The New GOP Money Stampede

How Republicans are outraising and outspending Democrats with the help of a network of little-known conservative political outfits based in D.C.

By Michael Crowley Thursday, Sept. 16, 2010
    • Photograph by Finlay MacKay for TIME

    (2 of 2)

    Republicans say their new efforts merely level a playing field that Democrats and their allies — with the help of Barack Obama — have owned for several election cycles. Moreover, whatever the Republican groups are doing, Democrat-friendly labor unions are set to put some $150 million of their own money into the fall elections. Other groups, such as Emily's List and the League of Conservation Voters, will kick in several million more. But this kind of cash is different from what the GOP groups are generating. Much of that union spending involves member-to-member communications, which Democratic operatives say are less effective than TV ads. And ads from unions and single-issue groups tend to be less effective than those from a purely tactical group like American Crossroads, which can tailor a flexible message.

    Meanwhile, Democrats claim something sinister is afoot. It's not just the dollar figures, they say; it's the disclosure. Unlike official party committees, the new conservative outfits are almost entirely unregulated by campaign-finance laws. That means they can raise funds in the millions of dollars — unlike federal candidates, who are limited to a few thousand per election cycle. And while some of these groups are required by federal law to report their donors at least quarterly, many are able to keep their benefactors secret. American Crossroads, like Swift Boat Veterans for Truth, was founded under the 527 section of the tax code, which allows it to collect unlimited campaign contributions as long as it periodically reports its donors to the IRS. But its spin-off group, Crossroads GPS, defines itself as a nonprofit 501(c)4 organization under the tax code. The IRS says such a group "may intervene in political campaigns as long as its primary purpose is the promotion of social welfare." Ostensibly, that means that a group like Crossroads GPS conducts what it calls "hard-hitting issue advocacy." In practice, that means thinly veiled ads on behalf of Republican candidates, like an ad bashing Democratic Kentucky Senate nominee Jack Conway's support for Obama's health care reform, which ends with the memorable kicker, "It's the wrong way, Conway."

    More important, perhaps, it also means that Crossroads GPS does not have to publicly disclose any information about its donors. And that, says Wertheimer of Democracy 21, "is a complete joke. Karl Rove and Gillespie did not create this organization to influence issues in America. The organization was created to elect Republicans and defeat Democrats." What information has become public reveals that some ultra-wealthy conservatives are bankrolling this effort, including Rupert Murdoch, whose News Corp., the parent company of Fox News, recently gave $1 million to the RGA; companies controlled by the billionaire Texas oil mogul Harold Simmons have given $2 million to American Crossroads. Steven Law protests that some conservative donors might not want their names made public for good reasons. "People are concerned about intimidation," he says. But reformers argue that disclosure has been a central part of campaign-finance law since Watergate, with few examples of political harassment.

    A Weak Democratic Response
    Democrats may condemn these Republican efforts. But in truth, they would love to match them. Some party operatives have been trying but with little success. "Our donors just haven't been interested" in big outside-group ventures, laments one Democrat with experience in such groups, "at least not yet." This strategist points to several factors: Wall Street donors who gave generously to the party in recent years now feel burned by Barack Obama's condemnations of the big banks; voters who were inspired by the prospect of the first African-American President have disappeared this cycle; and Democratic donors motivated by U.S. support for Israel are frustrated with Obama's policies toward the Jewish state. Democrats may also be the victims of their own success. The Obama campaign was so eager to neuter aggressive Republican outside groups in 2008 that it discouraged party donors from supporting independent liberal outfits, like a 527 operation run by MoveOn.org, which shut down as a result. Meanwhile, it's Republicans who can assure their donors of real bang for their buck. "A lot of [liberal] donors are smart business people, and the perception that Democrats are going to lose is chilling them from contributing," says Tom Matzzie, a former top official with MoveOn.org. "Why throw good money after bad?"

    Adding to the sting for Democrats is the realization that Republicans are beating them at their own game. Crucial to the Democratic wins in 2006 and 2008 was the formation of a network of independent groups that could accept six- and seven-figure contributions from wealthy megadonors. Groups like America Coming Together and the Media Fund spent more than $135 million mobilizing voters and airing anti-Bush ads. Law has been studying those efforts. On his desk sits a copy of The Argument: Billionaires, Bloggers, and the Battle to Remake Democratic Politics , a book describing how ultra-wealthy Democrats like billionaire George Soros and Progressive Insurance Companies chairman Peter Lewis helped fund the party's return to power. He's also immersed himself in Obama 2008 campaign manager David Plouffe's recent tome. "This is the photo negative of what Republicans experienced in 2006 and 2008," he says with a smile. ("Republicans are following our road map," Matzzie concurs.)

    But Democrats and some campaign-finance watchdogs say the Republicans today have a new advantage that makes them more potent than the Democrats ever were: a January Supreme Court ruling in the Citizens United case, which struck down a 2002 federal campaign-finance law prohibiting unions and corporations to spend money directly advocating for or against candidates. While corporations had previously been able to fund indirect issue advocacy, Wertheimer says many were spooked by ambiguities in the law. Because of the latest ruling, a corporate CEO may see such spending as "an exercise of your First Amendment rights rather than a potentially questionable circumvention of campaign-finance laws," Wertheimer says.

    Republicans note that labor unions, which typically support Democrats, will also benefit from the ruling, and Law says he has not heard any donors say they are giving because Citizens made it easier. But because groups like Crossroads GPS don't have to disclose their donors (this was true even before the Citizens ruling), while the origins of union money are obvious, it's difficult to say just how much corporations may be pumping into the midterm campaigns. And the story is far from over. This summer, companies in both the health care and coal-mining industries began discussing possible efforts to form issue-specific groups to target Democratic candidates, according to media reports.

    For Republicans like Law, 2010 is only the beginning of a much larger effort. The voter lists and polling data that groups like American Crossroads develop in the coming weeks won't be thrown away after Nov. 2. They will provide the basis for a potentially greater offensive around the next presidential election. "We're definitely building a foundation," Law says. "We hope to be an important player in 2012." Which means voters in Ohio — and elsewhere — will be hearing plenty more from those mysterious groups on their televisions.

    3. 1
    4. 2
    5. Next Page