Dark Money: The Rise of Outside Spending in 2012

More than $200 million spent on this election came from faceless donors. A Time/ProPublica report on how mystery cash is changing American politics.

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Bartholomew Cooke for TIME

About a week before election day, a young girl, maybe 10 years old, confronted Colorado House candidate Sal Pace in a pew at his Pueblo church. “She said, ‘Is it true that you want to cut my grandmother’s Medicare?’” Pace remembers.

Like many other Democrats around the country, Pace has spent months trying to rebut the charge that President Obama’s health care reforms hurt Grandma by cutting Medicare by $716 billion. In fact, the same cuts in payments to medical providers found in Obamacare can also be found in the House Republican budget, and they do not directly limit patient care. “I told the little girl that the ads are full of lies and that it’s not right for people to lie,” he said.

What Pace couldn’t tell the girl was who exactly is to blame. That’s because the moneymen behind the outfit spending the most on the Medicare attack ads in Pace’s district will not show their faces. The money is being spent through a Washington-based group, Americans for Tax Reform (ATR), that calls itself a “social welfare” nonprofit, so it does not need to reveal its donors to the public. In mid-October, the group popped up in Pace’s district, which is about the size of New York State, and promised to spend $1.3 million there in the campaign’s final three weeks. In one day, Pace spokesman James Dakin Owens said, “They basically matched us dollar for dollar for everything we had raised in the campaign. It was an 800-pound gorilla that just jumped in.”

(MORE: The Case for Obama)

This sort of thing has been happening a lot this year in House and Senate races around the country. Candidates have found their modest war chests, filled with checks for $2,500 or less, swamped by outside groups, which have no limits on the donations they can collect. In all, more than $800 million was spent through mid-October on election ads by outside groups, according to the Center for Responsive Politics. Of that total, nearly 1 in 4 dollars is so-called dark money, meaning the identities of the donors remain a secret. Voters watching TV, listening to the radio or receiving direct-mail appeals know only the names of the front organizations that bought the ads, names that range from the well-known (U.S. Chamber of Commerce) to the anodyne (Government Integrity Fund) to the borderline absurd (America Is Not Stupid).

Spending by outside groups is nothing new in American politics. The Willie Horton ad attacking Michael Dukakis in the 1988 presidential campaign was paid for by an outside group, as were the Swift Boat Veterans for Truth spots that skewered John Kerry in 2004. But in the past two years, American politics has been transformed by a surge in spending. One fact tells the story: explicit political-ad spending by outside groups in 2012 is on track to double the combined total spent by outside groups in each of the four elections since 2002.

(MORE: The Case for Mitt Romney)

Ads purchased with untraceable money tend to be among the most vicious. Nearly 9 in 10 dark-money spots are negative, and an analysis by the Annenberg Public Policy Center found that 26% of the ads are deceptive, a slightly higher rate than that for ads by groups that disclose their donors’ identities. In a year that has been marked by enormous enthusiasm among wealthy conservatives, there is another trend in anonymous spending: almost all of it—83%, according to one review—has been directed against Democrats. This has some in Obama’s party fretting about the outsize ability of wealthy individuals and institutions to shape the electoral landscape while hiding their identities behind front groups. “If we don’t find some way to respond to this, it’s going to turn us into a plutocracy, where a very few powerful people control the public agenda,” said former Ohio governor Ted Strickland.

Most of the secretive spending this year has been coordinated through a close-knit network of veteran Republican strategists in Washington who meet regularly to share polling data and decide which group should focus on what races around the country. “There’s no duplication. There’s no wasteful survey research done,” says Scott Reed, a Republican consultant working on the U.S. Chamber of Commerce advertising effort. “They have totally changed the way you run a campaign.”

The man behind the Colorado ads, Grover Norquist, is not shy about discussing the mechanics behind mounting multimillion-dollar dark-money campaigns. His organization works closely with such other dark-money giants as the U.S. Chamber; Crossroads GPS, co-founded by Karl Rove, a former adviser to George W. Bush; and Americans for Prosperity, founded by Charles and David Koch. While the groups can’t talk to campaigns, they can talk to one another. “For years, coordination was the thing you couldn’t do,” Norquist says about the shift in power from campaigns to outside groups. “Now it’s the thing you are most allowed to do.”

(MORE: Viewpoints — Why We’re Voting for Obama)

Not only do the groups share strategy, but they can share money as well. Under current rules, many campaign-finance lawyers say, nondisclosing groups must spend less than half their budget on political communications to keep their social-welfare status. In practice, this means there is a cost to anonymity. For every dollar spent on a dark-money political ad, another dollar must be spent on some nonpolitical effort. But by sharing, these groups have found ways to make the money go further.

In 2010, Crossroads GPS gave a $4 million grant to Norquist’s group, ATR—money that was earmarked for nonpolitical activities. Norquist used the money to finance his regular operations, freeing up about $4 million from other sources to spend on political communication. In effect, the nonpolitical Crossroads GPS money was transformed into political money by passing it through ATR. “That is part of the sales pitch you make to donors,” Norquist explained. “If you contribute a dollar to ATR, you are freeing up another dollar that you have already raised.”

Norquist would not say if he had received another large grant from Crossroads GPS this cycle, but he did say he expects the group’s political spending to have nearly tripled in 2012 to about $12 million. As for Pace, Norquist said the ads running in Colorado are meant as punishment for the candidate’s voting record in the state legislature. “What does he think we are going to do?” Norquist asked. “The tax-raising twit.”

(MORE: Viewpoints: Why We’re Voting for Romney)

Federal oversight of these groups is close to nonexistent. Of the roughly 104,000 people who work for the Internal Revenue Service, about 900 work in the tax-exempt division that monitors this spending. There is little hope of forcing groups like Norquist’s to disclose the identities of their donors. Republicans oppose such steps, and the courts have made it easier for the groups to operate secretly. A 2010 decision by the Supreme Court overturned a law banning unions and corporations from giving directly to efforts intended to influence elections. A subsequent court ruling created super PACs, independent groups that buy campaign ads with unlimited checks from disclosed donors. They now work in tandem with dark-money groups in races around the country.

That means there are likely to be far more candidates facing Pace’s predicament. In California’s Central Valley, José Hernández, a former farmworker and NASA astronaut, has been withstanding blistering attacks on television from outside groups as he challenges Representative Jeff Denham, a freshman Republican. Over the course of the year, Hernández has faced $3.1 million in outside spending against him, by the U.S. Chamber and a group called the American Action Network, neither of which discloses its donors. That is more than twice as much as Hernández has been able to raise for his campaign. “These folks have been throwing everything on the wall to see what will stick,” says Hernández. “It makes our job harder, but a lot of people see through all of this.” The election on Nov. 6 will tell how many.

—with reporting by Kim Barker and Justin Elliott/Propublica

51 comments
haldonahue
haldonahue

@BuzzDroppings @bmancuso7 @ravisomaiya @oppenheimera @VetsForObama @TIMEPolitics short answer is no it is not

superlogi
superlogi

Little late in the day to be discussing outside influence with the buffoon getting outside money from overseas, a Nobel Peace Prize and endorsements from our socialistic and economically failed cousins from across the pond.  But then, I'm about as cynical as your candidate.

PS  I wonder how much the 4th estate looking he other way on the incumbents foibles and the promoting of his imaginary skills is worth in dollars?  Scherer, get an honest job.  Work for anyone but the TIMES.

fitty_three
fitty_three

All I can say is 

"Welcome to the world of Citizens' United, where everything is legal."

DclareDiane
DclareDiane

@TIME @TIMEPolitics and one of Obama's donors happens to be Osama bin Laden

barefeeteez
barefeeteez

@TIME @TIMEPolitics so much money, so few good deeds.

sacredh
sacredh

This is OT, but in case it hasn't occurred to everybody how to create our own edit feature, copy the post you want to edit. Delete the original post and paste your original post. Edit the paste. I hope this helps out.

shepherdwong
shepherdwong

I'm starting to look forward to having a good laugh at the expense (literally) of these traitorous plutocrats who will have spent millions to put another psychopathic puppet in office, purely for the purpose of having their taxes cut (again)...for nothing.

YesterdaysWine
YesterdaysWine

Let's all look forward to the day when some incipient enemy - China, say, since it is the latest bogeyman - sets up a corporation here and funnels billions in state money through it into campaigns. The ultimate Trojan Horse.

TrajanSaldana
TrajanSaldana

can we at last stop kidding ourselves about our political process being "democratic" in any way?

sacredh
sacredh

Even if dark money doesn't buy this election, there will be elections in 2014 and 2016 to buy. What can't be bought is the image of Christie touring the devasted areas with President Obama and then praising his leadership during a time of crisis. Isn't that what the American people see? Dark money ads or a leader leading us through dark days? The Beatles sang that money "Can't Buy Me Love". Mitt is finding out that money can't buy him credibility either.

kathy
kathy

I've been telling people that it's okay for us to spend as much on presidential elections as we do on Hallowe'en candy - about 2.3 billion last year.  But now it turns out that the addition of outside spending brings this elections spending closer to 6 billion.  Not really as okay.

superlogi
superlogi

It's a pity you weren't so concerned about the enormous amount of money spent in the last campaign.  But then, that was a Democrat  who spent it.

MrObvious
MrObvious

The legal prostitution of our judicial and political system is a top down problem. Sure; we vote for them because between two options we often vote for the one that'll be least destructive - but we know we're only their 'pals' come election time. After that they'll be squeezing flesh their money handlers.

DonQuixotic
DonQuixotic

If only we had journalists that could dedicated themselves to following this money trail and tell us just who is dumping money on which candidate (both Presidential and Congressional).  Oh well, better luck next election year I guess.

outsider
outsider

Norquist is almost single handedly destroying democracy in the US. 

Paul,nnto
Paul,nnto

Spend that kind of scratch and you expect something for it. 

We know they are spending 100s of millions, the question is what is the expected return.

outsider
outsider

@chupkar 

It's true - we havent' seen much about that since the initial report. 

AlistairCookie
AlistairCookie

@filmnoia We sure could use a dose of Carlin right about now, may the Flying Spaghetti Monster rest his soul (Argh!)  

I don't know if he's spinning in his grave, or having laugh at us (while shaking his head.)  Either way, he was always right. 

AlistairCookie
AlistairCookie

@tom.litton That was an interesting article.  An intriguing idea, but IMHO, utterly unworkable.  We live in a post-CU world.  Blind trusts might work in theory, but it would do approximately zero to affect PAC's, super-PACS, ultra-mega-PAC's, uber-PAC's and the like.  It wouldn't change the dark money Sherer wrote about; the exact type of money that is so destructive.  

Within the confines of our current campaign finance system, I think more transparency is better.  A CU reversal would be better still.  Grover Norquist and his ilk (I don't care what party--all of 'em) taking a long walk off a short pier would be even better still.  

Ideally, we could scrap all this noise and start something new from scratch.  No more PACs--messages come directly from the candidates only.  State elections are limited to money from within the state.  No more national groups, or groups from another state, sandbagging state elections.  That the LDS in UT could pour so much into the Prop 8 vote in CA is absurd, for example.  No more lobbying, but something better needs to replace it.  There needs to be a fair and accessible way for individual constituents and business communities to actually reach our representatives with our issues and concerns--and I'm not sure what that way is.  Are there untenable aspects to my ideas, and unintended consequences?  Absolutely, but we gotta start somewhere.   

I think we, as a country, are capable of starting a new campaign finance system from scratch about the time we get a viable third party.     

outsider
outsider

@shepherdwong 

Me too. The idea of all that wasted money gives me a tickle. 

They're trying to game the system (and doing a good job of it) - but they shouldn't be allowed to get away with it. 

anon76
anon76

@kathy And I only spent half as much on Halloween candy this year!

mantisdragon91
mantisdragon91

@superlogi It's a pity that you aren't interested in the fact that the major contributors to your candidate are serial polluters and an Israel First Nationalist with ties to the Chinese Mob.

MrObvious
MrObvious

@superlogi 

I've been concerned about all spending every single year. It's a pity that you ignore the over all problem with false equivalence. 

superlogi
superlogi

@outsider2011 The freedom to keep as much of what one makes and spending it the way he/she sees fit, is about as democratic an idea as you can get.  On the other hand, big brother's redistributing more and more of what a person accumulate is, in fact, anti-democratic.

outsider
outsider

@Paul,nnto 

No question - more taxes on the middle class, and less taxes on the rich. 

Oh, and deregulation too. 

anon76
anon76

@outsider2011 @shepherdwong 

I said it following the 2010 Fiorina senate race in California, and I'll say it again:  Private interests are much more efficient at wasting money on an election than the public sector.  You think a government grant to Solyndra could have been as effective at wiping out so much wealth so quickly as the Super-Pac money that went to Romney?  Think again.  The mighty captains of American Industry and their ability to fritter their vast fortunes on lost political causes- they truly are breathtaking to behold.

Tero
Tero

@superlogi @outsider2011 

I think outsider was pointing to the fact that Norquist (who is unelected) holds power over your elected officials. Nice try at redirection though. PS the "redistribution" thing is getting really old, please get some new talking points, Joe the "Plumber" was sooooo 2008.

MrObvious
MrObvious

@superlogi

Did you know that our Gov have the constitutional right to collect taxes to pay for this nations spending?

DonQuixotic
DonQuixotic

@Tero @superlogi @outsider2011 

Even beyond that, the fact that they put stock into candidates that sign a document stating that they will not consider alternatives, ever, is very alarming.  I want my President to consider alternatives and hear dissenting opinions.  It's well known that George Bush never did this, and look where that got us.

TrajanSaldana
TrajanSaldana

fair enough...let's hear your plan for paying for infrastructure, schools, defense, etc.

outsider
outsider

@DonQuixotic @superlogi @outsider2011 @Paul,nnto 

And the whole, someone making 20 mil a year paying a lower tax rate than someone making 20k a year; it's a ridiculous argument. 

And it doesn't deserve an answer; it just dignifies the stupidity of the argument about the top 10%.