November 25, 2022

Consulting firms that multiply political candidates rake in more than $ 1 billion

Consulting firms employed by candidates and party committees simultaneously rake in huge sums of money working on the same races for independent political groups, according to a new report.

Why is this important: The Supreme Court’s Citizens United decision allowed unlimited campaign spending by groups that do not coordinate with national candidates or parties. For major political vendors working on high-profile races, this meant a huge new source of income.

  • These vendors can work for both campaigns and supporting political groups that they are legally prohibited from coordinating with, as long as they establish internal firewalls separating this work.
  • For companies doing big ad buys and messaging efforts for party committees and high-value campaigns, that means an entirely separate pool of potential customers – with a lot of cash on hand.
  • President Biden and Congressional Democrats are pushing for legislation that would restrict the practice.

In numbers : A new report from the Public Citizen group finds significant overlap between providers employed by “regulated” political entities – such as campaigns and party committees – and “unregulated” groups, which include super PACs and 501 (c) nonprofits (4), often called “dark-money” groups.

  • Vendors who worked for both categories of groups in the same races, either alone or through affiliated companies, were collectively paid around $ 1.4 billion for this work during the 2018 and 2020 election cycles, according to the report.
  • Much of it was for ad buying services, meaning the companies didn’t just pocket the funds. The sum nevertheless shows the extent of supplier overlap.

Between the lines: Public Citizen says the arrangement raises potential legal red flags.

  • The political consultants are well placed to harmonize the messages and spending strategies between the super PACs and the regulated political committees, thus facilitating coordination even if the leaders of the super PACs do not communicate with the campaign or the party leaders ”, indicates The report.
  • A network of seven affiliates that the report calls the Slaters Lane Entities is at the center of an ongoing lawsuit alleging the National Rifle Association and two GOP campaigns have used these vendors to circumvent coordination rules.

Be smart: This kind of end game around federal campaign finance laws is a concern, but companies working on both sides of the campaign-super PAC divide are generally careful to put up internal firewalls.

  • While there is an obvious legal incentive to do so, it also allows them to tap into pools of resources that by law must be allocated independently of each other.
  • It is common for vendors to rely on affiliated but legally separate entities for their campaign work and super PAC work.
  • Democratic company GMMB has set up a pair of ad buying affiliates, Waterfront Strategies and Great American Media, in part to “maintain clear lines between staff and different projects while fully complying with all regulations.” according to Eric Conrad, spokesperson for the company.
  • Together, the GMMB companies secured nearly $ 450 million from campaigns and party committees during the 2018 and 2020 cycles. They took an additional $ 483 million from independent spenders working on the same races.

What they say : “GMMB, Waterfront, and Great American Media are separate companies with a strict firewall policy between them, designed by legal counsel to comply with the letter and spirit of the law,” Conrad told Axios in an email.

  • “In addition, relevant staff are trained by legal counsel to further ensure strict compliance with regulations. “
  • Other vendors identified as the most prolific voice actors declined to comment or did not respond to Axios’ requests for comment.

The big picture: Super PACs can raise and spend unlimited amounts, including from businesses, unions, and nonprofits. But they typically pay higher rates for TV commercials, and coordination restrictions can make them bulky political vehicles.

  • Their unique characteristics mean that vendors working with these groups use different tactics than they would use with campaigns or party committees.
  • Suppliers large enough to do both, or who have affiliate companies with specialized expertise, are willing to profit from both sides.
  • Of the $ 1.4 billion in shared vendor payments identified in the Public Citizen report, nearly all – roughly $ 1.3 billion – went to the 10 highest-paying companies.

Looking forward: Radical electoral reform legislation currently in the Senate would severely restrict the shared supplier arrangement.

  • Under the Freedom to Vote Act, super PACs would be prohibited from paying a supplier for expenses in support of a candidate if the supplier has worked with that candidate within the previous two years.