Special interests employ intricate and complex rules and practices in their attempts to influence policy. Here's an abridged version of the OpenSecrets.Org guide to some of the "tricks of the trade" that you might not be aware of.
1. Where's Waldo? Lobbyists in Hiding
Former members of Congress, including both former Senate Minority Leader Tom Daschle (D-S.D.) and former House Speaker Newt Gingrich (R-Ga.), work in "government relations," but have never registered as lobbyists. They and other former lawmakers who work for lobbying firms after they leave the Hill often call themselves "advisors." By dodging registration requirements, these highly-valued and paid political influencers may be earning large amounts of money to influence policy, but the public can never know.
2. Bundles of Bucks
Top campaign fundraisers, commonly known as "bundlers," have had a growing role in presidential and congressional campaigns over the past decade, drawing substantial rewards to match. Despite this trend, there's no law requiring disclosure of campaign bundlers, as long as the fundraisers are not currently active, federally registered lobbyists. Beyond that, bundler disclosure is entirely voluntary. Even when campaigns do agree to voluntarily disclose top fundraisers, there is still plenty of leeway for hiding important names or information.
The amount raised by bundlers for winning presidential candidates has grown: In 2000, it was at least $55.8 million; in 2004, at least $79 million; in 2008, a minimum of $76.25 million; and in 2012, the floor was $186.5 million.
Hand-in-hand with the increasing sophistication of and reliance on bundlers is the heightened rate of return for those who bundle. According to Public Citizen, during his eight years in office, George W. Bush appointed about 200 bundlers to posts in his administration. An iWatch News investigation uncovered that President Obama had already appointed 184 bundlers to his administration in his first term alone.
3. Spotlight on Dark Money
Two Supreme Court decisions propelled the explosion in dark money - money from donors who remain anonymous. In 2007, Wisconsin Right to Life v. FEC freed nonprofit 501(c) organizations to spend directly from their treasuries to make "issue ads" mentioning a candidate in the weeks immediately before an election or a political convention -- as long as they didn't exhort voters to cast their ballots one way or another. That was new, and in the 2008 presidential election, non-disclosed spending hit a record $78.8 million.
The other case was 2010's Citizens United v. FEC, which made it possible for corporations, unions, nonprofit "social welfare" organizations and trade associations to take things a step farther by directly spending their treasury funds on advocacy expressly calling for the election or defeat of a candidate; these ads are known as "independent expenditures."
The result has been an upsurge in political spending by nonprofit 501(c)(4) "social welfare" organizations -- which aren't overseen by the FEC, but by the IRS. These groups can't have politics as their "primary purpose." But, according to the advice of many tax law experts, that leaves them free to spend 49 percent of their funds on political activity, including advertisements.
4. What Disclosure Statements Don't Disclose
Personal financial disclosure statements (PFDs) are filed annually by members of Congress, their staffs, Supreme Court justices and thousands of upper level executive branch employees. They list investments, transactions made in those investments throughout the year, and any substantial debts. They also reveal income, gifts received, and travel paid by others. The idea behind the filing requirement is to reveal conflicts of interest, both preemptively and after the fact.
But the transparency provided by these filings is poor. Just try using them to pinpoint how much a lawmaker is worth or investigate detailed aspects of his or her finances. The value of each lawmaker's assets, income and liabilities is reported in ranges, so it is impossible to pin down an exact figure.
Some information is left off of the forms by design. The rules explicitly exclude federal government retirement accounts, personal residences that aren't rented out and other personal property, such as cars and artwork, unless it is owned for investment purposes. Filers are not required to disclose their tax rates or returns. Also, the salary earned by a filer's spouse is not reported.
5. Where Does All That Money Go?
Big money in elections has two sides: contributions and expenditures. The cash and checks that flow to federal candidates and political committees can flow out in any number of ways -- not all of which help win elections. Committees can fritter money away ineffectively, use it to enrich friends and family, or otherwise abuse their supporters' trust with little fear of being found out.
In 2012 alone, all federal political committees and campaigns spent more than $109 million on "postage" without further explanation. Other vague purposes for which political organizations spent six-figure sums in 2012 include "Production" (New American City PAC), "Data Services" (the RNC), and simply "Mail" (Dewhurst for Texas). Even though the weak guidelines are regularly violated, the FEC only has the staff capacity to follow up on the most egregious cases.
6. A Spin Through The Revolving Door
The "revolving door" is the general term for the path taken by former senior executive and legislative branch officials who join Washington's influence industry after leaving a government post. Lobbying firms, which stand to benefit from these insiders' contacts and governmental know-how, are eager to snag these one-time officials. For former politicians, joining a government relations firm is a way to remain involved in policy decisions -- at a greatly increased salary. Lobbying is a $3 billion industry, and lobbyists at top-earning firms may earn 10 times the salary of a member of Congress.
Of the 97 former members of the 112th Congress, 23 accepted lucrative new positions at lobbying firms within the first four months of being out of office, and 13 more were working at organizations that hire lobbyists.
The Honest Leadership and Open Government Act (HLOGA) was passed in 2007 as an addendum to the Lobbying Disclosure Act of 1995. In addition to tightening rules on lobbying disclosure and filing, it lengthened the ban on post-employment lobbying for some government officials in an effort to put the brakes on this revolving door. In spite of these restrictions, many former members of Congress and top federal officials join lobbying firms during their "cooling-off" periods. Most of these revolvers will take the title of "senior advisor," or something similar, until they may legally lobby their old chamber on behalf of their clients.
7. Shell Games
Contrary to popular belief, super PACs and most of their donors are easily identifiable. Donors must provide certain information: name, address and -- if the donor is an individual -- occupation and employer. When a corporate donor (for-profit or nonprofit) makes a donation to a super PAC, the company gives its legal name, along with an address, which is more than enough to identify most legitimate businesses or nonprofits.
Sometimes, though, the information disclosed masks the identity of the true donor. By setting up a 'shell' corporation, it's possible to funnel large sums of money to a campaign without disclosing where the money came from or why it was donated.
While FEC rules continue to mandate disclosure of a super PAC's donors, the reality is that shell organizations, by careful scrubbing of incorporation documents and other tactics, can effectively obscure the real identities of donors.
8. Dollars From Dakar?
It's impossible to say how much foreign money is influencing our elections. Federal election law prohibits campaign donations from any individual who is not a U.S. citizen or a green card holder. However, after the 2010 Citizens United decision opened the electoral landscape to greater participation by nonprofit social welfare groups. Since it's not illegal for these groups to accept money from foreign citizens. the possibility for foreign involvement in campaign finance increased greatly.
It's also possible for a foreign donor to transfer money to an American-based shell corporation, or one in an offshore tax haven, and have the shell corporation make the donation to the 501(c)(4). Even if the tax-exempt group were audited by the IRS, it would be nearly impossible to determine the original source of the money.
9. Joint Victory Committees & Mega-Donors
A joint fundraising committee, or victory fund, is an account set up by two or more candidates, PACs, and/or political party committees hoping they can reap more together than they can on their own. Donors write one large check, and the money is divvied up between the partners. While neither can collect more from a single donor than they'd be able to on their own, it's often an efficient way to raise more money for everyone involved.
This arrangement also encourages donors to give more. The limits on how much a campaign can raise from one donor curtail how much each committee can ask individuals to contribute. Combining the two committees and adding others increases how much can be requested in one fundraising effort. But joint fundraising opportunities aren't helpful only to those on the receiving end. They also present opportunities for donors to make an impact with a large contribution. And it can be an opportunity to win points for their favorite candidate.
10. Undercover Coordination
The concept of "coordination" is one of the most important aspects of campaign finance rules -- and one of the murkiest post-Citizens United. Super PACs and other outside spending groups are allowed to spend unlimited amounts of money in federal races as long as they don't collaborate with candidates. However, the rules about what constitutes coordination keep loosening. In practice, there are few practical limits on cooperation between outside groups, candidates and parties.
The FEC has done very little to shed light on the interactions between candidates and outside spending groups. For the most part, one can only guess what kinds of conversations campaigns and outside spending groups are having behind the scenes.
1. Where's Waldo? Lobbyists in Hiding
Former members of Congress, including both former Senate Minority Leader Tom Daschle (D-S.D.) and former House Speaker Newt Gingrich (R-Ga.), work in "government relations," but have never registered as lobbyists. They and other former lawmakers who work for lobbying firms after they leave the Hill often call themselves "advisors." By dodging registration requirements, these highly-valued and paid political influencers may be earning large amounts of money to influence policy, but the public can never know.
2. Bundles of Bucks
Top campaign fundraisers, commonly known as "bundlers," have had a growing role in presidential and congressional campaigns over the past decade, drawing substantial rewards to match. Despite this trend, there's no law requiring disclosure of campaign bundlers, as long as the fundraisers are not currently active, federally registered lobbyists. Beyond that, bundler disclosure is entirely voluntary. Even when campaigns do agree to voluntarily disclose top fundraisers, there is still plenty of leeway for hiding important names or information.
The amount raised by bundlers for winning presidential candidates has grown: In 2000, it was at least $55.8 million; in 2004, at least $79 million; in 2008, a minimum of $76.25 million; and in 2012, the floor was $186.5 million.
Hand-in-hand with the increasing sophistication of and reliance on bundlers is the heightened rate of return for those who bundle. According to Public Citizen, during his eight years in office, George W. Bush appointed about 200 bundlers to posts in his administration. An iWatch News investigation uncovered that President Obama had already appointed 184 bundlers to his administration in his first term alone.
3. Spotlight on Dark Money
Two Supreme Court decisions propelled the explosion in dark money - money from donors who remain anonymous. In 2007, Wisconsin Right to Life v. FEC freed nonprofit 501(c) organizations to spend directly from their treasuries to make "issue ads" mentioning a candidate in the weeks immediately before an election or a political convention -- as long as they didn't exhort voters to cast their ballots one way or another. That was new, and in the 2008 presidential election, non-disclosed spending hit a record $78.8 million.
The other case was 2010's Citizens United v. FEC, which made it possible for corporations, unions, nonprofit "social welfare" organizations and trade associations to take things a step farther by directly spending their treasury funds on advocacy expressly calling for the election or defeat of a candidate; these ads are known as "independent expenditures."
The result has been an upsurge in political spending by nonprofit 501(c)(4) "social welfare" organizations -- which aren't overseen by the FEC, but by the IRS. These groups can't have politics as their "primary purpose." But, according to the advice of many tax law experts, that leaves them free to spend 49 percent of their funds on political activity, including advertisements.
4. What Disclosure Statements Don't Disclose
Personal financial disclosure statements (PFDs) are filed annually by members of Congress, their staffs, Supreme Court justices and thousands of upper level executive branch employees. They list investments, transactions made in those investments throughout the year, and any substantial debts. They also reveal income, gifts received, and travel paid by others. The idea behind the filing requirement is to reveal conflicts of interest, both preemptively and after the fact.
But the transparency provided by these filings is poor. Just try using them to pinpoint how much a lawmaker is worth or investigate detailed aspects of his or her finances. The value of each lawmaker's assets, income and liabilities is reported in ranges, so it is impossible to pin down an exact figure.
Some information is left off of the forms by design. The rules explicitly exclude federal government retirement accounts, personal residences that aren't rented out and other personal property, such as cars and artwork, unless it is owned for investment purposes. Filers are not required to disclose their tax rates or returns. Also, the salary earned by a filer's spouse is not reported.
5. Where Does All That Money Go?
Big money in elections has two sides: contributions and expenditures. The cash and checks that flow to federal candidates and political committees can flow out in any number of ways -- not all of which help win elections. Committees can fritter money away ineffectively, use it to enrich friends and family, or otherwise abuse their supporters' trust with little fear of being found out.
In 2012 alone, all federal political committees and campaigns spent more than $109 million on "postage" without further explanation. Other vague purposes for which political organizations spent six-figure sums in 2012 include "Production" (New American City PAC), "Data Services" (the RNC), and simply "Mail" (Dewhurst for Texas). Even though the weak guidelines are regularly violated, the FEC only has the staff capacity to follow up on the most egregious cases.
6. A Spin Through The Revolving Door
The "revolving door" is the general term for the path taken by former senior executive and legislative branch officials who join Washington's influence industry after leaving a government post. Lobbying firms, which stand to benefit from these insiders' contacts and governmental know-how, are eager to snag these one-time officials. For former politicians, joining a government relations firm is a way to remain involved in policy decisions -- at a greatly increased salary. Lobbying is a $3 billion industry, and lobbyists at top-earning firms may earn 10 times the salary of a member of Congress.
Of the 97 former members of the 112th Congress, 23 accepted lucrative new positions at lobbying firms within the first four months of being out of office, and 13 more were working at organizations that hire lobbyists.
The Honest Leadership and Open Government Act (HLOGA) was passed in 2007 as an addendum to the Lobbying Disclosure Act of 1995. In addition to tightening rules on lobbying disclosure and filing, it lengthened the ban on post-employment lobbying for some government officials in an effort to put the brakes on this revolving door. In spite of these restrictions, many former members of Congress and top federal officials join lobbying firms during their "cooling-off" periods. Most of these revolvers will take the title of "senior advisor," or something similar, until they may legally lobby their old chamber on behalf of their clients.
7. Shell Games
Contrary to popular belief, super PACs and most of their donors are easily identifiable. Donors must provide certain information: name, address and -- if the donor is an individual -- occupation and employer. When a corporate donor (for-profit or nonprofit) makes a donation to a super PAC, the company gives its legal name, along with an address, which is more than enough to identify most legitimate businesses or nonprofits.
Sometimes, though, the information disclosed masks the identity of the true donor. By setting up a 'shell' corporation, it's possible to funnel large sums of money to a campaign without disclosing where the money came from or why it was donated.
While FEC rules continue to mandate disclosure of a super PAC's donors, the reality is that shell organizations, by careful scrubbing of incorporation documents and other tactics, can effectively obscure the real identities of donors.
8. Dollars From Dakar?
It's impossible to say how much foreign money is influencing our elections. Federal election law prohibits campaign donations from any individual who is not a U.S. citizen or a green card holder. However, after the 2010 Citizens United decision opened the electoral landscape to greater participation by nonprofit social welfare groups. Since it's not illegal for these groups to accept money from foreign citizens. the possibility for foreign involvement in campaign finance increased greatly.
It's also possible for a foreign donor to transfer money to an American-based shell corporation, or one in an offshore tax haven, and have the shell corporation make the donation to the 501(c)(4). Even if the tax-exempt group were audited by the IRS, it would be nearly impossible to determine the original source of the money.
9. Joint Victory Committees & Mega-Donors
A joint fundraising committee, or victory fund, is an account set up by two or more candidates, PACs, and/or political party committees hoping they can reap more together than they can on their own. Donors write one large check, and the money is divvied up between the partners. While neither can collect more from a single donor than they'd be able to on their own, it's often an efficient way to raise more money for everyone involved.
This arrangement also encourages donors to give more. The limits on how much a campaign can raise from one donor curtail how much each committee can ask individuals to contribute. Combining the two committees and adding others increases how much can be requested in one fundraising effort. But joint fundraising opportunities aren't helpful only to those on the receiving end. They also present opportunities for donors to make an impact with a large contribution. And it can be an opportunity to win points for their favorite candidate.
10. Undercover Coordination
The concept of "coordination" is one of the most important aspects of campaign finance rules -- and one of the murkiest post-Citizens United. Super PACs and other outside spending groups are allowed to spend unlimited amounts of money in federal races as long as they don't collaborate with candidates. However, the rules about what constitutes coordination keep loosening. In practice, there are few practical limits on cooperation between outside groups, candidates and parties.
The FEC has done very little to shed light on the interactions between candidates and outside spending groups. For the most part, one can only guess what kinds of conversations campaigns and outside spending groups are having behind the scenes.
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