Freedom to spend money levels playing field against ‘bully pulpit’

The Atlantic published an article by Reid Wilson last week discussing how independent groups like American Crossroads and Priorities USA are participating in the current political debate over the debt limit, and what a difference this is from past occasions.

Outside Groups Deflate Obama’s Bully Pulpit

With groups like American Crossroads spending millions to control the national debate, what’s a president to do?

… this month may prove to be the critical moment of Obama’s first term, when he and congressional Republicans negotiate an increase in the nation’s debt ceiling… Were Obama’s the only message Americans heard every day, it would have a powerful impact… But the new political reality is that Obama’s is not the only voice, even with his bully pulpit, that is delivering a single message to voters. Instead, outside groups are playing a bigger role than at any time in the last decade, complicating Obama’s ability to deliver an uninterrupted narrative…

 The group [American Crossroads] is in the middle of a $5 million advertising campaign that backs up the Republican message. The goal, [American Crossroads president Steven] Law said, is to give Republicans something like the booming voice Obama’s office gives him.

“In these kinds of crisis confrontations, the power and value of the bully pulpit increases exponentially and gives the president asymmetric power to control perceptions of events as they unfold,” Law said. “We felt it was vitally important that outside groups try to balance that out…”

The sub-headline provocatively suggests that outside groups like American Crossroads and Priorities USA are able to ‘control the national debate,’ but reading the full article it’s clear that it is these very outside groups that ensure nobody is able to control the debate.

And that’s the way it is supposed to be, thanks to the First Amendment. The so-called campaign finance ‘reform’ community seek to limit independent voices  and would seemingly prefer to have only a few ‘authorized’ voices heard by the American public (mostly after being filtered by the media). But the freedom of citizens to donate and spend money to support their political beliefs ensures that those with a “bully pulpit” are not the only ones that will be heard.

It’s the freedom to spend money in politics, not the restraint of money spent in politics, that helps to provide a more level playing field for competing ideas and candidates in our political system.

Filed Under: Blog

Will ‘reformers’ protest ‘secret’ meeting of Democratic Senate donors??

Senator Patty Murray, current chair of the Democratic Senatorial Campaign Committee (DSCC), is in a bit of an embarrassing situation right now. It seems that in her role as chief fundraiser for the  DSCC, she sent a letter to Koch Industries, or executives there at least, asking for a “five figure” contribution to the DSCC.  She then followed up with a phone call, and wound up leaving a voice message.

The folks at Koch seem to be alternating between surprised and amused at this. They have sent a letter back to Senator Murray:

Letter to Senator Patty Murray, Chair Democratic Senatorial Campaign Committee

Senator Patty Murray, Chair
Democratic Senatorial Campaign Committee

Dear Senator Murray:

For many months now, your colleagues in the Democratic Senatorial Campaign Committee leadership have engaged in a series of disparagements and ad hominem attacks about us, apparently as part of a concerted political and fundraising strategy. Just recently, Senator Reid wrote in a DSCC fundraising letter that Republicans are trying to “force through their extreme agenda faster than you can say ‘Koch Brothers.'”

So you can imagine my chagrin when I got a letter from you on June 17 asking us to make five-figure contributions to the DSCC. You followed that up with a voicemail* indicating that, if we contributed heavily enough, we would garner an invitation to join you and other Democratic leaders at a retreat in Kiawah Island this September…

Most folks, understandably, are focusing the sheer hilarity of the DSCC beating up on the Charles and David Koch on one hand while soliciting large campaign contributions from them on the other. As someone who has raised money for a Senate candidate before, I tend to be a little more forgiving – these types of mistakes happen, the wrong people get solicited for gifts, and while mildly embarrassing or amusing, depending on where one stands, it’s really not that big of a deal.

But what did jump out at me was the invitation to a retreat in Kiawah Island for donors, made all the more ironic given the hysteria by self-styled campaign finance ‘reformers’ over meetings the Koch brothers hold with likeminded donors to conservative and libertarian causes.

Filed Under: Blog

IRS won’t tax donations to 501(c)4 groups

For the last few months there has been some concern that the IRS might be targeting donors to 501(c)4 organizations by applying the gift tax to their donations. The New York Times reported on this in May:

I.R.S. Moves to Tax Gifts to Groups Active in Politics

Big donors like David H. Koch and George Soros could owe taxes on their millions of dollars in contributions to nonprofit advocacy groups that are playing an increasing role in American politics.

Invoking a provision that had rarely, if ever, been enforced, the Internal Revenue Service said it had sent letters to five donors, who were not identified, informing them that their contributions may be subject to gift taxes depending on whether the donations exceeded limits under the tax laws.

These advocacy groups have been drawing more scrutiny, from President Obama as well as others, as they have proliferated and funneled vast sums of money in support of campaigns and causes, without having to publicly disclose their donors.

So-called campaign finance ‘reformers’ were giddy at the prospect of taxing donors to 501(c)4 groups, thinking it would reduce their speech and punish Karl Rove. Common Cause of New York released the following statement:

“We are pleased to learn that the IRS has taken action to enforce existing rules that are meant to address the misuse of an important tax-exempt status – 501(c)4 – to further partisan political goals and to make an end run around campaign finance laws. The practice has made a mockery of this tax status and damaged legitimate non-profits in the public interest for narrow political gain…

But this just doesn’t seem to be the ‘reformers’ year, or decade, or maybe even century. Today the IRS released a memo stating that they would not be applying gift taxes to donations made to 501(c)4 organizations.

Questions have been raised regarding the application of gift tax to contributions to I.R.C. § 501 (c)(4) organizations…

Until further notice, examination resources should not be expended on this issue. It is anticipated that any future examination activity would be after the coordination described above and would be prospective only after notice to the public…

In plain language (something the IRS is maybe not known for), it looks like the IRS has decided not to apply gift taxes to any donations made in the past to 501(c)4 organizations, and while they may decide to do so in the future, it would only apply to future gifts made after the IRS has released clear guidance on the issue.

This is great news, and means that donors to organizations speaking out on politics and public policy issues will not see have to pay the taxman in order fund speech.

Filed Under: Blog

Interesting, well written, and pointless study on campaign contribution matching programs

The Campaign Finance Institute (CFI) is an unusual organization in the so-called campaign finance ‘reform’ community. Founded and led by Michael Malbin, it’s one of the few groups in the ‘reform’ constellation that isn’t utterly hysterical on the subject of money in politics, and its research tends to rely on sound data that at the very least makes interesting points. And unlike its fellow travelers, CFI has been willing to think beyond the simple sloganeering and dogma of the ‘reform’ movement.

That said, CFI’s research (or at least their analysis and recommendations) suffer from the fact that it makes assumptions that have no real basis in fact or reason to believe they are correct, and in fact there is often ample evidence suggesting that their core assumptions are faulty.

Yesterday’s release of a new study by CFI drives this point home. Titled Public Financing of Elections After Citizens United and Arizona Free Republic, the study assumes up front that campaigns funded primarily by donors making small contributions are inherently superior to campaign funded primarily by donors making large contributions. The beneficiary of these supposedly superior campaigns are the general public.

But there is little reason to believe this assumption is true.

Filed Under: Blog, Maine

‘Reformers’ try getting corporations to dump First Amendment rights voluntarily

I’ve been reading a report from the Center for Political Accountability titled Hidden Rivers: How Trade Associations Conceal Corporate Political Spending, Its Threat to Companies, and What Shareholders Can Do, published in 2006 by the Center for Political Accountability (CPA). As one might expect from a group focused on limiting corporate involvement in the political process, the report is filled with the sort of odd leaps of logic and serious omissions of fact that are the stock-in-trade of the so-called campaign finance ‘reform’ community.

The report identifies “18 leading companies whose donations jeopardized both their business and reputation. These companies… have personnel policies regarding gay employees that were in direct conflict with the positions of judicial candidates who the companies directly or indirectly supported or provided help in 2004. Opposition to gay rights was a key part of their campaign…”

This is, of course, ridiculous. Companies have a whole host of issues that are of concern to them, with gay rights in almost all cases being far below issues like taxes, regulation, legal liability, collective bargaining, and other issues that directly relate to the companies’ profitability. Elections tend to be binary affairs, usually featuring two major candidates who tend to have sharply contrasting views on these more important and relevant issues, as well as gay rights.

Regardless of this plain fact, CPA simply assumes that a gay-friendly company siding with a candidate that offers views on taxes, regulations, and other high priority items beneficial to the company is somehow working against the company’s best interests if that candidate also is unsympathetic to gay rights.

Filed Under: Blog

Stephen Colbert’s SuperPAC gag getting a lot less funny for campaign finance ‘reformers’

Today promises to bring more attention to a meeting of the Federal Election Commission (FEC) than quite possibly all previous meetings combined. The cause of this is comedian Stephen Colbert’s appearance today to answer questions regarding his advisory opinion request.

Originally intended as an ongoing comedy skit to mock the Supreme Court’s ruling in Citizens United, the Colbert SuperPAC gag has spun into something of a headache for the self-styled campaign finance ‘reform’ community. Several media outlets have begun to report on this. From today’s Politico comes this story by Ken Vogel:

Stephen Colbert’s running PAC shtick creates sticky mess

Advocates of reducing the power of money in politics thought they had found a champion in the unlikely person of Comedy Central’s Stephen Colbert, whose ongoing shtick about forming a political action committee brought more attention to their cause than all their press releases, testimony and legal briefs combined.

As part of his effort to highlight – and parody – the impact of a 2010 Supreme Court decision opening new avenues for corporate money in elections, the satirist plans to testify Thursday in front of the Federal Election Commission about a very real legal request he filed that would allow his planned Colbert Super PAC to push the envelope on corporate political spending.

But the joke seems to be backfiring.

Filed Under: Blog, Money in Politics, Maine

Did Justice Kagan throw campaign finance contribution limits and disclosure under the bus?

Justice Elena Kagan’s dissent in Arizona Free Enterprise Club (AKA McComish) yesterday is being praised by the so-called campaign finance ‘reform’ community today. The New York Times, for example, writes:

Justice Elena Kagan, writing in dissent, dissects the court’s willful misunderstanding of the result. Rather than a restriction on speech, she says, the trigger mechanism is a subsidy with the opposite effect: “It subsidizes and produces more political speech.” Those challenging the law, she wrote, demanded – and have now won – the right to “quash others’ speech” so they could have “the field to themselves.” She explained that the matching funds program – unlike a lump sum grant to candidates – sensibly adjusted the amount disbursed so that it was neither too little money to attract candidates nor too large a drain on public coffers.

There are a lot of things wrong with Justice Kagan’s dissent, but that’s the subject of a later post. For now, I just want to focus on one of the more interesting things she wrote, which might give ‘reformers’ pause before celebrating this dissent any further.

Filed Under: Blog

Opposing view: Reject tax-financed campaigns

Filed Under: In the News

So what’s wrong with ‘equal’ speech?

Today’s ruling in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennet (also known as McComish v. Bennett, and which I’ll mercifully just call Arizona Free Enterprise Fund or AFEF from here) hinges largely on the idea of whether the government should be in the business of trying to establish a ‘level playing field’ for political speakers.

The idea of a government-directed ‘level playing field has long been a dream of the so-called campaign finance ‘reform’ community. But it is a dream that died long ago in Buckley, the defining campaign finance case for the last 35 years. As the Court noted in this case, borrowing from Buckley:

This sort of “beggar thy neighbor” approach to free speech-“restrict[ing] the speech of some elements of our society in order to enhance the relative voice of others”-is “wholly foreign to the First Amendment.”

Needless to say, this gets many people in the ‘reform’ community up in arms. As the argument goes, If some people are able to spend more in politics than others to advance their political views, oftentimes much more, how can we possibly say we have equal rights when it comes to free speech?

There are at least two answers off the top of my head.

Filed Under: Blog

Colbert Super PAC continues to face legal hassles

It’s been interesting to watch comedian Stephen Colbert’s stunt regarding his efforts to establish a PAC that can accept unlimited corporate contributions. While originally intended to highlight so-called ‘reformers’ objections to the Citizens United decision, I think it’s actually providing his viewers with an inside look at just how convoluted, complex, and stifling our current system of campaign finance regulations are.

I’m not alone in this view. Our friends at the Institute for Justice wrote an op-ed for the Wall Street Journal, ‘Stephen Colbert’s Free Speech Problem,” that explains:

Comedy Central funnyman Stephen Colbert, like most of his friends and allies on the left, thinks that last year’s Supreme Court ruling in Citizens United v. FEC is, literally, ridiculous. To make his case that the ruling invites “unlimited corporate money” to dominate politics, Mr. Colbert decided to set up a political action committee (PAC) of his own. So far, though, the joke’s been on him.

The hilarity began last month, when Mr. Colbert began to have difficulty setting up his PAC, which is a group that can raise money to run political ads or make contributions to candidates. So he called in Trevor Potter, a former Federal Elections Commission (FEC) chairman who is now a high-powered Washington lawyer.

Mr. Potter delivered some unfunny news: Mr. Colbert couldn’t set up his PAC because his show airs on Comedy Central, which is owned by Viacom, and corporations like Viacom cannot make contributions to PACs that give money to candidates. As Mr. Potter pointed out, Mr. Colbert’s on-air discussions of the candidates he supports might count as an illegal “in-kind” contribution from Viacom to Mr. Colbert’s PAC.

Since Mr. Potter delivered his news, Colbert’s PAC has turned into a ‘Super PAC,’ one that doesn’t contribute directly to candidates but makes independent expenditures and accepts unlimited funds. But his travails continue, as now Viacom’s lawyer’s are telling him that because of the difficulty in valuing any in-kind contribution made by them by allowing their employees and assets to be used promoting the PAC, they would really, really prefer he not set up a PAC.

Now Colbert is facing additional hassles with the law.

Filed Under: Blog

The Center for Competitive Politics is now the Institute for Free Speech.