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'Citizens United' Ruling Opened Floodgates On Groups' Ad Spending.

As campaign finance experts tell Fresh Air's Terry Gross, the Supreme Court's lifting of restrictions has led many interest groups to dramatically increase the number of ads they're airing.

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'Citizens United' Ruling Opened Floodgates On Groups' Ad Spending

TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

If you think you're seeing more campaign ads than you'd expect for a
midterm election, you're probably right. This year is expected to set a
new record in media spending for an election cycle, and that can be
attributed in part to the recent Supreme Court Citizens United decision,
which extended the right of free speech to corporations.

The decision allows corporations and unions to spend unlimited amounts
on ads and other campaign activities that can urge voters to directly
oppose or support individual candidates. And organizations with certain
IRS designations can accept unlimited donations without publicly
disclosing who their donors are, which means when we see an ad, we may
not know who is behind it.

We have three guests today talking about this new world of campaign
finance and how it's helped create what some describe as a shadow GOP.

Our first guest, Peter Stone, has spent the past two decades covering
lobbying and campaign finance. He wrote for National Journal for nearly
18 years and now leads the money and politics team for the Center for
Public Integrity, a nonprofit organization devoted to investigative
journalism.

Peter Stone, welcome to FRESH AIR.

Mr. PETER STONE (Center for Public Integrity): Thank you.

GROSS: Let's start with an explanation of how the Citizens United
Supreme Court decision changed the rules of campaign finance.

Mr. STONE: Basically, the Citizens United decision overturned a couple
decades of campaign finance laws and essentially gave the green light to
corporations, unions and individuals to spend unlimited sums on
political ads - political ads and other political activities that also
can directly endorse or oppose an individual candidate.

GROSS: And they could do it anonymous. They could give the money
anonymously.

Mr. STONE: They can give it to organizations that don't – that aren't
required to disclose their donors. And it appears this year that that is
where the lion's share of the money is going, to a variety of nonprofits
that don't have to disclose publicly who the donors are.

GROSS: Why do some campaign finance donors want anonymity?

Mr. STONE: I think this year the reason is – there are three or four
different reasons that are connected. One is that the decision itself
initially was highly unpopular. Roughly 80 percent of the public in
early polls said that they oppose the decision or dislike the decision.
That included a high percentage of Republicans, as well, from what I've
seen.

Secondly, the rules of the road here are untested. This decision came
down in January, and campaign finance lawyers and election lawyers
immediately started going through the fine print and trying to analyze
how it would be implemented. And it took them months, really, to figure
out a lot of the details of it.

And I think corporations were wary because of the unpopularity of the
decision. They were also wary because of the possibility that liberal
groups, unions and others might target them in some fashion or retaliate
if corporations ran ads directly in their own name.

So by and large, we've seen anonymous groups – groups with anonymous
donations pull in an awful lot of money and set much higher budgets for
themselves this year than they have in the past.

GROSS: And you've been trying to sort all that out and see who's getting
the money, who's giving the money.

Mr. STONE: Correct.

GROSS: There are some new groups that have formed in the wake of the
Citizens United decision. Let's look at some of those groups.

Karl Rove, who was President Bush's political advisor and also was
considered the architect of his successful presidential campaigns, so
Karl Rove and former Republican National Committee chair Ed Gillespie
teamed up earlier this year and launched a couple of groups or helped
launch a couple of groups.

One of them is called American Crossroads, the other Crossroads GPS.
Tell us what these groups are.

Mr. STONE: Well, essentially, they're two arms of the same organization.
The first one is a so-called 527, which can accept unlimited donations,
can spend all of its money on political activities but is required to
disclose its donors, large donors, every month. And they've been doing
so.

The other arm is called a 501(c)(4), which doesn't have to disclose its
donors at all, won't have to report anything to the IRS until early next
year and has a second requirement or another requirement that it can
only spend just under half of its money on political activities. The
majority of its funds have to be spent on lobbying, grassroots,
legislative issue activities. That's the other restriction that goes
with a 501(c)(4).

GROSS: So this group, these two groups are getting a lot of money. How
is the money being used in the midterm election campaigns?

Mr. STONE: Thus far, they've spent roughly 16, $18 million, as have been
reported in a few publications this week, on advertising. Most of it has
been spent by the 501(c)(4) arm, which again doesn't have to disclose
its donors, and it's primarily gone into six, eight, 10 Senate contests
in such states as Nevada, where they're trying to knock off Harry Reid;
Colorado, where they're trying to knock off Senator Bennet; and a number
of other battleground states such as Washington, Missouri, Pennsylvania,
Ohio.

And these have been issue ads, so-called issue ads, which tell the
listener, tell the viewer that so-and-so, such as Harry Reid, is not
very good on health care issues, and please call or write Washington
about your concerns.

That's the line that some of these 501(c)(4)s have to hew to to make
sure that they're sticking with the rules, which require a little over
half their spending to go for so-called legislative or lobbying issues.

GROSS: Wait, wait. So let me stop you. So if you have a campaign - if
you have an ad that says write Washington, let them know Harry Reid
isn't doing a good job, that's not considered a campaign ad, that's
considered lobbying or grassroots efforts?

Mr. STONE: Well, that's their interpretation, basically, and some
campaign finance lawyers agree with that. I talked to a former head of
the tax exempt division at the IRS, Marcus Owens, who pointed out
there's a lot of ambiguity there and that some of these ads are in some
ways very close to being political ads.

And they all but – you know, they criticize sharply a candidate on a
particular issue, and I think that issue is going to be – you know, is
still to be resolved, and it's going to take some time.

The IRS in the past has issued different - slightly different
interpretations on this. So the rules on this are a little murky. And
there's wiggle room on this for a group that wants to push the envelope,
so to speak, on an issue like that.

GROSS: If the IRS decides that this is out of bounds, it will be too
late for this election.

Mr. STONE: Almost definitely too late for this election. I mean, there
has been a challenge, as you know, filed just this week by Democracy 21,
a long-time campaign finance watchdog group run by Fred Wertheimer that
basically makes that point, that in their eyes, many of these eyes that
Crossroads GPS has been running are more political ads than they are
issue ads, more political ads than legislative ads.

And that's part of why Wertheimer and another – Wertheimer's group and
another organization decided to ask the IRS to look into the tax-exempt
status of this group.

GROSS: So why would major donors, individuals, corporations, give money
to groups that Karl Rove and Ed Gillespie are behind, as opposed to
giving money to the Republican National Committee?

Mr. STONE: I think there's been a very, very well-documented case this
year, and going back to last year, in many stories in the major media
about the problems at the RNC, that the national committee has been
plagued basically with management problems, fundraising problems,
excessive spending for over a year under chairman Michael Steele.

And donors and fundraisers, big names in the Republican circles, started
getting very upset about this at least early this year, if not late last
year, and looking around for options.

I think some were hoping that Steele might be replaced. I think that was
a hope that vanished early this year. And others decided why not build
kind of an outside organization? Why not build more outside groups,
which can do many of the same things that the Republican National
Committee has done historically?

This was a lot of what was behind Rove and Gillespie's idea to try to
launch American Crossroads and Crossroads GPS and encourage other
groups, as well. They thought that it would be better to put more money
into outside groups, where they had a lot of veterans from different
campaigns who could help organize issue ads, other ads and get-out-the-
vote efforts.

GROSS: So something else that's very interesting about this Karl Rove
and Ed Gillespie group, and they're not officially the head of the
group. They're not officially founders of the group. But everybody
reporting on these two groups say that they are the people who launched,
they are the people behind it. Am I right in saying that?

Mr. STONE: They're definitely the people who helped launch the group,
and I think that's – there's no doubt about it. They inspired a great
deal of it. They did some of the initial fundraising, as I've reported.

Both went down to Texas together early this year to woo some major Texas
donors. Those names have largely become public so far. They gave the
early money, and they've given subsequent money to the 527 arm, American
Crossroads.

And there are three or four Texas billionaires who have, either on their
own or through their companies or a combination, contributed a total of
$2 million each.

Probably the most prominent of them is Harold Simmons(ph), a Texas
billionaire who's been a long-time backer of conservative causes, helped
fund the somewhat notorious Swiftboat Veterans for Truth back in 2004.
And Simmons, through two little-known companies that he has a good-size
stake in, has put in roughly $2 million.

GROSS: Well, you know, I just find it very interesting that this is
supposed to be the year of, like, the Tea Party, the insurgent
candidates, a big change in the Republican Party, and you have these two
groups, American Crossroads and Crossroads GPS, with Bush-era powers
behind it in terms of Rove and Gillespie and also in terms of some of
the funders, including the funder who also helped fund the Swiftboat
campaign against John Kerry.

So what does that say to you about who's got the power now within the
Republican Party?

Mr. STONE: It says basically that it's split. It's bifurcated. You have
many old establishment figures, long-time GOP operatives, who have
helped organize groups like American Crossroads and others and helped do
a lot of the fundraising for them.

And they've recruited many, many veterans from the RNC, from the
National Republican Congressional Committee, from the National
Republican Senatorial Committee, to work for these groups. And they've
done a really incredible job of building what some have called a shadow
GOP.

They meet regularly. There must be about 10 or 12 of these
organizations. They started meeting regularly back in April. As I
reported in National Journal early this year, they did a luncheon at
Karl Rove's house on April 21st, where folks such as Steven Law, the
president of American Crossroads, Fred Mallek, long-time GOP fundraiser
who founded the American Action Network, Bill Miller, the political
director of the U.S. Chamber of Commerce, all attended. And the agenda
was, in good part, about the need for more cooperation, coordination
this year, which was perfectly legal, and they have continued to do
that.

GROSS: If you're just joining us, my guest is Peter Stone of the Center
for Public Integrity. It's a nonprofit investigative journalistic
organization. He leads the money and politics team.

We're going to take a short break, and then we'll talk more about new
changes in campaign finance. This is FRESH AIR.

(Soundbite of music)

GROSS: We're talking about the new world of campaign finance. My guest
is Peter Stone of the Center for Public Integrity. It's a nonprofit
investigative journalistic organization. He leads the money and politics
team.

The Chamber of Commerce is officially supposed to be a bipartisan group,
yet you include it in this, quote, shadow GOP. Where does the Chamber of
Commerce fit in, into this, quote, shadow GOP?

Mr. STONE: The chamber gives a lion's share of its money, 80, 85, 90
percent, depending upon the year, and runs ads in support of Republican
candidates. And they have been increasingly critical of the Obama
administration. They spent tens of millions of dollars trying to defeat
health care reform, financial services reform and opposed other
initiatives from the administration and the Democratic Congress.

And they have become more strident, more critical as they year has gone
on. And they have said on the record that the composition of the
Congress needs to change. And there's no secret that they're talking
about Republicans need to gain power.

Bill Miller, the political director of the chamber, said this to me. Tom
Donohue, the long-time head of the chamber, said this at a private
meeting earlier this year in Southern California, where there was a
retreat.

And at that point, Donahue mentioned that he wanted to increase spending
this year to 75 million, setting a much higher target than they'd
originally set of 50 million, all in the effort to change the
composition of the Congress.

GROSS: And you write that you think that it's the energy, health
insurance and financial services industries within the chamber that are
the forces behind this new drive.

Mr. STONE: I think they're a big part of it. Miller cited – I asked
Miller about what was fueling corporate anger, which he alluded to in a
couple of interviews that we did. And he cited four issues. He cited
financial services reform, health care reform and potential threats to
corporations.

He mentioned cap and trade legislation, and he mentioned the possibility
of card check legislation. He talked about four big issues that chamber
members are upset about.

This doesn't mean that they're necessarily the ones who have put in all
the money, but I think it provides kind of a roadmap, if you will, to
where a good bit of the support is coming from, that those are some of
the sectors that they've targeted for fundraising.

We don't know where the chamber's money is coming from. They also don't
have to disclose who their donors are. It has been reported last week
that NewsCorp, whose CEO is Rupert Murdock, gave a million dollars.
That's the only large donation that we're aware of publicly. The chamber
has not denied it, but I think sources have confirmed that that is in
fact what happened.

GROSS: The IRS and the FEC, the Federal Election Committee, are supposed
to be regulating how this money is spent on campaign ads. What are each
of their jobs? What is the IRS overseeing? What is the FEC overseeing?

Mr. STONE: Well, the IRS is principally overseeing many of these
organizations, which have mushroomed this year, the so-called
501(c)(4)s, the ones that don't have to report their donors publicly.
They also oversee 501(c)(6)s, which also don't have to report their
donors publicly, and some other so-called 501(c)s, which have different
rules. But it's primarily the (c)(4)s and the (6)s which have been
spending the bulk of the money on advertising.

And what they have to look at there again is with this issue of the
(c)(4), which American Crossroads has, you know, Crossroads GPS, their
501(c)(4) arm, the American Action Network has a 501(c)(4) arm, and some
of the others I mentioned.

The rule there is they have to spend over half their money on
legislative lobbying activity. And that's where the rubber meets the
road, so to speak. That's where they - the controversies are and we're
going to see challenges like the one that Democracy 21 has filed
recently, trying to figure out whether, indeed, these ads, which are
proliferating, that go to the heart of a candidate, stand on certain
issues, Harry Reid on health care, Harry Reid on stimulus, whether they
indeed are issue, legislative lobbying ads or whether they're more
political ads.

And if they don't have the right balance, if they don't prove
sufficiently that over half of the money is going to the legislative
front, then the IRS could crack down on them. But that's not going to
happen. That's not going to happen imminently.

Again, these are challenges that have just been filed, calling for
investigations. So that's the critical issue there that the IRS is
looking at.

The FEC had to write some rules for groups and organization in the wake
of the Supreme Court decision, has to provide guidance for them. And
historically, they have also overseen political action committees,
campaign spending, both individual campaigns and congressional
campaigns, and they have a range of issues they look at.

They have to be one of the groups that has to make sure that there is no
coordination between these outside groups and any of the campaigns or –
individual campaigns or committees, national committees. That's a lot of
their role.

GROSS: Now, the FEC is comprised of three Republicans and three
Democrats. They're political appointees. Is the FEC a politicized group?

Mr. STONE: The FEC has long been a deadlocked group. I mean, it's been a
major problem at the FEC historically is that big decisions take a long
time to come down, investigations take a long time, usually, to happen.
People are fined for campaign violations often well after the campaign –
well, almost always after the campaign is concluded, sometimes well
after the campaign is concluded.

And they deadlock. They deadlock on major issues over the years. And so
it's one that has been widely criticized by campaign finance reformers
and watchdogs for being an agency that is hobbled by its, you know, its
basic structure.

GROSS: Peter Stone, thank you so much for talking with us.

Mr. STONE: It's been a pleasure, thank you.

GROSS: Peter Stone leads the money and politics team for the Center for
Public Integrity, a nonprofit organization devoted to investigative
journalism. You can find links to his articles on our website,
freshair.npr.org.

We'll have more about the changing world of campaign finance in the
second half of the show. I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

GROSS: This is FRESH AIR. I'm Terry Gross.

We're devoting today's show to the new world of campaign finance that
has been created as a result of the Citizens United decision. The
decision gave corporations the right to donate unlimited amounts for
political ads and other campaign activities that can urge voters to
directly oppose or support individual candidates. Organizations that
qualify for certain tax status under the IRS are allowed to accept that
unlimited funding without disclosing where it's coming from.

Earlier, we heard about two new organizations that Karl Rove helped
launch this year, taking advantage of the Citizens United decision.

Here to follow up on how this changing world of campaign finance is
affecting politics is Ken Vogel. He reports on money, politics and
influence for Politico, a news organization that focuses on national
politics.

Ken Vogel, welcome to FRESH AIR. Since Karl Rove helped launch a couple
of very important fundraising groups, American Crossroads and Crossroads
GPS, how is that changing Karl Rove's place in the GOP? I mean, I
thought that he'd kind of left that aspect of politics and was, you
know, now serving as a commentator on Fox News. But he's reasserted
himself as an active force within party politics and party fundraising.
So where does Karl Rove fit in now in the Republican Party?

Mr. KEN VOGEL (Journalist, Politico): Well, if we were to think of these
groups as sort of a shadow RNC or a shadow party infrastructure, Karl
Rove would be the chairman of this shadow infrastructure. There's no
doubt that he is very much involved. Even as he and Ed Gillespie, to
some extent, protest to the contrary in really shaping the strategy of
these new groups, coordinating between these new groups, and raising
money for these new groups. And if Republicans are successful in the
2010 midterms, if they recapture the House of Representatives, certainly
if they recapture the Senate, a lot of credit will go to Karl Rove and
some of these groups that he helped form and helped orchestrate.

GROSS: So is Karl Rove's importance now as a fundraiser, as political
strategist, as somebody who's setting the actual political agenda, the
actual issues that are the foundation of the party? Which of those roles
is he active in?

Mr. VOGEL: All the above. There's no underestimating his importance
here. What's interesting is that both he and Ed Gillespie, a fellow
former Bush-era RNC political operative, have downplayed their roles
publicly. And it's a little curious to those of us who follow this stuff
on a regular basis, who know just how important he is and wonder why
he's doing this. A number of theories sort of have been put forth as to
explain his sort of reluctance to be associated with this shadow
political party effort, one of which is that he just is loyal to the
folks who are actually running it, who in some instances, actually owe
their careers to him, all of whom have close ties to him. And he wants
to see them get credit for it.

A more cynical possibility that has been raised is that he realizes that
he could potentially be a political liability for Republicans and for
some of the Republicans who are being supported by the groups that he is
helping raise money for and set strategy for because he really is
associated, in the public mind, polls show, with the Bush administration
and some of the - certainly, towards the end of the Bush administration
- some of the more unpopular aspects of it. And we have already seen in
some races in which American Crossroads and Crossroads GPS have been
active.

The Democrats who are on the receiving end of some of these attack ads
have aired ads invoking Karl Rove and suggesting that a vote for the
Republican who's being supported by the Rove-linked groups would be
tantamount to a vote to return to the sort of Bush years. And that seems
to be - at least the Democrats who have used this strategy believe that
it is an effective strategy. And so that could be an explanation for why
Rove has sought to stay in the background, even as he is so popularly
associated with some of these efforts.

GROSS: When you say that Karl Rove is distancing himself from the two
groups that he helped launch, you report that a spokesperson for
American Crossroads has been going around trying to correct journalists
who say that Rove is the head of the group or that Rove launched the
group. And the spokesperson has been saying that while both Rove and
Gillespie encouraged the formations of the groups, neither is on the
board, is compensated, consulted or is on any of the incorporating
documents. Have you been corrected for something you've said?

Mr. VOGEL: We've been corrected. I've talked to a number of other
reporters here in Washington or who cover the national political beat
who've been on the receiving end of some of these calls and emails, some
of which have been quite heated, where they've demanded corrections.
Sometimes they've demanded changes to cut lines under photos, or have
urged us or other media outlets to take down pictures of Rove and
Gillespie from stories posted online about American Crossroads or
Crossroads GPS, suggesting that even just having their pictures up there
creates a misleading impression that these folks are running or created
- created these groups.

Interestingly, Sheila Krumholz - the director of the Center for
Responsive Politics, a very well-regarded campaign finance watchdog,
non-partisan campaign finance watchdog here in Washington, D.C. - told
me she actually received a letter from an American Crossroads lawyer
demanding that they make just a very slight change to a story that
indicated that Rove and/or Gillespie started American Crossroads.

They changed it slightly because, as she told me, it's largely a
distinction without a difference. Their readers know and are savvy
enough to know that, in fact, if these guys helped create it and are
raising money for it, then their fingerprints are all over it and
they're likely guiding the direction of these groups. And I don't think
that that - I think that that is safe to say, that they are, in fact,
guiding the direction of these groups.

GROSS: I guess the fundamental question is: Why do these groups need to
exist? In other words, why isn't the money going - instead of to a
shadow RNC, why isn't the money going directly to the RNC?

Mr. VOGEL: Well, a lot of that certainly has to do with the
dissatisfaction over the RNC and over Michael Steele's tenure there.
It's interesting to note that the chairman who Michael Steele replaced
is a guy by the name of Mike Duncan, who had very close ties to the
Bush-era Republican machine, very close ties to Karl Rove and Ed
Gillespie. And when he left the RNC, so, too, did a lot of the big
donors who have come with him to American Crossroads and some of these
other groups.

GROSS: My guest is Ken Vogel of Politico.

We'll talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is journalist Ken Vogel of Politico. We've been talking
about how the Supreme Court's decision - the Citizens United decision -
is changing the world of campaign finance and politics.

Since you cover money, politics and influence for Politico, I wonder
what you've been seeing about any political divisions between the Tea
Party and the GOP. I mean, the Tea Party candidates are largely running
as Republicans, but in the primaries, they weren't necessarily the
Republican establishment's picks. So now that the primaries are over,
have Republican powerbrokers and Republican money started to back the
Tea Party candidates, who in the primaries, displaced the Republican
picks?

Mr. VOGEL: In most cases, yes. But, you know, we hear this cliche a lot
about the battle for the soul of the Republican Party. And I think we're
still seeing that and I think we will see that after the 2010 election,
no matter the result, where these Tea Party activists - many of whom are
new to politics - really reject, on its face, the Republican
establishment and the way that the Republican establishment has done
business. And so we saw that certainly, very acutely, in the primary
challenges in which Tea Party-backed candidates took on more established
Republican candidates who were the picks of the Republican Party, either
in those states or nationally, in some cases, won and upset - sort of
upset the Republican's general election plans.

We see that, obviously, in Delaware, where Christine O'Donnell defeated
long-time Republican Congressman, Former governor of Delaware, Mike
Castle. We certainly saw that in Alaska, where a failed state
legislative candidate by the name of Joe Miller, who was backed by the
former governor and Tea Party darling there, Sarah Palin, ended up
defeating a sitting United States senator, Lisa Murkowski, in that
primary. And we saw that in Nevada, where Sharron Angle, a long-time
state legislator and perennial candidate, defeated at least one and
possibly two candidates who the Republican Party would've preferred to
see running for Senate against Harry Reid, the Senate Majority Leader.

And the Tea Party activists who played a big role in these victories
say, you know what? We don't care if we - if the primary ended with us
supporting and nominating a candidate who is deemed to be less electable
by the establishment headed into a general election, we don't even care
if those candidates lose. For us, this is about pulling the Republican
Party further to the right. Of course, this is music to the ears of
Democrats who say yeah, we'd love for the Tea Party candidates to send
less electable candidates into the general election. And it really
chaffs a bit at the Republican establishment, who it's all about winning
the election, winning the general election for them, and they're willing
to make philosophical compromises in order to get the best candidate for
the specific race.

What we're seeing with the Tea Party activists, who are promising to
carry over this philosophy past the mid-term elections, is they're not
willing to make those philosophical compromises. They'd rather have
ideological purity, even if it means losing out on the potential to win
a majority in either chamber of the United States Congress.

GROSS: Do you think that the creation of several new fundraising groups
in the wake of Citizens United on the Republican side have managed
collectively to bring in more money than the Republican Party otherwise
would have gotten?

Mr. VOGEL: I think so. It's a combination of these new groups and donors
feeling freer to give as a result of several recent Supreme Court
decisions, as well as just the fact that the energy is on the right. You
know, donors aren't going to shell out a lot of money if they think that
their side is going to get creamed. We saw that a little bit in the 2008
presidential election. We certainly saw that in 2006, when all the
electoral factors were sort of pointing Democrats way. It's just harder.
If you talk to fundraisers, it's harder to raise money when all the
pundits and all the polls are pointing to a less-than-successful result
on election night.

Clearly, that's not the case this time on the right. All the polls and
electoral factors would seem to suggest the Republicans are in for huge
and potentially historic gains next month, and so it's simply easier to
raise money. The fact that there are more established operatives who
donors trust with their money, raising money, into newer groups, some
which promise anonymity and without the risk - or at least without the
perception of the risk that federal regulator will clamp down on these
groups after the fact and give these donors a hard time, all those
factors have combined to create really a surge that some operatives who
I talk to say is unprecedented in big money donations from the right.

GROSS: President Obama opposed the Citizens United decision and opposed
the idea that individuals and corporations should be allowed to give
unlimited amounts, and then, in some instances, be allowed to give those
amounts without even disclosing who they are. So given his opposition to
the Citizens United decision, how has that affected fundraising on the
Democratic side?

Mr. VOGEL: Well, President Obama's stance on these issues - campaign
finance, generally - even predating the Citizens United decision, has
had a chilling effect on Democratic big-money efforts outside of the
political parties. And it goes back to his presidential campaign - or
really before, frankly, where he really discouraged big donors from
giving to these groups. And, in fact, he and John McCain during the 2008
presidential campaign almost called something of a truce, where they
urged both of - because both folks, both then-Senators McCain and Obama,
had sort of staked-out stances as campaign finance reformers and
advocates for reducing the role of money in politics and special
interests in politics, and they discouraged the big donors on their
respective sides from giving to these types of groups. And we didn't see
a whole lot of that type of activity on either side during 2008
presidential campaign.

Of course, it really didn't matter on Obama - from Obama's perspective,
because he raised an unprecedented, record-shattering $750 million for
his campaign, so he didn't need a whole lot of help. But now Democrats
do need help, and a lot of big donors say that President Obama's stance
on these issues, on discouraging these large donations, has continued to
discourage them.

And frankly, Obama hasn't done a whole lot to sort of warm them up. Not
only has he continued to cry foul over the effect of this Citizens
United decision in ways with rhetoric that really decries the influence
of big money in politics across the board, but his administration has
done little to award or even in sort of a wink and a nod type of way,
large donors who contribute to these outside efforts in ways that we had
seen in past administrations where, you know, the Bush administration,
the Bush RNC would hold fundraisers at their houses or give them little
perks that would sort of show that, hey, we recognize that even though
we're not supposed to be coordinating with these outside groups, that
you helped us and out party out through these large donations.

We don’t see that from Obama and we do hear large donors saying that
they don’t feel inclined to give big donations to these groups that
would help President Obama and the Democratic Party because of President
Obama's stances on these issues.

GROSS: Well, Ken Vogel, thank you so much for talking with us.

Mr. VOGEL: It was my pleasure.

GROSS: Ken Vogel reports on money, politics and influence for Politico.

Coming up, Lee Fang talks about the story he broke this week, about how
the Chamber of Commerce may be using money from foreign corporations to
fund political ads in the U.S.

This is FRESH AIR.

(Soundbite of music)

GROSS: My guest Lee Fang broke a big campaign finance story this week.
He reports that the U.S. Chamber of Commerce, which has been funding
many political attack ads against Democrats, is trying to increase the
amount of money it raises from foreign corporations. According to Fang,
the money from those foreign corporations goes into the Chamber's
general account, the same account that funds the Chamber's political
ads. The Chamber says no foreign money is being used to fund political
activities.

Fang's report led to an editorial yesterday in The New York Times,
calling on the government to make sure that the tax code and American
control of American elections is not being violated. Fang writes for
Think Progress, the blog of the Center for American Progress.

Lee Fang, welcome to FRESH AIR. Now, you write that the largest attack
campaign against Democrats is being waged by the Chamber of Commerce.
Why is the Chamber of Commerce taking such an active role?

Mr. LEE FANG (Researcher, The Progress Report and ThinkProgress.org):
Well, Chamber of Commerce has fought bitterly against some of the
largest progressive agenda items in the last two years. They were the
largest interest group to run attack ads against health reform, many of
which were funded by health insurance companies secretly.

They were the largest group to lobby against financial reform. They’ve
attacked clean energy reform, helping to kill the bill in the Senate.
They’ve fought for free trade deals that some Democrats have opposed.
They’ve fought against the Disclose Act, which Democrats purposed to
deal with the campaign finance landscape after the Citizens United
Supreme Court case.

And finally, after the BP oil spill, the Chamber has really fought
against efforts to change the oil liability law, which would force BP to
pay for the cleanup. And I should note that BP is an active member of
the Chamber.

GROSS: You said that the Chamber of Commerce helped kill the Disclose
Act. What is the Disclose Act?

Mr. FANG: The Disclose Act is a fix - a partial fix - for the Citizens
United decision. It basically puts new stronger protections against
foreign money in American elections. It also says groups that accept
federal contracts and government bailouts can't be running ads in
American elections. It also says, most importantly, that groups that run
these big advertising campaigns or small advertising campaigns, have to
disclose their funders.

GROSS: Is it killed or is it just stalled?

Mr. FANG: It's stalled. Using their allies in the Senate, the Republican
Party, the Chamber of Commerce lobbied aggressively to basically stall
any effort to move the bill out of the Senate.

GROSS: So most of the money that the Chamber gets is from corporations,
right?

Mr. FANG: We believe so. Of course, the Chamber of Commerce does not
disclose its donors. They do not disclose who is paying for the lobbying
they do. They don’t disclose who is running the ads when they put ads on
television and radio, so we don’t fully know. They say they represent
all businesses, but there have been a lot of reporting from my own blog
and elsewhere that it's mostly large international corporations and
large conglomerates that are funding the Chamber.

GROSS: Let's get to the story that you broke this week. What did you
find out about foreign contributions to the Chamber of Commerce that you
think are going to fund political ads?

Mr. FANG: Well, here’s what we know: on Tuesday, I broke the story. The
Chamber of Commerce is very large and they set up a large network of
affiliates in countries all over the world. And what we found were
several fundraising documents that the Chamber has been using in places
like Bahrain, India and they're sending these fundraising applications
out recruiting foreign corporations, foreign businesses.

The documents say foreign companies are welcomed and they ask that these
foreign businesses send money to the same campaign account, the
501(c)(6), that the Chamber is using to run attack ads. And they're
telling these foreign businesses that they can have a voice in American
public policy debates.

GROSS: Is that legal?

Mr. FANG: Well, it's illegal for foreign companies and foreign nationals
to spend money in American elections. However, because the Chamber
doesn’t disclose and they’ve killed every effort to force disclosure on
these campaign ads, we don’t know the extent of this. We don’t know
exactly how these funds are used. But it’s important to note that all
these funds are comingled once they go inside this one big Chamber of
Commerce campaign account. They say they have internal controls, but
they’ve produced no documentation, no proof, but they have admitted that
they are accepting this foreign money in their campaign account that
they're using against Democrats.

GROSS: Do you think that the Chamber of Commerce accepting foreign money
is something that's new?

Mr. FANG: I don’t know. The Chamber of Commerce recently began many of
these foreign fundraising efforts. Actually, this month and last month
they commissioned former Ambassador Frank Lavin to go around to foreign
affiliates of the Chamber of Commerce in places like China to talk about
the importance of a midterm election. I know they’ve been ramping up
their fundraising efforts in the UAE, in Bahrain and several other
Middle Eastern countries. We do know that the Chamber of Commerce is
funded by government-owned corporations like the Bahrain Petroleum
Company and the State Bank of India and these stakes are very high.

GROSS: And what would their interest be in attack ads during American
elections?

Mr. FANG: There are a lot of stakes. For one thing, the Chamber of
Commerce lobbies very hard working often openly with foreign countries
to help push free trade deals. Right now the Korea free trade deal is on
the table. Democrats earlier this year tried to pass efforts to repeal
special tax breaks for companies that ship jobs overseas. The Chamber of
Commerce helped Republicans in the Senate kill that bill; that's one of
their largest priorities.

It's possible foreign companies are spending and giving money to the
Chamber for that purpose, but again, we don’t know.

GROSS: What did you learn about the Chamber of Commerce's approach to
raising money in foreign countries?

Mr. FANG: Well, they're very aggressive. For example, they have an
office inside their H Street building. It's across the street from the
White House called the U.S.-India Business Council. It sounds like a
separate entity but it’s not. It's actually just a part of their main
organization, organized under that same 501(c)(6) tax identity. And they
send out these applications to India, they set up offices to recruit
foreign businesses and they promise all kinds of different services,
like advocating certain public policy decisions. For example, the India
Business Council says that they will fight to improve the state of
manufacturing in India if Indian companies sign up.

GROSS: What does the law say about foreign funding of American political
ads?

Mr. FANG: The law is very clear that foreign nationals and foreign
corporations are not allowed to spend in expenditures in American
political campaigns, no political advertising, nothing.

GROSS: So if you’re right in your story, the Chamber of Commerce would
be breaking the law.

Mr. FANG: Yes. But again, they don’t disclose who is paying for these
ads; although, the bank account - the campaign account, I should say,
that's receiving these foreign funds is comingled with American
businesses. It's all combined and then used on the $75 million massive
campaign or attack campaign, I should say.

GROSS: If, as you reported, money from foreign sources is going into the
Chamber of Commerce and the Chamber of Commerce is using some of that
money for political ads, what are the dangers of that?

Mr. FANG: We don’t know. This is an unforeseen era in American politics.
If you have foreign government-backed businesses picking who wins and
who loses elections here in America, it’s - I don’t know if there is a
great precedent for that. But it’s a scary future if China or another
country or Saudi Arabia has a priority and they can elect candidates to
achieve that priority in our government. So, you know, we don’t know the
extent to what the Chamber is doing but, you know, it opens the door to
a lot of possibilities.

GROSS: Lee Fang, thank you so much for talking with us.

Mr. FANG: Thanks for having me.

GROSS: Lee Fang writes for ThinkProgess, the blog of the Center for
American Progress. The Chamber of Commerce denies that it is using any
foreign money to fund political activities in the U.S.

Senator Al Franken has called on the Federal Election Commission to
investigate allegations - these allegations.

You can find links to articles by all three of today's guests on our
website, freshair.npr.org, where you can also download podcasts of our
show.

(Soundbite of music)

GROSS: I'm Terry Gross.
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Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.

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