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Political Spending Sets New Records During Tumultuous Year

Tom Williams/CQ Roll Call File Photo
In March, a federal judge agreed with Van Hollen that FEC disclosure requirements for outside groups running issue ads are too lax.

Political spending set new records in 2012, which saw the first presidential election since the Supreme Court’s landmark Citizens United v. Federal Election Commission ruling.

Unrestricted super PACs and politically active advocacy groups spent more than $1 billion on campaign activities, and many found creative ways to avoid disclosing their funders. Some funneled campaign money through shell corporations, others took advantage of tax laws that allow 501(c)(4) social welfare groups and other nonprofits to keep their donors anonymous.

The year was marked by legal and regulatory battles over the campaign finance rules and numerous complaints from watchdogs to the IRS, the FEC and the Justice Department. Republicans went to court to roll back campaign finance limits further; Democrats sued to force the FEC to write stricter disclosure regulations. Lower court rulings sided first with one side, then with the other, creating confusion for political players. Proposed rules changes also fueled legislative battles on Capitol Hill, which are certain to continue in 2013.

Here are just a few of the political money turning points from 2012:

January

Jan. 11: Taking direct aim at a centerpiece of the campaign finance rules, the Republican National Committee argues in federal court that the ban on corporate contributions to candidates and parties is unconstitutional. The RNC files its brief before the Fourth Circuit Court of Appeals in a case known as U.S. v. Danielczyk.

February

Feb. 7: Having assailed unrestricted spending during the 2010 campaign, President Barack Obama signals he will now embrace Democrat-friendly super PACs.

Feb. 16: Seven Democratic senators write to ask IRS Commissioner Douglas Shulman to crack down on political spending by non-disclosing tax-exempt groups.

Feb. 21: Billionaire casino mogul Sheldon Adelson announces he might spend $100 million to support former Speaker Newt Gingrich of Georgia in his presidential bid or another Republican. Adelson and his wife, Miriam, go on to give $91.8 million to super PACs in the 2012 cycle, making him the biggest individual campaign donor in U.S. history. By some estimates, Adelson also gives another $50 million to $65 million to non-disclosing tax-exempt groups by the campaign’s end.

March

March 6: The IRS angers tea party activists by sending lengthy questionnaires to conservative groups seeking tax-exempt status.

March 21: Senate Democrats introduce a stripped-down version of the DISCLOSE Act, which would require politically active outside organizations to more fully disclose their funding sources.

March 30: A federal judge agrees with Rep. Chris Van Hollen, D-Md., that FEC disclosure requirements for outside groups running issue ads are too lax. The judge orders the FEC to rewrite the rules and puts politically active nonprofits on notice that some of their ads will be subject to disclosure.

April

April 2: California Democratic campaign treasurer Kinde Durkee pleads guilty to embezzling more than $7 million from dozens, and possibly hundreds, of clients’ accounts.

April 22: The leading super PAC backing Obama, Priorities USA Action, seeks help from former President Bill Clinton to help it offset the substantial fundraising advantage enjoyed by pro-GOP super PACs

May

May 16: Van Hollen wins another court victory when a U.S. appeals court panel rejects a conservative challenge to the federal appeals court’s March ruling that the FEC must rewrite its disclosure rules.

May 30: The U.S. Chamber of Commerce announces that, in light of the pro-disclosure federal court rulings, it will steer clear of the types of ads subject to the tighter reporting rules.

June

June 12: The FEC permits campaign donations via text message.

June 20: Angered by reports that the IRS is scrutinizing politically active nonprofits, 11 GOP senators write to the agency to warn it to back off and stay out of political territory.

June 21: In a final blow to the post-Watergate presidential public financing system, the Senate votes to ban the use of federal public funding to help underwrite the national party conventions.

June 24: The Supreme Court rejects an attempt by the state of Montana to limit corporate political spending. The state had defended its corporate spending ban in court challenges to the high court’s 2010 Citizens United v. FEC ruling. But in a 5-4 ruling reaffirming the Supreme Court’s commitment to Citizens United, the high court reversed a lower court ruling that had upheld Montana’s corporate spending ban.

July

July 16: The Democrat-authored DISCLOSE Act is blocked in the Senate amid unanimous GOP opposition.

July 23: In response to their numerous complaints, the IRS tells Democracy 21 and the Campaign Legal Center that it “is aware of the current public interest” in undisclosed political activity by tax-exempt groups and “will consider proposed changes in this area” as it works on regulations.

August

Aug. 2: In a victory for transparency advocates, the FEC begins posting information about political ad buys in the nation’s biggest TV markets directly to the Internet. The electronic postings, previously limited to hard copy, had been challenged unsuccessfully in court by broadcasters.

Aug. 29: In a forum on Reddit, Obama declares that Americans “need to seriously consider” a constitutional amendment to reverse the Citizens United ruling.

September

Sept. 5: In another sign pro-Democrat super PACs remain outgunned by their GOP counterparts, Chicago Mayor Rahm Emanuel prepares to leave his post as the Obama campaign’s honorary chairman to raise money for Priorities USA Action.

Sept. 12: Van Hollen’s winning streak ends when a federal appeals court reverses previous lower court rulings that had upheld his challenge to the FEC’s disclosure regulations. The ruling again gives outside groups more freedom to run campaign-style issue ads without revealing their donors.

October

Oct. 26: Chevron Corp. donates $2.5 million to the Congressional Leadership Fund, a super PAC backing House Republicans. The donation draws notice because super PACs in 2012 have been mostly backed by individual wealthy donors, not corporations.

November

Nov. 5: Outside political spending tops $1 billion, according to the Center for Responsive Politics, more than three times what outside groups spent in the 2008 presidential election. CRP also predicts that total 2012 spending will reach $6 billion.

Nov. 7: The Sunlight Foundation releases its analysis of campaign spenders’ return on investment, which proved disappointing for conservative groups that spent hundreds of millions of dollars but failed to capture the White House or the Senate. Among other findings, it shows that the influential GOP super PAC American Crossroads spent $104.7 million, but had a 1.29 percent return on investment.

December

Dec. 7: Post-election reports show that top donors from the real estate, casino, media and financial services industries poured six- and seven-figure contributions into super PACs in the election’s final weeks.

Dec. 28: Sens. Lisa Murkowski, R-Alaska, and Ron Wyden, D-Ore., team up to introduce a bipartisan campaign finance disclosure blueprint. The plan signals a possible end to uniform Senate GOP opposition to campaign finance changes and a revival of the political money wars in the next Congress.

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