Specialty Group Inc. of Knoxville, Tenn., has a peculiar specialty: political anonymity. The company filed for incorporation in late September. Within a few weeks, it had donated nearly $5.3 million to FreedomWorks for America, a conservative super PAC allied with former House majority leader Dick Armey.
What is Specialty Group? Where does its money come from? From the public record, it’s impossible to tell. The Center for Public Integrity and the Center for Responsive Politics reported that the company’s registered agent is a Knoxville man, William S. Rose Jr.
After news reports about the donation, Rose issued a statement describing Specialty as his investment firm, detailing his gripes with President Obama and assailing “prying media who seem hellbent on asking a private citizen about private facts.” He declined to answer questions about the source of the funds and described Specialty’s business as “my family secret.”
And here is the most disturbing thing about the Specialty contributions: By the degraded standards of the 2012 campaign, they are a model of transparency.
Because the donations were made to a super PAC, at least they were disclosed. Hundreds of millions of dollars more were spent — much of it on ads just as slashing and explicit as the super PAC commercials — by so-called “dark money” groups that do not report even the identities of their donors.
Yes, every election cycle features hand-wringing about how this is the most expensive and most out-of-control ever. But the magnitude and implications of the 2012 money are truly alarming.
This was the first presidential election since Watergate financed entirely with private money. Another bit of backsliding: Mitt Romney became the first presidential nominee since 2000 not to voluntarily reveal the identity of the “bundlers” to whom he is indebted for hauling in hundreds of thousands of dollars each.
Further, in the first presidential election since the Supreme Court’s Citizens United ruling, outside spending on all races more than tripled, from less than $300 million in 2008 to more than $1 billion in 2012, fueled by seven- and even eight-figure checks.
Individuals have always been free to spend unlimited sums for particular candidates, if they act independently. But Citizens United helped clear the way for super PACs, letting individuals — along with corporations and labor unions — band together in such efforts. The most pernicious are candidate-specific super PACs that function as virtual arms of the campaigns, freed from pesky contribution limits.
The outside groups’ messages were far more negative than those of the candidates themselves. And Specialty Group isn’t the only pop-up entity seemingly established solely to shield donors’ identities. One outfit, W Spann LLC, wrote a $1 million check during the primary season to the Romney-backing Restore Our Future PAC; only after sustained media attention did the real donor surface — Edward W. Conard, a former managing director of Romney’s Bain Capital.
Of course, Conard’s generosity looks skimpy in retrospect. Las Vegas casino owner Sheldon Adelson and his wife anted up an astonishing $53 million during the primary and general election campaigns.
By contrast, established corporations have so far been wary of writing big checks — at least publicly. One ominous portent of corporate giving in future elections: Chevron’s $2.5 million last month to a super PAC backing House Republicans.
But by far the most disturbing development is the hundreds of millions in dark money sloshing about the political system.
Of the $1 billion in outside spending, about $400 million came from these groups — nonprofits and trade associations, such as the Chamber of Commerce, that say they need not disclose donors.
Those entities have been able to engage in such shadow spending in previous elections, but the Citizens United ruling freed them from the flimsy fiction that their messages were mere advertising about issues. Now, with corporations free to engage in independent expenditures, nonprofits can be as transparent as the next PAC.
The leading example is Crossroads GPS, the nonprofit set up by Republican strategists Karl Rove and Ed Gillespie to complement their American Crossroads super PAC. Together, the groups have spent more than $175 million this election. Crossroads GPS accounted for more than $71 million of that, almost all on independent expenditures and with no donors’ identities disclosed.
All this makes a mockery of a campaign-finance system that is supposed to limit the size of contributions and ensure full disclosure. There are some solutions — stepped-up enforcement of tax and election rules and more stringent disclosure laws — but there needs to be a will to fix this mess.