The article lifted the veil on how big money from outside was spent in local races with a much larger goal in mind: to ultimately set the stage for a lasting and permanent Republican majority in the U.S. Congress.
Redistricting was on the horizon, and Republican strategists realized if they could win control of state legislatures, they could in turn manipulate district lines to favor Republican candidates for Congress down the road — or so the article claimed.
“What we saw was this small group of people influencing the public policy discussion for North Carolina,” said Walton Robinson, communications director for the N.C. Democratic Party. “It was just really a flood of outside resources from shady millionaire activists in General Assembly races attempting to buy themselves a seat.”
The New Yorker article, titled “State for Sale” was widely circulated and talked about in the region. It went viral, so to speak, promulgated through mass emails, social media, newspaper columns and letters to the editor.
Backlash followed, and a year later, Snow is still actively eliciting sympathy from voters for being picked on by outside money. At a candidate forum in Sylva two weeks ago, Snow cited the well-known New Yorker article and called himself the “poster child” for the ills of outside spending.
“I don’t mean to cause any problems, Jim, but here we go again. If you’ve been watching TV and you’ve been getting mail, you’ve probably seen something about me,” Snow said. “There are a lot of people who are overwhelmed by that. I think it is obscene on both sides. It has been particularly obscene for me because it caused me to lose the election and now it is happening again.”
Snow even ran a newspaper ad designed to resonate with voters familiar with the article. It pictured a flag plunked down on a map of Western North Carolina with the words “Not For Sale.”
The “State for Sale” article focused on one donor in particular: Art Pope, a wealthy businessman who has used his money to establish several conservative-leaning nonprofits in North Carolina.
Pope’s foundation and family are the primary benefactors for three outside groups that worked on behalf of Republican candidates in state races. Civitas Action, Real Jobs NC and Americans for Prosperity contributed 75 percent of the $2.6 million spent on the state’s 2010 legislative races by outside groups — campaign spending was credited in part for orchestrating the historic Republican takeover of both houses of the state legislature.
When the strategy came out, it didn’t sit well with the electorate, Robinson said.
“When people realized that these folks who had no interest in helping the citizenry, no interest in helping improve education, they just dumped their own money in for their own interest, a lot of people found that pretty disgusting,” Robinson said.
To the contrary, however, the wishes of special interest groups and outside money may have simply aligned with the wishes of voters. Hundreds of thousands of North Carolinians would no doubt see Art Pope as a champion for a important conservative causes and pro-business initiatives.
Yes, Pope is a big political donor, said Francis DeLuca, president of Civitas. But only those on the opposite end of the political spectrum seem to have a problem with that.
“Everything he has done has all been within the law and even the article acknowledged that,” DeLuca said, referring to the now infamous New Yorker article. “There is no illegal activity.”
The rise in spending by outside groups has been a game changer in the campaign process, according to Chris Cooper, a political science professor and director the Public Policy Institute at Western Carolina University.
“There are far fewer restrictions,” Cooper said. “Outside groups can do virtually anything they want to do. They can basically raise what they want and spend what they want.”
That’s different than the campaigns of yesteryear, which had to rely on direct contributions to the candidates themselves. State candidates can’t accept more than $5,000 in an election cycle from any one individual or special interest group.
Loyal supporters of a candidate who max out their own $5,000 maximum often bend the rules by donating in their wife’s name and a smattering of other relatives.
But even then, direct donations to candidates can’t hold a candle to the unlimited spending power of outside groups. So it’s no wonder donors are gravitating toward the flexibility outside groups offer to get their message out.
“It is a large and growing part of our electoral landscape,” said John Rustin, executive director of the non-partisan Free Enterprise Foundation.
That’s something that Chris Kromm, the director of the progressive Institute for Southern Studies, doesn’t particularly like.
“Money in politics is nothing new,” Kromm said. “But with the new system of this outside money that is not tied to any candidate or campaign allows a lot more negative campaigning than was happening previously. It creates an incentive to allow dirty politics to happen.”
Although liberals are more likely to cry foul over the growing role of outside money, it’s being spent on both ends of the political spectrum.
Conservative candidates do seem to attract more of the outside money, however, Rustin said.
“Whether it is fair or unfair is probably in the eyes of the beholder,” Rustin said. “Some people may try to characterize it as a fairness issue, but under federal and state law, the engagement of outside groups is certainly legal.”
Just because it’s legal doesn’t make it right, according to Louis Vitale, a Democrat who runs a rental real estate business in Davis’ hometown of Franklin.
He doesn’t deny money’s role in campaigns.
“There has always been money in politics, and there has always been a competition between parties on who can raise the most money,” Vitale said.
The issue now, however, is the magnitude.
“Now the amount of money raised in a district is overwhelmed by outside money,” Vitale said. “Who do you owe? It seems so totally unfair. It seems the balance is completely skewed.”
Where the parties fall
Prior to the rise of outside money, political parties functioned in a similar role. There is no limit on donations to political parties, and no limit on what parties could spend.
Donors that maxed out their $5,000 maximum donation to candidates could pour as much as they wanted into the party, and the party in turn can spend it on a candidate’s behalf.
There’s a catch, however. It’s illegal for donors to attach strings to money they give the party. Donors can’t dictate which races they want the party to spend their money on.
That rule doesn’t apply to outside groups. The backers behind outside groups can pick exactly which races they want the outside group to target.
Outside groups do face restrictions that parties don’t, however.
Outside groups are banned from coordinating with a candidate on campaign advertising — they can’t even talk about it casually. But parties can coordinate directly with candidates.
While Davis benefited greatly from outside money in 2010 — a total of $265,000 spent by outside groups on his behalf — it is far less this time around. So far, only about $50,000 in spending on Davis’ behalf has been reported by outside groups, although campaign finance reports lag real-time spending so that may not be a real picture.
Instead, this race shows most of Davis’ support is coming directly from the N.C. Republican Party.
Nearly all the flyers sent out supporting Davis or attacking Snow say they are paid for by the N.C. Republican Party.
For starters, the state Republican Party has more money at its disposal this year than two years ago. Unlike two years ago, the Republican Party holds the power in Raleigh, and that gives it a newfound fundraising advantage.
Until two years ago, Democrats reigned supreme in the state’s fundraising landscape. For more than a century, Democrats controlled the state legislature and usually the governor’s mansion. So money naturally flowed their way.
“We have seen that trend for decades in North Carolina. Democrats always saw the funding advantage at a 4-to-1 or even 5-to-1 level,” Rustin said.
But after the Republicans conquered the majority in the General Assembly two years ago, the fundraising tables were turned.
“The difference this year is the Republicans have an advantage for the first time in history. They took the majority, and now they have been able to raise the money,” said Frank DeLuca, the director of the conservative think-tank Civitas based in Raleigh.
Where outside groups played a starring role in the watershed election two years ago that swept Republicans into control of the state legislature, their support isn’t as critical this time.
Now in the majority, the state Republican Party has claimed the coveted fundraising advantage.
That could be one reason Davis isn’t seeing the same infusion of money from outside groups.
Another reason is the presidential and governor’s races on the ballot this year. Outside groups are putting more of their money and resources into those races, and less into the state General Assembly races.
But critics of outside funding have another theory. They believe backlash over the “State for Sale” article prompted a strategy shift. Davis has been unable to shake the spotlight The New Yorker shone on his race. He was, after all, the national poster child for the growing influence of outside money. And the takeaway message wasn’t flattering.
Outside money, right or wrong, is widely viewed as somehow disingenuous or illegitimate. So-called outside groups are depicted as shady puppeteers, and any candidates gullible enough to drink their Kool-Aid forever beholden to the special interest wishes.
“I think Davis was burned so badly by this that this time all the flyers say paid for by the Republican Party and approved by Davis,” Vitale said.
Jury still out
Tracking campaign funding isn’t easy under the best of circumstances. But add outside money to the mix, and it gets complicated quick.
Outside groups — just like candidates, political parties and PACs — have to file campaign finance reports.
They are all online at the N.C. Board of Elections site, but you can’t simply look up how much outside groups spent in a particular race. The only way to know whether — or how much — outside groups are spending in a race is to troll the spending reports of each outside group.
The process is so time-consuming, a few nonprofit political websites have sprung up to help the public wade through the campaign finance reporting data. They scour the N.C. Board of Elections site daily, sometimes even multiple times a day during peak election season, to find the latest spending — be it campaigns, parties, outside groups, or individuals. The data they mine is entered into a sortable database on their own websites that users can slice, dice and search as they please.
Even with the help of these trackers — the most well-known being FollowTheMoney.org — there’s still a hitch. Campaign spending isn’t reported in real time.
“We won’t know until after the election takes place what the entire landscape looks like,” said Rustin, whose organization also has an online campaign spending tracker.
It’s a challenge for candidates, who can be caught off guard and can’t plan their own campaigns accordingly.
“Some of the money being pumped into that race right now we don’t know about yet,” Kromm said of the Davis-Snow race.