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Wednesday, Sept. 15, 2010

Out-of-State Corporations Can Pour Unlimited Amounts of Money into Wisconsin Elections

And voters won’t know where the money is coming from

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Sick of campaign ads yet?

Well, watch out—it’s going to get worse in the seven weeks leading up to the Nov. 2 general election.

And the worst part is that Wisconsin voters won’t know precisely who is paying for ads promoting or slamming various candidates, thanks to the U.S. Supreme Court’s Citizens United decision. Now, corporations can contribute unlimited and largely untraceable amounts of cash to political organizations.

Prior to the Supreme Court’s ruling in January, corporations and labor unions could set up political action committees (PACs) to advance their political interests. But there was a hitch: Only individuals (typically executives, employees or members) could contribute, and they could donate a limited amount of money. In return, all contributions would be made public so voters would know the source of the PAC’s funds.

But the Citizens United decision changed all that.

Instead of relying on contributions from individuals, corporations can use their own general treasury funds to contribute unlimited amounts to political groups. PACs still play by the old rules, though.

Unfortunately, at the same time Wisconsin voters will be bombarded with corporate-sponsored campaign ads, robocalls and fliers, we won’t know which corporations are making donations, the amount of those donations, and which groups are receiving those donations.

Corporate Donations Are Easy to Hide

Traditionally, Wisconsin has had strong campaign finance disclosure laws and clean, transparent government. Corporate spending on campaigns has been banned since 1905, thanks to reforms pushed by Wisconsin Gov. Robert (Fighting Bob) La Follette.

A corporation still can’t directly contribute to a candidate’s campaign or a PAC. But the Citizens United decision invalidated bans—at the federal level and in various states, including Wisconsin—on corporate contributions to other political entities, such as advocacy groups.

And what about the disclosure of these funds?

According to Wisconsin statutes, a campaign contribution is defined as money given for political purposes, not as money spent for political purposes.

Therefore, a for-profit corporation can contribute to a political corporation or an advocacy group and claim that it’s not for election-related activities. But that contributed money can then be transferred from their general fund to a political account, which can be used for campaigning.

So new political shell corporations with bland, inoffensive names are springing up. Their advantage over PACs is that they can receive corporate treasury funds, in unlimited amounts, without disclosing the true source of their income.

“All that Wisconsin law requires them to do is to say that they’ve transferred money from their general fund to their political arm,” said Mike McCabe, executive director of the Wisconsin Democracy Campaign. “But you can’t see that the money came from Wal-Mart or Harley-Davidson or some big paper company or utility.”

Corporations Already Funding Preferred Candidates

While it’s impossible to tell which business corporations are actively funding Wisconsin campaigns, a handful of political corporations spanning the political spectrum have registered with the state Government Accountability Board.

On the left, there are groups such as Advancing Wisconsin, Citizens for a Progressive Wisconsin and Voces de la Frontera. All are based in Wisconsin.

On the right, there are innocuously named groups such as the Washington, D.C.-based pro-school voucher corporation American Federation for Children (AFC) Action Fund, which has been promoting three Milwaukee Democrats in their primaries—state Sen. Jeff Plale, Stephanie Findley and Angel Sanchez—with fliers, robocalls and radio and TV ads.

It’s difficult to figure out who, exactly, is funding these entities.

For example, AFC Action Fund’s latest campaign finance report merely shows $50,000 in “other income and commercial loans” from—you guessed it—AFC. As of this writing, AFC has spent more than $70,000 on the three races. The AFC board of directors has links to right-wing corporations like Amway, Wal-Mart and hedge funds, but you can’t see any direct contributions.

“A big corporation like Amway or Wal-Mart could funnel millions into elections in Wisconsin, but they won’t show up as the corporate spender,” McCabe said. “The corporate spender will be American Federation for Children.”

Citizens for a Progressive Wisconsin is a bit more transparent, though it shows the receipt of $10,000 from itself, with no other details offered. The group is backing Milwaukee County Supervisor Chris Larson in his primary challenge to Plale. Its corporate entity has spent about $9,000 thus far with no disclosure of donors required, but its PAC—which can only receive money from individuals and must disclose its donors—has spent roughly $56,000 on the Larson-Plale race, handily dwarfing its corporate activity.

Opting for the ‘Cover of Darkness’

Of course, a corporation is free to make political contributions out in the open, without donating to a benign-sounding advocacy group. But a controversial donation could create a backlash or boycott, and that would hurt the corporation’s bottom line.

Robert Kraig, executive director of Citizen Action of Wisconsin, said the “cover of darkness” serves a corporation’s political purposes.

“Corporations are very conflict-averse,” Kraig said. “They are large bureaucracies. They are much less likely to do these things if they think they are going to be exposed and become controversial. Shame and notoriety deter this kind of activity.”

Nor do corporations push the issues that are at the heart of their political activity, like lowering corporate taxes or privatizing government services.

For example, AFC solely advocates for school vouchers. Yet its pro-Plale mailings promote his supposed rescuing of jobs at Bucyrus International and support for BadgerCare. Vouchers are never mentioned.

“A lot of these groups know that if they focus on their issues, they may even turn a lot of voters off,” McCabe said. “If they come out and say, ‘This is why we want this senator elected or replaced,’ most voters might not share those views. So they craft messages that they think will appeal to the broadest number of voters possible.”

McCabe is urging lawmakers to strengthen Wisconsin’s campaign disclosure requirements by expanding the definition of campaign contributions to include money given or spent for political purposes.

“That would be a game-changer in terms of disclosure,” McCabe said.

Minnesota, for example, strengthened its disclosure law after the Citizens United ruling. And that’s how voters and shoppers found out that Target and Best Buy had contributed to a fund that supported a conservative, anti-gay candidate for governor. That revelation spurred a backlash and boycott of the firms.

“If Target and Best Buy did the same thing in Wisconsin that they did in Minnesota, they wouldn’t have to reveal their donations,” McCabe said.

Wondering about the sponsorship of a campaign ad or flier? Mail it to the Shepherd, 207 E. Buffalo St., Suite 410, Milwaukee, WI 53202 or e-mail editor@shepex.com with a description of the ad. We’ll try to trace the origins of campaign materials.