Consultancies hired by candidates and party bodies are simultaneously raking in huge sums working on the same races for independent political groups, a new report shows.
Why it matters: The Supreme Court’s Citizens United decision allowed unlimited campaign spending by groups that do not coordinate with candidates or national parties. For leading political providers working on high-profile races, this means a huge new revenue stream.
- These vendors can work for both campaigns and supporting political groups, which they are not legally allowed to coordinate with, as long as they set up internal firewalls separating this work.
- For companies that make large advertising buys and run party committee messaging and high-priced campaigns, this means a completely separate pool of potential customers – with lots of cash on hand.
- President Biden and congressional Democrats are pushing for legislation that would limit the practice.
Using the numbers: A new report from Public Citizen group finds that vendors employed by “regulated” political entities — such as campaigns and party committees — and “unregulated” groups, which often include super-PACs and 501(c)( 4) Non-profit organizations belong to heavily overlapping so-called “dark money” groups.
- Vendors who worked for both categories of groups in the same races, alone or through affiliates, collectively received about $1.4 billion for that work during the 2018 and 2020 election cycles, the report found.
- Much of that was for ad-buying services, which meant the companies weren’t just pocketing the money. The sum nevertheless shows the extent of the provider overlap.
Between the lines: According to Public Citizen, the agreement raises potential legal red flags.
- “Policy advisors are well placed to harmonize news and spending strategies between super PACs and regulated political committees, facilitating coordination even when super PAC leaders do not communicate with campaign or party leaders,” the report said .
- A network of seven affiliates, which the report calls the Slaters Lane entities, are at the center of an ongoing lawsuit alleging the National Rifle Association and two GOP campaigns used these providers to circumvent the coordination rules.
Be smart: This sort of final push around federal campaign finance laws is worrisome, but firms working on both sides of the campaign-super-PAC divide are generally careful to erect internal firewalls.
- While there’s an obvious legal incentive to do so, it also allows them to delve into pools of resources that by law must be independently allocated.
- It is common for vendors to rely on related but legally separate entities for their campaign work and Super PAC work.
- Democratic firm GMMB has created two ad-buying subsidiaries, Waterfront Strategies and Great American Media, in part to “maintain clear boundaries between employees and different projects while remaining fully compliant with all regulations,” according to Eric Conrad, a spokesman for the firm.
- Collectively, the GMMB companies received almost $450 million from campaigns and party committees in the 2018 and 2020 cycles. They withdrew another $483 million from independent donors working on the same races.
What you say: “GMMB, Waterfront and Great American Media are separate companies with a strict firewall policy designed by legal counsel to comply with the letter and spirit of the law,” Conrad Axios said in an email.
- “In addition, relevant employees undergo training conducted by legal advisors to further ensure diligent compliance.”
- The other vendors identified as the most prolific double-dippers either declined to comment or did not respond to Axios’ requests for comment.
The big picture: Super PACs can raise and spend unlimited amounts, including from corporations, unions and non-profit organizations. But they generally pay higher prices for television advertising, and restrictions on coordination can make them cumbersome political vehicles.
- Because of their unique characteristics, vendors working with these groups use different tactics than campaigns or party committees.
- Vendors large enough to do both, or who have affiliates with specialized expertise, are primed to benefit at both ends.
- Of the $1.4 billion in shared vendor payments identified in the Public Citizen report, nearly all — about $1.3 billion — went to the top 10 compensated companies.
Looking ahead: Sweeping electoral reform legislation currently in the Senate would dramatically limit the joint provider agreement.
- Under the Freedom to Vote Act, Super PACs would be prohibited from paying a vendor expenses in support of a candidate if the vendor had worked with that candidate within the previous two years.