A right wing website outed several right wing PACs as scams … and of course this prompted a right wing feud, because The Establishment. (More)
Usually my research on 21st Century Political Nuttitude makes me kind of … grumpy. Between the fear mongering and the race baiting and the downright incomprehensible – what is “organic law,” exactly? – I usually need a long dip in the
hot tub faculty lounge squirrel bath.
But this morning I feel like these guys:
For example, did you know that despite the fact that it raised a staggering 13 million dollars, The National Draft Ben Carson for President isn’t affiliated with Ben Carson and the small percentage of money it spent on independent expenditures didn’t go to him? Now you know why Ben Carson’s business manager, Armstrong Williams wouldn’t allow the group’s campaign director to take a picture with Carson and said, “People giving money think it’s going to Dr. Carson and it’s not. …Our hands are tied. We don’t want people exploited.”
We also found quite a few PACS that made large payments to vendors who were owned by people who worked for the PAC. This certainly can be done for legitimate purposes, but it’s also an easy way to move money around while keeping your donors from seeing what you’re actually doing with it. For example, this is done in some cases to obscure how much people at the PAC are really making. The Senate Conservatives Fund and American Crossroads appear to have done that. However, it can also be a way for PACs to siphon off money. If a PAC officer pays a vendor he owns, he doesn’t have to report what the vendor did with it to the FEC, which means nobody really knows what happens to the money.
The author, John Hawkins, may think “this can certainly be done for legitimate purposes,” but the IRS has a different view:
Section 501(c)(4) of the Internal Revenue Code expressly prohibits inurement of the net earnings of an entity otherwise described in that paragraph to the benefit of any private shareholder or individual.
Let’s say I founded SquirrelPAC as a 501(c)(4) and asked you to send me money. I could hire myself to run my PAC, and pay myself a salary, but I’d have to disclose that on my PAC’s IRS Form 990. And since anyone can ask to see that form, donors will know if I’m just pocketing their money.
The IRS Form 990 also requires PACs to list vendors – companies and non-employees they pay to do stuff – but they don’t have to specify what each vendor does, and most PACs just list “consulting,” “fundraising,” or some such. The IRS inurement rule says a PAC can’t hire as vendors its officers, employees, or any companies they own. In other words, SquirrelPAC (my hypothetical PAC) couldn’t hire Squirrel & Associates (my hypothetical public relations firm) as a vendor. But Hawkins found that a lot of right wing PACs do exactly that:
Last but not least before we get into the numbers, it’s worth noting that there are a lot of good people that volunteer and work for these organizations, even the ones that have terrible numbers, and most of them simply aren’t aware of what’s been going on. It’s necessary to say that because we don’t want grassroots volunteers who have no idea what the books look like to be tarred with the same brush as the people running the PACs that are performing poorly. On a personal note, even though I had heard a lot of anecdotal stories and had read what other news organizations had to say, I have to admit that I was shocked by how bad the numbers are for many of these groups. One of the things I realized while I was putting this report together is that perhaps the biggest reason grassroots candidates have been having trouble breaking through in recent years is because such a large percentage of the money that was intended for them is being siphoned off to vendors, wasted, and just plain old pocketed by people in these PACs.
Once he gets into the numbers, it’s not pretty:
[H]as the Republican Establishment railed against these groups for causing constituent backlash against them? That should reduce the population of culprits further. In fact, four groups in particular are routinely savaged by the Establishment for daring to fight against them: Madison Project, Freedom Works, Senate Conservatives Fund, and the Club For Growth. Those four groups are also most likely to be credited by currently elected officials and candidates as having given them the most help challenging the establishment. Consequently, the appearance of those four groups along with Americans for Prosperity, American Crossroads, and Tea Party Patriots, on the RWN list should raise eyebrows.
Now, in full disclosure, Madison Project; FreedomWorks; Tea Party Patriots; and Senate Conservatives Fund have, in the past sponsored the RedState Gathering.[…]
I also have great relations with and am a donor to Club For Growth, Madison Project and the Senate Conservatives Fund. In fact, in routine conversations I tell people regularly that there are very few groups on the right I give money to because I know it will get spent wisely. That list almost exclusively is the Senate Conservatives Fund, Madison Project, Club for Growth, FreedomWorks, and Heritage Action for America (HAFA) – the five groups that have put more points on the board for conservatives in the past few years than any others.
The National Review’s Jim Geraghty wonders if Hawkins’ report will change any minds:
Will the donors to these PACs think their donations were well spent?
Or are the donors to some of these groups the ones most inclined to believe any criticism of their spending is a plot by “the Establishment”?
The Washington Post’s Paul Waldman explains why donors should be outraged:
If there’s one thing conservatives of all stripes hate, it’s redistribution. But within their movement there’s a never-ending redistribution at work, in which the money and efforts of ordinary people feed the interests of those who enlist them, or in many cases just prey upon them. I’ve often wondered why conservatives themselves aren’t angrier about the most appalling scams, not only because of the opportunity cost when a donation goes to some consultant instead of to an effort that could have a real political impact, but also because it’s their people who are getting fleeced. I think the reason is that so many people are, in one way or another, in on the game.
Meanwhile, I’m shining my dancing shoes….
Good day and good nuts