Money & Politics

As Candidates Vie For the ‘Anti-Establishment’ Label, Real Establishment Lives On

It's important to not lose sight of the fact that behind the political establishment there is the money establishment -- and they are playing the long game.

As Candidates Vie For the [...]

One million dollars in $100 dollar bills is displayed at the Money Museum in the Federal Reserve Bank of Chicago June 22, 2011 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

This post originally appeared at Brennan Center for Justice.

This presidential election, every candidate both left and right seems allergic to the word “establishment.” This is a little bizarre since they are all desperate to be elected to the most establishment job in the world. But I get it: if the electorate is in an anti-establishment mood, presidential candidates will hide their resumes, instead of touting them, if that will bring home the win.

As an epithet, “establishment” has a useful plasticity which allows governors to lob it at senators and for the senators to lob it right back. But this does give us a moment to think about what “establishment” really means in the context of elections and political power in the US.

One measure of how engrained you are in the establishment is longevity. After the 22nd Amendment and the experience of the four-term presidency of Franklin Roosevelt, presidents are term-limited at eight years and so too are most governors. In a few states governors can only serve a single four-year term at a time. So the leaders of executive branches are perhaps the most temporary fixtures on the establishment spectrum.

Congress, by contrast, has no term limits. Attempts by certain states to impose term limits on their congressional delegations failed judicial review including at the Supreme Court, so at least in temporal terms, a popular legislator can get reelected for decades. For instance, Sen. Thad Cochran (R-Miss.) has been in office for 38 continuous years, and he only ranks third in seniority. And even Bernie Sanders has served in Congress for 26 years.

But we should not lose sight of the larger context as candidates throw insults at each other like a half-chewed chicken wing at a cafeteria food fight. The bigger context is most elections in America are privately financed. Even compared to a successful  multi-decade career of a Senator, the private interests lobbying and financing elections have an even longer time line. Take for example, the US Chamber of Commerce which was founded in 1912: giving it over 100 years of trying to influence the government and the electoral process.

One of the first things the Chamber did was lobby for what would become Section 501(c)(4) and 501(c)(6) of the Internal Revenue Code. The 16th Amendment, ratified in 1913, enabled the federal government to collect income taxes. And when the Congress was drafting the new income tax law, the Chamber urged “an exemption for ‘civic and commercial’ organizations.” The Congress obliged and to this day, social welfare organizations organized as 501(c)(4)s are tax exempt, and so too are trade associations organized under IRC Section 501(c)(6).

That trade associations are tax exempt is surprising to some since they are largely comprised of for-profit businesses. Until recently, the NFL took advantage of the 501(c)(6) filing status (despite the fact that its member teams are all for-profit entities) making the NFL tax exempt. But under increasing criticism, in 2015 the NFL decided to stop taking advantage of this section of the tax code. But the same logic and criticism could apply to the American Petroleum Institute, which is a trade association of for-profit oil and gas companies. But thanks to lobbying a century ago by the Chamber, here we are giving tax exemptions to groups of for-profit businesses.

In the last few election cycles, the 501(c)(4)s and 501(c)(6)s that the Chamber lobbied for so many moons ago are having a new and troubling impact on the democratic process. These groups are being used not only as a tax free way of associating, but also as a means to spend in politics anonymously. Basically, the way that dark money becomes dark is by being routed through a 501(c)(4) or 501(c)(6). Once the money flows through one of these opaque groups, it is secret, and barring some leak from an insider or rare court order, the public will never know the source of the funds.

Since trade associations are groups of businesses, shareholders have become increasingly concerned about the political money being funneled through these 501(c)(6)s. They have been filing shareholder proposals for years asking for increased transparency of corporate political spending. This shareholder activity has raised the hackles of business associations like the Chamber.

Last fall, as fundraising for the 2016 election was kicking off, the Chamber sent a letter to its members urging them to keep dark money dark. (The letter is here.) The missive was signed by US Chamber of Commerce President and CEO Thomas Donohue, Business Roundtable President John Engler and National Association of Manufacturers President and CEO Jay Timmons.

So as the media spills ink about which candidate is an “establishment” candidate, remember the bigger context: there is a money establishment behind the political establishment, spending secretly in our elections, and they are playing the long game.

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Ciara Torres-Spelliscy

Ciara Torres-Spelliscy is a Brennan Center Fellow and an associate professor of law at Stetson University College of Law. She is the author of Safeguarding Markets from Pernicious Pay to Play: A Model Explaining Why the SEC Regulates Money in Politics. She is also a former member of the Board of Directors of the National Institute on Money in State Politics. Follow her on Twitter: @ProfCiara.

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