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Groups Shield Political Gifts of Businesses
by Mike McIntire and Nicholas Confessore
July 7, 2012
American Electric Power, one
of the country’s largest utilities, gave $1 million last November to the
Founding Fund, a new tax-exempt group that intends to raise most of its money
from corporations and push for limited government.
The giant insurer Aetna
directed more than $3 million last year to the American
Action Network, a Republican-leaning
nonprofit organization that has spent millions of dollars attacking lawmakers
who voted for President Obama’s health care bill — even as Aetna’s president
publicly voiced support for the legislation.
Other corporations, including
Prudential Financial, Dow Chemical and the drugmaker Merck, have poured
millions of dollars more into the U.S. Chamber of Commerce, a tax-exempt trade
group that has pledged to spend at least $50 million on political advertising
this election cycle.
Two years after the Supreme Court’s Citizens United
decision opened the door for corporate spending on elections, relatively little
money has flowed from company treasuries into “super
PACs,” which can accept unlimited
contributions but must also disclose donors. Instead, there is growing evidence
that large corporations are trying to influence campaigns by donating money to
tax-exempt organizations that can spend millions of dollars without being
subject to the disclosure requirements that apply to candidates, parties and
PACs. [Emphasis added]
The secrecy shrouding these
groups makes a full accounting of corporate influence on the electoral process
impossible. But glimpses of their donors emerged in a New York Times review of
corporate governance reports, tax returns of nonprofit organizations and
regulatory filings by insurers and labor unions.
The review found that
corporate donations — many of them previously unreported — went to groups large
and small, dedicated to shaping public policy on the state and national levels.
From a redistricting fight in Minnesota
to the sprawling battleground of the 2012 presidential and Congressional
elections, corporations are opening their wallets and altering the political
world.
Some of the biggest
recipients of corporate money are organized under Section 501(c)(4) of the tax
code, the federal designation for “social welfare” groups dedicated to
advancing broad community interests. Because they are not technically political
organizations, they do not have to register with or disclose their donors to
the Federal Election Commission, potentially shielding corporate contributors
from shareholders or others unhappy with their political positions.
“Companies want to be able to
quietly push for their political agendas without being held accountable for it
by their customers,” said Melanie Sloan, executive director of Citizens
for Responsibility and Ethics in Washington,
which has filed complaints against issue groups. “I think the 501(c)(4)’s are
likely to outweigh super PAC spending, because so many donors want to remain
anonymous.”
Because social welfare groups
are prohibited from devoting themselves primarily to political activity, many
spend the bulk of their money on issue advertisements that purport to be
educational, not political, in nature. In May, for example, Crossroads
Grassroots Policy Strategies, a group co-founded by the
Republican strategist Karl Rove, began a $25 million advertising campaign,
carefully shaped with focus groups of undecided voters, that attacks Mr. Obama
for increasing the federal deficit and urges him to cut spending.
The Internal Revenue Service
has no clear test for determining what constitutes excessive political activity
by a social welfare group. And tax-exempt groups are permitted to begin raising
and spending money even before the I.R.S. formally recognizes them. Two years
after helping Republicans win control of the House with millions of dollars in
issue advertising, Crossroads GPS’s application for tax-exempt status is still
pending.
During the 2010 midterm
elections, tax-exempt groups outspent super PACs by a 3-to-2 margin, according
to a recent study by the Center
for Responsive Politicsand the Center
for Public Integrity, with most of that money
devoted to attacking Democrats or defending Republicans. And such groups have
accounted for two-thirds of the political advertising bought by the biggest
outside spenders so far in the 2012 election cycle, according to Kantar
Media’s Campaign Media Analysis Group, with close to $100 million in issue ads.
…
Read full article here:
http://www.nytimes.com/2012/07/08/us/politics/groups-shield-political-gifts-of-businesses.html?pagewanted=1&_r=1&nl=todaysheadlines&emc=edit_th_20120708
^^^
Update:
Democrats to Ask for Curbs on Donor-Shielding Groups
by Jonathan Weisman
July 8, 2012
WASHINGTON — The Democratic
Party’s Senate campaign arm will file a formal complaint on Monday with the Federal Election Commission against three of the Republicans’ biggest campaign
groups, accusing them of willful violations of federal election law and asking
that their electioneering be stopped.
The complaint by the
Democratic Senatorial Campaign Committee against Crossroads Grassroots Policy
Strategies, Americans for Prosperity and the 60 Plus Association begins a new
phase in the Democrats’ struggle to keep pace with Republicans since the
Supreme Court’s 2010 Citizens United ruling.
That decision cleared the way for unlimited campaign donations to a new breed
of “super
PACs” from corporations, unions and
wealthy contributors.
The complaint targets
Republican-leaning “social welfare” organizations that have received or are
requesting tax-exempt status under section
501(c)(4) of the tax code, which allows
funding sources to be kept private. Such groups are prohibited from devoting
themselves primarily to political activity, but Crossroads Grassroots Policy
Strategies, for instance, has conducted a $25 million
advertising campaign that attacks President Obama
on fiscal issues.
…
Read full article here:
***
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