How Bobby Jindal’s Con-Profit and David Vitter’s Super PAC Undermine Democracy

Four years ago, an otherwise dull case concerning a pay-per-view documentary about the former and future Presidential candidate Hillary Clinton provided a divided United States Supreme Court with the opportunity to issue its most consequential and most controversial ruling since it halted a ballot recount in Florida ten years prior. Citizens United v. Federal Election Commission, in simple terms, allows corporations to spend unlimited money in order to influence elections. To Chief Justice Roberts and the court’s other reliably conservative members, the previous limitations on corporate spending represented an improper restraint on speech and, therefore, a violation of the First Amendment. But for the Court’s more liberal members, limitations on corporate spending were critical in ensuring a fair, effective, accountable, and- most importantly- participatory system of democracy.

In my opinion, the free speech rights of corporations should not be entitled to the same protections as the free speech rights of citizens. Despite what the Court had held in dicta more than a century ago and despite what Mitt Romney may believe, corporations aren’t people; corporations are legal constructions that exist only on paper. Corporations don’t vote in elections; people vote. And as such, it’s completely reasonable to limit the influence that corporations may exert in political campaigns.

Although Citizens United seems fundamentally misguided to those who fear the outsized influence of corporate spending (and the ways in which that spending can effectively drown out the voices of ordinary citizens), money doesn’t always win elections. Last night, stunningly, House Majority Leader Eric Cantor lost by twelve points to a political unknown; Cantor spent more campaign money in steakhouses than his opponent spent in the entire election. But Cantor’s collapse is obviously an exception to an otherwise ironclad rule in politics: The more money you raise, the better your chances are.

Even if you agree with the Court’s logic in Citizens United, you must acknowledge the ruling has created more confusion than clarity, largely because of the subsequent creation of Super PACs. Elected officials have sometimes exploited that confusion, engaging in legally and ethically questionable accounting tricks that, only a few years ago, would have never been attempted.

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Louisiana Senator David Vitter, for example, recently donated $1 million of his federal campaign cash to a Super PAC supporting his state campaign for Governor. The National Journal reported the story under the headline, “How David Vitter Shattered Another Campaign Finance Rule.” Quoting (bold mine):

David Vitter had a $1 million problem. Back in January, by the time the Louisiana senator announced his long-rumored run for governor, Vitter had already lined up supporters and developed a campaign battle plan. Still, one major hurdle remained: State law barred him from using the seven-figure sum he had amassed in Senate campaign funds.

But through a super PAC and some creative lawyering, Vitter and his allies appear to have found a way to redirect all of that money to support his gubernatorial campaign. And in doing so, they’ve pioneered a new method for politicians nationwide to get around old prohibitions on spending federal money on state races, and vice versa.

Along the way, Vitter has become perhaps the first politician in the country to be the largest funder of his own super PAC.

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Indeed, his donation to the super PAC only makes sense when seen as a means to skirt the Louisiana law forbidding Vitter from transferring his federal campaign cash to his gubernatorial campaign.

“Absent that law, there’s zero reason that a candidate would do it,” said Paul S. Ryan, senior counsel to the Campaign Legal Center, a nonpartisan watchdog group that advocates for campaign finance reform.

Larry Norton, a former general counsel for the Federal Election Commission, said Vitter funding his own super PAC “strikes me as raising the questionableness of the separation of the super PACs and the campaign to a new level.

The whole notion of a super PAC’s independence from the campaign “rests on the idea that they’re not communicating about strategy or plans, or projects,” Norton said, noting that he’d never heard of a candidate doing this before. “But guess what—the candidate is going to fund the super PAC? You sort of wonder at what point the argument collapses under its own weight.

I’m not sure Senator Vitter “shattered” a federal campaign finance rule as much as he openly mocked a Louisiana campaign finance law.

Regardless, though, Senator Vitter’s $1 million wire transfer pales in comparison to the trick Governor Bobby Jindal is attempting to pull off.

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Citizens United may have lifted the restrictions on corporate donations with certain non-profit organizations and political action committees attempting to influence elections, but it did not change the restrictions and caps imposed on individual and corporate donations provided directly to a candidate’s campaign. As long as political action committees disclosed their donors and did not coordinate with the campaigns they were supporting, the conservatives on the Supreme Court argued, everything would still be transparent; citizens would still know who was attempting to exert influence, and campaigns would continue to function independently, the same way they always had.

But as David Vitter’s $1 million donation to a Super PAC established on his own behalf should clearly prove, the Supreme Court had been extraordinarily naive. Super PACs aren’t really “separate” from campaigns. In many cases, the only difference between a candidate’s official campaign organization and its supportive Super PAC is the number at the bottom of their checkbooks.

Individuals and businesses are still subject to caps on donations directly to political campaigns, because, despite the Court’s bloviating about “money as speech,” it still recognizes that if all a candidate needs to become competitive is the support of one or two wealthy donors, then the credibility of our process, the integrity of our candidates, and the promise of representative democracy are all severely imperiled.

Unfortunately, however, thus far, the Supreme Court’s five conservative justices have refused to realize that the creation of Super PACs allows candidates to completely and openly circumvent laws with which they would otherwise be required to comply.

Stories about the tax code and campaign finance laws don’t make for the most compelling reading. For one, it’s very easy to get bogged down by the details, and also, it’s usually pretty boring stuff. But sometimes, it’s about the front lines of American democracy; sometimes, it’s hugely important.

Knowing who donates to a candidate or an elected official can often be more informative than any campaign speech or press release could ever be. Our laws recognize that an open, transparent, and ethical government demands disclosure. Even Super PACs are required to disclose their donors, which is the only reason we now know about Senator Vitter’s controversial $1 million donation.

In my opinion, elected officials who refuse to disclose donations provided to campaign-related organizations should be presumed to be engaging in criminal activity, regardless of how these organizations are incorporated under the tax code. And that brings me to the subject of Governor Bobby Jindal and his new “charity,” America Next.

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On Monday, I wrote about how the Supriya Jindal Foundation received millions of dollars in donations from businesses seeking contracts, special deals, and incentives from the State of Louisiana. We know this because the foundation openly disclosed these donations.

To be sure, the Supriya Jindal Foundation may have provided the First Lady of Louisiana with the resources to embark on a statewide goodwill tour, furnishing hundreds of thousands of dollars worth of technology to teachers and schools, but Mrs. Jindal is not and has never been an elected official or a candidate for public office. Although donations to her charitable organization may have been made by companies seeking to ingratiate themselves with the Governor and his wife, the organization’s stated purpose was nonetheless noble.

Last October, Governor Jindal launched his own tax-exempt charitable organization, America Next, but unlike his wife’s charity, America Next is not providing impoverished schools with much-needed technology. Instead, as its name clearly implies, America Next appears to be nothing more than a thinly-veiled attempt to promote his own nascent campaign for President, something that was not lost on the national media when Jindal announced the organization’s formation. Quoting from The Weekly Standard (bold mine):

Louisana (sic) governor Bobby Jindal, the two-term Republican and potential presidential candidate, has announced the formation of a new group called America Next. The organization bills itself as a “conservative policy group” that aims to “focus on winning a war of ideas.”

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Jindal’s initial statement doesn’t list any specific policy ideas or proposals, though he has made education reform a priority during his governorship. But in places, the America Next mission statements sounds a bit like the first draft of a presidential announcement.

And then there’s this crucial detail from an otherwise fawning piece on Politico (bold mine):

His (Jindal’s) first hire, executive director Jill Neunaber, has experience in the early states. She managed Romney’s Iowa campaign last fall and was deputy manager of his New Hampshire operation during the primary season. She managed Gabriel Gomez’s unsuccessful Senate campaign in Massachusetts this spring.

Jindal confidant Curt Anderson, the veteran GOP strategist who runs On Message Inc., will serve as an adviser for the group.

Those involved stressed that this is not a campaign-in-waiting.

I’m not sure who, exactly, Jindal and his newly-hired employees think they’re fooling. They are manifestly-clearly, obviously, undoubtedly– a group of campaign consultants lamely masquerading as some sort of think tank promoting Jindal’s own ideas. Currently, America Next’s website features only one white paper on policy- Jindal’s health care policy. Quoting from The Daily Reveille (bold mine):

Gov. Bobby Jindal signed into law Senate Bill 682, implementing his health care plan “Louisiana First America Next Freedom and Empowerment Plan” May 30.

The “America Next” plan, which was unveiled by Jindal in April, was created to replace the Affordable Care Act in Louisiana to offer a conservative, consumer- focused alternative. The House voted 96-3 in favor of the bill.

Put another way, the only policy being promoted by Jindal’s new non-profit organization is a variation of a law he just enacted. When the Governor creates a charitable organization to promote a policy that he then signs into law, that charity isn’t just a “campaign-in-waiting;” it is a campaign in action. That may not seem like a big deal, but it is. An organization led by an elected official and created in order to promote his policies isn’t a social welfare charity; it’s a campaign. And this is why it matters. Quoting from The Times-Picayune (bold mine):

“America Next is a 501(c)(4) that will make all disclosures as required by law,” she said in an email. “Beyond that we do not see any reason to give the Obama Administration opportunity to unjustly target conservative donors.”

According to the Center for Responsive Politics, the Supreme Court’s Citizens Union ruling allowed 501(c)(4) groups to participate in political activities just like other groups already had been doing.

But, unlike most of the other groups, which are under the oversight of the Federal Election Commission and must disclose their contributors, disclosure requirements are limited for groups that register as a 501 (c) (4).

“They must make filings with the FEC when they spend money explicitly advocating for or against a candidate, as well as when they buy issue ads that run in the weeks close to an election, but they aren’t required to provide detail about where they’re getting their money or how they’re spending much of it,” the center said in its report on campaign finance law.

Groups that favor strong campaign disclosure laws says without disclosure it’s impossible to determine what interest groups are attempting to assert influence.

For Jindal’s American (sic) Next group, for example, without donor disclosure, there’s no way to determine whether the salaries for staffers who helped put together his health care proposal came from insurance companies, hospitals, or some benevolent group only interested in providing affordable health care. 

It’s worth emphasizing: Bobby Jindal refuses to disclose donations to an organization he created to promote and formulate public policies that he later signed into law. 

America Next isn’t just exempt from financial disclosure laws; because it’s a private organization, it’s also exempt from state public records laws.

Again, I believe elected officials who refuse to disclose donations and documentation related to the promotion, creation, and enactment of laws and public policies should be presumed to be engaging in criminal activity, and I do not think this is an unreasonable or overly burdensome presumption. The public has a fundamental right to know who is spending money to influence their elected officials, how much they’re donating, and when those donations were made.

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Only a few weeks after Jindal launched America Next, the IRS issued a notice for a rule change, a change that would likely result in Jindal’s organization losing its tax exempt status. Quoting from Independent Sector (bold mine):

In November 2013, the Treasury Department issued proposed regulations to provide guidance and more definitive rules on political activity for 501(c)(4) organizations. The proposal changes the definition of social welfare to exclude “candidate-related political activity,” which would encompass any communications expressly advocating for a political candidate, as well as any communications made within 60 days of a general election (or 30 days of a primary election) that identify a candidate or political party, among other stipulations. Also included in the new definition are voter registration drives and many civic engagement events. The IRS requested public comments on several elements of the proposed regulations, including on the meaning of “primarily” engaging in social welfare activities, how the standard should be measured, and whether these rules should also apply to 501(c)(5) and (c)(6) organizations.

The change is long overdue, and it should be accompanied by a full-scale investigation into the finances and activities of each and every elected official in America who has cynically attempted to exploit laws protecting charities in order to avoid accountability from the public.