The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

Money Flowed To McCarthy As Speaker-In-Waiting

By Eliza Newlin Carney, CQ-Roll Call (TNS)

WASHINGTON — House Majority Leader Kevin McCarthy received a windfall of six-figure checks from CEOs, Wall Street investors and other high-dollar GOP donors during the short window when he was the front-runner to be the next House speaker.

The California Republican’s lucrative joint fundraising committee, known as the McCarthy Victory Fund, collected $3 million in the fundraising quarter that began July 1 and ended on Sept. 30.

Much of the third-quarter money came in the form of checks in the $100,000 and $200,000 range that flowed in during the short window between Ohio Republican John A. Boehner’s Sept. 25 announcement that he would step down as speaker, and McCarthy’s surprise news on Oct. 8 that he would not run to replace Boehner, as expected. McCarthy’s windfall was first reported in Political MoneyLine.

Overall, McCarthy’s third-quarter haul was three times the $1 million that the committee had raised from April 1 through June 30.

Top contributors to the McCarthy Victory fund in late September include California investor John Fisher, a billionaire whose family founded The Gap clothing company, who donated $200,400 on Sept. 30; Laura Khouri, president of California’s Western National Property Management, who gave $200,400 on Sept. 29; and Thomas V. McKernan, former CEO and president of the Automobile Club of Southern California, who contributed $200,400 on Sept. 30.

Other generous McCarthy Victory Fund donors during that window are Wyoming mortgage lender Glenn B. Stearns, who gave $75,000 on Sept. 30; Charles T. Munger Jr., who gave $150,000 on the same day and who identifies himself on FEC reports as a self-employed physicist; and Charles Schwab, chairman of the board of Charles Schwab & Co., who gave $133,600 on Sept. 29.

The high-dollar donations late last month helped the McCarthy Victory Fund boost its total receipts so far in the 2016 election cycle to $5.8 million by the end of the third quarter. The joint fundraising account divvies up its receipts among the National Republican Congressional Committee; McCarthy’s campaign account; and his personal leadership PAC, which is known as the Majority Committee PAC.

McCarthy’s congressional campaign committee also ended the third quarter on a high note, with $1.3 million in receipts during the window between July 1 and Sept. 30. That brought his total receipts to just under $4 million since the beginning of the year.

One big donor to McCarthy’s campaign during his short but lucrative tenure as speaker-in-waiting was NextEra Energy Inc. PAC, which according to Political MoneyLine made an $8,500 contribution to McCarthy on Sept. 29.

McCarthy’s shocking decision to drop his bid for the speakership has thrown the House GOP leadership into chaos, and all eyes are now on Ways and Means Chairman Paul D. Ryan of Wisconsin, who is being urged to run. McCarthy has said he will stay on as majority leader, but some of his six-figure donors may have been banking on his anticipated ascendancy to the speakership.

Likewise, some of the top donors to Boehner’s joint fundraising committee, known as Boehner for Speaker, could be excused for wondering whether they, too, made a bad bet. On Sept. 22, just a few days before Boehner’s announcement that he would leave his speakership and Congress, his Boehner for Speaker account received a $100,000 contribution from Koch Industries executive and conservative mega-donor David Koch.

(Kate Ackley contributed to this report.)

Photo: House Majority Leader Kevin McCarthy (R-CA) speaks at the John Hay Initiative in Washington September 28, 2015. REUTERS/Gary Cameron

Outdated Voting Machines Could Pose Headaches In 2016

By Eliza Newlin Carney, CQ-Roll Call (TNS)

WASHINGTON — Fifteen years after hanging chads in Florida forced the U.S. Supreme Court to settle the contested 2000 presidential election, dysfunctional voting machines could once again disrupt Election Day, warned a report released Tuesday.

Aging voting machines around the nation are becoming obsolete and subject to such problems as flipped votes, tally errors and sudden shutdowns, according to a report by the Brennan Center for Justice at New York University’s School of Law. The problematic systems would cost at least $1 billion to fix, the report warns — well more than either Congress or cash-strapped state and local governments appear prepared to invest.

“Our findings might alarm a lot of people, and that might not be a bad thing,” Lawrence Norden, deputy director of the Brennan Center’s Democracy Program and a report co-author, told CQ Roll Call. Among those states operating outdated voting machines are such key presidential swing states as Florida, Ohio and Pennsylvania.

Based on interviews with dozens of election officials and technology experts, the report concluded that more than half the jurisdictions around the country will be using voting machines at or near the end of their projected lifespans in 2016. Many were purchased with the $2 billion in federal money freed up by the 2002 Help America Vote Act, enacted after the contested 2000 presidential contest pulled the curtain back on the nation’s balkanized, dilapidated and underfunded voting system.

But the touch-screen and direct-recording electronic machines that were new in 2000 had projected lifespans of no more than 10 years to 15 years, and rely on memory cards, zip disks and software programs that are now increasingly obsolete and hard to replace. Election officials reported scrambling on eBay to locate such parts as dot matrix printer ribbons.

“We had a system that was beginning to fail, but there were no parts to keep it running,” Arizona election official Brad Nelson told the Brennan Center.

“In some ways this is similar to what happened before 2000,” said Norden. “There were election officials who were warning that punch card machines were a disaster waiting to happen.”

On the plus side, the report noted, the federal Election Assistance Commission now has a quorum of three confirmed commissioners to advise the states on best practices and emerging technologies. Established by the Help America Vote Act to assist states in setting up and testing new voting systems, the EAC limped along between 2010 and 2014 without a full quorum.

Election officials in a few jurisdictions, such as Los Angeles and Travis County, Texas, also are experimenting with cost efficient, off-the-shelf technology to set up promising new digital voting systems, the report noted.

Given the unlikelihood that federal or state officials will invest heavily in voting machines between now and Election Day 2016, the report recommended that jurisdictions set up contingency plans, such as troubleshooting technical problems, boosting poll worker training and setting aside backup paper ballots.

“Congress put up the money after this catastrophe of 2000,” said Norden. “They do not seem inclined to do that again.”

Photo: Get ready for a 2000 election rerun! Keith Ivey/Flickr

IRS Wars Heat Up Rules Of The Game

By Eliza Newlin Carney, CQ-Roll Call (TNS)

WASHINGTON — Both Republicans on Capitol Hill and the Obama administration have brought fresh artillery to their war over the IRS and its policing of politically active tax-exempt groups.

GOP leaders are taking advantage of their new Senate majority and expanded House ranks to step up ongoing probes into IRS targeting of 501(c)4 social welfare groups, including Tea Party organizations. Republicans in both chambers have also introduced legislation that would block the IRS from issuing any new regulations to constrain political activity by tax-exempt groups until early 2017.

The Stop Targeting Political Beliefs by the IRS Act would “halt further action on the IRS’ proposed targeting regulations until the Justice Department and congressional investigating into the IRS’ previous targeting are complete,” Senator Pat Roberts (R-KS) said when introducing the bill last month with Senator Jeff Flake (R-AZ). An identical House bill was introduced by Reps. Paul D. Ryan (R-WI) and Peter Roskam (R-IL).

President Barack Obama asked for an 18 percent IRS funding boost in his recent budget request. Obama proposes $12.9 billion for the agency in fiscal 2016, up from the $10.9 billion in fiscal 2015. Agency officials have warned that budget cuts and growing workloads are damaging IRS operations and will downgrade taxpayer service during the coming filing season.

The administration’s budget also includes little-noticed language that would require tax-exempt groups to file Form 990s electronically. The Form 990 includes no information on an organization’s donors, but it does disclose the names of officers and information on salaries, expenditures and grants that can shed light on politically active tax-exempt groups.

Undisclosed political spending on both sides of the aisle has shot up dramatically since the Supreme Court’s Citizens United v. Federal Election Commission ruling in 2010. At a recent gathering of donors allied with the billionaire industrialists Charles and David Koch, conservative organizers announced plans to spend an astonishing $889 million in advance of the 2016 presidential election.

The administration’s e-filing proposal “is a common sense fix to a needlessly complicated system,” according to Robert Maguire, political nonprofits investigator for the Center for Responsive Politics. The center has logged countless hours chasing down Form 990s, which cannot be searched electronically at the IRS, from often uncooperative tax-free groups.

The plan probably won’t win much support from Republicans angry with the IRS. At a recent Senate Finance Committee hearing, Chairman Orrin G. Hatch of Utah and his Republican colleagues ran through their litany of complaints. These include extravagant IRS conferences, bonuses for tax-delinquent employees, salaries for workers engaged in labor union work, the agency’s implementation of the Affordable Care Act and Earned Income Tax Credit fraud.

Few IRS problems have incensed Republicans more, however, than the federal Inspector General’s revelation in 2013 that the IRS had improperly targeted Tea Party and other groups seeking tax exemption. Liberal groups were targeted, too, but Republicans say the IRS intrusions and delays disproportionately hurt conservatives.

The IRS tried to fix this problem by drafting new regulations for how it would define political activity by tax-exempt groups. But these were roundly assailed as overbroad and chilling to free speech on both sides of the aisle, and generated a record 160,000 comments. The IRS withdrew that plan and is now back to the drawing board, but Hatch urged IRS Commissioner John Koskinen at the recent Finance Committee hearing not to reissue draft rules at all.

“I think this would be a mistake, and I hope you don’t go down that path of trying to limit political speech,” Hatch told Koskinen. “That would only further entangle your agency in needless political debate and controversy.”

Koskinen assured Hatch the targeting mistakes “should never have been made, and they should not be made again.” But he also pointed out that the Inspector General’s report specifically directed the IRS to clear up its imprecise regulations governing election activity by tax-exempt groups. These rely on a hazy “facts and circumstances” standard to define when advocacy groups step over the line from social welfare into politics.

The Inspector General recommended the IRS “try to clarify the standard that’s in the regulations now so that people … externally and internally would have a better idea what’s permissible, what counts and what doesn’t count,” Koskinen explained.

A half-dozen ongoing investigations will no doubt shed fresh light this year on what went wrong at the IRS. But the agency got in trouble partly because its employees were stretched thin, and were struggling to follow ambiguous rules that even they did not understand. Blocking the IRS from clarifying its rules and curtailing its budget risk making those problems worse, not better.

As Senate Finance Committee Democrat Tom Carper, of Delaware, noted at the recent hearing, “It is clear that if we continue to underfund this critical agency, while asking it to increase its workload, we’re simply setting the IRS up to fail.”

Photo via Wikimedia Commons

Parties Poised To Exploit Broad New Rules

By Eliza Newlin Carney, CQ Roll Call (TNS)

WASHINGTON — When Congress moved quietly late last year to permit much larger contributions to the political parties, some experts cast the rules change as, at best, an improvement on the old system, and at worst, inconsequential.

“This isn’t going to be a game changer for big money in politics,” Jonathan Bernstein, political scientist and columnist, said of the higher limits. The limits now allow an individual to give as much as $1.7 million to the parties in one election cycle — an exponential increase over the previous per-cycle cap of $64,800.

“For those who want more transparency, this means more accountability in political fundraising,” declared Republican National Committee Chairman Reince Priebus in USA Today. The rule’s cheerleaders enthuse that strengthening parties tempers partisanship and frees parties to better compete with unrestricted and increasingly influential outside groups that often operate outside the disclosure rules.

It remains to be seen whether such sunny predictions come true, or whether the watchdogs’ dire warnings — that the new rules will usher in a new era of soft money abuses — will prove closer to the mark. Either way, there’s little question that party officials will test the new regulations to the fullest, exploring every possible legal avenue to fatten their coffers.

True, the new limits do not free the parties to raise unrestricted money for just any purpose. Under the campaign finance provisions inserted into the eleventh-hour “cromnibus” spending package, the party committees may raise larger amounts only for separate accounts to pay for their conventions; for buildings and facilities, and for election recounts and other legal matters.

But the broad wording of the campaign finance changes, and the backdoor way in which Senate leaders slipped them into budget legislation, leave plenty of room for interpretation. In the 1990s, a single Federal Election Commission regulation that approved soft money for “party building” ultimately led the parties to round up unlimited corporate checks to pay for campaign ads cast as “issue ads.”

This time, look for the parties to use funds set aside for building, legal and convention costs in equally creative ways. Of particular interest will be funds ostensibly raised for “the construction, purchase, renovation, operation and furnishings of one or more headquarters buildings of the party,” as the statute describes it. The term “party operations,” for one, could be interpreted to include “activities such as data mining and modeling projects or opposition research centers,” noted election lawyers at Covington & Burling in a recent client memo.

The new party convention accounts could also become “a route to tickets and passes to the national conventions,” the memo adds. The reference to “headquarters buildings of the party” is also open to interpretation. It could mean one national party headquarters building in Washington, D.C., for example, or buildings in states all over the country, noted Robert Lenhard, a Covington & Burling partner who coauthored the memo with four colleagues.

Having been approved with no public notice or comment, the new rules raise some tough questions said Lenhard, a former chairman of the FEC: “This is a statute that was passed without any committee hearings, without any statutory definitions, without any legislative history whatsoever.”

Legal funds, for example, could potentially be spent in any number of ways — and as yet, campaign finance lawyers don’t have ready answers. The new rules specify that parties may raise additional funds in accounts “to defray expenses incurred with respect to the preparation for and the conduct of election recounts and contests and other legal proceedings.”

But what is meant by legal proceedings? Could it, for example, be interpreted to include the Republican Party’s legal challenge to the Obama administration’s alleged abuses of executive power? Or to help pay for additional legal challenges to the Affordable Care Act?

“I don’t know,” said Trevor Potter, another former chairman of the FEC and president of the Campaign Legal Center. “None of us know.” He added: “I haven’t seen any legislative history. I’ve just seen these provisions. They’re pretty broadly drafted.”

It falls naturally to the FEC to step in and help answer the many regulatory questions raised by the new party fundraising rules. But the commission, divided evenly between Republicans and Democrats, has stalemated repeatedly on key policy matters in recent years. And few expect the FEC, which helped usher in the first round of soft money, to offer party officials much guidance.

In the meantime, even experts who applaud the infusion of fresh funds into the political parties have little doubt that the parties will leverage them to the fullest. Noted Lenhard: “I think politics is very entrepreneurial. And history has shown us that people are very creative and thoughtful in looking for ways they can succeed in a competitive environment.”

AFP Photo/Paul J. Richards

Veterans Advocacy Groups Pump Millions Into Midterm Election Campaigns

By Eliza Newlin Carney, CQ Roll Call

WASHINGTON — Veterans organizations with overtly partisan messages and agendas have spent millions of dollars promoting candidates in tight Senate races this year, prompting criticism from veterans and established vet groups on both sides of the political divide.

Concerned Veterans for America, a conservative advocacy group with ties to the billionaire industrialists Charles and David Koch, has spent more than $2 million blasting Democratic Senate candidates, Center for Responsive Politics data show, largely for failing to fix problems at the Department of Veterans Affairs. The veterans group has both stoked and capitalized on outrage over the VA scandal involving long waiting times for medical care and the agency’s cover-up of those delays.

On the liberal side, VoteVets.org has set out to spend about $7 million to help Democrats in the midterm elections, according to its organizers. The VoteVets political action committee has delivered more than $1 million to candidates both in direct donations and in bundled contributions since its founding in 2006.

The explosion in veteran-focused campaign spending alarms some veterans and longtime veterans organizations. Membership-focused veterans associations, such as the American Legion, have long had special tax protections coupled with strict limits on their political activities. Some vets associated with the “old guard” worry that politics will swallow the best interests of veterans.

“Most mainstream veterans groups are required to be nonpartisan, and it concerns me that we do have groups on both extremes that are very partisan in their approach and very calculating in what they want to accomplish,” said Joe Violante, national legislative director of Disabled American Veterans, established in 1920 and congressionally chartered in 1932.

Violante voiced particular concern over attacks by Concerned Veterans for America against the VA. The conservative group has challenged VA funding increases and supports partially privatizing health care for veterans. Such steps could make fewer veterans eligible for more limited services, Violante said.

Concerned Veterans of America is run by and champions veterans, said Dan Caldwell, the group’s issues and campaign manager, a veteran himself. The group fills a void in the veterans’ community, he said, by advocating VA changes, deficit reduction and national security.

Caldwell acknowledged that the VA scandal “changed the whole dynamic of our organization,” but denied that the group’s big-money dollar attacks on such Democrats as North Carolina incumbent Sen. Kay Hagan and Rep. Bruce Braley of Iowa are political.

“These ads we consider issue advocacy,” Caldwell said. “They are based out of our VA reform efforts. We are not just a fly-by-night 501(c)(4) trying to use the VA scandal as an election-year issue. We have a long history on these issues. We have a real agenda on VA reform.”

But Concerned Veterans for America’s frequent attacks on the Affordable Care Act align it squarely with other Koch-affiliated groups. Freedom Partners Chamber of Commerce, a trade association at the heart of the Koch donor network, gave $5.2 million to Concerned Veterans for America, 2012 tax records show.

Freedom Partners also purchased extensive airtime in Iowa and North Carolina earlier this summer, according to the Sunlight Foundation — valuable spots that were eventually used by Concerned Veterans for America. Caldwell said his group paid for the spots, and Freedom Partners had canceled its reservations, which freed up ad time.

VoteVets Chairman Jon Soltz rejected any comparison between Concerned Veterans for America and his organization, which claims 450,000 members and was founded in 2006.

“I’m hesitant to say they’re anywhere equivalent to what we’ve built over eight years,” Soltz said. But VoteVets.org has also taken heat for its campaign advertising, recently drawing public criticism from a prominent Kentucky veteran over an ad assailing Senate Minority Leader Mitch McConnell (R-KY) for not supporting a bill that would have boosted VA funding by $21 billion. The ad was part of a $600,000 ad campaign against McConnell by VoteVets, which operates both a PAC and a social welfare arm known as VoteVets Action Fund.

McConnell “has been a vocal advocate about the urgent need for reform at the VA and was instrumental in helping ensure Senate passage of the important bipartisan veterans bill that was signed into law last month,” Karl Kaelin, vice chairman of a Kentucky committee of the Veterans of Foreign Wars, said in a statement released by the McConnell campaign.

McConnell’s camp also dismissed VoteVets as a front “funded by environmental activists.” The VoteVets Action Fund has received more than $6 million in grants from a long list of environmental, labor and other progressive groups since 2010, according to the CRP. The group has also made grants to such Democrat-friendly allies as the American Bridge 21st Century Foundation and America Votes, an umbrella group for progressive activists, according to IRS records.

“We’re progressive, period,” Soltz said. “There are a lot of veterans out there who don’t feel veterans organizations represent them.”

Veterans’ issues have always resonated powerfully with voters, and that is particularly true in this election. The number of veteran-themed ads, by both outside organizations and candidates themselves, hit 34,000 nationwide as of the end of August, according to Kantar Media Ad Intelligence.

“Veterans are great messengers, because they don’t look political,” Soltz said. “And these are mom-and-apple pie issues: taking care of our veterans.”

 

Screenshot: votevets/YouTube