A Window on Campaign Abuse
The secret world of undisclosed political contributions is in desperate need of sunlight. Public corporations are giving money in support of political candidates without any accountability to shareholders or consumers. Charities are taking tax-deductible contributions and improperly funneling them to strident advocacy groups. All the while, government watchdogs are dozing.
Last week, finally, there were encouraging signs that two government agencies were beginning to pay attention. One was from an expected quarter: New York State's attorney general, Eric Schneiderman, who is looking into questionable transactions by the United States Chamber of Commerce. The other is the Internal Revenue Service, which should have cracked down on abuses of the tax code after the 2010 elections, but might be stirring now.
In 2010, and even more so this year, the chamber became an unofficial arm of the Republican Party, spending at least $80 million on ads that helped the party's candidates and attacked Democrats. Though it claims to speak for all ofAmerican business, it is little more than a rigid conservative fighter in the Washington battles over taxes, health care and government spending.
As a tax-exempt business league, the chamber is not required to disclose its corporate donors. In 2003 and 2004, it also accepted a loan from its charitable arm, the National Chamber Foundation, which unlike the chamber itself cannot engage in political or lobbying efforts because it accepts tax-deductible donations.
In 2010, a labor-backed group, U.S. Chamber Watch, complained to the I.R.S.that the loan had not been repaid, and seemed to have been mixed in with general funds for lobbying and political work. It is unknown if the I.R.S. investigated; it will not discuss individual cases.
Last year, the labor group and other organizations raised the issue with Mr. Schneiderman, noting that one of the biggest donors to the Chamber Foundation was the Starr Foundation, a huge New York charity headed by Maurice Greenberg, former chairman of the American International Group and a former member of the chamber's board.
As Nicholas Confessore reported in The Times last week, Mr. Schneiderman has begun an investigation into these charges, issuing subpoenas that examine the connections between the chamber and the two foundations. This is an extremely promising development that could finally illuminate the practices that the chamber is desperate to keep secret.
At the same time, the I.R.S. itself said it would begin sending questionnaires to some of the largest so-called "social welfare" organizations, like Crossroads GPS, founded by Karl Rove, that spend secret donations on behalf of political candidates, mostly Republicans. This is the first step in a belated effort to determine whether these groups are primarily political in nature, which would mean they are violating their tax-exempt status.
These investigations could last for months or years, and are unlikely to affect spending in this year's election. But they could help stanch the poisonous flow of secret money in future cycles.
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