The Lowdown on Election Spending

This election season, outside interest groups, freed from the restraints of campaign-finance law by the Citizens United ruling, are spending unprecedented amounts of money to influence races around the country. New groups are organizing under 501(c) nonprofit status, which allows them to spend up to half their money on political activities and doesn't require them to disclose who their donors are. According to a recent estimate by the Associated Press, $264 million has already been spent on communications alone -- more than during the entire 2008 presidential election season and more than four times the amount spent during the 2006 midterms.

TAP spoke with Sheila Krumholz, the executive director of the Center for Responsive Politics and its campaign-money-tracking database, about how, exactly, these 501( c) organizations work, what this means for democracy, why we shouldn't have forgotten Watergate, and why we don't want to wait to correct the problems caused by Citizen's United.

How much is this interest-group money affecting the elections? When we look at Meg Whitman, who has an enormous amount of money and self-funded her campaign, she still trails in the polls. How is out-of-state interest-group spending -- in terms of its impact -- different from self-funding?

The interest-group money is primarily coming from a few deep-pocketed individuals who are bankrolling most [of] -- if not the entire -- effort, and in many cases, the entire operation has been funded by one or two people. Some organizations are far more grassroots or truly grassroots, and you can argue about whether unions, based on their political spending based on dues, [are] grassroots. Some of these newer organizations, they're being very cagey and secretive not only about their donors but about who runs the organizations themselves.

What about out-of-state donations influencing local elections? Is this having an effect, or is it just buzz-generating?

Most of these organizations have a national focus, so they're looking at all the seats most likely to get them to tip the scales to their party. And they are, I think, having an enormous effect in this cycle, in particular with the amount of money being dedicated to advertising and advocacy. Constituents can't escape the barrage and scarily forget how negative and flat out irresponsible these ads are. So I think it's pretty effective. That's why these organizations do it.

How big has the change really been as a result of Citizens United? Are there any historical parallels?

The soft-money ruling by the [Federal Election Commission] in the 1978 decision regarding the Kansas Republican Party ushered in a new age of soft-money fundraising. Ultimately, [there] came [a] similarly enormous flood of money, particularly in the '90s. I think we learned -- particularly for corporations but also for organizations and individuals -- that where the law allows it, where there's a way, there's a will. And that became the story of the '90s. Two-thirds of that soft money going to the national party was coming from corporations or unions -- it was coming from the organizations' treasuries themselves. Right now, we are returning to that scenario in some ways, but in a much more direct way -- allowing outside independent groups to advocate directly for or against candidates.

Is there any chance for the disclose act?

Certainly, it survives another day. I'm not personally holding my breath. OpenSecrets doesn't take a position. It is in some ways a shame that there wasn't a much narrower approach to get opponents of this legislation on record saying that they would not support disclosure of the donors to these independent expenditure groups. For me, that is not a partisan issue. It is a very clear right-to-know issue and a defense of democracy, but it's complicated. And it really becomes extraordinarily important given the importance of outside money, and the size of the outside spending in this election cycle, for Congress to deal with this before the 2012 race, because this, of course, is just a taste of what we're in for in 2012. This is when people are going to work out the kinks in their strategy.

How serious is the problem of foreign funds coming into this election?

I think it's enormously serious because we've seen it in the past. I'm not talking about the [U.S. Chamber of Commerce]. In this case, I'm talking about the '90s. It was primarily associated with the Democrats, but it was also a bipartisan problem where we had checks coming from Hong Kong, Korea, of course the Hsai Lai Temple [ a California temple accused of funnelling foreign money to Democrats] -- there was a lot of money that was potentially coming from foreign corporations and even governments. In that case, at least there was a paper trail, a record and a path, for [Federal Communications Commission] and [Justice Department] investigators to follow. In this case we have no way of knowing.

What can the story of this election's campaign financing tell us about how democracy is changing?

I think, taking the macro view, [it] is, to many people, very disturbing [and] horrifying that the campaign-finance laws that we took for granted for so many years were really that defenseless or easily knocked down. But that's the nature of the beast. We have short memories in this country. We don't remember, many of us, in our 20s and 30s, what it was like to have gone through the painful process of Watergate and the reform period after that, and the serious conversations about the perils of money to unduly influence the democratic process -- and ultimately democracy. All it took was Sandra Day O'Connor to leave the high court [and] be replaced with Samuel Alito, and the dominoes just started to fall, one by one. The anti-regulation and anti-disclosure forces are just getting warmed up. Ultimately, they've made clear that they want to remove the principal tenant of the Watergate reforms, which is limits of contributions and disclosure, which is the whole reason the federal election commission was established. That, I think, is something that the American people would certainly sit up and take notice with. But the question is whether they'll do it in time.