Journalism in the Public Interest

When the GOP Tried to Ban Dark Money

For a brief moment a decade ago, it was Republicans who wanted disclosure of anonymous political donations that Democrats now decry.


Sen. John McCain, R-Ariz., at a conference on campaign finance reform in April 2001 in Washington, D.C. (Manny Ceneta/AFP/Getty Images)

Last month, when House Democrats introduced the DISCLOSE 2012 Act to try to stop the flow of secret "dark money" into the electoral process, it marked an ironic twist.

A decade ago, it was Republicans who were pushing for disclosure of donors to nonprofit social welfare groups who are now pouring millions into political attack ads and House Democrats who opposed them.

Now the parties have exchanged positions.

The groups in question are nonprofits known as 501(c)(4)s, after the section of the tax code that describes them.

The best-known of the newer c4's are the Karl Rove-affiliated Crossroads GPS, which last year raised a $33 million war chest to support Republicans, and the Obama-affiliated Priorities USA, which is expected to play a similar role for the president. Like super PACs, c4's can accept unlimited donations. But Super PACs have to reveal their donors; c4's do not.

The 501(c)(4) category is not new. Many older interest groups (including some that engage in little or no political activity) are organized as social welfare groups, from the Sierra Club to the National Rifle Association. But the Supreme Court's 2010 decision in the Citizens United case -- a case filed by a c4 -- eliminated restrictions on campaign activity by these social welfare groups and other types of corporations, taking their political spending to another level.

The legislative battle over donor disclosure in the summer of 2000 shows how history often repeats itself when it comes to campaign finance regulation and how the partisan divide was not always what it is today.

Social welfare groups came under scrutiny in 2000 when Congress, led by Sen. John McCain, R.-Ariz., sought to close a loophole involving 527s, other groups that were running campaign ads without revealing their donors. A pro-Bush 527 called Republicans for Clean Air had hammered McCain with $2.5 million in negative ads during the GOP presidential primary, which the senator ultimately lost.

In June 2000, a McCain-sponsored amendment passed the Senate that required 527s to disclose their donors. Then some House Republicans proposed extending the disclosure requirements to apply to 501 (c)(4), (5), and (6) organizations -- social welfare groups, unions, and business trade associations, respectively.

"We need disclosure by section 527 organizations, but when 501(c) groups intervene in the political process, they should disclose what they are doing and who is paying for it as well," said House Ways and Means Oversight Subcommittee Chairman Amo Houghton, a New York Republican who helped draft a bill to expand disclosure.

Houghton's bill would have required 501(c )(4) (5) and (6) organizations that spent more than $10,000 per cycle on political ads and other election activity to reveal donors who gave more than $1,000. The proposal met stiff opposition from the nonprofit community, which argued it would have a chilling effect on donations.

But Republicans on the Ways and Means committee –- as well as McCain -- supported the measure.

Democrats on the committee opposed it. Some argued that expanding disclosure requirements was a "poison pill" designed to make the legislation unpalatable and to prevent any reform from passing. Others said the bill imposed "overly broad and uncertain disclosure requirements" on social welfare groups. A top aide to House Minority Leader Richard Gephardt, D-Mo., told the newspaper Roll Call that the Houghton bill "goes too far."

Ultimately, the Republican leadership in the House concluded that it did not have the votes to force disclosure for 501 groups. The House approved the narrower bill that had passed the Senate and President Clinton signed it into law in July 2000, closing the 527 loophole.

But lawmakers recognized even then that big donors seeking ways to influence campaigns anonymously could turn from 527s to social welfare groups.

"[Q]uite honestly, I believe these groups are perfectly capable of hiring good tax lawyers and going out and finding another way of getting around this if you aim it at specific tax sections," said Rep. Mike Castle, R-Del., at a June 2000 news conference, explaining why he supported disclosure requirements for social welfare groups.

Castle left politics in 2011 after losing a GOP Senate primary to Tea Party favorite Christine O'Donnell. Now a partner at law firm DLA Piper, he said this election cycle has vindicated his concerns about anonymous money being routed through social welfare groups.

"You've got these groups that can essentially contribute huge sums of money, first of all without limitation and secondly without disclosure," Castle said. "I think it's just a terrible injustice to a fair election system."

If there was any honesty, at all, in our political process, all campaigns would be publicly financed. I have other fairy tails besides that one but enough for now..

Marty Andersen

March 8, 2012, 4:26 p.m.

If I’m not mistaken, it was inequity in how the election commission treated films explaining Democrat and Republican agendas that motivated Citizens United to challenge the bipartisan McCain-Feingold Act.

Before Citizens United funded and promoted Hillary: The Movie, Citzens had complained to FEC that promotion of Michael Moore’s Fahrenheit 9/11 violated violated federal election laws. When the FEC refused, in Citizen’s eyes, to consistently enforce the Act, Citizens’ effectively prayed for the overturn of what our courts concluded was an unconstitutional restriction on free speech by persons who aggregate their resources in corporate collectives.

Walt Disney Corp. produced the film, but when it failed to move the production toward release Mirimax Film Corp. founders bought distribution rights three other corporations pooled resources to distribute the critical assessment of the Bush administration during the 2004 campaign season.

ProPublica could do a better job of explaining the controversy surrounding pseudo-documentaries that serve obvious partisan agendas. Instead, ProPublica consistently selects news topics that inform a primarily progressive liberal narrative. The preference invites further restrictions on speech by corporations such as those that produced and distributed F9/11. The result is an investigative project that puts at risk liberties we all enjoy, while closing the market for professional journalists who refuse to serve one side or the other.

Walter D. Shutter, Jr.

March 8, 2012, 5:48 p.m.

Jack, there is no honesty in our political process.  The process is, after all, political, and politics has never been “honest”.
Furthermore, speech is specifically protected in the 1st amendment to the Constitution.  Of course, not all speech is equally constitutionally protected. As justice Holmes so famously opined “There is no freedom to yell “Fire” in a crowded theatre”. Neither is there freedom of speech to libel or slander someone, unless that someone is a public figure, or a celebrity or, wait for it, a POLITICIAN. Nor is commerical speech (advertising to sell a product or service) absolutely free. When was the last time you saw an ad for smokes on TV?
But political speech is different.  It is the speech that the Founders sought to protect absolutely.  For the most part, the Supreme Court has agreed. And free political speech includes the dissemination thereof.  Dissemination of free speech costs big money nowadays so curtailment or regulation of the money need to buy political speech is suspect.  In short, there is no constitutional way to legislate political speech to your satisfaction because you, like the rest of us, are a political animal and you have your favorite politicians and those who are not your favorites. 
Rather than pursue a problematic policy of regulating political speech by trying to curtail or regulate the money associated with it, the American People should embrace, as I have, the same healthy skepticism they generally employ when evaluating commercial speech.  For instance, when I hear a politician tell me that he is going to lower, or totally eliminate my taxes, while sending me a check from the Treasury at the same time, and also, as a kicker,bring my rich, snooty neighbors down to my level of existence by increasing their taxes,  I think,” Wait a minute.  This guy is a politician.  Maybe what he REALLY wants is simply to get elected by any means necessary.  Holy crap, this guy could be LYING to me.”
Try that for 30 days.  I guarrantee you’ll feel better or your money back.

Demand the Congress goes in and bring in Posse Comitatus on the enemies who have infiltrated our gov. If they refuse then occupy Air Force and demand they go in and blow up the nest of our domestic terrorists who have packed our White House and destroyed it already.

Dishonesty and human greed have so far dominated the world politics including USA just like any other place on this earth.
Now, in this new era of electronically connected global communities with shared awareness, the time of drastic change is imminent.

Nothing can stop, (of course by the silent approval of the cosmic creator to which we refer to, when we say ” in God we trust “); the timely birth of a new kind of geo-politics, led by forever humanitarian North-America.
Some may panic but there is a great humanitarian cause behind this contemporary changing process. It is never a destruction of an old and good politics, rather it is a modification of an out of date voting system that unlike past, will not be influenced by the volume of donated money from unscrupulous and financially too greedy businessmen of all kinds, especially of oil fields, war-machines, war-planes, bombs, drugs, guns etc..
The East has always followed the West, this time USA will lead because, the birth place of this new kind of politics is the North America. God bless USA, Barack Obama and every hard-working but less-greedy individuals in the soil of North America.

Walter, you’re right on target regarding the founders, but metaphors aside, money is not speech.  Especially in a world that includes the Internet and volunteers, it’s entirely feasible to put a strict limit on campaign spending across multiple organizations.

And whether or not a corporation is a person, it absolutely isn’t a citizen, and we explicitly ban non-citizens from political speech to sway campaigns.  So the infrastructure already exists to limit any of these corporate entities the way we’d limit a Chinese millionaire.

Also, we live in a world where, increasingly, the government tells us that, if we have nothing to hide, then we should give up our secrets and other liberties to them without question.  They should start walking the walk.

reply to Walter D. Shutter, Jr. : I think all of us are aware of the issues surrounding the 1st amendment. This article addresses the question of whether or not the money behind political ads should be disclosed. Your referenced “pseudo documentaries” are production films which don’t hide the funding sources behind their creations.

The issue here is whether or not funding sources behind political ads should be made known to us, rather than the current practice of hiding behind a freshly minted, cleverly titled committee whose real intent is usually the polar opposite of the suggested purpose of the committee’s name. (eg: the Swift Boat ads presented to us by “Veterans for Truth”)

Through later tracking via the IRS, we now know that more than half of the group’s reported contributions came from just three sources, all prominent Texas Republican donors: Houston builder Bob J. Perry, a longtime supporter of George W. Bush, donated $4.45 million, Harold Simmons’ Contrans donated $3 million, and T. Boone Pickens, Jr. donated $2 million. Other major contributors included Bush fundraiser Carl Lindner ($300,000), Robert Lindner ($260,000), GOP contributor Aubrey McClendon ($250,000), George Matthews Jr. ($250,000), and Crow Holdings ($100,000).

If we’re going to be lied to with political ads from either side of the aisle, shouldn’t we be informed about their funding sources?

Gio Wiederhold

March 9, 2012, 1:10 p.m.

john: has your assertion:
`And whether or not a corporation is a person, it absolutely isn’t a citizen, and we explicitly ban non-citizens from political speech to sway campaigns.  So the infrastructure already exists to limit any of these corporate entities the way we’d limit a Chinese millionaire.’
ever used to make a case in these issues? It makes a lot of sense.

Gio, I don’t think it’s been exercised yet, but I recently heard Lawrence Lessig talking about it (maybe in a TED talk), and I’d trust his opinion on these sorts of matters far more than my own thinking.

The problem is that such an action could only come from the government, I believe.  After all, nobody would have standing to sue a foreigner for spending money.  But they’re all quite happy having people spend millions of dollars to get them in power.

Lessig [Republic Lost, p128] quotes the Federalist papers “Congress `dependent on the people alone’ “. So we hit the snag agian - Are corporations `people’.
In reviewing “Citizens United” he makes the point that Justice Kennedy’s <addition> in “the voters and <contributors> who ” is   “wrong ” [p.242].  But Lessig does not use the citizen argument here.
But if “Citizens [and corporations] United” is revisited it’s a worthwhile point.


That was then, this is now. Everything changes. Just try and get over yourself.

Walter D. Shutter, Jr.

March 10, 2012, 10:37 a.m.

In response to Carolyn:  First, I never referenced any “pseudo documentaries” That was Marty Anderson and I’m sure he is a very fine fellow.  Second, you express concern that “the real issue is whether or not funding sources behind political ads should be made known to us rather than the current practice of hiding behing a freshly minted, cleverly titled committe whose real intent is usually the polar opposite of the suggested purpose of the committee’s name….”
I feel your pain, but when it comes to politics, truth is a bald-headed orphan. If only people would tell us what they were really about, this indeed would be a better world. For example, just this morning I googled “Concerned citizens for Peace and Prosperity” and I got a hit.  I then googled “Concerned citizens for War and Poverty” and got nothing.  Go figure.
As for myself, when I receive a political message,I ignore the name and look at the message.  Whether I agree or disagree with the message, I, along with anyone else with two neurons to rub together,can usually discern the true identity and agenda of the messenger. And if I can’t, I can always rely on another political messenger to set me straight.

In response to John and Gio:  John, you say that money is not speech.  That’s your opinion.  The SCOTUS says that money is speech.  That’s their opinion.  The difference? The opinion of the SCOTUS is the law of the land; yours is not.
You are correct when you say that a corporation may be a person but is not a citizen.  You are not correct when you say that we explicitly ban non-citizens from political speech to influence elections. I refer, of course, to the decision of the SCOTUS in Citizens United v. FEC.

Gio, Citizens United v. FEC will soon be revisited.  I invite you to google Bluman v. FEC.  The facts of the case:  Two resident aliens, one a Canadian citizen, the other an Israeli citizen, petitioned the Federal Elections Comission (FEC) for consent to take an official role in electioneering (manning phone banks, raising $$, making telephone calls, stuffing envelopes, etc) in the New York area.  The FEC denied their request, and the two non-citizens appealed to the US District Court in Washington, DC.  A 3 judge panel of the court unanimously upheld the decision of the FEC. Prediction:  The case will be appealed and will reach the SCOTUS where the non-citizens will prevail. 

Finally, Carolyn, John, and Gio:  A political message from me:  I would not trust Lawrence Lessig to walk my dogs past a Korean restaurant.

Repubic’s reputations are as dark as their money. Wanna know a way to put a curse on them? Find out who is buying his ‘favors’ and boycott. Put flyers all over the web who the golem corpses is and the public servant they bought to serve only them. Put them out of business and it won’t take long to stop this immoral bribery and soul-buying and Constitution crushing their corporations are doing for their satanic masters.

We need to restrict the length of campaigns to no more than 4 months and campaign financing needs to be publicly funded, no private or corporate contributions,

Over here in Oz we view your election process as a form of entertainment - no offense intended. Our process is significantly shorter, sometimes only 5-6 weeks. We don’t have the convoluted process of voting in primaries or an electoral college. We do obviously have the extended run-up into an election before it’s announced but it’s not blatant and you don’t see posters, flyers or debates on the teev, nor politicians in buses and planes jet setting across the country trying to suck in the gullible undecided.

Of course we have industry and ‘interested parties’ handing over cash, whether through direct donation or lobbyists, but these are supposedly fully accounted for and open to scrutiny. We also have industry groups who try to change public opinion one way or the other, but they’re pretty well known and exposed as soon as possible, so any specific political aim by, for example, big tobacco or oil & gas, is generally front page news.

The whole concept of Super Pacs, c4’s and the like is completely foreign to us, as are the obscene amounts of money that are needed to be raised by a candidate who goes all the way to the ‘final election’.

I know you guys look on it as situation normal, but from where i sit there’s something seriously wrong with the way your leaders go about their business. We have our problems too and we’re not perfect by any measure, but simplifying your political processes would help clarify a lot of muddied waters.

John and Gio, although a corporation is not a “citizen” or the concept of “residence” does not apply to corporations in the same manner as to natural persons, nonetheless the law treats corporations as artificial persons who in fact are citizens in a state of its incorporation and every other state where the corporation solicits. Thus, under the law, all persons, natural and artificial, enjoy the benefits of equal opportunity to act in whichever way they like so long as their actions do not interfere with the liberties of another.

Walter D. Shutter, Jr.

March 11, 2012, 11:33 p.m.

Aussie Sean:  I enjoyed your post. I’m glad that you view our political process as a form of entertainment.  Many of us feel the same way. That being said, I know little of your political process. I know that you have a parlimentary system.  From a distance, it appears to me to be a unitary form of government with no separation of powers.  Your legislative and executive branches are as one and , I would suppose, more “efficient” than ours.  Here in the US, we have a two party system for electing our chief executive and our legislators.  I believe you have more than two major parties.  I wonder if you could enlighten me as to how your politicians become Members of Parliment.  You say you have no “Primaries”.  How, then, are candidates for MP selected by the various parties?  Is there a vote?  If so, who gets to vote?  If there is no vote by the party faithful, then who decides who gets to run in the election?

Hi Walter, i tried for a while to find the words to describe our political system but in the end decided to use the collective wisdom of others :

Forgive the laziness but it’s a better and more accurate description than i could ever attempt.

We have 2 major parties here, the Liberal Party and the Australian Labor Party. Minor parties who fluctuate in popularity with the voters can or did include but are not limited to the Greens, NDP (Nuclear Disarmament Party, The Australian Democrats, various independent religious and vested interest groups (HEMP - Help End Marijuana Prohibition) and Independent representatives who hold no particular political allegiance.  The 2 main parties have various factions within their setup’s; Far Left, Left, Centre Left, Centre, Centre Right, Right, Far Right (possibly at times there’s also an Off the Planet; Out Of His/Her Mind and oft times there’s a You’re Joking/Who Voted This Clown In? faction as well ). A cynic would probably say that there’s also a Left Centre Right, a Right Centre Right et al,and to one such as me it all seems just a little bit centre left of wrong. I personally believe the factions are another way of ascertaining the level of fanaticism or mental state of the particular grub who thinks he’s good enough to become our elected representative and stand in our stead - but that’s another story.

Each party holds internal elections whereby the representatives from each electoral district who wish to become candidates are voted on by the party members (this is great in theory, but sometimes they’re rammed down the throat of the collective by a faction and everyone agrees that this is good for the party and votes accordingly).

That’s it for tonight - my head hurts.

Walter, are you suggesting that the law or the Supreme Court is never wrong?  To pick a random historical example, Dred Scott might disagree.  Heck, the Supreme Court barely acknowledged the Fourteenth Amendment for a hundred years, siding against minority rights until there were actual riots over it.

Where the government has made the wrong choice, our duty is to point that out and convince the legislature to change it, not shrug in the face of the divine power of judges and legislators.  It’s government “by the people,” not “upon the backs of the people.”

Lara, that’s not the entire story, though.  Microsoft can’t register to vote, for example.

    Do you have a reference that explicitly assigns citizenship rights to corporations? Delaware would be good bet?
I thought that only in the City-of-London can corporations—that are members of a guild, as the “The Worshipful Company of Tax Advisors”—vote (about one vote per 5 employees).

Maybe such a rule would be more straightforward than having Super-pacs.


Does Real Separation of Power exist anywhere?

Walter D. Shutter, Jr.

March 13, 2012, 3:56 p.m.

Update/correction:  the Supreme Court, per curiam , refused to hear the appeal of Bluman et al in Bluman v. SEC.  Thus the decision of the lower court stands, i.e, non-citizens, even if they are resident aliens, cannot actively participate in US political campaigns.  I must admit I am surprised.  I thought the Court would take the case to:
a. Overturn the decision of the lower court, thus giving more political rights to resident aliens even though they still could not vote in our elections, or,
b. Revisit the case of Citizens United v. SEC to either expand, restrict or clarify their original ruling .
But perhaps the Court has had enough of the Citizens United controversy, especially after the Prez dumped on them during his State of the Union message a couple of years back.

Aussie Sean:  thanks for the info on Oz political structure.  You were right; you don’t have Primary elections in public.  And you have compulsory, secret voting with preferential counting before and after the vote..But I guess your political system works about as well as ours does.

This article is part of an ongoing investigation:
Buying Your Vote

Buying Your Vote: Dark Money and Big Data

ProPublica is following the money and exploring campaign issues you won't read about elsewhere.

Get Updates

Our Hottest Stories