https://www.youtube.com/watch?v=noCOo1lAOhY&feature
Monday, August 10, 2020
Sunday, August 9, 2020
Dark Money Floods in to State Elections, Revealing Cracks in Disclosure Laws
Political spending in state elections by LLC's and nonprofit groups has surged in the decade since Citizens United, but some states are leading the way in strengthening disclosure laws around who’s buying and funding campaign ads.
https://readsludge.com/2020/07/17/dark-money-floods-in-to-state-elections-revealing-cracks-in-disclosure-laws/
Last month, the Republican primary runoff for a South Carolina Senate seat in the area around Myrtle Beach saw a rush of anonymous attack ads on issues ranging from guns and abortion to taxes and immigration.
One group that bought over half a million dollars of television ads attacking incumbent Luke Rankin, the South Carolina Conservatives Fund LLC, was created two days after the runoff started, the Charleston Post and Courier found. The LLC listed an address in Greensville, S.C. in its ads—but as reporters Andrew Brown and Jamie Lovegrove discovered, the owner of the building had never heard of the company, which is registered in Ohio. The LLC may well have picked a local address at random out of the phone book.
The experience of people in South Carolina who were deluged with ominous, anonymous ads is an example of how state disclosure laws are coming up short of ensuring transparency in election spending, Austin Graham, legal counsel with the nonpartisan Campaign Legal Center (CLC), tells Sludge.
“Where the action is in state campaign finance reform is with federal groups that don’t meet state requirements of PACs or 501(c)(4)s, so they’re not subject to the same disclosure rules as candidate committees and PACs that are registered with state authorities,” Graham said.
Untraceable spending to influence state elections has dramatically risen since the U.S. Supreme Court’s 2010 Citizen United ruling, which allowed groups that are technically independent of candidates and political parties to spend unlimited amounts of money on political contests. Groups buying TV ads attacking a candidate can do so through “dark money” 501(c)(4) nonprofits, which typically do not disclose their donors, or through a “gray money” PAC, which is required to disclose its donors, but may list groups whose funding sources are opaque.
Fully transparent outside spending on elections fell from 76% in 2006 to just 29% in 2014 in six states, according to a June 2016 report, “Secret Spending in the States,” by the nonpartisan policy institute Brennan Center for Justice. In those states analyzed—Alaska, Arizona, California, Colorado, Maine, and Massachusetts—dark money spending by outside groups surged by 38 times, on average, during that time.
Graham, with CLC’s State and Local Reform program, points to some bright spots in the national landscape where voters can access information about the funding behind fear-mongering ads they see on TV and election mail they receive close to Election Day. “There are states that have done a lot more than the federal level—for example, California, Rhode Island, and Minnesota—where disclosure requirements are much better. Then there’s South Carolina, which has atrocious disclosure requirements for groups that aren’t PACs.” (South Carolina Senator Rankin, who has held his seat since 1993, fended off his challenger last month and won his runoff by 1,792 votes, with 58% of the ballots cast.)
Looking at how states can ensure public knowledge about who’s ultimately paying for election ads after this November’s contests, Graham says, “The most important area in need of reform is in disclosures around independent expenditures by outside groups. Some states have a huge gap where PAC groups have to report their spending, but there’s nothing there for other groups that make expenditures.”
Other states that did not require disclosure of independent expenditures as of the 2018 election cycle—let alone details on who’s funding the groups making them—are Alabama, Indiana, and New Mexico. In April 2019, New Mexico moved to adopt greater disclosure of independent expenditures as part of a package of ethics reforms. Enhancing dark money disclosure was named as a priority by the newly-elected Colorado secretary of state, Democrat Jena Griswold, after the 2018 elections.
Aaron McKean, also legal counsel with CLC’s State and Local Reform program, points to the results of a bipartisan poll from November 2019 that found 83% of voters “support public disclosing contributions to organizations involved in elections,” with 56% “strongly in support.”
When it comes to being informed about the sources of state election spending, “The starting point is where voters and constituents are,” McKean told Sludge. “They’re most interested in transparency in elections. The 83% of voters in support speaks to the importance of disclosure in the electorate. The groundswell is there.”
The ability for states to set meaningful disclosure requirements scored a significant win in June, when the Supreme Court said it would not reconsider a strong Montana law requiring dark money groups to register with the state as PACs if they run campaign ads referring to a candidate or ballot issue.
On the less-sunlit side of the disclosure spectrum, in March of 2019, Mississippi’s Republican government trifecta passed a law that prohibits state agencies from requiring any disclosure by politically active nonprofits. On December 28, 2018, Michigan’s Republican Governor Rick Snyder vetoed a similar bill passed by the state’s lame-duck House of Representatives.
At the federal level, Democrats in Congress have since 2012 introduced the DISCLOSE Act, which would require organizations spending money in elections—including dark money nonprofits—to promptly disclose donors who have given $10,000 or more during an election cycle. The DISCLOSE Act’s provisions were updated and included in H.R. 1, the For the People Act of 2019, a sweeping ethics package passed by the Democratic House in March 2019.
Rhode Island is one state government that passed disclosure laws based on the DISCLOSE Act, requiring groups making independent expenditures of $1,000 or more to report their donors and expenditures to the state election board. The rules prompted a November 2019 lawsuit from two conservative groups that argued that revealing their donors’ identities would make donors less likely to give.
A Patchwork of State Contribution Limits and Disclosure Laws
States vary considerably in their laws for how different types of entities—individual donors, PACs, political parties, corporations, and others—are subject to campaign contribution limits, public disclosure rules, and other restrictions, like whether donations by lobbyists are prohibited. An interactive map with information about historical election rules in every state as of 2018 is available from the think tank Campaign Finance Institute (CFI), a division of the nonprofit National Institute on Money in Politics.
As of the last election cycle, 11 states had no contribution limits for an individual donating to a candidate: Alabama, Iowa, Indiana, Mississippi, North Dakota, Nebraska, Oregon, Pennsylvania, Texas, Utah, and Virginia. The national median for individual contribution limits in the other 39 states is $4,000 for governor, $2,000 for State Senate, and $1,600 for State House, according to the National Conference of State Legislatures.
Those 11 states correlate with CFI’s recent analysis of the states with the lowest percentage of campaign donations from small donations of $250 or less—that is, states where large donors, corporate contributors, and special interest PACs dominate campaign funding. Ten of the 11, excepting Nebraska, are in the bottom half of small-donor share among the 47 states that CFI recently analyzed. North Dakota (3%), Alabama (5%), Oregon (5%), and Utah (6%) are among the lowest nationwide by this metric.
Among the 22 state legislative chambers identified as 2020 battlegrounds by Ballotpedia, three are in states that have no individual contribution limits to candidates: the Iowa House, Nebraska Senate, and Pennsylvania House.
New Hampshire and South Dakota are unique in having contribution limits for individuals donating to state legislative candidates in 2018—$10,000 and $2,000, respectively—but no such limit for PAC donations. At least six more states have lower contribution limits for individuals than for PACs donating to state legislative candidates: Alaska ($1,000 vs. $2,000), Illinois ($5,600 vs. $55,400), New Jersey ($5,200 vs. $16,400), New Mexico ($5,000 vs. $11,000), Tennessee ($3,000 vs. $15,600), and Wyoming ($3,000 vs. $10,000).
Six states in 2018 had no contribution limits for corporations donating to candidates: Alabama, Illinois, Nebraska, Oregon, Utah, and Virginia. Similarly, over the past two decades, New York grappled with sky-high contribution limits through what was known as the “LLC Loophole,” where pass-through private companies were treated as individuals, enabling well-connected business interests to chain together multiple large donations—for example, up to $65,100 to statewide candidates. On January 24, 2019, New York Gov. Andrew Cuomo signed into law a significant overhaul of the state’s longstanding LLC loophole, prompted by new Democratic control of the State Senate after the 2018 primary elections ushered in several progressive reformers.
“Where contribution differences become a problem is when you have a prohibition on corporate contributions to candidates but it does not apply to contributions to a PAC or political party, so that opens up the possibility of donations going to a party, which then turns around and gives that same money to candidate, basically allowing them to be a conduit,” Graham said.
Graham highlights recent traction for public funding of campaigns as evidence that fair elections measures are catching on in state politics. “With broad support from Americans for transparency and accountability, we’ve seen support for public financing at the local level,” he said. In 2018, over 69% of voters in Denver passed a new public financing system, while a New York City ballot initiative voted 80% in favor of strengthening the city’s longstanding program last year, and Baltimore voters passed public financing with over 75% of the vote in 2018. “Public financing of elections offers more systemic change as to how campaigns operate and focus their fundraising efforts.”
Related coverage on Sludge:
Dark Money Pours Into West Virginia Ahead of State Supreme Court Election
Big Donors and PACs Dominate Campaign Funding in Nearly Every State, Report Finds
Grassroots NY Challengers Take on the Pandemic and the Big Money Machine
Bill Criminalizing Dark Money Disclosure is Passed by Michigan House
Campaign to Overturn Citizens United Keeps Racking Up Wins
In Race for Open Kennedy Seat, Pharma and Private Equity Execs Cut Big Checks
While candidates in the race for Joe Kennedy's seat have sworn off super PAC backing and corporate PAC money, many are still accepting large donations from powerful health care CEOs, pharma lobbyists, and private equity firms.
Daniel Boguslaw@BogieStrkr
Daniel Boguslaw is a writer and researcher focusing on money in politics and corporate greed.See more
EDITED BY DONALD SHAW
Share this:
https://readsludge.com/2020/07/20/in-race-for-open-kennedy-seat-pharma-and-private-equity-execs-cut-big-checks/
Massachusetts’ 4th Congressional District, which includes wealthy Boston suburbs as well as post-industrial legacy cities, has for decades elected representatives to the U.S. House who straddle a rift in the Democratic Party between its neoliberal base and its progressive left wing. Barney Frank, the district’s rabble-rousing former congressman, is well known in progressive circles for being one of the first member of Congress to come out as gay and for the eponymous Dodd-Frank Wall Street Reform and Consumer Protection Act. But Frank was also careful not to stray too far from the party line, railing against progressive policies set forth by Bernie Sanders and Elizabeth Warren and making sure never to cross his more moderate constituents. After Frank’s tenure, Joe Kennedy III furthered the outspoken representative’s legacy by trading on his family name while endorsing only the safest progressive issues and, until recently, maintaining substantial investments in the fossil fuel industry.
After four terms, Kennedy is leaving his post in MA-04 to challenge longtime progressive Senator Ed Markey, with one of his primary messages being that he is a younger candidate. But despite Kennedy’s departure, his distinctive brand of Janus-faced politicking is still well represented in the campaign finance disclosures of candidates in the nine-person scrum vying to replace him.
Couched in the language of “grassroots fundraising”, the financial front runners of the MA-04 race have lauded their progressive credentials by framing their millions in campaign cash as the result of independent donors instead of the corporate PACs and dark money groups that have come to dominate American campaign finance. The just-released fundraising numbers for the second quarter tell a different story, as high-dollar donations poured in from well-connected individuals who, taken together, belie an old-school style of money in politics, where political action committees are replaced with family connections and corporate donations pile up from dozens of top level employees at America’s largest and most predatory financial firms.
With nearly $1.4 million raised since he began his bid for the House, former Marine captain Jake Auchincloss is just a step away from the $1.6 million raised by nonprofit mogul Alan Khazei, a co-founder of CityYear and proud combatant of two failed senatorial bids. Auchincloss’s war chest, while almost entirely filled by individual donors, is rife with pharmaceutical CEOs, hospital executives, and healthcare industry lawyers who stand a vested interest in opposing Medicare for All, maintaining America’s broken healthcare industry, and ensuring massive kickbacks to the pharmaceutical and healthcare giants that call Boston home.
Some of the highest profile donors to the Auchincloss campaign include Albert Bourla, the chairman and CEO of Pfizer, who has donated $2,800; Giovanni Caforio, chairman of Bristol Myers Squibb, with $2,800; Keith Gottesdiener, CEO of Rhythm Pharmaceuticals, who chipped in $2,800; and Robert Bradway, chairman and CEO of Amgen.
While nothing on Auchincloss’s campaign site mentions lowering sky-high drug prices or holding Big Pharma accountable for their gouging of American consumers, an entire section is devoted to giving tax breaks and other legislative perks to pharmaceutical manufacturers in Massachusetts. When viewed by sector, Auchincloss has raised more than $80,000 from the health interests, and nearly $130,000 from FIRE (finance, insurance, realestate), according to the Center for Responsive Politics, with more money on the horizon as the race enters its final stretch.
The metro Boston area has long been a hospital and pharmaceutical hub, with industry giants like Partners HealthCare, Tufts, and Mass General, Novartis, Pfizer, and Sanofi holding outsized influence on local politics. Economic and social power are seated in the medical industry, with Boston’s elite “Brahmin” families sitting on hospital boards for over two hundred years, as detailed in Nelson Aldrich’s book, “Old Money”.
Auchincloss’s mother, Laurie Glimcher—the president and CEO of Boston based clinic the Dana Farber Cancer Institute—has spent time and energy whipping up funds for her son Jake from her vast rolodex of health professionals, according to a member of the Newton City Council and a source close to the Auchincloss campaign. Glimcher attended the elite Winsor prep school in Boston before earning degrees from Radcliffe and Harvard, going on to cement her ties to the Medical elite as a dean at Cornell, before turning down the position of dean of Harvard Medical School to join Dana Farber, where in 2018 she took in a whopping $1.6 million in executive compensation.
More than $15,000 has flooded into Auchincloss’s campaign from Dana Farber board members and doctors alone, Sludge found by reviewing Federal Election Commission records, and tens of thousands more was received from a coterie of medical school deans and doctors associations banking on the election of an industry-friendly candidate. In April, Auchincloss reaped cash from a Zoom fundraiser hosted by two prominent health industry lawyers with a suggested price tag of $2,800 a ticket.
High-ranking pharmaceutical lobbyists have also joined drug company CEOs in throwing their weight behind Auchincloss. Nicholas Shipley, vice president of Pharmaceutical Research and Manufacturers of America (PhRMA), donated $1,000 to the campaign, and FEC records show cash from two senior members of the Biotechnology Innovation Organization (BIO), the largest biotech lobby, contributing well over $1,000. Robert Coughlin, CEO of the Boston based MassBio healthcare lobby also threw $1,000 to the campaign.
With Big Pharma and the healthcare industry firmly secured by Auchincloss, Alan Khazei, the MA-04 fundraising leader, has turned to the robber barons of finance to secure his $1.6 million bag, running a campaign premised on his work as founder of CityYear, the AmeriCorps subsidiary routinely criticized for paying its young volunteers what often amounts to poverty wages.
Khazei has received over $100,000 in donations from executives and individuals affiliated with investment leviathan Bain Capital, over $50,000 combined from individuals affiliated with private equity companies Berkshire Partners and Advent International, and another $22,400 from affiliates of Fireman Capital Partners, a consumer focused private equity fund. One of Khazei’s biggest individual donors, who gave $5,600, is Charles Ledley—co-founder of Cornwall Capital and protagonist of “The Big Short,” who in 2008 turned a $110,000 dollar investment into $120 million by betting against the U.S. mortgage market and cashing out on the suffering of millions.
While Khazei has centered his platform on “fixing our democracy,” campaign finance reform is barely hinted at on his campaign site. His donors, taken together, represent private equity and investment firms that have lobbied against government oversight, failed to account for their role in destroying jobs through leveraged buyouts, and continue to post record profits as millions file for unemployment with no relief in sight.
Meanwhile, candidates like former Planned Parenthood vice president Jesse Mermell and president of the National Hispanic Bar Association Ben Sigel have posted significant sums in the hundreds of thousands from smaller dollar contributions. Becky Grossman, Ihssane Leckey, Dave Cavell, and Natalia Linos have hit a middle lane, combining high-dollar self funding with smaller individual donations. Grassroots fundraising from candidates like Mermell, who signed pledges rejecting fossil fuel and corporate PAC money, stands in sharp contrast to the top two frontrunners when it comes to campaign finance: it’s not only PACs and bundlers that hold tremendous sway over who is seen and who is left out, it also comes down to family networks and the industry elites who view a $2,800 campaign donation as a drop in the bucket.
Read more from Sludge:
Joe Kennedy, a Top Recipient of Hedge Fund Cash, Declined to Back Tax Fairness Act
Following Sludge Report, Kennedy’s Trust Fund Sells Its Fossil Fuel Stocks
Big Donors and PACs Dominate Campaign Funding in Nearly Every State, Report Finds
Subscribe to:
Posts (Atom)