BILL MOYERS: This week on Moyers & Company …

TREVOR POTTER: You don't really want corporations participating directly in elections. They have a very narrow interest. Which is supposed to be their shareholders. But we want voters and citizens to have a broader interest.

BILL MOYERS: And what you may have missed in that Mitt Romney video.

MITT ROMNEY: Frankly, what I need you to do is to raise millions of dollars.

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BILL MOYERS: Welcome. The humorist Andy Borowitz says it would be nice to spend billions on schools and roads, but right now that money is desperately needed for political ads. Sure enough, our political class is wallowing in cash, most of it going to your local TV stations. Last week, NBC reported that total spending on ads by both sides in the presidential race had surpassed $600 million: $318.5 million for Team Romney, $287.2 million for Team Obama. And get this: More than half of all that money for ads has been sent in just three swing states – Florida, Ohio and Virginia. What’s more, huge sums – not only for ads but for get-out-the-vote efforts like mailings and robocalls -- are going into House and Senate races in the fight to control Congress. Altogether, three billion dollars in campaign cash have been raised so far, and a projected $6 billion by the election, less than seven weeks away. It’s not just that we’re being hit by swarms of ads thicker than locusts. What’s truly frightening is that we don’t know who’s really paying for them.

PRESIDENT BARACK OBAMA: I’m pledging to cut the deficit—

AD VOICEOVER 1: Romney’s worth $200 million.

MALE VOICE: The President’s doing a mediocre job.

FEMALE VOICE: Governor Romney cares about big business.

AD VOICEOVER 2: Real job growth cut the debt—

FEMALE VOICE: I had no healthcare.

AD VOICEOVER 3: --to the highest corporate bidders--

BILL MOYERS: If you’re a super PAC, empowered by the Supreme Court’s Citizens United decision to take unlimited donations, you’re supposed to make your donors public. And you're not supposed to coordinate your efforts with the candidate. But there are ways to get around both requirements and to hide those campaign mega-dollars. Instead of calling yourself a super PAC you become a “social welfare” group. That’s right, a “social welfare” group, and the IRS designates you a 501(c)(4) non-profit. These are sucking up more and more of the big money precisely because their donors can remain secret. And just to add insult to injury, they’re tax exempt. By the way, “The Washington Post’s” Chris Cillizza reports that pro-Romney outside groups have paid for three out of four of the ads supporting him in this election cycle while pro-Obama outside groups have paid for one in every five ads backing the president. The conservative groups, Cillizza writes, "have kept Romney in the game" and he should be able to "outspend Obama rather significantly in the final weeks of the race." So whether you want to call it an arms race, a plague of Biblical proportions, or the death spiral of democracy, take it seriously. Especially all that secret money. It’s poison being mainlined into our country’s arteries, as destructive as arsenic in your drinking water. And you’ll never know who put it there. No one knows the ins-and-outs of this cash-and-carry racket better than Trevor Potter, and no one is more committed to cleaning it up. A former chairman of the Federal Election Commission, he served as general counsel to John McCain during the senator’s presidential campaigns in 2000 and again in 2008. Trevor Potter is with the law firm of Caplin and Drysdale in Washington, and he’s the founding president of the Campaign Legal Center, that’s a non-partisan group committed to “representing the public interest in enforcement of campaign and media law.” All very impressive, but let’s face it, these days Trevor Potter’s greatest claim to fame is as the man who keeps Stephen Colbert out of jail. He advised Colbert on how to create his own super PAC and then to set up his more clandestine 501(c)(4). Take a look.

STEPHEN COLBERT: So how do I gets me one, Trevor?

TREVOR POTTER: Well, lawyers often form Delaware corporations, which we call shell corporations, that just sit there until they're needed.

STEPHEN COLBERT: Like, so some anonymous shell corporation?

TREVOR POTTER: Right. And, and I happen to have one here in my briefcase.

STEPHEN COLBERT: Let's see it.


STEPHEN COLBERT: Okay, what's it called?

TREVOR POTTER: It's called, “Anonymous Shell Corporation.”

STEPHEN COLBERT: “Anonymous Shell Corporation” filed in Delaware? Okay, I got this. So now, now I have a (c)(4)?

TREVOR POTTER: Right. Now we need to turn it into your shell corporation, your anonymous one. And we do that by having normally a board of directors meeting.

STEPHEN COLBERT: And who's on the board of directors?

TREVOR POTTER: Well, just you. We can just have you do this--

STEPHEN COLBERT: Sounds like a nice group of people.


STEPHEN COLBERT: All right, called to order. Let's do this thing.

TREVOR POTTER: All right, so this says that you are the sole director of the corporation.


TREVOR POTTER: And that you are now electing yourself president, secretary, and treasurer.

STEPHEN COLBERT: Sounds like a great board.

TREVOR POTTER: And you are authorizing the corporation to file the papers with the I.R.S. in May, 2013.

STEPHEN COLBERT: So I could get money for my (c)(4), use that for political purposes, and nobody knows anything about it till six months after the election?

TREVOR POTTER: That's right. And even then, they won't--


TREVOR POTTER: --know who your donors are.

STEPHEN COLBERT: That's my kind of campaign finance restriction.

BILL MOYERS: Welcome, Trevor Potter.


BILL MOYERS You know that’s funny, but it’s not a laughing matter by November we’ll be drowning in money. This flood just keeps rising.

I brought a story in "The Financial Times." A campaign group backing Barack Obama is pushing to raise up to $150 million in coming weeks, you know, tit for tat, to counter the Republican's financial advantage and an expected advertising blitz for Mitt Romney. And that just strikes me as an all-out, inescapable arms race.

TREVOR POTTER: In a way, and I know this will sound a little odd that's not entirely a bad outcome for this election. Because what-- where we have been is that the Republicans have proven they have an enormous advantage of raising money. Therefore, they have—and I’m a Republican. But the party has essentially said, "We have such a tactical advantage, that we're not going to change this system."

If it turns out that both sides end up raising a lot of money and fighting each other to a draw, then I think members are going look at this and say, "This is not how we want to run our system and let's both of us step back from this."

BILL MOYERS: Thanks to you and Stephen Colbert, we know a lot more than we ever did about Super PACs. And I took from your appearances on his show that they are essentially another bank account that politicians have at their disposal, even if they don't direct them?

TREVOR POTTER: Clearly, they're there to benefit politicians and elect politicians. That's their job. The question is, to what extent are they actually under the control of a candidate? When Mitt Romney refers to "my Super PAC," he doesn't mean, I think, that he can pick up the phone and say, "I want you to run ads here or there." But he trusts it. And he knows the people who are running it who are former campaign aides of his, just as the Democratic ones are former Obama White House aides, they are savvy. He relies on them to make the right decisions. And if Romney wants to go out and raise money himself for his own campaign, he is limited. He can only take $2,500 a person. If the billionaire who has just given him $2,500 a person is then encouraged to give to the Super PAC, he can give $25 million for the same purpose, which is electing Mitt Romney president.

BILL MOYERS: And will we know that?

TREVOR POTTER: If he gives to the Super PAC, we'll know it. If he gives to the (c)(4), which is the other pocket of the Super PAC run by the same people in some cases, we won't know it.

BILL MOYERS: Well, that's what gets me. How do they get away with that, calling themselves social welfare groups when in fact he's given the $25 million to a political organization?

TREVOR POTTER: Well, the legal answer to that, is that their principle purpose has to be something other than running political ads. At the end of the day, they’re, in order to qualify as a social welfare group, they're going to have to say that "Most of what we did was to educate the public, to lobby, and was not focused on electing a specific candidate." They're allowed to be an issues group. So again, the Sierra Club has a (c)(4), the N.R.A. has a (c)(4), and they focus on gun control or the environment.

But they're not supposed to be out the majority of the time, running ads about candidates. So they have to be very careful not to cross that line. Here's the problem, the line is this incredible, gray, moving structure. The I.R.S. has, you know, a dozen-part test, where this or that or the other subjective factor can do it.

So even if you wanted to comply with all of this and be really careful, it's not easy to do it. So there's no clarity in this, which of course invites people to blow right through it and what happens if you're devious or you really don't care or you just are results-oriented, is you create one of these (c)(4)'s, you run all this money through it, and then you close it down. So it's gone. By the time the I.R.S. gets around to it and might want to audit it, it's defunct. You create another one. So this is the problem that you really face when you get down to the nuts and bolts of it.

BILL MOYERS: So Karl Rove sets up a big super PAC so it can collect millions of dollars from plutocrats or anybody else to attack candidates for the House and Senate who oppose, let's say, the corporate tax breaks. It needs a fig leaf. It wants to protect its backers, its bankers. So Crossroads G.P.S. sets up as a quote, social welfare group, under section 501(c)(4) of the tax code. And then it spends that money on negative ads paid for by secret donors.

AD VOICEOVER 4: Barack Obama’s got lots of excuses for the bad economy.

PRESIDENT BARACK OBAMA: Headwinds coming from Europe—

AD VOICEOVER 5: Warren went on a charm offensive with some of the same banks who got bailed out. Tell professor Warren we need jobs, not more bailouts and bigger government.

AD VOICEOVER 6: Today in Washington, America’s debt increased $3.5 billion. $3.5 billion every single day since John Tester arrived in the U.S. Senate.

AD VOICEOVER 7: $3.5 billion more debt per day since McCaskill’s been in office. Tell Claire to stop spending and cut the debt.

BILL MOYERS: Doesn't that make a travesty of the very meaning of social welfare?

TREVOR POTTER: Crossroads is an interesting example, because when they started, they came out and said, "We're American Crossroads we're a group of Republicans and conservatives." This was after Citizens United, 2010. "We need to change Washington. We're going to be completely transparent. We're going to form one of these new Super PACs, we're going to disclose all our donors."

Well, that's fair enough. I mean, if that's what the law allows them to do, at least they're disclosing. Well, they didn't raise much money for the first month, two month, three months. Suddenly, they had a new idea. "We're going to create a (c)(4), which is going to do the same thing, run by the same people, but it doesn't have to disclose its donors."

They announce that, then they announce, "We never saw the money." They announced they were raising tens of millions of dollars in the (c)(4) and spending it. Now, they can't spend the majority on it on these political ads. But if you raise enough money, you have a whole lot of it even if it's not the majority of what you're spending to run these ads with. And that's what happened in 2010 based on their own numbers.

BILL MOYERS: So back to your appearance on Stephen Colbert…

STEPHEN COLBERT: Can I take this (c)(4) money, and then donate it to my Super PAC?



STEPHEN COLBERT: But wait, wait. Super PACs are transparent.

TREVOR POTTER: Right, and--

STEPHEN COLBERT: And the (c)(4) is secret.


STEPHEN COLBERT: So I can take secret donations of my (c)(4) and give it to my supposedly transparent Super PAC?

TREVOR POTTER: And it'll say, "Given by your (c)(4)."

STEPHEN COLBERT: What is the difference between that and money laundering?

TREVOR POTTER: It's hard to say.

BILL MOYERS: You're taking us deep into this Kafka-like world, you know that, don't you?

TREVOR POTTER: Well, this is, I think, the problem is that it sounds Kafka-like. And it's because we don't have a single requirement for disclosure. If we did, if when you spent money on political ads mentioning a candidate in an election you had to disclose the donors over $10,000, what the Disclose Act proposes, this would all go away.

Because the reason people are giving to these groups, is to avoid disclosure. Without that, they'd go right ahead and give it to the publicly disclosed groups, 'cause it's so much simpler. The groups can spend 100 percent of what they raise on the ads. It's the avoiding of disclosure that is leading to all these other complicated tricks that we end up trying to figure out.

BILL MOYERS Let me walk you through some specific examples. In Virginia, just recently, a swing state in a tight U.S. senate race, outside political groups have brought $37 million worth of air time in the state's top four TV markets. Half of that money comes from groups that keep their donors secret.

AD VOICEOVER 8: As Senator, Tim Kaine would derail Virginia’s recovery. Virginia needs jobs. Not Tim Kaine and his big government policies. The U.S. Chamber is responsible for the content of this advertising.

AD VOICEOVER 9: Allen voted for 121 billion dollars in earmarks. Earmarks for imported fire ants, Alaskan berry research, and DNA study of bears in Montana.

TIM KAINE: And I’m doing what the President wants me to do, The President wants me to do, the President wants me to do--

AD VOICEOVER 10: Contact Mr. Kaine and tell him what Virginia doesn’t need is another Obama clone in the Senate.

AD VOICEOVER11: George Allen, what’s wrong with Washington. Majority PAC is responsible for the content of this advertising.

BILL MOYERS: So my question is, viewers and voters can't possibly know who's manipulating them then. What does that mean to representative government?

TREVOR POTTER: Well, and there are two problems there. I think one is, you're absolutely right, we won't know, but the candidate probably will. You know, I can assure you that if in that Senate race someone is spending millions of dollars to elect the candidate, the candidate knows where that money is coming from. There's nothing illegal about telling them.

It's illegal to actually sit down with them and show them the ad and say, "Do you want to edit it before I run it?" But that's about the limits there. So they're going to know who the money is behind it. Someone can go to them and say, "don't have to say a word, I'm going to help you out, I'm going to drop $10 million into your race."

The candidate is going to be incredibly grateful. But the voters of Virginia aren't going to know that. We are creating opportunities for corruption and candidates being beholden to specific private interests because of funding. And yet, there's no disclosure to the rest of us.

BILL MOYERS: Now, what does that tell you about our politics?

TREVOR POTTER: Well, it tells you all we need to know about these Super PACs, which is, they are not what the court said we were going to get. When the courts midwifed these things, they said, "They can't corrupt because they're totally independent of candidates and parties. And that's why you can give them an unlimited amount, because you're not buying access, the candidates may not like them, they're wholly independent." Well that's baloney. They're not independent in any way.

They become sort of shadow party committees. The candidates, including the President or the White House aides, are allowed under the current rules to actually raise money for them, to endorse them, to say, you know, "This group is really important to me." Mitt Romney went and spoke to a group of donors to what he called his Super PAC.


TREVOR POTTER: And, you know, told them how important it was. So we don't have a wall between them. We have essentially a union. And that's what gives us this possibility of corruption.

BILL MOYERS: Another case study, something called the Government Integrity Fund, great name, has spent over one million dollars on TV ads bashing Democratic Senator Sherrod Brown in Ohio and supporting his challenger Josh Mandel.

AD VOICEOVER 12: Young Sherrod Brown voted more for Ohio. Today’s Sherrod Brown? He just votes the party line. Where did the young Sherrod go?

AD VOICEOVER 13: And Josh Mandel got Ohio’s credit rating upgraded at the same time Sherrod Brown’s congress got America’s credit rating downgraded. Josh Mandel, protecting tax payers.

BILL MOYERS: But the so-called Government Integrity Fund, according to ProPublica, that's an investigative journalist organization, is shrouded in mystery. It isn't required to reveal donors. The only contact information is a P.O. Box. But no one answers their questions and they don't have to do so, do they?

TREVOR POTTER: You know, these groups have great names.


TREVOR POTTER: They all come up with the-- and it sounds like mom and apple pie, but more importantly, it's designed to tell you nothing. If it was a group that at least said, "The coal company's organization," you would know where they were coming from. We don't know anything about this. And you're right, they don't have to tell us.

One of the things that I discovered in doing my research for the Colbert show, is these groups don't actually have to even tell the I.R.S. they exist at the time they're taking in this money and running these ads. That was a surprise. I had assumed that they had to file, because that's what these groups do. But it turns out they can file after the election. And again, when they file, they're not filing their donors, they're just saying, "I'm here and I qualify as a social welfare group."

And one of the issues we have here, I think, is that the I.R.S. has traditionally not spent a lot of resources on this. They get literally tens of thousands of applications to create these groups. And they can't look at them all. Historically, they've turned down a tiny fraction. Obviously with a lot of the attention on them, it appears they're taking at least a closer look. But they don't have resources and they are being knocked about by Congress on this.


TREVOR POTTER: Well, they’re, when it came out in the press that some of the groups that had applied for exemption, some of the tea party groups, so presumptively more Republican, were being asked extra questions by the I.R.S. before they were given their exemption, like, "Please tell us in detail what sort of public communications you are making, because you say in your application you're going to run advertisements. What sort of advertisements?"

The next thing that happened after that report hit, is that Republican members of Congress wrote the I.R.S. and said essentially, "Stop asking questions." What they said was, "Don't intervene in politics, these groups are, you know, trying to engage in public life, and you shouldn't be preventing them, that is being partisan."

BILL MOYERS: And did the I.R.S. back down?

TREVOR POTTER: We don't know. What we do know on a very similar issue is that the, again, the press reported that the I.R.S. was asking some of the people who had contributed to these groups, because the I.R.S. knows who they are. We don't, but they actually file a secret report with the I.R.S. that tells the I.R.S. who their donors are, that it's not made public.

So it's there, it's just we don't get to see it. So the I.R.S. looked at those lists and saw big donations, million dollar donations. And they wrote and said, "Did you play gift tax on this? And if so, can you please show us your gift tax return? Because there's been a dispute."

But the I.R.S. position has been that if you give to a (c)(4), it is subject to gift tax on the donor. They ask this question, it hit the front page of the New York Times. Again, there was a letter from a group of senators, Republican senators in Congress to the commissioner of the I.R.S. saying, "Why are you asking these questions? Why are you threatening the donors to (c)(4)'s?"

I don't know if they were donors to liberal groups or conservative groups, but it was seen as the I.R.S. trying to crack down on the amount of money going to (c)(4)'s. The commissioner said, "I give up. We promise we won't ask any more questions of any donors about gift tax. We won't enforce our current policy, and we won't do a thing until Congress clarifies this area of law and tells us what to do."

BILL MOYERS: Good luck.

TREVOR POTTER: Well, and that's an example of how politically sensitive this has become. I mean, the I.R.S. does not want to be in the middle of this fight. They trying to keep their heads down.

BILL MOYERS: We know now that much of this corporate spending is coming from so-called nonprofits. In particular, trade associations. And trade associations, for some reason, can hide all their donor information. Why is that?

TREVOR POTTER: Well, what happened here, first of all, we don't have a system that was designed for this. We have a system where political committees are supposed to publicly disclose their donors. They register with the Federal Election Commission or at the state level with the state agency.

They say, "We're a political committee, we want to elect a candidate, we want to participate in politics, we're, you know, whatever it is." They disclose their donors because disclosure was always considered an important value for politics. Then you have all these other private groups that do other things.

You have (c)(3)'s, which are hospitals and universities. They don't disclose their donors on their tax returns. They might announce them, but that's up to them. You have (c)(4)'s, which are social welfare organizations, you have (c)(6)'s which are business leagues. You have a whole range of these. And they were considered nonpolitical. So there was never a disclosure requirement because there was never a thought that they were going to be the principle end-run around the disclosure laws. What happened was, lawyers figured out that they could engage in the same political speech.

After Citizens United, they can now use corporate and labor money and they could always have used individual money to run the same ads that the political groups are running. But because they're (c)(4)'s and (c)(6)'s, they never were required to disclose their donors, and they're still not.

BILL MOYERS: The American Petroleum Institute, that's the lobby for hundreds of multinational oil and gas companies, companies trying to obstruct climate reform, increase drilling on public lands, protect their taxpayer's subsidies and loopholes, can funnel, as I understand it, huge donations secretly to campaign groups, voters never know again what or who has hit them.

And in 2010, groups funded by these big multinationals through the American Petroleum Institute, unleashed a tidal wave of negative advertisements on Democrats in the midterm elections. Republicans took control of the House and since then have been, in effect, doing the industry's bidding. How did they get away with it?

TREVOR POTTER: Well, they, as a trade association, they're another type of nonprofit. They also do not disclose their donors to the general public. They don't have to tell people where their money came from. If they spent it directly on advertising, which, say the Chamber of Commerce often does, you will at least know where it's coming from because it'll say the "Chamber of Commerce," or it'll say a, "Improve America," a project of the Chamber of Commerce.

AD VOICEOVER 14: The U.S. Chamber is responsible for the content of this advertising.

AD VOICEOVER 15: The U.S. chamber is responsible for the content of this advertising.

AD VOICEOVER 16: The U.S. Chamber of Commerce is responsible for the content of this advertising.

TREVOR POTTER: So you know when they spend it directly, at least what part of the economy it's coming from. However, they may well give that money to another organization which isn't even got their name on it. So if they end up giving it to a (c)(4) which then spends the money and that group is called Better America, you don't know where Better America's money came from.

So it is, these groups do not themselves disclose their donors. And again, you know, most of their work is lobbying, it's oriented towards issues. You may well be right, that they have really strong policy positions. But what they would say is, "The money we spend directly on political ads is not a major part of what we do."

BILL MOYERS: What about foreign companies, foreign groups, multinationals? I know you remember the moment in President Obama's State of the Union message when he said, "Citizens United is going to invite contributions from foreign companies."

PRESIDENT BARACK OBAMA: Last week the Supreme Court reversed a century of law that I believe will open the flood gates for special interests including foreign corporations.

BILL MOYERS: And Justice Alito out there, "No, it's not true." Is it true?

TREVOR POTTER: The reason there was a bone of contention there is that in Citizens United itself, Stevens, Justice Stevens and his dissent had said, "This is going to allow foreign money in." The majority in their opinion responded to Stevens and said, "There's nothing in this case that has anything to do with foreign money. We're talking about corporate money only. There's a whole separate ban on foreign money in U.S. elections, and that is not being challenged today. So that law remains in place."

The issue behind it all is how do we know? If you have all these anonymous sources of spending, we have no way of knowing where the money is coming from.

BILL MOYERS: Take Aramco, for example. We talked about the American Petroleum Institute earlier. One of its members, big members, is Aramco, the Arabian Oil Company, a member of an American based petroleum lobby. How do we know that's not Aramco money mixed up in the American Petroleum Institute's donations?

TREVOR POTTER: Well, we don't. We have to rely on Aramco understanding and following the law. The way the law is written, the way the F.E.C. regulations are written, they are supposed to use U.S.-based money for their political speech in their own ads or giving it to someone else for politics.

Which means money that's derived from this country. So if Aramco has a U.S. subsidiary and the U.S. subsidiary makes money, the law says the U.S. subsidiary can give, and only U.S. citizens can be involved in that decision. That's not the most straightforward thing in the world. Aramco has to understand that and carefully follow it. And nobody on the outside is going to know how it worked.

BILL MOYERS: Well, you take us right to the core of it. How can secret corporate cash be a legitimate function of democracy?

TREVOR POTTER: Well, it's interesting that the Supreme Court in the Citizens United decision, the one that I and I think many other people think was a big mistake, even there, they went out of their way, eight to one, four in the majority, all in the minority got together and said, "Disclosure is a high value in a democracy."

And what Justice Kennedy, who had written this majority opinion said is, "Today, for the first time, we're going to have a situation we've never had before in America, where corporations are going to be able to spend unlimited amounts and it will be fully disclosed. Stockholders--"

BILL MOYERS: I remember that.

TREVOR POTTER: "Stockholders will know how their money is being spent, they'll be able to use corporate democracy to object, and voters will know who's paying for the ads. Which," he said, "is an important democratic value, that knowing where the ad is coming from, who is speaking to you informs you about the context of the ad and enables you to judge it.

"And," he said, "to hold politicians accountable so that if someone gets elected after millions have been spent for them, and you know it was the X industry or the Y industry that did it, you can then judge them and see whether they dance to the tune of those industries and hold them accountable." So the good news is, the court said, "These are American values. They are consistent with our constitution." The bad news is, we don't have the disclosure system he promised us we had.


TREVOR POTTER: Well, did he misread the law? Supreme Court justices shouldn't. He's right, the McCain-Feingold law did require disclosure that we're not getting. He talked a lot about the internet and the fact that it would give us instant disclosure. But as you and I know, you know, garbage in, garbage out. If the--

BILL MOYERS: And I thought--

TREVOR POTTER: --information isn't there, it won't turn up.

BILL MOYERS: I thought that's where we were seeing the naïveté of a Supreme Court justice really out of touch with reality. When he said, "Okay, we're going to give them the right to spend all this money, but shareholders in particular and citizens can go to the internet, get the information they want, and then hold them accountable if they're not spending money for the company's profit," right?

TREVOR POTTER: Right. And of course, that's interesting in itself, because it reveals the bias of that decision. He assumed the test was, are they spending the money in the way that most profits the company? And that's very interesting if you think about it, because--


TREVOR POTTER: Well, I mean, you go back to the founding of our country. And the founders' view was that we would be citizens, and we would act in the interests of the country, in our greater interests. They didn't think that everyone would go out and try to act solely in their own self-interest to better themselves if it was bad for the country.

These were people who had fought a war, who had left their families and their homes, clearly not in their self-interest. So to say that the right thing to do in a democracy is have a corporation spend money in ways that will give them the most profit, never mind what happens to anyone else or the best of the country. It is, I think, an example of why you don't really want corporations participating directly in elections.

They have a very narrow interest. Which is supposed to be their shareholders. But we want voters and citizens to have a broader interest. To think about the next generation, to think about the greater good. There's an interesting quote from the head of Exxon in a new book out on Exxon where he says, "Exxon is not a U.S. corporation, we do not act in the best interest of the United States."

Well, it is a U.S. corporation, but what he meant is, they have shareholders all over the world, they have investments all over the world, and it's not his job to do things that are good for America, it's his job to do things that are good for his international shareholders.

BILL MOYERS: But under Citizens United, he can contribute as much money as he or his board wants to on – secretly, on projects that may not be in the national.

TREVOR POTTER: Right. Again, this is the nasty combination of the really, the incredibly dangerous accident of Citizens United that allows this unlimited money and the other cases that have allowed unlimited contributions with a lack of disclosure. Because the presumption, the reason the court said this wouldn't be corrupting is we would know who was giving and could hold them accountable. And we don’t.

BILL MOYERS: It's like water running downhill. The old cliché, it finds a way around every obstacle you put into place. And that's what's happened to campaign finance reform.

TREVOR POTTER: Well it's a good cliché, it's been used by the Supreme Court. The reality is that dams hold. It can be done. In my view, McCain-Feingold was doing that until Justice O'Connor retired, the only justice on the court who actually knew anything about politics and had run for office. And she was replaced by somebody who opposed government regulations. So we have 5-4 the other way. That could change.

BILL MOYERS: Is it conceivable to you that the Citizens United decision, other thumbing of the nose at reform, comes because the justices don't have real world experience?

TREVOR POTTER: Yeah. I think they have a really ideological view without the real world experience that might tell them why it doesn't work. And I think O'Connor is actually a great example of the opposite. She'd been a leader in the Arizona legislature, she had raised and spent money in politics.

And when McCain-Feingold came along, she was willing to defer to Congress because they were the ones who were actually facing this power of money, this flood every day. And to understand how it corrupted the system and it resulted in backdoor legislative changes in favor of major donors. She took that because she had been in the legislature, and that, to her, was plausible.

But I think the Supreme Court, at least five of the justices, you know, have it in mind that these are incumbents somehow trying to protect themselves rather than incumbents who are trying to protect themselves from being corrupted, from being bought, or because they object when they see other people and party committees being bought.

BILL MOYERS: When you say they're ideological, what do you mean by that?

TREVOR POTTER: Well, it seems to me that the Supreme Court majority and Citizens United ignored, essentially, a hundred years of American history, going back to date Theodore Roosevelt and his first clarion call, that big money and Wall Street not dominate the presidential election. And his urging of Congress to limit corporate contributions.

The court essentially gave that all the back of their hand and said, "Under our view of the First Amendment, you can't do this." Now, to me, that is ideological to, first of all, not only ignore the precedent for a hundred years, but ignore a whole range of court decisions by other Supreme Courts, other justices, who thought this was consistent with the First Amendment.

So to say, "Everyone is wrong who's gone before us, all those justices, all those cases, we just see it a different way," seems to me to be a very ideological statement.

BILL MOYERS: You know, Barack Obama had real-world experience in politics. And as a state senator, he worked to pass campaign finance reform. As a United States Senator, he was critical and to the passing of ethics and lobbying reform after the Jack Abramoff scandal. He refused to take contributions from registered lobbyists or Political Action Committees. And as a presidential candidate, he promised to, quote, "tell the corporate lobbyists that their days of setting the agenda in Washington are over."

PRESIDENT BARACK OBAMA I am in this race to tell the corporate lobbyists that their days of setting the agenda in Washington are over. I have done more than any other candidate in this race to take on lobbyists — and won. They have not funded my campaign, they will not work in my White House, and they will not drown out the voices of the American people when I am president.

BILL MOYERS: And his own convention, was crawling with lobbyists schmoozing with politicians. And now, Rahm Emanuel has been turned loose by the president to go for the gold. Did you suggest earlier that he didn't have a choice? That with the great accumulation of money by the Republicans, he had to match them in order to be a viable candidate?

TREVOR POTTER: Well, being as kind as I can, and remember, I was John McCain's General Counsel, so I had some scars on this one-- I think he's a very practical politician. That's not necessarily a bad thing. But what he did in 2008 was sink the presidential public funding system.

John McCain had committed to be in it if the other party's nominee would. Everyone assumed that Obama would because he had said as much. And when the time came, he looked at it and clearly his political people said to him, you're raising so much more money than McCain, why would you go into that system and limit your spending? So don't go into the system.

PRESIDENT BARACK OBAMA We’ve made the decision not to participate in the public financing system for the general election. This means we’ll be forgoing more than 80 million dollars in public funds during the final months of this election. It’s not an easy decision, and especially because I support a robust system of public financing of elections.

TREVOR POTTER: And I think that was a practical, political decision, but contrary to everything he had said about the value of public financing. And what we're now learning is, once that cat is out of the bag, it's really hard to put it back in.

TREVOR POTTER: And so we're in a radically different place than we were four years ago. Individuals now can give unlimited amounts and corporations to these Super PACs. If they give to the allied (c)(4) social welfare group, no one will know who it is. So the first thing that's happened is it is possible to spend a huge amount to effectively buy an election, influence an election-- in a way that-- that other citizens will not be able to do. And that just couldn't happen before.

BILL MOYERS: You're describing a descent into Dante's inferno. Help me understand what we can do to get out of it. Can we get our democracy back?

TREVOR POTTER: Oh yeah, I think that's the good news. That we are, yeah, we're on the edge of spinning into this world where everyone is going to throw up their hands and say, you know, "It's too far gone, we can't do anything." But I don't think we're there. The Supreme Court gave us a roadmap.

It says, "Disclosure is fully constitutional." So we need to work on disclosure. The lower courts are continuing to uphold that. The groups that oppose disclosure and generally have opposed regulation in this area have been filing suits across the country trying to get state laws invalidated on the basis that they are too burdensome, they require too much disclosure. Those are generally being thrown out the suits are, and the courts are upholding disclosure. So we know it's constitutional. We know in Citizens United--

BILL MOYERS: That the disclosure's--

TREVOR POTTER: Decisions is--

BILL MOYERS: --constitute--

TREVOR POTTER: We know in Citizens United the court thought we actually already had it.

BILL MOYERS: There was legislation introduced in the Congress, it's called the Disclose Act for popular consumption, it passed in the House, right? And then went to the Senate and was filibustered by the Republicans.

TREVOR POTTER: It's actually come around twice. The first time it passed in the house and was defeated in the Senate. So that was 2010. They came back this time and it went straight to the Senate, they had a debate, Senator Whitehouse had rewritten this-- so that it's now purely disclosure.

SEN. SHELDON WHITEHOUSE These special interests have motives! They have motives to spend this money. And if those motives were good for America, if they were welcome to the average American, they wouldn’t need, and they wouldn’t want to keep them secret.

SEN. MITCH MCCONNELL A bill that has only two discernible purposes: to create the impression of mischief where there is none, and to send a message to unions that democrats are just as eager to do their legislative bidding as ever.

TREVOR POTTER: And again, they could not get the votes to get it to the floor.

SEN. CHRISTOPHER COONS Sadly every member of the other party voted against it. What is so wrong Mr. President with voters having information about who is trying to influence their vote?

BILL MOYERS: What would it have done if it had passed? What would it have required?

TREVOR POTTER: It would essentially have said that if you spend money to talk about candidates in an election season, no matter who you are, we don't care if you call yourself a (c)(4) or a (c)(6) or-- you know, a Martian spaceship. Whoever you are, if you spend money to talk about candidates in a public communication, paid advertising, then you have to disclose who is funding the ad.

And you could do it one of two ways. If you're a membership organization, you could disclose your major donors, 'cause this was a new aspect. They said, "We don't want to disclose, you know, little donors mom and pop. But if someone has given you more than $10,000, that's a substantial sum of money. That should be disclosed if you paid for this out of your regular funds, your membership funds, your corporate funds." The other alternative is to establish a separate account, raise money for ads in that, and only disclose those donors.

TREVOR POTTER: So what we need at the state level and at the federal level is to keep working on getting disclosure. Whether that is through Congress, whether that's through the Federal Election Commission.

You know, it's interesting, we would not be in the situation we're in if we had a majority on the Federal Election Commission who were enforcing the McCain-Feingold disclosure laws. We don't. We have five vacancies out of six commissioners.

BILL MOYERS: Why? Five out of six? That's dysfunctional--

TREVOR POTTER: Five out of six.

BILL MOYERS: --a disgraceful dysfunction.

TREVOR POTTER: All their terms have expired. They are sitting there, waiting for their successors to arrive. They are, you know, they're lame ducks. Whatever you want to call it. They shouldn't be there.

BILL MOYERS: Do we know why the president hasn't appointed successors?

TREVOR POTTER: We don't officially. The unofficial view is that it's part of the Washington deadlock. That in order to get successors through a Senate, you have to have Republican and Democratic consent. And traditionally, the president has gone to the congressional leadership of both parties to get advice from them and get names from them of people to nominate. And what we're told is that's not happening.

BILL MOYERS: See, that--

TREVOR POTTER: The White House isn't asking, Congress isn't giving, everyone is leaving this where it is. So, you know, if I were the Obama administration, and I'm not, but I stand here watching this I would've made this a priority.

BILL MOYERS: There are several efforts underway to get a constitutional amendment that would reverse Citizens United. Where did-- what's your stand on that?

TREVOR POTTER: Well, I think talking about this issue is really important to a modern democracy. We need to recognize where we are. I think we need to recognize that we're in trouble and we need to make changes. A constitutional amendment is like climbing Mount Everest. It's the hardest thing out there you could possibly do.

So it may be the only way to get there, but my own view is it is really worth exploring all the other ways to get to where we want to go before saying, "We have to go up and down the mountain to do it." You have to get the super majority in Congress to send it to the states to get the super majority of the states.

Whereas, you know, if you could pass pure disclosure, that would be a start, and that can be done without any super majority of states at all. If you could get the I.R.S. going, if you could get the Obama administration to nominate F.E.C. commissioners, if you could get the S.E.C., the Securities and Exchange Commission to say that corporations should let their shareholders know where their money is being spent in politics, all of those things, I think would be really helpful.

If you could begin to talk nationally, as many of the states and cities are about some way to have alternative sources of funding, some, tax refund, which we used to have, there used to be a tax credit so that you would double the amount that individual donors gave, effectively, 'cause it would be cost free to them if they got it.

I think all of those are possibilities. You could have a change in the Supreme Court. In the next administration, you may have one or more new justices if people retire.

BILL MOYERS: What can individual citizens do in the meantime?

TREVOR POTTER: Well, I'll give you a shameless plug answer, which is they can support groups like mine, the Campaign Legal Center, that are out there fighting these cases every day. Democracy 21 is fighting these cases. They have lawyers, they could use more help doing that. There are a lot of citizen groups out there that are involved in trying to make this issue a higher priority in Congress, Common Cause and others.

They all need help. So I think getting involved with those groups is a start. Also particularly on issues like the Disclose Act, writing members of Congress, writing to your Senator or Congressman, saying, "I'm watching you on this--" it's easy to find out how you members voted this time, why not write 'em a letter and say, "I know you voted wrong and you've better clean this up next time, because it's important."

BILL MOYERS: Why do you stay with this? I mean, you give a lot of pro bono time to working on these issues. Why?

TREVOR POTTER: Partly I'm an optimist. I've been at this a while. I have seen, you know, both the good and the bad sides. And I think we can have a better system. And a little bit, you know, if I'm not going to do it, you know, then I can't very well complain if other people don't do it.

And also, I keep running into people, and this is, you know, I know a lot of people from the Republican campaign world and they'll all say privately to me, "Trevor, we need to change the system. This is really not good." I'll run into corporate executives who will say, you know, "This is corrupting. This is not how we ought to run things." And if they're a Republican, I'll say, "Gosh, would you be willing to do something about that?"

And they said, "After the election, you know, I don't want to upset the applecart now. I don't want to draw attention away from our party's nominee. But yes, we need to do something." So my sense of it is that there is a real will out there, a groundswell to do something about this problem.

BILL MOYERS Trevor Potter, this has been very helpful. Thank you for being with me


BILL MOYERS: Like everyone else, I watched the movie of the week, that clandestine video from Mitt Romney’s fundraiser in Florida. I thought, we now have a record of what our modern day, wealthy gentry really thinks about the rest of us, and it’s not pretty. On the other hand, it’s also not news. If you had reported as long as some of us have on winner-take-all politics and the unenlightened assumptions of the moneyed class, you wouldn’t find the remarks of Romney and his pals all that exceptional. The resentment, disdain, and contempt with which they privately view those beneath them are an old story.

The video, in fact, called to mind our first Gilded Age, back in the late 19th century when the celebrated New York dandy of the time, Frederick Townsend Martin, summed up the era when he declared, “We are the rich; we own America; we got it, God knows how, but we intend to keep it.”

And so they do, as that glitzy gathering in Florida reminds us. You could see and hear one of the guests ask Mitt Romney:

AUDIENCE MEMBER But what do we do? Just tell us what we can help….

MITT ROMNEY: Frankly, what I need you to do is to raise millions of dollars, because the president’s going to have about $800 to $900 million. And that’s – that’s by far the most important thing you could do.

BILL MOYERS: The governor’s being truthful there, because as we heard from Trevor Potter, money rules these campaigns. If there were more secret videos from other candidates, we would see them in equally compromised positions -- bowing and scraping in their infernal pursuit of campaign cash, bending over backwards to suffer the advice that the privileged think their money entitles them.

And I do mean both parties. Not far from this studio the other night, at a Manhattan fundraiser hosted by Jay-Z and Beyoncé, President Obama joked, “If somebody here has a $10 million check -- I can’t solicit it from you, but feel free to use it wisely.” At least, I think he was joking. Obama and Romney alike now shape their schedules as much around moneymaking events as rallies and town halls. They’ll change the campaign jet’s flight plan and make a special landing just for the cold, hard cash.

This folks, is a racket, plain and simple. All that spending by the parties, corporations, super PACs and other outside groups will push political ad spending up this year by half a billion dollars, 25 percent higher than 2010. The biggest increase in history. That prompted the CEO of CBS, Leslie Moonves, to lick his chops and tell investors last December, “There’s going to be a lot of money spent. I’m not saying that’s the best thing for America, but it’s not a bad thing for the CBS Corporation.”

So we journalists can’t stop reporting on this, even though we’re often told, “Please. Change the subject. Everyone’s tired of this one. ” I’m not so sure. Trevor Potter sees a groundswell for rooting the money out of politics, as Americans come to see that this is the one reform that enables other reforms. And two polls released in the last few days report large majorities, as many as eight in ten of you, are in favor of clamping down on the amount of money that corporations, the super-rich, and those shadowy outside groups are pouring into the campaigns. It’s up to all of us to put a sign on every lawn and stoop in the land: “Our democracy is not for sale.”

That’s why next week we’ll investigate yet another way in which corporate forces and their political allies are flying underneath the public’s radar, with the help of a front group that goes by the innocent-sounding name, ALEC:

STATE SEN. STEVE FARLEY I’ve often told people that I talk to out on the campaign trail. When they say, “state what?” when I say I’m running for the state legislature. I tell them that the decisions that are made here in the legislature are often more important for your everyday life than the decisions the president makes.

JOHN NICHOLS If you really want to influence the politics of this country you don’t just give money to presidential campaigns, you don’t just give money to congressional campaign committees. The smart players put their money in states.

PRESIDENT RONALD REAGAN ALEC has forged a unique partnership between state legislators and leaders from the corporate and business community. This partnership offers businessmen the unique opportunity to apply their talents to solve our nation’s problems and build on our opportunities.

LISA GRAVES I was stunned at the notion that politicians and corporate representatives, corporate lobbyists were actually voting behind closed doors on these changes to the law before they were introduced in statehouses across the country.

REP. JOHN BOEHNER: ALEC, has been I think a wonderful organization. Not only does it bring like-minded legislators together. But the private sector engagement in partnership in ALEC is really what I think makes it the organization that it is.

BILL MOYERS: That’s next week’s program. Meanwhile, at, our colleague Laura Flanders has a web-exclusive interview on Occupy Wall Street’s first anniversary, and whether its campaign to fight income inequality has made a difference. She talks with journalist Arun Gupta and author and activist Marina Sitrin.

LAURA FLANDERS: Occupy Wall Street got a drubbing in a lot of the press on the anniversary. You had “The New York Times” talking about a "fad" and, you know, "talk is cheap." How do you respond to that, Marina?

MARINA SITRIN: To find out what Occupy is doing, you'd actually have to dig a little deeper and see that Occupy has kind of re-territorialized itself.

ARUN GUPTA: Occupy put the public space back in society. And it recreated the public so that people could come into these spaces and say, like, "Hey, I'm unemployed and can't find a job. Person next to me, their home is in foreclosure. This other person, they have this huge student debt. Someone else, they lack health care." And they see their problems as all the same, because the culprit is all the same, Wall Street.

BILL MOYERS: That’s at, where you also can find out more about the people and organizations working to get money out of politics. You can help. I’ll see you there and see you here, next time.

Elections for Sale

September 21, 2012

One of the reasons Moyers & Company frequently returns to the theme of money and politics is because it’s absolutely necessary to do so. Nothing corrupts our political system more than the ability of the rich and influential to spend limitless amounts of money — often in secret — with the intention of creating preferred political outcomes. And far from being a regulator of campaign finances, our political funding laws — aided by a corporate-friendly Supreme Court and self-interested politicians — only facilitate the process of empowering the few while subjugating the many.

Few understand how money moves in and out of our political system better than campaign finance reform advocate Trevor Potter. A former chairman of the Federal Election Commission and founding president of the Campaign Legal Center, Potter was Stephen Colbert’s chief advisor when Colbert formed his own super PAC and 501 (c)(4) in a clever effort to expose the potential for chicanery behind each.

Bill and Potter discuss how American elections are bought and sold, who covers the cost, and how the rest of us pay the price.

“I can assure you that if someone is spending millions of dollars to elect the candidate, the candidate knows where that money is coming from. There’s nothing illegal about telling them, but the voters aren’t going to know that,” Potter tells Bill. “We’re creating opportunities for corruption and candidates being beholden to specific private interests because of funding, yet there’s no disclosure to the rest of us.”

Also on the show, a Bill Moyers essay on how the Citizens United decision has candidates campaigning for cash more than votes, and how that money is pouring into TV ads and high paid political consultants.

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