Democrats opt for pragmatism on secret donors

President Obama, who denounced the Supreme Court’s 2010 Citizens United decision that allows donors to give unlimited funds to pay for campaign ads without having their names disclosed, now looks likely to benefit from those same type of ads next year.

In his State of Union address in 2010 Obama administered a scolding to the Supreme Court justices who had joined the majority in the Citizens United decision — with some of those justices sitting in front of him in the House chamber.

On Friday, NBC News and other news organizations reported that former Obama aide Bill Burton and allies have formed two committees to support Democratic candidates in 2012. One of the groups, Priorities USA, will allow undisclosed donations.

In last year's campaign, conservative groups such as Americans for Prosperity, organized under tax law as 501(c)(4) non-profit organizations, aired TV ads against Democrats, helping the GOP win control of the House.

These 501(c)(4) groups can take part in political campaign activity, such as airing TV ads, provided that it's not their primary activity. They're not allowed to coordinate with a candidate or his campaign committee.

Burton told the Associated Press that Democrats could not remain idle as GOP-leaning groups exploited the advantage created by the Citizens United decision.

"It has everything to do with Karl Rove and the Koch Brothers. As long as they play by one set of rules, we're not going to be boxed in by a double standard," Burton said.

Hypocritical — or sensible?
One reform group spoke out Friday to attack Republicans who might accuse Burton of hypocrisy.

David Donnelly, national campaigns director of the Public Campaign Action Fund, which supports a form of public financing of elections, said that those who call Burton hypocritical “are either trying to score political points against President Obama or are unfortunately out of touch with what it takes to make political change in this country. In order to change the rules of the game, we need to engage in the rules as they are, not as we wish they were. To act otherwise after Citizens United is to take a knife to a gunfight.”

Donnelly said, “The presidential system is broken. Obama pledged to fix it at the same time he opted out of it in 2008. We think he’s fallen far short of fighting for a fix — and we think he should make taking on special interests a major focus of his run for re-election. And not just as a message, but with specific comprehensive policy proposals.”

From the point of view of reform advocates such as Donnelly, is there a danger that once Democratic donors become accustomed to using Burton-type groups, that they might find that the system works well for their purposes?

“Yes, there is,” said Donnelly. “But the real winners and losers are everyday people if both parties chase big money. That’s why we’re focused on pushing Priorities USA and the president to change the rules.”

Will Obama know who gave the money?
Another advocate of reform, Donald Tobin, an expert on campaign finance at Ohio State University’s Moritz College of Law, said “The problem with highly connected people like Karl Rove or Bill Burton forming these groups is it is hard to believe that successful politicians will have no idea who gave to the independent organizations."

Burton’s group may be independent, “but that doesn’t mean that a successful president will not know who his friends are,” Tobin said. “This clearly raises significant concerns regarding the corruption of money and politics. You have situations where donors and candidates know of the support but no one else. Large, secret, contributions are a recipe for abuse and corruption.”

According to Obama spokesman Jay Carney, the president’s own position remains unchanged on the dangers of non-disclosure of donors.

But Obama does have a history on two previous occasions of having changed his position on the way campaigns are funded — evidence of a very pragmatic approach to running campaigns.

A switch on public funding
As a candidate in 2008, Obama at first said he would accept public financing for his campaign, along with the $85 million spending limit that came with that funding.

But then he decided to rely on voluntary campaign contributions and not accept money from the Presidential Election Campaign Fund, run by the Federal Election Commission, which had financed campaigns since 1976.

Obama explained in April 2008 that, "We have created a parallel public financing system where the American people decide if they want to support a campaign they can get on the Internet and finance it, and they will have as much access and influence over the course and direction of our campaign that has traditionally been reserved for the wealthy and the powerful.”

It worked out well for him: his campaign raised a record $745 million and won the election.

Obama’s decision to forego the FEC-administered public funding signaled a system in decline.

According to the FEC, Presidential Election Campaign Fund payments going to campaigns in 2008 totaled $139 million, the largest decline in the PECF spending from one election cycle to the next since the system was created.

Both Obama and his Republican opponent, John McCain, chose not to participate in the primary season matching fund program.

Obama, but not McCain, also opted out of public financing for the general election.

And voluntary taxpayer contributions to the system, through the check off on tax returns, fell from $67 million in 1996 to $49 million in 2008.

Another shift on campaign finance
Obama’s change of heart wasn’t the first time he’d shifted his stance on how campaigns ought to be paid for. In 2008 Obama made a point of not accepting contributions from political action committees, PACs, which corporations, trade groups, and labor unions use to support candidates. Donations to PACs are limited in amount and must be publicly disclosed.

“We can't have lobbyists running the show! That's why I don't take PAC money,” Obama said at a rally in Philadelphia during the campaign home stretch.

But when he won his Senate seat in 2004, he had taken more than $1.2 million from PACS including from those of General Electric, Bank of America, Exxon Mobil and Lockheed Martin.

Paul Ryan, a lawyer with the Campaign Legal Center, a nonpartisan organization that favors greater disclosure of contributions, said both Democrats and Republicans have a history of finding and exploiting gaps in campaign finance law.

In the late 1990s, the favored vehicle was “soft money” — unlimited amounts of money that donors could give to the political parties that allowed them to evade the legal limits on donations to a specific candidate. “Certainly Democrats used and abused the ‘soft money’ system just as Republicans did back in the Nineties,” Ryan said.

The big difference between the soft money era and the post-Citizens United era is that soft money donations had to be disclosed: in 2002, for instance, the public could see that California “Mighty Morphin Power Rangers” mogul Haim Saban had given $3 million to the Democratic National Committee.

Under the Citizens United decision, a donor such as Saban could give $3 million or any amount to a 501(c)(4) group and only he, the group and the Internal Revenue Service would know about it.