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A Times Editorial

Secret money distorts democracy

The secret money pouring into this 2010 election season is distorting our democracy. A torrent of contributions from corporations, wealthy individuals and possibly even foreigners has flowed into nonprofit advocacy groups — many of them shadowy and new ­— to pay for mountains of political advertising. These groups don't have to promptly disclose their donors, and that leaves voters unable to gauge the credibility and ulterior motives of the people and companies spending so much to influence the outcome of Tuesday's elections.

Independent, outside groups have spent more than $283 million nationwide in independent expenditures, electioneering communications and internal political communications, according to the Center for Responsive Politics. And by large margins, the money is going to pro-Republican groups.

Some of this money is being spent by so-called 527 political organizations, which can accept unlimited donations but have to periodically disclose their contributors. What is unique this year is the rise of the groups organized under 501(c)(4) of the tax code. These tax-exempt "social welfare" organizations have to disclose their donors only to the Internal Revenue Service, not to the public.

Everything about these groups is designed to keep voters in the dark. They have innocent-sounding names, such as the pro-Republican groups Americans for Prosperity, the American Future Fund and Crossroads GPS, founded by Karl Rove, the GOP political strategist. They are spending millions of dollars in this election — money that could be coming from energy firms, pharmaceutical companies or even foreign-owned corporations. There is no way to know.

Talk about a recipe for political corruption.

Anecdotal evidence suggests that the Supreme Court's ruling in Citizens United, which gave corporations and unions the right to underwrite express advocacy that calls for the election or defeat of candidates, has not resulted in an explosion of direct spending. Instead, businesses have responded by giving heavily to independent, Republican-leaning groups so they can remain anonymous while still electioneering.

There is legitimate debate about limiting who can spend what on influencing political campaigns. But there should be no question about the need for these expenditures to be transparent.

First, the Internal Revenue Service should investigate whether these 501(c)(4)s are violating their tax-exempt status. Democratic Sen. Max Baucus, who chairs the Senate Finance Committee, sent a letter to the IRS commissioner last month demanding stepped-up policing. Under the tax code, these groups are allowed to engage in lobbying and partisan politics but cannot be "primarily engaged" in those activities.

But to get a handle on this, there will also have to be new disclosure rules passed for 501(c)(4)s. An effort to do so passed the House. Unfortunately, the bill that emerged was deeply flawed, with carve-outs for the National Rifle Association and other big groups that objected to sharing donor lists. Republicans blocked the bill in the Senate because they like the secrecy. This is an issue that Congress has to revisit after the elections, because so much money from anonymous special interests hiding behind shadowy groups undermines the integrity of this country's elections.

Secret money distorts democracy 10/31/10 [Last modified: Sunday, October 31, 2010 4:30am]
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