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Revealed: Key Files on Big-Ticket Political Donations Vanish at Federal Election Commission

Top money and politics researchers discover that the FEC is quietly deleting information on fat-cat funders.
 
 
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The Federal Election Commission has long been the go-to source for tracking political money. So when it starts cleansing politically hot contributions from its files, it matters. Big time.

We have discovered that sometime after January of this year, the FEC deleted a whole set of contributions totaling millions of dollars made during the 2007-2008 election cycle. The most important of these files concern what is now called “dark money” – funds donated to ostensible charities or public interest groups rather parties, candidates or conventional political action committees (PACs). These non-profit groups – which Washington insiders often refer to generically as 501(c)s, after the section of the federal tax code regulating them – use the money to pay for allegedly educational “independent” ads that run outside conventional campaign channels. Such funding has now developed into a gigantic channel for evading disclosure of the donors’ identities and is acutely controversial.

In 2008, however, a substantial number of contributions to such 501(c)s made it into the FEC database. For the agency quietly to remove them almost four years later with no public comment is scandalous. It flouts the agency’s legal mandate to track political money and mocks the whole spirit of what the FEC was set up to do. No less seriously, as legal challenges and public criticism of similar contributions in the 2012 election cycle rise to fever pitch, the FEC’s action wipes out one of the few sources of real evidence about how dark money works. Obviously, the unheralded purge also raises unsettling questions about what else might be going on with the database that scholars and journalists of every persuasion have always relied upon. 

Why the FEC Was Created

Federal regulatory agencies are often the offspring of epic scandals. The Federal Election Commission is no exception. It was created in the aftermath of Watergate to do for political money what the Securities and Exchange Commission (SEC) did for securities markets in the New Deal: End an anything-goes saturnalia of corruption through a mix of tough new regulations and “sunlight” – in this case, open, transparent publication of who is trying to buy whom with campaign contributions.

The FEC was supposed to inform the public and curb abuse in our democracy. But like the SEC in the post-Reagan era, the FEC’s reach soon exceeded its grasp. Virtually from the beginning, dark forces of law and politics combined to render the agency almost impotent as a regulator. Today a generation of legal loopholes, court decisions and bipartisan foot-dragging has wrecked spending limits, destroyed the promise of public funding and spawned a new Gilded Age of money in politics.

As the actual situation of money and politics slid from bad to worse, the FEC adjusted by trumpeted its public reporting functions. Given the vast holes in coverage, calling its data reports and archives the “gold standard” of reporting about money in politics would be a stretch. Yet for a generation, we and virtually everyone who tracks political money have benefited hugely from the agency’s labyrinthine data collections as well as the patience and kindness of its staff in explaining them. While you knew FEC data was unlikely to be the last word, you could be confident that whatever the agency did report was as true as it could make it. That the FEC would ever delete true reports of politically relevant money was literally unthinkable.

Something now appears to have changed at the FEC. We are dismayed to find that at some point between January and July 8, 2012, the FEC deleted a whole set of contributions totaling millions of dollars made during the 2007-2008 election cycle.

How can we be so sure of what has happened? The FEC makes its data available to researchers mainly via a computerized data download system on its Web site. Until recently, these data downloads were only slightly more accessible than the high Himalayas. Comprehending their formatting and correctly interpreting their myriad rows and columns required the patience of Job and the informal equivalent of a BS in computer science. As a consequence, most researchers threw up their hands. They didn’t directly use FEC data; instead they relied upon data reworked by some for-profit reseller, or more commonly, the Center for Responsive Politics.

A year ago, we decided to reexamine the entirety of the FEC’s datasets from the ground up – not because of any suspicions of the FEC, but because we know that real data is always very messy. We hoped that a fresh appraisal of the whole system for reporting political money could shed new light on the role large contributors actually play in American politics. This turned out to be true. For the 2007-'08 election cycle, for example, we found millions of dollars in political contributions that appear to have escaped earlier nets. We are also able to do a much better job of aggregating contributions by large donors, which is key to understanding how the system really works.

We discovered the FEC deletions when cross-checking our results for big-ticket contributors. These deletions do not at all resemble other post-election corrections that the FEC routinely makes to its data downloads. Some of the now missing contributions were extensively discussed in the media at the time they were made. In addition, if you know exactly where to look, you can go back to the original paper or electronic records that provide the raw material for the downloads that everyone relies upon. Between the media reports and the original submissions, it is obvious that the deleted contributions represent money that really did move. In some cases, even the specific places ads ran are mentioned. The missing entries do not represent refunds for good reasons or corrections of earlier mistakes, such as the FEC frequently posts.

Harold Simmons’ contribution to the American Issues Project in 2008 is a sterling instance of what we are talking about. The Texas tycoon, with major interests in minerals and waste disposal that critics charge have been furthered by his long history of political donations, was already famous for the millions he poured into the notorious “Swift Boat” campaign that shredded John Kerry’s 2004 bid for the presidency. In 2008, he came back with what, until the September financial collapse, looked like another potential game-changer. With almost $2.9 million dollars of his money, the American Issues Project financed a television ad linking Barack Obama to William Ayres, who decades before had been a member of the Weather Underground. The ad created a sensation, with many critics questioning both its verisimilitude and its legality.

Right through January 2012, the FEC’s database contained not only the record of the organization’s expenditures, but also Simmons’ contribution. Now only the former is there. We have identified many similar cases, including almost three million dollars that John Templeton, Jr. donated to Let Freedom Ring and another $100,000 contribution by Foster Friess to the same organization.

Also Missing in Action

We are on the outside looking in. We cannot say for sure who decided to make the deletions or why. But one fact is telling: the missing files include essentially all those of one type in particular – donors to the so-called “501(c) 4” “charitable” organizations now in the eye of the storm over dark money.

Such organizations became more prominent as devices for major contributors to shield their identities thanks to a subtle change in reporting rules the FEC announced in the wake of a 2007 Supreme Court decision. That ruling went well beyond anything the Court ever suggested. The agency ordained that eligible 501(c)s needed to disclose donors’ identities only if the fat cats intended their contributions to support specific communications. Otherwise, the Commission maintained with a straight face, donors could be presumed simply to be supporting the general purposes of the organization, rather than contributing to specific ads. Their names therefore didn’t need to be disclosed at all.

It took a while for America’s 1 percent to absorb the meaning of this plain subversion of campaign finance disclosure provisions enshrined in the 2002 McCain-Feingold Bipartisan Campaign Finance Reform. While they were learning, especially around election time, not to ask too many questions about what charities might do with their donations, some very prominent contributors and organizations filed with the FEC anyway.

It is the contributors’ records that have now suddenly disappeared. By contrast records of expenditures by the organizations they gave the money to are still in the files.   

There is more. The FEC identifies, or used to identify, contributions to 501(c) 4 organizations with a code that begins with the letter C followed by eight numbers, of which the first is always a 9. We find that all such files (save for one case that plainly never belonged there) have been deleted. The C9 array also included substantial numbers of individuals, who were lumped into this category for recording purposes. They are gone, too. Here again, the deletions do not appear to be corrections long after the event. Our check of the original donation records shows, for example, radio ads that were bought with the money. We have also noticed other independent expenditures have also disappeared, including more than $1 million spent by a financier promoting the abortive presidential candidacy of former Alaska Senator Mike Gravel that the FEC itself once listed on its own tabulation of independent expenditures. (That one, which was again widely discussed in some media, was gone long before January 2012 – possibly 2010 or even earlier.)

To describe the FEC’s actions as troubling scarcely does justice to what appears to have happened. We would like to find out that all this was somehow a terrible mistake that the agency will immediately rectify. Efforts to regulate political money in America are notoriously fraught with problems and they are hard enough without having to check every new FEC update for deletions. In addition, we still retain much confidence in the FEC staff. But data vanishing like ghosts is intolerable in a government agency charged with enforcing the law. The data were there for years; the contributions were real. They should never have been deleted. We will include them in a full file of contributions for the 2007-'08 cycle we will publish later.

To be clear, we are not aware that any pending regulatory reviews or litigation involving 501(c)s turn on specific facts of any of these contributions, even those involving millions of dollars. But the most obvious FEC data one could use to test claims about such money has suddenly vanished, with as far as we can tell no announcement or request for public comment. Pointing up the stealthy way the deed was done is the pattern of diffusion to other Web sites that rely on the FEC downloads for their own data presentations. For-profit sites on political money that update their files all the time show the deletion; public interest sites, with less money and resources, that update less often, still contain the older files!

No more than in the Bureau of Labor Statistics or the Commerce Department can we tolerate arbitrary data changes at the FEC. It has been perfectly obvious for a long time that the FEC needs to be run like a normal independent regulatory agency instead of operating directly under Congress’ thumb in a way no other agency is forced to. We need to know who authorized these deletions and whether any more have occurred. This requires a formal inquest and, in the future, serious safeguards, such as outside review committees with members capable of detecting them if democracy is not to be mocked and the law flouted. Even banana republics don’t stoop to this.

Thomas Ferguson is professor of political science at the University of Massachusetts, Boston, senior fellow at the Roosevelt Institute and a contributing editor at AlterNet. His books include 'Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems' and 'Right Turn: The Decline of Democrats and the Future of American Politics.' Paul Jorgensen is a fellow at the Edmond J. Safra Center for Ethics at Harvard University. Jie Chen is university statistician at the University of Massachusetts, Boston.