When the National Association of Realtors’ board of directors approved a $40-a-year dues increase this month for political advocacy, backers said a recent Supreme Court decision had opened the floodgates for independent campaign expenditures and that NAR would need the additional $42 million a year to maintain the group’s clout with lawmakers.
A new report suggests that independent expenditures — "soft money" spent on behalf of candidates or issues by nonparty groups, as opposed to "hard money" contributions directly to the candidates’ campaign war chests — are not only on the rise, but that the Federal Election Commission isn’t tracking how millions in soft money is raised and spent.
Such "secret spending" makes it harder to determine who is backing or attacking candidates in television ads and in other venues, or understand how much money is being spent in a race, Bloomberg News reports.
Independent expenditures by nonparty groups more than quadrupled in the 2010 elections, to $305 million, compared to the previous midterm election in 2006, Bloomberg said, citing FEC records compiled by The Center for Responsive Politics.
A number of those groups are nonprofits that are allowed to keep the identities of donors secret. Spending by those groups grew 25-fold from 2006, to $137 million, Bloomberg reported. The U.S. Chamber of Commerce, American Action Network, and Crossroads Grassroots Policy Strategies — which all generally support conservative candidates and issues — were the biggest spenders in that group.
Other nonprofits registered as tax-exempt "social welfare" groups under section 501(c)(4) of the tax code also didn’t report some or all of their spending on political ads in the 2010 elections to the FEC, Bloomberg said.
Five groups, including the Commission on Hope, Growth and Opportunity (CHGO), spent at least $4.05 million on ads against Democrats without reporting those expenditures to the FEC, Bloomberg said, citing records compiled by Campaign Media Analysis Group. Some of the groups claimed that the ads were lobbying activities exempt from disclosure.
In announcing complaints it filed Monday with the FEC and IRS, Citizens for Responsibility and Ethics in Washington (CREW) claimed CHGO did not report at least $2.3 million it spent on broadcast television advertising in 12 elections for seats in the House of Representatives. In 11 out of 12 races, the CHGO’s ads targeted Democrat Party incumbents, CREW said.
In a follow-up story, CHGO general counsel William B. Canfield — a former Republican Senate aide — told Bloomberg the group maintains it was not required to disclose its spending to the FEC, and has been granted an extension until June 1 to respond to similar allegations made last year by the Democratic Congressional Campaign Committee.
Nearly a dozen other nonprofits that report independent political expenditures to the FEC, but which are not required to report the source of those funds, spent another $5.87 million on attack ads against one or more of the 11 House Democrats targeted by the Commission on Hope, Bloomberg said, and nine went down to defeat.
NAR officials have said that most of its $40 dues increase taking effect in 2012 and earmarked for political advocacy will be spent at the state and local level.
According to FEC records published by the Center for Responsive Politics at OpenSecrets.org, NAR’s independent expenditures totaled $6.02 million in 2010 — a 61 percent increase from the 2006 midterm elections, and almost twice as much as NAR’s $3.77 million in "hard money" donations to federal candidates in the 2010 election cycle.
NAR maintains that over the years, Realtor PAC, the group’s Political Action Committee, hasn’t favored Democrats or Republicans, but gets behind candidates aligned with its issue stances, which it calls the "Realtor party" position.
About 61 percent of NAR’s 2010 independent expenditures were on behalf of Democrats, while 74 percent of NAR’s soft money helped Republicans in 2006.
Because NAR tends to support incumbents of both parties, Realtor PAC happened to be backing all but one of the 11 House Democrats allegedly targeted by CHGO in the weeks before the election (Realtor PAC also supported the lone Democrat who allegedly benefited from CHGO’s ads, Rep. Walt Minnick of Idaho, to the tune of $10,500).
According to OpenSecrets.org, Realtor PAC provided nearly $3.5 million in "hard money" to the campaign funds of 476 House candidates during the 2010 election cycle. A little more than half of that money — 56 percent — went to Democrats.
The 10 House Democrats allegedly targeted by CHGO who also received "hard money" contributions ranging from $5,000 to $10,000 from RPAC were Rep. John Spratt, D-S.C.; Rep. Kathy Dahlkemper, D-Pa.; Rep. Frank Kratovil, D-Md.; Rep. Allen Boyd, D-Fla.; Rep. Suzanne Kosmas, D-Fla.; Rep. Baron Hill, D-Ind.; Rep. C.A. "Dutch" Ruppersberger, D-Md.; Rep. Paul Kanjorski, D-Pa.; Rep. John Salazar, D-Colo.; and Rep. Dan Maffei, D-N.Y.
Like all PACs, Realtor PAC can contribute no more than $5,000 per election in hard money to any one candidate’s campaign fund. If a candidate is running in a primary election and a general election, for example a PAC can contribute a total of $10,000 to the candidate’s campaign fund.
But thanks to last year’s Supreme Court decision in Citizens United v. FEC, there’s no spending limit on "soft money" — independent expenditures spent on ads advocating or opposing a particular candidate or issue.
According to OpenSecrets.org, NAR made more than $6 million in independent expenditures on behalf of 11 candidates in the 2010 elections, in each case supporting incumbents who had been receptive to the group’s causes in the past.
The biggest beneficiary of NAR’s 2010 independent expenditures was Kanjorksi, a longtime NAR ally who was the second most senior Democrat serving on the House Financial Services Committee.
According to CREW’s FEC complaint, CHGO spent $53,580 on an ad featuring Kanjorski and House Speaker Nancy Pelosi on the back of a mock, "fool’s gold" collector’s coin commemorating the Obama administration’s stimulus and health care bills.
The ad for the fake coin, which featured President Obama on its face under the slogan, "In Stimulus We Trust," asked viewers to help Kanjorski’s opponent, Lou Barletta, to "Stop the spending."
Despite NAR’s $1.2 million in independent expenditures on his behalf, Kanjorski went down to defeat on election day. But eight of the 11 candidates NAR backed with soft money were re-elected, including Rep. Ed Perlmutter, a Colorado Democrat who benefited from $429,908 in independent expenditures from NAR.
Bloomberg reported that American Action Network ran ads that made false claims about Perlmutter. The group spent $215,402 for the ad to appear 178 times before the November election, Bloomberg said, citing tracking data from Campaign Media Analysis Group.
American Action Network ran ads in Connecticut that also made false accusations against another Democrat, Rep. Christopher Murphy, Bloomberg reported. Murphy’s re-election campaign — which received $10,000 in hard money from RPAC in the 2010 election cycle — was a success.
The rise in "secret spending" and political fundraising by nonprofits who keep the identity of their donors secret calls into question the confidence expressed by the the Supreme Court in Citizens United that at least the system was transparent, Bloomberg reported.
Writing for the majority in the Citizens United decision, Justice Anthony Kennedy said the advent of the Internet ensured that independent expenditures would be promptly disclosed, providing citizens with the information they needed to keep corporations and elected officials accountable.
Nonprofits can’t devote more than half of their resources to politics without losing their tax-exempt status, and Democrats have asked the IRS to review the political activities of tax-exempt groups to see if they have stayed within those limits, Bloomberg said.
Democrats have also filed a complaint with the FEC accusing the Commission on Hope, Growth and Opportunity of violating election law by not reporting its spending in the 2010 election.
Bloomberg said that political gridlock on the commission has resulted in the FEC taking fewer enforcement actions in recent years.
Although Republicans were the primary beneficiaries of political spending by outside groups in the 2010 election, that spending amounted to only 8 percent of the total in the 2010 elections, Bloomberg said.
But Democrat David Axelrod said spending by outside groups made "a big difference" in Republicans’ successful bid to regain control of the House of Representatives.
Axelrod, who is helping plan President Obama’s re-election campaign, said Democrats are "not going to roll over," and have formed at least three outside groups of their own to raise money without disclosing donors.