The Democrats Money Problem

Sunday, November 27, 2011
By Reid Wilson

The National Journal reports:
It is becoming obvious that the outside groups that will raise and spend hundreds of millions of dollars on behalf of Republican candidates are going to outraise those groups spending money for Democratic candidates. That's going to be a complicating factor in President Obama's bid for re-election -- and Democrats have only themselves to blame.

Over the last decade, Democratic groups were way ahead of their Republican counterparts in pushing the boundaries of campaign finance legislation. Unions, environmental groups and other liberal surrogates used fronts organized under sections 501(c)(3), 501(c)(4) and 527 of the Internal Revenue Code to raise and spend huge amounts of money on field programs and ad campaigns.

But Citizens United v. FEC changed all that. The 2010 Supreme Court ruling, along with another case called SpeechNow.org v. FEC, allowed outside groups to raise and spend unlimited funds without disclosing donors. Republicans were ready to take advantage of the new rules, and groups like American Crossroads, the American Action Network and other so-called super PACs got off to quick starts.

Now, Democrats are racing to catch up with their Republican rivals, and it's not going great. American Crossroads and Crossroads GPS have set a goal of raising and spending $300 million in the next year, while Priorities USA, the outfit that will back Obama's re-election campaign, is aiming for $100 million. Crossroads is raising big bucks at a breakneck pace; Priorities has spent less than $1 million, an indication of a sluggish fundraising pace.

Bill Burton, who heads Priorities USA, placed the blame on his own low profile. He told the Wall Street Journal last week that he's spending a lot of time introducing himself to big donors who don't know who he is, hinting that money pitches will come later.

In fact, the problem is that Democratic donors have heard their party leaders bad-mouth the very same outside groups they're being asked to support. Donors we've heard from have questioned why their party stood so firmly against outside groups in 2010, only to turn around and tacitly embrace them in 2012.

Because Democrats found themselves so far behind in the race for outside cash last year, they did what any sports team does when they're suddenly at a disadvantage -- they blamed the refs. Democrats spent the last several months of the 2010 election cycle blasting what they called secret money influencing elections. The outside spending groups, President Obama said at an October 10, 2010, campaign rally in Philadelphia, were "not just a threat to Democrats, that's a threat to our democracy."

"The American people deserve to know who's trying to sway their elections. And you can't stand by and let special interests drown out the voices of the American people," Obama said at the rally.

Then-Democratic Congressional Campaign Committee chairman Chris Van Hollen, one of the party's leading advocates for campaign finance reform, was apoplectic at the new rules. He spent months arguing to anyone who would listen that outside groups were tarnishing democracy, and that his candidates would be vindicated because voters would see through Karl Rove's evil schemes.

"The Supreme Court's radical decision in the Citizens United case essentially equates corporations with individuals for the purposes of spending money in elections. It opens the floodgates to big corporate money that can drown out the voices of American citizens. It also opens wide the door to campaign spending by foreign corporate interests that don't put our country first. We must do everything we can to mitigate the damage this ruling could do to our democracy," Van Hollen said in a statement a few weeks after the Citizens United verdict came down.

Legally speaking, there's not much hypocrisy in the Democratic statements. Democrats are careful to make the distinction between super PACs, which must disclose their donors, and 501(c)(4) organizations, which don't have to disclose such information (American Crossroads is a super PAC; Crossroads GPS is a c4). Optically, it doesn't look great -- especially when Vice President Joe Biden meets with donors who have just been hit up for big super PAC contributions, as he did last week.

But Democratic donors haven't made the distinction, and without help from an accountant who knows the intricacies of the IRS code, it's tough to explain. Democratic outside groups are having trouble raising money not because the enthusiasm for President Obama is gone (it's not). They're having problems because the donors they are courting have heard how malicious those same super PACs are.

Democrats hammered home their message to the donor base that outside groups are harming the system. Now, they're trying to undo that message as they scramble to make up ground they've lost to the GOP. That's proving a more difficult task than party strategists anticipated.