In the News
FEC: FEC to Hold Public Hearing on the Advance Notice of Proposed Rulemaking in Light of McCutcheon, et al. v. FEC
Panel #18:30 – 9:30Robert BauerKaren GetmanElisabeth MacNamara (League of Women Voters)John Phillippe Jr. (Republican National Committee)Donald Simon (Democracy 21)Bradley Smith (Center for Competitive Politics)
Pay to Play Law Blog: Amicus Brief Highlights the Massive Reach and Unintended Consequences of SEC Rule 206(4)-5
By Stefan Passantino and Ben KeaneThat tension has manifested in the thoughtful – and, quite frankly, scary – amicus brief filed by the Center for Competitive Politics on behalf of the Financial Services Institute. In that brief, FSI notes that it is a network of independent financial advisors which are each independent broker-dealers operating entirely separately from each other as independent contractors. Because some of these advisors are registered to provide services to pension funds and other government retirement plans, FSI member firms are subject to Rule 206(4)-5. Makes sense, right? Sure, until one contemplates the fact that 206(4)-5 as crafted treats all of these Mom-and-Pop advisers who happen to be performing as independent contractors under the same FSI logo are inter-related “covered associates” for pay-to-play purposes. They are all responsible for each other’s campaign activity because the SEC chooses to treat “independent contractors” as “employees” for pay-to-play enforcement purposes (Black’s Law Dictionary having no jurisdiction over the Wisdom of the Sovereign).
Lessig Blog: On CCP’s Complaints: Tempest, Meet Teapot
As we have made clear in our filings with the FEC, the problem had nothing to do with the complexity of the law. The problem was getting vendors to follow it.When we launched our campaign, we took the steps to circulate the rules to the vendors making the ads. We assumed — mistakenly — that would suffice. When we discovered an issue with an early ad, the COO flagged it for the vendors, and we changed the ad approval system (adding a formal compliance sign-off before an ad would go on air). Even then, in one case, even though we had flagged an error and told the vendor to fix it, they mistakenly failed to fix it. Within a couple weeks, we had formalized the procedure enough (and buttressed it with at least one ALL CAPS EMAIL from me) so no other such errors occurred.
IRS
Wall Street Journal: End of the IRS Investigation?
EditorialRepublicans are rightly furious about the IRS targeting of conservative political groups—and the agency’s lack of cooperation in finding out what happened. They’ve even cut the IRS budget to get the agency’s attention. So it was odd to learn that the new head of the House Oversight Committee thinks these government employees deserve a pay raise.This week Chairman Jason Chaffetz (R., Utah) addressed the National Treasury Employees Union and lauded its members, while asking for cooperation in rooting out “bad apples.” Mr. Chaffetz seems not to realize that the whole point of a government-employee union is to not allow management to root out bad apples. And predictably, union chief Colleen Kelley said that while she wants a dialogue with Mr. Chaffetz, the “bad apples” comment was a bad way to start the conversation, reports Government Executive magazine.Meanwhile, we’ve learned that key staff in the targeting probe have left the Oversight committee. Does this mean there’s a kinder, gentler new Congressional overseer for the IRS?
Independent Groups
Inside Political Law: 5 Myths about Super PACs
By Robert LenhardFew subjects in federal campaign finance law are so frequently garbled by commentators, the press and the public as what a Super PAC is and how it operates. Here is a short list of common mistakes.1. Super PACS are “shadowy” “dark money” groups that mask where their money comes from and how its spent.Quite simply, nothing could be further from the truth. A Super PAC is among the most transparent outside spending groups around, disclosing to the public the source of all of its funds (including the name, address, occupation and employer of every person that gives over $200 in a year) and how it spends all those funds (including the name and address of every person or vendor that receives over $200 in a year, including the purpose of the disbursement). All that information is available on the web at www.fec.gov. Some complain that the disclosure is not fast enough or frequent enough. This is a problem mostly for those interested in the horse race aspect of politics. Super PACs can chose to disclose their activities either monthly or quarterly in election years and either monthly or semi-annually in non-election years. Others complain that entities such as 501(c)(4) social welfare groups (that do not publicly disclose their donors) can give to Super PACs and hence the source of those funds cannot be known. This problem arises from the laws that govern 501(c)(4) groups, not Super PACs.
Tax Financing
More Soft Money Hard Law: Mark Schmitt on New Directions in Political Reform
By Bob BauerHe recommends a program to enhance “political opportunity,” by which he means generally “to create structures that ensure opportunity for people, organizations, ideas and visions that are currently shut out of the political process.” He puts significant emphasis on public financing mechanisms, referring to examples like New York City’s small contribution matching program and suggesting as the best course a combination of matching programs with vouchers or credits. He notes the possibility of structuring rules to reward grassroots organizing. One example is the small donor PAC that would be limited to contributions of no more than $250 but given more legal flexibility, including higher limits on giving, to “encourage organizing and help causes that do not have wealthy supporters to be heard.” With his emphasis on broadening reform beyond the electoral sphere, he favors a proposal like Heather Gerken’s to provide publicly funded research support to public officials otherwise dependent on well-funded private lobbying. And he invites consideration of voting system reforms like instant run-off and ranked-choice voting.
Candidates, Politicians, Campaigns, and Parties
Politico: Drones fly into the political ad wars
By Daniel LippmanCampaign advertising gurus are using small versions of the unmanned aircraft to shoot footage of a fly-fishing candidate, scenic shots of a downtown and a marina, a pol walking near wind turbines, and other promotional images. But the relatively cheap, flexible technology has its downsides: one nearly crashed into Michigan Gov. Rick Snyder, for instance.And — as in violent conflicts — the legality of using drones for filming ads isn’t totally clear.
First Amendment
NPR: Last Thoughts: NPR And The Balance Between Ethics And The Nation
By Edward Schumacher-MatosFor continued survival, they better. The 50 or so years beginning with the Vietnam War and Watergate have been the Great Age of American Journalism. Yet, the irony is that while our ethics in terms of conflicts of interest and bias have never been higher, public trust in us has never been lower.This is partly because of a growing cynicism about all institutions. Authenticity is widely more valued today than authority. Moreover, in our magnificent ethical obsession, we in the news media like to think of ourselves as nobly holding other institutions accountable, but come across more like religious police. Small wonder we are accused of arrogance, as many Americans ask, with some resentment, “Who elected you?”
State and Local
Connecticut –– Hartford Courant: State Republicans Take Lead On Clean Elections
EditorialRepublicans in the state General Assembly beat Democrats to the punch last week by proposing legislation to close loopholes that have badly undermined this state’s campaign finance program, which was once a national model.
Utah –– Herald Extra: Politicians may be giving contributions to charity in the future
By Amy McDonaldIf passed, House Bill 91, sponsored by Rep. Kraig Powell, R-Heber City, will require that anonymous contributions made to political candidates that are more than $50 must be donated to the state’s general fund or to a 501(c)(3).“This bill addresses an issue that is arising with greater and greater frequency,” said Powell as he presented his bill Wednesday during House floor debate.“The problem is that although we have a $50 limit in state law that allows contributions up to $50 to be recorded for campaign finance disclosure purposes … we don’t have a provision that addresses anonymous contributions above that amount,” Powell said.
Indiana – Indy Star: Complaint: Monarch Beverage improperly funneled campaign cash
By Tony CookBut a wrinkle in the law allows certain kinds of businesses, including limited liability companies, to make unlimited donations. That exemption exists because Indiana didn’t even have LLCs when the state’s campaign finance laws were written.Still, contributors in Indiana are prohibited from giving in the name of another — and that’s what the Beverage Alliance says Monarch has done.Vision Concepts has contributed at least $1.47 million to Indiana candidates and political committees since 2002, making it one of the state’s biggest donors, according to the complaint. During that same time, Monarch alone would have been permitted to give just $264,000.
New York –– IB Times: Cuomo Officials Directed State Loan To Cuomo Donor At Center of Corruption Probe
By David Sirota“I’ll tell you the truth: I was totally shocked on a number of levels,” Governor Cuomo said of the allegations that Silver used his office to help politically connected real estate developers in their state business. Cuomo has positioned himself as a champion of ethics reform, declaring that “these acts of corruption are so damning.”But a careful review of state documents reveals that Cuomo and Silver are connected by a key figure in the scandal. Both lawmakers have a financial relationship with the same New York real estate mogul, Leonard Litwin, who has in turn relied upon them for preferential tax treatment and other government benefits.Silver is alleged to have benefited personally from Litwin’s spending — and there is no dispute that Cuomo has benefited politically from that same largesse.Litwin contributed $1 million to Cuomo’s reelection campaign and another $500,000 to the New York Democratic Party, making him the largest political donor in the state. His money flowed through 27subsidiaries of his firm, Glenwood Management. Those subsidiaries were also clients of the real estate law firm that paid referral fees to Silver. U.S. Attorney Preet Bharara has alleged that Silver “induce[d] real estate developers with business before the state” to employ the law firm, which in turn made payments to Silver.
