Clash over financial disclosure escalates, spilling into presidential race


Republican strategist Karl Rove, left, is driven in a golf cart at a private donors' conference for Republican presidential candidate Mitt Romney at The Chateaux at Silver Lake at Deer Valley Resort in Park City, Utah on Saturday. (Charles Dharapak/AP)
June 23, 2012

Democrats are stepping up the pressure on politically active nonprofit groups to divulge their largest donors, part of a broader partisan debate over disclosure rules that has spilled into the race between President Obama and Mitt Romney.

Last week, the office of Rep. Raul M. Grijalva (D-Ariz.) sent a letter to the Internal Revenue Service questioning the tax-exempt status of the National Federation of Independent Business (NFIB), which has been a sharp critic of Obama administration policies and has received millions of dollars from unidentified donors.

The letter is part of a wide-ranging pro-disclosure campaign by Democrats, who fear that their side will be massively outspent this year by well-funded conservative groups, many of which do not disclose their contributors. Democrats in Congress have introduced legislation aimed at forcing corporations and advocacy groups to reveal donations over $10,000 for campaign-related activities.

Republicans have blocked the legislation and accuse the Obama administration and its allies of attempting to use the power of the government to intimidate anonymous conservative donors. Senate Minority Leader Mitch McConnell (R-Ky.) alleged in a speech this month that Obama was targeting critics with “thuggish tactics” reminiscent of the Nixon administration.

The parties have clashed repeatedly over the disclosure issue since the Supreme Court ruled in 2010 that corporations are akin to people when it comes to political speech and can spend unlimited money on elections. That decision and others have sparked a wave of political spending by independent groups, including many that are considered tax-exempt “social welfare” organizations that do not have to reveal their funding sources.

The Obama campaign argues that voters have a right to know which corporations and individuals are funding groups that run ads or pay for other activities related to elections. Highlighting Romney’s connections to such groups also dovetails with the Obama campaign’s broader critique that the likely Republican nominee and former private-equity manager is out of touch.

Obama and his team have made the issue of wealthy donors and transparency a regular part of their campaign message in recent weeks, asking supporters to sign a petition “demanding that these secret front groups disclose for the country exactly who their donors are.”

Obama’s chief counsel, Bob Bauer, filed a complaint last week asserting that Crossroads GPS, a tax-exempt group that has funded millions of dollars in ads criticizing the president, should be required to register with the Federal Election Commission. The complaint cites a recent court case upholding FEC disclosure rules.

Bauer said in an interview that Republicans oppose disclosure because so many conservative groups rely on the promise of anonymity to raise funds.

“The predominant strategy behind this anti-disclosure campaign is to protect their fundraising base,” he said. “They decided at the end of 2008 that they weren’t going to get outspent again, and it’s working.”

As one of the biggest-spending conservative groups, Crossroads has been a lightning rod for Democratic criticism. Unlike American Crossroads, an affiliated super PAC, Crossroads GPS has declared itself a nonprofit group and is not required to reveal its donors or register as a political committee. The IRS has yet to rule on the group’s tax-exempt status.

A spokesman for Crossroads declined to comment on the criticisms Friday.

Karl Rove, a former George W. Bush political adviser who helped found the group, said in an interview on Fox News that Bauer and the Obama campaign were using “thuggish behavior” in an attempt to intimidate conservative donors. Rove noted that many liberal groups also do not have to disclose their individual donors.

“It’s a social-welfare organization because it spends the vast preponderance of its money in furtherance of its social-welfare goals,” Rove said of Crossroads GPS. “It’s an issue advocacy group.”

The Rove-backed group is also at the heart of Grijalva’s IRS complaint about NFIB, which accepted $3.7 million from Crossroads in 2010, according to disclosures filed by Crossroads this year. Grijalva alleges in his letter to the IRS that the donation may be part of funds used to mount a legal challenge to Obama’s health-care law, which is now under review by the Supreme Court.

Grijalva said the contribution shows that the “IRS may need to revisit existing non-profit disclosure regulations.”

“Secrecy is not a small business value, nor is it in the interests of political integrity,” he wrote. “If NFIB is determined not to say where its money comes from or who its members are, we must ask what the group is hiding.”

Dan Danner, NFIB’s president, said in a statement that “Crossroads GPS contributions were not used to fund the healthcare lawsuit. NFIB has always been, and will always remain, true and accountable to its membership of America’s smallest businesses.”

Another top Washington business group, the U.S. Chamber of Commerce, has also come under attack for refusing to disclose donors while funding ads against Democrats. In response to a recent court ruling, the group has said it will shift the focus of its advertising to maintain donor secrecy.

The Obama campaign has also trained its pro-disclosure arguments on Romney, who has refused to reveal his top campaign bundlers and has yet to release more than a single year of his personal tax returns.

The Romney campaign has said they make all disclosures required by law. Spokeswoman Andrea Saul also called attention to Obama’s decision to invoke executive privilege in withholding documents about a controversial Justice Department anti-gunrunning investigation.

“The Obama campaign is desperate to distract from the fact that, just this week, President Obama’s pledge to run the most open and transparent administration in history turned out to be just another broken promise,” Saul said.

Staff writer Tom Hamburger contributed to this report.

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