May 19, 2014 2:25 pm

‘Dark money’ floods in to US election

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Charles Koch (left), CEO of Koch Industries and David Koch (right), Executive Vice-President of Koch Industries.©Bloomberg

Charles Koch, left, Koch Industries chief, and David Koch, executive vice-president

Long used to opposing candidates bitterly facing off in elections, US voters are being offered a different choice for this year’s congressional polls – the spectacle of billionaires battling each other head on.

Tom Steyer, a billionaire Democrat-aligned investor who is deploying his fortune to highlight the threat of climate change, is airing TV advertisements attacking not the Republicans but fellow billionaires Charles and David Koch.

Mr Steyer’s advertisements targeting the two industrialists are largely a stunt aimed at lifting the brothers’ public profile and demonising their role in backing conservative causes. But underlying the Democrats’ anti-Koch campaign is a genuine trend – of a huge growth in spending on politics by wealthy Americans outside of the once standard campaign channels.

On top of the formal campaigns, spending by so-called super political action committees – bodies that face no restrictions on donations but cannot co-ordinate with candidates – has exploded in recent years.

But the greatest spurt of growth in the run-up to the 2014 congressional elections is through “dark money” channels, funds that are donated to non-profit advocacy groups and trade and business associations.

Unlike campaigns and super PACs, donations to non-profits and trade associations do not have to be declared and their spending can only be tracked by examining their purchases of advertising and tax returns.

Ahead of the November polls, the outlays of such bodies is running at three times the rate of the 2012 presidential campaign, and at 17 times that of the 2010 midterms elections for the House and the Senate.

“This is really a perfect storm of political spending,” said Michael Toner, a former Republican-aligned head of the Federal Electoral Commission, which oversees electoral funding rules.

At the current rate, these groups might spend upwards of $1bn on the 2014 elections, according to a report by Robert Maguire, of the Centre for Responsive Politics, in Washington.

However, Mr Maguire says this captures only part of the “dark money” spending, because large amounts do not have to be declared until the period just before elections.

“There is a whole other world of money on top of this which is never reported,” he said.

Among the most prominent spenders so far in the lead-up to the 2014 polls have been two conservative groups, Americans for Prosperity and Freedom Partners, which are registered as social welfare and trade associations respectively.

There is a whole other world of money on top of this which is never reported

- Robert Maguire, Centre for Responsive Politics

Both receive funds from the Kochs and the network of conservative supporters they have attracted to their cause, although the precise amounts are undeclared and thus unknown.

Harry Reid, whose grip on the Senate as the chamber’s majority leader is threatened by the Koch-backed outside groups, has raged against the brothers in a concerted campaign in the past month.

“The Kochs’ bid for a hostile takeover of the American democracy is calculated to make themselves even richer,” he said, adding last week he supported amending the constitution to restrict “unlimited campaign spending”.

Mitch McConnell, the Republican minority leader, a strong opponent of restrictions of any kind on political donations, called Mr Reid’s plan “an all-out assault on the right to free speech”.

In Mr Steyer, the Democrats have their very own billionaire, but the $100m he has pledged to spend ahead of November is far less than that of the Kochs, and is aimed at a single issue – climate change.

Like Mr Reid, he wants to bring the Kochs directly into the political spotlight at a time when the Republicans are poised to win both houses of Congress and the Democrats are searching for an issue to use to stop them.

The website of Mr Steyer’s group, NextGen Climate Action, features him facing off against Kansas-based David Koch, as if they are opposing candidates. He also challenged the Koch brothers to a debate on climate change, which they rejected.

Charles Koch, in a recent article, said he was only motivated by the need to defend the federal government’s attacks on the “fundamental concepts of dignity, respect, equality before the law and personal freedom”.

Congress passed legislation in 2002 limiting campaign donations but the restrictions have slowly been undermined by a string of court decisions and a sharpening of the partisan divide in US politics.

“Efforts to reduce spending and level the playing field have not been very effective,” said Mr Toner. “Money will always find a way into the electoral process.”

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