An Arizona ballot measure would expose hidden spending in politics
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The “Marketplace Morning Report” is running a special series, “Secret Money, Public Influence,” on money, politics and whether campaign donors can be “secret Santas” who spend big but don’t have to disclose it. This election cycle, we traveled to Arizona, where, in a month, voters will decide whether some of the biggest campaign spenders should have to reveal their identities. How this measure got on the ballot, what it hopes to achieve and what opponents say about it provide lessons about the so-called dark money that can sway elections near you.
The measure, Proposition 211, would make political nonprofits that gather large sums of money disclose the names of their original donors. There are parameters on this: It applies to groups that spend $50,000 or more on a statewide campaign or $25,000 or more on a local campaign. And the original sources would only be made public if they gave $5,000 or more.
Terry Goddard, a former Arizona attorney general, knows money laundering. What he calls dark money is not criminal money laundering, but it is a way to launder money, he said.
“The same techniques that are used by the cartels to move money from sale of drugs into legitimate business is the kind of thing that’s being done politically with the dark money operation,” Goddard said.
Goddard is a guiding force behind Proposition 211. To understand it, you need to know how political donations can become anonymous. Funders can hand the money to an intermediary, a kind of nonprofit that’s allowed to play in politics.
Who paid for that attack ad? Don’t know. Some nonprofit with a pleasant-sounding name.
“Americans for Peanut Butter or Americans for a Better Tomorrow,” Goddard said. “Whatever the nonsense name is, they can say anything. And if it means defaming the other side or saying things that are untrue, they’re happy to do it because they have no reputation at risk.”
So part one, according to supporters, is about changing the tone: If you have to put your legal name or corporate brand on it when you write checks that equal $5,000 in an election cycle, maybe you won’t want to go as nasty. And, part two, supporters say, the disclosure is crucial information for voters trying to sift through promises, accusations, claims and counterclaims.
Goddard is a Democrat. But the ballot initiative’s top funder, David Tedesco, is a registered independent who gives to campaigns for both Republicans and Democrats.
It would have been mighty rich for this story had Tedesco given his money to the campaign secretly. But, no.
He’s the founder of a Phoenix-based company called Outlier that’s in everything from travel medicine to real estate. In a state where some lie awake worried about billionaire Charles Koch on the right and others lie awake about billionaire George Soros on the left, Tedesco’s conservative business friends and liberal pals are getting behind the proposal, he said.
“I think, historically, Republicans felt like dark money benefited them. And Democrats felt like it hurt them. If you look at the data, you can actually see that in some cycles, Democrats have actually benefited more from dark money than Republicans have. And I think that both sides have come to realize that it’s sort of a weapon of mass destruction that isn’t really helping anybody.”
A recent poll finds 87% of Arizonans support the disclosure measure they’ll get to vote on in November. But “bipartisan” does not mean universal appeal.
Cathi Herrod is president of the Center for Arizona Policy, which advocates for what it terms “life, marriage and family and religious freedom.” She also runs a related nonprofit, the Center for Arizona Policy Action, which is of the sort that does political work — not a 501(c)(3) under the tax code, but a 501(c)(4). Herrod argues that Proposition 211 would chill free speech.
“Every Arizonan should be free to support causes with our dollars without fear of bullying, disclosure, harassment,” she said.
She brought up a 2014 controversy in neighboring California involving Brendan Eich. the then-CEO of the Firefox browser company, Mozilla.
“And when the donation became public, he lost his job because he was supporting the marriage amendment that would have prohibited marriage between two men or two women,” Herrod said. “And that was not a popular cause. He lost his job.”
That said, Eich’s donation had been structured to be public from the get-go. Herrod said that if expanded disclosure rules pressure people into not spending money in Arizona, and if money enables speech, it would mean less speech, which she said violates the First Amendment.
But Arizona voters will get to decide after almost 400,000 signatures supporting its appearance on the ballot were submitted. Many of those signatures were gathered by volunteers like Nikki Kirkeby, a retired flight attendant with a secret weapon.
“I’d have doggie treats for the dogs at my table, and people would come up and talk,” Kirkeby said.
Her pitch highlights the contrast with normal campaign donations, both large and small, the ones that don’t go through nonprofits. Those are public for all to see.
“It’s only fair. We have to disclose when we make a donation of $50 or more,” she said. “The people behind these large donations should have their name attached to them.”
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