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  • FILE In this Jan. 21, 2010, file photo Citizens United President David Bossie talks on his cell phone outside the Supreme Court in Washington after the court's ruling on the campaign finance reform case. The emergence of super PACs and other outside groups, emboldened partly by the court's 2010 Citizens United decision, has done more than anything else to reshape the contours of campaign fundraising. Operating with few rules and limited oversight, outside groups spent a record-shattering $1 billion to influence political campaigns last fall. And the system faces further de-regulation as the Supreme Court prepares to hear a case this year that could wipe away aggregate annual limits on direct contributions to candidates and official campaign committees. (AP Photo/Lauren Victoria Burke, File)

Saturday, April 06, 2013 10:26 am

Spending mushrooms in new 'political ecosystem'

By STEVE PEOPLESAssociated Press

Operating with few rules and limited oversight, outside groups spent a record $1 billion to influence last year's election.

Politicians of all persuasions griped about the meddling. But few are working to change laws that ushered in an unprecedented flood of money made possible by a 2010 Supreme Court ruling that erased years of campaign finance law.

Instead, political leaders and donors from both parties are preparing for the flow of outside money to intensify. New groups have formed and others are shaping plans to come back bigger and smarter ahead of the 2014 congressional elections and the 2016 presidential race.

What laws do remain could become even looser as the Supreme Court considers another high-profile decision.

"The unregulated system that we seem to be headed in will make Watergate look like a bad soap opera," said Robert Zimmerman, a member of the Democratic National Committee's national finance team who helped raise as much as $500,000 for President Barack Obama's re-election effort.

"Everybody is focusing on raising more," Zimmerman said.

Even as some fundraisers report fatigue following a vicious and expensive presidential campaign last year, both sides are aggressively courting donors to help further transform the political landscape.

Campaigns and political parties bound by traditional fundraising limits are moving to outsource research, advertising, data collection and issue advocacy to groups that can accept unlimited donations while often offering donors anonymity.

The president, too, is intensifying his fundraising focus to help his party and a new nonprofit organization led by his former campaign manager.

Having promised to headline at least 20 fundraisers in his final presidential term for Democrat's campaign committees, Obama last week raised millions of dollars in four events. One was a $32,400-per person brunch in Atherton, Calif.

"I'm going to need some help," Obama told donors.

Donors who gave millions last fall, largely on the Republican side, are already lining up to do more.

"I'm going to do everything I possibly can to help our country and those people who believe in our country," said Republican donor Foster Friess, who gave more than $2 million to a new kind of political action committee, known as a super PAC, that fueled the 2012 presidential campaign of former Sen. Rick Santorum, R-Pa.

Super PACs can raise and spend unlimited funds to help candidates, but cannot coordinate expenditures or strategy with a campaign.

Like other donors, Friess says he's eager to use his "affluence" to shape policy fights in addition to helping candidates.

The emergence of super PACs and other outside groups, emboldened partly by the Citizens United decision by the Supreme Court in 2010, has done more than anything else to reshape the contours of campaign fundraising.

A few federal court cases have broadly eased campaign finance rules, allowing donors to give unlimited sums. That kind of money largely has gone to super PACs.

Many super PACs have affiliated nonprofit "social welfare" organizations that spent hundreds of millions last year on issue ads. Those groups don't have to disclose their donors because they're governed by tax law. Open-government groups have pushed Congress, to no avail, for a law that would require politically active groups to disclose their finances.

The system faces further deregulation as the Supreme Court prepares to hear a case this year that could wipe away aggregate annual limits on direct contributions to candidates and official campaign committees.

Officials across the political spectrum already acknowledge that there is little oversight in the new world of political fundraising, where the Internal Revenue Service and Federal Election Commission have been reluctant to enforce what rules remain.

Experts suggest this could change.

While a Supreme Court decision looms, former FEC Chairman Michael Toner says the IRS may trigger a more significant shift by challenging the tax-exempt status of prominent outside groups - one on the right and one on the left - in federal court.

"I think it's only a matter of time," Toner said.

Such enforcement could have a massive ripple effect across the fundraising world for groups that use their nonprofit status to attract major donors seeking tax breaks. But the IRS has yet to act. An agency spokesman said he could not comment on potential enforcement activity.

Meanwhile, the number of outside groups leveraging the tax code to court major donors is growing.

Obama earlier in the year converted his victorious re-election campaign into an unprecedented nonprofit organization, Organizing for Action, designed to influence policy debates in Washington. Individual donations to the Obama campaign were capped at $2,500 last year; the new group has no such limits.

Its leaders have reached out to at least 50 top Obama donors who intend to raise at least $500,000 this year. Former Obama campaign manager and group chairman, Jim Messina, said that Organizing for Action voluntarily would disclose the identity and specific amount of money it receives from donors, while denying corporate donations.

With no requirement to do so, the group will self-police the effort.

Late last month, GOP officials with strong ties to the Republican National Committee started an independent organization designed to track and research Democrats in the coming elections. The group is intended to counter a similar organization on the Democratic side established during the last election. Both groups can accept unlimited donations.

The idea for an independent research arm was included among dozens of recommendations in a recent Republican National Committee report released last week. At the same time, the report condemned the proliferation of outside groups that "use unlimited, and often unreported, amounts of the same money federal candidates and national parties are now prohibited from spending or raising."

Republicans were quick to react to the 2010 Supreme Court ruling, creating well-funded outside groups that spent heavily on television ads that aided the GOP's success in the 2010 congressional elections. Obama initially signaled that he didn't want Democrats to form outside groups, but ultimately gave his blessing after the Republican gains in that election.

"It's a disaster of a system. But Democrats need to be engaged or else Republicans are going to perpetually win," said Bill Burton, a former Obama adviser who led the president's super PAC.

Indeed, outside groups overwhelmingly favored Republicans in the last election. The super PAC allied with Obama, for example, spent more than $65 million compared with $142 million spent by that of Republican presidential nominee Mitt Romney.

Las Vegas casino magnate Sheldon Adelson topped the list of big donors, giving more than $90 million to Republican super PACs in all. That included more than $15 million to the organization backing former House Speaker Newt Gingrich's presidential bid and $30 million to Romney's super PAC.

Gingrich, who describes Adelson as "a good friend," predicted that number of Super PACs would grow in the coming years.

Both sides seem to be embracing what they see as a new normal in politics.

"Super PACs are a permanent reality within the political ecosystem," said Washington-based Republican consultant Phil Musser. "And I think their influence and number will increase not decrease."