlets such as The Washington Post, The Atlantic and Salon. She’s specialized in “dark money,” or social welfare nonprofits that do not report their donors for election ads.
Theodoric Meyer is ProPublica’s reporting fellow. He started at ProPublica as a reporting intern in 2012 and previously worked as a reporting intern at The New York Times and The Seattle Times. He’s written about everything from Syrian refugees to triceratops to the data centers Google and Facebook operate in rural Oregon. He has also reported from Madrid for GlobalPost. He is a graduate of McGill University and Columbia University.
Constitutional scholar and activist Lawrence Lessig, whose march through New Hampshire to get money out of politics is featured on our broadcast this week, often says that his crusade is the most urgent in America because it impacts virtually every other issue. From achieving tax reform to fighting climate change to strengthening the social safety net, we will see no progress until the wealthy entities that benefit can no longer buy up politicians to prevent the status quo from changing.
“The people who want to stop reform will pay an enormous amount of money to be able to achieve that,” Lessig told us when we met during his march. “…What this system has done is made the politics of dysfunction incredibly profitable.” Some lobbyists, he noted, even advertise their ability to exploit the system and use legislators to “delay and obstruct” progress in Congress.
“We will never get your issue solved until we fix this issue first,” Lessig said in a TED talk last year. “So it’s not that mine is the most important issue. It’s not. Yours is the most important issue, but mine is the first issue, the issue we have to solve before we get to fix the issues you care about.”
Here are five examples of issues beaten into stasis by a barrage of big money. MORE
Photo from TV monitor shows Rep. Richard Kelly, R-Fla., standing and reaching to his back pocket as he was videotaped during the FBI's AbSCAM investigation. (AP Photo/ Charles Tasnadi)
The academy award nominated American Hustle is loosely based on the Abscam sting by the FBI in the late 1970s and early ‘80s, which brought down six congressmen, Sen. Harrison “Pete” Williams, Camden Mayor Angelo Errichetti and members of the Philadelphia City Council. The heart of the sting was a fake sheik who offered cash in exchange for official acts.
What strikes me, both watching the film (which admittedly takes many liberties and only claims “some of this actually happened”) and in researching the real and twisted tale of Abscam, is how black and white the bribery issue was for the politicians who took the cash back then.
By contrast, now we have a system where vastly more money is being spent for the benefit of elected officials — after all, think of the millions spent by super PACs, which by comparison makes $50,000 in a briefcase seem quaint. The director of American Hustle, David O. Russell, has made this point as well. As he said, “seventy-five thousand dollars in a briefcase is very innocent by today’s standards, where the Supreme Court has made legal… [unlimited election spending].” MORE
Sen. Ted Cruz, R-Texas, stands in front of pheasants that were shot during a hunt hosted by Rep. Steve King, R-Iowa. (Nati Harnik / AP.)
An unexpected legacy of Citizens United: The GOP’s intra-party war —> Many conservatives cheered the 2010 Citizens United decision as a “First Amendment triumph,” as Senate Minority Leader Mitch McConnell (R-KY) put it. But now some Republican incumbents may find their enthusiasm fading as tea party activists go after their seats in an effort to pull the Republican Party further to the right. According to Washington Post reporters Matea Gold and Dan Keating, the Club for Growth has Rep. Mike Simpson (R-ID) and Sen. Thad Cochran (R-MS) in its sights, and the Senate Conservatives Fund has added Sens. Pat Roberts (R-KS) and McConnell himself to its hit list. The fallout, report Gold and Keating, is a financial arms race as establishment groups like the Chamber of Commerce and Main Street Partnership (a group led by former Ohio Rep. Steven LaTourette) are stepping up their efforts to support incumbents. MORE
President Barack Obama stands with Vice President Joe Biden in the Green Room of the White House prior to delivering a statement on the economy in the East Room, Nov. 9, 2012. (Official White House Photo by Pete Souza)
The Obama of 2010 might not recognize the Democratic Party of 2014.
In the intervening years, Obama and his fellow Democrats embraced big-money politics. Democrats formed super PACs to defend the presidency, gain seats in the House of Representatives and preserve their majority in the Senate. Obama is the first president in history to utilize a tax-exempt 501(c)(4) group, which can accept unlimited sums from anonymous donors, to promote his policy agenda. (Organizing for Action, the president’s nonprofit, chose to voluntarily disclose its 2013 donors.) And with an eye toward the 2016 presidential race, Democratic operatives have gone to work for various super PACs mounting a campaign-in-waiting for presumed front-runner Hillary Clinton. If Democrats hate Citizens United on paper, they love it in practice. MORE
The Supreme Court building in Washington, DC. Photo Credit: Stock
Will McCutcheon replay Citizens United? | Rules of the game –> Any day now the Supreme Court is expected to rule on McCutcheon v. FEC, a case that could deal another serious blow to campaign finance restrictions. Roll-Call’s Eliza Newlin Carney explains this latest challenge to the constitutionality of limiting the amount of money any one donor can give to candidates or parties in an election cycle. In Citizens United the court concluded that unlimited spending by corporations and unions wouldn’t corrupt politicians as long as it came from outside groups that weren’t coordinating with the candidate or the party. “The question now,” writes Carney, “is whether the high court, having freed outside groups to spend record sums of unrestricted soft money in campaigns, will also extend that invitation to political parties — and the politicians who run them.”
Koch World 2014 –> In 2012 the billionaire brothers Charles and David Koch raised $400 million to attack President Obama and congressional Democrats. To prepare yourself for their next act, read Politico’s Ken Vogel reporting on the Koch brothers’ ever-expanding political operation. Koch affiliates are now raising money and planning to recruit candidates who will help shape their desired policy outcomes. Vogel explains that the Koch empire has a new strategy: “That includes wading into Republican primaries for the first time to ensure their ideal candidates end up on the ticket, and also centralizing control of their network to limit headache-inducing freelancing by affiliated operatives.”
Unemployment benefits’ big bang for the buck –> After listening to President Obama speak about income inequality, unemployment and economic growth in the State of the Union address, Mother Jones’ latest charts are a must see. Jaeah Lee, Tasneem Raja and Brett Brownell show that spending on unemployment benefits and food stamps has a much greater return on investment overall than tax cuts. Among the economists they quote is Chad Stone of the Center on Budget and Policy Priorities who explains how this type of spending trickles up, giving the overall economy an added boost.
Why the climate needs its own tea party –> The League of Conservation Voters wants its money back. In 2012 it donated $5,000 to Rep. William Enyart (D-IL) who convinced the League that he supported the Environmental Protection Agency’s regulation of power plant carbon emissions. Last week, Enyart signed on as a cosponsor of the Electricity Security and Affordability Act which would block the EPA’s new rules limiting emissions from coal-fired power plants. In response, the League sent an angry letter to Enyart, a freshman congressman, demanding a refund. Ben Adler, writing for Grist, thinks it’s unlikely that the sum of $5,000 will reverse Enyart’s decision. But he thinks that the left can take a page from the tea party and threaten to launch a national effort to “primary” him.
The temperatures started to drop Tuesday morning, and continued to plummet through the night, so by Wednesday at 8 AM it was 0° Fahrenheit in Concord, New Hampshire.
In the Marriott Fairfield Inn next to Interstate 93, noted activist Lawrence Lessig was lacing up his shoes. In the lobby was a crowd of about 20 people in white shirts reading “New Hampshire Rebellion.” They gathered, looking out at the snow piled high in the parking lot, which had thawed and refrozen many times over.
This frigid morning in Concord was the 12th — and coldest — day of Lessig’s walk from the top of the state to the bottom to raise awareness of the corrupting influence of money in politics. “New Hampshire Rebellion” was the title given the endeavor by a coalition of citizen’s groups. “Have you been interested in politics long?” Archon Fung, a professor at Harvard asked Mary Redway, a retired environmental organizer from Rhode Island. They were eating at the hotel’s complementary breakfast buffet. MORE
George Tsunis faces questioning by Sen John McCain (R-AZ).
The State Department is filled with veteran foreign service officers with years of experience in international relations. Most of them are products of elite universities, where they studied subjects like conflict resolution or international trade theory. Many are multilingual, and all have deep expertise on the political scenes of various countries.
Yet they routinely watch as deep-pocketed political donors with little or no foreign service experience are appointed to serve as America’s ambassadors overseas. The practice is so common that a pair of international relations scholars at the University of Pennsylvania were able to put prices on various plum ambassadorships. According to The New York Times, “the study found that political ambassadors who had made campaign donations of $550,000, or bundled contributions of $750,000, had a 90 percent chance of being posted to a country in Western Europe.” The best postings — in France or Monaco — could cost up to $6.2 million in direct contributions.
The US is an outlier in this regard; according to The Times, other democracies’ diplomats “are nearly always career professionals, products of intense competition and intensive training, with successive foreign rotations for posts deemed to require in-depth knowledge of a region, culture and language — not just political connections.” MORE
This is the third installment of a new feature at Moyers & Company, as producer Gail Ablow shares her must-read money-and-politics stories every week.
Legalized bribery –> It is four years this week since the Supreme Court’s Citizens United decision struck down the limits on how much money corporations and unions can spend in federal elections. A number of legal watchdogs have been keeping close tabs on the repercussions. In an essay in Politico Magazine, Fred Wertheimer, president of Democracy 21, describes how super PACs, social welfare groups and corporations poured more than $1 billion into the 2012 election cycle; with $300 million of those dollars from undisclosed sources. Wertheimer argues that we are at a watershed moment and Americans must seize the chance to make a change. On the Brennan Center blog, law professor Ciarra Torres-Spelliscy details some of the high and low points since the decision and the efforts to fight its impact – “the good, the bad and the ugly,” she calls it; while her colleague at the Brennan Center’s Democracy Program, Ian Vandewalker, warns on MSNBC.com that our few remaining campaign finance restrictions are still under siege. He suggests the best way to re-empower voters, and protect American democracy from torrents of independent political spending is to create a system of public financing that matches small donors.
Loophole allows lawmakers to reel in trips and donations –> For a window into how money from special interests buys access to lawmakers legally, take a trip to the ski slopes of Vail, CO and Park City, UT with New York Times reporter Eric Lipton. Lipton’s report describes how lawmakers, donors and lobbyists are hobnobbing and fundraising at “destination events” in exclusive vacation venues. Since a corruption scandal in 2007, Congress prohibits lobbyists from giving gifts to lawmakers. But there’s a legal workaround: corporate and lobbyist dollars can be given to political campaigns and leadership PACs. If the PACs then use the money to pay for lavish ski vacations or trips to the golf course it’s no longer “technically” a gift. And it’s entirely legal for lawmakers to travel home to DC with their vacation buddies’ business interests in mind. MORE
Demonstrators protest against the Trans-Pacific Partnership free trade talks in Zuccotti Park in New York on Sept. 17, 2013, two years after the Occupy Wall Street protests started there. (Kyodo via AP Images)
The United States is currently engaged in secret negotiations on the Trans-Pacific Partnership (TPP), a multinational trade agreement with the goal of liberalizing trade among a dozen or so countries that border on the Pacific Ocean. A draft of the TPP chapter on intellectual property that was recently published by WikiLeaks shows that the U.S. has been pushing the other countries involved in the negotiations to make their laws on copyright, patents and trademarks more agreeable to U.S. companies in the film, telecommunications, and pharmaceuticals industries, among others.
Aside from select members of the Administration, the only people with full access to the working documents on the TPP negotiations are the members of the United States Trade Representative’s (USTR) trade advisory system, including the 18-member Industry Trade Advisory Committee on Intellectual Property Rights (ITAC-15). Members of ITAC-15 include representatives from businesses and industry groups like the Recording Industry Association of America, Verizon, and Pharmaceutical Research and Manufacturers of America; no public-interest groups, academics, or other non-industry experts serve on the committee.
President Barack Obama speaks with Hassanal Bolkiah, the Sultan of Brunei after meeting with Trans-Pacific Partnership leaders at the Hale Koa Hotel in Honolulu, Hawaii on Saturday, November 12, 2011. (Photo by Kent Nishimura-Pool/Getty Images)
Another chapter in the tale of the Trans-Pacific Partnership (TPP) — a secret international trade deal being pushed by the Obama administration and described by critics as “NAFTA on steroids” — has once again been Wikileaked. This one deals with the environment, and it shows that, by and large, the US is caving on environmental standards it had previously set for international trade agreements.
Environmental groups say the protections that are included in the document are weak — and, furthermore, that the pact contains no enforcement mechanisms. This breaks with recent precedent — in 2007, Bush reached an agreement with congressional Democrats that required environmental provisions in trade agreements to be legally binding. MORE
This infographic from the Communications Workers of America makes plain why we should all be paying attention to McCutcheon v. Federal Elections Commission, a Supreme Court case that many are calling Citizens United 2.0. MORE
The Obama administration's new IRS regulations would do little to deter powerful individuals and corporations from engaging in dark money electioneering.
President Obama could take immediate steps to begin to clean up the dark money problem in American politics. He could, for instance, issue an executive order requiring all government contractors to disclose their contributions to 501(c) advocacy groups, a decision that would impact hundreds of major firms.
Instead, the administration’s response to the flood of dark money in recent elections is a set of new IRS regulations aimed only at addressing some activity taken by 501(c)(4) “issue advocacy” groups. The new rules restrict “participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.” The rules also restrict C4 organizations from engaging in so-called “candidate-related” communications.
Though put forth with purportedly good intentions, this proposed rule would do little to deter powerful individuals or large companies from engaging in limitless dark money electioneering. The $400 million in undisclosed campaign money spent by the Koch network in 2012, revealed recently by Robert Maguire of the Center for Responsive Politics and Matea Gold of The Washington Post, showed that deep-pocketed donors have been quick to set up 501(c)(6) trade associations, which would not even be impacted by the rules as they stand now. Like 501(c)(4) issue advocacy organizations, 501(c)(6) trade groups may take unlimited donations and engage in unrestricted partisan or election activity. Trade groups are often formed by industry associations or coalitions of like-minded businesses. One of the largest of the new Koch groups, called Freedom Partners, is a 501(c)(6) trade association. MORE