Crossroad GPS, RIP

In Defying the Odds, we discuss congressional elections as well as the presidential race.  Campaign finance is a big part of the story.

Anna Massoglia and Karl Evers-Hillstrom at Open Secrets:

One Nation, a conservative 501(c)(4) “dark money” nonprofit masterminded by Karl Rove, raised nearly $17 million last year, according to the most recent IRS tax filings released Friday.

Meanwhile, Crossroads GPS — formerly a dominant group in conservative circles and also run by Rove — raised just $75,000 last year, all but confirming its demise less than a year after the IRS granted it tax-exempt status.

The two dark money groups — along with the conservative American Crossroads and Senate Leadership Fund (SLF) — share the same Washington, D.C. office and employees. Each organization is run by Steven Law, a former chief of staff to Senate Majority Leader Mitch McConnell, who remains closely aligned with the groups.
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Crossroads GPS was once a dominant outside spending group, shelling out $71 million in an attempt to defeat Democrats in 2012. The group was so prolific that its legal battles ultimately spawned new guidance from the FEC earlier this year that now requires all “dark money” groups that spend at least $250 on independent expenditures explicitly advocating for or against a candidate to report every donor who gave at least $200 for “political purposes” in the calendar year.

The nonprofit reported raising more than $16 million in 2016, but its funding appears to have disappeared almost entirely as the focus shifts to One Nation.

The tight-knit super PACs and dark money groups like to shuffle their money around and have remained active in the 2018 election cycle. SLF reported accepting one contribution of $6.8 million from One Nation in September 2018 and two additional $3 million contributions last month.

SLF — which spent nearly $94 million to support Republican Senate candidates, mostly through attack ads — is the second-largest donor to American Crossroads in 2018, giving more than $690,000.

Courts and Dark Money

In Defying the Odds, we discuss congressional elections as well as the presidential race.  Campaign finance is a big part of the story.

A release from CREW:

In a major defeat for secret money in politics, a judge ruled that dark money groups that spend at least $250 in independent expenditures—a key type of political ad—must report every contributor who gave at least $200 in the past year as well as those who give to finance independent expenditures generally, throwing out an illegal three decades old regulation that was used to avoid disclosure and changing the legal landscape for political spending.

The decision in Citizens for Responsibility and Ethics in Washington (CREW) v. Federal Election Commission (FEC) and Crossroads Grassroots Policy Strategies, handed down late on Friday, declares that the law unambiguously commands more disclosure than the FEC has required in 30 years, restoring Congress’s intended full disclosure of those making contributions to groups that fund independent expenditures—ads that explicitly endorse or oppose a candidate for office.

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The case stems from an FEC complaint filed by CREW in 2012 against Karl Rove’s Crossroads GPS over its failure to disclose the donors behind $6 million in independent expenditures in the Ohio Senate race. Even though Rove told a gathering of contributors that a donor had said he really liked Republican candidate Josh Mandel and had made a $3 million “matching challenge” contribution, the FEC said the contributor’s name could stay secret because he did not earmark it to pay for a specific ad. The court yesterday invalidated the regulation that decision was based on, saying it interpreted the Federal Election Campaign Act much too narrowly.

“This ruling could dramatically change the American political landscape and result in significantly more transparency,” Bookbinder said. “Major donors are now on notice that if they contribute to politically active 501(c)(4) organizations, their contributions will have to be disclosed, and if they are not, CREW will pursue enforcement cases with the FEC and, if necessary, in court.”

Read the decision here.

A July 24 release from Montana Governor Steve Bullock:

Governor Steve Bullock today filed a lawsuit against the Internal Revenue Service (IRS) and the U.S. Department of the Treasury over their decision last week to abandon disclosure requirements for major donors to dark money groups.

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The suit seeks to block the Trump Administration from upending the rules that have been in place for almost 50 years that require 501(c) dark money groups to disclose their major donors to the IRS. Absent that disclosure, so-called social welfare groups could be taking unlimited corporate, or even foreign, contributions to influence elections, contrary to the requirements that grant them tax exempt status.

A copy of the lawsuit is attached.

Governor Bullock has been called “the biggest threat to Citizens United,” and remains committed to ensuring Montana’s elections are the most transparent in the nation. As Attorney General, Bullock led the effortto preserve Montana’s 100-year-old Corrupt Practices Act, taking the case for the state’s citizen democracy all the way to the U.S. Supreme Court.

In an exceedingly rare bipartisan effort, Governor Bullock worked with Republicans and Democrats to pass the DISCLOSE Act to require the disclosure of donors to independent group spending money on state-level elections. The Act requires any group, regardless of their tax status, that spends money or resources to influence an election within 60 days of when voting begins, must disclose how they are spending money and the source of the money.

Most recently, Governor Bullock signed a first-of-its kind executive order requiring the recipients of major government contracts to disclose dark money spending in elections. The order represents a significant new step for transparency in government. Under the executive order, government contractors who have spent over $2,500 in the past two years in elections will be required to disclose their donations. The order covers contributions to so-called “dark money” groups that are otherwise not required to disclose their donors.

Saving the GOP Majority from the Outside

Anna Palmer and Jake Sherman report at Politico:

Two top outside groups designed to support Senate Republicans raised $42 million in August, a massive haul that shows the fervor with which GOP donors are training their focus – and dollars – on maintaining control of the upper chamber.

The gigantic fundraising number by Senate Leadership Fund and the related One Nation, groups with strong ties to Majority Leader Mitch McConnell (R-Ky.), helps underscore a driving dynamic this election: Donors, skeptical of Donald Trump and increasingly convinced he will lose in November, are turning away from the presidential race in an effort to save their legislative firewall on Capitol Hill.

The two groups have raised nearly $100 million this election cycle and August – a typically slow fundraising period – was their best month.

“Most donors go away; they go on vacation, they don’t want to talk about politics and they don’t want to write checks,” Steven Law, executive director of the Senate Leadership Fund and president of One Nation, told POLITICO. “There was an earth-shattering explosion of donor interest and support … Far beyond anything we’ve seen in any previous cycle. Basically August was the month that donors rolled up their sleeves and got in the game.”

Law is CEO of the Crossroads groups.  Last month, Josh Israel wrote at ThinkProgress:

American Crossroads reported just about $2.7 million raised as of its July 2016 disclosure. Crossroads GPS, which does not disclose its donors or report its finances to the FEC, has made no independent expenditures at all this cycle and its website appears to be unchanged since June 2015.

While One Nation has spent about $20 million so far this cycle in support of Republican Senate candidates, the Crossroads groups have been largely silent. In fact, $135,378 in independent attacks, by American Crossroads against Hillary Clinton, are the only reported expenditures for either entity so far this cycle.

An IRS Win for GPS

Matea Gold reports at The Washington Post:

The Internal Revenue Service has granted tax-exempt status to Crossroads GPS, a conservative group that has aggressively pioneered in a new form of political engagement by nonprofit groups sanctioned by the Supreme Court's Citizens United decision.

The decision by the IRS -- first reported by OpenSecrets.org, the website of the nonpartisan Center for Responsive Politics -- means that Crossroads GPS has been deemed a "social welfare" nonprofit under Section 501(c)(4) of the tax code. Such groups can raised unlimited sums from individuals and corporations and spend money on direct political activity, as long as they do not spend the majority of their funds on campaigns. Unlike political committees, they are not required to reveal their donors.

“We have always taken compliance very seriously, so we’re not surprised by the final result," president Steven Law said in a statement. "What we were surprised by was how long it took and how people outside the IRS improperly tried to influence and politicize the process, not just against us but against many other law-abiding advocacy groups.”

A Problem for Anti-Clinton Issue Advocacy Ads

At Politico, Tarini Parti and Kenneth Vogel tell why some 501(c)(4) groups have been slow to run anti-Clinton ads:

“The IRS’s standards are hopelessly vague and complicated,” fumed Jim Bopp, a top GOP campaign finance lawyer who brought the landmark Citizens United to the Supreme Court. “They aren’t standards. They are un-standards when you’re figuring out what’s lawful or not.”

The tax provision in question — section 501(c) — allows groups such as AFP and the Karl Rove-conceived Crossroads GPS, to keep donors secret. But it requires them to spend more than half of their total cash on issue advocacy that is not expressly election-related.

That’s easy when your target is a sitting president, cabinet member or senator, because you can criticize them on issues — even when they’re on the ballot — and count it towards your so-called “primary purpose” of issue advocacy.

It’s harder, though, when the target hasn’t been in public office for many months, like Clinton, who stepped down as Secretary of State in early 2013 and hasn’t occupied an elected office since she left the Senate for the State Department in 2009. Compounding the ambiguity, conservative legal sources say, is an unclear Internal Revenue Service interpretation of the provision.

Crossroads 2016

Patrick O'Connor reports at The Wall Street Journal:

Crossroads has spent months conducting polls, focus groups and other research to determine the best ways to undercut Mrs. Clinton. The group is hoping to craft specific attacks that resonate with individual segments of the electorate, rather than lob the sort of broad-brush attacks that didn’t work against Mr. Obama in 2012. 

It is a lesson Crossroads operatives learned in the 2014 midterms. In Alaska, polling and focus groups showed ads linking former Democratic Sen. Mark Begich to Mr. Obama weren’t that effective. Instead, the Crossroads team discovered Anchorage residents didn’t have a favorable view of Mr. Begich’s tenure as mayor. They ran three separate ads tapping into those concerns. The first two didn’t move the needle, causing Mr. Law to question the strategy. The third struck a nerve, forcing the Democrat to respond to the attacks. Mr. Begich never recovered. 

“We were building stories, not simply throwing punches,” Mr. Law said of the group’s ads in 2014. “That’s a key part of connecting with voters, especially in a highly cluttered environment.”

Changed World for the Crossroads Groups

Eric Lichtblau and Maggie Haberman report at The New York Times that the Crossroads groups are facing an environment that has changed considerably since 2010.

The nonprofit arm of Crossroads is facing an Internal Revenue Service review that could eviscerate its fund-raising. Data projects nurtured by Mr. Rove are being supplanted in Republican circles by a more successful initiative funded by the Koch political network, which has leapfrogged the Crossroads organizations in size and reach.

And the group faces intense competition for donors from a new wave of “super PACs” that are being set up by backers of the leading Republican candidates for president, who are unwilling to defer to Mr. Rove’s authority or cede strategic and fund-raising dominance to the organizations he helped start.

In recent weeks, Crossroads has begun carving a niche for itself in attacking Hillary Rodham Clinton, the presumed Democratic front-runner. The group will use polling data and opposition research to paint her as “a typical politician who would say or do anything to get elected,” said Steven Law, president of Crossroads.

If the group’s role seems diminished, Crossroads officials are not complaining publicly. If anything, they are lowering expectations for an organization that raised $300 million in the 2012 cycle.

“Our goal is not to make American Crossroads the big dog of 2016,” Mr. Law said in an interview. “Our goal is to win the White House and hold the Senate and the House.”

Tillis, Crossroads, and NRSC

How did Thom Tillis upset Kay Hagan in North Carolina?  Alexis Levinson writes at Roll Call:

It was not clear how much outside help Tillis would get in the home stretch. Heading into the final month, Republican groups faced a gaping $7 million spending disparity with Democrats.Only Crossroads had reserved airtime for October. The NRSC, already stretched thin, had not put any money in.

“It was a huge investment for us. And there was talk, do we put 5, 6 million here, or do we go up and shore up these other states — because we were pretty confident in Iowa and Colorado,” [NRSC political director Ward] Baker told reporters after the election.

They believed Tillis could win, but they knew they had to close the spending gap for that to happen. Outside groups, they were sure, were not going to fill a hole that big. In the second week of October, the NRSC’s independent expenditure arm put $6 million into the race.

“As soon as we did that, a race that could have been left for dead, you saw all the other outside groups do what we hoped they do, which was all of a sudden going to their donors, and filling a $2 million hole is a lot easier,” NRSC Executive Director Rob Collins said.

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A major turning point in the campaign, said Tillis supporters, was the Oct. 8 debate, after which Hagan admitted that she had missed a classified hearing for Armed Services Committee about ISIS to attend a campaign fundraiser in New York City.

It gave the Tillis campaign a concrete data point on which to hang the charge that Hagan, like Obama, was mishandling ISIS and the nation’s security. And while few people watch Senate debates, plenty of North Carolinians saw Hagan’s remarks. Three days later, Crossroads GPS, the NRSC, and the Tillis campaign were all running ads attacking her for missing the hearing.

At that same debate, Hagan took heat for her husband’s company that received money from the government stimulus, which Hagan had voted for. The story had come out in September, but those attacks amped up in the final weeks, and, in an environment where distrust of Washington is high, they hurt her.

Crossroads, Fundraising, Coordination

At Bloomberg, Annie Linskey reports that Crossroads GPS initially had fundraising problems, the result of a disappointing 2012.

The donor freeze started thawing in September when polling began to tighten in a number of races and big-names such as Sheldon Adelson started opening their wallets. He wrote a $10 million check to Crossroads GPS in September, a nonprofit arm of the Rove organization. GPS, as a nonprofit, is not required to disclose its donors. Adelson's windfall was leaked to the news media. "Typically donors who support Crossroads are pretty sophisticated consumers of political information," Law said. "My guess is donors paid attention to what they saw on sites like Real Clear Politics."

The group scraped together $36 million to put into television for Senate races in the last 90 days of the campaign, according to figures provided by Crossroads. It was the lead spender in Colorado, Arkansas and Alaska, where GOP Dan Sullivan is about 8,000 votes ahead of Democrat Mark Begich.

However, resources weren't arriving evenly or predictably. That forced Crossroads and some of the other GOP groups to cooperate this year in ways they've never done before. One example came in October when Crossroads realized there was a "hole in our budget" for Colorado, Law said.

Law emailed Brain Baker at Ending Spending Action Fund, the super-PAC backed by TD Ameritrade founder Joe Ricketts and the two worked out a deal—the Ricketts group would go up on the air and continue pounding incumbent Democrat Mark Udall while Crossroads took a week off. "Ending Spending filled a gap," Law said. "The take away for all of us was sharing information and strategy was smart for all of us." Udall lost to Republican Cory Gardner.

The Night of Crossroads

Two years ago, some on the left and the right criticized Karl Rove for the defeat of Crossroads-backed candidates.  The midterm is different as Michael Beckel, Carrie Levine, and Dave Levinthal write at Slate:

Groups connected to Rove and the Koch brothers were among the biggest winners in Tuesday’s midterm elections. Of the 10 U.S. Senate races where either the Rove-linked nonprofit Crossroads GPS or its sister super PAC, American Crossroads, was active, their favored candidates prevailed in at least six—with the Alaska Senate race still too close to call at this writing and a runoff election coming next month in Louisiana. Similarly, of the nine U.S. Senate races where the Koch-backed Americans for Prosperity was active, its favored candidates also prevailed in at least five contests. Only in New Hampshire and Michigan did the Crossroads groups and Americans for Prosperity see defeat.

In the Granite State, incumbent Sen. Jeanne Shaheen kept Republican challenger Scott Brown, who previously represented Massachusetts in the U.S. Senate, at bay. And in Michigan, Rep. Gary Peters defeated former Secretary of State Terri Lynn Land to win an open-seat race. As of press time, incumbent Sen. Mark Begich, D-Alaska, was trailing GOP challenger Dan Sullivan, the state’s former attorney general and natural resources commissioner, by about four percentage points.

Ultimately, the current occupant of the White House decided the 2014 election, said Steven Law, president of American Crossroads. “This election was about President Obama,” Law said in a statement. Levi Russell, a spokesman for Americans for Prosperity, did not respond to requests for comment.

The Sunlight Foundation reports:

Two years ago, when we took the post-mortem of the presidential-year elections, powerhouse conservative spenders like Crossroads GPS, American Crossroads and the U.S. Chamber of Commerce had almost nothing to show for the tens of millions of dollars they funneled into that campaign. In 2014, conservatives turned the ship around, drubbing their liberal rivals in a year in which independent groups on both sides dropped unprecedented amounts of money.

The three conservative organizations mentioned above all had success rates under 20 percent two years ago. This year? Each group batted .800 or above. With several races remaining to be decided, the National Republican Senatorial Committee also boasts a 94 percent success rate.

Nicholas Confessore reports at The New York Times:

American Crossroads and its affiliated nonprofit group spent $50 million on political advertising, and at least $20 million more on so-called issue ads, a spokesman said. The groups dominated outside spending in Alaska, where the Crossroads groups put about $7 million into television advertising, and Colorado, fielding close to $14 million, which helped crush Senator Mark Udall, the Democrat who was once favored to win.

All told, Republican outside groups spent about $205 million on television advertising in Senate races, according to a Democrat tracking media purchases, who agreed to share the information on condition of anonymity, while Democratic groups spent $132 million.

For many conservative strategists, this election was a dress rehearsal for the next one. Beginning next year, they face the prospect of a formidable presidential contender in Hillary Rodham Clinton and a Democratic Party that is itself quickly mastering the mechanics of unlimited fund-raising.

“The key to success in most endeavors, including politics, is learning and adaptation,” said Stuart Stevens, who served as a top strategist to Mitt Romney’s presidential campaign. After Tuesday, Mr. Stevens said, “Republicans have that experience — and it’s an advantage.”

Crossroads GPS Keeps After Horsford, Who Bring in Obama

Justin Sink reports at The Hill:

But one Nevada Democrat — Rep. Steven Horsford — is hoping the president can help him turn out the Democratic base after a late surge of Republican spending propelled challenger Cresent Hardy into contention.

Horsford’s campaign will begin airing a new ad featuring the president praising Horsford as a “tireless advocate” on their behalf, and touting his bipartisan credentials.
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“Steven has worked with Republicans and Democrats to get laws passed — laws that created thousands of jobs right here in Nevada,” Obama continues.
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To that point, the Democratic Congressional Campaign Committee announced Thursday it was planning to spend $360,000 on the race. Republicans are also pouring big money into the contest, with Karl Rove's Crossroads GPS buying nearly $1 million in ad time.

Another Spelling Bee

As it has in New Hampshire and Arkansas, Crossroads GPS is running a "spelling bee" ad against Kay Hagan in North Carolina.  Hagan is spelled O-B-A-M-A.

 

Crossroads GPS v. Grimes on Coal

Crossroads GPS links Alison Ludergan Grimes to a 2008 Obama comment on coal.  (See Glenn Kessler's analysis of the quotation.)

 

Outside Money: Pump It!

A release from the Campaign Finance Institute:

Independent spending has shifted into high gear during the closing weeks of the 2014 midterm congressional elections. Non-party organizations have spent nearly twice as much as formal party committees in reportable independent spending as of thirteen days before Election Day. This repeats the party/non-party balance of 2012, the first full election cycle after the Supreme Court’s decision in Citizens United.

Though the totals have not changed much since 2012, the balance between House and Senate has shifted markedly. Roughly half of the money that non-party organizations spent on House races in 2012 has now moved toward the Senate. And among Senate Republicans, non-party committees so far have spent nearly five times as much as the National Republican Senatorial Committee (NRSC).

American Crossroads and the allied Crossroads GPS stand out among non-party groups in 2014 general election expenditures. In addition to spending the most among non-party organizations, the Crossroads organizations by themselves have surpassed the NRSC in general election independent spending. On the other side of the aisle, it should be noted that the Senate Majority PAC’s primary election spending was almost entirely the functional equivalent of general election spending.

While the non-party organizations have spent more than the parties so far, the parties should be expected to close the gap at least partly during the campaign’s closing days. Over the past seven days, the party committees were four of the top five spenders. In addition, it should be remembered that parties may be able to buy more than non-party groups with the same amount of money, since the parties typically reserve their advertising time earlier.

The Crossroads Groups Use Obama & Obamacare in House Races

In House races, the Crossroads groups are linking Democrats to Obama and Obamacare.

In Arkansas 2, American Crossroads attacks Patrick Henry Hays:





In Nevada 4, Crossroads GPS highlights Rep. Steven Horsford's pro-Obama voting record:




In New Jersey 3, Crossroads GPS focuses on Aimee Belgard's local record, but works in a reference to her support for Obamacare.

"All Folks Who Vote With Me"

Aaron Blake reports at The Washington Post:

A couple weeks ago, President Obama declared that, while he wasn't on the Nov. 4 ballot, his policies were. And just about every GOP candidate in a red or swing state soon launched an ad using that comment to tie his or her Democratic opponent to Obama.

Well, Obama appears to have just handed Republicans some more ammunition.
In an interview with Rev. Al Sharpton on Monday, Obama defended his support for candidates in top races who haven't welcomed Obama to campaign with them.

"The bottom line is, though, these are are all folks who vote with me; they have supported my agenda in Congress," Obama said.

 

That approach is just fine with the Crossroads groups.

Crossroads GPS says that Kay Hagan sides with Obama instead of North Carolina:



Crossroads GPS uses the"my policies" quotation and says that Kay Hagan votes with the president 95 percent of the time.



In Arkansas, it says that Mark Pryor voted with him 93 percent of the time:




In Alaska, American Crossroads points out that Mark Begich voted with POTUS 97 percent of the time.




And in New Hampshire, it re-purposes an earlier attack on Pryor to say that "Shaheen" spells "Obama."

Another Attack on Partisanship

In Iowa, American Crossroads criticizes Bruce Braley for being partisan:



Crossroads GPS has made a similar ad against Kay Hagan in North Carolina:

 
And NRCC has gone after Sean Eldridge the same way:

 

GOP Surge

Nicholas Confessore reports at The New York Times that GOP Senate candidates and related groups have overcome the Democratic fundraising lead.

All told, in seven races for which both Democrats and Republicans provided complete fund-raising totals by Wednesday evening — Alaska, Arkansas, Colorado, Kentucky, Louisiana, Michigan and North Carolina — Republicans held more cash in six of them, with a net advantage of about $7 million. At the same time, Democrats had booked more advertising from Sept. 29 through Election Day in at least five of those races, with the biggest advantages in North Carolina and Iowa, according to a Republican tracking media purchases. In Alaska, Arkansas, Colorado, Georgia and Iowa, Republican contenders posted their best fund-raising quarter of the year. In Iowa, the Republican candidate, Joni Ernst, who narrowly leads in polling, raised $6 million, more than double the amount taken in by her Democratic opponent, Representative Bruce Braley, and reported three times as much in cash on hand than Mr. Braley. Representative Tom Cotton of Arkansas reported raising $3.8 million, far more than the Democratic incumbent, Senator Mark Pryor, who took in $2.2 million. In Colorado, Representative Cory Gardner raised $4.5 million and reported $1.4 million more in cash on hand than Senator Mark Udall, the Democratic incumbent.

In past cycles, you had candidates that have really disappointed people,” said Ray Washburne, a top Republican fund-raiser and the finance chairman of the Republican National Committee. “This time, they are seeing that great candidates have been recruited and vetted, and they are getting stronger as the race goes on, and not fumbling the ball.”

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People smell victory,” Mr. Washburne said.Continue reading the main story

American Crossroads, the super PAC founded by Karl Rove, raised $11 million, making September its best month yet in this campaign cycle. An affiliated political nonprofit, Crossroads Grassroots Policy Strategies, which does not disclose its donors, also received substantial new donations in September, an official confirmed. The group has purchased about $26 million in advertising for the last five weeks of the campaign, including new spending in Colorado and Iowa, and the group’s first advertising in the Senate race in New Hampshire.

Gary Langer reports at ABC:

Barack Obama and his political party are heading into the midterm elections in trouble. The president’s 40 percent job approval rating in a new ABC News/Washington Post poll is the lowest of his career – and the Democratic Party’s popularity is its weakest in polling back 30 years, with more than half of Americans seeing the party unfavorably for the first time.

The Republican Party is even more unpopular. But benefitting from their supporters’ greater likelihood of voting, GOP candidates nonetheless hold a 50-43 percent lead among likely voters for U.S. House seats in the Nov. 4 election.

See PDF with full results, charts and tables here.

These and other results are informed by an array of public concerns on issues from the economy to international terrorism to the Ebola virus, crashing into a long-running crisis of confidence in the nation’s political leadership. Almost two-thirds say the country is headed seriously off on the wrong track. Even more, three-quarters, are dissatisfied with the way the political system is working.

Crossroads GPS: Landrieu Left Louisiana Behind

Another attack by Crossroads GPS against Mary Landrieu, over Obamacare and Washington:

Puzzle Ads

In Kansas, American Crossroads is running an ad depicting independent Senate candidate Greg Orman as an Obama-supporting puzzle. Crossroads GPS is running a similar ad against Alison Lundergan Grimes in Kentucky.