It's All Politics
Fri September 7, 2012
It's 60 Days Until The Election, And Ad Rules Change
A tax-exempt group backed by the billionaire Koch brothers on Monday wraps up a monthlong, $26 million series of television ads that explicitly tell viewers to vote against President Obama — raising the question of what happens next with so-called dark money in the fall campaign.
Americans for Prosperity so far has been the only one of the major "social welfare organizations" — which do not disclose their donors — to risk possible problems with the Internal Revenue Service by running such explicitly political ads.
Others, such as Crossroads GPS, stopped running ads in early August, when the presidential campaign entered the period where the more oblique "issue ads" (the ones that have ended with the ubiquitous "Tell President Obama") would have required revealing the donors' names.
Americans for Prosperity spokesman Levi Russell told NPR that the group has not yet decided what it will do after Monday.
For the first half of this year, it appeared that outside political groups set up as so-called social welfare organizations under the tax code would be the vehicle of choice for funneling hundreds of millions of dollars from rich donors into ads against Obama.
The advantage of a 501(c)(4) over a superPAC, which can also accept unlimited donations?
Secrecy. While superPACs disclose their donors regularly, the tax-exempt groups keep their donors names secret — a desirable and sometimes even prerequisite feature for rich donors who want to influence the election but don't want to risk alienating customers and clients.
That all changed when a federal court ruled that the Federal Election Commission had to enforce a law requiring such groups to disclose every donor who gave more than $1,000. An appeals court later refused to block that ruling.
That left the tax-exempt groups that wanted to play in the presidential race with two options. They could continue their issue ads but disclose their donors to the FEC. Or they could take advantage of a separate FEC loophole that lets outside groups keep donors secret — but only if the ads explicitly tell voters to support or oppose a candidate.
That second option, however, could cause problems with the IRS. Its rules for social welfare groups state that politics cannot be their primary purpose. Some election lawyers have interpreted that as meaning less than 50 percent, but the IRS itself has never provided specific guidance.
While American Crossroads, a superPAC affiliated with Crossroads GPS, this week began its second seven-figure ad buy, it has been a minor player to date in the Republicans' team against President Obama. Groups like Crossroads GPS and Americans for Prosperity just a few months ago were believed to be planning to spend upwards of a half-billion dollars on television ads. Crossroads GPS spent nearly $54 million by itself, according to co-founder Karl Rove in an Aug. 1 op-ed.
Yet a full month has gone by now without a single Crossroads GPS ad in the presidential race.
On top of all this, Friday is 60 days from Nov. 6, meaning the same disclosure rules that have applied to issue ads in the presidential race now also apply to all federal contests — including the U.S. Senate races where Crossroads GPS, Americans for Prosperity and others have continued spending millions against Democratic Senate members.
Starting Friday, they will have to reveal their donors if want to continue those ads — or switch to explicit, "vote against" language that could affect the groups' IRS tax status.
S.V. Dáte is congressional editor on NPR's Washington Desk.