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In  January  2010,  the  Supreme  Court  dealt  a  major  blow  to  McCain-Feingold.  Ruling  in  Citizens  United  v.  Federal  Election Commission, the court said the government  cannot  prevent  corporations  and  unions  from  spending  unlimited  money to support or criticize specific candidates.     Drawing  on  this  decision  in  March  2010,  a  federal  appeals  court  ruled  in  SpeechNow.org  v.  Federal  Election  Commission  that  political  committees  making  independent  expenditures  —  that  is,  spending  not  coordinated  with  or directed by a candidate’s campaign —  could accept donations of unlimited size.     Together,  the  rulings  super-charged  some  existing  fundraising  groups  and  paved  the  way  for  new  ones.  The  FEC,  deadlocked  for  months  on  issues  of  disclosure  and  foreign  money,  has  not  yet  written  new  rules  interpreting  the  court  decisions.  That’s  left  the  field  open  for  political strategists and lawyers.     “We’re  in  very  dangerous  territory,”  said  Fred  Wertheimer,  president  of  Democracy  21,  a  campaign-finance  watchdog  group.  “There’s  one  word  to  describe  what’s  going  on  in  the  campaign-finance area: The word is ‘obscene.’  And  it’s  going  to  result  in  scandal  and  corruption and, eventually, opportunities  for reform.”     Advocates say the changes are needed  to protect the First Amendment rights of  corporations and certain nonprofits.     “Campaign-finance  laws  inhibit  free  speech,”  said  Sean  Parnell,  president  of  the  Center  for  Competitive  Politics,  which  views  most  campaign-finance  laws as government meddling. “The First  Amendment  is  not  a  guarantee  that  all  voices will be heard as often or as effectively  as  all  other  voices.  It’s  just  a  guarantee  that  the  government  won’t  step  in and say, ‘OK, you’ve spoken enough.’” IN ThE OlD DAyS ThERE WERE JUST PACS  — political action committees that could  accept  donations  of  up  to  $5,000  from  individuals and pass the money along to  the candidates and parties they chose.     Now there are Super-PACs — committees  that,  thanks  to  the  court  decisions,  can  raise  and  spend  unlimited  sums  of  money  from  individuals,  corporations,  unions  and  other  groups.  Known  officially  as  “independent  expenditure-only  committees,”  they  can’t  donate  directly  to candidates but can promote them and  attack  their  opponents,  so  long  as  they  don’t  coordinate  with  any  candidate  or  political party.     Super-PACs  are  still  new,  having  debuted  by  spending  more  than  $80  million  on  the  2010  midterm  elections.  Republicans  pioneered  the  groups,  but  Democrats jumped in, too. Many of these  new  entities  have  innocuous-sounding

names  that  make  it  hard  to  guess  their  true political intent: Concerned Taxpayers  of  America,  Citizens  for  a  Working  America, We love USA. (And then there’s  comedian  Stephen  Colbert’s  new  SuperPAC:  Americans  for  a  Better  Tomorrow,  Tomorrow.) More than 100 are now registered with the FEC.     like  ordinary  PACs,  Super-PACs  must  disclose  their  donors.  But  because  of  time  lags  in  reporting,  months  can  go  by  before  the  identities  of  million-dollar  donors  are  revealed;  some  weren’t  disclosed until after the 2010 midterm elections. loopholes also can allow donors to  stay hidden, such as when money comes  from  a  nonprofit  that  doesn’t  have  to  disclose how it’s funded.     last  month,  the  campaign-finance  watchdog  group  Center  for  Responsive  Politics  found  five  Super-PACs  that  attributed a vast majority — and in some cases  all — of their funding to affiliated nonprofits that are not required to reveal donors.     Most PACs will file their first fundraising  reports  of  the  year  Friday,  but  two  Super-PACs that had to file early reported  raising more than $4.6 million. American  Crossroads,  which  Rove  formed  to  support  Republican  candidates,  raised  $3.8  million.  The  house  Majority  PAC,  aimed  at  reclaiming  the  Democratic  majority  lost in 2010, raised $800,000.   NAMED FOR ThE TAx CODE gOvERNINg  them, “527” groups were sort of a precursor to Super-PACs.     historically,  527s  had  a  choice  —  they  could register as PACs and give directly to  candidates under FEC limits, or they could  focus  on  issues,  allowing  them  to  raise  and  spend  unlimited  amounts.  These  issue-oriented  527s  were  not  supposed  to promote or attack candidates directly,  and  they  often  focused  on  hot-button  topics such as guns or abortion.     Strict  527  groups  first  played  a  major  role in the 2004 election, blurring the line  between  advocating  for  an  issue  and  a  candidate.  Three  paid  fines  for  breaking  laws barring them from directly supporting or criticizing candidates.     Because  of  the  recent  court  rulings,  some  527s  have  decided  to  become  Super-PACs so they can both raise unlimited  amounts  and  advocate  for  candidates. That said, 527 groups still played an  important role in the 2010 mid-term elections,  spending  more  than  $415  million,  according  to  the  Center  for  Responsive  Politics.   AlSO  NAMED  FOR  ThEIR  SECTION  IN  the  IRS  tax  code,  tax-exempt  501(C)  organizations  include  charities,  civic  leagues  and  unions.  (leave  it  to  the  IRS  to make their descriptions resemble algebra homework.)     Charities  that  fall  under  the  501(c)(3)

heading  are  not  allowed  to  be  involved  in  political  campaigns,  but  other  501(c)  organizations  are,  at  least  to  a  certain  extent. That includes 501(c)(4) “social welfare”  organizations,  a  class  that  includes  groups  like  the  AARP  and  the  NAACP;  501(c)(5) labor unions, like the Teamsters;  and  501(c)(6)  trade  associations,  like  the  U.S. Chamber of Commerce.     These  groups  could  always  pursue  political  activities  while  raising  unlimited  funds  and  without  disclosing  donors  —  but  only  if  their  primary  purpose  wasn’t  politics.  The  Sunlight  Foundation  described  them  as  “perhaps  the  most  opaque  political  players  since  pre-Watergate  days  of  anonymous  cash  contributions to candidates.”      The  best-known  of  these  groups  is  the  Tea  Party-supporting  Americans  for  Prosperity,  a  501(c)(4)  group  co-founded  by  billionaire  David  Koch,  who  with  his  brother  Charles  is  credited  with  pioneering  some  of  the  bolder  new  campaign  fundraising tactics.     Why donate anonymously when influence is the goal? Experts say secret giving  can  shield  corporations  from  blowback  when  supporting  controversial  causes,  and it can make a corporate-funded effort  appear  to  be  grassroots.  Plus,  no  rule  prevents  donors  from  telling  politicians  directly  about  their  support  if  it  suits  their needs.     “Say  I  gave  a  million  dollars  to  Crossroads gPS,” said Rick hasen, a law professor  at  the  University  of  California-Irvine  who  runs  Election  law  Blog.  “you  can  tell the whole Republican leadership that.  ProPublica  can’t  find  it,  but  the  people  you are trying to influence can find it.”     So, to review: Super-PACs focus only on  politics  but  must  disclose  their  donors.  The 501(c) groups must not have politics  as their primary purpose but don’t have to  disclose who gives them money.     It gets even more interesting when the  two groups combine powers.     Say  some  like-minded  people  form  both  a  Super-PAC  and  a  nonprofit  501(c) (4).  Corporations  and  individuals  could  then donate as much as they want to the  nonprofit, which isn’t required to publicly  disclose funders. The nonprofit could then  donate as much as it wanted to the SuperPAC, which lists the nonprofit’s donation  but not the original contributors.     This  isn’t  just  hypothetical.  Karl  Rove  set  up  this  model  with  the  Super-PAC  American  Crossroads  and  the  nonprofit  Crossroads  gPS.  While  some  Democrats  complain about the influence of so-called  “dark money,” others have started to follow in his footsteps.     Now  the  IRS  seems  to  be  stepping  in  —  or  thinking  about  it.  The  IRS  in  May  warned major funders of 501(c)(4) groups  that  their  donations  could  be  subject  to  gift taxes, but the agency announced last


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