In NC Senate race there's plenty of money, but whose money

Published April 6, 2014

by Renee Schoof, McClatchey Washington Bureau, published in Charlotte Observer, April 5, 2014.

Outside groups have spent more than $15 million on political advertising – most of it negative – on both sides of North Carolina’s U.S. Senate race, more money than in any other state.

Who is behind much of it remains a secret.

Supporters of transparency in government say all this matters because the people watching political ads on TV often don’t know who’s paying for them and why.

Outside money in campaigns isn’t new, nor is the puzzle of who’s behind it. But in 2010, a Supreme Court ruling in a case known as Citizens United v. Federal Election Commission overturned a ban on corporate and union spending in federal elections. It allowed special-interest policy groups across the political spectrum to spend unlimited amounts on independent political ads – often without having to disclose their donors.

The ruling opened the floodgates on campaign spending, and this election year, North Carolina is seeing a lot of the fallout because it’s considered key to controlling the U.S. Senate in 2015. Republicans need to pick up six seats to take over the majority, and they see first-term Democratic Sen. Kay Hagan as vulnerable.

Much of the outside spending early in the campaign season was simply anti-Hagan, linking her to the federal health care law. More recently money has been spent to bolster specific GOP candidates. Cary doctor Greg Brannon has received some attention, but the primary beneficiary has been state House Speaker Thom Tillis, who most GOP strategists think has the best chance of beating Hagan.

Last week, the same U.S. Supreme Court majority that opened the taps for unlimited corporate spending with the Citizens United decision went further in a ruling that lifts the aggregate contribution limits for individuals. Donors will now be able to give the maximum amount allowed to as many candidates and state political parties as they want.

While many Republicans and conservatives cheered the ruling as a victory for the First Amendment, U.S. Rep. David Price, a Democrat from Chapel Hill and former political science professor at Duke University, said the high court’s conservative majority was “systematically destroying ... laws that limit the influence of big money in politics.”

“Increasingly, a few mega-donors are drowning out the voices of small contributors and ordinary citizens,” he said. “This compromises trust in government and puts the integrity of our elections at risk.”

Big-name donors

The most recent big injection of political spending in North Carolina came April 1 from American Crossroads, a super PAC created by Republican operative Karl Rove. The group spent $1.1 million on an ad for Tillis.

The ad says Tillis is “true to our values” and lists his support for tax cuts and the state’s more restrictive voter ID rules, as well as his opposition to the Affordable Care Act. It will run for four weeks, nearly up to the date of the Republican Senate primary.

FEC records show that one of American Crossroads’ biggest recent donors was Contran Corp., a Dallas manufacturing and nuclear waste management company that gave $1 million. Contran’s late owner, Harold Simmons, was a major conservative Republican contributor.

American Crossroads’ major donors also include Billy Joe “Red” McCombs, the founder of Red McCombs Automotive Group in Texas and a former owner of the Minnesota Vikings, Denver Nuggets and San Antonio Spurs. He is listed as giving $60,000. Tulsa coal executive Joseph Craft III gave $500,000 through his JWC III Revocable Trust.

The American Crossroads ad follows $8.3 million spent on six ads against Hagan and the health care law, which she supported, by Americans for Prosperity, a group backed by billionaire industrialists Charles and David Koch. Koch Industries has headquarters in Kansas.

The Kochs were among the founders of AFP and have donated to it, as Koch Industries reports on its website. But other donors aren’t known.

AFP is a nonprofit advocacy group that is not required by law to reveal its donors, and it doesn’t. Super PACs, by contrast, do report their donors to the Federal Election Commission, where the information is a public record. In some cases, though, it’s only partial disclosure, because some groups that give to super PACs are themselves nonprofits that don’t have to reveal where they get their contributions.

In addition, some ads on politicians’ behalf don’t have to be reported to the Federal Election Commission. These are ads that don’t call for the election or defeat of a candidate but discuss an issue instead – for example, the Americans for Prosperity ads that criticized the Affordable Care Act and Hagan’s support for it.

To find out how much is being spent, Republican and Democratic trackers check ad buys. These findings show that outside groups have spent about $10 million against Hagan or for her challengers. On the other side, groups have spent more than $5 million on her behalf.

Money from the outside groups spent directly for and against candidates already exceeds totals from the 2010 Senate race won by Republican Richard Burr.

Obamacare an issue

Hagan’s largest single source of outside support has been $2.4 million from the Senate Majority PAC, a super PAC founded by Democratic strategists who want their party to retain control of the Senate. It has spent more on ads for Hagan so far than for any other Democratic Senate candidate.

Former New York Mayor Michael Bloomberg, who gave the PAC $2.5 million last year, has been its largest donor so far this cycle. The Massachusetts Teachers Association, a union, has given $700,000.

A Senate Majority PAC ad says the “out-of-state” Koch brothers back Tillis and declares: “The Koch brothers and Thom Tillis – a win for the special interests.”

Other large Hagan ad buys have been by Democratic Patriot Majority USA, which has spent more than $800,000. Patriot Majority USA is a nonprofit group that can keep its donors secret.

In a campaign video, Hagan said she needed support to “fight back against the outsiders like the Koch brothers and Karl Rove, who have made me their No. 1 target.”

Tillis spokesman Jordan Shaw said that Hagan was being hypocritical because her campaign has also received outside support.

“Kay Hagan and her far-left liberal allies are spending millions attacking Thom Tillis because they know he will end the train wreck in Washington that they have created,” Shaw said.

The outside groups behind the Republicans in the race include FreedomWorks for America, a conservative super PAC that partially discloses donors. It has spent more than $78,000 on political messages, such as online ads and yard signs, against Hagan and for Brannon, according to tracking by the Center for Responsive Politics, a nonpartisan campaign watchdog group.

But the biggest buy by far has been the six ads from Americans for Prosperity against Hagan and the federal health care law, which Republicans have been trying to repeal for several years.

“The reason we’re spending the money now is it’s an important issue to North Carolinians, and with an election going on, the issue is being hotly debated,” said AFP spokesman Levi Russell.

The Hagan campaign, however, claims the attacks by the Koch-affiliated group go beyond the health care law and indicate a “Tillis-Koch agenda.” The campaign cites Tillis’ record in the state House and his opposition to an increase in the federal minimum wage, backed by Democrats, to $10.10 an hour.

Voters get to wade through all the ads, trying to discern who’s behind them.

Jackie Brooks of Lake Waccamaw, registered as an independent, said she didn’t think outside money had any more persuasive power than other influences on voters, and that it was important to look at the bigger picture.

“A variety of groups and individuals can sway my vote, but only if the candidate has my potential vote first,” she said. “Where I live, neighbors, churches, political party and how government policies have impacted them personally sway voters. Oh, and rumors!”

Not the first time

Big political spending and lots of television ads are not new to the Tar Heel State.

“This is a state that’s been a test kitchen for assault-your-opponent ads,” said Ferrel Guillory, director of the Program on Public Life at the University of North Carolina at Chapel Hill.

The trend dates to the 1984 race between the late Republican Sen. Jesse Helms and then-Gov. Jim Hunt, he said. At the time, that race, which Helms won, was the most expensive Senate contest in American history.

More recently, outside groups spent $3.8 million on the state Supreme Court race between incumbent Justice Paul Newby and challenger Sam Ervin IV, including $2.9 million from North Carolina Judicial Coalition, a conservative super PAC, on Newby’s behalf. Adding in public financing and money the candidates raised, the race cost $4.4 million. It broke the record for spending on judicial elections in the state and was the fourth-highest in state Supreme Court race expenditures nationwide, according to a report by Justice at Stake, the Brennan Center for Justice at New York University School of Law and the National Institute on Money in State Politics.

This year, political observers are watching to see what the impact of the growing amounts of outside money will be on the state’s Senate contest.

“I would say at least so far it’s been pretty limited,” said David Rohde, a political science professor at Duke University who has followed campaign finance throughout his career.

He noted that Republican donors spent huge sums in 2012, but Democrats did well nationally. One example is the estimated $15 million that casino magnate Sheldon Adelson spent on the failed candidacy of Republican presidential hopeful Newt Gingrich.

Hagan’s approval ratings have dropped since the attack ads began, but it’s important to look carefully at the reasons, Rohde said. President Barack Obama’s support also has declined, and Hagan’s political fate is tied to his.

What’s immediately worrisome, he said, is the public’s perception that those who give a lot of money get their way. As a result, “faith in the system itself is undermined.” MICHAEL DOYLE AND GREG GORDON IN WASHINGTON CONTRIBUTED.