In 2010, two landmark Supreme Court rulings turned election law on its head by allowing corporations, business leaders and labor unions to make unlimited contributions to political action committees that are legally separate from the candidates they support. Practically overnight, the courts helped to spawn a new generation of political “Daddy Warbucks,” who now are able to influence the course of an election by writing a personal check to the new Super PACs that legally must operate independently of the candidate.
History is littered with examples of powerful capitalists and titans of industry with deep pockets who bankrolled the ambitions and campaigns of presidential aspirants. Some of the country’s richest men, including J.P. Morgan and Andrew Carnegie, opened their wallets to help elect Theodore Roosevelt president in 1904. Wealthy industrialist Joseph P. Kennedy underwrote the cost of the presidential campaign of his son, John F. Kennedy, in 1960 and famously said that there was no way he was paying “for a landslide.”
Since the turn of the century, corporations and wealthy businessmen technically have been barred by law from using their own money to influence the outcome of elections, although some, including liberal billionaire George Soros, used tax-exempt “527” organizations to skirt those restrictions in the 2004 and 2008 presidential campaigns.
The Super PAC Phenom
Among the big political news this week is that these new “Super PACs” raised more than $42 million last year to back GOP candidates, according to documents released Tuesday by the Federal Election Commission.
Former Massachusetts governor Mitt Romney, who rolled over Newt Gingrich to claim victory in Tuesday’s Florida primary, was the greatest beneficiary of this free flowing campaign funding. His Super PAC, Restore our Future, reported raising $30 million in 2011, with nearly $24 million in the bank at the end of the year.
Romney won the primary with nearly 50 percent of the vote thanks largely to carpet-bombing Newt Gingrich with nearly 10 days of negative advertising, funded by the Super PAC. While nearly 60 corporations and wealthy individuals gave checks of $100,000 or more to Romney’s Super PAC, six individuals – hedge fund executives Robert Mercer, Paul Singer, Julian Robertson and John Paulson, investor Edward Conard and Houston homebuilder Bob Perry – each gave checks for $1 million, according to an analysis by the New York Times.
None of these men is a household name, but they are engaging in a plutocracy of sorts by making oversized contributions that far eclipse the $2,500 limit that federal campaign law currently imposes on most people.
Mercer is the Co-Chief Executive Officer of Renaissance Technologies Corp., a hedge fund management company based in East Setauket, New York. The assets the company manages were valued at $23.5 billion in Sept. 2011. Singer is the founder and chief executive of Elliott Management Corp., a New York-based hedge fund, which as of Sept. 2011 was managing $17.6 billion in assets. In the past, Singer has led fundraising efforts for President George W. Bush and former New York Mayor Rudolph Giuliani.
Robertson is a retired hedge fund manager, who was the CEO of Tiger Management LLC until 2000. During the 1980s and 1990s, he delivered such heavy returns to investors that he was called the “Wizard of Wall Street.” At one time, Tiger was the world’s largest hedge funds.
A Casino Mogul Bets on Gingrich
Gingrich fumed over the Romney Super PAC ads that portrayed him as a disgraced former House leader and shameless influence peddler on K Street, and has vowed to stay in the race through the national convention this summer. “We are going to have people power defeat money power in the next six months,” he told his supporters in Orlando. While Romney outgunned Gingrich in media spending by nearly five to one, the Georgian is still in the race, thanks to the largesse of another Daddy Warbucks, Las Vegas casino mogul Sheldon Adelson.
The decision by Adelson and his wife, Miriam, to pump $10 million into Gingrich’s sagging Super PAC in early January gave the former speaker the wherewithal to purchase TV advertising that proved critical to Gingrich’s victory over Romney in South Carolina on January 21. That victory, after losses in Iowa and New Hampshire, momentarily thrust Gingrich back to the top of the Republican heap and gave him a chance to topple the former governor in the crucial Florida contest.
Now, in the wake of Gingrich’s poor second place showing in Florida, Adelson’s money will help to keep the former speaker’s badly wounded campaign afloat throughout February, when the only nationally televised debate in Arizona will provide the Georgian with much needed free airtime.
Forbes lists Adelson, a 78-year-old billionaire, as the eighth-wealthiest American. He is an ardent supporter of Israel who has pushed for a bill to move the U.S. Embassy in Israel from Tel Aviv to Jerusalem. It is far from clear how many more millions he and his family will be willing to sink into Gingrich’s increasingly long-shot campaign. Moreover, Gingrich may have to explain to voters and the media why his campaign – which boasts of widespread conservative grass-roots support – is so dependent on one powerful business tycoon for its survival.
“My motivation for helping Newt is simple and should not be mistaken for anything other than the fact that my wife Miriam and I hold our friendship with him very dear and are doing what we can as private citizens to support his candidacy,” Adelson told the Washington Post in an emailed statement last month.
Senate Democrats on Wednesday voiced outrage over the Federal Election Commission disclosures of the massive fundraising and spending by the Republican Super PACs and announced plans for a task force, public hearings and legislation to rein in unrestricted campaign money. Sen. Charles Schumer, D., NY, and other senators said they would push again for legislation to ensure the public will have a better idea of where the money is coming from and how it is being spent.
The “silver lining” to the big spending by super PACs, Schumer said, is that “it offers us a fresh opportunity for reform, and we are going to seize it.”
The Super Pac Game Changer
The rapid emergence of Republican Super PACS over the past year marks a significant change in how presidential campaigns work. In January 2010, the Supreme Court, citing the first amendment of free speech, ruled in the Citizens United case that the federal government may not prevent corporations or unions from spending money to support or denounce individual candidates in elections. While corporations or unions may not give money directly to campaigns, they may seek to persuade the voting public through other independent expenditure.
Then in July of that year, another High Court ruling in Speechnow.org v. Federal Election Commission created independent expenditure-only committees, which, like tax-exempt 527 organizations, can raise unlimited amounts of money from individuals, unions, associations and corporations to influence elections. These new Super PACs must also disclose their finances to the FEC and cannot coordinate with candidates or political parties.
Those court rulings “made it much more straightforward for all kinds of individual people, organizations, companies, and unions to participate in the very aggressive, very assertive kinds of electoral campaigns,” said Robert Biersack, a senior fellow at the Center for Responsive Politics. “Now it’s just much more straight forward and much quicker and easier for them to do it.”
As a result, candidates like Gingrich and former Pennsylvania senator Rick Santorum, who likely would have folded their tents because of a paucity of campaign contributions, may be able to hang on for months.
“Somebody who really supports you for any number of different reasons and has lots of resources can keep you in the race,” said Biersack, an expert on federal campaign law. “I think we’ve seen that. But the flip side is you’re also losing a little bit of control over what message is going out, how it is conveyed and how people will react to it. And that can be tricky.”
Super PACs serve another important purpose for GOP candidates and party leaders: They are helping them to close the huge fundraising gap with President Obama and the Democrats. Overall, Obama raised $224.6 million in 2011 for his campaign and the Democratic Party, which easily overshadowed the combined fundraising of all the GOP presidential candidates, according to a Washington Post analysis.
As the GOP presidential field has shrunk from nine or ten candidates to only four, some of the Super PACs have gone by the boards. Here is a summary the four Super PACs that are backing the remaining GOP candidates:
Follow the Money
Mitt Romney: "Restore Our Future" raised about $30 million from just 200 donors in the second half of 2011, with millions coming from executives of Bain Capital, Romney's former firm, Goldman Sachs and a handful of hedge funds. The Super PAC reported spending $17.5 million in ads for Romney, including $10.7 million in Florida.
Six biggest donors, giving $1 million apiece:
• Robert Mercer of Renaissance Technologies, a hedge fund.
• Paul Singer of Elliott Management Corp., a hedge fund
• Julian Robertson, retired CEO of Tiger Management LLC, a hedge fund
• Edward Conard, a former executive at Bain Capital
• John Paulson, hedge fund founder
• Bob Perry, Houston homebuilder
Newt Gingrich: “Winning Our Future” raised about $12 million last year this January and helped to fund $3.7 million of pro-Gingrich /Anti Romney TV and radio ads in Florida.
• Las Vegas casino owner Sheldon Adelson and his wife Miriam, who each gave $5 million in January.
• Sivan Ochshorn, Mrs. Adelson’s youngest daughter, who gave $500,000.
Rick Santorum: “The Red White and Blue Fund.” While Santorum’s poorly funded campaign boasted of raising $4.2 million more this month, it has been heavily reliant on the Super PAC, which has spent $2 million to date.
• Foster Friess, a wealthy mutual fund executive and Republican donor, Foster is an active patron of many religious and conservative causes.
Ron Paul: “Endorse Liberty” is a libertarian group that spent $3.3 million to promote the veteran Texas House member’s campaign.
• Peter Thiel and Luke Nosek, cofounders of online payment service PayPal, now owned by eBay Inc. Thiel, a libertarian activist whose $1.5 billion in wealth ranked him 833rd on the Forbes top billionaires list last year, became the first outside investor in social networking service Facebook in 2004.
Michelle Hirsch contributed to this report