By Dan Eggen
Washington Post Staff Writer
Saturday, October 9, 2010; A3
The long-simmering feud between Democrats and the U.S. Chamber of Commerce has erupted into a full-scale war.
The chamber, one of Washington's most influential lobbying groups, emerged from the background of the midterm elections this week, spending millions of dollars on ads to help Republicans and fending off Democratic allegations that the effort may include money collected from foreign firms.
The chamber told the Federal Election Commission that it spent $10.5 million in 31 House and Senate races this week, all in favor of Republicans. The disclosure marks the opening of the floodgates for the business group, which has spent a total of $25 million so far and has vowed to spend up to three times that much by Election Day.
Democrats have responded by attacking the chamber as part of a coalition of conservative groups spending tens of millions on political ads without having to reveal donors. The party and President Obama also have seized on allegations from a liberal think tank that money from overseas chamber affiliates may be polluting the U.S. election process - a charge the business group adamantly denies.
"Just this week, we learned that one of the largest groups paying for these ads regularly takes in money from foreign corporations," Obama said at a rally this week, in a clear reference to the chamber. "So groups that receive foreign money are spending huge sums to influence American elections, and they won't tell you where the money for their ads comes from."
R. Bruce Josten, the chamber's executive vice president for government affairs, said in an interview Friday that the group "has never and will never" use dues collected from overseas business councils, known as "AmChams," for U.S. political activities. He said the chamber is the victim of "a smear campaign" orchestrated with the involvement of the White House.
"This is an outlandish act of desperation from people who are not able to run on their record," Josten said. "They have stooped to smear campaigns."Republican unity
The developments mark a further escalation of tensions between the business lobby and the White House, which has clashed with the chamber over policies including health-care reform and Wall Street regulations. Democrats won several of the biggest policy votes but now business groups, are spending big in the hopes of helping Republicans win control of Congress.
Many Republicans noted that independent liberal groups spent tens of millions of dollars with little oversight during previous elections and that some were doing the same this year.
The chamber's ad buy this week is its largest so far and dwarfs the spending of any group other than the political parties. The spots comment on about two dozen House races and many key Senate contests.
The chamber said it spent at least $1 million per race targeting Senate candidate Paul Hodes (D) in New Hampshire; Sen. Barbara Boxer (D) in California; and Florida Gov. Charlie Crist, a disaffected Republican running as an independent against Marco Rubio (R) and Rep. Kendrick Meek (D). The group is also running ads against endangered Democratic Sen. Russ Feingold in Wisconsin and Democratic Senate candidate Richard Blumenthal in Connecticut, who is in an unexpectedly tight race with Linda McMahon, a former wrestling executive who is tapping her personal fortune for the campaign.
Josten said the chamber also went on the air Thursday with ads that were supportive of 10 Democrats who had voted against Obama's health-care reform legislation. Spending figures for the spots were not yet disclosed on Friday.
But Josten said overall party unity on such issues makes it difficult for the chamber to endorse many Democrats. "This is an unusually heavy Republican cycle for us," he said.
Liberal groups and Democratic lawmakers have increasingly focused criticism on the chamber in recent weeks for its aggressive midterm elections effort, arguing that it is impossible to tell who is behind the campaign because of tax laws allowing nonprofits to keep their funding confidential. Obama and Democratic leaders failed in two attempts to pass legislation that would have required greater disclosure of political spending by corporations.Disclosure of donors
The foreign-money angle springs from a report this week by ThinkProgress, an arm of the liberal Center for American Progress think tank, alleging that the chamber collects dues from more than 100 overseas business councils - known as "AmChams" - that are funneled into its general fund, which is also the source of funding for the group's political activities in the United States.
ThinkProgress said it had identified $300,000 in dues from the AmCham in Bahrain alone since 2006 and questioned whether the chamber was improperly co-mingling the dues with political funds.
The chamber refuted the report, saying that it abided by long-standing prohibitions against the use of foreign money in U.S. elections. Josten said total AmCham dues amounted to about $100,000 a year, all of it devoted to international programs.
Liberal groups and some Democrats have also attacked the chamber for accepting a $1 million contribution from News Corp., the owner of Fox News.
The developments come amid a growing effort by Democrats and liberal groups to focus on the rise in importance of secret donors in the midterm elections. A Washington Post analysis found that spending by outside groups such as American Crossroads and Americans for Job Security had increased fivefold since 2006, and that most of it was funded by donors who do not have to be disclosed by the groups involved.
Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, recently asked the Internal Revenue Service to investigate whether nonprofit groups, including advocacy organizations, unions and trade groups such as the chamber, were violating tax laws by engaging primarily in political activities. A group of labor unions also filed a separate complaint with the IRS alleging tax violations by the chamber.
David Donnelly, director of Campaign Money Watch, a liberal-leaning group, said the chamber should release records verifying its assertion that no foreign money is being used in its U.S. electioneering efforts.
"No candidate should sit quietly by and accept help from TV advertising that is furthering the special interest agenda of the chamber," Donnelly said. "That agenda now appears to include operating as a political outpost for foreign corporate interests in Washington."
Josten dismissed such attacks as political stunts. He said similar allegations could be lodged against labor unions, many of which have longstanding international ties.
"This is an orchestrated and deliberate attempt to push a non-story to make it appear to be a story," he said. "They want to put people that we support on defense and use the red meat of foreign money to do it."