How super PACs are changing the U.S. presidential race

This year’s Republican presidential nomination race has not only been the most volatile in recent memory. It has also been the first to see the rise of parallel, shadow campaigns run by independent groups that have been outspending the candidates themselves. The airwaves in early primary states have been awash with foreboding ads warning of Newt Gingrich’s “serial hypocrisy” or Mitt Romney taking “blood money.” The candidates have been able to escape responsibility for the vitriol by noting that the ads weren’t run by the campaigns, but by independent “political action committees.” Known as super PACs, they have pumped an estimated $45 million into the Republican race so far—doubling what the candidates’ own campaign organizations spent in some states.

The political resurrection of Newt Gingrich and his victory in South Carolina were paid for in large part by a single billionaire, the 78-year-old casino magnate Sheldon Adelson, who together with his wife contributed $10 million in January to a single super PAC, Winning Our Future, a group run by former top Gingrich staffers that has been running attack ads against Romney. In the wake of Romney’s victory in the Florida primary vote on Jan. 31, Adelson’s desire to continue bankrolling Winning Our Future and its attack ads against Romney may determine how long the primary campaign slogs on and how damaging it becomes to front-runner Romney.

Adelson’s role in this race is exactly the kind of deep-pocketed backroom influence U.S. lawmakers tried to end a decade ago when they passed a sweeping bipartisan law to limit money in politics. The law capped the amount of funding any individual could give to a candidate’s campaign at $2,500, and banned corporations and unions from donating to campaigns and political action committees. It also capped the amount of money a PAC could accept from an individual, and the amount it could spend promoting a single candidate, at $5,000 each. The campaign finance rules were aimed at preventing any one person, company or labour union from “buying” a candidate—but it also meant candidates had to spend a lot of time hustling for small contributions from large numbers of donors.

But two court decisions swept away many of those restrictions. In January 2010, the Supreme Court struck down 5-4 the ban on corporate and labour union contributions to political action committees, saying that the ban infringed on free speech. Two months later, a federal appeals court cited that precedent in striking down the limit on the amount of money PACs could raise from any single source, or spend to promote a particular candidate. Together, the rulings paved the way for the rise of the super PACs—groups that can now accept unlimited amounts of money from anyone and then spend as much as they see fit to help a single favoured candidate, as long as it stays formally independent of his official campaign.

Under the new rules, a billionaire such as Adelson, or one of his companies, can transform an election by cutting a seven-figure cheque to Winning Our Future, an expert professional operation. The group has spent $9 million so far this year running TV ads attacking Romney and promoting Gingrich in the same markets where Gingrich is campaigning. Its role in carpet-bombing South Carolina with attack ads was a crucial component of Gingrich’s victory there, dwarfing what his official campaign—which must raise money that is still subject to contribution limits—spent. The pro-Romney forces also spent roughly $5 million on South Carolina—of which the campaign spent $1.8 million. The rest was paid for by the pro-Romney super PAC Restore Our Future, which has some very wealthy backers. Its largest individual contribution to date is $1 million from John Paulson, a hedge fund manager worth $15.5 billion.

Romney’s victory in Florida came after pro-Romney forces vastly outspent Gingrich on that state’s airwaves. Indeed, the pro-Romney group has spent $17.5 million so far in 2012—$17 million of it on attack ads, according to the Center for Responsive Politics, a non-profit organization that has been tracking the money flows. The biggest contributors to that group were employees of Bain Capital, the private equity firm once headed by Romney.

The role of the super PACs in the few short months of the primary campaign has been a foretaste of what is to come in the general election—which is expected to cost a record $8 billion. Now, some of the super PACs are muscling in on other activities traditionally carried out by campaign organizations. The pro-Gingrich super PAC, for example, is setting up phone banks and a get-out-the-vote operation, complete with poll workers and drivers, in several key states. But not all campaign operatives are pleased. After pro-Ron Paul groups began phoning voters in primary states, Paul’s campaign manager complained that the duplicative actions were annoying voters and causing headaches for the campaign.

Critics say the big role of outside money is creating the potential for massive corruption. “Super PACs are the most dangerous element we’ve seen emerge in campaign finance in recent years,” says Craig Holman, lobbyist for Public Citizen, a non-profit group that advocates for ethics in government.

Adelson is a case in point, he adds. “If Gingrich becomes president, he becomes indebted to specific candidates and individuals who finance his super PAC. The same with Romney and Obama,” says Holman. “This is a very dangerous precedent. We’re going to see so much scandal erupting from the 2012 election and its aftermath, hopefully that will wake up Americans to say we’ve got to fix this mess.”

Critics like Holman scoff at the notion that the groups are acting “independently” of campaigns as required by law. “They are not allowed to pick up the phone and say, ‘Place an ad here,’ but they know exactly what needs to be done,” he says. And he worries about a lack of transparency. The super PACs must disclose their donors, but the Jan. 31 deadline for doing so came after ads had already run in the key primary states. And there is a disclosure loophole: corporations or individuals can give their money to a non-profit organization such as a business association or an issue advocacy group, which can pass it on to a super PAC. The non-profits are not required to disclose their donor lists. “The problem is that corporations will launder money through a non-profit,” says Holman.

Political operatives are well aware of the option. Former George W. Bush campaign architect Karl Rove has created two separate groups since the laws changed: a super PAC called American Crossroads that discloses all its donors, and a separate non-profit organization, American Crossroads GPS, a “grassroots advocacy organization” opposed to a “big government agenda.” The group spent $17 million in the 2010 congressional elections without disclosing its donors—leading critics to dub it a “dark money machine.” The two groups have announced a goal to spent $240 million in the 2012 elections.

Meanwhile, there are proposals floating around Congress for reining in the super PACs. They include forcing disclosure of non-profit donors, or requiring corporations to disclose political contributions to shareholders. But eliminating them is nearly impossible. “We have to either convince one of the judges that they are wrong or pass a constitutional amendment,” says Holman. For his part, Romney said it’s “outrageous” that candidates can’t manage ads being run on their behalf. “We all would like to have super PACs disappear,” he said. “Let people make contributions they want to campaigns, let campaigns then take responsibility for their own words.”

But not everyone agrees the judges have caused harm. “I think that in certain ways this race shows that super PACS are for good,” says Bradley Smith, chairman of the Center for Competitive Politics and a former commissioner on the Federal Election Commission. “Newt Gingrich would be pretty much left for dead without the support he got from Adelson,” adds Smith, a law professor at Capital University in Ohio. Super PACs are able to inject large amounts of money into an election quickly and can help challengers take on front-runners and incumbents without having to spend a lot of their time raising money. “The benefits will be more competitive races, and that will be good for voter turnout and voter knowledge,” says Smith.

He dismisses concerns about increased corruption, noting that mere gratitude to an individual by a politician is not illegal. “A candidate can be grateful to a journalist for a story or to a public figure for endorsing them or to Oprah for letting them on the air,” Smith notes.

Gingrich says Adelson supported him because of his long-standing staunch support of Israel, a passionate cause for the billionaire. Smith doesn’t buy the notion that Gingrich will be in his patron’s pocket. “If Adelson really wanted someone to be indebted to him, he would have been better off sending $10 million to Romney to finish off Gingrich and end the race,” he says. “This may prove to be a colossal waste of his money.”