Mystery money corrupts campaign

Published July 12, 2012

Two years after the U.S. Supreme Court's overreaching Citizens United decision that allowed corporations to spend freely to influence elections, the unhealthy results are clear. Corporations are spending millions to advance their agendas, and too often they are hiding behind tax rules to do it secretly. For example, an outfit called American Commitment is airing an ad attacking Democratic U.S. Sen. Bill Nelson that is riddled with false statements about health care reform. The Internal Revenue Service should get serious about investigating these sorts of organizations that are effectively laundering anonymous contributions, and at the very least the contributions should be publicly disclosed.

Voters in Florida and other swing states are being flooded with television attack ads that too often stretch the truth and too often are paid for by organizations with nebulous sounding names. The so-called super PACs, which can raise unlimited amounts of money, are bad enough. Republican strategist Karl Rove's American Crossroads super PAC has reserved more than $6 million in air time to attack Nelson. But at least those super PACs have to disclose their donors. It turns out corporations are steering more of their money to other types of tax-exempt groups such as American Commitment to avoid being held accountable for their mudslinging.

The New York Times reports that huge corporate contributions are flowing into these nonprofits organized under the IRS tax code as 501(c)4 "social welfare" organizations. For example, American Electric Power gave $1 million to the Founding Fund. Aetna, the insurer, sent more than $3 million to the Republican-leaning American Action Network. The U.S. Chamber of Commerce expects to spend at least $50 million on political advertising with contributions from corporations such as Prudential Financial and Dow Chemical. Then there is Rove's Crossroads GPS, the nonprofit arm of American Crossroads, which already has launched a $25 million advertising campaign and plans to spend $100 million.

It is a legitimate question about whether corporations should be permitted to warp elections with such huge amounts of money, but the Supreme Court unfortunately has decided the issue for now. The next best step is for Congress to pass the Disclose Act, which would require social welfare nonprofits, businesses and unions to disclose all political contributions and expenditures of more than $10,000. Contributors who give directly to candidates and to super PACs understand they already will be publicly identified, and such disclosure should apply to the political contributions to the others as well, regardless of whether they lean Republican or Democratic.

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The Senate is expected to consider the Disclose Act this month, but don't expect it to pass. Senate Minority Leader Mitch McConnell, R-Ky., calls the legislation a violation of free speech rights and an attempt by the Obama administration and other Democrats "to identify and punish political enemies.'' It is nothing of the sort, and the Supreme Court mentioned the importance of disclosure in its Citizens opinion.

With legislation going nowhere, the IRS should investigate whether these social welfare organizations are violating their tax-exempt status. Their tax designation says they are primarily aimed at promoting broad community interests and prevents them from coordinating with candidate committees. But many of them are clearly organized for the sole reason of attacking specific candidates and hiding the names of contributors.

It's bad enough that the 2012 elections are being corrupted by vast sums of money from individuals and corporations that most Americans could not fathom. It's even worse that the identity of many of those deep pocket donors will remain a mystery.