Money in Politics This Week

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

NEW YORK

Daily News Tells Legislators to Reveal Outside Income to Corruption Commission

The Daily News ran an editorial on Saturday asking Albany lawmakers to come clean about their outside income. The Moreland Commission to Investigate Public Corruption set last Friday as the deadline for state legislators to provide information regarding outside employment that earned them more than $20,000 in 2012. State Assemblymen and Senators serve for only part of the year, and the commission is investigating whether legislators are using their political power for private gain. In a rare bipartisan response, lawyers representing lawmakers have stated that all information that is legally required has been disclosed and that the commission is constitutionally constrained from demanding any more. “So much for openness and accountability,” the editorial reads. Commission spokeswoman Michelle Duffy said that “There are a number of avenues through which the commission can [still] obtain the information being sought, and we will pursue them.”

Moreland Commission Holds Second Public Hearing

The Moreland Commission to Investigate Public Corruption held its second public hearing on Tuesday, this time in Albany. The location was changed at the last minute due to higher than expected attendance: at its peak there were nearly 100 people in the audience. Several good-government groups were present to testify in favor of comprehensive campaign finance reform as an answer to the epidemic of corruption in the state legislature. New York Public Interest Research Group research coordinator Bill Mahoney emphasized that lax enforcement by the state Board of Elections has allowed politicians to spend campaign funds on private expenses including pool covers, cars and legal defense. Brian Paul of Common Cause of New York criticized the infamous LLC loophole – whereby a single corporation can use multiple limited liability companies to give effectively unlimited amounts. They also derided the “soft money” loophole that has allowed just 59 special interest groups to contribute over $47.6 million to political party housekeeping accounts, which in turn are used to benefit party-favored candidates. Brennan Center counsel Ian Vandewalker requested that the commission examine legal corruption in addition to illegal corruption. Almost all of the speakers testifying asked the commission to focus on a comprehensive solution that includes small-donor public financing based on the New York City elections model.

Norden and Vandewalker Discuss Albany’s Tax-Break Protection Racket in Daily News Op-ed

A Daily News op-ed by Brennan Center attorneys Lawrence Norden and Ian Vandewalker describes the way decisions about tax credits seem to be driven by campaign contributions. In testimony before the Moreland Commission to Investigate Public Corruption, the Brennan Center singled out 14 temporary tax credits that were repeatedly scheduled to expire and were reauthorized. Although the Brennan Center takes no position on the utility of the tax breaks, the authors ask why the credits are not made permanent if they benefit the economy. Our money-driven campaign system provides a possible answer. In 1999, the state legislature reduced taxes on gambling wagers from 7.5 percent to 1.6 percent. Although these were set to expire in 2007, since then, they have been reauthorized seven times. Meanwhile, research by Common Cause/NY shows that racetrack and racino interests contributed over $4.7 million to political campaigns in the state between 2005 and 2012, as well as $2.4 million to the Committee to Save New York. As long as our campaign finance laws remain broken, “corruption will remain endemic.”

Super PAC Files Suit against NYS Aggregate Contribution Limits

The New York Progress and Protection PAC, a Republican Super PAC, has filed a suit against the New York State Board of Elections over the right of individuals to donate more than $150,000 to independent political organizations. New York State law bars an individual from contributing more than $150,000 per year to independent political groups. Shaun McCutcheon, a wealthy Republican donor from Alabama, alleges that his free speech rights are being violated because he wants to donate at least $200,000 to the organization. He has also filed a case against the federal aggregate contribution limit for political campaigns, set to be heard by the Supreme Court this October. The new group plans on spending funds to indirectly support Republican mayoral candidate Joe Lhota. Lhota claims he does not know the group in question, but supports the right of big donors to spend as much money as they wish on political contests. During his primary race, Lhota was able to keep his campaign afloat against self-financed grocery chain owner John Catsimatidis through the New York City’s public financing program, which matches small donations with public funds.

NATIONAL

Obama Campaign Bundlers Awarded with Ambassadorships

Twenty bundlers that raised at least $13.8 million for Obama’s election campaigns have received U.S. ambassadorships to countries and international organizations. Bundlers are major fundraisers who collect donations from family, friends and co-workers for political contests. Recent appointees to ambassador posts include prominent finance, consulting and law firm executives, as well as former government officials and political campaign veterans. According to the American Foreign Service Association, which represents career diplomats, President Obama’s rate of appointing non-career ambassadors is similar to previous administrations: about one in three. Historic White House tapes, released in 1997, reveal that President Nixon informed donors during his 1972 reelection campaign that they needed to contribute at least $250,000 – $1.4 million in 2013 dollars – to be considered for an ambassadorship. The AFSA has criticized the practice saying that is hard “to attract, train, retain and deploy a professional cadre…if the majority of key senior diplomatic positions at home and abroad are reserved for political appointees.”

Senate Finally Approves FEC Nominees After Two Months

Two of President Obama’s nominees to the Federal Election Commission have finally been approved by the Senate after their initial nomination on June 21^st. Lee E. Goodman, a Republican attorney at the law firm LeClairRyan, and Ann Miller Ravel, a Democrat and the head of California’s Fair Political Practices Commission, are set to join the commission. The FEC has struggled with ideological divides and gridlock over enforcement for years. The new members will fill two slots that have been vacant because of resignations. Ravel, in her official capacity, fought for the disclosure of donors to a secretive Arizona non-profit that spent $2 million on California ballot initiatives. Goodman served as a lobbyist for America Online and Time Warner, as well as a counsel to the governor of Virginia and assistant attorney general of Virginia.

The Battle over Obamacare Turns to Ad Spending

The ongoing battle in Congress over the implementation of the Affordable Care Act is jeopardizing the nation’s financial stability with the threat of another government shutdown. The Obama administration, aided by Organizing for America and insurance companies, is set to kick off a six-month campaign to encourage uninsured Americans to purchase health insurance. Some Republicans, meanwhile, are also spending big to discourage consumers from enrolling. If enough consumers do not enroll it threatens to derail the signature healthcare law, which aims to lower premium costs through a wider pool of less risk-prone, healthy, young people. Insurance companies are poised to spend nearly $1 billion on marketing to attract new customers. The Republican National Committee has been boosting a campaign to run commercials during popular radio and TV programs. And the Republican-controlled House of Representatives just passed a government funding bill last week that strips funding for key Obamacare provisions. The Senate Conservatives Fund, a political action committee connected to Heritage Foundation President Jim DeMint, has raised more than $1.5 million to pressure Republican Senators to defund Obamacare as well. If the House and Senate cannot agree on a funding bill by September 30^th, it will lead to a government shutdown.

Money in Politics This Week

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

NEW YORK

U.S. and NY Attorneys Testify at Moreland Commission’s First Hearing

The Moreland Commission to Investigate Public Corruption held its first hearing in New York City on Tuesday. The Commission, composed of district attorneys, law professors and private sector lawyers, was appointed by Governor Cuomo to investigate corruption in the state legislature. Federal prosecutors, state district attorneys, reform organizations, and members of the general public testified at the hearing. Preet Bharara, the U.S. Attorney for the Southern District of New York who is leading the corruption cases against lawmakers caught taking bribes earlier this year, was the first speaker. He decried the “unacceptable level” of corruption in Albany. Under new policies, his office will use civil forfeiture to prevent convicted public officials from collecting a tax-payer funded pension. Loretta Lynch, U.S. Attorney for the Eastern District of New York, called for greater financial disclosure by legislators to reduce the potential for conflicts of interest. Manhattan District Attorney Cyrus Vance Jr. recommended changes to state laws that would ease the burden for prosecutors trying corruption cases.

Good Government Groups, NYC City Councilman Ask Moreland Commission to Consider Comprehensive Campaign Finance Reform

Good-government groups and a New York City Councilman were also present at the Moreland Commission hearing on Tuesday. Republican Eric Ulrich (CD-32) testified about the benefits of the city’s public matching system, which reform organizations have been pushing as a model for the state. The small donor matching system, which provides $6 for every $1 raised by a candidate up to $175, allowed Ulrich to effectively compete against an incumbent by building a broad base of grassroots support, he said. In a State Senate race however, his prospects were diminished due to the influence of large contributors. Following Ulrich, Larry Norden and Ian Vandewalker at the Brennan Center for Justice informed the Commission that comprehensive campaign finance reform was necessary to address the scale of corruption in Albany. They singled out 14 tax credits in their analysis that are reauthorized every few years to the benefit of industries that make significant campaign contributions. Bill Samuels, co-founder of Effective NY, urged the Commission to examine campaign contributions by groups using limited liability corporations to evade donation limits. Samuels also requested further investigation into political party “housekeeping accounts,” which have become a means for transferring contributions to party-favored candidates.

NYC Public Financing System Kept Focus on Constituents

Although outside spending played a role in New York City’s first citywide election since the Citizens United decision, Mark Schmitt argues in the New Republic that public financing helped keep the focus on small donors. Public financing allowed candidates like Scott Stringer and Joe Lhota to compete against well-known, self-financed millionaires. Unlike many jurisdictions throughout the country, the city requires outside groups to make detailed disclosures of their donations and expenditures, with data available online. In total dollar terms, the ratio of candidate spending to outside dollars in New York City was $105 million to $12.7 million—over eight to one. By contrast, in the 2012 U.S. Senate races, this ratio was only two to one. Even with the ever-increasing threat of independent expenditures, almost all candidates participated in the public financing program, likely because the amplification of grassroots support through public matching funds is an effective way to defend against independent spending.

Primary Winners, Common Cause Praise Public Financing Model

Around 10 victors from the City Council primary election held a press conference outside City Hall with Common Cause/NY on Monday. Susan Lerner, executive director at Common Cause/NY, said that the races demonstrated that New York City’s public campaign financing model works well and should be adopted by the state. The attendees pointed out that the influence of  independent spenders like Jobs for New York, a group backed by real estate developers, was blunted by the public funding system. City Council nominees including Ben Kallos (CD-05), Margaret Chin (CD-01), Laurie Cumbo (CD-35), Mark Levine (CD-07) and Carlos Menchaca (CD-38) were present to show their support for the City’s campaign finance system. Kallos emphasized that public campaign financing allows “idealist candidates who are reformers to get elected without being in debt to the very special interest we are running against.”

Post-Star Commends Moreland Commission’s Investigation

The Post-Star in Glens Falls, New York, commended the work of the Moreland Commission to Investigate Public Corruption in an editorial last week. Legislators in Albany perform public service part-time from January to June each year and are allowed the hold employment positions at law firms, companies and government agencies. In early September, the commission requested state lawmakers provide information regarding outside employment if they were compensated more than $20,000 in 2012, as well as a description of the work performed. “It is a level of transparency that is long overdue and would immediately expose any patronage going on in Albany,” the Post-Star stated.

NATIONAL

Dark Money Groups May Have Violated IRS Rules

A Center for Responsive Politics investigation shows that a large contingent of dark money groups spent a significant portion of their resources on political efforts in defiance of the law. “Social welfare” organizations (501(c)(4)s) and industry trade groups (501(c)(6)) do not have to disclose their donors so long as the money they spend on elections doesn’t constitute a majority of their budget, according to a common interpretation of Internal Revenue Service (IRS) rules. The CRP merged separate datasets from the IRS and the Federal Election Commission to paint a complete picture of expenditures by such non-profits. The groups reported more than $51.6 million in political spending to the FEC, but only $24 million to the IRS over an identical timeframe. The discrepancy is because these entities channeled funds to other similar non-profits, allowing them to evade IRS disclosure rules. For example, the 60 Plus Association, which spent millions in 2012 supporting conservative candidates, received major donations from three non-profits: the Center to Protect Patient Rights, TC4 Trust and Free Enterprise America – two of which are now defunct. Yet these three organizations did not consider their donations to be political expenditures on their 990 IRS filings. If such hidden spending is taken into account, then nine groups, including the Crossroads GPS, American Action Fund, and Green Tech Action Fund, may be in danger of exceeding the legal IRS limit on political spending.

Virginia Gubernatorial Race Inviting Big Independent Spenders

The competitive race for governor in Virginia is inviting several outside groups into the political battle between Democratic businessmen Terry McAuliffe and Republican Attorney General Ken Cuccinelli. Citizens United, the group made famous by the Supreme Court’s Citizens United v. FEC decision, is the second biggest spender in the race, after the Republican Governors Association. It will launch a $375,000 advertisement campaign criticizing McAuliffe’s business record at his electric car start-up and his support for President Obama’s healthcare overhaul. The Ending Spending Action Fund, connected to Chicago Cubs owner and TDAmeritrade founder Joe Ricketts, will be spending $200,000 on ads opposing McAuliffe, including $10,800 to air 13 spots in northern Virginia. Meanwhile, the Northern Virginia Technology Council’s decision to endorse Cuccinelli was resisted by pro-McAuliffe legislators, who threatened that the group’s legislative concerns will be ignored in the state senate. “The response [from legislators] will be frigid and doors will be closed,” an email from state Senator Janet D. Howell (D-Fairfax) stated.

McCutcheon v. FEC Decision Could Allow Donors to Evade Individual Contribution Limits

In October, the U.S. Supreme Court is set to hear McCutcheon v. Federal Election Commission. The case, brought by prominent Alabama Republican donor Shaun McCutcheon, challenges the aggregate contribution limits for federal elections. Candidates are limited in terms of how much money they may accept from one individual. Individuals are also restricted by the total amount they may donate during an election cycle – currently the limit stands at $123,200 total for all candidate committees, PACs and political parties. Aggregate contribution limits prevent the circumvention of individual contribution limits in a process detailed by the Center for Responsive Politics. Leadership PACs and joint fundraising committees enable candidates and parties to hold fundraisers and split the proceeds as they wish, with money frequently going to party-favored candidates afterwards. Big donors already exert significant control over our elections. Poll after poll shows that Americans disfavor the heavy-handed influence of special interests and big donors on Congress. Only 646 donors in the 2012 election cycle reached the aggregate contribution limit of $117,000, providing a total of $93.4 million to candidates and committees in federal elections. And Shaun McCutcheon’s lawsuit threatens to amplify our representatives’ reliance on these mega-donors.

NJ Pay-to-Play Rules Don’t Stop Independent Spending

A Republican Governors Association fundraiser is being scrutinized by the New York Times after revelations that the organization made $1.7 million in expenditures in support of New Jersey Governor Chris Christie’s reelection campaign. The fundraiser, led by Christie, at the Liberty National Golf Course, involved individuals prohibited from making large contributions directly to the governor under New Jersey’s pay-to-play rules. Christie has helped the Republican Governors Association amass $1.65 million from donors in New Jersey, a third of which came from people and companies doing business with the state. Reform groups, such as Citizens Campaign, fear that the transactions allow contractors, lobbyists and major donors to circumvent pay-to-play rules. Christie’s competitor, state Senator Barbara Buono, has also benefited from outside spending. One New Jersey, a teachers’ union-backed organizations, which has been attacking Christie for vetoing a minimum wage increase and opposing higher taxes on the wealthy, has spent $2.8 million on radio and TV ads.

Money in Politics This Week

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

NEW YORK

Reform Advocates Meet With Moreland Commission Co-Chair Fitzpatrick

Representatives from three good-government groups met with Onondaga County District Attorney William Fitzpatrick at the end of August. Fitzpatrick is one of three co-chairs of the Commission to Investigate Public Corruption, a body appointed by Governor Cuomo to examine political corruption in the legislature. Representatives from Citizen Action of New York, the Brennan Center for Justice and Democracy Matters were present at the meeting. Karen Scharff, executive director of Citizen Action, noted that the commission is “very willing to do investigations.” Already it has subpoenaed five major political donors – real estate developers in New York City – who received tax abatements from the state legislature. The advocates stated that Fitzpatrick was attentive to their comprehensive campaign finance reform proposal, which includes lower contribution limits, pay-to-play restrictions, public financing and better enforcement of existing laws. 

Public Financing Keeps Focus on Small Donors in NYC Elections

Wall Street is noticeably absent from the campaign chests of New York City mayoral candidates. Three candidates in the Democratic primary ran on a platform of reducing income inequality and imposing higher taxes on the rich, and yet the city’s financial elite have been relatively inactive. New Republic senior editor Alec MacGillis explains that the city’s public financing system helps ensure that money does not speak louder than the voices of voters. Candidates that can garner small donations from enough city residents are provided with six dollars for every one dollar raised up to $175. Individual donations are capped at $4,950 for mayoral candidates. The system has encouraged mayoral candidates to spend time raising small donations from constituents rather than a few mega-donors. A 2012 study by the Brennan Center and the Campaign Finance Institute showed that 89 percent of census block groups in the city had at least one person who donated up to $175 to a City Council candidate, whereas only 30 percent of census block groups had a donor for the New York State Assembly races – where public financing is absent.  

Independent Spenders Active in NYC Races

Although the New York City public financing system has done much to reduce the influence of special interests on electoral campaigns, independent groups can still spend unlimited funds as a result of the U.S. Supreme Court’s decision in Citizens United v. FEC. In the first citywide election since the Supreme Court’s 2010 verdict, special interest groups are flexing their muscle through independent expenditures. Approximately $12.7 million has been spent by these groups on all races, with Jobs for New York, a real estate developers’ group, topping the charts with $4.8 million for and against City Council candidates. In the Democratic primary, Bill Thompson received the most favorable spending on his behalf; $2.9 million by a teachers’ union organization and a firefighters’ group, among others. On the Republican side, independent spenders preferred Joe Lhota. New Yorkers for Proven Leadership, co-founded by former Mayor Rudy Giuliani aides, spent $120,001 in support of Lhota.

NATIONAL

The Donors and Lobbyists Behind the President’s Syria Resolution

In August, President Obama sought Congressional approval to engage in limited military action in Syria. On Wednesday of last week, a resolution authorizing the strike cleared the Senate Foreign Relations Committee by a 10 to seven vote. Analysis by MapLight illustrates that Senators who voted for the resolution received, on average, 83 percent more in campaign contributions from defense companies and defense-related interests, compared to Senators that voted “no.” Senators authorizing military force received on average $72,850 from the defense industry, whereas those rejecting the resolution received $39,770. Senator John McCain (R-AZ) who has been leading the effort to convince fellow Congressman on the issue received the greatest amount: $176,300. The American Israeli Public Affairs Committee (AIPAC) has also been active, dispatching 250 members and activists to D.C. to lobby undecided lawmakers. AIPAC and Israeli Prime Minister Benjamin Netanyahu are both supportive of the strikes, seeking to send a bold message to the Syrian regime’s key ally, Iran, and punish Bashar Al-Assad for the alleged use of chemical weapons. After Russia presented a diplomatic opening, Obama has asked Congress to postpone the vote on his resolution.

Independent Group Spent $3.5 Million on Recall Elections in Colorado

Recall elections held last week in Colorado that were seen as a referendum on gun control provided a battlefield for outside spenders as the issue gathered national attention. Four Colorado state Senators were challenged in the recall election for voting to expand background checks on private gun sales and limit ammunition magazine capacity in the aftermath of the tragedies in Newtown and Aurora. Two Democratic state Senators, John Morse and Angela Giron, lost their seats. An estimated $3.5 million was spent by both sides, much of it from out of the state, and it’s likely much more spending went unreported. New York City Mayor Michael Bloomberg donated $350,000 to Taxpayers for Responsible Democracy, a new Denver-based organization opposed to the recalls. Americans for Responsible Solutions, the group founded by former U.S. Representative and gun violence victim Gabrielle Giffords, spent $400,000 on TV ads in support of the Senators. The National Association for Gun Rights, spent $100,000 on this anti-Morse ad. The Virginia-based National Rifle Association, which put forth $400,000 for the recall efforts, accused Mayor Bloomberg of “coming in and trying to buy elections.”  

Disclosure Proposals Introduced in Several State Legislatures

A new analysis by the Sunlight Foundation shows that legislators in nearly half of all states have introduced legislation to expand disclosure and transparency in state politics following the Citizens United decision. Thirty-nine of the 66 bills introduced in 2012 and 2013 on campaign finance include proposals for greater disclosure, whereas 25 remain neutral on the issue, and two would actually damage transparency. Measures in D.C., Delaware, Florida, Hawaii, Minnesota and Rhode Island, if passed, would improve disclosure around “dark money.” For instance, in Delaware, HB 300, which was introduced back in April and just passed last week, requires the prompt reporting of third-party spending on campaign ads. Unfortunately some states, such as Connecticut, Maryland, Florida, Arizona, Wyoming, and Minnesota have responded to heavy independent expenditures by dismantling or increasing contribution limits for candidates, political action committees, or political parties. For example, Arizona Governor Jan Brewer signed HB 2593 into law last April. The law raised the legal contribution limit, as well as the total amount one individual may donate to PACs. Reformers fear that the law threatens the survival of the state’s public financing system.

Kentucky Senate Race Drawing Outside Groups, Big Donors

The Senate race in Kentucky is drawing national attention and consequently attracting big checks from major donors as well as expenditures from outside groups. Senate Minority Leader Mitch McConnell (R-KY) is up for up for reelection, contending with a tea party-backed primary challenger, Matt Bevin, as well as Democratic front-runner Kentucky Secretary of State Alison Grimes, for the general election. The Senate Conservative Fund has launched $340,000 worth of TV ads criticizing McConnell’s unwillingness to defund the Affordable Care Act. A 501(c)(4) called Kentuckians for Strong Leadership, founded by Caleb Crosby – the treasurer  of Karl Rove’s American Crossroads Super PAC – has raised $1.4 million. Most of the money is from 17 out-of-state donors, including $50,000 from Donald Trump and $100,000 from a Super PAC run by conservative pundit Dick Morris. KSL has released ads painting Grimes as a “rubber stamp” for the President’s agenda. On the liberal side, the Senate Majority PAC, which has raised $3 million, including $1.6 million from labor unions, will be assisting Grimes. Jeffrey Katzenberg, who bundled more than $500,000 to reelect Obama, is slated to hold a fundraiser for Grimes in Los Angeles. He has already maxed out on personal contributions to her campaign. McConnell, seeing the field of challengers, is also actively raising money, gathering $13.7 million so far. He has already spent $4 million. Grimes’s contributions and expenditures will be revealed on September 30th.