From the upside-down perspective of Republicans, the biggest threat to American democracy comes not from the millions in unregulated, undisclosed money sloshing through campaigns, but from the slightest attempt to shed light on the big donors funding secretive political groups.
So alarmed are conservatives by the specter that non-disclosing groups will be politically harassed and intimidated that they have set out to impeach Internal Revenue Service Commissioner John Koskinen. It's a move that worries GOP leaders, but that has fired up the right-leaning House Freedom Caucus. It all goes back to a federal Inspector General's finding in 2013 that the IRS had improperly targeted tax-exempt Tea Party groups for special scrutiny.
At a hearing before his committee this week, House Judiciary Chairman Bob Goodlatte of Virginia accused Koskinen of engaging in “a political plan to silence the voices of groups representing millions of Americans.”
House conservatives want to charge Koskinen with “high crimes and misdemeanors” for allegedly hiding information from Congress. Never mind that two independent investigations have cleared Koskinen of wrongdoing, or that congressional Republicans have already spent $20 million investigating the IRS.
Koskinen has apologized for the agency's self-admitted mishandling of Tea Party groups. But obscured in the Tea Party flap is that the IRS is known less for its agressive enforcement than for its well-documented failure to police widespread abuse by politically active tax-exempt groups. Also overlooked is that the IG targeting report also ordered the IRS to clear up its hazy rules regarding nonprofit political activity—something congressional Republicans have now expressly forbidden the agency to do. Conveniently for the GOP, that frees conservative nonprofits to continue shielding the identities of their super-rich donors from public view.
The heart of Republicans’ dispute with the IRS is whether nonprofit groups should be free to secretly spend millions on American elections. Tax laws fully shield such groups from having to disclose their donors. Yet since the Supreme Court’s 2010 Citizens United v. FEC ruling to deregulate independent campaign spending, politically active tax-exempt groups have exploded in number. Such non-disclosing groups, mostly 501(c)(4) social welfare groups and 501(c)(6) trade groups, have spent $600 million on elections since that 2010 ruling.
That money should remain secret, conservatives argue, because its real purpose is constitutionally protected advocacy, not to elect or defeat candidates. But that argument has never washed with the Supreme Court, which has repeatedly upheld the campaign disclosure laws—including in Citizens United. And recent document disclosures and court rulings are making the conservative war on disclosure increasingly hard to defend.
Court documents leaked to The Guardian newspaper last week paint a vivid picture of the brazen way elected officials—in this case Wisconsin Governor Scott Walker—solicit big checks from CEOs, hedge fund managers and other corporate donors for non-disclosing tax-exempt groups that help them politically. The Guardian obtained 1,500 pages of sealed documents from an investigation into whether Walker coordinated with the Wisconsin Club for Growth, a “social welfare” group that helped Walker beat back a recall campaign in 2011 and 2012. Such coordination is expressly forbidden by law.
“Get on a plane to Vegas and sit down with Sheldon Adelson. Ask for $1 million now,” wrote one fundraising consultant to Walker. The email also urged the governor to “create a list of legislation that passed and benefits whom.” Walker complied, meeting with corporate donors around the country and pulling in millions for the Wisconsin Club for Growth, including $15,000 from now-GOP presidential nominee Donald Trump. “I got $1 million from John Menard today,” wrote Walker in one email, referring to the billionaire owner of a home improvement store chain. One $10,000 donor wrote on his check to the Wisconsin Club for Growth: “Because Scott Walker asked.”
The Wisconsin Supreme Court last year ended the probe, known as the “John Doe” investigation, and ordered prosecutors to “permanently destroy” all materials they had collected. It’s not known how The Guardian obtained them. Prosecutors have appealed their case to the Supreme Court, in part on the grounds that two state Supreme Court Justices who had received backing from the Wisconsin Club for Growth and another tax-exempt group named in the probe should have recused themselves.
Now stalemated 4-4 due to the death of Justice Antonin Scalia, the Supreme Court may be reluctant to weigh in. But the court is poised for a new majority following the election, possibly a liberal one. And there’s some evidence that lower courts may be looking at secretive political spending with a more critical eye. This week a federal judge ordered the Federal Election Commission to revisit its decision not to investigate alleged campaign-finance violations by two big-spending conservative tax-exempt groups between 2009 and 2011.
“It blinks reality to conclude that many of the ads considered by the Commissioners in this case were not designed to influence the election or defeat of a particular candidate in an ongoing race,” wrote U.S. District Court Judge Christopher R. Cooper in the ruling. The case stemmed from a complaint by the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) against two conservative social welfare groups, the American Action Network and Americans for Job Security. The groups spent millions on ads that Republican appointees to the FEC said promoted issues, but that the district court said were patently political.
CREW Executive Director Noah Bookbinder called the ruling a “huge victory.”
“I don’t have any illusions that this will turn the ship around in one fell swoop,” Bookbinder told The American Prospect. “But it may well be something that can jump start [efforts] to establish a real enforcement scheme that prevents the abuse of nonprofits.”