mcce report11 theshellgame spreads

7/27/2019 MCCE Report11 TheShellGame Spreads

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How much do we really know about the truesources fueling the explosion in independentexpenditures? Disclosure requirements in thisarea range from incomplete to non-existent.We do know that much of this hard-to-trackmoney comes from outside of Maine, andorganizations involved in campaigns at the

federal level may be required to report someof their activities to either the Federal ElectionCommission or the IRS. But when a person orcorporation wishes to spend a great deal ofmoney anonymously by making independentexpenditures or transferring money for that

purpose, that person has several options forconcealing his or her identity from the generalpublic. Here are some of the entities involvedin what often looks like a campaign financeshell game:

501(c)(4) Organizations. The Center for Re-sponsive Politics (CRP) calls 501(c)(4) organi-zations “dark money mailboxes.” A 501(c)(4)organization may engage in political activitiesso long as those activities are not the “pri-mary purpose” of the organization. The barebones reports filed by these non-profit “socialwelfare” organizations with the IRS are notlegally required to include information abouttheir funding sources. Some 501(c)(4) fund-ing sources can occasionally be identifiedby researchers, such as when a corporationreleases information about its political contri-butions to 501(c)(4) organizations pursuant toa corporate accountability policy. Accordingto CRP, whatever information is released is notonly difficult to uncover, it may be delayed forbetween 5 and 23 months beyond the relevant

election. 501(c)(4) donor information is notavailable through Maine’s Commission onGovernmental Ethics and Election Practices.Similar rules apply to 501(c)(5) labor unionsand 501(c)(6) trade associations like theChamber of Commerce.

527’S. Section 527 of the Internal RevenueCode provides another popular option for big-

money fundraising. 527 Committees muswith the state in which they are located, tFEC, or the IRS. If the 527 does not engagexpress advocacy, no donor information iquired; and even when information is reqit is often filed long after the election is oEven this limited disclosure can be avoidcreating 501(c)(4) organization instead, apolitical operatives have recently been maway from 527’s.

Super PACs. The FEC does require monthquarterly reporting from independent-ex

diture-only PACs, also known as “Super PThe reports must include the donors, butis a potential loophole: In many cases a Sper PAC lists a 501(c) organization as a dSince a 501(c) organization does not havdisclose its funders, the ultimate sourcesfunding for the Super PAC may be effectivconcealed from public view.

National Party Committees. The DemocrParty and the Republican Party each havmajor national fundraising committees –party committee, a national committee, aate committee, and a Congressional comtee. In 2012, the parties each raised over

billion through those committees. This mis in addition to the funds raised directly

the presidential campaigns and their affiSuper PACs.

Labor Organizations. Most funding for pcal activity by unions ultimately derives

contributions from union members, althounions may also accept contributions fronon-members. Labor organizations are n

required to provide additional details abotheir fundraising, although a labor PAC mreport any transfers made from the uniongeneral treasury to the PAC fund. Under scircumstances, money received by unionbe covered by disclosure regulations if it earmarked for specific campaign purpose

FIGURE 11–4

The Ten 2012 Senate and House Races with the Most Independent Expenditures

Rank District Senate Candidates Total Independent Expenditures

1 32 Geoffrey M. Gratwick, Nichi S. Farnham $452,835

2 6 James A. Boyle, Ruth A. Summers $288,652

3 17 Colleen J. Quint, Garrett Paul Mason $246,335

4 15 John J. Cleveland, Lois A. Snowe-Mello $241,170

5 25 Colleen M. Lachowicz, Thomas H. Martin Jr. $184,072

6 22 Christopher W. Rector, Edward J. Mazurek $171,325

7 20 Christopher K. Johnson, Leslie T. Fossel $169,401

8 11 Christopher Michael Tyll, Richard Woodbury $116,680

9 28 Brian D. Langley, David A. White $81,852

10 27 Douglas Andrew Thomas, Herbert E. Clark $64,336

Average candidate campaign budget $19,724

District House Candidates Total Independent Expenditures

1 5 Michael J. Willette, Robert Joseph Saucier $69,240

2 128 Heather W. Sirocki, Jean-Marie Caterina $66,663

3 52 Deborah J. Sanderson, Elizabeth S. Miller $42,581

4 18 Aaron M. Frey, James W. Parker $41,247

5 148 Roberta B. Beavers, Sarah O. Lewin $39,870

6 139 Aaron F. Libby, Joseph A. Wagner $38,953

7 54 Catherine M. Nadeau, Susan Ellen Morissette $37,748

8 16 Douglas K. Damon, John C. Schneck $35,017

9 64 Jeremy G. Saxton, Kimberly N. Olsen $34,883

10 80 Melvin L. Newendyke, Rachel Lynne Sukeforth $34,275

Average candidate campaign budget $4,870

The Senate special election on August 27,2013, provides the latest evidence of the sig-nificant impact of independent expendituresin legislative races. A total of $155,752 wasspent on independent expenditures duringthat short campaign. Independent expendi-

tures of $96,110 were reported for the benefit ofthe winning candidate, Democrat Eloise Vitelli,while $59,642 were reported on behalf of theRepublican, Paula Benoit.

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Part 2: Entities Making IndependentExpenditures in Maine andTheir Sources of FundingIn order to more fully understand the sourcesthat are funding independent expenditures,MCCE examined the records of millions of dol-lars of independent expenditures reported inthe 2012 election cycle. The five entities thatreported spending the most on independent

expenditures are listed in FIGURE 11-6.

FIGURE 11–6

Top Five Entities Making IndependentExpenditures in Maine 2012

Entity Expenditure

Maine Republ ican Party $919,430

Maine Democratic Party/State Committee

$885,256

The Committee to RebuildMaine’s Middle Class

$764,852

Maine SenateRepublican Majority

$304,000

Citizens Who SupportMaine’s Public Schools

$172,271

$3,045,809

This list reflects over $3 million in expendi-tures by state party committees, advocacygroups, and a caucus PAC. Each of these en-tities is itself an organization that receives

funds from other sources, so this list alonereveals very little about the true source of themoney for independent expenditures. To someextent, each of these entities functions as apass-through for funding from other sources.

To dig deeper, we analyzed how the five enti-ties in FIGURE 11-6 raised their funds during the2012 cycle. FIGURE 11-7 shows the ten groups, in-dividuals, and organizations that contributed

the most funding to the five entities listed inFIGURE 11-6 and the amount each contributed—atotal of over $4 million.

FIGURE 11–7

Top Ten Contributors Supportingthe Top Five Independent Spendersin Maine 2012 Election

5

1House DemocraticCampaign Fund

$737,000

2Senate Democratic

Campaign Committee$654,675

3Republican State LeadershipCommittee—Maine PAC

$495,000

4 Sussman, Donald $457,000

5National EducationAssociation

$373,995

6 Republican Speakers Fund $364,470

7 Bosarge, Ed $354,800

8Maine SenateRepublican Majority

$234,555

9 MSEA SEIU $224,917

10Maine EducationAssociation

$184,165

$4,080,577

Campaign finance reports do not elaborate onhow this $4 million was used by the entities inFIGURE 11-6. Some likely went toward expensesother than independent expenditures, such ascandidate contributions, operating expenses,or transfers to other entities. But much of the$4 million was plainly spent on independentexpenditures. With current campaign finance

reporting, the money can’t be traced to specificadvertisements or mailings, but the overallsurge of funds certainly helped fuel thoserecord-setting expenditures.

From where, in turn, do the entities in FIGURE 11-7 get their funding? Further tracking is not nec-essary in the case of an individual contributorsuch as Donald Sussman or Ed Borsage.

For unions, further tracking may be possibledepending on whether the union made thecontribution from its general treasury or itsPAC. FIGURE 11-8 shows the breakdown for threeunions between contributions from their gen-eral treasury funds and their PAC.

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FIGURE 11–8

Unions and their Treasuries

General Treasury PAC Total

Maine Education Assoc. $169,665 $14,500 $184,165

National Education Assoc . $14,025 $359,970 $373,995

MSEA SEIU $193,917 $31,000 $224,917

FIGURE 11-8 shows that a large majority of thefunds given by the Maine Education Associa-tion and MSEA SEIU to the entities listed inFIGURE 11-6 were paid out of their general trea-sury funds. The National Education Associa-tion is the only one of the three unions to givelargely from its PAC, but federal reports showthat the National Education Association PACreceives all of its funds from the National Edu-

cation Association general treasury. So thereis little additional tracking possible or neces-sary for the union contributors.

The other five entities listed in FIGURE 11-7 arePACs that file reports under state or federallaw. Therefor further tracking for those fundsis possible. FIGURE 11-9 shows the top five con-tributors to each of these entities during2012. The funds in FIGURE 11-9 provided indirectsupport for the surge in independent expendi-tures.

5 Totals include general treasury, political funds, and affiliatedentities where applicable.

6 We assume that money from an entity with “PAC,” “Action Fund,” “Education Fund,” “Advocacy Fund,” or similar terms in the name as reported in the campaign finance reports is not a general treasury contribution.

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FIGURE 11–9

Fundraising Indirectly SupportingIndependent Expenditures in 2012

Source entity. No further tracking is possible.

HouseDemocraticCampaignCommittee

DLCC7

$255,000

Sussman, Donald $75,000

Cain for Maine $35,300

Carey for Maine $20,222

Hayes for ME PAC $18,500

SenateDemocraticCampaignCommittee

DLCC $220,000

Sussman, Donald $75,000

ABCD PAC $54,000

Empowering Maine PAC $28,000

Int. Association of Fire Fighters $17,500

RepublicanStateLeadershipCommittee8

U.S. Chamber of Commerce $4,025,889

Blue Cross/BlueShield $2,657,707

American Justice Partnership $1,350,000

American Future Fund $1,185,000

Altria Group $1,017,280

RepublicanSpeakersFund

RSLC-Maine PAC $400,000House Republican Majority Fund $60,000

StudentsFirst $10,000

Maine Truck PAC $7,500

Wal-Mart $7,000

MaineSenateRepublicanMajority

RSLC-Maine PAC $495,000

Capital Leadership PAC $82,000

Paving the Way to a Prosperous Maine $34,500

Imagine Maine PAC $26,500

Leading to a Balanced Maine $26,000

Many of the entities listed in FIGURE 11-9 alsoengage in their own fundraising. Althoughtracking the money can be a never-endingendeavor, the lists above begin to show somewell-known corporations, associations, andindividuals who are providing funds that di-rectly or indirectly support independent ex-penditures influencing Maine campaigns. Yetbecause of weak reporting requirements andthe influence of Citizens United, much remainsunclear about the ultimate sources of funding.

ConclusionThe national surge of independent expendi-tures that followed Citizens United has hitMaine.

Maine campaigns—once local affairs—areincreasingly dominated by messages paid fordirectly or indirectly by deep-pocketed, out-of-state groups. In the din of a campaign’s finalweeks, candidates can barely be heard abovethe unprecedented surge of communicationsfunded by new, unaccountable money.

Congress and the Federal Election Commis-sion have it within their power to require dis-closure of secret money, but so far they havedone little.

Maine and the other states may have to insti-tute greater disclosure to shine a bright lighton the secret funds now beginning to dominatedemocracy at the state level.

NotesInformation for this report is taken from cam-paign finance reports filed with the Commis-sion on Governmental Ethics and ElectionPractices. Although reporting has improvedover the years, that information is not uni-formly accurate and consistent. Analyzing thesources of funding sometimes requires certainassumptions about the identity of a funderwhere the name is not reported consistently

from one report to the next. For example, thisreport assumes that contributions reportedfrom “Republican National” and “National Re-publican” are the same entity—the RepublicanNational Committee. In this report we also as-sume that “Democratic Governor’s Association”includes “Democratic Governor’s Association—Maine” as well as “Democratic Governor’sAssociation—Maine PAC.” “House RepublicanCommittee” includes “House Republicans,”

“House Republican Fund,” and “House Repub-lican Majority.” “House Democratic CampaignFund” includes “House Democratic CampaignCommittee,” “ House Democratic Commit-tee,” “House Legislative Campaign Fund,” and“House Democratic Campaign.”

MCCE gratefully acknowledges OpenSecrets.org and Followthemoney.org for data on na-tional organizations.

7 Democratic Legislative Campaign Committee, a national party committee.

8 RSLC – ME PAC received funds only from the RSLC parent PAC, so the fundraising of the parent PAC is shown here. Data from Opensecrets.org.

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mcce report11 theshellgame spreads

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