I’m Kim Barker, a campaign finance reporter at ProPublica. AMA about how outside money is influencing the 2012 election.

Is this campaign really that different from previous ones? How do SuperPacs differ from "soft money", 501c4, 527s?

Good question. In every campaign, both sides try to do end runs around campaign finance restrictions, to run through loopholes, to try to raise big money without reporting their donors, at least until after the elections. After McCain Feingold, it was 527s in 2004, and then 527s and 501c4s in 2008, and now, post-Citizens United and Speech Now (fun reading for you court buffs), we're in a world where it seems like anything goes. Super PACs! 501c4s! There are different ways to spend money on politics, and also to hide donors.

So is it different than before? The level of money is much higher now. The ability of 501c4s to spend seems much greater.

As far as how super PACs differ from the other groups--501c4s and 527s--it's (of course) complicated. Super PACs are actually 527s under the IRS rules, but as registered political committees with the FEC, they have to report their donors on a regular basis.

The 501c4s (and 501c6s, the trade associations like the Chamber of Commerce) aren't considered political committees by the FEC. As of now, they don't have to report their donors for the direct independent expenditure ads to the FEC. They are supposed to report their major donors for electioneering communications--those softer, issue ads, that say things like "Call Candidate X and tell him to stop being a jerk." But they're trying to get around that new rule.

Let me know if all that didn't make sense.

yes, yes, quite

damn it, tony

Alright--tell me what I need to explain further. I'm a little in the weeds in this, so tend to geek out with IRS and FEC facts.

You need to explain the numbers.

A 501c4 is a nonprofit Civic League, Social Welfare Organization, or Local Association of Employees.

501c6s are Business Leagues, Chambers of Commerce, Real Estate Boards, etc.

A 527 is a type of U.S. tax-exempt organization named after Section 527 of the U.S. Internal Revenue Code (26 U.S.C. § 527) created primarily to influence the selection, nomination, election, appointment or defeat of candidates to federal, state or local public office.

Tl;dr, a 501c4 is a union, or an organization like Planned Parenthood. They raised and spent about $100 million influencing the election of Barack Obama.

A 527 is an organization like Priorities USA, Barack Obama's SuperPac, which accepts unlimited amounts of money and spends that money influencing people to vote for him by running false ads that Obama claims he doesn't know about, for example, the ad which falsely claimed that Mitt Romney killed a woman by laying off her husband. His campaign had introduced the man to the SuperPac and even held a conference call with reporters about that false claim - even though such candidate coordination with SuperPacs is blatantly illegal. He'll be charged with violation of campaign finance laws as soon as his friend Eric Holder is removed from the Justice Department by voters.

A union is actually a 501c5, not a 501c4.

Priorities USA is a 501c4. Priorities USA Action is a 527 or a super PAC.

I don't know what any of those numbers mean.

The long and hairy of it is that there is a lot more money moving in, and there is no way to find out who is giving that money to whom, or how it's being spent?

OK. The IRS has different categories for nonprofits. A charity, for instance, is a 501c3--not allowed to do much politicking, if any. A social-welfare nonprofit is a 501c4--primarily supposed to be serving a social welfare purpose, but allowed to do lobbying and some campaign intervention. A union is a 501c5, and a trade association like the Chamber of Commerce is a 501c6. Both categories allowed to do a certain level of campaign intervention. A 527 is the IRS definition of a political committee, which has to report its donors to the IRS. The IRS makes those donors public. The other nonprofits have to report their donors to the IRS. But the IRS doesn't make those donors public.

Then, to the FEC. The FEC requires registered political action committees to report their donors on a regular basis. But outside spending groups that can prove their main purpose isn't politics don't necessarily have to report their donors for ads. (One change this year: A new court ruling and FEC interpretation says major donors to soft issue ads right before the election must be named. But these outside spending groups are already figuring out ways to get around that requirement.)

So: A super PAC with the FEC is a 527 with the IRS. A 501c4 with the IRS is simply an outside spending group with the FEC.

And yes, the long and hairy of it is, there's a lot more money moving in, and in the cases of these dark money 501c4 and 501c6 groups, there's no way of finding out where that money is coming from, unless the group is forthcoming. It is possible to find out how it's being spent--as long as the group reports it to the FEC.

Does that help?

Fascinating, so in theory an organization could advocate one thing but donate in such a way that they're supporting contrary views?

In theory, yes, but it could be confusing.

The interesting thing is, a group of Democrats could start one of these called something like Conservatives for a Fair and Just Hope, say the group's a 501c4 and incorporate out of Delaware. Then, it could start operating without even being recognized by the IRS. Then, it could buy ads praising Democrats--maybe just slightly, like, "Candidate X may be a Democrat, but he shares our values," and then give some examples of this. The ad would say, "Paid for by Conservatives for a Fair and Just Hope." It would seem as if a conservative group had paid for it--when in reality, it was formed by liberals.

This hasn't happened yet, as far as I know. But the thing is, it could.

Which outside source should we be most concerned with?

As a reporter, I'm most interested in the idea of these dark money groups, the social welfare nonprofits that can spend millions on electing people without disclosing their donors. Sure, super PACs are important, and the millions of dollars being given are certainly worth noting, but at least with super PACs, we know (in general) who's giving that money. Anonymous money raises different questions--questions I think we should be talking about. Maybe everyone's fine with anonymous money coming into the system. But it seems as if we've gotten to this place almost accidentally, without most people realizing it and without even having a discussion about it.

As Congressmen and Senators will never vote against their own rational self-interest regarding campaign finance reform, what ways are available for us to turn off the spigot of these sources of undocumented campaign monies?

I think this is a really interesting point. Experts see two ways of the spigot being turned off: Either Congress taking action, or the IRS cracking down. It seems in the short term, the IRS is the most likely option, although the agency is reluctant to get involved with politics, for understandable reasons.

And it goes without saying: No one holds out much hope of the FEC doing much, with its chronic 3-3 deadlock. But who knows? Maybe the commissioners will surprise us.

By deadlock do you mean that they continue to vote down ideological lines?

Exactly. After the Watergate scandal, the FEC was created as part of a revamping of campaign finance laws. It was designed, on purpose, to be split 3 to 3--with 3 Dems, 3 Republicans. The thought was this--a split FEC could minimize the influence, say, a Nixon would have on any investigation into campaign-finance violations. In the beginning, sure, there were split 3-3 decisions. But there were also 5-1 and 6-0 and 4-2 decisions. Lately, though, it's been a 3-3 free-for-all. This means effectively that you can come up with something that might seem slightly crazy and go before the FEC and ask if you can do it, and the FEC might end up tying 3-3. Which is basically the FEC equivalent of knock yourself out, go for it.

I feel like a dolt for even asking this, but can you elaborate on what is considered to be dark money? I'm guessing it is "anonymous" donors with malicious intent, but I don't want to operate under that assumption if it is incorrect.

There are no dolts here. Yes--"dark money" is used to refer to groups that can keep their donors anonymous. So the social welfare nonprofits, or 501c4s, and the trade associations, or 501c6s, like the U.S. Chamber of Commerce, are dark money groups.

Are you saying that (most) dark money groups are social welfare nonprofits? What kind of social welfare are they claiming to support?

"Dark money" is a way of describing groups that don't disclose their donors for political ads. As of now, most of the groups that do this are social-welfare nonprofits, although trade associations like the U.S. Chamber of Commerce are also dark money groups.

As to their social welfare purpose, let's have some fun with this one and go to the facts. Here is an application to be recognized as tax-exempt by one group that just landed on my desk. "Foundation for a Secure and Prosperous America (FSPA) is a newly formed organization that will undertake several activities designed to inform the public and leaders in private and public institutions about ways to assure that America remains secure and prosperous."

What books do you recommend reading to learn about campaign finance?

Wow, I heart you, you want to read a book about campaign finance! Honestly, the field has been changing so much, there's not necessarily a book that can bring you completely up to speed. Or, if there is, I haven't been reading it because I've been too busy working. I'd suggest you take a look at this reading guide we put together: http://www.propublica.org/article/from-citizens-united-to-super-pacs-a-campaign-finance-reading-guide

Also, anything Jane Mayer at The New Yorker does on this topic is usually edifying and interesting. I'm hoping she's doing a book.

Maybe you should write one then.

I've thought about a book on campaign finance. If Jane doesn't do one. Any agents out there?

Lawrence Lessig, Republic Lost

its also a good book about money in politics in general

Yes--that's the next one on my nightstand. Hear good things.

How can we stop/limit the amount of money influencing future elections? Can we stop it, at this point?

I think that by talking about this issue and by pounding officials on this issue, perhaps it's possible to make a change. But as of now, unlikely. The Supreme Court has opened the door to unlimited fundraising and spending by outside groups, and that's the world we now live in, like it or not. So that raises the question: Should we know who's giving that money? That's an issue I think people can push on. The Supreme Court, even in Citizens United, was adamant that disclosure was paramount, and that disclosure would help voters make decisions. Well, we have a system now with unlimited money, but with very little disclosure.

Thanks for the response.

Sounds like getting the money out wont' happen.... So, is there a way that we, the people, can push for more disclosure? Best strategy for us to follow to achieve this?

I've been thinking about this a lot and I think framing an argument to scare people into thinking that a lot of this money could possibly and easily be coming from outside of the country (maybe even terrorists are donating to Obama!?!?!?) would get politicians to move.

Really, just mention potential terrorist donors and that we have no idea how much money they are contributing because of so little disclosure.

Hahahahaha. You are probably right. But in all seriousness, it seems pretty tough to stop foreign money from coming in to social welfare nonprofits and trade associations, which then could be spent on politics. Is it happening? I dunno. But it could be....(insert evil villain laugh here.)

Would 100% publicly funded campaigns be good for our democracy?

It's something that certain campaign-finance reformers have talked about, and there's definitely a case that can be made for public funding. Or, at the very least, to use public funding to be able to help non-incumbents be able to run for office. No one I know holds out much hope for publicly funded campaigns at this point though--the amounts of money pouring in from the outside are just too great for anyone to turn their backs on it.

How do you look for corruption regarding campaign finance? How is corruption proved?

Proving corruption in campaign finance is very difficult, and almost impossible unless you get leaked documents or a revealing court case or a Watergate break-in. Most of the time, all you can do as a reporter is shine a light on potential things that are interesting: Say, Donor A gave $X million to Candidate B, who wins election. Then, say, Donor A is awarded an $X million contract, six months down the road. Is it corruption? Tough to say. But it's certainly worth pointing out the dots, and letting readers connect them as they can.

And then what? What can citizens do about the corruption?

Vote with your ballot and your money.

But everyone is already polarized. Corruption won't even hinder someones reputation as long as your goal is simply to remove the party in power.

I think this is an interesting point. I do worry that people are in general so cynical about politics, about campaign finance and the way things are now, that they feel it's not worth it to even pay attention to the topic at all. I'd argue that it's one of the most important issues out there: How is money spent to elect politicians? (And yes, it's my job too. So maybe I've brainwashed myself.)

For some reason my question was downvoted:

Do you think lobbying should be outlawed?

Reporter! So don't really have an opinion. I don't see there being a lot of momentum to outlawing lobbying in the short or long term at this point....

Is it corruption?

I would say your example falls more into collusion.

corruption would be, i give you 100k cash and you award me a 1 million dollar public contract.

Yes, that would be corruption. If you know of that happening, please let me know. I'll meet you in a parking garage, any night of the week.

someone is looking for a date.

ha! watergate reference.

But it's certainly worth pointing out the dots, and letting readers connect them as they can.

While that can be helpful, it can also be misleading. This sounds like the kind of journalism Fox News often performs.

I would much prefer more solid proof if possible. If it isn't currently possible, I wish there were more laws to at least make it more difficult for this type of corruption to take place.

For example, no-bid contracts should be all but impossible.

It's never possible to prove corruption in these cases--that XX$ was traded for Y contract--unless you have documents or video showing it or people saying on the record that it happened. Just the way it is. To prove it, one needs proof!

As a financial auditor, I am always intrigued by stories of shady money trails and the tools used to follow the money. What kind of investigative tools/methods/sources do you use?

Secret sources! No, seriously, if anyone's out there, I'd love to get an inside line on any of these groups, left or right. As to what I did for our most recent story, I FOIA'd the IRS for applications of these groups (Form 1024s) and their annual tax returns for 2010 (Form 990s). (In fact, a pile of documents just landed on my desk.) I then compared these documents with what the groups told the FEC, and with their websites and their ads. I then pointed out trends--particularly, how these groups underreported their FEC spending to the IRS, or told the IRS much different things than they actually did.

But again--I'd love sources!

Very cool. I love a nice stack of tax returns and cryptic schedules/financial reports. It's so satisfying to connect everything and put the big picture together.

And lord help me if I get my hands on bank statements. That's like Christmas morning.

I am very excited to dig into this latest pile to arrive. Six inches. That's my version of Christmas these days. (Just writing that, I thought: Sad.)

Do you use Secretary of State databases, things like Lexis, CorporationWiki or anything like that to connect the dots in these corporate shell games? What is most effective?

Yes. For some of these groups--let's take The Annual Fund, for example--it was very tough to come up with a starting point. Two other nonprofits had "disclosed" their donors for specific ads, but most of their money for those ads was coming from something called The Annual Fund. (Just try googling The Annual Fund. Try it!) So then, I was left with a starting point of an address, listed on FEC records. Which happened to be a UPS store, if memory serves. (That or a Mailboxes Etc.) So then, I was left with a post-office box and the name of The Annual Fund. So then, I went to incorporation records. Was it incorporated in that state? (No.) Then, I went to Delaware incorporation records. (When in doubt, always try Delaware.) This time, a registered corporation named The Annual Fund came up. Was it MY The Annual Fund? I didn't know. So then I requested the incorporation papers through the Delaware Secretary of State. Bingo--it was. And the phone number of the group led to Neil Corkery, also involved with another social-welfare nonprofit, the National Organization for Marriage, who eventually answered my call and at least sent part of The Annual Fund's tax return to me.

I'm hoping the other part is in the documents the IRS just mailed me. Christmas!

Are the Koch Brothers throwing in as much money as people have been saying they are (a lot)? Do you see a particular interest group disproportionately represented in the outside money crowd?

Hi there. It's difficult to say how much money the Koch brothers are throwing into this race, simply because of the existence of these social-welfare nonprofits, which don't have to report their donors. What is known is that they founded Americans for Prosperity, the social-welfare nonprofit that is spending millions on TV ads opposing Barack Obama. As far as reported donors--the folks we know are giving to the super PACs--sure, there is a disproportionately represented group. Much more billionaires, say, than folks with not as much money.

why are there super pacs anymore if the 501(c)4's do the same thing and they dont need to release donor lists?

Well, that's an interesting question. I think some folks--Sheldon Adelson comes to mind--have no problem being public, and are fine with being named. With 501c4s, the problem comes because they're supposed to have a primary purpose of helping the public--not of doing politics. I do think some folks are worried that the IRS might be coming after 501c4s at some point for being overly political. If their tax status is revoked, that could mean paying millions in back taxes for some of these groups...

Do you see any difference between the funding of the Democrats vs. the funding of the Republicans?

Are they both playing on the same sheet of music?

Well, it seems that on the Democrat side this year, it's more money being raised and spent through traditional means--ie, Obama's campaign--vs outside spending groups like super PACs and social welfare nonprofits. That could change as the election gets closer, and unions are expected to play a major role on the left.

On the right, Romney's raising a lot, but so are super PACs. And social welfare nonprofits like Americans for Prosperity and Crossroads GPS could end up spending more on this election than super PACs--remains to be seen.

Why do we talk about money in elections so much, but never about why money matters?

To me, money isn't the problem. I believe the root problem is an uninformed electorate that decided who to vote for based on a 30 second TV spot they saw, or who had the most little paper signs displayed throughout their town. With an abundance of ignorant voters, then yes, having more money for advertisements will influence an election in the favor of the richer candidate.

My question is, rather than set limits on money spent, why not diminish the effects of what money buys? Why not focus on producing a more informed electorate? Focus on informing people so they have a better understanding of who and what they're really voting for. Set up programs that work for the people who aren't politically motivated or interested. This way, we can make advertisements less effective, and now, having more money isn't as important in an election.

I think that's a great idea: Creating a very informed electorate not susceptible to 30-second ads. It's also really tough. Maybe you should try!

I have a crazy ex-gf named Kim Barker. I almost had a heart attack when I saw the title of this thread.

Dave?

[deleted]

Aw, thanks. I love to get the love...

Do you think that at some point we will be able to reverse Citizens United or otherwise limit campaign contributions again, or have we passed a point of no return?

Also, how much money would be needed for a complete moron or absolutely unqualified person to get elected over a well qualified candidate without as much financial backing?

I think that this Supreme Court has been very clear on two things, when it comes to campaign finance. Everyone--corporations, unions, etc--is allowed to spend money on campaign intervention, because any ban on spending would be a violation of free speech. And disclosure is paramount. We have unlimited special-interest spending now. But not disclosure. It will be interesting to see if the court wants to take that up--lower courts that have done so have tended to require disclosure.

As to how much money it would take for a complete moron to get elected, wow, so many things I could say there. Must. Bite. Tongue. But the real answer is probably, more than his or her well-qualified opponent, enough so that the well-qualified candidate comes off as a degenerate/skirt chaser/malfeasant in comparison.

What do you think of Lawrence Lessig's analysis and proposed next steps outlined in Republic, Lost? (I've wrapped up some of it at http://rootstrike.com/1)

I have only heard the Cliff Notes version, and I honestly want to read the book forward to back before saying what I think. I'll get to it on vacation next week. (Again, while writing that, I thought: Sad.)

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If you look at our story, we focused on every 501(c)(4) group that reported spending money on politics to the FEC in 2010 or that we determined spent money on politics. Every group--so we included both liberal and conservative groups in our story. I'll be doing the same over this election. I think it's very important to look at what's happening with both liberals and conservatives--it's just that so far, conservatives are vastly outspending liberals when it comes to actual political ads.

How is outside money influencing the 2012 election?

This is what you wanted, right?

Are you asking if I wanted outside money influencing the elections or if I wanted your question! I'll pick the question: Outside money is hugely influencing the 2012 election, whether super PACs, 501c4s or groups like the Chamber of Commerce. I think there will be people elected this year that owe their elections to these outside groups, many of which don't have to report their donors. I think that's something we should understand, and should be talking about.

I really enjoyed The Taliban Shuffle. (Read it, Redditors for a great first hand perspective of Afghanistan). But my questions, 1. what does a group have to accomplish to be 'primarily' engaged in enhancing social welfare? Can it be as simple as providing 'educational' television advertisements? 2. How much foreign money do you think is coming into this election through these groups?

Well thanks for the book shout out. Yes, Redditors, read it.

On your questions: 1. Good question! The IRS has not defined "primarily," so it's tough to say. The statute on these groups actually says they're supposed to "exclusively" be engaged in promoting social welfare; a later regulation defined "exclusively" as "primarily." (I know--your head hurts from the mental gymnastics. Believe me, I know.) But the IRS has never defined what exactly primarily means. Groups have interpreted this as meaning they can spend up to 49 percent of their expenditures on political ads. The IRS hasn't said boo about that. (I'd like to see the IRS say "boo," period.) What the IRS has been doing lately, though, is interesting. It's gone after a smaller Democratic group and revoked its social-welfare status because it benefited a political party, and not the community at large. It's also denied the requests for recognition of at least four social-welfare groups for similar reasons. As far as providing "educational" TV ads--sure, that can be social welfare, if the ads are really educational TV ads, and not just political ads dressed in educational TV clothing. 2. No idea on the foreign money. Wish I knew! (And again, feel free to contact me. Let's meet. I'll be the one wearing the red carnation.)

What's your favorite kind of salad dressing?

Honestly, if I can find green goddess, I'm happy. Reminds me of my childhood. Otherwise, bring on the blue cheese.

Do you see the sick system ever getting better? The closer I look the more entrenched the money appears and the more difficult reform, whatever that actually looks like, seems. Is there a way out?

Money does seem entrenched at this point, and I can't advocate for reform one way or another. (Reporter! Cover the ball where it lands.) But reformers say that the IRS could do something, at least when it comes to these social-welfare nonprofits. The question is: Will it?

As far as a complete overhaul of campaign-finance laws, I'm not sure there's the stomach for it in Congress now. But again, you never know...

What types of cultures do these groups have? Do you see a stark pattern of certain attitudes from these organizations and their people?

But seriously--some of these groups, like Americans for Prosperity and Crossroads GPS--have actual infrastructure and employees and offices.

Most of these newer political social-welfare nonprofits, though, are based out of post-office boxes and in Beltway consultant firms and shared office spaces where they never show up. They have no paid staff. They have no websites. They have no offices. Therefore, seems to me, their culture is a question mark.

As to the few groups with infrastructure, most don't seem interested in talking to me and in fact do all they can to avoid me. I did meet some nice people in Miami, though, at the Hispanic Leadership Network's conference in January.

I rely heavily on liberal news sources, which gives me a one sided opinion. Is there any upside to the current set up of campaign finance?

The upside is, all who want to contribute, can contribute, as much as he, she, or it wants. There are no limits on free speech.

I do have to say, though, that many conservatives don't love the current set up of campaign finance.

1.) Considering that most mainstream election coverage is delivered by "The Big 5" media conglomerates, do you believe the term "liberal media" has any place in public discourse?

It seems these days that once reputable news organizations, like CNN or NBC, are resting on their journalistic laurels by running political ads and taking all that massive superPAC money instead of doing actual election coverage that helps create an informed voting public. I swear I've seen more media coverage of the ads themselves than actual issues.

2.) With all that said, what can we do to help journalism (perhaps independent journalism) make a comeback in the face of so much money, FCC lobbyists, and the oligopoly of media congomerates that are out to make that money rather than inform their audience about the truth?

1. I think the term "liberal media" is a joke, a misnomer, inaccurate, a convenient phrase used to dismiss good reporting, at least when it comes to most MSM like the Big 5.

You may be right on the media coverage of the ads--I have to admit, because I have Time Warner, I got rid of cable, so I don't necessarily see all the TV news out there.

And 2. Give to ProPublica....or to similar organizations. (But ProPublica first.)

Also, I think people need to be reminded of the role that journalism and watchdog journalism plays in our democracy.

If you had your own 501(c)(4) group, what would you name it?

Well, I've thought a lot about this. I've determined that one needs to maximize the use of the following words: America. Future. Citizens. Secure. Alliance.

So therefore, I'd call it: The Alliance for the Future Citizens of a Secure America.

What do you think? Will you consider a non-deductible donation?

Every cent should be disclosed for each campaign. I want to be able to see what kind of coffee an Obama intern in Wyoming (for example) is buying.

Interestingly, Ron Paul's campaign did this. Every cent spent at a gas station, even the $1.99 spent on iTunes. I kind of wrote an ode to his transparency: http://www.propublica.org/article/ron-paul-is-really-serious-about-transparency