Wednesday, August 21, 2013

What Part Of 'Exclusive' Does IRS Fail To Grasp?

At the heart of the crooked dark money game and the hijacking of elections by phony front groups is the abuse of the federal tax code.

Thanks to the U.S. Supreme Court's preposterous decision three years ago in the Citizens United case, corporations are considered people and have been freed to spend as much as they want to influence American elections. This ruling has led to a proliferation of nonprofit corporations devoted to meddling in elections. Most of these outfits are organized under section 501c4 of the Internal Revenue Code.

But it's not just the Citizens United decision that has unleashed the 501c4s politically speaking. The IRS deserves a substantial share of the blame.

Federal law says 501c4 groups have to "exclusively" work to promote social welfare. When the IRS wrote rules to implement the statute, the agency ignored the plain meaning of the law. IRS rules say 501c4 groups have to "primarily" focus on social welfare work, while the law Congress passed says "exclusively."

Exactly how federal bureaucrats could see the word "exclusively" and interpret it to mean "primarily" is a mystery. But this word play has devastating consequences for democracy. The IRS rules are allowing nonprofit organizations that have been granted tax-exempt status for the purposes of doing social welfare work to devote close to half of their resources to warping election outcomes. And because social welfare nonprofits do not have to publicly disclose those who donate to their cause, who's behind this election activity can be cloaked in secrecy.

There is a simple solution to the explosion of dark money-fueled electioneering by 501c4s. Reclassify all 501c4 groups as 527 organizations. Groups organized under section 527 of the federal tax code can do as much politicking as they want, but they have to disclose their donors, while 501c4 social welfare nonprofits can keep their funding sources secret.

The IRS is about to be sued over its misinterpretation and misapplication of federal law. Here's hoping this lawsuit succeeds in forcing the IRS to bring its rules and its enforcement in line with that law.

Monday, August 19, 2013

Choosing Who Chooses

Senator Mary Lazich insists there is no need for redistricting reform. This is noteworthy because she chairs the committee that is sitting on legislation to overhaul the redistricting process in Wisconsin that closely mirrors the system in place in Iowa.

Lazich dismisses Iowa's nonpartisan approach to redistricting as "nonsense" and cites one study that speculates “taking redistricting out of the hands of a unified legislature and giving it to a bipartisan or judicial commission could result in less competitive elections.”

She overlooks the fact that of Iowa's four U.S. House districts, two rank among the 20 most competitive of the country's 435 congressional districts. None of Wisconsin's eight House districts ranked among the 50 most competitive. In 2012, none of Wisconsin's congressional elections were competitive. All were won by double-digit margins.

The senator also overlooks the fact that in Wisconsin's 2012 elections one party collectively won the most votes for U.S. House, state Senate and state Assembly, but the other party won the most seats in all three legislative bodies.

The way redistricting is handled currently in Wisconsin badly weakens voters, thwarts the public's will, and virtually cements in place those already holding office. It's good for the politicians and bad for the voting public.

It's no surprise Senator Lazich is fond of the way it works now. But if your idea of democracy involves having citizens in the driver's seat, partisan redistricting done by elected officials is pure poison.

A simple choice has to be made. We either can have voters choosing representatives, or representatives choosing voters. If you are OK with the latter, then Senator Lazich is showing the way. If you prefer the former, then we need the reform embodied in Senate Bill 163 and Assembly Bill 185 in the worst way.

Friday, August 09, 2013

Nothing In Common Anymore

There is a conspicuous and growing disconnect between the public and the elected officials who are supposed to be representing the citizenry. Nowhere are the representatives and the represented more disconnected than on the subject of money in politics.

Poll after poll shows a tripartisan consensus among members of the general public that money is playing far too great a role in our elections, is having a poisonous effect on governing, and needs to be reined in.

According to the latest Gallup Poll half of Americans now have reached the point of favoring banning campaign contributions altogether. Voters of every political stripe oppose the U.S. Supreme Court's ludicrous Citizens United decision allowing unlimited election spending by special interest groups and want the ruling overturned.

Even those who are best positioned to buy elections – namely America's top business leaders – are evidently getting tired of the political money game and have grown uncomfortable with elected officials being bought. Three-quarters of them regard political giving as "pay to play" and close to 90% believe the campaign finance system needs to be overhauled.

The political establishment, on the other hand, has a radically different view. The problem is not that there is too much money in politics, but rather not enough. Witness the bipartisan voice vote in Wisconsin's state Assembly in June to pass an amended elections bill doubling the limits on campaign contributions.

Not only do political insiders believe campaign donations should be even bigger, they also believe the money should be hard to see. Witness the lack of action – no votes, no committee consideration, not even a public hearing – in either house of Wisconsin's legislature on bipartisan legislation like Senate Bill 166 that improves disclosure by closing the notorious "magic words" loophole and thereby shining light on the dark money in elections.

Instead we have the assistant Senate majority leader introducing legislation that would gut Wisconsin’s campaign finance disclosure laws. Currently, the occupation and employer of any donor who gives more than $100 must be reported. Under this new legislation, disclosure of only the occupation of any donor giving more than $500 would be required.

There are 862,064 contributions from individuals in the Democracy Campaign’s searchable online database. Of those donations, 825,827 or 96% are $500 or less. Contributions of more than $500 total 36,237. If Grothman’s new proposal had been state law all along, our database would be 96% smaller and would show the occupation but not the employer of each of the donors who made those 36,237 contributions.

Put another way, if this bill had been law when we built our database, citizens would not have been able to see what that database enables them to see today, namely the economic interests of donors who gave more than $122.5 million to Wisconsin politicians since the mid-1990s.

It is neither healthy nor sustainable for voters to be thinking one way and their "representatives" thinking and acting another way. Some course corrections are sorely needed.