The curious spending of Republicans for Choice

Introduction

Wharton Professor Yoram “Jerry” Wind calls himself a liberal Republican. Unhappy with what he considers far-right positions taken by his party, he searched for a way to change the GOP. Unsolicited, in July of 2000, Wind donated $250 to an Alexandria, Virginia-based political action committee: Republicans for Choice. Over the next nine years, he and his wife sent 10 more contributions to the same PAC, totaling $4,000. Like many of the more than 300 donors to the PAC since 2006, Wind expected that his contributions were going to help elect Republican candidates who support abortion rights — and “to fight against those who want to legislate against abortion.”

Since the PAC’s formation in 1990, documents show that Republicans for Choice has raised and spent more than $5.5 million. But a Center for Public Integrity analysis of the PAC’s more recent filings — along with data from CQ MoneyLine, which tracks political giving — reveals that over the past decade less than five percent of the committee’s spending has gone to political candidates, other political committees, or independent expenditures. Since 2005, just about one-half of one percent of the PAC’s nearly $1 million in spending has gone to federal or state campaigns, according to a review of records. By comparison, Federal Election Commission data show the average federal PAC in the recent 2007-2008 cycle dedicated about 35 percent of spending to contributions aiding federal candidates. A comparison to other PACs on both sides of the abortion debate shows that similar groups spend a much greater portion of their funds on candidates and campaigns.

Where did RFC’s money go? Much of the group’s spending has been for consulting companies owned by the PAC’s chairwoman, Ann E. W. Stone. Those firms — along with payments to reimburse Stone’s expenses for travel, entertainment, and automobile repairs — comprise more than two-thirds of RFC PAC’s expenditures since 2006. And hundreds of dollars more went to pay for Stone’s parking tickets.

Stone says that her group’s overhead is high because, unlike most political action committees, it does not have affiliated interest groups to share administrative expenses. And she notes that much of the organization’s activity goes beyond the election of political candidates.

Since the post-Watergate campaign finance laws went into effect in the mid-1970s, more and more interest groups have formed PACs to allow multiple contributors to make joint contributions to magnify their impact and elect candidates who share their viewpoints. According to the FEC, the number of registered PACs has grown from 608 in 1974 to more than 5,200 over the 2007-2008 election cycle. In the last election, these thousands of PACs combined to distribute more than $412 million to federal candidates. But there are few rules and no accepted norms for PAC spending, raising broader questions about how other political action committees spend their money. As Paul S. Ryan, program director and legal counsel at the nonpartisan Campaign Legal Center, notes, donating to PACs is a “contributor beware” proposition.

A veteran operative

Stone, 57, is the founder, chairman, treasurer, and sole registered officer of Republicans for Choice. A veteran GOP political operative, she was a protégé of conservative direct mail pioneer Richard Viguerie and, in 1991, an unsuccessful mayoral candidate in Alexandria, Virginia; she is also the ex-wife of prominent Republican strategist Roger Stone, who was known for controversial hardball tactics. She has often attributed the idea for her organization to the late Republican national chairman Lee Atwater.

Republicans for Choice PAC was created in 1990 and soon after registered with the Federal Election Commission. Tax-exempt political action committees such as RFC are authorized by statute to distribute funds to influence “the selection, nomination, election, or appointment” of political candidates. The committee lists three major goals on its website: locating and mobilizing a “pro-choice” majority within the GOP, fighting to remove anti-abortion language from the party’s platform, and raising money to elect pro-abortion-rights Republican candidates to state and federal office.

In its early years, some pro-abortion-rights Republicans publicly expressed skepticism about the true intentions of Stone and RFC PAC. Nevertheless, Stone quickly became the national face of abortion-rights Republicans. Every four years, during the Republican convention, Stone hits the airwaves to make the case for a pro-abortion-rights GOP. (In a June CBS News/New York Times poll, 40 percent of Republicans said that Roe v. Wade’s establishment of a “constitutional right for women to obtain legal abortions,” was a “good thing,” while 51 percent said it was a “bad thing.”) She cites a long list of accomplishments: assembling a hefty list of abortion-rights Republican donors and activists, near-wins in platform language fights, defeating a proposal to withhold party funding from candidates who opposed a late-term abortion ban, organization of a 100-sailboat parade during the 1996 Republican convention, and some candidate recruitment coups. Aided by that publicity, her PAC raised sizeable sums of money: $850,000 combined over the 1992 and 1994 cycles, about $1 million in the 1996 cycle, and nearly $1.5 million in the 1998 cycle. FEC numbers show the average PAC’s per-cycle haul was less than $82,000 in 1992 and less than $110,000 in 1998.

Following the money

As the PAC’s fundraising grew, it began racking up expenditures. But unlike many similar committees, the amount of cash going to federal candidates — the bread and butter of most PACs — never once approached the 10 percent mark.

When the issue of the group’s early spending was raised in a 1992 Legal Times article, Stone wrote a rebuttal defending the PAC’s practices. The first goal of the group, she said, was “not the election of federal candidates, but the election of pro-choice delegates” to the Republican national convention. Including state campaigns, she added, 10.6 percent of total spending at that point had gone to “direct assistance to candidates,” putting the PAC in line with other major abortion rights political action committees. But in recent years, the group’s expenditures have not tracked with other major PACs on both sides of the abortion debate. Using data from the Center for Responsive Politics, the Center analyzed how much other abortion-issue PACs spent on federal candidates, political committees, and independent expenditures since 1997:

• Republican Majority for Choice PAC, another abortion rights GOP committee: more than 87 percent;
• NARAL Pro-Choice America PAC: 49 percent;
• Planned Parenthood Action Fund’s PAC: 72 percent;
• Republican National Coalition for Life PAC, an anti-abortion GOP group: 79 percent; and
• National Right to Life PAC: over 91 percent.

Stone says the fact that RFC PAC is organized only as a political action committee (with no affiliated non-profit organization to handle administrative functions) “distorts the percentages of how our money is spent under our reporting. … Most other groups segregate out their PAC activity” into other affiliated organizations, while RFC PAC does everything under the PAC’s banner. That would mean a larger percentage of PAC funds go to overhead than for groups that can cover administrative costs through other accounts.

Joseph Birkenstock, a former chief counsel to the Democratic National Committee and an attorney at Caplin & Drysdale, told the Center that political action committees often have high overhead for their first few years and that there is no set “best practice.” But, after more than 18 years of operation, “anything of this scale — [more than] two-thirds of receipts going to overhead — certainly strikes me as a pretty large percentage.”

Allison Hayward of George Mason University’s School of Law, former chief of staff and counsel to Bradley Smith (a Republican commissioner on the Federal Election Commission who served as chairman in 2004), echoes these concerns. While noting that some PACs do spend money mostly on issues, instead of contributions to candidates, in this case — with most of RFC’s money going to the PAC’s sole officer — “the PAC seems to be an extension of Ann Stone,” she told the Center.

Over time, the percentage of RFC PAC’s spending going to clear political activity actually dropped from low to even lower. Since the 2004 cycle, when the committee’s contributions to state and federal candidates and committees totaled a mere $44,780 out of $539,504 spent in that period (8.3%), political giving dropped precipitously. Just $5,420 of $967,108 spent since the beginning of 2005 has gone to federal or state candidates or committees — less than one percent.

Among the three major goals listed on the group’s website is raising money to “support and elect more abortion-rights Republican candidates at the state and federal levels.” A 2006 article still on the site, “Look Past the Party Label,” highlighted seven allies Stone feared might be defeated in that year’s Congressional elections. These incumbents, she warned, “all have tough races.” As PACs may contribute up to $10,000 per candidate per cycle between the primary and general elections, RFC PAC could have given these candidates a major financial boost. It had the money to do so, as the PAC ended the 2006 cycle reporting nearly $760,000 cash-on-hand. Yet, despite Stone’s concern, RFC PAC only reported contributions to two of the seven ($1,000 each). And her fear proved well founded; five were defeated in the November elections that year. Without them, proposed abortion restrictions were added to the House health care reform bill last month without a single Republican dissenting.

Stone defends her organization’s spending, arguing that “a big part of the aid we give candidates is not money.” But while some support for political candidates that would not show up on the disclosure forms is possible, no “independent expenditures” are listed in RFC’s filings this decade.

“A group might say a lot of things are not included in those numbers,” campaign finance legal expert Birkenstock noted. “But if a PAC incurs expenses explicitly to help a federal candidate, it would need to be listed in the group’s FEC filings.”

Where the money goes

In recent years, most of the PAC’s payments have gone to one of three recipients: Capstone Lists (a direct-marketing company owned by Stone), The Stone Group (a political consulting firm owned by Stone), and Ann Stone directly.

Dating back to the beginning of 2005, about 69 percent of the $967,108 spent by the group has gone to those three entities. Both companies and the PAC, along with the not-yet-built National Women’s History Museum (Stone is senior vice president), share space in an Alexandria office building. Though the four entities list different suite numbers on correspondence, filings, and the building’s occupant directory, the four Stone groups share a second-floor office with a door marked “250-260.”

Republicans for Choice pays thousands of dollars each year for office, equipment, and list rental to Capstone Lists. The Stone Group’s services are retained for the PAC’s accounting, mailing production, and website updates (though www.republicansforchoice.com contains numerous out-of-date and under construction pages).

Stone herself received nearly $250,000 since the start of 2001 as reimbursements for her “travel and entertainment,” “automobile maintenance repairs,” phone, tires, gasoline, and various other expenses.

In her response to the Center and in her 1992 rebuttal, Stone defended the arrangement, saying her firms are the best in the business — that while she takes no salary she must be reimbursed for all PAC-related personal expenses (under campaign finance rules), and that PACs are legally required to pay her companies the prevailing market rates for services provided. She also expressed surprise that the percentage going to her companies was not even higher. “We outsourced the administrative processes to Capstone,” which also handles finances and filings, and “The Stone Group does all the mailings, graphics, messaging, and advertising, as well as project coordination,” she said. This arrangement, according to Stone, saves the PAC money.

A controversial agenda

While PACs are largely legally free to spend money as they deem fit , Michael Surrusco, director of research for Common Cause, says the expenditures raise an ethical question. “It seems like there’s clearly a conflict of interest on the part of [Stone] benefiting significantly from the PAC she controls,” he told the Center. The high percentage of spending going to Stone and her companies, he observed, “just smells fishy.”

But Stone says her companies have lost more business due to her controversial views on abortion rights within the GOP than they have gained from RFC PAC. To those who suggest the PAC is just a money-making scheme by Stone, she says, it would have to be “the worst money-making scheme ever.”

Among other expenditures by the RFC PAC were 13 payments over the 2006 and 2008 cycles to the Washington, D.C. government and one to the City of Alexandria to cover $685 worth of parking tickets. This figure represents more than 10 percent of the total given by the committee to political candidates over the same period. Stone does not dispute that these were her violations, but points out that the PAC is transparent about them. “I could have put these on an expense report to ‘hide’ it,” she said. “I did not.”

Stone told the Center that, while she makes the final decisions, she relies on an advisory board and her PAC’s donors to set the agenda on PAC spending. At their suggestion, she said, she has emphasized state battles, such the 2008 South Dakota abortion ban ballot initiative. But a number of longtime donors contacted by the Center said they have never been asked for any input from the organization; only for money.

Upon hearing about where the PAC’s money has gone over the years, Wind, the Wharton professor, told the Center “If that’s the correct number, it’s quite shocking.” The longtime contributor noted that he still believes in the cause behind the PAC, but that there are problems that need to be addressed. “Those who run it,” he said, “are not running it very effectively, should be accountable for the money they get, and use it for the purpose people give the money.”

Caitlin Ginley and Laura Cheek contributed to this report.