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'Dark money' groups fueled by cable industry

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The U.S. cable industry’s largest trade association last year helped bankroll several groups that spent millions of dollars in attempts to defeat President Barack Obama, new disclosures indicate.

A 2012 tax return filing, obtained today by the Center for Public Integrity, shows the National Cable & Telecommunications Association funds several politically active “dark money” groups that do not disclose their donors.

The groups receiving National Cable & Telecommunications Association money include:

Americans for Prosperity, which received $50,000, spent $33.5 million opposing Obama during the 2012 election cycle, according to the Center for Responsive Politics, a nonpartisan group that tracks campaign spending. Americans for Prosperity often supports Tea Party causes and candidates and is the main political arm of billionaire industrialists Charles and David Koch. As the Center reported Thursday, the group spent a staggering $122 million overall in 2012.

Americans for Tax Reform, which received $50,000, spent $15.8 million on the 2012 federal election, according to the Center for Responsive Politics. The group’s president and founder, Grover Norquist, is famous for his Taxpayer Protection Pledge, by which legislators and candidates promise to oppose all tax increases.

American Commitment, which received $10,000, spent $1.9 million on the 2012 federal election to advocate for and against political candidates — mostly to help U.S. Sen. Jeff Flake (R-Ariz.) defeat Democrat Richard Carmona. American Commitment also spent some of its money to oppose Sen. Tim Kaine (D-Va.) and Obama. American Commitment Founder and President Phil Kerpen is the former policy and legislative strategist at Americans for Prosperity and previously worked at Club for Growth, another group that doesn’t disclose its donors.

The Center for Individual Freedom, which received $20,000, has been actively fighting against proposals for increased disclosure of donors to politically active nonprofits. It spent $1.8 million during the 2012 election cycle mostly opposing Democratic congressmen Steven Horsford, Bill Owens and Dan Maffei, all from New York.

In all, the National Cable & Telecommunications Association awarded $5.8 million in grants to more than 80 groups spanning realms that include politics, business, advocacy and media. Among them: the Congressional Black Caucus Foundation, the National Association for the Advancement of Colored People, LULAC Institute Inc., the National Gay & Lesbian Chamber of Commerce, the National Urban League and the National Press Foundation.

The National Cable & Telecommunications Association’s largest grant, $2 million, went to Broadband for America, a lobbying group.

The association declined to comment. Among the 173 members listed on its website are notable media entities such as Cablevision Systems Corp., Comcast Corporation, C-SPAN, Discovery Communications Inc., Disney Media Networks, Fox Networks Group, Home Box Office, NBC Universal, Showtime Networks, Time Warner Cable and Turner Cable Networks.

The National Cable & Telecommunications Association received $60 million in membership dues, including $16 million in non-deductible lobbying and political expenses. 

Other highlights from the association’s Internal Revenue Service tax return, known as a Form 990, include some of its expenses, $786,608 for travel and $47,000 in contributions to four political entities known as 527 groups: the Republican State Leadership Committee, the Democratic Attorneys General Association, the Democratic Legislative Campaign Committee and the Republican Mayors and Local Officials coalition.

Association President Michael K. Powell’s compensation topped $3 million and James M. Assey Jr., its executive vice president, earned more than $1 million. Eight other employees earned more than half a million dollars, according to the 990.

The National Cable & Telecommunications Association spent nearly $19 million on lobbying in 2012. Seventy-eight out of the 89 federal-level lobbyists who represented it in 2012 had previously worked in government jobs, according to the Center for Responsive Politics.

The group’s IRS form says its mission “is to advance the cable and telecommunications industry's public policy interest before Congress, the executive branch and the courts, and to encourage and promote the industry's operating, programming and technology developments.”

Michael Beckel contributed to this report.

 

 

National Cable & Telecommunications Association President and CEO Michael PowellJulie Patelhttp://www.publicintegrity.org/authors/julie-patelhttp://www.publicintegrity.org/2013/11/15/13780/dark-money-groups-fueled-cable-industry

The mess gets worse at Hanford’s nuclear site

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The government’s multi-billion-dollar effort to clean up the nation’s largest nuclear dump has become its own dysfunctional mess.

For more than two decades, the government has worked to dispose of 56 million gallons of toxic nuclear and chemical waste stored in underground, leak-prone steel tanks at the Hanford Nuclear Site in southeastern Washington State.

But progress has been slow, the project’s budget is rising by billions of dollars, and a long-running technical dispute has sown ill will between members of the project’s senior engineering staff, the Energy Department and its lead contractors.

The waste is a legacy of the Cold War, when the site housed nuclear reactors churning out radioactive plutonium for thousands of American atomic bombs. To clean up the site — the largest such environmental undertaking in the country — the Department of Energy (DOE) started building a factory 12 years ago to encase the nuclear leftovers in stable glass for long-term storage.

But today, construction of the factory is only two-thirds complete after billions of dollars in spending, leaving partially constructed buildings and heavy machinery scattered across the 65-acre desert construction site, 12 miles from the Columbia River.

Technical personnel have expressed concerns about the plant’s ability to operate safely, and say the government and its contractors have tried to discredit them, and in some cases harassed and punished them. Experts also say that some of the tanks have already leaked radioactive waste into the groundwater below, and worry that the contamination is now making its way to the river, a major regional source of drinking water.

Some lawmakers say Hanford has been an early — and so far dismaying — test of whether Secretary of Energy Ernest Moniz, previously an MIT physics professor, can turn the problem-plagued Energy Department around through improved scientific rigor and better management of its faltering, multi-billion dollar projects. They have accused his aides of standing by while a well-known whistleblower was dismissed last month.

Meanwhile, DOE officials are now considering spending an extra $2 billion to $3 billion to help make the wastes safer for treatment. Doing so would delay the cleanup’s completion for years, the Government Accountability Office (GAO) estimated in December. DOE is already strapped for cash, due to the impact of the budget sequestration, likely to take billions of dollars out of its budget.

In an Oct. 9 letter to Moniz, Sen. Edward J. Markey, D-Mass., demanded that he take new steps to ensure that the project’s technical and safety experts are well-treated. Four organizations have reviewed their complaints, he said, and “all have agreed that the project is deeply troubled, and all have affirmed the underlying technical problems.”

On Nov. 14, Sen. Ron Wyden, D-Ore., told DOE’s nominee for general counsel at his confirmation hearing that he worries ”the message is out department-wide that when you speak truth to power and come forward and lay out what your concerns are, you face these kinds of [retaliation] problems.” If that’s true, Wyden said, “I think it’s going to be very detrimental to the safety agenda.”

A troubled past

Government officials and environmental activists agree that Hanford needs to be cleaned as soon as possible. But the timetable keeps slipping: Almost 25 years ago, DOE, the U.S. Environmental Protection Agency and the state of Washington agreed to start turning the waste into glass by 2011. But in 2010, the deadline was extended to 2019 with a completion date of 2047.

The project’s problems mirror those afflicting many of the Energy Department’s largest engineering projects. The estimated cost of cleaning up Hanford ballooned from $4.3 billion in 2000 to $13.4 billion in 2012, according to GAO’s December report. The DOE halted much of the construction last year due to technical problems, and Moniz announced last month that the agency is likely to miss three more project deadlines.

The GAO has long criticized the project’s “fast-track” approach, in which workers — operating under a single, overarching contract — have simultaneously been developing technology, designing the treatment plants, and undertaking construction. The approach is meant to ease the integration of technologies and help ensure the projects meet its legal deadlines. But the GAO says it has led to cost increases and delays.

On Sept. 30, DOE’s inspector general issued an audit stating that Bechtel, the project’s prime contractor, had repeatedly made design changes to plant equipment without a required safety review. DOE inspector general Gregory Friedman called the problems “systemic.”

That report came 13 months after Gary Brunson, who was then the plant’s engineering division director at DOE, told superiors in a memo that Bechtel had made at least 34 technical decisions that were incorrect, infeasible, unverified, unsafe, or too costly, according to a copy. He called for the company’s removal from its role as design manager. Frank Russo, Bechtel’s plant director at the time, responded that the issues were not new and had all been addressed in concert with the department.

DOE’s Office of Environmental Management responded with assurances that Bechtel has already started to address these shortcomings, and promised to monitor the company’s actions. Although Bechtel has completed many impressive engineering projects, it is not new to construction snafus. Bechtel paid $352 million to settle a government lawsuit after panels of a tunnel in Boston’s enormously complex and expensive “Big Dig” highway project collapsed in 2006.

But Hanford’s problems extend beyond the missed deadlines, budget troubles and critical watchdog reports. Employees and independent agencies say that DOE and contractor officials overseeing the project have created a workplace climate that discourages employees from raising grave technical and safety concerns.

Many of the concerns center on the danger that liquid and solid or semi-solid radioactive wastes could settle to the bottom of tanks and piping during treatment in sufficient quantities to start a chain reaction, explode, and release deadly radiation.

But engineers and scientists working on the project have alleged that project supervisors have relentlessly pushed to shorten testing and “close” technical issues related to the mixing of the wastes by deadlines — meeting their benchmarks to gain financial rewards — before solutions had really been found.

DOE offers this explanation: When an issue is “closed,” says Carrie Meyer, a DOE spokesperson at Hanford, it means that the agency and its contractors have developed a credible plan to resolve any remaining problems. Speaking of the challenges of keeping the wastes adequately mixed, she said “there’s no way you would solve an issue of that magnitude” quickly.

In hindsight, she said, using the word “closure” “was not a good way to characterize it.”

The firing of a prominent critic

The most prominent of those alleging retaliation for raising concerns about the project’s safety is Walter Tamosaitis, the project’s former research and technical manager for URS, the prime subcontractor to Bechtel. He was dismissed in October, sparking new controversy.

Donna Busche, a URS employee and manager of environmental and nuclear safety at the plant who worked with Tamosaitis, described him as “extroverted,” “tenacious” and “aggressive but not in a negative way” — someone who was “very forthright in conversations, [saying] that, ‘This needs to be addressed.’”

Tamosaitis’s troubles began after a 2010 meeting with Bechtel and URS managers, at which he turned over a list of unresolved technical issues that he said could affect the plant’s safety. Two days later, URS, acting under orders from a Bechtel executive, pulled him from the project, according to a legal complaint Tamosaitis filed in federal court in November 2011.

His claims that managers repeatedly spurned safety warnings and resolved technical problems too slowly led to an investigation by department’s nuclear safety board. In June 2011, it affirmed that department and contractor officials on the project had instilled a culture that deterred employees from reporting their concerns.

Board chairman Peter Winokur said in an April 1, 2013, letter to Wyden that the department has “vigorously tackled this issue but progress in changing any organizational culture is historically slow.” On Sept. 27, Deputy Secretary of Energy Daniel Poneman told the board that his department needed more time to assess if workers were deterred from reporting problems at other sites and find solutions.

After Tamosaitis’s forced departure from the plant, he was assigned to a non-supervisory post in URS’s main office in downtown Richland. But five days after Poneman’s letter, URS managers told Tamosaitis — a 44-year company veteran with a Ph.D. in engineering — to clean off his desk there and leave that day. URS insisted — as a condition of receiving severance pay — that he give up the lawsuit he filed against the company. He refused.

In an interview with the Center, Tamosaitis, 66, said the layoff was “clearly retaliatory.” Tamosaitis said he was particularly surprised by URS’s decision, because three months earlier, he had met with Moniz to discuss his concerns about the plant’s design and safety culture. Moniz had promised at his April confirmation hearing to meet whistleblowers at Hanford.

“He was very receptive,” Tamosaitis said of the 20-minute meeting. “I was optimistic that, yes, indeed changes would be made.” Tamosaitis was also encouraged by a memo Moniz sent to department heads in September stating DOE must “foster a safety conscious work environment” that does not “deter, discourage, or penalize employees for the timely identification of safety, health, environmental, quality or security issues.”

After Tamosaitis’s dismissal, Markey and Wyden each sent angry letters to Moniz stating that it appears little has changed. Tamosaitis’s “termination within days of your pledge can only be seen as perpetuating a culture that would plunge DOE employees and contractors who dare to raise safety issues into the deep freeze or worse,” Wyden wrote in his Oct. 9 letter.

DOE officials did not respond to requests by the Center for comment about the letters or the dismissal. Wyden spokesperson Keith Chu said Moniz has not replied to the senator’s letter.

URS spokesperson Pamela Blum declined to say if DOE officials had contacted URS about Tamosaitis’s firing or Moniz’s June meeting with Tamosaitis. “There is very robust oversight of this project — including daily communication with our client — but our practice is not to discuss the specifics of our interactions,” she said.

Blum said in an emailed statement that, “While we will not comment on specific employee matters, in recent months URS has reduced employment levels in our federal sector business due to budgetary constraints.” The company, she wrote, “encourages its employees to raise concerns about safety, which remains the company’s highest priority.” She also said URS asks all laid-off employees to sign severance agreements absolving the company from legal claims.

Tom Carpenter, executive director of the Hanford Challenge, a nonprofit in Seattle that has assisted Hanford whistleblowers, said URS “created the conditions” to lay off Tamosaitis. “He was turned into a symbol by them that this is what happens to people who raise concerns,” Carpenter said. “It’ll be a cold day indeed when someone tries to follow in his footsteps.”

Attack of the whistleblower

Hanford’s technical challenges have long bedeviled its workers and managers.

DOE scrapped its first three plans to dispose of the waste, now stored in 177 massive tanks, before hiring Bechtel in 2000. The department finally decided to build a 12-story pretreatment facility to divide the low- and high-level radioactive wastes and pump them into separate plants, where they would be mixed with molten glass, and then poured and sealed into thick steel canisters.

Engineers are still struggling to find a way to ensure that wastes flowing into the pretreatment facility and the two separate plants — which have a consistency ranging from a broth-like liquid to a peanut butter-like sludge — are kept evenly mixed. Otherwise, the plutonium or uranium they contain — materials that can cause a chain reaction — could settle together and cause what’s known as a criticality accident, a burst of lethal radioactivity and heat. Hydrogen gas bubbles could also develop, become trapped in the waste, and explode.

According to the GAO’s December report, project engineers have struggled to design compressed-air, pulse jet mixers, because the technology has never been used to treat waste with large solids like those at Hanford.

Moreover, many of the new mixing tanks will be located in sealed chambers called “black cells” where radiation levels will be so high that workers will be unable to enter for at least 40 years. So the equipment must be able to operate without maintenance for that period. But some experts have raised concerns that the wastes will corrode the tanks and pipes more quickly than that.

After the GAO first expressed concerns about the plant’s design, Tamosaitis was appointed in October 2005 to head a study of it. More than 50 consultants participated, and they identified 28 unresolved technical issues. By October 2009, DOE had resolved 27 of the issues, but one remained: how to keep the wastes well-mixed.

In his legal complaint against URS and DOE, Tamosaitis said Bechtel’s plant director at the time, Frank Russo, pressed to “close” the issue by the Energy Department’s June 30, 2010, deadline. Meeting that goal would make Bechtel and URS eligible for millions of dollars in performance incentive fees. It was also expected to bring an additional $50 million in congressional funding.

In a June 30 email to Bechtel president David Walker, Russo said he told DOE officials that “a clear way to kill momentum within the project and with Congress re funding would be to declare m3 [the mixing issue] as not complete.” The next day Russo again mentioned the funding in an email to Walker, saying, “Declare failure and high probability that the $50 mil goes away.” Copies of the emails were filed with the complaint.

But Tamosaitis said he and other experts repeatedly raised their design concerns with Bechtel and URS managers. For example, in March 2010, Bechtel decided the pulse jet mixers only needed to move the waste around the bottom of the tanks, not force it toward the top. This approach, Tamosaitis said, increases the risk of plutonium particles collecting at the bottom and triggering an uncontrolled nuclear reaction.

He compared it to stirring corn kernels in a pot: The cook has to make sure the corn is suspended in the water, not burning at the bottom.

Bechtel engineering managers responded by saying they would consider improving the design once the issue was deemed “closed,” Tamosaitis said in his legal complaint.“They were trying to justify their design,” Tamosaitis said, “but their design led to safety issues.”

Critically, in March 2010, Don Alexander, a senior Energy Department scientist at the plant, met with Bechtel, URS and Pacific Northwest National Laboratory managers and told them the material they had used to test the mixing of thicker, jello-like materials was not representative of the plant’s actual waste. In late April, Tamosaitis’s complaint alleges, Bechtel officials pushed back and “launched an effort to show that no testing was needed.”

After Alexander documented his concerns in a report, Russo directed Tamosaitis to put together a team of “top flight PhD’s” to discredit Alexander’s paper, according to a grievance Alexander filed with an employee union in August 2011. “Walt [Tamosaitis] knew my issues were technically correct and never submitted a paper.”

Bechtel spokesperson Suzanne Heaston responded that “in designing and constructing this complex facility, it is part of our process, when questions arise, for us to engage the appropriate expertise to address, respond and resolve issues.”

Similar disputes recurred repeatedly that spring, as management officials struggled to meet their deadline. At one point, Perry A. Meyer, a Pacific Northwest National Laboratory staff scientist at the time who now works for the safety board, wrote a June 16 e-mail for the record relating “three potential threats I have heard” from managers towards technical staff.

In his e-mail, Meyer wrote that Tamosaitis reported he would be fired if the laboratory turned in a letter suggesting flawed test results, according to a copy. “He would like us to send the letter anyway, as he agrees with our concerns,” Meyer wrote, referring to Tamosaitis. The letter was indeed sent to Bechtel on June 25. Meyer declined to speak for this article.

At a June 30 meeting, the day of the deadline, Tamosaitis gave Bechtel and URS managers a list of 50 unresolved technical items that Bechtel had requested as part of what officials depicted in documents as a “clean out your drawers” effort.

A day later, Tamosaitis sent an email to Meyer and two other experts warning that Bechtel and DOE officials were likely to announce that all the mixing issues were being closed. Tamosaitis wrote that he anticipated an additional test “will go by the wayside.”

Then, on the next day, a URS executive, acting on orders from Bechtel’s Russo, told Tamosaitis to turn in his badge and cellphone, and escorted him off the Hanford site. Tamosaitis said he was not given a reason for his removal that day.

Tamosaitis’s federal court complaint includes emails that show Russo ordered his removal after communicating with Dale Knutson, DOE’s project director of the plant at the time. “Walt [Tamosaitis] does not speak for DOE,” Knutson said in an email to Russo. “Use this message as you see fit to accelerate staffing changes.”

Russo, after receiving Knutson’s email, sent a message to URS plant manager URS plant manager William Gay, stating that “Walt is killing us. Get him in your corporate office tomorrow.” Gay responded, “He will be gone tomorrow,” according to copies of the messages.

URS reassigned Tamosaitis to a non-supervisory position, unaffiliated with the waste treatment plant, in the basement of its Richland office. For 16 months, he worked alongside copy machines, Tamosaitis said.

Bechtel, URS and the Energy Department say that Tamosaitis’s removal had nothing to do with the technical concerns he expressed. In its response to a complaint Tamosaitis filed with the Department of Labor, Bechtel said Tamosaitis was demeaning to coworkers on multiple occasions.

Russo told the court in a deposition that he never saw Tamosaitis’s list of unresolved issues before transferring him. He said Tamosaitis had prior performance issues and was being reassigned anyway. Blum, a URS spokeswoman, said the basement office was the only available space at the time.

Tamosaitis’s lawsuits have yet to bear fruit. Judge Craig Matheson of Benton County Superior Court dismissed his case against Bechtel in January 2012 without comment. Then, Judge Lonny Suko of the Eastern Washington U.S. District Court dismissed his lawsuits against DOE and URS partly because Tamosaitis had not waited a full year for the Department of Labor to act on his case, a step the judge said was required by applicable statutes.

In his October 2012 decision regarding URS, he said Bechtel, not URS, ordered Tamosaitis’s removal, his pay had not been reduced, he had turned down URS offers of meaningful work elsewhere, and he had declined another office space. Tamosaitis said he was never offered a comparable position and URS only offered to move him to another office in the basement or to a cubicle on the first floor.

In his May 2012 ruling to dismiss DOE, Suko, who was appointed to the bench by President George W. Bush in 2003, said. “It is necessary to read quite a bit into Knutson’s [of DOE’s] email to describe it as a ‘directive’ to specifically remove Dr. Tamosaitis.”

A three-judge panel at the U.S. Court of Appeals for the Ninth Circuit heard his appeal of the case against DOE and URS on Nov. 7. A ruling is pending.

Going public with dissident views

Even if Tamosaitis’s firing resulted from an employment dispute, his complaint that rushed DOE and contract officials pushed aside safety and technical criticisms — and those who raised them — is supported by independent reports.

The Defense Nuclear Facilities Safety board’s report concluded that his removal “sent a strong message to other WTP project employees that individuals who question current practices … are not considered team players and will be dealt with harshly.” It said Bechtel was behind Tamosaitis’s removal from the plant, and URS carried it out without considering the message it sent to other employees.

DOE’s Office of Health, Safety and Security, in a separate 2012 study, said it had found a “definite unwillingness and uncertainty among employees about the ability to openly challenge management decisions” at the Hanford plant.

At the direction of then-Secretary of Energy Steven Chu in 2011, Bechtel selected seven nuclear industry experts — including Nils Diaz, former chairman of the Nuclear Regulatory Commission and three others who had worked at the NRC, plus two former DOE contractors — to conduct its own study. The panel concluded in November 2011 that while “there is no widespread reluctance on the part of DOE, URS and BNI [Bechtel] project personnel to raise safety and technical issues,” managers had not addressed technical issues as quickly as they should have. It did not specify what those issues were.

Gerald Garfield, an attorney who specializes in energy and public utility law and was a member of the review team, told reporters on Dec. 1, 2011 that Tamosaitis’s public battle against plant management created “further anxiety and uncertainty” among people working on the project. But he depicted this mostly as a public relations problem, caused by inadequate advocacy by the government and its contractors.

Because officials did not explain their side of the story, he said, it led to speculation “that this was simply a situation where an individual had been treated very badly, and there was no justification …  It emerged that there was an explanation … and I think when that was expressed by management, we were told by people on the project at least that it helped reduce anxiety.”

Other project managers say that raising safety and technical concerns has provoked retribution, however. Busche, a URS employee and the plant’s manager of environmental and nuclear safety, filed a lawsuit against Bechtel and URS in February claiming the companies retaliated against her for raising concerns about design and other safety issues — an allegation that the companies deny.

In her complaint in the U.S. District Court for the Eastern District of Washington, Busche said that she was seen as a “roadblock to meeting deadlines.” URS and Bechtel officials excluded her from meetings and belittled her authority, she alleged; they deny it.

Busche says her troubles escalated after she questioned DOE’s judgment at an Oct. 7, 2010, safety board hearing about how much radiation might escape in the event of an accident at the plant. Board officials had expressed concern that DOE’s calculations underestimated the threat, but Ines Triay, then DOE’s assistant secretary for environmental management, defended the calculations.

When a board member asked Busche if she supported DOE’s method, Busche replied, “Short answer, no,” according to a transcript of the hearing. Afterwards, Triay told Busche if her “intent was to piss people off, [she] did a very good job,” according to Busche’s complaint.

Triay, now executive director of the Applied Research Center at Florida International University, did not respond to requests for comment. Busche’s lawsuit is ongoing.

Cleaning up the mess

In August 2010, the department announced that all the mixing design issues were closed. As a result, Bechtel and URS received more than $4 million in bonus funds. Congress also allocated $50 million in additional annual funding for fiscal years 2011 and 2012, according to GAO.

But problems persisted. In 2011, Alexander expressed new concerns that the mixing vessels could erode and spring leaks. Energy officials in late 2011 ordered Bechtel to demonstrate its pulse jet mixers would work properly, according to GAO. By that point, Bechtel had built 38 tanks with pulse jet mixers and installed 27 of them in the project’s pretreatment and high-level waste facilities — but it was not able to verify that all the tanks worked as designed and met safety requirements, the GAO said in its report.

Last year, the department halted construction on both the pretreatment plant and the high-level waste plant as it worked to resolve technical problems, including ensuring that the wastes are adequately mixed. Tamosaitis cited this move as proof that his technical concerns were valid.

Some independent experts have been urging the department to conduct further, small-scale mixing tests to avoid any accidents. Alexander said DOE and contract officials are planning a full-scale test to ensure the mixing vessels work appropriately. He said in a telephone interview that he’s pleased that the project is “doing what needs to be done.”

In an effort to restart the plant’s construction, Secretary Moniz told Washington State officials in a Sept. 24 report that his department and its contractors are working to settle lingering questions about the mixing of high-level waste slurries, among other issues. He said officials want to start encasing some low-level waste in glass while resolving other problems with the high-level waste treatment.

Bechtel spokesperson Jason Bohne said in a statement that Bechtel’s “focus remains on safely designing and building the Waste Treatment and Immobilization Plant to the highest nuclear safety standards. We remain committed to working with DOE to achieve the permanent solution for Hanford’s aging tank waste.”

Tamosaitis meanwhile says he is sorting through his papers and figuring out what to do next. “I want an environment where the foot soldiers can raise issues without fear they’re going to be put in a basement office for 16 months and then laid off,” he said. “This issue is a heck of a lot bigger than me.”

Rebecca LaFlurehttp://www.publicintegrity.org/authors/rebecca-laflurehttp://www.publicintegrity.org/2013/11/18/13770/mess-gets-worse-hanford-s-nuclear-site

Sorting out why insurers cancel policies

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Now that President Obama has said it’s OK with him if insurance companies keep their policyholders in health plans that don’t meet the standards established by the Affordable Care Act, at least for another year, the big question is whether insurers will take him up on the offer.

The answer: it depends.

Some insurance executives will view the offer as one they can’t turn down. Even though Karen Ignagni, president of America’s Health Insurance Plans, the industry’s big PR and lobbying group, had nothing good to say about Obama’s proposal, keep in mind that she doesn’t run an insurance company.  While industry executives look to her to comment on what politicians do, they make their own decisions when it comes to their companies’ bottom lines.

Here’s what Ignagni was quoted as saying in a FOX News story Friday:

“The only reason consumers are getting notices about their current coverage changing is because the ACA (Affordable Care Act) requires all polices to cover a broad range of benefits that go beyond what many people choose to purchase today.”

Not so fast. There are other reasons some folks are being told they’ll have to change health plans next year. Many of them are having to switch plans not because of Obamacare but because their insurance companies want to move them into policies with higher profit margins.

Insurance companies have been sending similar notices to their customers for years. My son Alex — and thousands of other customers of a Blue Cross plan in Pennsylvania — got such a notice four years ago, months before Congress passed the health reform law.

Why? The insurer wanted to move those policyholders out of a plan with a reasonable $500 annual deductible and into one with a deductible ten times that amount. To accomplish that, Blue Cross notified its policyholders that their health plan would not be available in 2010. Their options were to switch to the high-deductible policy, which would still cost them a couple of dollars more each month, or to another plan with that reasonable $500 deductible. If they chose the latter, their monthly premiums would increase 65 percent.

Notices like the one Alex got have provided a mechanism for insurers to implement a years-long industry strategy of shifting more and more of the cost of medical care to their policyholders. And that strategy will continue until every last one of us is in a high-deductible plan.

Some of you are likely old enough to remember the days before managed care when almost all Americans with private health insurance were in indemnity plans. In an old-fashioned indemnity plan, the insurer didn’t constrain us in a limited network of doctors and hospitals and didn’t call the shots about whether a knee replacement or liver transplant your doctor recommended was really necessary.

Those days are long gone. Everybody eventually got notices that those plans were being discontinued. They were replaced by HMOs and PPOs with limited provider networks and armies of utilization review nurses and medical directors who decided if you would get coverage for your new knee or new liver.

In most cases, it was our employers who killed off the indemnity plans in favor of managed care. But eventually, HMOs and PPOs also fell out of favor. The managed care backlash of the late 1990s forced insurers to abandon some of their utilization review practices and to add more doctors and hospitals to their skinny networks. That led to shrinking profit margins — and to the latest silver bullet from the insurance industry: high-deductible plans.

Before Obama signed the Affordable Care Act, insurance companies already were making rapid progress in implementing their business plans of “migrating” their customers from traditional managed care plans to so-called “consumer-directed” plans, the industry euphemism for high-deductible policies. At the same time they’ve been requiring us to pay more out of our own pockets for care, they’ve also been implementing a strategy of reducing benefits.  Investors and Wall Street financial analysts refer to these common industry practices as “benefit buydowns.” That’s another euphemism, by the way.

 

I myself — and thousands of my fellow Cigna employees — were notified several years ago, long before I left my job, that our HMOs and PPOs were being discontinued. Yep, we got notices in the mail. If we wanted to stay in a Cigna-subsidized health plan, we would have to switch to a high-deductible plan. The same thing has happened to tens of millions of other Americans in recent years.

Yet if you relied on the Washington media for your news and information about health care, you’d think that insurance companies would never have considered sending policy discontinuation notices to their policyholders until forced to do so by Obamacare.

The truth: they have always done this when profits were at stake.

Which is why some insurers will be happy as clams to be able to keep their policyholders in plans that don’t meet the ACA’s standards. Many of those plans — especially the junk insurance plans many folks are in — are exceedingly profitable.

For people who are in those plans who have complained about their discontinuation notices, I hope they will shop around. Chances are, they’ll be able to get much better coverage at a better price. Thanks to the Affordable Care Act.

America's Health Insurance Plans President and Chief Executive Officer Karen Ignagni, speaks to reporters at the National Press Club in Washington, May 2009.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/11/18/13782/sorting-out-why-insurers-cancel-policies

American League of Lobbyists changes name

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The nation's largest lobbying industry group is ditching its lobbyist-centric name.

The American League of Lobbyists — known as such since its founding in 1979 — will now call itself the Association of Government Relations Professionals, organization officials confirm to the Center for Public Integrity. A formal announcement is expected Tuesday morning.

The change comes after 83 percent of the group's voting membership backed the new moniker during a vote conducted from Oct. 15 through Friday. It also considered calling itself the National Association of Government Relations Professionals and the Government Relations Professionals Association.

"ALL has always been a big tent organization, and I am excited that our new name will better reflect that reality," said Monte Ward, the group's president and president of Advanced Capitol Consulting.

Ward added that the rebranded group aims to foster "open and transparent debates in the formulation of public policy" and ensure "the highest ethical standards are practiced by all in the broader government relations profession."

The name change comes during a turbulent time for the regulated lobbying industry, which has endured high-profilescandals and been targeted by President Barack Obama.

Lobbyists have meanwhile witnessed an industry-wide decline in revenue after reported cashflow peaked at $3.55 billion in 2010, according to the Center for Responsive Politics.

Prior to changing its name, the American League of Lobbyists' board of directors determined that most of its members don't consider themselves to be only lobbyists. It mulled for months how the group might better include public relations, campaign finance and other political influence industry professionals and officially recommended the name change in October.

In recent years, the American League of Lobbyists, which only counts a fraction of the nation's more than 12,000 registered lobbyists among its paid members, has sponsored various workshops and training classes. It also routinely advocates the industry to government officials and the public.

 

 

K Street, home to many Washington lobbyist shops.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/11/18/13789/american-league-lobbyists-changes-name

Anti-Obama nonprofit tells IRS it's not 'political'

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Swing state voters in Virginia and Ohio last fall were bombarded with television advertisements encouraging them to "stand with coal" and "vote no on Obama's failing energy policy."

But the sponsor of these ads — a pro-business nonprofit advocacy group called the American Energy Alliance — says the messages weren’t designed to aid Republican Mitt Romney in his bid to unseat President Barack Obama.

In a new tax return filed Friday and first obtained by the Center for Responsive Politics, the American Energy Alliance, led by former Koch Industries lobbyist Thomas Pyle, told the Internal Revenue Service that it did not "engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office" last year.

The group made an even more explicit pledge to be nonpartisan when it applied for tax-exempt status in 2008, telling the IRS that it had "no interest in supporting the agenda or any particular political party or political candidate."

While it acknowledged “the possibility that some of AEA's publications and communications may be considered ‘political,’” the group asserted that it was a “nonpartisan policy-oriented organization,” not a “‘political’ organization.”

The new tax documents also show that American Energy Alliance spent more than $5 million on "media and advertising," with vendor Mentzer Media, a media buying firm that works primarily with Republicans, receiving $3.9 million of that amount.

The “stand with coal” ads cost at least $1.36 million, according to disclosures the American Energy Alliance filed with the Federal Election Commission.

Because these broadcast ads came within 60 days of the November election and mentioned the president, the American Energy Alliance was required to report the spots to the FEC as “electioneering communications” — a special type of issue-based advertising that comes with enhanced disclosure requirements.

The group also engaged in a host of other pre-election activities that often included battleground presidential states and attacked Obama.

Marcus Owens, an attorney who previously headed the IRS’ tax-exempt division, said the American Energy Alliance’s new filing “certainly raises a red flag.”

“It’s a politically active organization,” he said, adding that the pre-election advertisements were veiled in what “sounds like a lobbying message on its face.”

Benjamin Cole, a spokesman for the American Energy Alliance, rejected accusations that his group behaved improperly.

Cole told the Center for Public Integrity that the ads were “designed to inform the American public about President Obama's energy policies… not his re-election efforts.”

“We could just as easily run those same ads today,” Cole continued, adding that all of the group’s ads are vetted by lawyers to “ensure that nothing we do runs afoul of federal election or tax laws.”

One element of the new IRS documents that’s for sure: The American Energy Alliance’s footprint has grown substantially. In all, the American Energy Alliance spent $7 million last year.

That's a nearly seven times what it spent in 2010 — and more than 300 percent above the roughly $1.7 million it spent during its inaugural year in 2008, according to a Center for Public Integrity review of IRS records.

It’s unclear who precisely has funded this surge, although the American Energy Alliance’s new annual report does show that just three donors — who each gave at least $1 million — accounted for three-fourths of the American Energy Alliance’s total $7.3 million haul last year.

As a "social welfare" nonprofit organized under Sec. 501(c)(4) of the U.S. tax code, the American Energy Alliance is not required to publicly disclose its funders.

Notably, the Center for Responsive Politics reported Friday that the American Energy Alliance received $15,000 last year from Americans for Prosperity, a nonprofit backed by conservative billionaires Charles and David Koch, who lead Koch Industries.

And Politicoreported last year that the American Energy Alliance — and its related charity — have both received financial support from the Koch brothers themselves and their donor network.

Cole says neither Koch brother contributed to the American Energy Alliance in 2012, “though we'd be happy to accept their contributions in 2013, as well as any contribution from Tom Steyer, George Soros, Warren Buffett or T. Boone Pickens.”

So how did the American Energy Alliance spend the rest of its hefty multimillion-dollar media budget in 2012? The new tax filing, officially known as a Form 990, doesn't itself specify.

But last March, the American Energy Alliance announced plans to spend $3.6 million on ads hitting the president for the price of gasoline at the time.

The ads also criticized Obama for giving "millions of tax dollars to Solyndra," a solar energy company that went bankrupt despite the federal assistance. The California firm was backed by a major Obama fundraiser, as the Center for Public Integrity and ABC News previously reported.

A month later, the American Energy Alliance took its argument to the airwaves of Internet radio service Pandora, where it purchased 45 million spots targeting listeners in the potential presidential battleground states of Colorado, Florida, Iowa, Michigan, Nevada, New Mexico, North Carolina, Ohio and Virginia.

In addition to its pre-election “stand with coal” advertising blitz, the American Energy Alliance also drummed up support for coal with an 18,000-mile, 17-state bus tour.

Its sleek, signature-laden bus traveled through numerous swing states — including Colorado, Florida, Ohio, Pennsylvania and Virginia — as well as portions of the route of the proposed Keystone XL pipeline in the Great Plains.

The bus tour gathered signatures of supporters who desired to "stand with coal" and "support manufacturing jobs."

Conservative commentator Michael Reagan, Fox News host Sean Hannity, Rep. Heather Wilson, R-N.M., and Rep. James Lanksford, R-Okla., were among those who to sign the bus on its journey to Washington, D.C., where the American Energy Alliance ultimately delivered more than 14,000 petitions to lawmakers and regulators.

Moreover, the American Energy Alliance released an extensive infographic comparing Obama's policies and Romney’s prior to Election Day.

"This election year, perhaps even more than 1980, offers voters a clear contrast on energy policy between the two candidates," Pyle said in a press release at the time. "It's time to pull the plug on broken energy policies and chart a new course."

This year, the American Energy Alliance has criticized Obama for wanting to "double down on bad energy policy" and for embracing "punitive and discriminatory tax measures for oil and gas producers."

The group has also urged Congress to let a major tax credit for wind energy expire. And it has praised the budget proposal of Rep. Paul Ryan, R-Wis., for opening "taxpayer-owned lands and waters to responsible energy development."

Environmental groups, such as the Sierra Club, have argued that the Ryan budget is "straight out of the polluters’ playbook" and a "policy that nobody but the big oil and coal billionaires who bankrolled his campaign could love."

Screen shot from American Energy Association's ad "Stand with Coal."Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/11/18/13785/anti-obama-nonprofit-tells-irs-its-not-political

Remarkable public response to 'Breathless and Burdened' as its impact continues

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The public reaction to our black lung investigation, "Breathless and Burdened", has been as extraordinary as the initial political impact.

Produced in collaboration with ABC News, The Center’s year-long investigation revealed how lawyers and doctors retained by coal companies have played a crucial role in helping defeat the legitimate benefit claims of miners sick and dying of black lung disease. Here is what’s happened since our report was published in late October:

  • Members of Congress started crafting legislation with the help of the U.S. Labor Department to reform the black lung benefits program, using the Center’s stories as a guide. According to Sen. Robert Casey, D-Pa., the system didn't work for ailing miners: “Their government failed them as well as their company failing. So we have, I think, an abiding obligation to right this wrong.”
  • Meanwhile, Johns Hopkins University Medicine announced it was suspending its program of reading X-rays for black lung, pending a review. The government agency that certifies doctors to read X-rays for black lung issued a statement saying it was “deeply disturbed” by the findings of our investigation. The agency, the National Institute for Occupational Safety and Health (NIOSH), said, “In light of the recent troubling reports, NIOSH applauds the decision of the Johns Hopkins School of Medicine to investigate its [black lung X-ray reading] service and offers whatever assistance we can provide.”
  • Two congressmen asked the Labor Department’s inspector general to investigate the problems raised in the Center’s reports. In the meantime, they wrote, they will work “to ensure that those who have been improperly denied benefits will have another opportunity at securing fair treatment.”

The public response to our reporting includes emails, phone calls and letters from miners and their families, lawyers, government officials, reporters, public health experts and ordinary citizens from all walks of life. These responses have heaped praise on reporter Chris Hamby for his painstaking investigative work. 

There have also been many newspaper editorials along the lines of the Lexington Herald-Leader: “Even for an industry that's notorious for dodging its responsibilities, a yearlong investigation by the Center for Public Integrity and ABC News produced revelations that are shocking and repugnant.”

A number of lawyers wrote to say, for example:

  • “Wow!  Just incredible work. Congratulations. I am not shocked it happened, but I am shocked it got out and was reported so well.”
  •  “Masterful. You nailed it.”
  • “A heartbreaking story, as well as a terrific reporting. As a lawyer I'm ashamed of Jackson Kelly [The industry’s law firm cited in our reporting]. As someone who works on coal issues, though, I see this as part of a familiar pattern of coal companies screwing the miners they pretend to care about.”

As one government official said, “I just wanted to thank you for the outstanding job you did on this investigation.  I really feel our coal miners have won a huge victory thanks to you.”

Perhaps the most meaningful reaction has come from family members of coal miners:

  • “Thank you for taking on the coal companies and their system of perpetuating unsafe working conditions and subsequently denying miners their benefits. My grandfather was denied black lung benefits many years ago; like many of the miners, he was too proud to beg for something he had earned and so he never appealed. He passed away seven years ago.  Again, many thanks to you for shining a light on one of the many injustices perpetuated by the coal companies.”
  • “My father has been a coal miner in southwest Virginia since he was 17. He is now 57. On behalf of all families and friends of coal miners, I wanted to thank you for your incredible work with the 'Breathless and Burdened' series. To refer to that series as an excellent piece of journalism would be a very serious understatement. I look forward to following your work for many years to come!”

Overall, the reactions can be summed up with this public comment:

“You did a fantastic job with this series, and the result is so moving that I expect it will influence how black lung benefits get awarded in the future. This is the kind of journalism that leads to policy change! … The series is a perfect combination of meticulous research and wrenching stories of miners and their families. Thank you for putting in the many, many hours — the result is well worth it!”

I want to add my thanks to reporter Hamby and his editors, fact-checkers, and Web team, along with our ABC partners, for this landmark Center for Public Integrity investigation.

Thank you all for your responses.

Until next week,
Bill

Bill Buzenberghttp://www.publicintegrity.org/authors/bill-buzenberghttp://www.publicintegrity.org/2013/11/18/13790/remarkable-public-response-breathless-and-burdened-its-impact-continues

Pro-Obama nonprofit boosted by undisclosed donors

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A nonprofit organization started by two former Obama White House staffers received $5 million — or most of its $8.4 million in revenue last year — from four unnamed donors, new disclosures obtained by the Center for Public Integrity indicate.

Priorities USA used the big-money contributions to advocate for “public policies that advantage the middle class“ and help a president in Barack Obama who prides himself on transparency and the small-dollar donors who have supported his political campaigns.

The organization’s new tax filing offers the first official glimpse of how Priorities USA spent the money it raised last year.

Where did its funds go? Mostly to other politically active nonprofits — and also to the leadership team behind the organization that incessantly advocated for Obama's re-election in other capacities.

In 2012, Priorities USA awarded $4.7 million in grants to Democratic-aligned groups organized under Sec. 501(c)(4) of the U.S. tax code that are not required to disclose their donors. Its biggest beneficiary: Planned Parenthood, which received $2.25 million.

Other beneficiaries of these grants for “social welfare” work at “groups that share similar missions” included the Unity Fund ($750,000), the League of Conservation Voters ($650,000), People for the American Way ($550,000) and America’s Voice ($500,000).

It also contributed $255,000 to two "Occupy Sandy" groups in New Jersey and New York that provided relief efforts after Superstorm Sandy struck the region.

Priorities USA further told the Internal Revenue Service that it did not spend money on “direct and indirect political campaign activities” or lobbying.

But it did report spending about $1.8 million for “printing and mailing,” $630,200 for “media consulting” and $119,900 for “research.” It also reported that it engaged in polling and paid for a mailing sent to households nationwide “on the issue of the fiscal cliff.”

Both Priorities USA and its affiliated super PAC, Priorities USA Action, were launched in 2011 to help Obama compete with the conservative super PAC and nonprofit fundraising juggernauts co-founded by GOP strategist Karl Rove.

Unlike Rove’s network, where both the American Crossroads super PAC and the nonprofit Crossroads GPS have publicly taken to the airwaves, Priorities USA remained largely behind the scenes during the 2012 election, while its related super PAC played the role of the relentless attack dog.

Meanwhile, Priorities USA Action became the top Democratic super PAC in 2012, raising $75 million. But both Priorities groups were dwarfed by the $325 million American Crossroads and Crossroads GPS raised during the 2012 election cycle.

Priorities USA Action's top donors included hedge fund manager James Simons, media mogul Fred Eychaner, trial lawyer Steve Mostyn, Hollywood executive Jeffrey Katzenberg and several national labor unions.

Fully 100 percent of Priorities USA Action’s $65 million in ad spending last year came in the form of negative ads against GOP presidential nominee Mitt Romney.

One of its ads linked Romney to the death of a woman who lost her battle with cancer. Another spot featured a worker describing how constructing the stage on which officials announced his plant’s closure (after Romney’s firm, Bain Capital, bought it) was like building his “own coffin.”

Priorities USA paid Bill Burton and fellow co-founder Sean Sweeney $95,100 and $79,900, respectively, for 20 hours of work a week, according to the new filing.

Records filed with the Federal Election Commission show that Burton was paid an additional $130,700 by Priorities USA Action in 2012, while Sweeney was paid $125,700 by the super PAC.

Both the nonprofit and super PAC also paid Democratic strategist Paul Begala large sums in 2012.

Begala earned $241,300 from Priorities USA and $265,800 from Priorities USA Action for “communications consulting.” The super PAC payment also included expenses for several trips he took.

Other unpaid advisers listed in Priorities USA's new filing include longtime Democratic fundraiser Jay Dunn, EMILY's List founder Ellen Malcolm, Democracy Alliance Chairman Rob McKay and Jonathan Mantz, who served as Hillary Clinton's national finance director during her 2008 presidential campaign.

In all, Priorities USA, the nonprofit, had just 21 donors that gave it $5,000 or more, according to the group’s 2012 tax return. More than half of them donated six-figures or more.

Watchdog groups such as Democracy 21 and Campaign Legal Center have argued that Priorities USA, as well as Crossroads GPS, are abusing their tax-exempt status by keeping their donors secret while substantially engaging in elections activities.

Burton, who previously served as Obama's deputy White House press secretary, did not immediately respond to requests for comment.

 

 

President Barack Obama pauses as he talks about the the budget and the partial government shutdown, October 2013, in the Brady Press Room of the White House. Julie Patelhttp://www.publicintegrity.org/authors/julie-patelMichael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/11/19/13795/pro-obama-nonprofit-boosted-undisclosed-donors

'Dark money' groups give big to similar nonprofits

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New Internal Revenue Service tax returns shed light on hefty spending by key nonprofit groups on political campaigns and lobbying  — and the disclosures also show that some of the money raised by these groups, which aren’t required to reveal their donors, are sharing money with other groups that don’t reveal their donors. This makes it even more difficult to determine their ultimate funding sources.

For tax-exempt nonprofit groups, politics cannot by law serve as their primary mission. Nevertheless, some of these organizations — 501(c)(4) social welfare non-profits and 501(c)(6) trade associations — have played an outsized role in federal elections since the Supreme Court’s Citizens United v. Federal Election Commission decision in 2010 to allow unlimited corporate, union and nonprofit group spending to oppose or support candidates.

The Center for Public Integrity analyzed IRS tax returns covering 2012 for some of the most politically active nonprofits. Ten of the organizations, and highlights from their returns — including information about salaries, travel and fundraising costs — are as follows:

The Advocacy Fund, a left leaning group connected to the Tides Foundation, gave $7.7 million in grants to more than 50 groups. Some of that money went to groups that aren’t required to disclose their donors. This includes $2 million to the League of Conservation Voters, $1 million to the Campaign for Community Change, $278,000 to the Sierra Club, $80,000 to the NRDC Action Fund and $27,500 to the Ohio Organizing Campaign.  The Advocacy Fund also gave $106,500 to Give Missourians a Raise, a union-backed group that successfully fought to raise the state’s minimum wage. The Fund’s grants made up more than three-fourths of its expenses.

The American Petroleum Institute, received $165.4 million in dues in 2012. That includes $98.4 million for political or lobbying expenses — the highest amounts in five years, based on the organization's previous IRS filings. The trade association’s tax return, known as a Form 990, lists 13 employees with six-figure salaries and a $3.6 million compensation for its president, Jack Gerard. The group reported other expenses, including $73.5 million for advertising and promotion and $3.5 million for travel. It gave $7.1 million in grants, including some that went to politically active “dark money” nonprofits: $250,000 to American Action Network, $25,000 to the 60 Plus Association and $15,000 to Americans for Prosperity. The Institute, the largest trade association of the oil and natural gas industry, has more than 500 members including BP America, Chevron and ExxonMobil.

Americans for Prosperity, backed by oil moguls David and Charles Koch, provided about $486,000 in grants to groups such as the Center to Protect Patient Rights, which received $100,000, and the National Federation of Independent Business, which received $20,000. Americans for Prosperity awarded smaller grants to the American Energy Alliance, which spent hefty sums opposing President Barack Obama, and two groups that have opposed measures to raise New Mexico’s minimum wage. In all, the group reported spending $33.5 million on political campaign activities, $83 million in advertising and promotion and $3 million on travel in 2012. Of its advertising output, Americans for Prosperity paid $55.8 million to a right-leaning, Maryland-based contractor, Mentzer Media Services Inc.

Club for Growth’s ratio of fundraising costs to contributions – a key measure of a non-profit's success — increased about threefold in three years. It spent 39 cents to raise $1 last year, which is considered relatively inefficient, according to Charity Navigator, which monitors charitable groups. It spent $1.4 million on fundraising during the fiscal year ending in June, according to information filed recently to the Colorado Secretary of State. The group agreed to pay a contractor, Alexandria-based Response America LLC, $60 per thousand letters mailed — or at least $2,500, according to documents received in January by the North Carolina Secretary of State. It also agreed to pay another contractor — Alexandria-based BMD Inc., also known as GMA — $4,000, or 6 cents per piece, in addition to reimbursing for other costs such as postage and travel. During the fiscal year ending June 2012, the group spent more than $1 million on two contractors in Bethesda, Md., for media and research purposes; $1.4 million on legislative involvement and policy advocacy; $941,000 on issue advocacy; and $244,000 on "independent express advocacy."

Ending Spending Inc.’s revenue went up 89 percent last year, to $4.4 million from $2.3 million in 2011. The group is affiliated with Ending Spending Action Fund, a super PAC that spent more than $13 million on the 2012 federal elections, according to the Center for Responsive Politics, a non-partisan group that tracks campaign spending. The super PAC spent more than $400,000 on advertisements opposing Democrat Terry McAuliffe before he was elected governor of Virginia this month, and supporting McAuliffe’s rival, Republican Ken Cuccinelli, according to Brian Baker, the president and general counsel of both Ending Spending entities. The nonprofit effectively subsidizes the super PAC through shared resources such as office space and employees. Therefore, those resources must be reported as “in-kind” contributions from the non-profit to the PAC, Baker said. He added that the higher revenues and expenses are largely because of Ending Spending publishing a book, the Fiscal Cliff, written by a husband-and-wife team Ayse and Selo Imrohoroglu of the University of Southern California. Baker said his group paid to have the book written through a contractor, Pacific Finance and Economics, which received $291,668 from Ending Spending Inc. in 2012. The professors wrote in an email that they were commissioned by Pacific Finance but “our contract had no effect on our economic analysis.” Baker agreed, saying the book wasn’t intended to be partisan and didn’t end up that way.

Pharmaceutical Research and Manufacturers of America, a drug industry trade association, doled out $18.1 million in grants, including some to politically active “dark money” groups. It awarded $1.5 million to American Action Network; $75,000 to Heritage Action for America; $25,000 to American Commitment; and roughly $250,000 each to the American Legislative Exchange Council, Americans for Tax Reform and Freedom Path Inc. Another $50,000 went to American Justice Partnership, the third largest donor to the Republican State Leadership Committee. Last year, PhRMA spent $2.1 million, less than it has in previous years, on donations to 501(c)(4) groups that don’t have to disclose donors, according to the Center for Responsive Politics. And for the first time, contributions to politically active nonprofits went only to Republican-oriented groups, according to the Center. However, PhRMA gave to both Democratic and Republican political organizations called 527 groups. It collected nearly $198 million in dues, including $68.3 million in political and lobbying campaign activities. PhRMA has dozens of members, including Johnson & Johnson and Merck & Co. Inc. Matthew Bennett, a senior vice president at PhRMA, said the group donates to a variety of 501(c)3 charities, as well as social welfare and trade groups, and the money often goes to “organizations that share our goals of improving the quality of patients’ lives, increasing the availability of life-saving and life-enhancing medical treatments and supporting the discovery of new treatments and cures by biopharmaceutical research companies.”

The Republican Jewish Coalition is a social welfare nonprofit that aims to “educate and advocate support for Israel and other issues of importance to the Jewish community.” How did it accomplish its mission last year? Apparently, in part, by making lots of ads: The Coalition spent $6.6 million on “advertising and promotion.” Of that amount, FEC records indicate $4.6 million went toward ads urging voters to oust Obama, which was nearly 46 percent of its overall spending last year. In 2012, the Republican Jewish Coalition raised a record $10 million thanks in large part to one individual who donated $5.1 million. The group’s annual tax report does not identify that donor, although journalist Peter Stone has reported that casino magnate Sheldon Adelson, a board member of the Republican Jewish Coalition, contributed the bulk of the group’s money in 2012. A spokesman for Adelson did not respond to requests for comment.

The U.S. Chamber of Commerce spent $53.9 million on political campaign activities — more than it spent in at least five years. The group also reported spending $57 million on advertising and promotion, $9.1 million on travel and $5.4 million in compensation for its president, Thomas Donohue. Five other executives received at least $1 million each. The Chamber, which represents business and industry interests and doesn’t disclose its members, received $167 million in dues from them, including $103.3 million that went toward political and lobbying expenses combined. The IRS doesn’t require non-profits to publicly disclose its members, although it does list members of its board of directors, which includes representatives of companies such as Verizon Communications Inc., Phillips 66 Company, Xerox Corp., Alcoa Inc., IBM, United Parcel Service, Southern Co., Allstate Insurance Co. and the Las Vegas Sands Corp., which is run by Republican mega-donor Sheldon Adelson.   

The U.S. Chamber Institute for Legal Reform — it also doesn’t disclose its members — received $39.8 million in dues, mostly from 21 groups that paid more than $1 million each. Of this money collected,  $32.2 million was for lobbying or political expenses. It also reported spending $7.1 million on political campaign activities, $1.6 million on advertising and promotion, $2.6 million in salary and compensation costs. The Institute donated $5.9 million to political 527 organizations including $3.7 million to the Republican State Leadership Committee and $1 million each to the Republican Governors Association and the Florida Jobs PAC.

YG Network, the nonprofit arm of the “Young Guns” empire, raised $12.75 million in its first full year of existence, mostly from just five donors who each gave between $1 million and $2.5 million, according to its 2012 tax return, which was first obtained by the Center for Responsive Politics. Launched in October 2011, the group spent nearly $3 million on political advertisements expressly calling for the election of Republican candidates or the defeat of Democratic ones, according to filings with the FEC. YG Network also spent about $625,000 last year on its “YG Woman Up” initiative that seeks to “communicate center-right policies to women and recruit women advocates for the same.” Its president, John Murray, a former aide to House Majority Leader Eric Cantor, R-Va., earned about the same amount in compensation: $630,000.

Michael Beckel contributed to this report.

 

 

Julie Patelhttp://www.publicintegrity.org/authors/julie-patelhttp://www.publicintegrity.org/2013/11/20/13791/dark-money-groups-give-big-similar-nonprofits

Push against offshore secrecy an uphill battle

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In June 2000, international groups rolled out blacklists targeting offshore refuges that shelter tax dodging and money laundering. Some observers predicted “the death of tax havens.” 

By 2002 the campaign had, as one tax analyst put it, “dissolved into a series of toothless pronouncements.”

In 2009, offshore centers faced new attacks as the United States pursued an investigation of Swiss banks and nations hit by economic crisis sought to boost tax revenues. “Tax havens and bank secrecy are finished,” French President Nicolas Sarkozy declared.

By 2010 it was clear the offshore industry had once more survived mostly unscathed.

Now offshore havens are under attack again in the wake of exposés by the International Consortium of Investigative Journalists and other news outlets.

Britain has vowed to lift the secrecy covering the Cayman Islands and other financial sanctuaries operating under its flag. Dozens of rich nations have agreed — in an unprecedented example of global cooperation on offshore issues — to begin swapping information about assets stashed in foreign accounts. Another French president — François Hollande — has promised to “eradicate” tax havens.

“Looks like the offshore party is over,” the Chicago Tribunesaid recently.

Will this time be different?

Many financial crime fighters are skeptical.

They fear the new initiatives mostly target small and medium tax scofflaws but allow other offshore clients — ultra-rich tax dodgers, white collar fraudsters, terrorism funders and tax-phobic corporations — to continue much as they always have.

One problem: Some jurisdictions — including Delaware and many other U.S. states — continue to harbor anonymous “shell companies” that are tools of choice for money launderers and other financial wrongdoers. The U.S. and other nations have promised to require that the real owners be revealed when companies are created within their borders, but haven’t followed through on these pledges.

Rich nations’ latest promises to crack down on offshore centers are “a lot of bluster,” Donald Semesky, former financial crimes chief for the U.S. Drug Enforcement Administration, believes. “They all look good on paper, but they’re not real good in practice.”

International groups working against offshore abuses acknowledge their efforts’ uneven history, but say there are good reasons, this time around, for optimism.

The sweeping plan for information exchange among nations shows that real change is coming, says Pascal Saint-Amans, tax policy director for the Organization for Economic Cooperation and Development, a multinational alliance that’s played a key role in efforts to quell cross-border tax evasion.

He says the OECD and its allies will continue taking an aggressive stance against offshore secrecy as the 121-nation Global Forum on Transparency and Exchange of Information for Tax Purposes meets Thursday and Friday in Jakarta, Indonesia. During the conference, the forum will announce its compliance ratings for dozens of jurisdictions, including several that will rated “non-compliant” for failing to meet its standards on financial transparency. 

“There is no trick, no loophole, to what we’re doing,” Saint-Amans says.

‘Necessary action’

The offshore world is a place of shadows and strange bedfellows. The politics of offshore reform are no different.

Initiatives by rich nations are often hampered by conflicts of interest. International coalitions working to reshape the offshore system include Switzerland and other countries that have long been known as tax havens. These groups’ members also include the U.S. and the U.K., nations whose banking systems serve as hubs for flows of illicit money from traditional offshore locales.

Advocates for offshore reform say the latest push on offshore abuses will fall short unless developed countries take strong action on several fronts — ending secrecy on company ownership, attacking corporate tax avoidance and making sure solutions benefit not only rich nations but also poor countries where corruption and offshore secrecy are intimately linked.

Financial transparency activists worry that big players are already beginning to backtrack on their promises to remake the offshore system.

This spring U.K. Prime Minister David Cameron made headlines by promising to crack down on British-flagged havens that provide cover for tax cheats and other seekers of financial opacity. After a meeting in May at the White House with U.S. President Barack Obama, Cameron pledged to “tackle the scourge of tax evasion” and fight for a new era of financial openness.

This fall, after getting assurances from British overseas territories and Crown dependencies that they would change laws and practices, Cameron declared that it is now unfair to call them tax havens. They “have taken the necessary action and should get the backing for it,” Cameron said during a Parliamentary session.

Richard Murphy, a U.K. accountant who had been a leading advocate for change in Britain’s offshore empire, calls Cameron’s recent remarks “absurd.”

What Cameron is saying, Murphy says, is that the Caymans and others are no longer tax havens because “they made a vague commitment to take unspecified actions at an unspecified time in the future.”

A Cameron spokeswoman did not answer questions for this story, but pointed to a recent speech in which Cameron says he continues to work to “close the door” on “shadowy, corrupt, illegal practices once and for all.”

For their part, the Caymans and other U.K. overseas territories argue that they offer not secrecy but rather legitimate confidentiality. They praised Cameron’s remarks, saying in a joint statement that they are “well regulated, independent financial services jurisdictions” and will “continue to lead on meeting international standards of tax and transparency.”

Operation Red Spider

Questions about how well global standards are enforced arose earlier this year amid a banking scandal in India.

The case began when a man introducing himself as an operative for a corrupt politician visited dozens of bankers across India, explaining candidly that he was seeking to launder “black money” and turn it into “white money.”

Almost every banker he met, he later reported, was willing to help, with many offering to channel cash overseas and use shell companies to cover the trail.

Only later did the bankers learn the man’s real identity: he was a journalist doing a hidden-camera sting for Cobrapost, a muckraking Indian magazine that codenamed its undercover effort “Operation Red Spider.”

When the magazine announced its findings this spring, it asserted that “money laundering services are being offered practically as a standard product across the country.”

Government regulators did not share that assessment.

“Let us not unnecessarily downgrade ourself,” a deputy governor of the Reserve Bank of India, the nation’s central bank, told reporters. “Our system to prevent money laundering is perfect.”

Indian authorities got support from the Financial Action Task Force, a Paris-based intergovernmental body that developed nations have deputized as the main watchdog in the global fight against money laundering.

In June, FATF released a long-in-the-works evaluation that gave India’s systems for fighting money laundering the organization’s stamp of approval. India was doing so well, in fact, that FATF said it no longer needed to do regular follow-ups to check India’s technical compliance with international standards.

Ultimately, though, Indian officials had to acknowledge that the country’s anti-money laundering regime fell short of perfect. A review by the Reserve Bank in the wake of Cobrapost’s exposés found that 25 banks had indeed violated anti-money laundering rules. Among them were some of India’s largest banks.

Aniruddha Bahal, Cobrapost’s founder, says the episode suggests FATF is more interested in shuffling papers than in cracking down on money laundering.

The United Nations Office on Drugs and Crime estimates that just a fraction of 1 percent of money that’s laundered around the globe is intercepted and recovered.

Instead of focusing on paper compliance, Bahal says, FATF “should have people on the ground. You have to have a way for international organizations to do spot checks on banks.”

FAFT acknowledged in a prepared statement that its assessment focused on India’s on-paper compliance rather than on how well its anti-money laundering regime works. It says future reviews of India and other countries will shift the focus to their on-the-ground success in reducing the flow of dirty money.

Offshore wars

Concerns about the role of offshore havens in money laundering and tax evasion go back the better part of a century.

In 1921, the U.S. Congress raised questions about foreign subsidiaries that were used to “milk” their U.S. parent corporations, helping them cut tax bills. In 1937, U.S. Treasury Secretary Henry Morgenthau warned President Franklin D. Roosevelt that Americans were dodging taxes by setting up holding companies in the Bahamas, Newfoundland and elsewhere, resorting to “all manner of devices to prevent the acquisition of information regarding their companies.”

It wasn’t until the late 1990s that world powers began their first coordinated attack on offshore shell games.

Two multinational groups counting the U.S., Japan and other powerful nations as members led the effort. The Financial Action Task Force targeted money laundering by criminals and terrorists. The Organization for Economic Cooperation and Development zeroed in on offshore-enabled tax evasion.

In 2000, FATF and the OECD announced blacklists for “non-cooperative” jurisdictions that, for example, failed to do much to help foreign authorities investigating tax and financial crimes.

The OECD listed 35 jurisdictions, including the Bahamas, the Cook Islands and Monaco. OECD members threatened economic sanctions against jurisdictions that didn’t change banking secrecy provisions and other practices that encouraged the flow of unreported cash.

The U.S. supported the OECD’s blacklist under the Clinton administration. American support didn’t hold, though, after the 2000 election put George W. Bush in the White House.

The Center for Freedom and Prosperity — a Washington, D.C.-based group associated with corporate-funded think tanks — launched an aggressive lobbying campaign against the OECD’s efforts.

The group painted the OECD, which like FATF is headquartered in Paris, as a band of European socialists bent on destroying free enterprise. Along with calling on anti-tax conservatives in the U.S. Congress, it also enlisted the support of the liberal-leaning Congressional Black Caucus, which voiced concern that the measures could hurt island nations’ fragile economies.

The lobbying paid off.

The Bush administration announced in May 2001 that it was withdrawing U.S. support for the OECD’s tax haven assault. Undercut by the U.S.’s reversal and bureaucratic infighting in other big countries, the OECD’s blacklist dwindled into “a mixture of cheerleading and scorekeeping,” the authoritative newsletter Tax Notes said.

Saint-Amans, who joined the OECD in 2007, says the organization’s early 2000s push was “not a great success” because it allowed offshore havens to escape its blacklist by making empty promises.

“They all committed, but did nothing,” he says.

By April 2002, all but seven of the 35 jurisdictions named by the OECD — Andorra, Liechtenstein, Liberia, Monaco, the Marshall Islands, Nauru and Vanuatu — had managed to get off the OECD’s blacklist. By 2009, no countries remained on the list.

Tough talk

The next big push to combat offshore secrecy began in 2008.

Acting on information from a whistleblower, U.S. authorities charged that Swiss banking giant UBS maintained some 17,000 undisclosed accounts for U.S. citizens. UBS eventually turned over the names of nearly 5,000 clients and paid a $780 million to settle charges that it had carried out a scheme to defraud the U.S.

As the UBS case was playing out, governments around the globe were becoming increasingly concerned about shrinking tax collections in the aftermath of the September 2008 financial crash.

In advance of the July 2009 Italian summit of the “Group of 8” club of rich nations, Cameron’s predecessor as U.K. Prime Minister, Gordon Brown, proclaimed: “The world should be in no doubt that the writing is on the wall for tax havens.”

Tough talk from Brown and other leaders produced modest reforms.

Rich nations moved to expand what financial transparency advocates say is a mostly ineffectual method of policing offshore transactions — agreements between countries in which they promise to honor requests from each other about specific individuals suspected of hiding assets.

If Spain, for example, wants information about assets a Spaniard has stashed in the Bahamas, it lodges a request with Bahamian authorities. The catch is Spanish authorities must already know the name and account details of the suspected tax dodger, or see the request rejected as a “fishing expedition.”

By 2010 “the tax havens were sort of relieved,” says Jason Sharman, an Australian political scientist and co-author of a forthcoming book on offshore issues, Global Shell Games. “They thought that they had had a near-death experience in 2009, but that their problems were behind them.”

Perfect storm

Over the next two years, policymakers and activists kept pushing for change, winning small victories but also hitting roadblocks.

In 2012, the European Union’s tax commissioner, Lithuanian economist Algirdas Semeta, found his efforts to fight cross-border tax evasion schemes frustrated by Austria and Luxembourg, two EU members with traditions of banking secrecy. “Tax havens give EU commissioner the runaround,” a headline in the independent EU Observer said.

Things were about to change. What Semeta called a “perfect storm” of events would soon transform tax politics in Europe, making it easier for him and like-minded officials around the world to put aggressive plans in motion.

These events included an offshore scandal in France involving President Hollande’s former budget minister and the rollout of a potent U.S. law, the Foreign Account Tax Compliance Act, which threatens to slap financial penalties on foreign banks that refuse to report accounts controlled by U.S. citizens.

The offshore issue reached a boiling point in April 2013 when the International Consortium of Investigative Journalists revealed a leak of 2.5 million secret tax-haven records, publishing stories in more than 40 news outlets, including France’s Le Monde, which added to the pressure on Hollande by exposing the offshore holdings of yet another confidant, his campaign manager.

ICIJ’s “Offshore Leaks” probe sparked official investigations in Greece, South Korea, the Philippines and other lands, and was credited with helping force Hollande to promise an end to tax havens. The EU’s Semeta called ICIJ’s disclosures “the most significant trigger” in the transformation of tax politics in Europe.

Days after the leak stories broke, France, Germany, Italy, Spain and the U.K. announced they had agreed to an expansive plan for swapping tax information across borders. Soon after, British tax havens in the English Channel and the Caribbean promised to share information on offshore bank accounts.

At a summit in September in Russia, the “Group of 20” club approved a historic plan for automatic sharing of tax information across borders — a big change from the previous one-off system of information sharing “on request.” More than 60 nations have agreed to join.

Under the plan, countries would regularly hand over data on financial activities of foreign citizens to the tax authorities in their home nations. The Netherlands, for example, would as a matter of course share information with Germany about Germans with accounts in Dutch banks.

The G20 says its members will begin automatic data exchange by 2015, and that the group will work to help developing nations “reap the benefits of a more transparent international tax system.”

In the shadows

How well the G20 plan will succeed may depend on the answer to this question: How good is the information that will be shared?

Anti-corruption activists worry that information-sharing efforts will be frustrated by the secrecy that pervades the offshore system. Few people who move assets offshore set up bank accounts in their own names. Instead, they hide behind layers of anonymous corporate structures that obscure the paper trails and the players.

A bank account in Switzerland might, for example, be controlled by a shell company in Belize that’s owned by a shadowy trust in the South Pacific’s Cook Islands and overseen, on paper, by a corporate director in Cyprus who is paid to know nothing about the company’s activities.

Most jurisdictions — offshore and onshore — don’t verify and collect the names of the real people behind companies created within their borders.

“If you don’t have a public register of who owns what companies, it defeats the purpose of having automatic exchange of information,” says Alvin Mosioma, the Kenya-based director of Tax Justice Network Africa, a non-governmental advocacy group.

Sharman, the Australian political scientist, believes automatic information sharing will limit middling tax dodgers in the EU and the U.S., but won’t do much to stop super-wealthy tax evaders who can afford to set up sophisticated offshore structures that either provide maximum secrecy or a “veneer of legality” created by accounting ingenuity.

Without transparency on company ownership, he says, “you’re only going to catch the real idiots who are maintaining bank accounts in their own names — the real small-timers.”

Around the world, shell companies are a key tool for hiding the flow of offshore money, according to a World Bank study of 150 “grand corruption cases” spanning more than three decades.

When James Ibori was governor of Nigeria’s oil-rich Delta State, for example, he and his cronies pocketed an estimated $250 million in government graft with the help of a web of companies based in Switzerland, Mauritius and elsewhere.

These companies provided cover that allowed him to shift millions of dollars through accounts at Citibank, Barclays and HSBC. He purchased a $20 million private jet, a fleet of armored Range Rovers and million-dollar homes in London, Houston and Washington, D.C.

Ibori was eventually brought to justice in London and sentenced to 13 years in prison, thanks in large measure to Scotland Yard’s discovery of two incriminating computer hard drives.

Most investigations involving shell companies, however, come up empty.

In a case highlighted by a U.S. Senate probe, U.S. Homeland Security agents investigating nearly $150 million in suspect wire transfers uncovered a network of some 800 U.S. companies that were shifting money among themselves and out to offshore havens. U.S. Sen. Carl Levin of Michigan, who has campaigned against tax havens for decades, described this arrangement as a “massive financial shell game.”

None of the incorporation documents in various states listed the firms’ real owners. The paper trail on 200 Utah companies involved in the scheme led to a Delaware-based “company formation agent” who had been questioned in at least eight earlier investigations targeting suspected money laundering by U.S. shell companies, Levin said.

The incorporation agent said he didn’t know the identities of the real owners behind the companies he set up, because the law didn’t require him to collect that information. The investigation — like the eight previous investigations that had ended up at his door — “hit a dead end,” Levin said.

The case illustrates that the U.S. and other big nations aren’t simply victims of the offshore secrecy. Western countries play a role in the offshore system through laws that allow company owners to remain hidden and through the offshore activities of brand-name companies and banks.

Apple, Google and other U.S. multinationals have embraced offshore havens and complex shelters that allow them to avoid taxes. Big U.S. banks frequently provide access to money launderers and fraudsters, government investigations have found. Wachovia Bank, for example, paid $160 million to settle charges that it had allowed Mexican drug cartels to launder billions of dollars.

Many state governments across America, meanwhile, benefit from serving as tax and secrecy havens for corporations. Delaware collects hundreds of millions of dollars each year in taxes and fees from absentee corporations, about a quarter of the tiny state’s budget.

Offshore centers’ defenders often cite Delaware’s reputation as a haven for arms smugglers and con men as evidence of the U.S.’s failure to keep its own house clean. The Cayman Islands financial industry’s trade group calls Delaware “the biggest hypocrisy of all … Delaware continues to provide probably the best option to set up a corporation without proper disclosure.”

‘We can’t wait’

Legislation proposed in August by Sen. Levin would require states to identify the real owners of companies created within their borders.

The bill faces hurdles. Similar legislation has been repeatedly shot down in Congress in recent years, and the bill has some influential opponents, including the American Bankers Association, the American Bar Association and the U.S. Chamber of Commerce. The Chamber believes such legislation would hit  “every form of business, particularly small businesses, with new, costly and complex regulatory burdens.”

Global Financial Integrity, a leading anti-corruption group, notes that the U.S. and other Western nations have failed for a decade to live up to their pledges to meet even FATF’s less-than-stringent standards for transparency on company ownership.

The advocacy group wants a worldwide requirement that company ownership be verified and listed in public registries, so the information is open not only to government authorities but also to non-governmental organizations, media and citizens.

UK Prime Minister Cameron announced in October that Britain would open a public registry that names the true owners of British companies. But that decision doesn’t appear to apply yet to the country’s overseas territories and dependencies — and the EU and the U.S. have yet to follow suit.

Mosioma, the Kenya-based activist, says poor nations desperately need swift, global action on shell companies and other tools of the offshore trade.

Offshore secrecy, he argues, “lies at the heart” of corruption and poverty in Africa and other struggling regions, allowing corrupt officials and businesspeople to loot public treasuries and plunder oil and mineral wealth. Global Financial Integrity estimates Africa lost between $850 billion and $1.8 trillion in illicit financial transfers from 1970 to 2008.

“Rich nations have a reputation for making grand pronouncements and not keeping them. That for us is a reason for pessimism,” Mosioma says. “It’s also a reason to keep the pressure on. We can’t wait for another decade of talking about this.”

British Prime Minister David Cameron, left, speaks during a news conference with President Barack Obama in the East Room of the White House, in Washington, May 2013.Michael Hudsonhttp://www.publicintegrity.org/authors/michael-hudsonhttp://www.publicintegrity.org/2013/11/20/13786/push-against-offshore-secrecy-uphill-battle

Center to cover political power of broadband industry

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The Center for Public Integrity is investing in investigative reporting on the politics of broadband and the digital divide.

Allan Holmes, an award-winning business journalist and former director of Telecommunications and Technology at Bloomberg Government, will lead the Center’s coverage of the political influence of the cable and telecommunications companies that provide Internet service in the U.S.

He will begin work December 2.

Holmes, a 25-year news veteran, led a team of reporters and analysts who wrote about federal and international technology policy including spectrum allocation, cyber security, big data and privacy. He frequently appeared on Bloomberg television and radio.

Prior to joining Bloomberg, Holmes was with the Atlantic Media Group where he led the startup of Nextgov.com, a website for federal technology executives, and was technology editor at Government Executive magazine.

He’s been honored multiple times by the American Society of Business Publication Editors, and is a three-time national winner of the best government coverage web site.

Holmes grew up in Sewanee, Tenn. He earned a bachelor’s degree in history and economics and a masters degree in public policy from Duke University.



 

Allan HolmesThe Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/11/21/13797/center-cover-political-power-broadband-industry

The 'lobbyist' is dead

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The lobbyist, like Philip Morris, ValuJet and the World Wrestling Federation before him, died today.

He was 150 years old, give or take a decade, the victim of relentless pejorativation and transmogrification. Naysayers who believed hetoooftenabusedtheright to petition his government for a redress of grievances hastened his demise.

The lobbyist’s heyday arrived during the 2000s. He found himself in the black riding on a smile and shoeshine as the federal government ballooned, congressional earmarks proliferated and two overseas wars required the unmitigated services of defense contractors. He worked for everyone — tree huggers and coal miners, churches and states, peaceniks and warmongers. 

By 2010, he earned $3.55 billion in Washington, D.C., alone — more than ever before.

But the lobbyist felt infirmity’s creep.

The government sometimes tossed him in jail. His friends in Congress stopped offering him food and drink. The president shunned him, giving him no work or shelter. Lifeblood bled from his pockets with alarming volume.

There, on the shingles above his mightiest redoubts — Akin Gump Strauss Hauer & Feld; Brownstein Hyatt Farber Schreck, Cassidy & Associates, the Podesta Group— the lobbyist’s moniker had been relegated or removed. Often in its place: “federal affairs professional,” “strategic communications professional,” “advocate,” “adviser.”

During his final days, however, the lobbyist filled himself with hope for life anew.

An old lobbyist never dies, he reasoned. He just changes his name.

Official pronouncement of the lobbyist’s death came today at the Washington Court Hotel during the annual meeting of the American League of Lobbyists, henceforth known as the Association of Government Relations Professionals.

 

 

A pedestrian talks on his mobile phone as he crosses the intersection of Connecticut Avenue and K Street.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/11/21/13799/lobbyist-dead

League of Conservation Voters becoming 'dark money' heavyweight

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The liberal League of Conservation Voters is fast becoming one of the nation’s strongest “dark money” forces — a realm conservative groups have typically dominated.

New documents filed with the Internal Revenue Service and obtained by the Center for Public Integrity show the nonprofit League of Conservation Voters spent a record $36 million in 2012, of which more than 40 percent — nearly $15 million — came in the form of "direct and indirect political campaign activities."

That's up from about 25 percent in both 2010, when congressional midterm elections were held, and 2008, the last year when control of both Congress and the White House was at stake.

“There was a lot at stake last year on our issues, both on Capitol Hill and across the country,” said Jeff Gohringer, a spokesman for the League of Conservation Voters, which, as a 501(c)(4) nonprofit must annually file a tax return with the IRS.

The League’s involvement helped defend “our allies at the ballot box in the face of unprecedented spending from polluters,” Gohringer added.

While super PACs, candidates’ campaigns and traditional political action committees must regularly report their funders, the Federal Election Commission has interpreted the law to require politically active nonprofits to disclose only the names of donors who give for the specific purpose of “furthering” particular ads — something that rarely happens.

Repeatedly in 2012, the League of Conservation Voters told the FEC that all expenditures were paid for by money from its “general treasury funds.”

Little is known about the sources of the League of Conservation Voters’ cash — although, earlier this year, it got a boost at an annual fundraising gala that featured speeches by Democratic Sens. Elizabeth Warren, D-Mass., and Al Franken, D-Minn.

Gohringer said only that the League has financial backing from “more than [a] half-million supporters across the country.”

But a Center for Public Integrity review of IRS records show the League received substantial financial support last year from a nonprofit started by two of President Barack Obama's former aides, as well as nonprofits dedicated to advocating for “progressive” legislation and “clean energy.”

For instance, the Green Tech Action Fund — which describes itself as a "nonpartisan, not-for-profit grant-making organization" with the goal of spurring "big new markets for clean energy technologies" — contributed $2.6 million.

And The Advocacy Fund — which touts itself as a way to enable "progressive donors and activists to impact the legislative arena" — contributed $2 million. (Full disclosure: The related Tides Center has previously contributed to the Center for Public Integrity. A full list of the Center’s donors is available here.)

Meanwhile, Priorities USA, a Democratic-aligned nonprofit headed by former White House staffers Bill Burton and Sean Sweeney, gave $650,000 to the League of Conservation Voters in 2012, as the Center for Public Integrity previously reported.

Amy Fuerstenau, Green Tech Action Fund’s executive director, said her group contributed to the League because it helps the organization "in its mission to advance clean energy policy.”

Neither Burton nor representatives of The Advocacy Fund responded to requests for comment.

Fred Wertheimer, president of campaign finance reform group Democracy 21, says he's disturbed that groups on both sides of the partisan divide are uniting in their use of anonymous cash to bankroll political ads.

“We would like to see all 501(c) [nonprofits] get out of the business of making expenditures to influence campaigns,” he said.

But Gohringer, the League spokesman, doesn’t like that prescription.

“It’s unfortunate that groups like Crossroads GPS have given c4 organizations a bad name because 501(c)(4) advocacy organizations like LCV — as well as the Sierra Club, NRA, AARP and others — serve an important role in our democracy,” he said.

Since the U.S. Supreme Court’s Citizens United v. FEC ruling in 2010 and a related lower court ruling, nonprofits have gained more freedom to produce advertisements that target candidates without disclosing their donors.

Though Republican-aligned nonprofits have in recent years spent more money during recent election seasons, some liberal groups have been closing the gap. And the League of Conservation Voters is chief among them.

FEC records show that the League spent$10.8 million on what the agency calls “independent expenditures,” spending on activities such as TV ads, mailings or canvassers that expressly call for the election or defeat of federal candidates.

All of this money went into efforts designed to aid “pro-environmental” Democratic candidates.

No other Democratic-aligned nonprofit made more independent expenditures during the 2012 election cycle, according to the Center for Responsive Politics.

And the League has retained its preeminent position this year, as it poured more than $800,000 into efforts to boost Democratic Rep. Ed Markey, a longtime advocate against global warming, during Massachusetts' special U.S. Senate election.

By contrast, the U.S. Chamber of Commerce has reported spending about $200,000 on political ads this year to the FEC, while the conservative Crossroads GPS, which was co-founded by Karl Rove, has not spent a dime — although both groups significantly outspent the League of Conservation Voters in 2012.

Julie Patel contributed to this report.

Screenshot from a 2012 League of Conservation Voters' ad supporting Democrat Tammy Baldwin for U.S. Senate.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/11/22/13801/league-conservation-voters-becoming-dark-money-heavyweight

As glitches fade, Obamacare approval will rise

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The latest polls on Obamacare are bleak. A Kaiser Family Foundation survey found that almost half of those questioned last week had an unfavorable opinion of the law. Just a third had a favorable opinion, even less than the 40 percent support for the law in the Nov. 14 Gallup poll.

But those poll numbers will change as more people like Bob Freukes of St. Louis and Donna Smith of Denver are finally able to shop for coverage on the new health insurance websites — and find coverage that is surprisingly affordable.

Considering all the negative stories about the malfunctioning HealthCare.gov website and policy cancellations folks have been receiving, the steep decline in support for Obamacare shouldn’t surprise anyone.

But in the very week that poll numbers reached an all-time low, people who had tried for more than a month to enroll online in a health plan were finally able to do so.

Just minutes after the administration’s tech surge team said 90 percent of applicants were now able to enroll online, I started getting emails from people eager to share their success stories.

“My wife and I are both self-employed small sole proprietors,” wrote Freukes, a photographer. “This will be the first time in our married lives we will have health insurance.”

Freukes said that over the course of the past year, he and his wife — married 30 years and are now in their fifties — rarely went to the doctor because of the expense.

“We paid for doctor visits, prescriptions, eye glasses and everything else out of [our] own pockets, always knowing we were one major illness away from bankruptcy.

“We tried to find an affordable policy, but the going rate for my wife and me was roughly $900-$1,400 dollars a month with deductibles in the $5,000 range.” Considering that their combined annual income is often no more than $25,000, health insurance was out of the question.

Not only will they finally have coverage starting January 1, it will cost the Freukes less than they had expected because of the federal tax credits available to low- and middle-income individuals who buy coverage on the state exchanges. In fact, with the tax credits, the Freukes will not have to pay monthly premiums at all.

“I sat rubbing my eyes in amazement as the website did the math. Our portion of the premium for both plans was ZERO. No cost to us at all. I was stunned.”

Donna Smith wasn’t that fortunate, but she at long last will be able to get a comprehensive policy that she can afford.

Like Bob Freukes, it took Smith weeks of effort before she was finally able to enroll in a plan. Her delay, though, was caused by a different, though no less frustrating quirk in the system. Colorado is one of 13 states and the District of Columbia operating their own exchanges, which generally have experienced fewer problems than the federal website, where residents of most states have been sent. Several thousand people were able to begin the application process in Colorado but they had to wait — and wait and wait — while state officials checked to see if the applicants were eligible for Medicaid.

Smith knew her income was too high to qualify for Medicaid, but she nevertheless had to fill out an extensive questionnaire and was put in what she described as a “bureaucratic black hole” for 37 days. It was an agonizing wait for Smith, a cancer survivor who — along with husband Larry — had to file for bankruptcy several years ago because of medical debt. If her name sounds familiar, by the way, it might be because you’ve seen her in the movies. When she wrote filmmaker Michael Moore about her plight, he included her in the 2007 documentary, SiCKO. Since then she has been an active supporter of health care reform.

 

After she finally got the Medicaid denial she was expecting, Smith called Connect for Health Colorado — the name of the state exchange — and worked with an employee to complete her application.

“If people can get through the Medicaid process, I think they’ll be pleasantly surprised,” said Smith, who has been paying $875 a month for an individual policy. Beginning next year, she will be covered in a better plan, but it will cost her only $450 a month after factoring in a $72 federal tax credit.

 As happy as she was to discover she will soon have affordable coverage —and that it can’t be canceled if her cancer returns, thanks to Obamacare — she still believes a single-payer, Medicare-for-all type system would be better.

She has a point. The Affordable Care Act is far from perfect. But in the coming months and years, millions of us who have been unable to find affordable coverage will at long last be insured. Poll numbers will eventually reflect that.

Yvette Bass of Madison, right, gets assistance exploring the new online insurance marketplace, or exchange, from Elissa Sprecher, left, and Lorraine McGowan, October 2013, in Madison, Wisconsin.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/11/25/13807/glitches-fade-obamacare-approval-will-rise

Obama's pardoned turkeys courtesy of lobbyists

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Lobbyists are strictly for the birds, President Barack Obama regularlyasserts. But an influential lobbying powerhouse will on Wednesday provide Obama a pair of well-pampered turkeys that the president plans to pardon.

The National Turkey Federation, which raised and transported the lucky gobblers known as "Popcorn" and "Caramel" to the nation's capital, spent $105,000 on lobbying between January and September, federal records show — pressing lawmakers and agencies on issues ranging from renewable fuel standards to immigration reform.

And during the same period, the National Turkey Federation's political action committee doled out an additional $125,000. Nearly three-fourths of that sum aided Republicans.

Notable beneficiaries of the trade group's PAC money include House Minority Leader Eric Cantor, R-Va., who has received $5,000, and Speaker of the House John Boehner, R-Ohio, who has received $2,500.

Meanwhile, embattled incumbent Sens. Kay Hagan, D-N.C., and Mark Pryor, D-Ark., account for more than 40 percent of the money the National Turkey Federation PAC contributed to Democrats through September.

Hagan collected $8,000 — more than any other recipient — and Pryor collected $7,000. Ten other Democratic candidates and PACs collectively received $20,000.

Popcorn and Caramel will be accompanied to the White House on Wednesday by John Burkel, a fourth-generation turkey farmer and current chairman of the National Turkey Federation.

Burkel and his birds hold the distinction of hailing from Badger, Minn., a town of just a few hundred residents near the Canadian border where turkeys outnumber humans.

He also maintains the distinction of being the top donor in Badger to politicians and political groups, according to a Center for Public Integrity review of federal records.

Since January, Burkel has donated $560 to the political action committee of the National Turkey Federation, Federal Election Commission recordsshow. Only one other resident of his ZIP code has even contributed enough to exceed the federal disclosure threshold of $200.

 

 

President Barack Obama, with daughters Sasha, center, and Malia, right, carries on the Thanksgiving tradition of saving a turkey from the dinner table with a "presidential pardon," at the White House in Washington, Wednesday, Nov. 21, 2012.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/11/26/13811/obamas-pardoned-turkeys-courtesy-lobbyists

Nation's largest school police force, in L.A., will stop ticketing kids 12 and younger

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Responding to demand for reforms, the nation’s largest school police force — in Los Angeles — will stop issuing tickets to students 12-years-old or younger for minor infractions allegedly committed on or near campuses during school hours.

A memo this month to officers from Los Angeles Unified School Police Department Chief Steven Zipperman outlined the new policy, which goes into effect in December. The announcement comes in the wake of community demands for the school district to “decriminalize” minor school disciplinary matters and use more discretion when involving law enforcement personnel.

The post-Newtown push to place more police in schools nationwide makes it more urgent to set standards for officers’ roles, some juvenile court judges and others have warned.

In 2012, in a series of reports, the Center for Public Integrity and KPCC radio documented the citations of thousands of kids in middle school and even some elementary schools for disturbing the peace, graffiti, marijuana and cigarette possession, truancy, trespassing, jaywalking and other allegations.

The new age-limit policy in Los Angeles, Zipperman said, includes room for exceptions “when all other methods of an officer and/or school administrator [for a] ‘teachable moment’ learning objective cannot be accomplished.”

The Labor-Community Strategy Center, an organization that has pushed for reforms, called the new policy “one step bringing us closer to the models called for by students and community members for several years…to reverse the school-to-prison pipeline impacts” at L.A. Unified.

However, in a letter to Zipperman and L.A. Unified school board member Monica Garcia, the group also urged district officials to move forward in defining the role of police at schools and setting guidelines for when the force’s 300-plus officers should get involved in school matters.

Earlier this year, the district’s board of trustees adopted a School Climate Bill of Rights that calls for defining the role of police. The policy also prohibits out-of-school suspensions for “willful defiance,” a vague charge which some critics said leaves students further behind academically and on their own at home — or on the streets — unsupervised.

Children’s rights advocates have argued for several years that some Los Angeles school staff had begun to summon police too often to deal with minor disciplinary matters often involving young children. Ticketed students were mostly Latino, black and in low-income areas.

Juvenile-court judges, too, began objecting to the ticketing and to police sweeps that were catching tardy kids and forcing them to go to court.

Judges said that too many children were being ushered into the criminal-justice system at a young age, when counseling and other family services would be more appropriate.

In October, the Labor-Community Strategy Center issued a report analyzing recent police ticketing data. The group found that more than 48 percent of approximately 4,740 school police tickets issued during the 2012-2013 school year were given to kids 14 or younger. Students who were 12 or 11 received 545 tickets. The single biggest offense for younger kids was disturbing the peace.

In calendar year 2011, records examined by the Center for Public Integrity showed that more than 960 kids 12 and younger were ticketed. More than 10,200 tickets in all were issued to students that year, with more than 43 percent going to kids 14 and younger.

In April of 2012, two first graders, six and seven, were ticketed after they got into a shoving match and the mother of one called police, the principal of the kids’ school told the Center. In September, the Center found, a 10-year-old was ticketed for trespassing.

Getting a ticket used to mean that students were forced to miss school and appear in court with parents — and pay dollar fines or perform community service. Students were saddled with misdemeanor records if they didn’t show up at court, which many failed to do.

Last year, with the closure of Los Angeles County’s lower-level juvenile courts, school police began forwarding tickets for truancy directly to counseling centers in the city and tickets for other infractions to Los Angeles County Probation officials. Probation officers’ task is to review the tickets and assign kids and families to appropriate counseling or other services in an effort to avoid court involvement.

The volume of tickets issued to students in Los Angeles was far greater during previous years than citations issued to students in any comparably sized metropolitan district, including New York City’s.

   

Los Angeles Unified School District Police Chief, Steve Zipperman, speaks at a December 2012 news conference about the school shooting in Connecticut. LAPD Commander Andrew Smith appears in background.Susan Ferrisshttp://www.publicintegrity.org/authors/susan-ferrisshttp://www.publicintegrity.org/2013/11/27/13813/nations-largest-school-police-force-la-will-stop-ticketing-kids-12-and-younger

Energy Department 'bet' on Fisker Automotive ends in bankruptcy

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Green-lighting a half-billion dollar loan to help a California electric car startup build a fleet of sleek plug-ins four years ago, the Obama administration’s Energy Department promised cutting-edge cars and thousands of jobs.

“We're making a bet in the future,” Vice President Joe Biden said in October 2009, standing in a shuttered Delaware plant slated to spring to life with electric cars. “We're making a bet in innovation.”

The thousands of Fisker Automotive cars never did roll off assembly lines, and the thousands of jobs never surfaced. This month, Fisker filed for Chapter 11 bankruptcy protection — a symbol of a larger Energy Department electric car program that has yet to fully take off.

In October 2011, The Center for Public Integrity and ABC News explored the Energy Department’s risky $1 billion bet on Fisker and another California electric car maker backed by political powerhouses, Tesla Motors. Tesla paid off its $465 million U.S. loan nine years early, but Fisker’s project never gained traction.

The Energy Department earmarked $529 million to Fisker and ultimately dispersed $192 million. Of that, DOE said, it recovered $53 million.

Fisker was financed under an Advanced Technology Vehicles Manufacturing (ATVM) Program central to Obama’s long-shot goal of putting 1 million electric vehicles on the road by 2015. The DOE said this week it is moving ahead, accepting applications and conducting outreach.

The program “will help the U.S. compete in a rapidly-growing, global market for advanced electric and fuel-efficient vehicles,” the agency said in a statement. “The Department has committed more than $8 billion in loans to date supporting projects that are supporting tens of thousands jobs, reducing our dependence on foreign oil and promoting U.S. leadership across an array of innovative vehicle technologies, including plug-in vehicles and high-efficiency gasoline vehicles.”

While saying the Fisker loss “is not what anyone hoped,” energy officials said it “represents less than two percent of our advanced vehicle loans.”

“All our loan agreements include strong safeguards that allow us to protect taxpayers when a company can't meet its obligations. Accordingly, the Department stopped disbursements to Fisker in June 2011 after the company fell short of the rigorous milestones that we had established as conditions of the loan,” the DOE statement said.

Yet the ATVM program itself has not yet reached the goals set by Congress, and came under criticism in Government Accountability Office reports in 2011 and 2013.

This year’s GAO report found that the ATVM program had not closed a loan in two years and had spent just a fraction, $8 billion, of the $25 billion Congress allocated. The program was infused with another $7.5 billion to cover credit subsidy costs; according to the GAO report, $4.2 billion remained in that pool of money.

“Most applicants and manufacturers we spoke with told us that, currently, the costs of participating outweigh the benefits,” the report said.

Fisker had hoped the $529 million loan guarantee would help it build thousands of luxury Karmas along with another car on its drawing board, the more affordable Atlantic. This April, company co-founder Henrik Fisker told the House Committee on Oversight & Government Reform about a series of setbacks — from slow moving regulatory approvals to recalls and a bankruptcy dogging outside suppliers – that derailed his vision.

“From the outset, Fisker Automotive aimed to be a new American car company, setting pioneering standards for low-emission technology and cutting-edge design,” he said.

While Fisker filed for bankruptcy last week, another company, Hybrid Technology, purchased its assets, including paying $25 million of its DOE loan. In its bankruptcy filing, Fisker estimated assets between $100 million and $500 million – and liabilities between $500 million and $1 billion.

Fisker was backed by an electric car program that is one piece of a larger, $30 billion green energy portfolio “that is helping to diversify our energy portfolio with clean, renewable domestic energy, spur U.S. industry, and make America more competitive in a rapidly-growing, global market for advanced vehicles,” the DOE said.

The portfolio includes several other firms that filed for bankruptcy after receiving DOE money, including California solar panel maker Solyndra. In several cases, the Center and ABC reported last year, green energy companies paid six-figure bonuses or payouts to executives before filing for bankruptcy.

The Energy Department cited “estimated losses to date of approximately two percent” — less, the DOE said, than the 10 percent Congress set aside.

Congressional critics cited Fisker’s bankruptcy filing as “yet another sad chapter” in DOE's portfolio. “The jobs that were promised never materialized and, once again, taxpayers are on the hook for the administration’s reckless gamble,” House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA) said last week.

Others who closely scrutinize green energy spending say the Fisker bankruptcy, combined with the other failings, spotlight larger questions about the role of government in financing start-up ventures with public money.

“I think structurally there were challenges right from the outset,” said Doug Koplow, founder of Earth Track, a consulting firm that tracks energy subsidies.

For years, Koplow has raised questions about the way DOE allocates taxpayer money. “I’m not surprised to see some of these things go bankrupt,” he said. “I think it would be inevitable.”

Henrik Fisker, CEO of Fisker Automotive, listens as Vice President Joe Biden makes an announcement about the company's plan for electric vehicles.Ronnie Greenehttp://www.publicintegrity.org/authors/ronnie-greenehttp://www.publicintegrity.org/2013/11/27/13817/energy-department-bet-fisker-automotive-ends-bankruptcy

IRS sets its sights on political 'dark money'

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Nearly four years after the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision helped usher in a surge of political spending by “social welfare” nonprofits, the Internal Revenue Service is proposing new rules that could curtail the groups’ ability to influence elections while concealing their donors.

The agency’s action will have massive implications for politically engaged nonprofits from the Republican-aligned Crossroads GPS, which was co-founded by former Bush strategist Karl Rove, to the pro-Democratic Patriot Majority USA— as well as for ideological groups such as the League of Conservation Voters and Americans for Prosperity.

Such nonprofits organized under Sec. 501(c)(4) of the U.S. tax code must be “operated exclusively to promote social welfare” and function “primarily to further the common good and general welfare of the people of the community,” according to the IRS.

Citizens United opened the door for such groups to expand their political activities, including allowing them to advocate for the election or defeat of candidates. But the IRS definition of what exactly constitutes political spending is murky, and the agency has never defined how much money social welfare groups can spend on express political advocacy. Until now most nonprofits have been working under the rule of thumb that express political advocacy cannot constitute more than 50 percent of their spending.

The new proposed rules seek to clarify both.

The IRS is calling for the creation of a new legal term known as “candidate-related political activity,” which would not overlap with activities for the “promotion of social welfare.” And the agency is seeking input from the public on whether the level of political spending should be restricted to a certain percentage.

According to the Center for Responsive Politics, social welfare nonprofits spent more than $240 million on advertising calling for the election or defeat of federal political candidates during the 2012 election cycle.

As the Center for Public Integrity previously reported, the League of Conservation Voters alone spent more than 40 percent of its budget on express advocacy in 2012, while such expenditures amounted to nearly 46 percent of the Republican Jewish Coalition’s spending last year.

Social welfare groups also spent hundreds of millions more on “issue ads” — so called because they name a candidate but stop short of explicitly calling for their election or defeat.

When these advertisements were broadcast within 30 days of a primary election or 60 days of a general election, they were required to be reported to the FEC as “electioneering communications.”

Even so, most social welfare nonprofit groups did not define such advertising as political activity for the purposes of their IRS reporting.

For instance, one pro-business social welfare group with ties to the conservative billionaires Charles and David Koch — the American Energy Alliance — told the FEC it spent $1.36 million on ads urging viewers in Virginia and Ohio to "stand with coal" and "vote no on Obama's failing energy policy."

Yet the American Energy Alliance later told the IRS it did not spend a dime on “direct or indirect political campaign activities on behalf of or in opposition to candidates for public office."

The major difference between politically active social welfare group and traditional political committees that are organized under Sec. 527 of the tax code is that the latter must regularly disclose their funders. This includes candidates’ campaigns, parties, political action committees and super PACs.

The FEC has interpreted the law to require politically active nonprofits to disclose only the names of donors who give for the specific purpose of “furthering” particular ads — something that rarely happens.

Critics have dubbed the influx of ads bankrolled by unnamed sources “dark money,” and they have argued the true donors of the money should be disclosed.

Supporters, meanwhile, assert they are spending within their constitutional rights and are complying with existing disclosure rules.

The new IRS proposal comes down closer to the side of the dark money opponents.

The new category of “candidate-related political activity” would encompass all spending reported to the FEC — including express advocacy and electioneering communications — as well as some additional activities, such as get-out-the-vote drives and events featuring candidates.

In a press release Tuesday, Treasury Assistant Secretary for Tax Policy Mark J. Mazur called the proposal“a critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations.”

Meanwhile, pro-campaign finance reform advocacy group Democracy 21 released a statement to “applaud” the action taken by the IRS as “an important step further.”

Democracy 21 President Fred Wertheimer further encouraged the agency to “seize this opportunity to end the scandalous practice of groups abusing the tax laws to hide from the American people campaign finance information to which they are entitled.”

But the proposal also immediately drew criticism from campaign finance reform opponents.

David Keating, the president of the Center for Competitive Politics, said the proposal went “seriously off track” by including “electioneering communications” as “candidate-related political activity.”

He argued that groups may be compelled to run issue ads on controversial legislation in the two months before Election Day because of the timetable under which Congress decides to act.

For instance, he cited votes on an alternative to sequestration, an omnibus appropriations bill and the reauthorization of the Foreign Intelligence Surveillance Act among high-profile votes occurring within 60 days of the November election last Congress.

“It is absurd to categorize ads on such legislation as per se political activity simply because an incumbent is mentioned in the communication,” Keating said. “Many social welfare groups are active on a single issue and are at the mercy of the congressional schedule.”

Representatives of the Republican Jewish Coalition, Crossroads GPS and Patriot Majority USA did not immediately respond to requests for comment. Spokesmen for both the League of Conservation Voters and Americans for Prosperity declined to comment.

Benjamin Cole, the communications director of the pro-coal American Energy Alliance, said his group was “looking closely at the administration's proposal.”

“Behold, the tax man cometh," Cole continued, adding that the president's "political agenda" and "his personal contempt for the Citizens United decision" were both "nakedly obvious in this latest move."

The Internal Revenue Service building at the Federal Triangle complex in Washington.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/11/27/13819/irs-sets-its-sights-political-dark-money

Center thankful for stellar reviews from charity watchdogs

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I can honestly say that as a nonprofit organization, The Center for Public Integrity itself meets the highest standards of accountability.

We’ve just been given the coveted certification by the Better Business Bureau’s Wise Giving Alliance. To get it, we’ve met the BBB’s rigorous 20 Standards of Charitable Accountability. The BBB designation is in addition to our Four-Star ranking by Charity Navigator — its highest designation. The Center for Public Integrity has had a Four-Star ranking from Charity Navigator for the last three years, one of only about 10 percent of all nonprofits that are so recognized. In addition, we are also designated as a Silver Participant by GuideStar Exchange. 

These third-party oversight organizations, the nation’s leading nonprofit evaluators, look closely at the Center’s operations, fiscal management, leadership and fundraising. I’m happy to report these charity watchdogs all like what they see here. Such third-party oversight has increased in recent years in response to growing public demand for greater accountability and transparency from the nonprofit sector. We welcome this trend.

The BBB Wise Giving Alliance, in particular, is a highly influential evaluator of nonprofits that conduct fundraising. Its mission and website aim to assist donors in making informed judgments by providing objective evaluations of charities based on some of the most detailed standards of accountability.

The truth is foundations, governments and donors have all begun to seek more and better information about the activities, outcomes and operations of nonprofit organizations — and what they are achieving with their donations. Again, such scrutiny is beneficial. The Center for Public Integrity seeks to be one of the highest ranking nonprofits for potential contributors.

In our investigative work, we fervently believe in greater transparency and accountability. I don’t think we could accept anything less when it comes to our own operations as a well-run nonprofit organization. Here is where you can make a donation.

Enjoy your holiday.

Until next week.

Bill 

P.S. For any Watchdog readers interested in solutions to the federal debt and deficits questions, there will be a conference at the U.S. Capitol Visitor Center in Washington, D.C., next Tuesday, Dec. 3rd. I will be helping moderate the Second Annual Conference on Fiscal Responsibility, sponsored by the University of New Hampshire Law School’s Rudman Center. The non-partisan gathering from 9:00 a.m. - 2:00 p.m. is called, “Moving Beyond the Short-term: What will It Take to Prevent a Debt Crisis?”  

Bill Buzenberghttp://www.publicintegrity.org/authors/bill-buzenberghttp://www.publicintegrity.org/2013/11/27/13820/center-thankful-stellar-reviews-charity-watchdogs

Fighting the 'spin' war over Obamacare

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Now that November is history, will the Obamacare website work flawlessly from now on? Or, as the president has said, will it at least work for the “vast majority” of people who need to buy insurance on their own?

We will know in a few days if, as administration officials pledged last week, most of the problems that plagued HealthCare.gov were actually resolved. They predicted that at least 90 percent of folks seeking to enroll in a health plan online would be able to do so by the first of December.

The tech team that has been working around the clock to fix the website said it can now handle 50,000 users at a time — and up to 800,000 a day — without crashing. And if folks have trouble with the site during particularly busy times, they can leave an email address to be notified later when fewer users are online trying to enroll.

It will be a largely seamless experience for most, and hundreds of thousands — if not millions — of people who were previously uninsured or underinsured will have quality, affordable coverage beginning January 1, many for the first time.

But that doesn’t mean those who have invested hundreds of millions of dollars to scare people about the reform law — including health insurers — will throw in the towel. On the contrary, we can expect them to double down, at least through 2014.

That’s because this is about politics. It is not about making sure that all Americans have access to solid medical care when they need it. It is about which political party will control the House and the Senate after the midterm elections eleven months and two days from now.

Both political parties will be seeking to control the debate — and the media coverage — about Obamacare. The way things seem to be shaping up, the Republicans may have the advantage. That’s because unlike Democrats, GOP lawmakers have shown that they can stay on message about the law, that they can take the talking points of the week they’re handed and repeat them over and over again. And it’s because many Washington reporters have demonstrated a willingness to be little more than dictation takers, reliably reporting what politicians say without taking the time to determine the veracity of those claims.  

From the very beginning of the health care reform debate — before the first word of legislation was written — Republican political consultant Frank Luntz advised GOP lawmakers to call whatever plan the Democrats came up with a “government takeover of health care.” It was repeated so often — and dutifully reported by the media — that Politifact chose it as the “Lie of the Year” in 2010.

Luntz didn’t coin the term. Variations of it have been used for decades to defeat reform efforts. When I was still working as an insurance industry PR guy, my colleagues and I settled on “government takeover of health care” in 2007, in press releases from a front group we had created, as the central message of a campaign to persuade the public that filmmaker Michael Moore was advocating such a takeover in his movie SiCKO.

Two and a half years later, on November 7, 2009, the day the House of Representatives narrowly approved what became the Affordable Care Act, just about every GOP member of Congress rose to condemn the legislation as a “government takeover of health care.”

As the New York Times reported a few days back, House Republicans are returning to their playbook, distributing memos with “talking points and marching orders” about Obamacare.

According to the Times story: “Republican strategists say that over the next several months, they intend to keep Democrats on their heels through a multi-layered, sequenced assault.”

Having participated in numerous clandestine meetings with Republican strategists in years past — at PR agencies in Washington and in airport hotel conference rooms in cities like Chicago and Dallas — I can almost assure you that some of my former colleagues are playing behind-the-scenes roles in crafting the current batch of talking points. Like, “Because of Obamacare, I lost my insurance.”

While most insurers like the requirement that Americans have to buy coverage from them, they don’t like the profit-limiting consumer protections in the law. They know they will have a better chance of weakening or getting rid of them if the GOP can take control of both the House and Senate next November.

Democratic consultants have developed a few talking points of their own, of course, but I have not observed the same level of message discipline among Democrats as I have seen among Republicans. Unless they figure out how to adapt the GOP playbook to their own advantage, they will continue to be on the defensive about Obamacare for months to come.

House Speaker John Boehner of Ohio, left, joined House Majority Whip Kevin McCarthy of Calif., and Rep. Keith Rothfus, R-Pa., right, meets with reporters on Capitol Hill in Washington, November, 2013.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/12/02/13872/fighting-spin-war-over-obamacare

Don’t support ‘campaign finance reform’? Try combating ‘corruption’

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How important is reducing the influence of money in politics to Americans? It depends on how you ask the question.

A new poll sponsored by the campaign reform advocacy group United Republic, through its Represent.us project, concludes more than 60 percent of Americans would strongly support “a federal law that imposes tough, new campaign finance laws for politicians, lobbyists and super PACs.”

That’s not an unimpressive figure, but strong support for a reform law jumped to about 72 percent when respondents were asked about “tough, new anti-corruption laws” instead of “campaign finance” ones, according to polling documents reviewed by the Center for Public Integrity.

Josh Silver, Represent.Us’s director, said his organization’s poll “confirms that while Americans may support campaign finance reform, they are truly fired up about corruption.”

“Conservatives, progressives, and independents are all willing to support bold reforms, provided that we stop using dated, inaccessible language and start defining this issue in terms everyone can get behind,” he continued.

Most Americans, regardless of political affiliation, aren’t impressed with the country’s elections or integrity of officeholders, according to the poll’s findings.

More than seven in 10 respondents agreed that the U.S. election system was “biased in favor of the candidate with the most money.” Only 15 percent said that the system was “equally fair to all candidates.”

And 51 percent agreed with the statement that “most politicians” are “corrupt.”

Republicans were slightly more likely than Democrats to believe most politicians are corrupt. About 53 percent affirmed that statement, versus nearly 45 percent of Democrats.

Yet independents viewed politicians least favorably of all — with about 56 percent agreeing that most politicians are corrupt.

Additionally, vast majorities of poll respondents thought many groups wield too much influence over the country’s government, including “labor unions” (61.4 percent), “special interests” (76.5 percent), “super PACs” (77 percent), “the wealthiest 1 percent” (77.2 percent), “Wall Street and corporations” (81.2 percent), “lobbyists” (82.9 percent) and “Big Money” (88.3 percent).

With poll numbers like this, it’s no wonder that the American League of Lobbyists recently changed its name to the National Association of Government Relations Professionals.

Represent.us hired pollsters MFour Market Research and Tulchin Research to conduct the poll, which contacted 1,003 Americans last month and was “controlled and weighted to reflect U.S. voter demographics.” Those contacted say they at least vote in “most elections.”  

The margin of error for most poll questions is plus or minus 3.5 percent, according to the group.

Voting booths are illuminated by sunlight as voters cast their ballots at a polling place in Billings, Mont., Tuesday, Nov. 6, 2012. (AP Photo/Jae C. Hong)Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/12/03/13943/don-t-support-campaign-finance-reform-try-combating-corruption
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