Articles on this Page
- 01/21/16--19:06: _Is 'dark money' boo...
- 01/22/16--11:46: _Commentary: The con...
- 01/22/16--13:08: _Federal Trade Commi...
- 01/26/16--08:54: _Conservative nation...
- 01/26/16--06:55: _Commentary: The dee...
- 01/27/16--08:30: _Trade groups to top...
- 01/27/16--13:51: _Giant auto title lo...
- 01/28/16--11:02: _Koch-linked group b...
- 01/28/16--12:58: _Kool & the Gang won...
- 01/29/16--02:00: _State Integrity Inv...
- 01/29/16--14:27: _Sarah Palin's PAC b...
- 01/29/16--19:22: _Democratic super PA...
- 02/01/16--11:47: _What's hiding in pr...
- 02/01/16--11:36: _White House race ne...
- 02/02/16--10:21: _Bill seeks to incre...
- 02/01/16--21:24: _ Super PACs super c...
- 02/02/16--09:18: _Big U.S. foreign po...
- 02/03/16--05:33: _Workers threw out U...
- 02/03/16--10:09: _Nice is right in Io...
- 02/03/16--12:34: _HUD loan investment...
- 01/21/16--19:06: Is 'dark money' boosting Bernie Sanders?
- 01/22/16--11:46: Commentary: The consequences of our secret elections
- 01/26/16--06:55: Commentary: The deeper meaning of Flint
- 01/27/16--08:30: Trade groups to top corporations: Resist political disclosure
- 01/27/16--13:51: Giant auto title loan firms fight to keep financial data secret
- 01/28/16--11:02: Koch-linked group blasts Kasich in ad buy
- 01/28/16--12:58: Kool & the Gang won't celebrate Republican National Convention
- 01/29/16--02:00: State Integrity Investigation spurs proposals for reform
- 01/29/16--14:27: Sarah Palin's PAC burning through cash
$248,750 on various consultants, including those providing fundraising, research and “logistics” services.
$160,141 on fundraising, direct mail and related website management, including HSP Direct, a Virginia-based firm that describes itself as an agency that targets people who believe in the “values of conservatism, patriotism and integrity.”
$84,789 on postage.
About $48,336 on travel, lodging and related services. When Palin traveled to Washington, D.C., in September to appear at a rally alongside Trump and Cruz, her PAC covered a $4,700 bill at the Hotel George, which promises guests it’ll accommodate their every need — “even those wishes you didn’t yet know you had.” In August, while guest hosting a One America News Network show in San Diego, during which she interviewed Trump, Palin’s PAC spent $643 to put her up at the Fairmont Grand Del Mar. The resort boasts of its “unrivaled five-star/five diamond service.” SarahPAC spent thousands of dollars on vehicle rentals from companies such as BAC Transport of Alaska, which features a fleet of high-end SUVs and limousines.
$30,000 on two clerical staffers.
$29,683 to produce a video.
$18,000 on speechwriting. Aries Petra Consulting LLC, a small firm formed in Virginia and operating from Los Angeles, provided the services. Some political observers might argue Palin hasn’t gotten her money’s worth. Among the gems from Palin’s Trump endorsement speech: “Well, and then, funny, ha ha, not funny, but now, what they’re doing is wailing, ‘Well, Trump and his Trumpeters, they’re not conservative enough.’” And, on U.S. policy in the Middle East: “You quit footing the bill for these nations who are oil-rich, we’re paying for some of their squirmishes that have been going on for centuries. Where they’re fighting each other and yelling ‘Allahu akbar,’ calling jihad on each other’s heads forever and ever.”
$11,529 on legal fees and services
- 01/29/16--19:22: Democratic super PAC aided by secret money
- 02/01/16--11:47: What's hiding in presidential campaign finance disclosures
- 02/01/16--11:36: White House race nearing $1 billion
- 02/02/16--10:21: Bill seeks to increase D.C.’s judicial transparency
- 02/01/16--21:24: Super PACs super charge 2016 presidential election spending
- 02/02/16--09:18: Big U.S. foreign policy initiatives unlikely this year
- 02/03/16--10:09: Nice is right in Iowa caucuses
- 02/03/16--12:34: HUD loan investment program draws scrutiny
Are homeowners notified of the status of their mortgage before the sale and are they informed of their inclusion in the program? (According to lawyers the Center spoke to last fall, most borrowers learn their loan was sold well after the initial auction — if they become aware at all — after the mortgage has been stripped of FHA protections.)
How does HUD ensure required loss mitigation procedures are being followed before the sale? (The Center’s original report explains that HUD relies on banks to self-report the loan’s status without checking with the homeowner.)
What protections are provided to homeowners after their mortgages are sold through the program? (Several borrowers reported to the Center that they were repeatedly denied opportunities to negotiate for more affordable loan terms, including terms that would have been available had the mortgages stayed under FHA protection.)
What data does HUD provide to the public about the program? (At the time of the Center’s investigation, HUD did not provide or seem to collect detailed information about the mortgages after auction.)
What percentage of mortgages are sold to nonprofits? (The Center reported only 2 percent of sales went to nonprofits as of September 2015.)
Bernie Sanders may decry how big money influences political elections, but that isn’t stopping groups independent of the Democratic presidential candidate from spending significant cash in his name.
The latest organization to do so: Friends of the Earth Action.
The national environmental nonprofit this week released an ad that praises Sanders’s green record and highlights his early opposition to the Keystone XL pipeline.
“He’s proven a bold and fearless voice for a healthy and just world,” the ad’s narrator says. The ad, first reported by CNN, is airing in Iowa and New Hampshire markets this week.
Friends of the Earth Action is a “social welfare” nonprofit, also known as a 501(c)(4) organization. Under law, 501(c)(4) nonprofits are not required to disclose their donors.
And so, these types of nonprofits have increasingly become vehicles for “dark money”—untraceable and often immense cash flows used to influence elections. Such nonprofits must by law avoid being “primarily” political, but that’s not stopping them from collectively injecting hundreds of millions of dollars into political elections this decade.
Hillary Clinton’s presidential campaign labeled the Friends of the Earth Action as “dark money” group in a recent blog post titled “Sanders’ ‘No Super PAC’ Myth.”
But Friends of the Earth Action rejects the “dark money” label.
“We’ve got a long history of engaging in the political process that predates super PACs and Citizens United,” said Erich Pica, president of the environmentally-minded nonprofit. “So they can call us a dark money group, but we are mainly small-donor driven.”
The ad’s sponsor
Friends of the Earth Action “provides extra political muscle” to sister group Friends of the Earth, a 501(c)(3) nonprofit founded in 1969.
The duo vows “to urge policymakers to defend the environment and work towards a healthy environment for all people.”
This is not Friends of the Earth Action’s first time entering the political arena. In 2008, for example, Friends of the Earth Action spent more than $70,000 in support of Democrat John Edwards’s failed presidential run.
The Sanders ad blitz is twofold, Pica said. He sees Sanders as more committed than Clinton to environmental issues, but he also wants to force a conversation on climate change — a topic that has yet to be robustly discussed in debates.
Pica has, perhaps, already seen a measure of success: Sanders on Wednesday released a statement addressing a new report confirming 2015 was the hottest year in recorded history.
“Unless we get our act together, we will see in years to come more droughts, more floods and more extreme weather disturbances,” Sanders said in the statement.
Who’s behind it?
Erich Pica, president of Friends of the Earth Action, is helping lead the ad blitz.
Canal Partners Media placed the ad, according to Federal Election Commission records. The media buying group regularly places ads for Democratic parties, movements and candidates.
When it comes to their donors, “social welfare” nonprofits can be — and often are — opaque.
But heeding Sanders’s money-in-politics gospel, Pica is promising transparency. Friends of the Earth Action, he says, will disclose within 24 hours on its website every donor who contributes more than $200. This aligns with the level of disclosure federal law requires traditional political action committees, super PACs and political parties.
This week’s ad flurry was purchased with preexisting funds, Pica said.
Normally, Friends of the Earth only partially discloses its donors and has accepted anonymous contributions when donors request anonymity. At the same time, the group fought for more political disclosure in Minnesota, where legislators introduced a bill in 2014 to tighten campaign finance rules.
Friends of the Earth Action paid about $20,000 to produce and air the ads, according to FEC documents. This is the first expenditure the group has made in any federal election this cycle — presidential or congressional, records show.
Why to watch this group
Friends of the Earth Action will continue to support Sanders, Pica said, and he left open the possibility of additional pro-Sanders ad campaigns.
“What we’ve done is a really modest buy,” Pica said. “He needs people to stand up, take action and contribute.” The group’s ad campaign does present a problem for Sanders, at least to some degree: As much as Sanders says he doesn’t have, want or need a super PAC, he has little control over the matter.
Beside Friends of the Earth Action, a super PAC funded by a national nurses union is spending significant sums of money to promote Sanders's candidacy.
National Nurses United for Patient Protection has unleashed $2 million on behalf of Sanders since the start of the election, according to the Center for Responsive Politics. The group has mostly paid for mailers, and has yet to make its debut on the airwaves.
Then there’s Americans Socially United, a pro-Sanders super PAC run by a man with a long history of legal problems. This particular super PAC even duped Daniel Craig of James Bond fame into making a contribution.
Although the Sanders campaign sent a cease-and-desist order to Cary Lee Peterson, the man behind Americans Socially United — the letter had minimal effect — the campaign has done comparatively little to reign in the nurses’ union super PAC or environmental nonprofit.
Officials from both the environmental and nurses groups say their pro-Sanders campaigns were started independent of Sanders or his campaign staffers, current or former.
Many super PACs supporting specific presidential candidates, such as pro-Jeb Bush super PAC Right to Rise USA and pro-Hillary Clinton super PAC Priorities USA Action, are led by close friends and political allies of the candidates being supported.
This presidential election, dark money groups supporting Republicans have so far outspent those supporting Democrats. Conservative Solutions Project, a 501(c)(4) nonprofit, has alone spent millions of dollars boosting Sen. Marco Rubio of Florida.
The Sanders campaign did not respond to requests for comment, but in an interview with CNN, Sanders spokesman Michael Briggs differentiated Friends of the Earth Action from other outside groups infusing the presidential election with money.
“Friends of the Earth Action is not a corporation looking to gut regulations or procure tax breaks,” Briggs said. “They are an organization made up of thousands of American citizens concerned about a healthy environment and fighting climate change.”
It was six years ago this week that the U.S. Supreme Court dramatically altered the American political landscape with its landmark ruling in Citizens United v. Federal Election Commission, essentially deciding that corporations and labor unions can spend millions of dollars getting candidates elected to federal office.
As long as the funds didn’t go directly to the candidate, or were not spent in coordination with the candidate, there would be no law broken. Corporate and union donations to the campaigns were still illegal.
As a result of the ruling, super PACs were born, giant pools of money that act as shadow campaign committees, often run by people with close ties to the campaigns themselves. The organizers of these PACs must report all their donors and expenditures. They’re also — in theory, anyway — prohibited from “coordinating” with the candidate.
But in politics, it seems, there’s always a way to dodge the rules and obfuscate what’s really happening. This election, secrecy has been pushed to another level. Since the Citizens United decision came down, nonprofit groups have formed to back candidates. And unlike the super PACs, the nonprofits are not required to report who their donors are. That’s because these groups are theoretically focused on “social welfare,” not politics. It’s a highly cynical and dubious claim in many cases, but it’s working. The Internal Revenue Service is supposed to police whether these groups are actually concentrating on “social welfare,” but that’s not happening — not now, maybe not ever — because the IRS is paralyzed by budget cuts, missteps in its previous efforts to oversee these groups and related political controversies.
One candidate in particular who’s gotten a secret boost is U.S. Sen. Marco Rubio, R-Fla., who has benefitted from millions spent by a nonprofit, the Conservative Solutions Project, on ads pushing him for the White House. The group is spending as fast as it can to get Rubio in office. But no one knows who is supplying the cash.
This was exactly the sort of scenario that was predicted six years ago when the U.S. Supreme Court voted to allow corporations to spend money to get candidates elected. That included certain nonprofit corporations.
No, corporations still aren’t permitted to give a donation to a candidate. But they can spend heavily to benefit a candidate, and indeed they do. They can still call the tune as to who’s a viable candidate and who isn’t. And they can do it all without you knowing who’s providing that cash, and whose agenda is propelling that candidate.
Is that really what the Founding Fathers had in mind?
A federal judge who already ruled that former race-car driver Scott Tucker violated U.S. lending laws must now decide whether to order him to pay $1.3 billion for operating an illegal payday-lending business.
The Federal Trade Commission this week asked U.S. District Judge Gloria M. Navarro of Nevada to award the large sum in damages, which it said was how much borrowers were overcharged for the company’s payday loans from 2008 to 2012.
Until court documents were recently unsealed, the size of Tucker’s enterprise was unknown. The Center for Public Integrity and CBS News exposed Tucker’s online business in a 2011 joint investigation. Tucker at that point was best known as a millionaire professional race-car driver in the American Le Mans series.
The investigation revealed that Tucker set up a series of shell corporations to hide his involvement in the payday lending company, AMG Services of Overland Park, Kansas. Once state law enforcement agencies tried to shut down those shell companies for violating payday lending laws, Tucker turned over ownership of the business to the Miami and Modoc tribes of Oklahoma and the Santee Sioux tribe of Nebraska. However, the deal allowed the tribes to keep only 1 percent of revenues.
In April 2012, the FTC sued Tucker and tribal entities for making loans with deceptive terms. Borrowers were told that a $300 loan would cost only $90 in interest, but in fact borrowers would have to repay as much as $1,000, the court found.
The tribal entities settled last year for $25 million. AMG Services shut down and Tucker dissolved his racing team.
The federal agency now says the judge must decide damages for Tucker and his businesses. The FTC says the payday lending business gave $60 million to Tucker’s racing team, Level 5 Motorsports, with little to show for its sponsorship. The FTC also claims that $20 million went to Tucker’s wife and $8 million was used to buy a home for the couple in Aspen, Colorado.
The agency is also asking the judge to bar Tucker from ever being able to operate a lending business again, noting that he previously was convicted on federal charges related to making illegal loans.
The FTC is seeking damages from the estate of Blaine Tucker. Blaine, Scott’s brother, committed suicide in 2014 shortly after the judge ruled against the defendants.
Tucker’s attorneys accused the FTC of overreaching its authority in seeking such a large amount in damages. They say Tucker agreed shortly after the lawsuit was filed to stop engaging in business practices that the FTC said were illegal.
It’s only a short phrase buried in the U.S. Constitution, but it enables an unprecedented avenue to change the law of the land: If two-thirds of the states demand it, Congress “shall call a convention” for proposing constitutional amendments.
A hopeless pipe dream? Actually, no; the issue is front and center right now. Some 27 states have active calls for a convention on a balanced budget amendment, which would force the federal government to pass budgets that do not enlarge the national debt. This means that theoretically just seven more have to act for a constitutional convention to be called, at least on that subject.
In just the first few weeks of this year's state legislative sessions, at least 10 states have bills pending that call for a convention. So suddenly such a meeting, not held since the earliest days of this country, is becoming a real possibility.
Even GOP presidential candidates are seizing on the burgeoning movement, with Florida Sen. Marco Rubio, former Arkansas Gov. Mike Huckabee and Ohio Gov. John Kasich endorsing this unconventional process and rallying their supporters as legislative sessions start up again.
While the legislation appears to be a grassroots effort bubbling up from the states, in reality it’s quite the opposite. National groups have been holding workshops, publishing tips and even crafting model legislation for years to persuade legislators to use their states to circumvent the logjam in Congress.
The push is led by American Legislative Exchange Council, the Virginia-headquartered conservative think tank known as ALEC made up of state lawmakers and corporations that advocate free-market policies in the states. It has a cadre of other like-minded national allies working on the controversial strategy to revise the country’s supreme laws.
But in a fight reflecting the broader schism within the Republican Party, other national groups on the right such as the John Birch Society and Phyllis Schlafly’s Eagle Forum are combating these efforts with their own legislative push to rescind those calls for what is called an Article V convention. Working alongside unlikely liberal allies, they say the country runs the risk of a runaway convention where delegates could change the complete makeup of the Constitution.
“Once you open up the Constitution to change at a convention, then you can change anything in the Constitution,” said Michael Leachman at the left-leaning Center on Budget and Policy Priorities, a think tank that has written about the dangers of a balanced budget amendment. “It’s theoretically possible.”
How it works
Americans can amend the Constitution in two ways, as laid forth in Article V of the body of laws. The first has been used to pass all 27 amendments that exist today: Congress proposes an amendment with two-thirds majority in both chambers that must then be ratified by three-quarters of the states.
The second route requires two-thirds of states to call a convention for proposing amendments, according to the Constitution.
Besides these few words, the Constitution doesn’t give much more guidance. Lawmakers grapple with how to conduct such a meeting: Who attends? Where is it held? What is the agenda? Who leads the proceedings? What are the rules?
Activists trying to convene such a convention are drawing on historical records to interpret the body of laws for clues on how to pull it off. Based on that limited research, they see two routes to such a meeting.
On one side, ALEC and its allies seek to persuade 34 states to pass resolutions to call the meeting, as well as parallel legislation that outlines the rules and structure of the convention. After the convention delegates meet, 38 states would still need to ratify any amendment that the attendees produce at the convention.
For bills to count toward the necessary 34 applications, though, they must seek the same amendment to discuss at the convention. So far, a balanced budget amendment is the closest to that requirement. But bills have also called for conventions about a cornucopia of issues, ranging from reforming campaign finance to congressional term limits. Critics are concerned that other topics could be introduced once the convention begins.
The other, albeit more unlikely path, wraps up the resolution, rules and ratification in one neat package: an interstate compact. This alternative method requires 38 states to pass the compact package, as well as congressional approval.
This compact strategy still has a long way to go. The group leading the charge, Compact for America, has helped pass bills only in Alaska, North Dakota, Mississippi and Georgia so far. But it also has the backing of ALEC, which posted model compact legislation on its website. And at least four compact bills have been filed to be heard in 2016.
"The founders thought this was a very controlled, moderate, predictable process,” said Nick Dranias, Compact for America's president and executive director. "It was not meant as a red button. Nothing could be more lawless than what we already have going on in Congress."
The Texas-based group has deep ties to the conservative Goldwater Institute in Arizona; its leaders, Dranias and Thomas Patterson, were both formerly top brass there. Compact for America does not disclose its donors for “fear of political retaliation,” according to its tax filings.
The campaign for conventions, however one comes about, is not solely led by a conservative bastion. Former Democratic presidential candidate Lawrence Lessig stands out as a major leader in the movement.
Lessig and ALEC are pushing for different final goals, though. Lessig hopes to overturn the U.S. Supreme Court campaign finance case Citizens United with a constitutional amendment. Still, they have united on using states to overcome congressional stagnation.
"In my view, if you look at American government today, the fundamental stale institution of Congress is crippled by the way congressmen are selected,” Lessig told the Center for Public Integrity. “It produces a widely more polarized Congress than the population. An Article V convention is the only solution the framers gave us."
Critics say the only precedent for a successful convention occurred in 1787 when framers met to discuss weaknesses found in the Articles of Confederation. Instead of tinkering with the articles, the attendees scrapped the whole set of laws for the current Constitution. This context only intensifies critics’ fears of a runaway convention.
“It’s quite clear that any convention would be subject to enormous lobbying pressure,” Leachman said. “This convention is deciding amendments to the Constitution. Any interest group in the country would be very interested in the results of that.”
Convention supporters point to research that suggests states held nearly 20 smaller conventions before 1787 that can be used as guidelines, according to Rob Natelson, a senior fellow at the free-market Independence Institute think tank in Colorado, who wrote ALEC’s handbook on such conventions.
“Essentially, they served as task forces where delegates from different states could share information, debate, compare notes, and try to hammer out creative solutions to the problems posed to them,” Natelson wrote.
Natelson said many safeguards exist to prevent chaos at a convention: legislation that limits the scope of the meeting by attending states, the potential for lawsuits and the required ratification of any proposed amendment. The more pressing worry, he says, is that delegates won’t be able to agree on the fine print of an amendment to fix the issue they’re discussing.
“The more legitimate concern is not that they’ll go wild, but that they won’t cure the problem,” Natelson said. “Getting so many people to agree on wording is difficult and deadlock is probable.”
The race to secure states
The push for a constitutional convention isn’t just a recent phenomenon. Between 1957 and 1983, 32 states passed calls for a convention to discuss a balanced budget amendment — two states away from the required total. The National Taxpayers Union, a conservative advocacy group that works to rein in federal spending, led the effort decades ago.
But Alabama reversed its call in 1988 after intense lobbying from the John Birch Society, the Eagle Forum, the progressive nonprofit Common Cause, the Daughters of the American Revolution and Norman Lear’s liberal People for the American Way. It was the first of 16 states canceling their calls between 1988 and 2010.
"We have a wonderful Constitution that has lasted for 200 years, and we don't think anybody should play games with it," Eagle Forum founder Phyllis Schlafly told The Washington Post at the time.
Almost two decades after states began withdrawing their legislation, Lessig and Mark Meckler, co-founder of the conservative Tea Party Patriots, helped rally a renewed push for a convention. They brought together around 300 people at Harvard University Law School in 2011 for the Constitutional Convention Conference (nicknamed the Con Con Con). There, the two men on opposite sides of the political spectrum preached about corruption in Washington and why a convention was a citizen’s last resort to combat it.
“Politicians profit when we are inflamed against each other,” Meckler said in his opening remarks. “If we spend time fighting each other, the politicians can do what they want. It’s the incumbents versus the citizens. Those are the two parties we are facing today.”
Around the same time, ALEC and related groups jumpstarted a new campaign to hold a convention to discuss a balanced budget amendment. ALEC, primarily funded by corporations and trade groups, released Natelson’s handbook for state lawmakers, drafted model legislation and held workshops on the subject at their annual conferences.
The convention supporters are trying to build off the earlier wins in the 1970s and ’80s, because the votes do not expire, according to the U.S. House Judiciary Committee.
“Let’s get Article V passed, get the power out of Washington back to the local government where the founders intended it to be,” said Mike Huckabee, a keynote speaker at ALEC’s annual meeting in San Diego last July.
The group’s latest conference in Scottsdale, Arizona, in December hosted two convention sessions, one titled “Beyond the Ivory Tower and onto Main Street: What Ordinary Citizens Think about the Article V Solution and How You Can Become Their Champion.”
ALEC did not return multiple requests for comment. But the group has written about its push on its site: “The federal government has steadily consolidated its power while eroding state control.”
Connected to ALEC, the Florida-based Balanced Budget Amendment Task Force lobbied state legislators in at least 13 states in 2014, according to its tax return, with successful resolutions passed in Michigan, Louisiana, Georgia and Indiana.
The task force has targeted 13 more states in 2016: Washington, Idaho, Montana, Wyoming, Arizona, Oklahoma, Minnesota, Wisconsin, Kentucky, West Virginia, Virginia, South Carolina and Maine.
Those pushing for the conventions face some legislative leaders who refuse to send any convention bills to a vote, such as Arizona Senate President Andy Biggs, a Republican, according to the task force’s co-founder, David Biddulph. But he said his organization has connected with like-minded groups to help push through these barriers.
“We’ve got extremely limited resources but extremely valuable friends,” Biddulph said.
While primarily composed of volunteers, the task force has partnered with larger, well-resourced groups to push their message and lobby state legislators, including ALEC, the conservative think tank Heartland Institute and the D.C.-based small business organization, the National Federation of Independent Business, Biddulph said.
Another ALEC ally, the Virginia-based Convention of States, is founded by Meckler’s right-wing advocacy group, the Citizens for Self-Governance. With big name conservative endorsements ranging from Republican vice presidential candidate Sarah Palin to Fox News host Sean Hannity, Convention of States uses similar tactics as ALEC: providing model legislation, citizen toolkits and responses to opposing arguments. The group hosted Article V workshops at recent ALEC conferences and has planned information sessions in Arizona, New Jersey, Illinois and Virginia for this January and February.
Convention of States members did not return requests for comment. However, its co-founder Meckler told Fox News after Rubio endorsed the effort in December, “I’ve never been more excited about our prospects for achieving real governmental reform as I am right now.”
The advocates are bolstered by last year’s momentum. A Center for Public Integrity review of legislation found that state lawmakers introduced approximately 190 bills in 45 states last year about conventions on a range of issues. Bills passed in at least seven states.
Supporters are also taking more symbolic action. Activists introduced a ballot measure in California to seek a constitutional amendment and Republican Texas Gov. Greg Abbott proposed nine constitutional amendments to strengthen state powers earlier this month, urging Texas and other states to push them using an Article V convention.
Not giving up the fight
But the Eagle Forum and the John Birch Society are continuing their efforts from the ’80s to combat this renewed push from ALEC and its allies to seek a convention.
“The whole Article V ‘Convention of States’ process is a prescription for political chaos,” wrote Schlafly in a Jan. 11 fundraising email. “Alas, I don’t see any George Washingtons, James Madisons or Ben Franklins around today who could do as good a job as the Founding Fathers, and I’m worried about the men who think they can.”
Meanwhile, the John Birch Society, which advocates for limited government from its Wisconsin headquarters, sends out action alert emails, posts videos, distributes educational materials and works with state legislators, according to Larry Greenley, the group’s director of missions.
“I was flabbergasted,” she said. “I didn’t understand why it wasn’t more of a heated issue, thinking about changing the Constitution.”
After seeing this legislation pass, Rehwinkel Vasilinda raised her concerns among her friends, family and fellow lawmakers. Shortly after, she said, a John Birch Society field coordinator brought the Democratic lawmaker language for a bill to repeal all past calls for a convention.
Bills with similar rescinding language cropped up in the last five years in other states, including Missouri, New Hampshire, North Carolina and North Dakota.
Rehwinkel Vasilinda introduced the bill last year, but it died in committee. Undeterred, she introduced a new version for this legislative session, which began Jan. 12.
“My bill is in some ways a statement and not a bill,” she said. “I want the issue to get heard and on people’s radar. I want there to be honest debate instead of letting these bills slide by.”
What began as a tainted-water story out of Flint, Michigan, has blown up into a much broader discussion of environmental justice in the United States: Did Gov. Rick Snyder and the U.S. Environmental Protection Agency play down the risks of a money-driven switch from lake to more corrosive river water because Flint has a disproportionate number of poor and African-American residents? Did they minimize residents’ complaints about high levels of brain-damaging lead in their water, released by aging pipes, for the same reason?
Snyder has apologized profusely, and the EPA’s regional administrator in Chicago has resigned. It’s fair to ask, however, whether something deeper is at work here: Is environmental racism so entrenched in this country that public health crises like Flint are inevitable?
That’s a question the Center for Public Integrity posed last year in “Environmental Justice, Denied,” an investigative series done in conjunction with NBC News. What we found was not encouraging.
The EPA’s Office of Civil Rights, we learned, has never made a formal finding of environmental discrimination in its 22-year history, although it has the power to do so under Title VI of the Civil Rights Act of 1964. Our reporters reviewed thousands of pages of documents and concluded that the office has either rejected outright or dismissed after investigation complaints from communities such as Uniontown, Alabama, and Baton Rouge, Louisiana.
Advocates and residents of these communities say the EPA has been abiding by an unreasonably narrow definition of discrimination that has kept if from finding in complainants’ favor. The agency was set on this path by a case out of … Flint.
In today’s edition of The Hill, J. Mijin Cha, a fellow at Cornell University’s Worker Institute, writes, “The current environmental crisis in Flint was caused by failure at many levels of government, including the EPA's Office of Civil Rights. Any solution must include an overhaul and new mandate for Title VI complaints. It's time for the EPA to step up and enforce its duty to protect communities of color.”
The EPA has promised to make “wholesale” changes in its civil-rights office. Whether those changes go far enough remains to be seen.
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Three of the nation’s leading trade associations have a message for their member corporations: Resist activists who demand you disclose more details about your politicking than the law requires.
“The strategy of pressuring companies to voluntarily disclose the details of their spending on public policy engagement for the purpose of reducing that engagement is, in fact, their ultimate goal,” wrote U.S. Chamber of Commerce President and CEO Tom Donohue, Business Roundtable President John Engler and National Association of Manufacturers President and CEO Jay Timmons in a letter dated Oct. 13 and obtained by the Center for Public Integrity.
They added: “As these activists continue efforts to silence the business community’s voice, we will continue to engage on your behalf.”
The trade association leaders reserved particular criticism for the Center for Political Accountability and the Zicklin Center for Business Ethics at the University of Pennsylvania’s Wharton School, which in early October published an annual index ranking large companies on their political disclosure practices and policies.
Companies earn points on more than two-dozen measures, such as revealing money spent to influence state-level ballot initiatives and voluntarily disclosing contributions to politically active trade associations and other nonprofit groups.
Such politically active nonprofit groups — including the U.S. Chamber itself — sometimes directly advocate for and against political candidates and may spend into the millions of dollars to do so.
Donohue, Engler and Timmons argued that the index is little more than a “tool to be used to attack companies” and “name-and-shame” them “into either curtailing or eliminating their involvement in public policy debates altogether.” They also warned that the index could be used by activist investors to justify proxy proposals aimed at forcing companies to publish details about their political efforts.
The men sent a similar do-not-disclose letter to their members in 2013.
Bruce Freed, president of the Center for Political Accountability, scoffed at the groups’ criticism, which he says he expects.
“The reason: it is leading to the broader disclosure of company payments to trade associations, and the U.S. Chamber in particular. The Chamber has a deep investment in secrecy,” Freed said. As for the trade groups’ letter, Freed added that “hasn’t been effective in discrediting CPA or the Index. Companies continue to treat the index as a credible, serious benchmarking.”
Officials at the U.S. Chamber, Business Roundtable and National Association of Manufacturers declined the Center for Public Integrity’s requests for comment.
The trade groups’ plea comes as the U.S. Chamber is preparing to play a major role in the 2016 congressional elections.
Consider that during the 2014 midterm elections, the U.S. Chamber spent about $35.5 million on messages naming federal political candidates, if not overtly advocating for their election or defeat, Federal Election Commission records indicate.
Of that, the U.S. Chamber spent about $6.8 million total to help elect Republicans Thom Tillis of North Carolina and Joni Ernst of Iowa to the U.S. Senate, according to the Center for Responsive Politics.
All the while, the U.S. Chamber could hide the names of people or corporations bankrolling what were primarily political attack ads: Trade groups, which are nonprofits organized under Section 501(c)(6) of the Internal Revenue Service code, are not by law required to reveal their funders.
Thank the Supreme Court’s Citizens United v. FEC decision for this. The 2010 ruling allowed corporations — including certain nonprofits and unions — to spend unlimited amounts of “dark money” to promote or attack political candidates.
A Center for Public Integrity investigation, for example, identified dozens of companies that in 2012 or 2013 gave money to the U.S. Chamber, Business Roundtable and National Association of Manufacturers.
Some contributions, which ranged from low five-figure amounts to well into the millions, specifically funded the trade groups’ government lobbying or political efforts. Companies with household names such as PepsiCo Inc., eBay Inc., Intel Corp. and AFLAC Inc. ranked among those who earmarked money for such purposes.
More recently, some companies that play key roles in one or more of the trade associations have, in practice, gone against the trade associations’ wishes as they pertain to political transparency.
Take Dow Chemical Co., whose executive vice president and general counsel, Charles Kalil, is also a member of the U.S. Chamber of Commerce board of directors.
Dow voluntarily disclosed that it contributed more than $2.91 million to the U.S. Chamber, $250,000 to the National Association of Manufacturers and about $92,000 to the Business Roundtable in 2014. It also revealed significant contributions it made to various ballot initiative campaigns and other politically active nonprofits.
“Dow endeavors to participate actively in the leadership of its key trade associations,” the company said. “However, we may from time to time find ourselves in disagreement with the prevailing views of the majority of the association's membership.”
So-called 501(c)(4) “social welfare” nonprofits, like their trade association cousins, may also engage in direct politicking so long as this is not their primary purpose for existing.
The U.S. Chamber doesn’t generally involve itself in presidential politics, but several nonprofits are already combining to pump millions of anonymous dollars into the 2016 presidential election. They include a group backing Republican presidential candidate Marco Rubio.
More will almost assuredly become active later this year once the general election campaign begins in earnest. And they, too, may accept unlimited, anonymous contributions from corporations.
RICHMOND, Virginia — As the auto title-loan industry faces mounting criticism from Virginia lawmakers, state officials heard arguments today from three of the nation’s biggest lenders fighting to keep their sensitive financial reports from being made public.
The title loan companies — TitleMax of Virginia Inc.; Anderson Financial Services LLC, doing business as Loan Max; and Fast Auto Loans Inc. — argued during a Virginia State Corporation Commission hearing that disclosing the annual financial reports they file with the state could seriously harm their businesses.
The lenders said that release of the information such as the interest rates they each charge and how many cars they repossess from buyers who default on loans could be used by their competitors to gain an edge, or were “trade secrets” that should remain confidential.
“We fight very seriously for the business we have,” said Robert W. Loftin, an attorney for Loan Max.
After listening to the legal debate for nearly two hours, the three-member commission ordered the parties to submit more written arguments to justify their positions, giving them three weeks to complete.
Commissioners said they wanted to explore the industry’s claims that its reports should be considered “personal financial information” under the law, which would keep the records from public disclosure. The general counsel for the commission rejected that argument, saying the law is intended to shield the privacy of financial records of consumers, not giant loan companies. A final decision will come down to how commissioners interpret the law.
The hearing marks the latest round in a public records dispute between the Center for Public Integrity and the title loan firms, which operate in more than a dozen states. The commission regulates financial institutions in Virginia.
Erin Witte, who represented the Center for Public Integrity, told the commission the companies favor secrecy so they can “make more money.” She said the lenders are doing business with people “on the margins of society” and should be subjected to more scrutiny, not less.
“How is the General Assembly supposed to address abuses that are happening [as a result of title lending] if they don’t know what they are up to?” she asked.
The annual reports detail loan sales figures and other information about business practices, including how often the lenders are cited by regulators nationwide and how many cars they repossess from buyers who can’t repay loans. The reports don’t name borrowers.
In November, the Center for Public Integrity asked for copies of the 2014 reports from the Virginia Bureau of Financial Institutions, a division of the three-member corporation commission. Bureau officials said at the time they could find no legal basis to keep the reports confidential.
But when the lenders objected to the release of the reports, the commission agreed to hold a hearing before rendering a decision. This month, officials let the firms submit redacted versions of the reports, in which they disclosed little beyond the number of stores each runs in the state. The lenders contend that revealing the full contents of the reports would damage their businesses.
Car title loans are legal in about half the states. Lenders say they offer fast cash to people with poor credit and others whom banks won’t consider for loans. But title loans often come at a high cost: triple-digit interest rates, backed by the threat that borrowers who miss payments can swiftly lose their cars, according to a Center of Public Integrity investigation.
The high price of the loans has drawn fire from some lawmakers in Virginia, where nearly 500 storefronts offer title loans. The average interest rate charged in the commonwealth was 222 percent in 2014, according to state data. Prompted at least partly by critical media coverage of the costs, the Virginia General Assembly is considering legislation to crack down on the business practices, including a bill to cap interest rates at 36 percent annually.
Title lenders have fought off similar limits in other states, arguing rate caps would force them to close their doors.
Some states ban high-interest loans altogether under usury laws, while others have licensed and regulated title lenders for years. Yet there’s surprising little data to guide state policymakers in deciding how much interest is reasonable — or how much the public should be able to learn about the industry.
A Center for Public Integrity investigation published late last year found that oversight and disclosure policies vary widely nationwide. In Missouri, where all three of the Virginia title lenders also operate, financial reports are public records and anyone can request copies, for instance.
Yet regulators in other states either don’t require title lenders to file detailed financial data, including interest and default rates, or they keep information from these reports confidential.
Wisconsin officials, for instance, said they collect and examine title-loan sales figures for each company they license, but making the findings public is a felony.
In New Mexico, lawmakers took years to pass legislation allowing state officials to quiz lenders on the size and duration of loans, interest rates and other fees — and how often people lose their cars when they default.
Ready access to this data is “critical for both the public and policy makers,” said Ona Porter president and CEO of Prosperity Works, which advocates for working families in New Mexico.
Watchdog groups worry that many lenders don’t check if customers have the ability to repay loans. Porter said her group wants state officials to consider revoking the licenses of title lenders that repossess cars from more than 10 percent of customers.
But how aggressively state officials are enforcing regulations is hard to assess without knowing the lending practices of each licensed company, said Steve Fischmann, co-chair of the New Mexico Fair Lending Coalition, an advocacy group.
He said that state law gives officials the power “to withhold licenses from bad actors, but they are sitting on their hands.”
Consumer advocates in Illinois also contend they have a tough time evaluating title lenders when state officials shield their lending and repayment policies.
Since 2009, the Illinois Department of Financial and Professional Regulation has collected details of all loans the companies make, but it has refused to make that data public so others could analyze it. An advocacy group said in a report that they are unable to “fully assess the state of title lending in Illinois” as a result.
“It makes it really difficult to understand the impact of this type of predatory lending in communities,” said Lucy Mullany, a senior policy associate with the Heartland Alliance, an advocacy group that works to end poverty.
Though title companies argue that close inspection of their finances is bad for business, there’s little indication that’s happened in Missouri.
The three title lenders made a total of 76,467 loans in the state during 2014 for more than $85 million. The companies, or their affiliates, repossessed 11,632 cars from borrowers in Missouri during 2014. TitleMax dominates the Missouri market with about two-thirds of the loans and three quarters of the repossessions, state records show.
An infamous “dark money” group took its first shot in the presidential TV ad wars with a six-figure ad buy attacking ascendant Republican candidate John Kasich.
The Iowa-based American Future Fund is a conservative nonprofit linked to the billionaire brothers Charles and David Koch that since 2010 has inundated federal and state races with tens of millions of dollars.
But it seems the Ohio governor, while a Republican, is not right-leaning enough for the group.
“John Kasich — not a conservative. Not even a moderate. An Obama Republican,” the ad’s narrator says. The ad zeroes in on Kasich’s purported support of Common Core educational standards, Medicaid expansion and tax increases.
Airing in New Hampshire markets, the ad flurry follows Kasich’s recent surge in the Granite State. Kasich nabbed endorsements from two newspapers there and is making a strong showing in New Hampshire polls. But if American Future Fund has any say, Kasich will flounder in the first-in-the-nation primary on Feb. 9.
The ad’s sponsor
This likely will not be American Future Fund’s sole appearance in the 2016 presidential race.
Consider this: The “dark money” nonprofit spent just under $21 million in the 2012 presidential race, with more than half of that directed to touting defeated Republican nominee Mitt Romney. And during the 2012 federal election, American Future Fund ranked fourth among nonprofits in spending, according to the Center for Responsive Politics.
Like all 501(c)(4) nonprofits — or “social welfare” organizations — American Future Fund does not have to disclose its donors, so its cash flows are largely untraceable. Such nonprofits can’t make politics their primary purpose, but these groups continue to inject hundreds of millions of dollars into elections.
Its primary purpose, at least according to its tax filings, is “to educate and advocate for conservative, free market ideas.” Though in the past, watchdog groups such as Public Citizen have asked the Federal Election Commission to investigate whether American Future Fund’s true intent is to influence elections.
There are numerous examples of American Future Fund entering the political arena.
When Sen. Kelly Ayotte in 2012 voted against enhancing firearm background checks, American Future Fund spent $1.3 million in ads supporting the New Hampshire Republican. Leadership PACs of six Republicans gave a cumulative $105,000 to American Future Fund shortly before the pro-Ayotte ad campaign.
American Future Fund injects money in state races too. In 2014, American Future Fund spent about $360,000 in Nebraska’s gubernatorial election and Arkansas’ attorney general race.
The group even involves itself in island matters. The group sponsored ads in 2014 that attacked Puerto Rico’s Democratic Gov. Alejandro Garcia Padilla.
Who’s behind it?
Leading American Future Fund is Republican operative Nick Ryan, who founded the nonprofit in 2007.
Ryan also heads Pursuing America’s Greatness, a super PAC supporting Republican Mike Huckabee, and nonprofit Iowa Progress Project. In 2014, America Future Fund funneled $451,500 to Iowa Progress Project — a group that recently launched ads critical of presidential candidate Ted Cruz for his stance on ethanol subsidies.
Exactly how much the group will raise this election season will remain a mystery until long after ballots are cast. As a nonprofit, American Future Fund reports to the Internal Revenue Service once a year.
The group received $6.9 million in contributions in 2014, according to its most recent tax filing, though that number has likely since surged. The group receives more contributions during election years. In 2012, American Future Fund reported revenue of $67.9 million.
That year, most of the group’s revenue came from two Koch-linked organizations: the Center to Protect Patient Rights and Freedom Partners Chamber of Commerce — groups that cumulatively contributed $62.8 million in 2012.
The funder’s identities are largely are unknown, but in 2014, three people contributed more than $1 million.
The group has been tied to several individuals. In 2010, The New York Times identified Iowa businessman Bruce Rastetter as providing seed money for American Future Fund. Rastetter is co-founder of Hawkeye Energy Holdings, one of the nation’s largest ethanol producers.
A drug lobby’s trade association has bankrolled American Future Fund as well. The Pharmaceutical Research and Manufacturers of America gave $300,000 to American Future Fund during the 2010 election.
American Future Fund plans to spend $1 million on ads in New Hampshire markets, according to The New York Times. So far, Federal Communications Commission filings indicate that the group has placed about $600,000 in ads.
Why watch this group
To put it simply, American Future Fund is one of the biggest “dark money” spenders in the game.
American Future Fund spends tremendous sums per election cycle — focusing primarily on state and federal races. In 2013, the group attacked the IRS.
There’s little doubt that 2016 will be any different. In the past though, American Future Fund was absent during primary elections and it rarely attacks Republicans, making its attack on Kasich more interesting.
This story was co-published with TIME.
So much for cherished hopes: Republicans won’t be celebrating good times with Kool & the Gang when they nominate their presidential candidate this summer.
Organizers originally billed the 1980s hitmakers as entertainment for a party during the Republican National Convention honoring prominent Republican politicians — and likely awash in lobbyists and corporate influence peddlers.
But Carla Eudy, a prominent GOP fundraiser whose past convention parties have been sponsored by the likes of Koch Industries and megadonor Sheldon Adelson’s Las Vegas Sands Corp., said Kool & the Gang was no longer participating.
Eudy declined to explain why the band now won’t be performing at the event scheduled for July 17 in Cleveland. “The reasons are between us and the band, and we agreed not to discuss the terms,” she said in an e-mail.
Kool & the Gang’s management company, Red Light Management, did not respond to a request for comment.
A solicitation sent to prospective sponsors states the party is meant to honor Republican leadership and members of the U.S. Senate, with National Republican Senatorial Committee Chairman Roger Wicker, a U.S. senator from Mississippi, as the featured speaker.
The bright side for the organizers, who have a long track record of organizing these parties: they’re unlikely to have much trouble finding an act to take Kool & the Gang’s place.
Kid Rock, Journey, Lynyrd Skynyrd and the Commodores have played Republican convention-associated events in past years. Democrats have rocked out to Kanye West, the Black Eyed Peas and Death Cab for Cutie.
But clearly, it’s time to get down on it.
That’s because regardless of which presidential candidates win their parties’ nominations, partisan operatives view national conventions as prime power networking opportunities. Lavish corporate-and-lobbyist-sponsored events that happen alongside the conventions are classic venues for politicos and political influencers to connect.
Congress passed sweeping ethics reform legislation in 2007 that in part attempted to curb the convention-related mingling between lawmakers and the corporations and lobbyists that advocate before them.
Still, there are multiple loopholes that have allowed the parties to continue. Because of them, convention attendees, especially members of Congress, continue to have their pick of fancy functions carefully tailored to comply with the law.
For example, some rules apply specifically to events held during the dates of the convention. The July 17 affair comes one day before the kickoff of the Republican National Convention.
“Simply by staging this party prior to the official date of the convention, those who can afford the price of admission will no doubt be duly recognized and given one-on-one face time with the senators and party officials,” said Craig Holman, government affairs lobbyist for the nonprofit advocacy group Public Citizen, after seeing a flier advertising sponsorship packages for the July 17 party.
In an interview with the Center for Public Integrity, Eudy said the point of the date outside of the convention period wasn’t evading ethics rules that apply specifically to events held within the dates of the convention. Rather, it was because there’s less competition from other parties for venues and attendees, she said.
Nonetheless, “The party conventions are the most troubling big money bonanzas on the election calendar, rife with opportunities for special interests to buy face time with our nation’s elected leaders and their staff,” said Paul S. Ryan, deputy executive director of the nonpartisan Campaign Legal Center.
The lowest-tier sponsorship option for the party — the $25,000 “Huron” package — includes 10 tickets to a VIP area, 10 general admission tickets and corporate name and logo placement on invitations, credentials and event signage.
Then there’s the $100,000 “superior” package for the main event underwriter, which includes more tickets, a roped-off area within the VIP section, prominent corporate logo placement and a backstage photo op with the band for up to six couples.
Other past clients and event sponsors for events put together by Eudy’s team include trade association America’s Health Insurance Plans, Google, ExxonMobil and a long list of other well-known companies and trade associations.
So far, most lobbying firms and companies are keeping their national convention plans quiet.
For example, prominent Democratic lobbyist Tony Podesta did confirm his firm, the Podesta Group, will host events at both conventions. Republican lobbying firm BGR Group, headed by former Republican National Committee Chairman and Mississippi Gov. Haley Barbour, confirmed it will be hosting a party, but declined to release details.
There’s some evidence, however, that high-profile venues in both cities are booking up.
For instance, Jenny Packer, a spokeswoman for the National Constitution Center in Philadelphia, said the museum, which is dedicated to increasing awareness of the Constitution, has had multiple queries for dates during or around the Democratic National Convention and already has several nights on hold.
“I expect that we will definitely be booked every single evening of the convention,” she said.
The Constitution Center’s venue options range from the Grand Hall Overlook, which boasts a view of Independence Mall and can accommodate a cocktail reception for 800 people and rents for about $5,000, to the Kirby Auditorium, which seats 200 people and goes for about $1,500 for the night.
Some parties raise money for charity. Others, including the one organized by Eudy, are “truly just a party,” she said. “We solicit sponsors to pay for the event.”
As state legislative sessions shift into high gear, lawmakers are proposing significant new ethics and transparency laws in nearly a dozen states, in part as a result of the Center’s State Integrity Investigation.
Many of these states have suffered recent statehouse scandals. But elected officials, advocates and editorial boards have also seized on the State Integrity Investigation report to argue for changes in how business is done in their capitals.
The State Integrity Investigation is a data-driven evaluation of state government accountability and transparency, published in November by the Center for Public Integrity and Global Integrity. The best score, a C, went to Alaska, while 11 states received failing grades.
The project found that in most states, ethics and open records laws are riddled with loopholes while the government agencies meant to enforce them are often toothless and underfunded. Many states that earned poor grades could see improvement if the new proposals are enacted. The barriers are significant, and calls for reform aren’t new, but the mood appears right in several states, where scandal and public outcry have put significant pressure on officials to act.
In Missouri, which has no limits on the size of campaign contributions or lobbyist gifts, a series of scandals has helped push several single-issue ethics bills through the Legislature. This week, the House passed a bill that would prohibit lawmakers from accepting gifts offered by lobbyists. The state earned a D- in the Center’s report, which spurred a long editorial from the St. Louis Post-Dispatch in November. Gov. Jay Nixon, a Democrat, has said that ethics reforms would be his top priority this year, his last in office. But despite the moves so far, Republicans in the legislature appear unlikely to advance broader reforms such as a cap on campaign contributions.
In New York, where successive rounds of ethics reforms in recent years have failed to slow a wave of prosecutions of public officials, Gov. Andrew Cuomo once again called for major changes to the state’s campaign finance and ethics laws. Last year, publication of the state’s D- grade came amid the convictions of the former speaker of the Assembly and former leader of the Senate in separate federal corruption trials. Both scandals and the Center’s report highlighted Albany’s infamous political culture, where many lawmakers earn substantial incomes working as private lawyers or consultants for some of the same industries that contribute millions of dollars to their political campaigns.
In his state of the state speech this month, Cuomo called for closing a major loophole in the state’s campaign finance law that allows for essentially unlimited contributions from corporate entities and also for a cap on lawmakers’ outside income. Many lawmakers have called for similar changes, but because of the nature of New York politics, the effort will likely live or die as part of budget negotiations later this year.
Reformers in other states may face longer odds. Lawmakers in Minnesota and Colorado and Washington’s attorney general have all cited their states’ grades in proposing bills that would make government more transparent and implement stronger conflicts-of-interest rules. The Minneapolis Star Tribune and The Seattle Times cited the State Integrity Investigation grades in editorials praising those efforts.
In Vermont, one of eight states without an independent ethics commission, Sen. Anthony Pollina introduced a bill to change that. The move is backed by Secretary of State Jim Condos, who has cited the state’s D- grade as evidence of the need for such a commission. But some lawmakers have questioned the costs associated with creating and staffing the commission and also whether the state constitution would even allow for it. Several scandals have helped build support for reforms, including an investigation into the state’s attorney general for allegedly violating campaign finance rules and the recent suspension of a senator who has been charged with sexually assaulting two women.
Lawmakers from both parties have also proposed creating an ethics commission in New Mexico, where former Secretary of State Dianna Duran recently completed a 30-day sentence after pleading guilty last year to stealing campaign funds. While Gov. Susana Martinez has not indicated whether she supports the move, she did recently call for improving campaign finance reporting and closing the revolving door between public office and lobbying. New Mexico earned an overall grade of D-, scoring failing grades in the categories of ethics enforcement agencies, political financing and legislative accountability. Earlier this month, the nonprofit news organization New Mexico In Depth published a special report on the new session focusing on transparency and accountability and drawing extensively on the State Integrity Investigation.
South Dakotans will not have to wait for their representatives to pass tougher laws. This month, the secretary of state approved a measure for this year’s ballot that would enact sweeping changes, including creating an independent ethics commission and limiting gifts from lobbyists. The measure is the result of a bipartisan campaign that was inspired by the state’s failing grade in the first State Integrity Investigation, published in 2012. After the state earned another F in November, the leaders of the ballot drive penned a column in the Argus Leader to build support for their campaign.
Nine states have yet to open their legislative sessions, while four do not meet for regular sessions at all this year, according to the National Conference of State Legislatures.
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In a blaze of rhyming, rambling glory, Sarah Palin this month glommed onto Donald Trump’s presidential campaign.
Trump beamed. Comedyshows rejoiced. And Palin, who's belly-up online channel, kaput Fox News contract and son's domestic violence arrest rank among recent indignities, thrust herself backintolame-streammediaheadlines.
But the former Alaska governor's own political action committee, once prodigious, is flaming out: Palin's appetite for luxury travel and pricey consultants has depleted its cash reserves to historically low levels, a Center for Public Integrity review of new federal records indicate.
Sure, lots of political committees would love to have the $380,000 that remained in Sarah PAC’s coffers as of Dec. 31.
But not since mid-2009, just after Palin formed SarahPAC following her unsuccessful vice presidential bid, has the group’s cash stash dipped so low. It sat on $1 million as recently as mid-2014.
How’d this happen?
SarahPAC is simply burning through more money than it’s bringing in.
During 2015, SarahPAC expenditures ($1.4 million) outpaced income (about $950,000), federal records show. This, from a former politician who markets her “fiscal responsibility” bona fides and once urged lawmakers to “cut spending — don't just simply slow down a spending spree” as an elixir to the Great Recession.
By another measure: the $457,459 SarahPAC reported raising from July 1 through Dec. 1 represents its smallest half-year haul since its formation in early 2009.
Meanwhile, conservative politicians’ campaigns didn’t receive a dime of SarahPAC’s heavy spending during the second half of 2015. Only a handful of lawmakers directly received cash during the first half of 2015.
This might surprise Palin supporters, who she solicits to “chip in $25 today to help us stack Congress with true conservatives” while asserting that SarahPAC is “working hard to support and elect conservative leaders.” (Prior to endorsing Trump, Palin pointed to Sen. Ted Cruz’s praise for SarahPAC as proof.)
There are other ways that PACs may support political candidates. A frequent method is “independent expenditures”— money that supports a candidate through television, radio, digital or other forms of advertising. But SarahPAC reported no independent expenditures during 2015.
SarahPAC officials did not return requests for comment.
So where did SarahPAC’s money go? Mostly toward efforts that supported Palin’s travels or helped SarahPAC sustain its own existence.
It’s expenditures from July 1 through Dec. 31 include:
SarahPAC’s most dedicated donors of late 2015 — those giving more than $200 — are elderly: More than three in five such contributors listed their occupation as “retired” or some variation thereof. They are most likely to hail from California, Texas or Florida.
But small-dollar donors, who don’t have to publicly reveal who they are or what they do, provided the lion’s share of SarahPAC contributions during late 2015.
To woo them, SarahPAC offers public television-like incentives to supporters willing to make a more modest contribution.
Backers donating at least $75 receive an autographed copy of Palin’s book “Sweet Freedom: A Devotional.”
Those who give $100 take home a plush “SarahPAC mama grizzly bear” toy.
Many of those donations — $22,325 in all during the second half of 2015, federal records show — funded SarahPAC’s purchase of Palin’s own book and those grizzly bear toys.
A super PAC leading Democratic efforts to retake the U.S. Senate is sharing resources with a new, allied nonprofit group that will not have to reveal its donors.
In a campaign finance disclosure report filed Friday, Senate Majority PAC reported receiving more than $300,000 in reimbursements for staff, office space and other expenses during the second half of last year from a group called Majority Forward.
In response to questions from the Center for Public Integrity, Senate Majority PAC spokesman Shripal Shah described Majority Forward as "an allied organization" with "shared office space, shared staff."
Majority Forward will be engaging in nonpartisan voter registration work, he said in an email.
The two groups share an address, and Washington, D.C., corporate records show Majority Forward was incorporated in June by Perkins Coie lawyer Marc Elias, who represents Senate Majority PAC.
Elias, who is also general counsel for the campaign of Democratic presidential candidate Hillary Clinton, said Friday night he could not immediately comment.
Shah declined Friday evening to answer additional questions about who Majority Forward’s contributors are and whether the group had any staff or resources independent of Senate Majority PAC, or to provide additional details about its voter registration work.
Senate Majority PAC advertises itself as a “transparent” organization, and as a super PAC, it files regular reports with the Federal Election Commission disclosing its donors and expenses.
But this isn't the first time it has received hundreds of thousands of dollars from a so-called "dark money" nonprofit that engages in politics but doesn't reveal the source of its funds.
For example, Patriot Majority USA, a liberal nonprofit organized under the same section of the tax code as Majority Forward — 501(c)(4) — gave it more than $500,000 during the 2014 election cycle for expenses such as salaries and insurance.
Democratic presidential candidates Clinton and Bernie Sanders have both been highly critical of the influence of untraceable money in politics.
“We have to end the flood of secret, unaccountable money that is distorting our elections, corrupting our political system and drowning out the voices of too many everyday Americans,” Clinton said in a statement posted prominently on her website.
Sanders, for his part, blasts the “huge piles of undisclosed cash” in play in the 2016 election and wants “wealthy individuals and corporations who make large campaign contributions to disclose where their money is going.”
Senate Majority PAC was the dominant Democratic group during the 2014 election cycle, and ran about 45,000 ads in Senate races — more than any other non-candidate committee group.
More than a few curiosities, oddities and abnormalities arose when presidential campaigns and super PACs filed their 2015 end-of-year campaign finance disclosures Sunday night.
Among the notable numbers the Center for Public Integrity flagged:
$4,769,923: Amount raked in by Eleventy Marketing, the top-paid vendor to Republican Ben Carson’s campaign during the fourth quarter of 2015, when Carson’s campaign spent nearly $5 million more than it raised. The Carson campaign raised about $54 million in 2015, mostly from small donors, but spent a big chunk of the money on fundraising expenses.
$1,019,469.74: What a super PAC backed by the National Nurses United union spent advocating for Bernie Sanders. Sanders’s disdain of big money politics hasn’t stopped super PACs from supporting him, with the National Nurses United for Patient Protection super PAC out in force. But while other super PACs are bankrolled by six- and seven-figure donations, all of the nurses’ union coffers are funded by “both mandatory and voluntary dues paid by its 185,000 members,” officials told the Washington Post.
$834,960: White House, red ink? Despite President Barack Obama’s 2012 re-election campaign using the “Democratic Hope Fund” to pay down lingering debt — Kanye West is helping! — the commander in chief remains saddled with six-figures worth of obligations. Most of it is owed to Perkins Coie LLP, a massive law firm whose political law practice leader, Marc Elias, is general counsel to Hillary Clinton’s presidential campaign.
$500,000: Value of a bank loan Democrat Martin O’Malley took out in December to keep his campaign afloat. With less than $170,000 cash on hand, the O’Malley campaign fell behind on paying senior staffers. Some relief arrived in January when the campaign took receipt of more than $846,000 in public matching funds and paid the loan off, O’Malley spokeswoman Haley Morris noted. The campaign has “actually seen an uptick in low-dollar fundraising since we announced we would be applying for public financing,” she said, although O’Malley’s poll numbers remain dismal.
$307,068: That’s how much Whole Foods cofounder John Mackey contributed to pro-Rand Paul super PAC Concerned American Voters. This may come as a surprise to some, but Mackey, a self-described “ethical vegan,” told Mother Jones that he “rejects the premise that liberal and libertarian values are necessarily in conflict.”
$288,387: The amount Right to Rise USA, the Jeb Bush-backing super PAC, paid a mysterious LLC linked to the Bush campaign’s national finance director. The arrangement makes it difficult to tell where the money is ultimately going.
$202,892: What Ready PAC, the supposedly defunct super PAC formerly known as Ready for Hillary PAC, earned by selling or renting supporters’ personal information to three other entities: the Democratic Congressional Campaign Committee, Democratic operative-led PAC End Citizens United and Infogroup, which promotes“using big data to drive your business” to its clients. It spent more than $316,000 during the latter half of 2015, particularly on consultants, staffers and direct mail.
$167,401: Debt reported by Republican Rick Santorum’s flagging presidential campaign, which also disclosed having next to no cash on hand through Dec. 31. If there’s a silver lining in the 2016 edition of Santorum’s sweater vest, it’s this: His 2012 presidential campaign is still carrying more than $450,000 in debt.
$7,300: The amount Right to Rise PAC — the sister organization of pro-Bush super PAC Right to Rise USA — reported contributing to the re-election campaign of Sen. John McCain. The Arizona Republican and 2008 GOP presidential nominee had already endorsed fellow Sen. Lindsey Graham for the 2016 Republican presidential nomination when Right to Rise PAC made its contribution on July 31. But Graham quit the race in December — and endorsed Bush earlier this month.
$2,484: What Bush, in a Sunday night email to supporters, said was needed to avoid “not having the resources we need to turn out voters tomorrow” at the Iowa caucus. The email arrived the hour after pro-Bush super PAC Right to Rise USA reported having almost $58.6 million in reserve through December — more than any other super PAC in the nation.
$1,000: The largest “sacrifice” Sen. Ted Cruz asked supporters to make to his campaign by 11:59 p.m. Sunday night.
$251: The amount O’Malley’s campaign paid the Koch Brothers— not to be confused with David and Charles Koch, the billionaires that funnel millions of dollars into conservative causes. O’Malley instead paid Koch Brothers, an office furniture store in Des Moines, Iowa.
$20: Amount Democrat Lincoln Chafee’s presidential campaign, in its final days, paid out for a parking reimbursement at Washington, D.C.’s Newseum. The recipient? Chafee himself.
This story was co-published with the Huffington Post.
The 2016 White House race is well on its way to being the most expensive in history.
Presidential candidates and the political groups supporting them combined to raise more than $837 million during 2015, driven by a massive influx of cash to big-money super PACs, according to a Center for Public Integrity analysis of new campaign finance filings.
The new filings show that Democratic presidential candidates Hillary Clinton and Bernie Sanders, as well as Republican contenders Ted Cruz and Marco Rubio, ranked among candidates whose campaigns raised the most impressive sums in 2015. This effectively ensures they’ll remain in the presidential race long past Monday’s Iowa caucuses.
Super PACs backing GOP presidential contenders raised one-third more cash last year than the candidates’ own committees — a significant departure from four years ago, when GOP presidential candidates outraised their supportive super PACs by more than 3-to-1.
Federal regulators sanctioned super PACs in 2010 following the U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling and a lower court decision. They’re supposed to avoid coordinating their spending with politicians they support, but many nevertheless are closely tied.
The result: The presidential campaign is now a super PAC-fueled arms race where almost everyone has a money bomb.
Some political observers say the increased flow of big money into political campaigns has helped give voters more choices and information. But others fret that wealthy donors have hijacked elections, distorted the public policy process and skewed politicians’ priorities.
“Super PACs likely encouraged more candidates to get into the 2016 GOP presidential race,” said Jay Goodliffe, a political science professor at Brigham Young University. “Even if their polls were not initially good, or there were other setbacks, the super PAC could help keep them afloat.”
But the widespread embrace of super PACs isn’t shared by Adam Lioz, a policy advisor at the left-leaning think tank Demos.
“Your success and your longevity as a candidate should depend upon the people you can rally to your cause,” Lioz said — not a few people writing “million-dollar checks.”
He continued: “People are tired of being bombarded by ads, especially when they know that those ads are paid for by the ‘one percent.’”
Mighty super PAC can’t buy Bush love
Here’s what super PACs aren’t this presidential election: A silver bullet for any candidate.
Take Right to Rise USA, the super PAC supporting former Florida Gov. Jeb Bush, which has raised and spent more money than any other super PAC active in the 2016 presidential race.
Despite this, Bush has languished in the polls. The last poll sponsored by the Des Moines Register ahead of Monday night’s caucuses showed Bush earning just 2 percent of the expected vote.
Most of Right to Rise USA’s $118 million haul was collected before Bush officially announced his candidacy and while Bush himself was traveling the country helping the super PAC raise funds.
Documents filed Sunday show the pro-Bush super PAC’s largest donor during the fourth quarter of 2015 was C.V. Starr & Co., a financial firm headed by Maurice “Hank” Greenberg, the former chairman and CEO of insurance giant AIG. The company donated $10 million in October.
Another major donor is the Oklahoma-based firm Rooney Holdings, which has given $2.3 million to Right to Rise USA. The company’s president and CEO — L. Francis Rooney III — is a veteran GOP fundraiser and served as President George W. Bush’s ambassador to Vatican City.
Thanks, in part, to the financial largess of such wealthy supporters, Right to Rise USA raised more than three times as much cash as Bush’s own campaign last year.
Right to Rise USA has spent more than $60 million to date. Most of that money has been targeting voters in the critical early states of Iowa, New Hampshire, South Carolina and Nevada, which conduct their presidential nominating contests in February.
In fact, the pro-Bush super PAC has accounted for more than one of every four TV ads sponsored during the GOP presidential primary, according to a Center for Public Integrity review of data provided by Kantar Media/CMAG, a firm that monitors broadcast TV ads as well as those on national — but not local — cable.
Trump, a billionaire real estate mogul and reality TV star, raised less money last year than most of his rivals: $19 million, including nearly $13 million of his own funds. Yet Trump has benefited from his unique celebrity status, coupled with endless — and free — media coverage.
While Trump initially vowed to self-fund his campaign, he’s also raised nearly $6.6 million from other donors. About 75 percent of that sum has come from small-dollar donors giving $200 or less.
Super PAC cash dwarfs GOP candidates’ war chests
Bush isn’t the only presidential candidate who’s witnessed a supportive super PAC outraise his own campaign.
The pro-Christie super PAC America Leads raised $16 million last year, while Christie’s own campaign raised about $7.2 million.
And a pair of pro-Kasich super PACs called New Day for America and New Day Independent Media Committee combined to raise nearly $18 million in 2015, while Kasich’s own campaign collected about $7.6 million.
These super PACs have largely directed their advertising barrages on New Hampshire, where Kasich and Christie are hoping a potential victory over Rubio, a U.S. senator from Florida, would help garner them both momentum and support from the Republican Party’s establishment wing.
Rubio’s own campaign raised about $33 million in 2015, while his main supportive super PAC — called the Conservative Solutions PAC — raised $30 million. A separate pro-Rubio nonprofit that doesn’t disclose its donors announced last summer that it had raised about $16 million — of which it has spent at least $8.5 million on TV ads.
Tucker Martin, a spokesman for America Leads, said the super PAC’s ad buys have been successful in bringing Christie’s message “directly to voters in their living rooms.”
Conservative Solutions PAC spokesman Jeffrey Sadosky said his group’s “air cover has been incredibly important,” especially as Rubio has become increasingly under attack.
Connie Wehrkamp, a spokeswoman for the pro-Kasich super PACs, did not respond to a request for comment.
Jeffrey Peck, a top Democratic lobbyist in Washington, D.C., at the firm Peck Madigan Jones, told the Center for Public Integrity that “the need for money breeds the need for more money.”
He added: “If you are in a race where your competitors have tremendous amounts of super PAC money being spent, then for you to be competitive, you need to do the same thing.”
Meanwhile, a network of eight separate super PACs has formed to support the presidential bid of Cruz, the U.S. senator from Texas. These groups — one of which has already disbanded — combined to raise more than $42 million in 2015.
For its part, Cruz’s campaign collected $47 million last year — more money than any other Republican candidate save retired neurosurgeon Ben Carson, who raised $54 million but burned through nearly 90 percent of that sum.
Cruz entered 2016 with nearly $19 million in the bank — more than any other GOP campaign. Megadonors supporting his bid include hedge fund manager Robert Mercer, businessman Toby Neugebauer and the Wilks family of Texas, who made its fortune in the fracking business.
Larry Levy, the lawyer of the Mercer-funded Keep the Promise I super PAC, which raised $11 million last year, said his super PAC was helping to “engage voters” and provide “positive reasons on why Sen. Cruz would make the best candidate.”
In addition to TV ads, Levy said Keep the Promise I has made significant investments in radio ads, digital ads and field organizers.
“Super PACs, when they started, were just advertising machines,” he said. “We’ve been something different."
Democrats battle with big money
While super PACs have dominated the TV airwaves in the GOP presidential race, such groups have so far played a much lesser role for the Democrats.
Just don’t expect it to stay that way.
Clinton’s super PAC cavalry is already ready in the wings: The main super PACs supporting her raised nearly $48 million last year. So far the groups have spent less than $13 million.
Moreover, the largest of these groups, Priorities USA Action, raised an additional $10 million in January and has secured more than $40 million in pledges, according to the New York Times.
Might Priorities USA Action jump into the fray against Sanders if the U.S. senator from Vermont wins Iowa, New Hampshire or both?
“We will continue to work as hard as we can to elect Hillary Clinton president throughout the primary season and into the general,” said Justin Barasky, the spokesman for Priorities USA Action.
“We’re the only super PAC right now that isn’t being forced to spend heavily and that speaks to the strength of Hillary Clinton’s candidacy,” he continued.
Priorities USA Action’s largest donors include billionaires George Soros, who gave $7 million last year, as well as Haim and Cheryl Saban, who each gave $2.5 million. Financiers Donald Sussman and Herbert Sandler also each gave $2.5 million to Priorities USA Action last year.
These five megadonors accounted for 40 percent of the $41 million Priorities USA Action raised.
Like her supportive super PAC, Clinton’s campaign has also relied more heavily on wealthy patrons. In 2015, about 16 percent of the $116 million Clinton raised campaign from people who gave $200 or less.
For his part, Sanders, who is neck-and-neck with Clinton in most recent polls in Iowa and New Hampshire, has relied overwhelmingly on grassroots donors to build his own big-money political machine.
In 2015, Sanders raised about $75 million. More than 70 percent of that sum came from small-dollar donors giving $200 or less.
Unlike Clinton, Sanders has disavowed super PACs, though, he has benefited from about $1 million in spending by a super PAC of a national nurses labor union.
Meanwhile, Martin O’Malley holds the distinction of being the only candidate so far to qualify for country’s nearly obsolete public finance system. He raised $4.8 million last year. His supportive super PAC only collected about $800,000.
The last major presidential candidate to participate in the public financing system was Republican John McCain in 2008. Because of that system’s spending limits, McCain was easily outspent by Democrat Barack Obama.
Clinton, Sanders and O’Malley have each touted campaign finance reform plans designed to curb the influence of super PACs and overturn the Citizens United Supreme Court ruling.
Several of the Republican presidential contenders, on the other hand, have called for the elimination of campaign contribution limits as a way to steer more money back to candidates instead of super PACs.
Alex Cohen and Chris Zubak-Skees contributed to this report.
A new congressional bill is calling for greater transparency in how District of Columbia judges report their financial ties, a response to a 2013 Center for Public Integrity investigation that gave the city a failing grade.
“It’s out of sync with other states’ courts,” said the longstanding Democratic representative. “I don’t see why Congress should stand in the way.”
The legislation must go through Congress, rather than the D.C. Council, because of the peculiar relationship the city has as the nation’s capital.
And that quirk highlights the oddity of the existing situation: District of Columbia Court judges’ paychecks come from the federal government, but the judges currently aren’t held to the same standard as federal judges when it comes to publicly disclosing where they invest that money.
Annual disclosure reports typically show judges’ income, investments, debts and gifts. But in the case of the disclosures from the city’s Court of Appeals and Superior Court judges, only two of the disclosure form’s 10 sections — “Business and Charitable Affiliations” and “Honorarium” — are open for public inspection.
That makes it difficult for those coming before the courts to have confidence that judges’ personal financial interests are not affecting their cases.
The only states that scored worse — Montana, Idaho and Utah — did not require judges to publicly file annual reports at all. (In light of the Center’s report, however, Montana’s Supreme Court has since ordered judges to file the same financial disclosures as other statewide officials.)
Norton’s bill calls for making the D.C. judges’ reports available for public inspection, with provisions for information to be redacted if specific personal details could endanger a judge or a family member.
She told the Center for Public Integrity that she wants the District to go even further than the federal government in making the information accessible. She said she plans to ask the D.C. Commission on Judicial Disabilities and Tenure, which collects the reports, to make them available online.
News of the legislation was welcomed by the D.C. Open Government Coalition, which had been working behind the scenes since 2014 to reform the disclosure rules.
“This was an anomaly and the bill will help correct a longstanding problem,” said Fritz Mulhauser, a coalition member who championed a change. “We look forward to the passage of the bill.”
Norton is optimistic the reform will pass even though she is a Democratic non-voting delegate in a Republican-run Congress plagued by legislative logjams.
“This is the kind of bill I have been able to get through,” Norton said. “I certainly am going to give it an old school try.”
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If you want to run for president in the U.S. — particularly if you are a Republican —you better have a super PAC on your side. Or be a billionaire. Since the 2010 Citizens United decision, special interest groups are playing a bigger role than ever in how campaigns are financed. The latest government released fundraising reports suggest that this election is already set to break all spending records.
President Obama’s final year in office isn’t likely to be marked by major new U.S. foreign policy initiatives, if a list of policy priorities offered recently by White House chief of staff Denis McDonough winds up holding sway.
When McDonough was asked on Jan. 29 at a meeting at The Washington Post of past Pulitzer Prize winners what the eighth year of Obama’s term is going to look like, he gave a short list of priorities: criminal justice reform, passage of the Trans-Pacific Partnership trade deal, and climate-related environmental regulations.
Notably, McDonough didn’t hint at anything new on nuclear arms control (an issue at the center of Obama’s 2009 Nobel Prize), any new diplomatic bridges (or pressures, for that matter) involving Russia or China, any new initiatives related to peace or regional stability in the Middle East, or any structural shifts in federal defense spending.
McDonough reiterated that Obama has told his staff he’s inclined this year to say “why not?” more than “why?” He also said “we’re open for business with Congress” and promised that if the Republican majorities offer nothing, Obama will pull any levers he can to accomplish his goals. But he addressed the humanitarian and political mess in Syria only after Washington Post columnist Eugene Robinson asked him about it, and suggested only that the administration plans to stay the course there. By that, he meant it will continue to press for a political settlement and destruction of the self-styled Islamic State.
McDonough didn’t bite when Robinson asked if the president was disappointed he hasn’t been able to build a better bridge to the Muslim world. He said Obama has “set out challenges” to Muslim nations by offering to befriend those who want to partner with America, while at the same time defending U.S. interests. The conversation didn’t get deeper on this point.
Moments earlier at the event, hosted in the auditorium of the Post’s gleaming new Washington headquarters, journalist Bob Woodward – appearing on a panel assessing Obama’s potential legacy – praised the president for achieving a diplomatic deal with Iran that at least postpones for fifteen years that country’s stockpiling of a significant quantity of nuclear explosive materials.
Those privy to nuclear war plans, Woodward said, know how frightening they are. He said “anything to reduce the likelihood of that nightmare is to be applauded.” But he also complained that Obama had shown too much restraint on foreign policy dangers, which he said “doesn’t work in a world where you have Russia and ISIS.”
In June 2014, a worker at the Y-12 National Security Complex in Tennessee was surprised to find U.S. nuclear secrets inside a trash bag marked for disposal along with standard rubbish. Taking a closer look, the worker found 19 more documents in the bag that were either marked classified or were later determined to contain information that should have been labeled secret.
A dozen more bags of trash sat nearby, awaiting transport to an open landfill where Y-12 workers routinely dump garbage with no bearing on national security. When employees of Babcock & Wilcox Technical Services, Y-12, LLC, the contractor responsible for running the site at that time, poked inside two of these additional bags, they found more top-secret documents.
“(They) then decided not to search any additional containers because they were, given the prior results, presumed likely to contain additional classified information,” a preliminary notice of violation issued Feb. 2 by the Energy Department’s enforcement arm said.
Many of the records discovered that day detailed how the department’s employees and contractors worked with nuclear explosive materials, such as highly-enriched uranium, housed at the Y-12 complex. But it quickly got worse: Further investigation by the National Nuclear Security Administration, which oversees such work, led officials to conclude that nuclear secrets had been thrown away with lax security at the Tennessee plant for more than 20 years.
In a letter dated Jan. 28, 2016, Frank Klotz, head of the NNSA, informed David J. Richardson of Charlotte, North Carolina, the president of Babcock & Wilcox Technical Services, Y-12, LLC, that the company was being cited for three violations, even though B&W was replaced as the managing contractor at Y-12 on July 1, 2014. The company had failed to appropriately label classified information, failed to protect and control classified information, and had so feebly assessed its own performance that it left national defense secrets susceptible to theft by adversaries for years, according to NNSA's notice of violation.
The mix of violations involved “actual or high potential for adverse impact on the national security,” and “a significant lack of attention or carelessness” with the potential to harm national security, the NNSA’s notice said. Jud Simmons, a spokesman for BWX Technologies, the parent company of Babcock and Wilcox's government operations unit, responded in a statement to CPI that "there was no compromise of classified information" in the incident that sparked the investigation. "While still serving as the contractor at Y-12, we implemented an effective corrective action plan that was accepted by the customer," Simmons said. "We believe that the NNSA’s decision to not impose a civil penalty is appropriate."
Klotz threatened to fine Babcock & Wilcox Technical Services, Y-12, nearly a quarter-million dollars. But after negotiating with Richardson and his staff on April 9, 2015, at the company’s corporate office in Oak Ridge, Tennessee, Klotz forgave the $240,000 in proposed fines.
The company had suffered enough, Klotz decided. He noted in his letter to Richardson that the NNSA withheld bonus money from Babcock & Wilcox in fiscal year 2014 for “numerous safeguards and security issues, including deficiencies in B&W Y-12’s information security program,” and said that as a result no additional fines would be imposed.
More than a year before the enforcement action, NNSA gave Babcock & Wilcox a rating of “good” on its annual performance review in a category including its control of classified information. That earned the company an extra $10.6 million in fiscal year 2014, 74 percent of the bonus available in that category alone. In all, for its performance at Y-12 in fiscal year 2014 B&W received $44.7 million in bonuses– 78 percent of the potential rewards.
But the new violation notice makes clear that despite getting a grade of “good” from the NNSA, the classification division at Y-12 appeared to struggle at its job.
When the Energy Department investigated the items plucked from the trash, it determined some of the documents had never been reviewed by the staff responsible for making classification decisions. Those that had been reviewed were erratically categorized, according to the NNSA’s notice of violation to Babcock & Wilcox. Some were marked at higher or lower classification levels than the information warranted. Others were designated classified when they held no sensitive information, according to the notice of violation.
The documents that genuinely did contain high-consequence secrets were vulnerable to theft throughout their journey from the nuclear site and at the disposal location for unclassified waste. And they were not “destroyed beyond recognition” to assure they wouldn’t be recovered, as the Energy Department requires, according to the notice of violation. Since 2005, they were transported by a truck driver without clearances to an unprotected landfill; before then, it's unclear where they went, but the notice says that no special precautions were taken even then for discarding the classified material.
“The driver may stop for overnight rest breaks, during which the truck may be left unattended,” the notice of violation said. Devices attached to some of the waste packages to detect any tampering were not checked on arrival. “So B&W Y-12 would not know whether any [tamper-indicating devices] had been tampered with or missing,” the notice of violation said.
When investigators from the NNSA interviewed workers who’d handled the classified records that were discovered in the trash, some said they commonly disposed of documents – including those that referenced work with nuclear materials – in the unclassified waste stream.
“Some workers indicated that this process for discarding work-related paper had always been in place (i.e., for over 20 years) until discovery of the security event,” the notice of violation said.
Many of the workers investigators interviewed mistakenly believed the waste was trucked off to a dump approved for disposal of classified material and guarded to prevent theft. But since 2005, the loads were taken to a landfill that’s not approved for classified material.
Protection of nuclear materials and secrets at Y-12 has been under scrutiny since July 28, 2012, when an 82-year-old nun and two more peace protestors penetrated the security perimeter and advanced far enough to scrawl graffiti on a storage vault full of weapon-grade nuclear materials.
The guard force responsible during the 2012 security breach at Y-12 had faked its way through proficiency drills by obtaining details of mock sieges in advance, according to a report by the Energy Department’s Office of Inspector General.
Many of the NNSA’s contractors have struggled to appropriately identify and protect classified information. The Energy Department’s office of inspector general reviewed a sample of 231 documents from various sites in the nuclear weapon program in 2014. Sixty-five percent of them had been incorrectly classified, with both under-classification and over-classification prevalent, according to the inspector general’s report.
The notice of violation against Babcock and Wilcox was one of five issued by the NNSA against contractors at nuclear weapon sites during the last five years. Two of these were issued last year, when NNSA accused Los Alamos National Laboratory and Sandia of losing control of classified information.
A Sandia scientist had widely presented nuclear weapon design secrets during public appearances between 2003 and 2011. Numerous versions of his presentation had been stored on unprotected computer networks at the lab that were easy to access by people on-site, including foreign nationals.
Los Alamos’ violation involved the disappearance of unspecified classified matter that was supposed to be shipped to another nuclear site in Nevada, but five years later hadn’t arrived. Contractor staff at Los Alamos told investigators the item had probably been destroyed, but the NNSA regarded the explanation as implausible, and the mysterious item remains missing.
This story was co-published with the Daily Beast.
For six months, candidates and outside groups assailed Iowa TV viewers with a nonstop barrage of political ads.
They aired thousands of spots on morning shows. Democrats Hillary Clinton and Bernie Sanders went big on soap operas. Team Rubio sought out football games. Everyone clogged up the commercial breaks on Wheel of Fortune.
Millions of dollars and roughly 100,000 TV ads later, according to a Center for Public Integrity analysis of data provided by advertising tracking firm CMAG/Kantar Media, no one is ready to say any of the ads made the decisive difference in the Iowa caucus on Monday.
But one thing appears to be clear — nice was better than nasty.
Travis Ridout, co-director of the Wesleyan Media Project, which tracks political advertising, said Sanders and U.S. Sen. Marco Rubio of Florida in particular probably benefited from ads introducing themselves to voters and building a sense of viability.
Rubio finished a strong third on the Republican side. Sanders, a U.S. senator from Vermont who identifies as a socialist, nearly tied Clinton, the former Secretary of State and Democratic establishment favorite.
Meanwhile, Right to Rise USA, the pro-Jeb Bush super PAC behemoth, ran the largest number of negative ads and so-called contrast ads, which compare candidates with each other and often have a negative cast.
The super PAC drew fire for targeting Rubio with negative ads, which didn’t work particularly well. Rubio buried Bush on caucus night.
“They spent an enormous amount of money trying to depress support for other candidates,” said Elizabeth Wilner, vice president at Kantar Media/CMAG. “That clearly failed.”
Early in the campaign season, Bush hired prominent Iowa hand David Kochel, seen as a sign that he would vigorously compete there. But his campaign opted not to air a single ad in Iowa, instead letting the super PAC pick up the slack.
Right to Rise USA ultimately aired almost twice as many ads in Iowa markets (10,355) than Bush received votes on caucus night (5,238).
The airtime assault is now poised to continue in New Hampshire, whose first-in-the-nation primary takes place next Tuesday. The number of political ads aimed at the Granite State jumped 76 percent, from 9,029 to 15,917, between December and January.
As the field winnows down, advertising could have a more powerful impact.
“Advertising in the best circumstances makes a difference at the margin that is much more noticeable in a general election when you’re talking about a two-way race over a long period of time,” said Wilner.
Super PACs more negative
Overall, the candidates who led the field in Iowa ran more positive ads than negative ones, according to a Center for Public Integrity analysis of data provided by Kantar Media/CMAG, though the outside groups supporting them typically struck a less sunny tone.
On the Republican side, nearly three-quarters of the ads run by the big winner of the night, U.S. Sen. Ted Cruz of Texas, were positive. Factoring in ads from the cluster of super PACs supporting him, however, drops the percentage of positive ads to not quite half of the total.
Cruz had help from two super PACs — Keep the Promise I and Stand for Truth Inc. — that pumped more than 2,500 ads into Iowa markets during the last three weeks of January through Feb. 1, saturating the airwaves up until caucus-goers cast their ballots.
One other pro-Cruz super PAC, Keep the Promise III, had earlier aired a few dozen ads.
Advertising, of course, only tells part of the story.
Cruz’s victory has also been credited to an organized ground game and a strong performance on the stump, said Scott Reed, who managed Bob Dole’s 1996 presidential campaign and is now senior political strategist for the U.S. Chamber of Commerce.
Larry Levy, the lawyer for Keep the Promise I, a super PAC supporting Cruz, said the group intends to continue on its current course.
“You have a finite amount [of money] and then you figure out what’s the most effective way to use that money, whether you’re running a PAC or a business,” he said.
About 80 percent of the ads run by real estate mogul Donald Trump, who finished second, were positive. That’s essentially the same portion as Rubio and the outside groups supporting him.
Trump didn’t air any ads until January, but then sponsored 6,280 spots in the lead-up to the caucuses on Feb. 1 — an average of about 1 TV ad every seven minutes.
Rubio and the outside groups supporting him took the candidate’s football roots — he was a star player in high school — into account in their ad strategy. They’ve so far aired roughly 400 ads during football games in Iowa and New Hampshire markets, more than any other candidate.
Rubio even produced a football-specific ad in which he “fields” questions while tossing a football. The ad has so far aired 34 times during games in Iowa and New Hampshire markets.
On the Democratic side, Kantar Media/CMAG classified all of Clinton and Sanders’ ads as positive. That includes one Sanders ad widely viewed as attacking Clinton’s ties to Wall Street that doesn’t actually mention her by name.
Good showing critical
Ads are expensive, and a good showing in the Iowa caucuses is critical to the ability of campaigns and outside groups to keep attracting funding so they can buy time.
Annie Presley, the former deputy finance director for the Republican George W. Bush’s 2000 campaign, said candidates who aren’t viable “can’t expect people to keep giving.”
Presley, who isn’t raising money for anyone this year, added: “Those guys who were [at] 2, 3, 4, 5 percent — if their money doesn’t dry up, I’ll be very surprised.”
Coming out of Jeb Bush’s sixth-place finish in Iowa, his backers say New Hampshire will be critical.
“He certainly always was expected to do better in New Hampshire,” said lobbyist David Beightol, a Bush backer, who has given $2,700 to Bush’s campaign.
On a phone call with donors Tuesday morning, Bush campaign officials took no questions and asked only for deployment of volunteers, not for money, said a Bush bundler who did not want to be identified discussing communications with the campaign.
“I can imagine they probably have had a conversation which says it’s fools’ folly to ask people to raise money right now,” the bundler said.
“He’s got to come out of New Hampshire looking viable,” the bundler added.
Otherwise, establishment donors will turn to Rubio, who now has momentum after his unexp ectedly strong third-place finish in Iowa.
Cruz bundler Mica Mosbacher, meanwhile, said her phone has been blowing up since the caucus results came in. Prospective donors have been emailing and texting her, including some at 2 a.m. after the caucus win — a change from her typically having to chase them down.
“I am hearing from potential donors that I thought had forgotten me,” she told the Center for Public Integrity.
A typical email for her today: “Ted Cruz had a good night. Any fundraisers coming up?”
Michael Beckel contributed to this report.
This story was co-published with TIME.
Two U.S. congressmen have asked the Department of Housing and Urban Development (HUD) to address concerns that a program to sell mortgages to investors in bulk auctions is harming homeowners.
Sen. Sherrod Brown, D-Ohio, and Rep. Elijah Cummings, D-Md., requested a briefing on the program in a Feb. 1 letter to HUD secretary Julian Castro.
The letter cites the Center for Public Integrity’s investigation of the Distressed Asset Stabilization Program (DASP), a HUD program to sell mortgages insured by the Federal Housing Authority (FHA) to the highest bidder. The story outlined consumer protection shortcomings in the DASP system. The story was co-published on The Atlantic.
Brown is ranking member on the Senate Committee on Banking, Housing and Urban Affairs. Cummings is ranking member of the House Committee on Oversight and Government Reform.
“Several recent reports indicate that the Federal Housing Authority (FHA) may be selling nonperforming loans for properties located in some of our most vulnerable communities to hedge funds and private equity firms via quarterly auctions without sufficient protections for homeowners and neighborhoods,” the letter reads.
Over 98,000 mortgages have been sold through DASP with the stated goal of helping homeowners to avoid foreclosure while also getting troubled loans off the FHA’s books. The Center investigation revealed that the mortgages were sold for as little as 41 percent of their value and that only 16.9 percent of DASP mortgages avoided foreclosures.
In the letter, Brown and Cummings ask HUD several questions:
“Many of these questions we have been trying to get answers to for a long time,” says Alys Cohen, a staff attorney with the National Consumer Law Center. “FHA is supposed to work for homeowners, not just the lending community.”
Cohen adds, “The bottom line is lenders still say these sales are a way to get rid of loans that have no other options but we know many homeowners that are trying to save their homes are having their loan sold without any notice.”
HUD has continued to sell mortgages through DASP after the Center for Public Integrity report. The latest sale took place on Nov. 18, 2015 and put 7,787 mortgages on the auction block. Mortgages were grouped into 24 pools, two of which were bought by nonprofits, according to a post-sale report. Seventeen pools went to the investors at Bayview Acquisitions, LLC. Fannie Mae and Freddie Mac, who together hold the rights to many more mortgages than FHA, have followed with similar sales.
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