"Dark money," popularized by Jane Mayer's book of the same name, is the disparaging term for influential and discreet big money operatives in American politics. Mayer, a staff writer for the New Yorker, wrote her book to be a traumatic exposure of the so-called "Radical Right," a catch-all phrase for non-liberal and non-centrist activists. Viewed more agnostically, the dark money problem simply refers to the corrupting influence of extremely wealthy benefactors in politics, especially when connected with well-funded large political action committees (“super PACs”).
Bigger Problem Than Jane Mayer's Dark Money
Mayer is a left-of-center activist, and a reasonable degree of bias exists in her presentation. For example, she frequently lumps together neoconservatives and libertarian groups, and her book singles out Charles and David Koch. She also routinely criticizes Richard Mellon Scaife and John M. Olin, two other right-of-center donors. A broader and more appropriate list of dark money billionaire activists could include Warren Buffett, Eric Schmidt, George Soros, Bill Gates and hedge fund manager Tom Steyer, each a significant donor in his own right. Interestingly enough, Mayer's great-great-grandfather was Emanuel Lehman, co-founder of Lehman Brothers, a company with an intricate role in international politics dating back at least to World War II.
The American political system, like most around the world, does appear susceptible to the oversized power of cultural and economic elites. As the government grows larger, so too do the favors and regulations that can be used to concentrate wealth and power in the hands of those with money and influence. Dark money may be the fastest-growing method through which governmental favors are curried.
Dark Money: Political Non-Profits and Super PACs
There are two principal mechanisms by which dark money is deployed: political non-profit organizations and super PACs. Political non-profits are primarily organized in the tax code as 501(c)(4) or 501(c)(6) groups. Such organizations can receive corporate, individual or union-based contributions for political campaigning without any contribution limits or donor disclosures. According to the website OpenSecrets.org, a wing of the non-profit and nonpartisan Center for Responsive Politics (CRP), money spent by organizations without donor disclosures grew from $5.2 million in 2006 to over $300 million in 2012.
Super PACs are more complicated. Each super PAC must list its donors, but it can still accept clinical donations from non-profits or other organizations that do not disclose donors. There is no limit to the amount of money a super PAC can receive. OpenSecrets also reports that, as of July 20, 2016, organized super PACs reported total donations of $755 million in the 2016 election cycle.
The 2016 Election Cycle and Citizens United
In 2016, both major political parties received hundreds of millions of dollars in donor money, whether dark or not. If you include all individuals or groups who donated $200 or more by July 20, 2016, there were 304,851 donors to Republicans for a total of $548 million, as well as 395,469 donors to Democrats for a total of $569.8 million. The vast majority of donors give less than $2,700, hardly enough to curry strong political favor.
There were 1,247 donors who gave more than $100,000, though only a minority of those donations went to non-profits or super PACs. Nevertheless, the role of anonymous donations is growing significantly, which is most likely a reaction to the landmark 2010 Supreme Court ruling in the Citizens United case, which removed caps on how much unions, interest groups and corporations could spend on advocacy communications.
OpenSecrets lists the most politically active individuals and advocacy groups during the 2016 election cycle. Some names in the top 10 should be familiar to investors. Elliott Management's Paul Singer spent approximately $12.9 million on Republicans or conservative causes, while George Soros effectively countered with $12.9 million toward Democrats or liberal causes. The top 10 donors averaged $14.39 million each, with six left-of-center donors and four right-of-center donors.
The Koch brothers did not make the top 35 individual donors. Charles Koch and his wife Elizabeth ranked 37th, while David was not listed in the top 100. However, the top individual dark money organization was the Koch-backed Freedom Partners Chamber of Commerce, followed by the Center to Protect Patient Rights, now American Encore, another pro-liberty group with ties to the Freedom Partners Chamber of Commerce. Rounding out the top five was environmental group ClimateWorks, as well as Sea Change Foundation and Crossroads GPS.
One does have to question the effectiveness of such outside money campaigns. According to OpenSecrets data, the top recipients of outside money in the 2016 presidential cycle were Jeb Bush at $121 million, Hillary Clinton at $84 million, Ted Cruz at $67 million and Marco Rubio at $61 million. Only Hillary Clinton received her party's nomination, and she was widely considered to be the favorite in 2016 by as early as 2009. The other two candidates who really made splashes in 2016, Bernie Sanders and Donald Trump, received a combined $4 million in dark money. For all their money organized and spent, the Koch brothers are faced with a Republican nominee they dislike so much that Charles Koch told ABC that he was considering voting for Clinton instead.