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Campaign Cash: The Independent Fundraising Gold Rush Since Citizens United Ruling

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A pair of campaign finance watchdog groups have called for a probe of a new nonprofit formed by Karl Rove to spend over $50 million this election cycle to help elect Republican candidates. The Center for Public Integrity reports Republicans and Democrats each now boast ten or so deep-pocketed independent groups with plans to spend collectively some $500 million or more. The groups are all taking advantage of this year’s Supreme Court ruling in the Citizens United case that cleared the way for unlimited spending by corporations, unions and other interest groups on election ads. We speak to journalist and author Peter Stone of the Center for Public Integrity. [includes rush transcript]

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StoryOct 28, 2010“Free Speech for People” Coalition Calls for Constitutional Amendment to Overturn Citizens United Decision Allowing Unlimited Corporate Spending on Elections
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: A pair of campaign finance watchdog groups have called on the Internal Revenue Service to investigate a new nonprofit formed by Karl Rove ahead of the midterm election. Rove and former Republican National Committee chair Ed Gillespie have formed a pair of new organizations that are planning to spend over $50 million this election cycle to help elect Republican candidates. One of their groups, American Crossroads, is set up so they can raise unlimited amounts without having to disclose its donors until after the election. The other organization, Crossroads Grassroots Policy Strategies, is paying for attack ads in many states, including Nevada.

CROSSROADS GRASSROOTS POLICY STRATEGIES AD: ObamaCare is bad for healthcare in America – and worse for Nevada, because when Senator Harry Reid needed votes to push ObamaCare, he cut sweet deals across the country to help Nebraska, to help Louisiana, to even help Florida. What has Nevada gotten from Senator Reid? Record foreclosures and the highest unemployment rate in the nation. And Reid’s still pushing for even more government control of your healthcare. Really, Harry, how about some help for Nevada?

AMY GOODMAN: Karl Rove and Ed Gillespie are also cooperating with other conservative organizations, including the Chamber of Commerce, to strategize on campaign spending. Some have said Rove has essentially formed a shadow GOP outside of the traditional Republican Party.

The Center for Public Integrity reports Republicans and Democrats each now boast ten or so deep-pocketed independent groups with plans to spend $10 million-plus helping Senate and House candidates by running expensive ads and/or conducting get-out-the-vote efforts. And they’re on track to spend, collectively, some $500 million or more – with little oversight. The Center also reports financial, energy and healthcare interests are grabbing for their checkbooks to secretly bankroll conservative organizations. The groups are all taking advantage of this year’s Supreme Court ruling in the Citizens United case that cleared the way for unlimited spending by corporations, unions and other interest groups on election ads.

Our first guest today is Peter Stone. He is a reporter at the Center for Public Integrity focusing on money and politics, covered campaign finance and lobbying for nearly twenty years. His latest article is called “Campaign Cash: The Independent Fundraising Gold Rush Since ‘Citizens United’ Ruling.” He is also author of the book Casino Jack and the United States of Money about Jack Abramoff.

Well, welcome to Democracy Now! I should say, welcome back, Peter. Let’s start off by talking about Rove’s groups.

PETER STONE: Well, Rove’s group is probably, in some ways, the most important of the new entities. Karl Rove and Ed Gillespie, who are now both super consultants on K Street in Washington, started strategizing late last year, basically, about the need for more outside muscle to help Republicans this year. And a lot of the thinking early on was spurred by the fact that the RNC, starting last year probably the middle of the year, began to have major management, fundraising and other problems that were well publicized in places all across the country, in different media outlets. The Washington Times, a conservative newspaper, has been particularly good at reporting on some of the internal difficulties at the RNC. And what this caused was a hemorrhage, basically, of longtime fundraisers and donors at the RNC. Some of their biggest contributors, biggest fundraisers, started to get jittery about things and were not participating in RNC programs. It was partly a personal thing. Some of them didn’t feel like they were getting enough attention from the new chairman, Michael Steele. With this as a backdrop, Rove and Gillespie – and others, but they were two principals here – began to think about a need for a better outside machine, if you will, to help Republicans. They looked back to what some Democrats had done in 2004 and 2006 with outside groups. And, in fact, they say they were inspired by what Democratic groups had done previously.

When Citizens United ruling came down in January, it was really a godsend for their effort, because it freed up corporations and unions and others to give unlimited amounts to run campaign ads and conduct other activities, where there previously had been limits. And American Crossroads opens its doors, first in March. The first iteration of American Crossroads was a 527 group, which means that basically it had to disclose its donors. And we have learned who some of those donors are. They’re mainly Texas billionaires who are old friends of Karl Rove’s. Harold Simmons of Dallas, two small companies Simmons has investments in have given $2 million. A couple of other Texas billionaires have weighed in, as well. But after two months, roughly, they set up another arm of American Crossroads, Crossroads GPS, which probably has taken in more – a little more money at this stage, of the $32 million they raised as of a couple weeks ago. And this entity, Crossroads GPS, doesn’t have to disclose its donors at all. And it’s typical of other new groups that have started this year, which are set up as 501(c)(4) organizations and are havens for donors who want to remain anonymous.

AMY GOODMAN: And American Crossroads, this group – talk about, overall, how Citizens United, the Supreme Court ruling, has changed the face of politics.

PETER STONE: Well, it’s made it possible for both groups, both American Crossroads and its sister organization Crossroads GPS, to go after a lot of big money. And a lot of the big donors they’re going after are in the corporate world, on Wall Street, in healthcare, in energy, particularly, but there are lots of others, as well. But those sectors are seen as particularly ripe, because a number of companies in those sectors have been annoyed, irked, frustrated by new regulations in the last couple years. They were upset by financial services reform. They were upset by healthcare reform. And they’ve become big targets for most of these new groups.

I reported early in the year that Gillespie, who is an informal adviser to Crossroads, like Karl Rove – only informal advisers, they call themselves – went up to Wall Street with former senator Norm Coleman, who’s the CEO of another organization, very similar organization that actually shares offices with American Crossroads, called the American Action Network, and Gillespie, Coleman and a famous Republican fundraiser, Fred Malek, who dreamt up the idea of the American Action Network, all pitched donors, a large contingent of donors, for their separate efforts. They say there’s been more joint fundraising. There’s been a lot of joint activity, which is another novel and fascinating feature of what Republican groups have been doing this year. They have worked together closely by sharing offices, meeting regularly, strategizing about which races they should be involved with, who should take the lead on which races, which Senate races, and basically trying to get the maximum bang for their buck. So it’s become a very smart, businesslike effort that in many ways has filled a big, big void created by the fact that the Republican National Committee has had major problems this year.

AMY GOODMAN: We’re going to break and then come back. Peter Stone, reporter at the Center for Public Integrity, focusing on money and politics. I want to ask you about the US Chamber of Commerce and much more. This is Democracy Now! Back in a minute.


AMY GOODMAN: Our guest is Peter Stone. He is the investigator of politics and money, has been doing it for years, works at the Center for Public Integrity, money and politics. His book, among them, Casino Jack and the United States of Money. His latest piece, “Campaign Cash: The Independent Fundraising Gold Rush Since ‘Citizens United’ Ruling.”

OK, Peter, the Chamber of Commerce. Let’s see, Rupert Murdoch gave a million dollars first to the Republican Governors Association, now most recently to the US Chamber of Commerce. Talk about the role of the US Chamber of Commerce in this election cycle.

PETER STONE: Well, the US Chamber of Commerce is interesting, because we’ve heard a lot about new groups that have popped up, like American Crossroads and the American Action Network, but the Chamber is really sort of the granddaddy of a lot of this activity. Officially, they’re bipartisan. If you look at their record over recent years, though, the lion’s share of their support, their PAC money, and the issue ads they typically run in campaigns, have been tilted heavily toward Republicans. So, they have been very active, increasingly active, really working closely with American Crossroads and other organizations this year.

Bill Miller, the national political director of the Chamber of Commerce, attended a first major pow-wow of the outside groups. It was a luncheon at Karl Rove’s house on April 21st. Ed Gillespie and Rove had invited people there. And it was billed as, you know, a preliminary look at the electoral landscape this year. Actually, the meeting had a lot more to do with strategizing about what was needed for – what was needed to build an effective network by outside groups. And that’s really where the first discussions, serious discussions, about coordination, cooperation got underway.

It’s important to note that this is perfectly legal. What they can’t do, and what they have to be very careful about, is coordinating any of their activities with candidates’ campaigns or national party committees. And they had lawyers there who briefed them on this. And they say they’re being very careful about this. So far, there’s no public evidence of any coordination. But a lot of these groups are stocked with veterans, particularly American Crossroads – are stocked with veterans of the NRCC, the Republican House Committee, the NRSC, the RNC. They’ve got a lot of heavyweights who have worked at these places before. The Chamber, though, participated in this meeting.

As I reported later, the Chamber decided early in the summer that they wanted to spend significantly more than they had ever spent on a federal election campaign. And Tom Donohue, in a speech in late June to a lot of trade association leaders, powerful leaders of major business groups in Washington, upped the ante by telling a group out in California that they were going to be spending $75 million, which is more than double the previous high of $36 million. To date, Bill Miller told me a couple weeks ago that they’ve spent about $20 million thus far through mid-September. About half of that is on ads. Like the other groups, they’re playing in battleground states very heavily, states such as Colorado, Nevada, Ohio, Pennsylvania. And the other half that they’ve spent thus far has been on mail and phone. Whether they get to their big goal of $75 million is a question mark. I mean, there’s four-and-a-half weeks left, a little – maybe a little under four-and-a-half weeks, and that’s a lot of money. But they surely have a lot left in the bank. And, you know, they have been meeting very closely with the other groups this year and playing a key role in this outside network.

AMY GOODMAN: Wesleyan Media Project says the Chamber aired more than 8,000 ads on behalf of Republican candidates in September – as of September 15th, I should say?

PETER STONE: Right. That’s quite possible. I don’t know the exact total, but they have spent a lot of money. They’ve been in a lot of the big battleground states. And they’re going to be doing a lot of get-out-the-vote activity, too – they and other groups. American Crossroads has set aside $10 million for get-out-the-vote activity, something the left and unions are better known for, and where unions this year will be spending probably three-quarters of their resources, which have also increased this year in the wake of, you know, the Republican onslaught. Unions – some big unions like AFSCME and SEIU told me they’ve upped their budgets by 25 percent. They put about three-quarters of their money, which will be upwards of $150 million altogether, into get out the vote. And the Republicans are trying to get in that game, too.

AMY GOODMAN: Peter Stone –

PETER STONE: I should say, overall, the –

AMY GOODMAN: Go ahead.

PETER STONE: One point, I’m sorry. Overall, just for perspective, the Republican groups are likely to outspend the liberal groups, the Democratic allies, by a three-to-two, maybe even two-to-one, margin. They should be spending something on the order of $300 million, based on their budgets, based on what – the numbers they have put out publicly. Some of those may not come to pass, but I’m working with the numbers they’ve put out thus far.

AMY GOODMAN: Peter Stone, I want to ask you about the little-known Iowa group, the American Future Fund. This is an ad paid for by the organization attacking Democratic Congressman Bruce Braley of Iowa.

AMERICAN FUTURE FUND AD: For centuries, Muslims built mosques where they won military victories. Now they want to build a mosque at Ground Zero, where Islamic terrorists killed 3,000 Americans. It’s like the Japanese building at Pearl Harbor. The Muslim cleric building the mosque believes America was partly responsible for 9/11 and is raising millions overseas from secret donors. But incredibly, Bruce Braley supports building a mosque at Ground Zero. Tell Braley what you think.

AMY GOODMAN: What is this Iowa group, American Future Fund?

PETER STONE: This Iowa group is one of the more secretive ones that’s out there this year. It, too, has increased its presence significantly. It spent roughly a hundred – I’m sorry, roughly a million dollars early in the year to help elect Scott Brown in Massachusetts. The leader and founder of the group, Nick Ryan, told me that they raised and spent roughly $8 million in 2008 on issue ads to help Republicans. This year, he told me, they’re going to roughly triple that to as much as $25 million. We don’t know where the money is coming from. This is another one that can accept anonymous donations. Ryan said their money is from all over the country. Sources have told me they do have some million-dollar donors, but who they are, we don’t know.

The ad they ran in Iowa, the one you just played, is particularly noteworthy, because it was the handiwork of Larry McCarthy, who has done a lot of their ads. Larry McCarthy has a long history in negative advertising and in fact was one of the key architects of the infamous ad, the Willie Horton ad, that ran in the 1988 presidential campaign to tar Michael Dukakis. A lot of the American Future Fund ads are particularly negative. And, you know, there are others who are doing similar things on the Republican side and some on the Democratic side. But his ads rather stand out in their, you know, hard-hitting negative quality.

AMY GOODMAN: What about the Kochs? What about David Koch, speaking of billionaires, who has poured millions into the tea party? An excellent piece by Jane Mayer in The New Yorker really lays out this story. Peter Stone?

PETER STONE: Well, the Kochs, of course, are the owners of the nation’s, I believe, second-largest privately held company, Koch Industries of Wichita, Kansas, a giant energy firm that has had a lot of run-ins with regulators over the years on many different fronts. The Kochs have been around for a couple decades, funding a network of conservative institutions in Washington and elsewhere, think tanks and other operations. They were the money behind a very powerful group in the 1990s called Citizens for a Sound Economy that worked very closely with the Republican leadership in the House and the Senate, particularly in the House in those days. Citizens United began to disintegrate in the late ’90s, or after – around the time the Bush administration came in. And there were a couple of successor organizations that sprang up soon afterwards.

The most recent iteration of this is Americans for Prosperity, which is the key group in Washington that’s been getting Koch money. They say they’re going to spend about $45 million this year on the elections, and they, too, have been running a lot of ads. Unlike the bulk of the ads that other groups have run, theirs started focusing on the House a little earlier. Other groups have focused much more on the Senate but are moving to the House now, starting moving to the House, as well. And the Kochs have, you know, helped to seed the tea party movement. They put up some of the money. We don’t know just how much is going to the tea party movement. I would guess, you know, a few million, but that’s a very, very rough guess – could be a little more, could be a little less. But Americans for Prosperity is their principal advocacy group in Washington. And they have said they’re looking a $45 million. They’re not coordinating quite as much, from what I understand, with the other groups, but there is – you know, there’s obviously some contact, some exchange of information.

I think all of these groups are trying to ensure that Republicans, you know, play this game as smart as they can this year, are as efficient as they can be, and don’t waste their money. Former Senator Coleman said to me, about the American Action Network, that donors don’t like duplication, and so they’re trying to be as clever as they can. And Americans for Prosperity is certainly a key part of this effort.

AMY GOODMAN: Well, we’ll continue to follow, of course, the money trail, money in politics, and we’ll speak with you again soon. Peter Stone, thanks so much for your great reporting over the decades, now at the Center for Public Integrity. Thanks so much for being with us.

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