Coordination in Michigan

Take a recent ad in Michigan, where a gubernatorial hopeful speaks directly into the camera as he walks through what appears to be a manufacturing plant.

“I’m Mark Schauer, and there’s a lot we can do to make Michigan’s economy better,” the Democratic candidate says. “Tell Gov. [Rick] Snyder his economic policies work for the wealthy, but not for the rest of Michigan.”

It appears to be a typical campaign ad. But it’s paid for by the Democratic Governors Association (DGA), a Washington, D.C.-based political group that can accept unlimited donations from labor unions, corporations and wealthy individuals.

Like the federal law, Michigan bans corporations and unions from giving directly to candidates. However, the state’s flexible coordination laws allow Schauer to take advantage of the DGA’s deep-pocketed corporate and union donors.

In Michigan, a candidate can coordinate with an independent group as long as the candidate doesn’t control or direct the group, according to Rich Robinson, who runs the Michigan Campaign Finance Network, which tracks outside spending in the state and advocates for better disclosure.

The ad — one of four the DGA has aired in Michigan, including three featuring Schauer speaking directly to the camera — would probably have been illegal if Schauer were a federal candidate because federal law prohibits corporations and labor unions from running ads coordinated with federal candidates.

Even if the funds came from an allowable source, like an individual or party committee, the ad would probably still have been illegal for a federal candidate because it would be seen as an in-kind contribution in excess of the legal limit, according to Matthew Sanderson, a campaign finance attorney with Caplin & Drysdale.

Neither the DGA, nor Schauer’s campaign returned requests for comment.

Schauer is clearly benefiting from the lack of a state coordination ban.

Typically the first ads of a candidate’s campaign serve as an introduction to voters. But Schauer faces a fundraising cap because he is taking advantage of limited public funds for his campaign and is more than happy to see the DGA pick up the tab, Robinson said.

Robinson predicted that most of the ads supporting the Democrat in this race may continue to come from the DGA.

And because the DGA is footing the bill, rather than Schauer, the ads don’t need to be reported to the state.

Unlike candidates, independent political spenders don’t have to report their ads to the Michigan secretary of state unless they specifically ask viewers to “vote for” or “vote against” a candidate. Those words were absent from this and other ads the DGA has produced to support Schauer.

Seeking clarity on state rules

In April, the DGA sued Connecticut claiming its rules for independent spending by political groups were too vague and too broad. The issue was over whether Democratic Gov. Dannel Malloy should be permitted to help the group raise money.

“If [the] DGA were not able to utilize its members to raise funds in support of its nationwide programs and activities, its ability to function effectively would be severely compromised,” the group wrote in a federal court filing.

The court ruled against the DGA’s request to block the 2013 campaign finance law in June, and the DGA dropped the rest of its lawsuit.

Similarly in Minnesota, GOP candidate for governor Jeff Johnson recently asked the state’s Campaign Finance and Public Disclosure Board to clarify whether he could raise money for an independent political spender, according to the Associated Press.

The answer was no.

Minnesota law says spending can be considered independent only if it is made without the consent, authorization or cooperation of a candidate. Fundraising is part of the spending process because no group can spend money if it hasn’t first raised money, the state agency explained in its February opinion.

By comparison, a federal candidate may ask donors to a super PAC, for example, to give no more than the federal contribution limit to a political committee — $5,000 per donor.

Feds bring no clarity

The rules can be murky even at the federal level.

In 2011, an ad that was similar to Schauer’s aired featuring then-U.S. Sen. Ben Nelson, a Nebraska Democrat. It was paid for by Democratic Party committees. Nelson’s campaign argued the ad was legal mainly because it aired far in advance of his next election contest.

American Crossroads, a conservative federal super PAC, wanted to run the same kinds of ads and forced the issue by asking for an advisory opinion from the Federal Election Commission. The commission’s three Republicans said the ads were OK while the three Democrats said they were not.

The end result — candidates and groups are operating in a sort of legal limbo.

Meanwhile, in Wisconsin, prosecutors in five counties have been investigating ties between Gov. Walker’s candidate committee and representatives of conservative political nonprofit organizations such as the Wisconsin Club for Growth, Citizens for a Strong America and Wisconsin Right to Life.

Emails recently released in court records show Walker discussing his and other conservatives’ then-upcoming recall elections in 2011 and 2012 with strategists such as former George W. Bush adviser Karl Rove and R.J. Johnson, a Walker consultant and Club for Growth adviser. Walker has also acknowledged that he raised money for Club for Growth.

Walker has denied any wrongdoing and has not been criminally charged.

Wisconsin law prohibits political committees from coordinating with candidates to produce materials that expressly advocate for the candidate’s election through phrases like “vote for” or “vote against.”

However, many of the TV and radio ads sponsored by the groups in question mentioned candidates’ names, though they didn’t explicitly say to “vote for” or “vote against.” Wisconsin Club for Growth argued they were “issue ads,” which are intended to express opinions on policy, not advocate for a candidate’s election, and which are protected by the First Amendment as political speech.

“Such ads are meant to educate the electorate, not curry favor with corruptible candidates,” wrote Eric O’Keefe, director of the group.

Federal law prohibits a candidate and an outside group such as Club for Growth from coordinating to produce ads that mention the candidate by name if they run immediately before the election, the way groups did in Wisconsin.

Whether Wisconsin has similar restrictions is in dispute.

The Wisconsin Club for Growth has challenged the campaign finance investigation as unconstitutional, and the 7th U.S. Circuit Court of Appeals is reviewing the case. 

If the Wisconsin Club for Growth wins its suit to shut down the investigation, the impact could be far-reaching, said Mike McCabe, who leads the nonprofit Wisconsin Democracy Campaign, which advocates for greater campaign transparency.

“What these groups are really interested in doing is making this a test case that goes all the way to the U.S. Supreme Court,” he said. “And I think they’re hoping that they can convince the five-member majority that has swept away so many campaign finance regulations in recent years to do away with coordination laws.”