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Super PACs – one big loophole

Published in the Sunday Herald on February 19, 2012.

In every national poll conducted since his three state sweep of Missouri, Colorado and Minnesota, Rick Santorum leads the Republican presidential field. He has the backing of a majority of evangelical Christians, members of the Tea Party and self-described conservatives, once again highlighting a powerful desire among the party base for an alternative to Mitt Romney, the anointed nominee. But as the contest turns into a coast to coast slog, destined to last all summer, few believe he can win, for one simple reason: money.

Romney’s fundraising organisation is the envy of his rivals, but it is only half the story. A sister group called Restore Our Future, staffed by former aides, has spent significantly more on adverts than the formal campaign – $17 million at the last count.

Restore Our Future is what is known as a Super PAC, an entity created by the Supreme Court’s controversial decision in Citizens United v Federal Election Commission, which ruled that the First Amendment of the US Constitution guarantees individuals and corporations the right to unlimited political spending.

The maximum cheque a contributor can write to an official campaign is $2,500 but there are no such restrictions in the shadow system. During the last six months of 2011, Restore Our Future raised $18 million from just two hundred ultra-wealthy supporters. Three hedge fund managers gave $1 million each. Romney’s former colleagues at Bain Capital chipped in $750,000. There was $385,000 from Goldman Sachs, plus $250,000 from a mysterious company in Connecticut with a post office box for an address.

Restore Our Future is run by Larry McCarthy, best known for creating an advert that put paid the chances of Democratic nominee Michael Dukakis in 1988. The commercial focused on Willie Horton, a black prisoner in Massachusetts who ran away while he was on a weekend furlough programme and later raped a white woman at knifepoint – it implied that Dukakis, the then Governor, was soft on crime, but also stoked racial fear and resentment.

In Florida, Newt Gingrich was buried under a barrage of negative television advertising, abruptly halting the momentum he had gained with his lopsided win in South Carolina, where his Super PAC, Winning Our Future, had gone after Romney’s record at Bain Capital, with the help of two $5 million cheques from casino magnate Sheldon Adelson.

Until now, Santorum has been above the fray, watching as Gingrich and Romney tear each other down. In the states he won last week, his approval rating among Republicans topped 70%. But crucially, a majority of registered party members say they have yet to form a strong opinion about him. Now that he has emerged as the likely conservative figurehead, with Gingrich fading, Restore Our Future will be keen to fill in the blanks.

As no delegates were at stake in Missouri, none of the campaigns devoted resources there. Santorum boasted in his victory speech that “tonight we had an opportunity to see what a campaign looks like when one candidate isn’t outspent five or ten to one by negative ads, impugning their integrity and distorting the record.” It won’t happen again – and with Super Tuesday, in which ten states go to the polls, coming up on March 6, the importance of televised attacks will grow significantly. Santorum’s four wins so far have been in states where he could run an old-fashioned, town to town campaign.

Santorum has wealthy backers of his own. The most important of them, investment manager Foster Friess, joined him on stage in Missouri. Friess has donated around $1 million to Santorum’s Super PAC, the Red, White and Blue Fund. Asked what he expects in return, he joked “I have my heart set on the ambassadorship to Zimbabwe.” Santorum calls him a “friend” and insists that in their conversations they never discuss the Super PAC or co-ordinate strategy, which is prohibited by law.

Candidates routinely disavow responsibility for the negative adverts produced by their Super PACs, but the loopholes are so huge that they effectively operate as proxy campaigns. Both McCarthy and his co-director at Restore Our Future, Carl Forti, were on Romney’s staff in the last presidential election.

Most Super PACs are not tied to a candidate. Groups such as American Crossroads, run by Karl Rove, previously a spin doctor for George W. Bush, advocate for conservative causes all over the USA. A Texan billionaire, Harold Simmons, gave $7 million to the organisation in the last quarter of 2011 alone. A sister group, Crossroads GPS, is what’s known as a 501 (c) (4) organisation, named for its status in the tax code. These need not disclose their donors, as long as spend most of their money campaigning on issues, rather than for or against specific candidates. This is a slippery definition and an anonymous back door for tens of millions more in corporate political spending.

There are plenty of well-funded Democratic groups too, sponsored by unions and wealthy liberal patrons, but they account for less than a quarter of the total spending. President Barack Obama condemned the Citizens United ruling as “a major victory for big oil, Wall Street banks, health-insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of ordinary Americans.”

Although Obama’s official campaign dwarfs those of his Republican rivals, having raised $140 million last year, not least from Wall Street, he has abandoned the moral high ground, signalling that he will support a Democratic Super PAC, Priorities Action USA, by sending White House aides and members of his cabinet to speak at fundraisers. The group, run by Bill Burton, a veteran of Obama’s last campaign (which spent a record amount on negative advertising in the run-up to the2008 election), expects to raise at least $100 million.

Analysts estimate that the total bill for political advertising will reach $2 billion by November. In this respect, the Republican primaries are a preview of the general election, which promises to be the most expensive – and nastiest – of all time.