G.O.P. Allies Drive Ad Spending Disparity

Original Link: http://www.nytimes.com/2010/09/14/us/politics/14money.html

By MICHAEL LUO

Outside groups supporting Republican candidates in House and Senate races across the country have been swamping their Democratic-leaning counterparts on television since early August as the midterm election season has begun heating up.

Driving the disparity in the ad wars has been an array of Republican-oriented organizations that are set up so they can accept donations of unlimited size from individuals and corporations without having to disclose them. The situation raises the possibility that a relatively small cadre of deep-pocketed donors, unknown to the general public, is shaping the battle for Congress in the early going.

The yawning gap in independent interest group spending is alarming some Democratic officials, who argue that it amounts to an effort on the part of wealthy Republican donors, as well as corporate interests, newly emboldened by regulatory changes, to buy the election.

“While each of our campaigns has the resources they need to be competitive, we now face shadow groups putting their thumbs on the scale with undisclosed, unlimited and unregulated donations,” said Senator Robert Menendez of New Jersey, chairman of the Democratic Senatorial Campaign Committee.

As the primary season ends this week and the general election begins in earnest, the nightmare for the Democrats is that this is just the beginning. Tracking by Democratic media buyers, in fact, shows that other large chunks of television time have been set aside in the coming weeks in key House races by more Republican-leaning groups.

The snapshot of early television spending would seem to be a fulfillment of Democrats’ worst fears after the Supreme Court’s ruling in the Citizens United case in January that lifted a ban on direct corporate spending on political campaigns.

It is not clear, however, whether it is actually an influx of new corporate money unleashed by the Citizens United decision that is driving the spending chasm, or other factors, notably, a political environment that favors Republicans.

There are only scattered clues that can be gleaned about the financing, like the two $1 million contributions from Louisiana companies tied to Harold Simmons, a Texas billionaire and longtime Republican donor who helped finance Swift Boat Veterans for Truth, in the campaign finance filings of one group, American Crossroads; and that David Koch, the billionaire co-owner of Koch Industries, is closely tied to another major player, Americans for Prosperity.

Corporations have so far mostly chosen not to take advantage of the Citizens United ruling to directly sponsor campaign ads themselves.

Some, however, are most likely funneling more money into campaigns through some of these independent groups, said Lawrence M. Noble, a lawyer at Skadden, Arps, Slate, Meagher & Flom and a former general counsel for the Federal Election Commission. They had the right to make such contributions before the ruling, he said, but Citizens United made it more straightforward.

“There’s a greater comfort level,” Mr. Noble said.

Still, disclosure laws make it impossible to know for sure where the money for these groups is coming from in most cases.

“Corporate interests are buying the elections?” said Sheila Krumholz, executive director of the Center for Responsive Politics, a watchdog group. “Oh no, it’s much worse than that. We don’t know who’s buying the election.”

If the trend on television continues and extends across other types of independent group spending, it would be a reversal from the past. In recent elections, it was Democrats who used so-called soft money vehicles, which are able to accept unrestricted donations, to a much greater degree.

In 2006, for example, the last midterm election, Democratic-leaning 527 groups, named for the part of the tax code they fall under, outspent Republican-leaning ones in federal races $121 million to $65 million, according to the Center for Responsive Politics.

“The groups that perfected this were on the Democratic side,” said Steven Law, president and chief executive of American Crossroads, a Republican-oriented advocacy group, and its sister organization, Crossroads GPS. Crossroads GPS has been the biggest third-party player on television by far since early August.

In Senate races, Republican-leaning interest groups outspent Democratic-leaning ones on television $10.9 million to $1.3 million, from Aug. 1 to Sept. 8, according to Campaign Media Analysis Group, a company that tracks political advertising.

In the House, Republican-leaning groups outspent Democratic-leaning ones, $3.1 million to $1.5 million.

Television spending by the candidates themselves was fairly even during the period, with Republicans in the Senate pouring out about $19.6 million compared with $17.3 million by Democrats; in the House, Democrats spent $7.6 million to the Republicans $7 million. Spending by the party committees was negligible.

A major question is how big a mark labor unions will be able to make for Democrats; they have mostly held their fire on television up to this point. The one exception is the American Federation of State, County and Municipal Employees, which spent $1.2 million on House races. The Citizens United decision frees them up to more directly support candidates, as well, but even their leaders seemed to indicate that they would not be able to match pro-Republican expenditures over the airwaves.

“If we try to compete in that game, we can’t compete,” said Richard Trumka, president of the A.F.L.-C.I.O. “They have so much more resources.”

Fear has been building for some time among Democratic operatives that third-party spending on all fronts this year would favor Republicans, based on declarations by various groups on the amounts they were hoping to devote to this election. Spending on other activities, however, is much more difficult to track. Television advertising is, therefore, a useful gauge.

In Senate races over the last month, Crossroads GPS spent $4.8 million in California, Kentucky, Missouri, Nevada and Pennsylvania. It was followed by the United States Chamber of Commerce, a Republican-leaning trade association, which spent $2.9 million in television advertising in Illinois, Missouri and New Hampshire.

Fund-raising for both of the Crossroads groups has been spearheaded by Karl Rove, the former political strategist for President George W. Bush, and Ed Gillespie, a former Republican Party chairman.

The groups are well on their way to meeting their combined fund-raising goal of just over $50 million for this election, Mr. Law said.

Crossroads GPS is organized as a 501(c)(4) nonprofit, meaning it legally cannot devote more than half of its activities to politics, but it also means that it does not have to disclose its donors.

American Crossroads, on the other hand, recently filed paperwork to become an independent-expenditure political action committee, a new classification for third-party groups made possible by a pair of recent advisory opinions by the F.E.C. after the Citizens United decision. Such groups can accept donations of unlimited size but are required to regularly disclose their donors.

Perhaps not so coincidentally, American Crossroads spent only $437,000 on television in August and early September, much less than its sister-organization. Donations revealed in campaign finance filings by American Crossroads, however, offer a glimpse of the kinds of hefty contributions its leaders have been soliciting. There are the $1 million contributions linked to Mr. Simmons; and another $1 million donation came from a trust controlled by Jerry Perenchio, a former chairman of Univision and another major contributor to Republican causes.

Meanwhile, the biggest sponsor of television advertising in House races over the last month was Americans for Prosperity, which spent about $1.5 million, singling out races in which Republican candidates are at a fund-raising disadvantage.

Americans for Prosperity is another 501(c)(4), which does not have to disclose its donors. Mr. Koch, who has mostly supported Republicans over the years, serves as the chairman of its sister organization, Americans for Prosperity Foundation, which is much more limited in its political activities because it is set up as a 501(c)(3) nonprofit.