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“Stealth Campaigns” — Podcast |

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In this election, independent groups—so-called 527s—are on track to spend more than ever before. In this second part of a special series on money in presidential politics, the Center for Public Integrity examines these “Stealth Campaigns.” I’m Bill Buzenberg.

[SEIU Advertisement]

What we need is a fresh voice. Someone who has not gone Washington. Someone who isn’t in the pocket of special interests. Someone like Barack Obama.

In the week before the Democratic primary in Ohio, it cost almost $700,000 to air this ad for just one day across the state. The price was the same for a second ad, one that described Barack Obama’s record on health care in equally glowing terms. But lucky for the Obama campaign, they didn’t have to come up with that $1.4 million.

SEIU-COPE is responsible for the content of this advertising.

A 527 group associated with the Service Employees International Union covered the cost of these ads. And that’s not the only way they helped Obama. In February alone, just in Ohio, the group spent about another $850,000 for mailings and door-to-door canvassing.

This kind of money is just a drop in the bucket. According to the Campaign Finance Institute, which tracks spending by political groups, the Service Employees Union’s political education fund spent almost $14 million on federal elections in 2007. That makes it the biggest player so far among the hundreds of groups who are trying to influence the election.

Journalist Sara Fritz investigated the rise of 527s and other such groups for the Center for Public Integrity.

Sara Fritz: A 527 is a political action committee. When they were created, there was some question about whether they had to report their contributors. So they got away without reporting them for a year.

That was in 2000. In 2001, largely in response to reporting by the Center for Public Integrity and other journalists, Congress passed a law requiring 527s to disclose their contributions and expenses. After the 2004 election, the Federal Election Commission fined some of the largest 527s hundreds of thousands of dollars in excessive spending. But Fritz says, those punishments didn’t solve the problem.

Fritz: The people who were creating 527s found even cleverer ways to get around the disclosure rules and now they create different kinds of tax-free organizations.

That’s why those who want to influence the elections are creating groups called 501(c)(4)s or 501(c)(3)s. They’re named for relevant sections of the tax code.

Fritz: (c)(3)s are organizations which are committed to social causes, usually social justice, helping the poor…(c)(4)s tend to be more involved in lobbying, and that kind of thing.

Each of these groups can impact the election in slightly different ways. (c)(3)s can help get out the vote, as long as they don’t mention particular candidates. (c)(4)s can run issue ads and are allowed to spend a certain amount of their time and money advocating for or against candidates. Neither has to disclose its contributors.

Sara Fritz says that sometimes a group will have a combination of a 501(c)(3), a 501(c)(4), and a 527. To an extent, the group’s different branches then can “donate” money to each other.

Fritz: Technically you could have created these at any time, because they show some creative use of the tax code. But what really prompted this was the enactment of a new campaign finance reform law about 5 years ago, which eliminated soft money. And that was the kind of unlimited contributions that were made through political parties. When contributors could no longer give an unlimited amount of money to political parties, they began looking for other places, and these independent groups became the vehicle.

[Swift Boat Veterans for Truth advertisement]

I served with John Kerry. I served with John Kerry.

In the last presidential election, the Swift Boat Veterans for Truth, an infamous 527 group, was able to influence the course of the race with just a few ads, like this one.

John Kerry lied to get Bronze Star. I know. I was there. I saw what happened.

This first ad brought in scores of small donations that helped the group continue their campaign. But, like most 527 groups, the Swift Boat Veterans also benefitted from large donations from a few wealthy individuals. One of their financers, the Texas oilman T. Boone Pickens, is reportedly funding a new group this year, one whose name has not been released yet. 

In total, spending by independent groups topped $61 million in 2007, says the Campaign Finance Institute. It’s still an open question whether 527s should have to abide by any fundraising limits. But Sara Fritz says these groups aren’t worried about limiting their fundraising or about disclosing their donors.

Fritz: They know that whatever comes off this will occur after the election. They’ve seen this happen. They realize that they know they’re not going to get in trouble now… it appears to me that many of the groups are going ahead, full bore, without worrying about the consequences.

So keep an eye on massive unregulated spending by 527s and other such groups during this year’s multi-billion dollar presidential campaign.

For the Center for Public Integrity, I’m Bill Buzenberg.