OUTSIDE MONEY

By 2015, "outside money" had come to mean spending by super PACs and politically active tax-exempt groups. Super PACs are registered political committees under the FECA and must disclose their donors; their spending is labeled "outside" only because it is done outside the formal structure of candidate and party committees. Politically active tax-exempt groups are not registered political committees that disclose their donors; they are registered with the IRS as nonpolitical groups and do not have to disclose their donors. Their spending is labeled "outside" because it is done not only outside the formal party structure but also largely outside the FECA; because it is not disclosed, their spending is called "dark money."

Raising and spending money for federal elections, but largely outside federal election law, is a practice that is almost as old as the FECA. The parties themselves began the practice in the 1980 election by inventing what came to be called "soft money," which was raised mostly under state laws. It was only after Congress severely curbed party soft money by passing the McCain-Feingold Act in 2002 that outside money began to flow through tax-exempt groups that were regulated only by the IRS. And it was after Citizens United that the money flowing through tax-exempt groups and super PACs turned into a flood.

 
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