Outside spending, 'dark' money fuel NC Senate race

by Jim Morrill, Charlotte Observer, July 4, 2014.

Almost no Senate race in the nation has reported more outside spending than North Carolina – and that’s just the tip of a financial iceberg.

Unreported “dark money” has poured into the race on both sides, more than doubling the amount reported to the Federal Election Commission.

Outside money already has eclipsed the $25 million spent in the 2008 race that put Democrat Kay Hagan in the U.S. Senate.

Media trackers for Hagan and Republican Thom Tillis say liberal, conservative and advocacy groups have spent a total of $26 million, mostly on TV ads. That’s more than twice the $11.4 million reported to the FEC.

So-called dark money comes from groups that can take unlimited contributions and which generally don’t disclose their donors. It was unleashed by the Supreme Court’s 2010 Citizens United decision that allowed corporations and unions to give unlimited amounts.

“Dark money has been increasing,” says Travis Ridout, co-director of the Wesleyan Media Project, which tracks political advertising. “We’re going to see a lot more … and in my mind, that’s a negative for voters. They deserve to know who’s paying for those messages that are flooding the airwaves.”

The money comes as North Carolina has become increasingly competitive in presidental races and now is one of a handful of states that could determine which party controls the Senate.

Though two recent polls have shown Hagan with a slight lead, analysts like those at the Cook Political Report call the race a toss-up.

Hagan’s media trackers have tallied $17 million in anti-Hagan ads, more than half from Americans for Prosperity, funded by the conservative Koch brothers.

Tillis’ trackers say outside groups have spent nearly $9 million against their candidate. Most – $5.5 million – has come from the Senate Majority Fund allied with Senate Majority Leader Harry Reid of Nevada.

Only Mississippi’s Senate race, with last month’s hotly contested runoff, has reported more outside money than North Carolina.

WBTV case study

Outside spending complements spending by the campaigns themselves. That helps Tillis, who last reported raising $3.2 million through March to Hagan’s $13.3 million, according to the Center for Responsive Politics.

Groups such as the Senate Majority Fund are super PACs that report their spending and donors to the FEC. Others are 501(c) groups that fall under Internal Revenue Service rules, which don’t require as much disclosure.

Examples are the liberal Patriot Majority USA, which has spent more than $840,000 against Tillis, and the conservative Crossroads GPS, which has spent $3.6 million against Hagan.

The Sunlight Foundation, a Washington-based nonprofit, analyzed the spending by digging into records at one Charlotte TV station.

From the start of 2013 through mid-June, it found 4,086 political ads bought on WBTV at a total cost of $3.8 million. About $3 million backed a Senate candidate.

Almost half that money, the group found, has not been reported to the FEC.

Two-thirds of the ad dollars spent by Tillis allies were from Republican groups that aren’t required to file with the FEC. And only 27 percent came from groups required to disclose their donors.

Among Hagan allies, 69 percent of the buys came from groups required to disclose donors.

“Charlotte is a pretty good barometer for other markets with equally competitive races,” says Kathy Kiely, the foundation’s managing editor.

Sunlight also found that while outside groups cannot coordinate with a candidate by law, they apparently do with each other. It found little overlap in advertising by groups on the same side.

Conservative groups such as Americans for Prosperity, Crossroads GPS and the U.S. Chamber of Commerce, for example, had no ads running on WBTV at the same time. Neither did Hagan allies such as the Senate Majority PAC, Patriot Majority and the League of Conservation Voters.

“There was remarkably little overlap by those playing on the same side,” wrote Sunlight’s Jacob Fenton.

‘Back to square one’

It was the Supreme Court’s 2010 Citizens United ruling that opened the door to independent expenditures by corporations and labor unions, and to the proliferation of super PACs and tax-exempt groups.

Kiely says dark money groups circumvent the spirit of the post-Watergate measures that put limits on campaign contributions.

“It’s just as secret, if not more secretive, than what was done before the Watergate reforms,” she says. “We’re back to square one.”

Not all dark money goes into TV ads.

The Sunlight Foundation and Center for Responsive Politics tracked donors to Organizing for Action, a nonprofit group that grew out of Barack Obama’s presidential campaign and has been active in North Carolina. They found 14 donors who had given the group $100,000 or more.

“Obama has the largest dark money operation of them all,” says Tillis strategist Paul Shumaker.

Outside spending in North Carolina will only grow. Crossroads GPS, a nonprofit backed by former GOP White House adviser Karl Rove, already has reserved $5.1 million worth of TV time for the last five weeks of the campaign. That’s on top of its current $3.5 million buy.

Last month Hagan was one of 50 Senate Democrats to co-sponsor a new version of the Disclose Act, a measure that would require nonprofit groups that spend $10,000 or more on election ads to disclose their donors within 24 hours. Republicans have opposed earlier versions of the bill.

“2014 is just a preview of the new North Carolina,” says Shumaker. “This is just a warm-up for 2016.”