“Nesting doll” campaigns, in which one PAC gives to another to avoid disclosing donors, are increasingly common. Initiative 1464 would require more transparency, but it doesn’t daylight “dark money,” another kind of opaque campaign money.
Mark Mullet, a Democratic state senator from Issaquah, has been attacked time and again this year — Mullet says inaccurately — in hard-hitting campaign mailers by a group called Working Families.
And who are these Working Families? Who financed their $395,000 in attack ads on Mullet?
According to the fine print on its ads, Working Families is entirely funded by another innocuous-sounding political-action committee (PAC), the Leadership Council.
And who bankrolls the Leadership Council? Records at the state Public Disclosure Commission (PDC) reveal that its biggest donor is the Republican State Leadership Committee, based in Washington, D.C. Its second-biggest funder is called Strat PAC.
And who finances them?
You get the idea.
These “nesting doll” campaigns — in which one generic-sounding PAC gives to another, and so on — have become a chief source of “gray money,” or hard-to-track campaign spending, according to a report by the Brennan Center for Justice at New York University.
“Dark money,” which flows from nonprofit groups that don’t have to disclose their donors, has received more media attention, the “Secret Spending in the States” report says. But gray money is becoming a preferred way to obscure donors and their agendas, especially in state campaigns, says the Brennan Center.
Here in Washington, we’ve seen an increase in “independent expenditure” campaigns not affiliated with the state legislative candidates they’re helping or hurting. Spending for such campaigns, mostly funded by gray money, increased from $2.2?million in 2008 to $9.4?million in 2014.
In this election cycle, $5.7?million had been spent on such independent campaigns, as of Friday.
Both sides play the game. It was a Democratic group, She’s Changed PAC, which set the record for gray-money attack ads in a state legislative race, spending $772,909 in 2013 against Republican Jan Angel of Port Orchard.
Much of that came from California billionaire Tom Steyer, through his NextGen Climate Action committee.
Mullet’s Republican opponent this fall, Chad Magendanz, of Issaquah, has been attacked by a group called Mainstream Voters. That group is almost entirely financed by the Truman Fund and Kennedy Fund. Who is behind those Democratic groups? Mostly labor unions, it turns out.
Working Families and Mainstream Voters aren’t the only nesting-doll PACs active in close races that could determine which party controls the state Senate majority. Both parties are using other PACs with names such as Community Progress and New Direction, which has raised $2.9?million, mostly from the Democratic Truman and Kennedy funds, and spent more than $400,000 attacking Republican Senate candidates Steve Litzow, of Mercer Island, and Lynda Wilson, of Vancouver, Wash.
Digging for the donors
If you’re savvy enough, you can keep peeling back layers of campaign finance to learn the biggest donors to the attacks against Mullet — sort of. Strat PAC is a collection of debt-collection companies. The Republican State Leadership Committee is more opaque. Its top funder is the U.S. Chamber of Commerce, which does not disclose donors to its nonprofit trade association.
The vast majority of voters, however, are clueless as to who’s really behind the attacks. That’s why these opaque PACs often produce nasty ads.
“If your name is associated with an ad, I guarantee you there would be a higher level of discourse,” said state Sen. Andy Billig, D-Spokane. To curb the nesting-doll practice, Billig has proposed a bill that would prohibit a PAC from receiving more than 70 percent of its funds from another PAC.
Initiative 1464 on the November ballot offers more comprehensive disclosure.
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Under current law, ads by a PAC must list the five persons or entities contributing the most; so we get PACs listing other PACs in a cloudy form of disclosure.
If any of the top five contributors to a political ad is a PAC, I-1464 requires that PAC’s top five donors to be identified until the highest contributing individuals or entities other than PACs have been revealed.
I-1464 would not daylight dark money, which flows from groups organized under the tax code as “social welfare” entities or “trade associations.” Known to the IRS as 501(c)(4) or 501(c)(6) groups, they’re exempt from disclosing donors because they say they’re not primarily political groups.
Dark money’s big role here
Dark money has fueled significant campaigns in Washington state.
Voters faced a statewide ballot question in 2013, Initiative 522, which would have required labeling of genetically modified foods. The committee opposing I-522 stockpiled $22?million, the most money ever raised to defeat a Washington ballot initiative.
Where did it come from?
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The Grocery Manufacturers Association (GMA) in Washington, D.C., raised $11?million to fight the initiative. But the GMA did not reveal that top donors included PepsiCo and Nestle until state Attorney General Bob Ferguson filed a lawsuit seeking disclosure. I-522 failed, with 51 percent of voters rejecting the measure.
Liberal groups also used dark money in the same election.
In the campaign for a $15-an-hour minimum wage in the city of SeaTac, top contributors to the $1.4?million effort included Working Washington, a nonprofit group that didn’t disclose donors. The measure passed.
This year’s I-1464 campaign decided it wouldn’t take on dark money. “We would love to have included it in this initiative. But it was seen as biting off too much at one time,” said campaign spokesman Peter McCollum.
The initiative, which claims to put “you back in control of your government,” is funded partly by out-of-state dark money.
Of the campaign’s $2.1?million in contributions, $300,000 comes from Represent.Us, a nonprofit group that voluntarily discloses some information about its donors if requested. Every Voice, a 501(c)(4) group that has contributed $375,000, lists on its website most of its donors who gave more than $5,000. But it doesn’t detail specific amounts.
Neither group’s voluntary disclosures amount to full transparency.
Billig, the state senator from Spokane, had proposed a bill that would compel such nonprofit groups to disclose donors to campaigns in Washington. His bill sailed through the Senate in 2014 with Republican sponsors and a unanimous vote.
But after it was passed by the House, with minor changes, and came back for final approval, Senate Republicans balked. They’ve held the bill, effectively killing it, in the last two legislative sessions.
The reversal came after some business groups such as the Association of General Contractors of Washington lobbied against the proposal, arguing it would subject their members to unfair scrutiny.
With federal inaction, the burden is on states to daylight gray and dark money, according to the Brennan Center report.
“With federal officials unwilling or unable to act,” wrote the Brennan Center report authors, “the best answers for now are likely to come from the states and towns where unlimited, unaccountable election spending in many ways hits hardest.”