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A Banner Year for 'Dark Money' in Politics

Albert R. Hunt is a Bloomberg View columnist. He was the executive editor of Bloomberg News, before which he was a reporter, bureau chief and executive Washington editor at the Wall Street Journal.
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The 2016 presidential campaign not only will feature more money than any since Watergate, but also more secret money than the days when black satchels of illicit cash were passed around.

QuickTake U.S. Campaign Finance

The so-called dark money, or contributions that don't have to be disclosed, topped more than $300 million in the 2012 presidential race, and some experts believe that the levels may be far higher this time. There also is a risk that foreign money could be surreptitiously funneled into the presidential campaign because it wouldn't have to be publicly disclosed.

This flood of cash is occurring thanks to a ruse that permits political advocacy groups to claim that they are principally social welfare agencies and thus tax exempt and not subject to disclosure. These organizations court interest groups and rich donors, some of whom want the influence that political money brings but not the public association. It's a win for the interest groups and the candidates; the public is kept in the dark.

This time, presidential candidates, especially Senator Marco Rubio, are getting into the act. Almost one in five television ads has been financed by dark money, according to the Center for Responsive Politics -- most of that from the Conservative Solutions Project, a nonprofit that backs Rubio.

"Rubio is breaking new ground," says Viveca Novak, communications director for the center. "Most of the others really aren't following at this point." It's not hard to see that changing.

Potential efforts by regulatory agencies to rein in these secretive activities were thwarted by Congress in the year-end government funding bill. The Senate Republican leader, Mitch McConnell, and a number of party colleagues in the House and Senate, yielded to the Democrats and President Barack Obama on a number of big-ticket spending, tax and regulatory measures. But they were adamant about keeping provisions that protect the status of dark money.

This means that the Internal Revenue Service, which is reviewing and soliciting comments on these tax-exempt political organizations, is barred from drafting and issuing any new rules. And the Securities and Exchange Commission would be barred from requiring public companies to disclose their political campaign activities.

McConnell, once a champion of disclosure to head off campaign-finance restrictions, has pressured fellow Republicans for years to resist any disclosure requirements, arguing that secret money works to the party's advantage. About the only one who that has stood up to his demands is Senator Lisa Murkowski of Alaska. Even the champion of campaign finance reform, Senator John McCain, has been rather quiet lately.

There are also a number of pro-Democratic nonprofits associated with party leaders and leadership-directed committees that make extensive use of dark money. David Brock, a one-time prominent critic of Hillary Clinton who now is a prominent supporter, is involved with several political organizations including nonprofits that don't have to disclose donors, and political action committees that do. They all seem to comingle legally.

The biggest dark money practitioners, however, have been the Chamber of Commerce and one of Republican strategist Karl Rove's political arms.

The Federal Election Commission could force these organizations, with their heavy campaign involvement, to register as political committees, requiring them to name their donors. But the FEC, almost from its inception 40 years ago, has been toothless.

And with congressionally enacted prohibitions, there is almost no way to bring these activities into the sunlight, Novak says, "unless the Justice Department gets into the act."

Fred Wertheimer, the president of Democracy 21 and a veteran leader on campaign finance reform has asked Justice to do just that, with an emphasis on Rubio's practices.

"Secret money is the formula for corruption," he says. "It's the influence buyer's dream."

The catchphrase of the Watergate scandal was "follow the money." Bob Woodward actually put it more directly: "The key," he said a half-century ago, "was the secret campaign cash."

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Albert R. Hunt at ahunt1@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net