Super PACs Multiply as Companies Freed to Give

At least 25 “super PACS,” including one linked to Karl Rove, are fueling a surge in money for this year’s elections following the U.S. Supreme Court ruling that struck down limits on corporate campaign spending.

These political action committees can take unlimited company, union and individual donations and explicitly urge voters to support or oppose candidates, unlike ordinary PACs and nonprofit groups. Like other PACs, they must register with the Federal Election Commission and disclose donors.

“They can say whatever they want politically in the advertising,” said Michael Toner, a former FEC chairman who’s among the lawyers dubbing them super PACs. “It’s very liberating.”

American Crossroads, a group advised by Rove, a top adviser to former President George W. Bush, said it has raised more than $17 million. That includes $1 million from Dixie Rice Agricultural Corp., a company led by Harold Simmons, also the chairman of Dallas-based Titanium Metals Corp. A trust controlled by Jerrold Perenchio, former chairman of New York- based Univision Communications Inc., also gave $1 million.

That may be just the beginning. American Crossroads also has an issue-advocacy group that doesn’t have to disclose donors, and it won’t say how much of the $52 million it plans to raise in this campaign will go toward that effort. Other groups aren’t even registering as PACs and will be able to spend millions on ads without disclosing their contributors as long as they steer clear of expressly advocating for or against a candidate.

‘Flood’ of Ads

Americans are “seeing a flood of attack ads run by shadowy groups with harmless-sounding names,” President Barack Obama, whose Democratic Party is vulnerable to losses in the midterm balloting, said in his Aug. 21 weekly address. “We don’t know who’s behind these ads and we don’t know who’s paying for them.”

The new super PACs emerge as spending is already surpassing past midterm elections. As of late last month, outside groups and the political parties had spent $150 million on ads, up $41 million from the same period in 2006, said Evan Tracey at Kantar Media’s Campaign Media Analysis Group in Arlington, Virginia.

The Supreme Court in January ruled against prohibitions on corporate campaign spending, allowing companies to use their treasuries to support or oppose candidates. The FEC sanctioned the new PACs on July 22, saying that because of the court decision, “there is no basis to impose contribution limits” on committees that spend money independently of candidates. Most won’t have to disclose contributors until mid-October.

‘Major Increase’

Toner, who now heads the election law practice at Bryan Cave LLP in Washington, said he wouldn’t be surprised if the new PACs alone spend $50 million or more during this campaign. “As we get into the primetime season, we’re going to see a major increase in the number of these super PACs,” he said.

Of the 25 super PACS, at least nine lean Republican and 10 Democratic. There may also be dozens more that haven’t formally outlined their plans to the FEC, said Mary Brandenberger, an agency spokeswoman.

The super PACs include new units of established groups such as the Club for Growth, which supports lower taxes and favors Republicans, and the League of Conservation Voters, which primarily backs Democrats.

American Crossroads

American Crossroads may be the biggest. Rove and former Republican National Committee Chairman Ed Gillespie serve as fundraisers and informal advisers for the group, headed by former Republican chairman Mike Duncan.

American Crossroads spent $454,342 last month to support Republican Rob Portman’s Ohio Senate bid. Its nonprofit arm released new ads on Sept. 2 as part of a $3 million buy targeting four Democrats: Senate Majority Leader Harry Reid of Nevada, Senator Michael Bennet of Colorado and Senate nominees Jack Conway in Kentucky and Robin Carnahan in Missouri.

Rove didn’t respond to requests for comment.

“You’ll see more money spent on the Republican side,” said Larry Noble, a former FEC general counsel and a lawyer with Skadden, Arps, Slate, Meagher & Flom LLP in Washington.

Some super PACs are being started by groups that ran 527 organizations, which can take unlimited donations yet can’t explicitly say “vote for” or “vote against” a candidate.

527 Groups

Those 527 groups, named after the section of the tax code that governs them, also included Swift Boat Veterans for Truth, which went after Democratic presidential nominee John Kerry in 2004.

Swift Boat Veterans, League of Conservation Voters, Club for Growth and eight other groups later ran into trouble with the FEC for backing candidates, drawing more than $3 million in fines.

Spending by federal 527s declined to $244 million in 2008 from $439 million in 2004, according to the Washington-based Center for Responsive Politics.

The new PACs allow corporations to participate in a more targeted way with “a truly effective ad,” said Trevor Potter, a former FEC chairman who runs the political activities law practice at Caplin & Drysdale in Washington.

“You don’t have to do those kinds of commercials where it says, ‘Call so-and-so,’” said Tony Massaro, the conservation group’s senior vice president for political affairs. “This allows straightforward communication with voters.”

To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net.

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