SuperPAC Totals Only Tip of the Corporate Cash Iceberg: Watchdog

Thousands of pages of Federal Election Commission Filings released at the end of January show that businesses have helped Super PACs raise over $40 million so far. But current disclosure practices ensure there's no way to know how much corporations are really spending on elections, according to a campaign finance reform advocate.

By now we know that Mitt Romney's campaign led the end-of-year fundraising charge among Republicans with over $24 million in receipts. Restore Our Future, a pro-Romney SuperPAC, raised almost $18 million, and now has more cash on hand than the candidate it supports.

Over $5 million of Restore Our Future's end-of-year receipts came directly from companies and corporations—that's just for one Super PAC in one financial quarter.

On the one hand, this is troubling because we're only finding out about it now. For all of January, when there were four nominating contests that steer the narrative for the rest of the year, we had little clue as to who was paying for the endless stream of attack ads. Who knows what those primaries and caucuses may have looked like without those ads, or if there were more information about who had ponied up the dough for them?

Politico notes the revelation that SuperPACs changed their filing status with the FEC in December from "quarterly" to "monthly" in order to avoid disclosing before the primaries.

But it's not just that we didn't know sooner: it's that there's still a lot we may not know. The impressive figures in the FEC filings don't reflect the only means available to corporations for spending money on elections. Contributions and annual dues given to third party organizations, like non-profits and trade associations, can then be spent on advertising or funneled into other groups by those same organizations, without any disclosure of their sources of funding to the FEC.

The Center for Responsive Politics estimated that of the $300 million spent by outside groups in the 2010 election cycle, the sources of 42 percent of that money went undisclosed—more than $123 million came through non-profits like the U.S. Chamber of Commerce.

It's loopholes like that one that that Kate CoyneMcCoy, the Executive Director of the Coalition for Accountability in Political Spending (CAPS), wants to close. CAPS recently completed a letter-writing campaign urging companies with poor transparency ratings (per other public watchdogs) to bar explicitly their third-party donations and dues from being use in electioneering war chests.

"If you are Qualcomm and you give $5 million to the Chamber of Commerce, you should say, 'Dear Chamber, you cannot use my $5 million for electioneering purposes,'" said CoyneMcCoy, who likened the use of annual dues for political spending to money laundering. In the 2010 elections, the Chamber of Commerce, which doesn't have to disclose its donors, spent over $32 million on electioneering communications.

Ideally, CAPS would like corporations to be even more stringent: no political spending at all; but if you must, disclose it quickly and publicly on the company website, instead of waiting for that information to turn up buried in thousands of pages of FEC data that gets dumped once every three months. Under the current rules, an entire season of attack ads and electioneering could—indeed, did—pass before we have any idea who's funding them.

To date, only two of the 20 corporations that received letters from CAPS have responded (full list here). Sprint-Nextel said it was changing its policy, but Warren Buffett's Berkshire Hathaway, which doesn't make political contributions itself, said it had no control over what its 70-plus subsidiaries want to do.

"Corporations don't intend to make changes," CoyneMcCoy said. "Most of [the companies we contacted] have connections to the federal government through contracts. If tax dollars are paying corporations that are using our money to influence elections, we have a right to know."

Given the lukewarm response, CAPS is pursuing reform through new legislation and pressure on regulatory agencies. The group hopes to have hearings with the Securities and Exchange Commission in March. It's also introduced legislation in several states that goes beyond existing "pay-to-play" laws by prohibiting corporations with government contracts from investing in independent expenditure organizations, which could set up an interesting post-Citizens United court battle about when corporate "speech" shouldn't be free.

This is only the first full election cycle since the Supreme Court's 2010 decision, and campaign spending is set to break just about every record.  That's just the spending we know about—the spending that gets reported to the FEC, and which teams of watchdogs and journalists have to pore over to draw conclusions about who's doing what to influence the election. The process is not timely, and the data is both staggering and complex. Money is easy to hide, and there's likely a lot more of it than we think.

"What Citizens United allowed corporations to do, we've only seen the tip of the iceberg," CoyneMcCoy said.