Unprecedented political spending. Secret donors. New ways for unions and corporations to spend money on politics.

An analysis by the Center for Responsive Politics reveals that the Citizens United v. Federal Election Commission Supreme Court ruling of January 2010 has profoundly affected the nation's political landscape.  

 

Corporations and unions both benefited from the ruling, being able to use their general treasuries to pay for independent expenditures for the first time.

Unions spent more than $17.3 million from their general treasuries on independent expenditures opposing Republican candidates such as Roy Blunt (R-Mo.), Tim Walberg (R-Mich.) and James Renacci (R-Ohio). The American Federation of State County and Municipal Employees spent more than $7 million out of their general treasury, the most of any other union.

The National Education Association had a different strategy. It set up a so called "super PAC" and financed it with $3.3 million from its general treasury. Pre-Citizens United unions could only spend money on independent expenditures using funds that were voluntarily donated to their political action committee by union members. Now unions can tap into funds that come directly from union member's dues. Unions are still banned from using their treasuries to donate to congressional campaigns and party committees.

Corporations generally did not directly get involved in political spending but rather donated more than $15 million to a new type of political group known as a "super PAC". These groups may raise unlimited amounts of money from any source as long as the donors are disclosed and the groups only spend money on independent expenditures. The top two corporate donors in 2010 were TRT Holdings and Alliance Resource Partners, which each donated about $2.5 million to the 'super PAC' American Crossroads. Corporate donations are likely higher than reported as conservative non-profit groups spent $121 million without disclosing where the money came from.

The ruling allowed corporations and unions to use their general treasuries to pay for political advertisements that expressly call for the election or defeat of a candidate, also known as independent expenditures. This ruling subsequently allowed non-profit corporations under the tax code 501c to spend unlimited amounts of money running these political advertisements while not revealing their donors.

Influencing elections cannot, by law, be the primary purpose of the non-profits.

These nonprofits certainly took advantage of their new power, however, spending $61.3 million on independent expenditures in 2010.

Top findings of the Center's study include:

 

• The percentage of spending coming from groups that do not disclose their donors has risen from 1 percent to 47 percent since the 2006 midterm elections
• 501c non-profit spending increased from zero percent of total spending by outside groups in 2006 to 42 percent in 2010.
• Outside interest groups spent more on election season political advertising than party committees for the first time in at least two decades, besting party committees by about $105 million.
• The amount of independent expenditure and electioneering communication spending by outside groups has quadrupled since 2006.
• Seventy-two percent of political advertising spending by outside groups in 2010 came from sources that were prohibited from spending money in 2006

GLOSSARY OF TERMS USED IN THIS REPORT:

 

Independent Expenditure - political advertisement that expressly calls for the election of defeat of a candidate -- includes mailings, radio ads, television ads, billboards and other media.

Electioneering Communication - a broadcast, cable or satellite communication that mentions a candidate's name within 30 days of a primary election and 60 days of a general election -- were popular by '527' groups in 2004 but now are mostly used by 501c non-profit groups

Super PAC - A political group that can raise unlimited amounts of money from any source as long as the donors are disclosed and the money is only spent on independent expenditures -- came about in 2010 for the first time in part from the Citizens United ruling. Examples: American Crossroads, America's Families First Action Fund, Club for Growth Action

501c Groups - Non-profit organization registered under the IRS tax code 501c. Certain kinds of these groups -- most notably, 501c(4), 501c(5) and 501c(6) organizations -- may spend unlimited amounts of money on electioneering communications and independent expenditures. They do not have to reveal their donors. Influencing elections cannot, however, be their primary purpose. They cannot donate to political campaign committees or party committees. Examples: U.S. Chamber of Commerce, American Action Network, Crossroads Grassroots Policy Strategies, League of Conservation Voters, VoteVets.org

527 Groups - Political groups registered under tax code 527. They may raise unlimited amounts of money from individuals and corporations and could spend unlimited amounts of money on what are generally electioneering communications, although during the 2010 cycle, they began spending some money on independent expenditures. The groups can also use the money on get-out-the-vote drives, polling, fund-raising and other political activities. These groups cannot donate to political campaign committees or party committees and have to disclose all donors and expenditures to the IRS. Examples: The Media Fund, Swift Boat Veteran for Truth, Progress for America

QNC (Qualified Non-Profit Corporations) - Qualified non-profit corporations are ideological 501c(4) groups permitted to raise unlimited amounts of money from individuals  and to spend that money on independent expenditures and electioneering communications. They cannot accept money from corporations or unions, have significant business income, or have electioneering as their major purpose. They are not required to disclose their donors unless the donor specifically earmarks their contribution for electioneering. Examples: Defenders of Wildlife, Planned Parenthood, Environment America, Humane Society of the US

PAC (Political Action Committee) - Political committees that can donate up to $5,000 per election to a candidate's campaign committee, spend unlimited amounts of money on independent expenditures. They can only accept contributions of $5,000 or less from individuals or other PACs and must disclose all donors and expenditures to the FEC. Companies cannot donate to a PAC but their employees can donate to a PAC. Examples, AT&T (PAC), American Bankers Association, Laborers Union, Boeing (PAC)

Citizens United v. Federal Election Commission (2010) - A Supreme Court case that ruled in a 5-4 decision to allowed corporations and unions to use their general treasuries to pay for political advertisements that expressly call for the election of defeat of a candidate, also known as an independent expenditure.

Federal Election Commission v. Wisconsin Right to Life (2007) - A Supreme Court case that ruled in a 5-4 'as-applied' decision to allowed corporate and union treasury money to be used in electioneering communications. This law went into effect December 26th, 2007.

McCain-Feingold  Act of 2002 - Named after sponsors Russell Feingold (D-Wis.) and John McCain (R-Ariz.), it required the disclosure of electioneering communications and banned corporate and union treasury money in political advertisements leading up to an election and banned unlimited “soft money” donations to national political party committees.