The Center for Public Integrity

Watchdog groups are accusing a House committee that investigates wasteful government spending of apparently using taxpayer funds to produce a campaign video attacking President Barack Obama.

The video was produced by House Committee on Oversight and Reform, chaired by Rep. Darrell Issa, R-Calif. The one-minute video criticizes Obama for the cost of state dinners and was posted to the committee’s YouTube channel on Friday. It has made its way through Twitter and conservative blogs over the weekend.

“Spend like he says, not like he does,” the narrator says of the president, as a photo of Obama in a tuxedo holding champagne shares a split screen with dollar bills raining down.

“It is so far beyond the pale. I think it is clearly an ethics violation,” said Melanie Sloan, the executive director of the government watchdog group Citizens for Responsibility and Ethics in Washington. “It is one of the most outrageous abuses of official resources I’ve ever seen.”

CREW plans to file a complaint, Sloan said.

When asked if taxpayer funds were used to create the video, committee spokesman Seamus Kraft said in an email that “the committee’s video presentation is fully consistent with House rules and did not incur any additional taxpayer expenditures for its production.”

According to Paul Ryan, an election law and ethics attorney at the Campaign Legal Center, the video amounts to an “electioneering” campaign ad — it supports or opposes a candidate even though it doesn’t explicitly say vote for or against that candidate.

It falls short only in that it wasn’t broadcast on television.

Thanks to a flood of outside spending, state supreme court races nationwide are awash in tens of millions of dollars’ worth of ads. Just how much is being spent isn’t clear, as many states allow certain types of ads to go unreported.

In North Carolina, one outside group has single-handedly outspent two candidates for a seat on the North Carolina Supreme Court. The North Carolina Judicial Coalition has unleashed a torrent of ads on behalf of conservative Paul Newby, blanketing the state with a $1.3 million ad buy. Tobacco giant RJ Reynolds and the North Carolina Chamber of Commerce gave a combined $264,000 to the ad campaign.

Both Newby and his opponent, liberal Sam Ervin IV, accepted $240,000 from the state as part of North Carolina’s public financing program — established in 2004 to limit spending and rein in the excesses of special interest money in judicial races. 

Unlimited spending by unaffiliated groups has threatened the effectiveness of the program — one of 16 in the nation, according to the National Conference of State Legislatures.

The flood of spending was made possible thanks to the U.S. Supreme Court’s Citizens United ruling in 2010. Unlike candidates, outside spending groups can raise and spend unlimited sums from people, corporations and unions.

“Outside entities can spend as much as they want,” said Kim Strach, of North Carolina’s election board. “Candidates certified in our [public financing] program don’t have that ability.”

Michigan

The Michigan Supreme Court election is the nation’s most expensive judicial race this year. The state has seen millions of dollars in “off-the-books” outside spending before an election that could flip the 4-3 conservative edge on the state’s highest court.

Update (Nov. 5, 4:10 p.m.): This story has been updated to include comment from William S. Rose, Jr., of Specialty Group Inc.

The biggest corporate contributor in the 2012 election so far doesn’t appear to make anything — other than very large contributions to a conservative super PAC.

Specialty Group Inc., of Knoxville, Tenn., donated nearly $5.3 million between Oct. 1 and Oct. 11 to FreedomWorks for America, which is affiliated with former GOP House Majority Leader Dick Armey.

FreedomWorks’ super PAC has spent more than $19 million on political advertising including $1.7 million on Oct. 29 opposing Tammy Duckworth, a Democrat running for Congress in Illinois against tea party favorite Joe Walsh, a first-term incumbent.

The buy was more than four times greater than the group’s previous largest single expenditure.

Specialty was formed only a month ago. Its “principal office” is a private home in Knoxville. It has no website. And the only name associated with it is that of its registered agent, William S. Rose Jr., a lawyer whose phone number, listed in a legal directory, is disconnected.

Rose released a press release Monday saying the company was created to "buy, sell, develop and invest in a variety of real estate ventures and investments."

In the six-page statement, Rose said he was a "disappointed, yet staunchly patriotic, baby boomer" with concerns about the administration's handling of the terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, as well as the Department of Justice's botched "Operation Fast and Furious" gunwalking program.

Despite his vast wealth, Sheldon Adelson was not exactly a household name when the Republican presidential primary campaign got under way. But the casino magnate’s multimillion-dollar contributions to a pro-Newt Gingrich super PAC ended that.

Adelson’s support was linked to a shared stance with Gingrich as staunch supporters of Israel. Not quite so well publicized was Adelson’s financial stake in who wins the presidency.

A second Obama term, thanks to the incumbent’s proposed tax policies — could cost Adelson billions if he brought home profits earned at his overseas casinos, according to tax experts.

Since Gingrich flamed out in the primaries, Adelson and his wife Miriam have shifted their allegiance to GOP presidential nominee Mitt Romney, giving the pro-Romney super PAC Restore Our Future $20 million.

With Romney as president, Adelson, the billionaire chairman and CEO of the Las Vegas Sands Corp., could bring his profits home tax-free.

The Las Vegas Sands’ overseas operations account for 86 percent of its revenue from casinos, hotels and shopping, according to its 2011 annual report to the Securities and Exchange Commission. The Sands’ most lucrative holdings are in Macau, a special administrative region in China.

Super PACs like Restore Our Future can accept unlimited contributions from billionaires, corporations and unions and spend the money on ads helping their favorite candidates, thanks to the U.S. Supreme Court’s 2010 Citizens United decision.

In the final weekend before Election Day, President Barack Obama was hit with more than $37 million in attack ads; Romney faced less than $1 million in attacks, according to reports filed with the Federal Election Commission.

Outside spenders dropped roughly $56.3 million on the presidential election in recent days, according to reports filed Friday, Saturday and Sunday. More than two-thirds of the ads are negative, a Center for Public Integrity analysis shows.

On all federal races, outside groups reported over the weekend spending roughly $73.3 million.

The biggest outside spender, not counting party committees and traditional political action committees, was the conservative super PAC American Crossroads, co-founded by GOP strategist Karl Rove. It reported spending nearly $23 million, almost entirely opposing Obama.

In a distant second was American Future Fund, a conservative nonprofit, which reported spending $7.9 million, most of it supporting Romney. Two new anti-Obama ads, “Fed Up” and “Delphi” debuted Friday.

The primary pro-Romney super PAC, Restore Our Future, reported spending $4.4 million opposing Obama. It released the ad “Flatline” on Friday.

Securities and Investments

Rank: 1

Total: $94 million*

Favorite candidate: Mitt Romney

Top donors: Ken Griffin, Paul Singer, Robert Mercer, John Paulson, Joe Ricketts

Donors’ interests: Most favor limited regulation of financial markets and keeping taxes low, particularly on income from investments.

Industry’s interest: Same as donors.

Casinos and Gambling

Rank: 2

Total: $55 million

Favorite candidate: Mitt Romney

Top donors: Sheldon Adelson and family

Donors’ interests: Keeping taxes low on overseas profits that are repatriated to the U.S., strong support for Israel.

Industry’s interests: Removing online gaming restrictions and expanding the visa waiver program (so foreign tourists can more easily come to the U.S. to gamble), according to the American Gaming Association.

Chemical and Related Manufacturing

Rank: 3

Total: $31 million

Favorite candidate: Mitt Romney

Top donors: Harold Simmons and his company, Contran Corp.

Donors’ interests: Simmons’s companies want to eliminate certain environmental regulations that have resulted in millions of dollars’ worth of environmental cleanup costs for Contran subsidiary Valhi Inc. and led to numerous personal injury lawsuits against Valhi subsidiary NL Industries, according to Securities and Exchange Commission filings.

Industry’s interests: Keeping the costs of environmental and safety regulations to a minimum while improving the industry’s image relative to climate change.

With President Barack Obama earning high marks on his response to Hurricane Sandy, conservative outside spending groups and Republicans are seeking to contrast it with charges that he dropped the ball in Benghazi.

Americans for Limited Government’s “Obama Campaign Has Its ‘Perfect Storm’” and Campaign for American Values PAC’s “Obama Has Left Americans Behind” follow the line of attack launched by Michael Brown, the director of FEMA under George W. Bush, who was widely criticized for botching the response to Hurricane Katrina in 2005.

While the new ads do not go quite as far as Brown, who charged the president with acting too quickly on the response to Sandy, they do capitalize on his juxtaposition of the president’s response to Sandy and his response to the terrorist attack on the American consulate in Libya.

Obama was “openly working with New Jersey Gov. Chris Christie during hurricane recovery,” the ALG ad begins. Christie, a Republican with presidential aspirations, heaped praise on the president for his response, which was seen as a hit to GOP nominee Mitt Romney.

“Obama didn’t react to terrorist attacks in Libya the same way he reacted to Sandy,” cursive text on the screen continues. “The Obama admin. [sic] tried to blame the attack on a movie released on YouTube. Maybe they can try to blame Hurricane Sandy on one of those Al Gore movies.”

A movie poster from “The Day After Tomorrow,” a high-budget, special-effects driven disaster film from 2004, is shown in the background.

Conservative outside spending groups have taken to the airwaves in an attempt to kick four Supreme Court justices off the bench in Iowa and Florida for taking positions the groups find objectionable.

In Iowa, one organization, joined by former GOP presidential candidate Rick Santorum, hopes to oust a justice who supports same-sex marriage. In Florida, justices face the wrath of a pro-business group and a physician who object to President Barack Obama’s health care reform law.

Supporters of the justices have paid for ads and mailers and are defending the judges’ records while accusing their opponents of politicizing the court system.

The campaigns include television ads and dueling bus tours.

Eighteen states, including Iowa and Florida, require their appointed Supreme Court justices to periodically face voters in what are known as “merit retention elections.” Voters are asked whether a judge should remain on the bench. If a majority says no, the governor appoints new justices from a list of names submitted by a nonpartisan nominating commission.

Historically, retention elections generate little political spending and limited voter interest. From 2000 to 2009, retention elections accounted for about 1 percent of campaign spending on all state Supreme Court elections, according to Justice at Stake, a Washington, D.C.-based group critical of judicial elections.

In 2010, conservatives waged a successful campaign to oust three Iowa Supreme Court justices who voted the previous year to legalize gay marriage. Spending on retention elections that year jumped to roughly 13 percent of the total spent on all state Supreme Court elections.

The lone remaining justice in Iowa who voted with his ex-colleagues in supporting same-sex marriage has been targeted, as have three Florida justices.

A secretive nonprofit group that wants to nullify Montana’s campaign finance laws received a $300,000 donation from an anti-union organization aligned with a Colorado furniture executive, an Internal Revenue Service document shows.

American Tradition Partnership, a pro-energy group known for successfully suing Montana to force it to abide by the U.S. Supreme Court’s Citizens United ruling, has also sued the state to protect the identity of its donors — who have funded the ATP’s attack mailers in state races.

An IRS document obtained by the Center for Public Integrity indicates one of its early donors was a nonprofit 501(c)(4) called Coloradans for Economic Growth, which spent millions of dollars from undisclosed sources to support a failed 2008 ballot initiative that would have made Colorado a “right-to-work” state.

Among the initiative’s supporters was Jacob Jabs, president and CEO of American Furniture Warehouse. A 2008 letter to the IRS signed by former ATP employee Athena Dalton said Jabs was the “primary donor” and had promised to give $300,000 to ATP, but only if the IRS expedited its approval of ATP’s application for tax-exempt status.

Jabs has denied knowing anything about the group or giving it any money.

The appeal apparently worked. Three days later, the IRS approved the application.

ATP’s 2008 donors list shows a $300,000 contribution from Coloradans for Economic Growth, but makes no mention of any donation from Jabs.

Dalton did not return numerous calls. According to a report by ProPublica, a nonprofit news organization, Jabs said he contacted Dalton earlier this October and she told him that ATP officials had instructed her to use Jabs’ name in the letter.