Money and Democracy

Published — June 3, 2012 Updated — May 19, 2014 at 12:19 pm ET

Wisconsin recall breaks record thanks to outside cash

Election a national referendum on public sector unions


Tuesday’s recall election of Republican Gov. Scott Walker is the most expensive in Wisconsin history. More than $63.5 million has been spent by candidates and independent groups, the overwhelming majority underwritten by out-of-state sources.

The record spending total was made possible thanks to the Citizens United U.S. Supreme Court decision — which had the effect of invalidating Wisconsin’s century-old ban on independent expenditures by corporations and unions — and a state law that allows unlimited contributions to the incumbent in recall elections.

The amount spent since November 2011 trounces the state’s previous record of $37.4 million, set during the 2010 gubernatorial campaign.

The election has become a national referendum on the future of public sector unions, which have been a major force within the Democratic Party for decades.

In the first of two debates, Walker vowed to “stand up and take on the powerful special interests,” suggesting that national unions have propped up his Democratic challenger, Milwaukee Mayor Tom Barrett.

While Barrett has received about 26 percent of his $4 million in campaign donations from outside the Badger State, Walker has drawn nearly two-thirds of his $30.5 million contributions from out of state, according to campaign filings released May 29. Walker has outraised Barrett 7 ½ to 1 since late 2011, though Barrett didn’t enter the race until late March.

“It’s big time,” said Mike McCabe, director of the campaign finance watchdog Wisconsin Democracy Campaign, which compiled the numbers. “We have a level of outside interference in this election that the state has never been seen before.”

Union money pours in

Campaign contributions tell only part of the story. National unions have kept Barrett’s campaign alive by funding outside groups dedicated to defeating Walker.

More than a year since Walker limited collective bargaining rights for most public employees, the nation’s three largest public unions — the National Education Association (NEA), American Federation of State, County and Municipal Employees (AFSCME), and the Service Employees International Union (SEIU) — have channeled at least $2 million from their treasuries and super PACs to two Wisconsin-based independent expenditure groups.

The American Federation of Teachers, United Food and Commercial Workers, Teamsters and the United Autoworkers have also dipped into their D.C. treasuries for the Wisconsin recall.

The unions, however, have struggled to keep up with Walker’s deep-pocketed, anti-union friends. They include the Republican Governors Association, which received a $1 million contribution from conservative billionaire David Koch in February, and billionaire casino owner Sheldon Adelson.

On March 7, the NEA, the nation’s largest union, transferred $3 million to its super PAC, the NEA Advocacy Fund. A week later, that super PAC sent $500,000 to the We Are Wisconsin Political Fund, a state-based independent expenditure group headed by the state AFL-CIO’s president. The fund has spent the money on direct mail, phone banking, canvassing and support for other pro-recall groups in the state.

With access to unlimited corporate and union dollars, independent expenditure groups in Wisconsin may advocate for or against an opponent, but must disclose their donors and spending to the state’s Government Accountability Board.

In early April, the SEIU sent two contributions totaling $500,000 to the We are Wisconsin PAC, which makes direct donations to candidates and parties.

The NEA and SEIU declined to comment for this story.

Union funds ground game

A third public sector union based in Washington, D.C., AFSCME, has set up a special account for the Wisconsin battles, which also include recall votes for four GOP state senators. Much of that money has gone to staff a vast, union-funded network of dozens of field offices in the state.

Two weeks before the primary, the national union wrote a $500,000 check to bolster We are Wisconsin, which has paid for union staff from Alaska to Massachusetts to boost the ground game.

“This election is going to boil down to a turnout game,” said AFSCME national spokesman Chris Fleming.

Labor unions had heavily favored former Dane County Executive Kathleen Falk to challenge Walker.

“Let’s face it, I wasn’t their first choice,” said Barrett in May. AFSCME, a major Falk funder, criticized Barrett during the Democratic primary for trying to wring concessions from Milwaukee public employees.

But when Falk lost to Barrett in the May 8 Democratic primary, national unions quickly shifted their support to Barrett — who lost to Walker by 5 points in 2010.

We are Wisconsin and a second group, the Greater Wisconsin Committee, saw an infusion of union cash for Barrett’s second attempt in May. We are Wisconsin got another $500,000 from the NEA’ Advocacy Fund on May 7 — making for a cool million from the teachers union super PAC in under two months.

The American Federation of Teachers also chipped in $350,000 in May.

We are Wisconsin has spread its wealth too, sending $1.3 million in May to Greater Wisconsin, a one-stop political shop comprised of a 527, a (c)4, a PAC, and an independent expenditure fund.

In late May, Greater Wisconsin took a $500,000 donation from AFSCME and $900,000 more from the Democratic Governors Association to fuel a final online, radio, and TV ad push in the week ahead of the vote.

Walker’s campaign did not return calls for comment, but the governor called Greater Wisconsin “a front group for all the union money coming in.”

Union leaders say the opposition to Walker is home grown.

“I would tell Walker to look in his backyard,” says Fleming of AFSCME. “There were people from Eau Claire and Waukesha and Green Bay, putting together the largest demonstrations at the Capitol since the Vietnam War.”

‘Outrageous, wrong and legal’

Walker, meanwhile, has benefitted from the state’s election finance rules that allowed his campaign to raise unlimited contributions from individuals after recall petitions were filed in November 2011. His challengers could take no more than $10,000 from individuals.

Through April, Walker’s top three donors combined gave more than challenger Barrett’s campaign had raised overall. Four of Walker’s top seven donors are out-of-state billionaires, including former Amway CEO and former Michigan gubernatorial candidate Dick DeVos, and casino magnate Adelson, who each gave $250,000.

Adelson has given $26.5 million to super PACs in the 2012 election — most of it to Winning Our Future, a pro-Newt Gingrich group — making him the most prolific super PAC contributor so far, according to a Center for Public Integrity report. Though he is known primarily for his support of Israel, Adelson also has an extensive history of bitter disputes with unions who want to organize at his exclusively non-union casinos.

When Citizens United came down, it didn’t just nullify Wisconsin’s 1905 ban on corporate campaign cash, it also plunged much of the state’s campaign finance reporting into darkness.

“Because corporate and labor expenditures were previously illegal, there were no disclosure laws to regulate their spending,” said McCabe. “There’s been a precipitous drop off in transparency.”

Since Citizens United, Wisconsin’s Government Accountability Board requires independent expenditure groups to register as so-called “1.91 groups,” named for the state rule that created them. Of the more than $63 million spent in the race, $22 million has come from these groups, according to the Wisconsin Democracy Campaign.

Similar to federal super PACs, 1.91 groups can raise and spend unlimited corporate or union dollars and urge voters to support or oppose a candidate. Also, like federal super PACs, they must report their donors — except when they can avoid it.

The Republican Governors Association has spent roughly $4 million on campaign ads through its Right Direction Wisconsin PAC since April 23. But because the RGA’s PAC is based out-of-state, it only has to disclose to state regulators its donations coming from inside Wisconsin, a glaring loophole.

Of its most recent $4 million outlay, the RGA raised only a little over $7,000 from inside the state.

The RGA does have to report donors to the IRS, and its 2012 first quarter filing reveals a $500,000 donation from the Chamber of Commerce and a $1 million February contribution from Koch.

McCabe says the 1.91 groups that are based in-state, like We Are Wisconsin and Greater Wisconsin, also have ways around disclosure rules. The nonprofit arms of these organizations don’t have to disclose donors, and can funnel unlimited money from undisclosed sources into independent expenditure funds — making the source of a lot of campaign cash “nearly impossible to track.”

For example, Greater Wisconsin transferred $191,000 from its political fund to its independent expenditure fund in early May. The money would be spent on ads supporting Barrett or opposing Walker. Because its political fund does not have to report donors to the state, no one knows who paid for the ads — an end-around the state’s disclosure rules that parallels campaign financing tricks at the federal level.

The group is required to report its donors to the IRS. Its report covering the second quarter of 2012 is due July 15.

Then there are issue ad groups which raise and spend unlimited funds, and do not register or disclose their spending. However, they are barred from urging voters to support or oppose a candidate.

The Campaign for Wisconsin Democracy gathers purchasing data from media outlets, and estimates about $8.5 million in issue ads have been bought during the recall.

The right-wing groups Americans for Prosperity and Wisconsin Manufacturers and Commerce, known as “Wisconsin’s Business Voice,” and the anti-union Center for Union Facts have made roughly 75 percent of those purchases. Greater Wisconsin has spent about $2 million, according to McCabe.

Despite the record fundraising numbers and the unprecedented degree of outside influence, neither Walker’s haul from out-of-state billionaires, nor the national union cash infusion breaks campaign finance law.

In total, outside spending made by independent expenditure groups and Issue ad organizations, totals $30.5 million in the recall election — well over half of which has been contributed by undisclosed sources, according to the Wisconsin Democracy Campaign.

“All the spending is outrageous and wrong, but it’s also legal,” says McCabe.

Capital versus people

Wisconsin is ground zero in a national fight for unions, which have supported state-based legal and ballot campaigns to overturn laws restricting collective bargaining and automatic dues check offs — as they have in Wisconsin, Ohio, Arizona and Michigan.

McCabe says the unions better bank on a ground game, because they can’t compete long-term with corporations.

“I always thought it was foolhardy to play a capital-intensive game when the unions have people, and their adversaries have capital,” he says. “They just can’t keep up.”

The intense spending by outside groups has made a lot of Wisconsinites feel powerless.

Elena Barham is a West Madison High School senior who helped form the Students for Wisconsin PAC. So far, the group has raised about $30 from T-shirt sales.

“Our goal is not money-based,” said Barham, whose group has focused on voter registration among young voters. “It’s about showing that a grassroots effort could have an impact.”

Barham’s PAC produced a Web ad critical of Walker’s cuts to education and is canvassing in pivotal Dane County — where Barrett needs to win big to have a chance.

At school, Barham has the difficult task of rallying enthusiasm.

“High school kids see all this big money and say, ‘I don’t have a million dollars,’” she said. “It’s hard to convince people of their political efficacy — it’s discouraging.”

Update, (June 7, 12:33 pm): Outside groups made a final spending blitz on the weekend before the recall vote. According to the Wisconsin Democracy Campaign, outside spending, which includes independent expenditures and issue ad buys, now totals roughly $33.5 million.

Of this sum, Walker supporters outspent Barrett supporters $18 million to $15.5 million.

The state’s registered 1.91 groups —which can spend unlimited corporate and union dollars to expressly advocate for candidates thanks to Citizens United — spent $24.5 million.

Unions devoted their resources to 1.91 groups, spending about $13.5 million on ads and field staff. The Walker camp benefited from major spending by the Republican Governors Association, whose Right Direction Wisconsin group made a majority of the Walker camp’s $11 million in independent expenditures.

Correction, (June 4, 12:30 pm): The Center originally reported the Dick DeVos was the founder of Amway. He is the former CEO and his father Dick DeVos Sr. founded the company.

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