When the U.S. Supreme Court ruled in the Citizens United case two years ago that rich individuals and corporations could spend an unlimited amount of money on political advertising, so long as it was not technically coordinated with candidates' campaigns, the immediate fear was that new "superPACS" allowed under the ruling would ultimately dictate the shape and outcome of this nation's political elections by the sheer volume of slick attack ads they could buy.
But there's now a larger concern on the political horizon: the corporate and political misuse of tax-exempt groups established under IRS laws as nonprofit "social welfare agencies" that are chartered to operate behalf of the broad public good in their communities. Some these nonprofit groups are now, apparently wrongly, exploiting their tax-exempt status, and simultaneously masking the identity of their funders, by quietly receiving and spending vast amounts of money on political advertising promoting the legislative and election agenda of the Republican right wing.
Abuse of tax-exempt status
Because they are not supposed to be engaged in partisan political activities under their 501(c)(4) charters, they are not required -- as are the superPACS -- to register with the Federal Election Commission, which oversees and publicly lists political donations and donors, and the activities they fund. As a result, the extent of the 501(c)(4)s' donor lists and the dollar amount of their partisan political activities is not fully known. But the information accumulated by nonprofit Washington watchdogs, including Citizens for Responsibility and Ethics, the Center for Political Accountability, and the Center for Public Integrity, is troubling. It suggests their partisan political spending is immense.
Aetna, the insurance industry behemoth, for example, gave $3 million earlier this month to the American Action Network, a right-wing nonprofit 501(c)(4) group that has spent millions criticizing President Obama's Affordable Care Act and the lawmakers who supported it, The New York Times reported last week.
Aetna's gift to the American Action Network, moreover, came even as the company's president was saying publicly that he supported the ACA. Aetna also gave $4.5 million last year to the U.S. Chamber of Commerce, which, under its tax-exempt "business league" charter, spent $33 million in the last cycle of its political advertising largely opposing the policies of Obama and Democrats. And it expects to spend even more the same way this year.
Among other corporations reported to have given huge tax-exempt donations to "social welfare agencies" for similar political purposes were Merck, the pharmaceutical giant, Dow Chemical and Prudential Financial. Disclosure of such corporate contributions is infrequent, and generally shielded from stockholders and the public by the pass-through to tax-exempt organizations, which themselves are technically allowed only to advocate for the interest of public policies that serve general social welfare.
Still, research by the Center for Responsible Politics and the Center for Public Integrity, The Times reported, showed that spending by the tax-exempt groups outpaced the superPACS by a 3 to 2 margin in 2010. So far in the current 2012 cycle, they reportedly have raised that margin to account for two-thirds of the outside political spending.
"Companies want to be able to quietly push for their political agendas without being held accountable for it by their customers," Melanie Sloan, executive director of the Citizens for Responsibility and Ethics, told The Times. "I think the 501(c)(4)'s are likely to outweigh superPac spending, because so many donors want to remain anonymous."
GOP's protection racket
That view has become broadly embraced by all but the Republican leadership in Congress. Sen. Mitch McConnell, the Senate Republican leader, for example, is resisting having the IRS review the partisan activities of these supposedly "social welfare groups." He said in a recent essay that he believes IRS reviews would be "un-American" and would chill their First Amendment free speech rights.
His view is plainly intended to provide political cover for their secrecy. Yet it's not their First Amendment rights that are threatened. They can enjoy all those rights -- indeed, all their super enriched rights under the Supreme Court's Citizens United ruling -- without the limits on political giving that apply to ordinary Americans.
What is at stake in the secrecy that surrounds hundreds of millions of dollars now being spent on partisan political activities by corporations and other donors who are not being held accountable for the political attacks their donations are supporting. Americans voters should know the source of the money being used for political attack ads. Such knowledge is essential to informed voting and the sustainability of our democracy.