Outside money returns to IA-03

Bleeding Heartland user Strong Island Hawk reviews some “issue ads” now targeting (or defending) U.S. Representative Cindy Axne.

Welcome to the Age of Dark Money. And that means All Political Ads, All the Time. Iowans know all too well the constant barrage of campaign commercials especially before Election Day or during the primaries. Thanks to long experience with the first-in-the-nation caucuses, Hawkeyes have learned to tune out the relentless stream of political messages, TV, radio and digital ads, phone calls and door knocks, which can start more than a year before the general election. But they’re also used to a respite from the electioneering activity once the election has passed. This year, most Iowans were probably hoping for a break from the noise, especially after a long and bruising 2020 campaign.  

However, the never-ending flow of dark money has made political ads a year-round reality, even in non-election years. And in a hotly contested swing district like Iowa’s third Congressional, voters can scarcely get through an episode of Wheel of Fortune or a morning news broadcast without seeing an attack ad funded by shadowy outside forces. The ads have become almost as ubiquitous as the commercials for sports betting sites. And it’s hard to believe it’s only September of a year ending in “-1” – and not even one before a presidential year. This is before a midterm election. 

One thing is clear: IA-03 is already a major electoral battleground gaining national attention. And the money is pouring in. 

“ISSUE ADS” HELP GROUP CIRCUMVENT POLITICAL SPENDING RULES

Outside money can have a deleterious effect on Congressional races, especially early in the early going. I believe it was highly influential in last year’s U.S. Senate primary, helping to advance a Democratic candidate who may not have been the best choice for Iowans.

This recent spending is something of an extension of the greater lobbying war taking place in Washington over the Build Back Better bill. Big business supports bipartisan infrastructure legislation but is spending major dollars to crush the larger Democratic spending initiative and its accompanying tax hikes on corporations and the wealthy. And dark money gives an avenue to bring that fight to districts back home while also chipping away at the candidacies of vulnerable incumbents.

These groups are mostly 501(c)(4) organizations, meaning they are essentially nonprofits or charities and are actually prohibited from spending more than 50 percent of their budget on political activity. However, they get around this by running “issue ads” which strongly resemble typical campaign commercials. The scripts never explicitly advocate for one candidate or the other. Instead, positive ads urge viewers to “thank [Insert Politician Here]” by calling their Congressional office, while the negative ads push viewers to tell their member of Congress to “reject higher taxes” or “protect your retirement.”  Except for this linguistic sleight of hand, these look just like campaign ads.

BUSINESS-BACKED GROUPS TARGETING CINDY AXNE

For example, the U.S. Chamber is running a very ominous ad warning of  “massive tax increases” by the Democrats that will hammer an American middle class already beset by the pandemic and growing inflation. It says “Tell Representative Axne: don’t knock us out with these tax increases.”  

Similarly, the American Action Network’s ad titled “Tell Cindy Axne: Vote Against Pelosi’s Spending Spree” strongly resembles a campaign commercial (conservative groups love to throw in a mention of coastal left-wing boogeymen like Bernie Sanders, Nancy Pelosi or AOC to scare their voters).

American Action Network, which describes itself as an “action tank” is a 501(c)(4) that engages in “issue advocacy”, according to its 990 forms filed with the IRS. But, Issue One, an organization dedicated to fighting money in politics, considers American Action Network one of the top 15 dark money groups operating in the U.S. since the U.S. Supreme Court’s Citizens United decision.

AAN is currently running ads encouraging Iowans to tell Democratic Representative Cindy Axne to “vote against Pelosi’s spending spree.” The most recent political activity for AAN is not available yet, however, Schedule C of its IRS 990 for the 2017-2018 tax year, mentions that it “ran grassroots lobbying communications and similar messages on issues of importance.” Those communications “sometimes expressed views on the records of the officials” the AAN mentioned in the ads but it “avoided any reference to voting or elections and did not disseminate the communications in close proximity to an election.” The Schedule C goes on to state that the communications were not considered “political campaign intervention” because they referenced “upcoming legislative action” relevant to AAN. Under the legal structure that Citizens United has carved out, this is all legal. 

AAN is headed by former Republican Senator Norm Coleman and is staffed by a number of GOP operatives, including prominent fundraisers and former lawmakers. According to the public interest group Accountable.US, AAN received more than $4.5 million from Pharmaceutical Research and Manufacturers of America (PhRMA), in 2019 and from 2009-2017 it received $12 million from the group. PhRMA is the largest trade association of prescription drugmakers in the U.S. and counts Merck, Pfizer and AstraZeneca among its members. Unsurprisingly, it lobbies heavily against drug pricing legislation. The Build Back Better Act also has provisions that will bring down the price of prescription drugs, specifically allowing Medicare to negotiate the price of pharmaceuticals. While we cannot definitively say that PhRMA is funding these ads in Iowa, we can make an educated guess that they are. 

AAN has also received millions from groups like Business Roundtable, American Natural Gas Alliance and American Petroleum Institute as well.  These industries are also opposed to the Build Back Better Act and will likely be subject to increased taxation and regulation if the bill passes. A spokesman for AAN said the group has already spent approximately $6 million on ads this year.

NEW GOP GROUP ALSO SPENDING IN IA-03

Some of the most dramatic issue ads have come courtesy of the Common Sense Leadership Fund, Inc. (CSLF). This group, just formed in March 2021, makes a number of disturbing claims in its ads. For example, it refers to the $3.5 trillion dollar bipartisan infrastructure bill as a liberal “power grab” and makes unsubstantiated allegations that the bill will be paid for by raiding “your retirement” (without specifically mentioning Social Security). The spot features grim, black and white photos of retirement-age seniors looking very concerned, while also providing no sourcing of the factual statements it makes.

Side note: you can tell how bogus a political ad is by looking for the fine print on the bottom of the screen. IF they don’t provide a bill number or cite a report from a credible news source, the assertion is usually bunk. Liberal groups are guilty of this too, of course, but these ads from CSLF are pure fear-mongering. 

Since the CSLF was created in March of this year, the group will not have to report anything to the IRS until May 2022. And even then they will not be required to disclose the names of donors; they will only have to report the date and amount, no identifying information has to be provided. And because it is technically a 501(c)(4) nonprofit and not a political committee, and these are considered issue ads and not electioneering communications, CSLF is not required to report anything to the Federal Election Commission.

CSLF is helmed by seasoned DC Republican operatives Kevin McLaughlin and Chris Ashby. McLaughlin comes straight from the National Republican Senatorial Committee where he served as the executive director during the 2020 campaign cycle. He described CSLF’s multi-million dollar anti-infrastructure campaign against various Democrats as “very grassroots-centric.”

According to Virginia corporation records, GOP power lawyer Chris Ashby is registered as the principal of the CSLF. Ashby is a veteran election attorney who comes from the Super PAC world [as a reminder: Super PACs are independent expenditure-only committees meaning they can raise unlimited amounts of money from corporate donors – as long as they don’t coordinate with campaigns or candidates]. Ashby’s bio boasts that he represented one of the “largest Super PACs in the 2015-2016 federal election cycle” and that he is “pioneering the use of LLCs and other for-profit corporate forms for political purposes.” 

While we can’t see CSLF’s backers, we can guess that there is probably some overlap with the National Republican Senatorial Committee’s donor roster. During the 2019-2020 election cycle, the NRSC raised more than $338 million and spent more than $331 million. Its largest contributors included the financial firms Charles Schwab Corp. and Fisher Investments and hedge funds Citadel LLC and Elliot Management, all of which gave $500,000 or more.

McLaughlin and NRSC are no strangers to Iowa, either. NRSC made more than $19 million in independent expenditures opposing Theresa Greenfield’s campaign, more than any other, in 2020. By contrast, the NRSC spent a total of $76,700 on independent expenditures supporting Senator Joni Ernst during last year’s contest. 

These aren’t the only conservative groups making independent expenditures in the Des Moines market. I have also noticed ads targeting Axne from more obscure outside groups like Building America’s Future and America Next. And we don’t even know who Axne’s general election opponent will be. (Four Republicans are seeking the nomination in IA-03.)

DEMOCRATIC-ALIGNED DARK MONEY GROUPS ALSO INVOLVED

Axne hasn’t been left to fight this battle on her own. A handful of progressive groups that don’t disclose their donors have countered the conservative messages with ad buys of their own. 

For example, House Majority Forward –  the dark money arm of U.S. House Democrats – has been running a spot touting President Joe Biden’s economic agenda and telling viewers to “thank Cindy Axne for fighting for Iowa’s economy.” This group’s dark money ventures are somewhat new; it was created in 2019 and at this writing, its 990 forms are unavailable through the IRS. Records do show it was only granted tax-exempt status in April of last year.

House Majority PAC (actually a super-PAC affiliated with House Majority Forward) contributed $15,000 to Axne’s 2020 re-election campaign. But more notably, the hybrid PAC made more than $1 million in independent expenditures from its 501(c)(4) and more than $138 million from its Super PAC. More than $6.75 million of that went to oppose the candidacies of Iowa Republicans David Young, Ashley Hinson, and Mariannette Miller-Meeks. The House Majority PAC’s donor base is an odd mix of Dem-connected billionaires like Mike Bloomberg and Jim Simons, along with union and labor groups. 

Building Back Together, a 501(c)(4) launched by Biden’s allies to support his agenda, is also spending in Iowa. In August, the group announced it would spend $10 million to support vulnerable Democratic candidates in swing districts and to tout the president’s Build Back Better Act. Prominent former Biden campaign strategists, pollsters, and state directors are running this group, which may never reveal its donors. In fact, the organization’s IRS 990 form may not be publicly available for several months.

We can make a reasonable assumption that Building Back Together’s donor base is made up of the same people who pumped in more than $580 million in outside money to back the Biden campaign. Those large donors include Bloomberg LP, Paloma Partners and Euclidean Capital as well as labor unions and environmental groups.

The League of Conservation Voters, a standard liberal environmental group which was very involved in Iowa’s 2020 Senate race, has also run ads supporting Axne. 

Finally, a mysterious group called Stand for Children, Inc. has been active in Iowa in 2021. Little information about this effort is publicly available. 

DARK MONEY DANGERS

It’s hard to know what to make of this trend. I bristle when liberals and Democrats embrace the Dark Side. It often seems like a weapon they’re forced to use out of necessity because Republicans will wield it shamelessly (in fact, it seems like McLaughlin and Ashby are already scheming new ways to get around traditional campaign finance laws). But if we’re going to have billionaire donors on our side, we might as well use that money for something worthwhile like getting the Build Back Better Act passed.

On the other hand, I can’t help but wonder: Is the spending to defend Democrats just a reaction to the dark money spending from the conservative side? Or would these groups be running ads anyway? 

As a civics nerd who obsesses over political fights and policy discussions in Washington, a part of me is glad to see these topics brought to the American public outside of a typical election cycle. However, a steady stream of issue ads may burn out voters. Iowans will get tired of seeing constant political fights while they’re driving to work or watching a ballgame. And it could entrench our dysfunction and reinforce the idea among the public that Democrats and Republicans are constantly fighting and never accomplish anything.

If suspicious groups can raise unlimited amounts of money from the shadows and run constant ads, that puts the target in an unfair spot. Members of Congress have limits on how much they can raise for their campaign committee and PAC (if they even have one). If they find themselves in the crosshairs of a 501(c)(4) that is dead-set on taking them out, they cannot possibly raise enough to compete. They can only hope a progressive dark money group comes to the rescue with air support.

Year-round attack ads prey on under-informed voters. Your Average Joe who doesn’t pay close attention to politics and has a full-time job and three kids is unlikely to vote for Axne if he’s heard eighteen months of nonstop negative ads, mentioning her alongside ill-defined notions of socialism and supposed massive tax hikes at the hands of Democratic lawmakers.

One thing seems certain: whenever a major piece of legislation moves through Congress in the future, voters will be bombarded with influence campaigns powered by undisclosed donors. This is the Age of Dark Money.

“Strong Island Hawk” is an Iowa Democrat and political researcher based in Des Moines. Prior to moving to Iowa in 2018, he lived in DC for seven years, researching campaign finance, lobbying and ethics issues for one of the nation’s top public interest groups. In Iowa, he has canvassed for the 2018 Axne campaign and volunteered with Elizabeth Warren’s 2020 caucus team.

Editor’s note: Bleeding Heartland allows guest authors to use pseudonyms as long as screen names are not used to conceal conflicts of interest.

Top image: Screenshot from American Action Network commercial targeting Cindy Axne.

  • Other targets

    What is also interesting is that there is little to no outside money targeting other major candidates in Iowa races next year: Sen. Charles Grassley and Gov. Kim Reynolds. Like Rep. Axne, they don’t really have opponents yet necessarily, but I’m surprised no one has decided to chip away at their candidacies. The liberal groups have chosen to come to Axne’s aid rather than take shots at Chuck and Kim. I hope that means that they’re waiting for opoonents to materialize. I hope it doesn’t mean that the smart money is on Reynolds and Grassley to win re-election.

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