Rove Spotlights Post-Citizens United Terrain

Posted July 27, 2010 at 4:33pm

I want to start by thanking Karl Rove for his singular contribution to campaign finance reform. For months, I and others have pointed out the rank hypocrisy among opponents of campaign finance reform, who spent years saying the magic elixir was disclosure of where the campaign money was coming from.

[IMGCAP(1)]Senate Minority Leader Mitch McConnell, who holds the undisputed twin titles of No. 1 campaign finance anti-reformer and No. 1 hypocrite, once said he didn’t understand why a little disclosure is better than a lot of disclosure. Now the Kentucky Republican is leading his party and outside activists in spurning the clear, 8-1 mandate of the Roberts Supreme Court in the Citizens United decision to encourage robust disclosure, as they call the disclosure they once championed a horrendous burden and even an unconstitutional blockage of free speech.

But their hollow arguments have been largely lost in the shuffle as the bill to fulfill the Supreme Court mandate for robust disclosure, the DISCLOSE Act, was instead sidetracked over its own controversies, including the deal to exempt the National Rifle Association and other organizations from its thrust. Regardless of whether that was a pragmatic choice on the part of the bill’s sponsors to get majority support, it clearly backfired. Some controversial provisions involving labor have been dropped, but the fate of the DISCLOSE Act remains a tossup at best, with less than a handful of Republicans willing to show any support, not just for this election but for the future.

Now comes Rove to show why Citizens United opens up a brave new world of huge and overweaning big-money influence on elections — tens of millions in negative ads done through the cloak of anonymity.

Post-Citizens United, Rove and Ed Gillespie created a 527 group, American Crossroads, to jump into the 2010 elections. It raised nearly $5 million quickly, nearly all from four billionaires, three not surprisingly from Texas. But that was not enough; Rove and Gillespie then set up a second American Crossroads group, this one a 501(c)4 under the tax code, a nonprofit that can do advocacy but does not have to disclose donors. It raised $5.1 million in June alone, with a goal of getting to $50 million for this election, and according to media accounts, was set up and succeeded in its fundraising because it tapped into sources who did not want to be identified. The “concept paper” describing American Crossroads GPS, as the 501(c)4 is called, said the group will conduct “in-depth research on congressional expense account abuses,” to blame Democrats for “failed border controls” and to frame the BP oil spill as “Obama’s Katrina.”

The IRS manual defines 501(c)4 organizations in the following way: “Unlike 501(c)3 organizations, 501(c)4 organizations may lobby for legislation; they may also participate in political campaigns and elections, as long as campaigning is not the organization’s primary purpose.”

I would love to be persuaded that American Crossroads GPS has any other purpose besides campaigning and elections, or that its creation has any other purpose besides keeping the fat cat donor names hidden from public view. As reporter Ken Vogel noted, the spinoff was created so donors wouldn’t have to be publicly associated with Rove.

The former adviser to President George W. Bush is not the only political operative seizing on this loophole in IRS regulations to do aggressive partisan campaigning. So is former Sen. Norm Coleman (R-Minn.), who formed a “think tank” called the American Action Network after he left the Senate; its 501(c)4, also called American Action Network, has now spent a bundle of money on attack ads hitting Gov. Charlie Crist (I) in the Florida Senate race and Sen. Patty Murray (D-Wash.).

There are plenty of highly partisan 527s and 501(c)4s on the Democratic side as well. I would like to see the IRS do a full-scale review of its various nonprofit categories, including 527s and the 501(c)4s, which I think are being distorted well beyond that IRS definition above. But in the meantime, there is the DISCLOSE Act.

The DISCLOSE Act is far from flawless. The NRA exemption is cringe-worthy, but should not in my view be a deal-breaker. I am troubled as well, as are my reformer colleagues Michael Malbin, Tony Corrado and Tom Mann, by the party coordination provisions, relating to the degree to which parties can act in concert with their candidates in a unified effort using party-raised money; the bill dilutes the term “coordinated” enough that we fear a backdoor way to undermine the individual contribution limits to candidates, meaning yet another flood of huge money in a repeat of the pre-reform soft money era.

We have a better idea, to free up parties to work with their candidates and at the same time tilt the system toward small donors, by allowing unlimited coordinated spending by parties on candidates so long as the money comes from a pool with an annual maximum of $200 per person.

I also recognize the unease of some Senators about enacting a major law in the middle of a campaign, with all the upheaval that can cause (even if somehow that argument did not stop the Roberts court from turning Arizona’s campaign finance law upside down in the middle of this campaign).

I am not eager to see the 501(c)4 loophole used in the next 100 days to allow secret fat cats, corporations and unions to flood the zone with vicious ads. But that would be a small price to pay to get some robust disclosure regimen on the books for the future. If DISCLOSE isn’t passed this year, whether it takes effect immediately or not, it will not pass in 2011, given certain Republican gains in the House and Senate. Thank you again, Karl, for showing us what the post-Citizens United landscape will look like in that case.

Norman Ornstein is a resident scholar at the American Enterprise Institute.