POLITICO Magazine – Paul H. Jossey
Greedy super PACs drained the movement with endless pleas for money to support “conservative” candidates—while instead using the money to enrich themselves. I should know. I worked for one of them
As we watch the Republican Party tear itself to shreds over Donald Trump, perhaps it’s time to take note of another conservative political phenomenon that the GOP nominee has utterly eclipsed: the Tea Party. The Tea Party movement is pretty much dead now, but it didn’t die a natural death. It was murdered—and it was an inside job. In a half decade, the spontaneous uprising that shook official Washington degenerated into a form of pyramid scheme that transferred tens of millions of dollars from rural, poorer Southerners and Midwesterners to bicoastal political operatives.
What began as an organic, policy-driven grass-roots movement was drained of its vitality and resources by national political action committees that dunned the movement’s true believers endlessly for money to support its candidates and causes. The PACs used that money first to enrich themselves and their vendors and then deployed most of the rest to search for more “prospects.” In Tea Party world, that meant mostly older, technologically unsavvy people willing to divulge personal information through “petitions”—which only made them prey to further attempts to lighten their wallets for what they believed was a good cause. While the solicitations continue, the audience has greatly diminished because of a lack of policy results and changing political winds.
I was an employee at one of the firms that ran these operations. But nothing that follows is proprietary or gleaned directly from my employment. The evidence of the scheming is all there in the public record, available for anyone willing to look.
The Tea Party movement began building in the George W. Bush years. Profligate spending and foreign adventurism with no discernible results nurtured disgust with Washington’s habit of spending beyond its means and sending others to die in its wars. When President Obama made reorganizing the nation’s health care system his foremost priority—and repeatedly misrepresented its effects in the process—anger at Washington exploded.
Republicans inside the Beltway reacted to the burgeoning Tea Party with glee but uncertainty about how to channel the grass-roots energy usually reserved for the left. A small group of supposedly conservative lawyers and consultants saw something different: dollar signs. The PACs found anger at the Republican Party sells very well. The campaigns they ran would be headlined “Boot John Boehner,” or “Drop a Truth Bomb on Kevin McCarthy.” And after Boehner was in fact booted and McCarthy bombed in his bid to succeed him, it was naturally time to “Fire Paul Ryan.” The selling is always urgent: “Stop what you’re doing” “This can’t wait.” One active solicitor is the Tea Party Leadership Fund, which received $6.7 million from 2013 to mid-2015, overwhelmingly from small donors. A typical solicitation from the TPLF read: “Your immediate contribution could be the most important financial investment you will make to help return America to greatness.” But, according to an investigation by POLITICO, 87 percent of that “investment” went to overhead; only $910,000 of the $6.7 million raised was used to support political candidates. If the prospect signs a “petition,” typically a solicitation of his or her personal information is recorded and a new screen immediately appears asking for money. Vendors pass the information around in “list swaps” and “revenue shares” ad infinitum.
Starting a new PAC is easy: Fill out some paperwork, throw up a splash-page website, rent an email list, and you’re off. It’s an entrepreneurial endeavor. Through trial-and-error, operatives test messages to see which resonate best and are most likely to get them and their vendors paid. They may pay someone known in the movement to “sign” the pitch, as current Donald Trump spokeswoman Katrina Pierson has on TPLF emails.
Today, the Tea Party movement is dead, and Trump has co-opted the remnants. What was left of the Tea Party split for a while between Trump and, while he was still in the race, Ted Cruz, who was backed by Jenny Beth Martin, co-founder and national coordinator of the Tea Party Patriots. In 2014, the Tea Party Patriots group spent just 10 percent of the $14.4 million it collected actually supporting candidates, with the rest going to consultants and vendors and Martin’s hefty salary of $15,000 per month; in all, she makes an estimated $450,000 a year from her Tea Party-related ventures. Today, of course, it’s all about Trump, but Trump rallies are only Trump rallies, not Tea Party rallies that he assumed control of. There are no more Tea Party rallies.
A recent poll showed that just 17 percent of Americans support what was once known as the Tea Party—the lowest number ever. The bailout-Obamacare-driven grass-roots revolt has vanished. Various autopsies have offered a number of causes: IRS targeting, bad candidates, hostile media, and even some hazy form of moral and political victory, in that the Tea Party pushed the GOP to take tougher stances on some issues. All have at least some merit.
But any insurgent movement needs oxygen in the form of victories or other measured progress in order to sustain itself and grow. By sapping the Tea Party’s resources and energy, the PACs thwarted any hope of building the movement. Every dollar swallowed up in PAC overhead or vendor fees was a dollar that did not go to federal Tea Party candidates in crucial primaries or general elections. This allowed the GOP to easily defeat or ignore them (with some rare exceptions). Second, the PACs drained money especially from local Tea Party groups, some of which were actively trying to grow the movement electorally from the ground up, at the school board and city council level. Lacking results five years on, interest in the movement waned—all that was left were the PACs and their lists.
Any postmortem should start with the fact that there were always two Tea Parties. First were people who believe in constitutional conservatism. These folks sense the country they will leave their children and grandchildren is a shell of what they inherited. And they have little confidence the Republican Party can muster the courage or will to fix it.
Second were lawyers and consultants who read 2009’s political winds and saw a chance to get rich.
For 18 months ending in 2013, I worked for one of these consultants, Dan Backer, who has served as treasurer for dozens of PACs, many now defunct, through his law and consulting firm. I thus benefited from the Tea Party’s fleecing.
The PACs seem to operate through a familiar model. It works something like this: Prospects whose name appear on a vendor’s list get a phone call, email or glossy mailer from a group they’ve likely never heard of asking them for money. Conservative pundit and Redstate.com Editor-in-Chief Erick Erickson described one such encounter. A woman called and asked if she could play a taped message touting efforts to help Senators Rand Paul and Ted Cruz fight for conservative governance. When the recording stopped an older man (the woman was gone) offered Erickson the chance to join “the Tea Party.” He wouldn’t say who paid him, just “the Tea Party.” Membership was even half price. For just $100 he was in! Erickson declined.
Erickson’s call came from InfoCision or a similar vendor hired by PACs to “prospect” for new donors. Often PAC creators have financial interests in the vendors—in fact, sometimes they are the vendors, too—which makes keeping money in house easier, and harder to track. PAC names include “Tea Party,” “Patriots,” “Freedom,” or some other emotive term to assure benevolence. And names and images of political figures the prospects admire (or detest), usually accompany the solicitation, giving the illusion of imprimatur. Those people are almost never actually involved and little money ends up supporting candidates.
According to Federal Election Commission reports between 80 to 90 percent, and sometimes all the money these PACs get is swallowed in fees and poured into more prospecting. For example, conservative activist Larry Ward created Constitutional Rights PAC. He also runs Political Media, a communications firm. The New York Times reviewed Constitutional Rights’ filings and found: “Mr. Ward’s PAC spends every dollar it gets on consultants, mailings and fund-raising—making no donations to candidates.” Ward justified the arrangement by saying Political Media discounts solicitations on behalf of Constitutional Rights.
Let that sink in. Ward takes his PAC’s money and redistributes it to his company and other vendors for more messaging and solicitations, but suggests critics should rest easy since the PAC gets a discount on Political Media’s normal rate. Constitutional Rights PAC may be extreme but it’s hardly an outlier.
POLITICO last year reviewed the activity of 33 conservative PACs for the 2014 cycle. Combined, they raked in $43 million dollars, according to the POLITICO report. Of that, $39.5 million went to overhead including $6 million to entities owned by PAC operators; candidates got $3 million. Another report analyzed 17 conservative PACs from the 2014 midterm. It came up with different numbers than POLITICO, finding that the bottom 10 PACs in terms of the ratio of spending to actual candidate support received $54,318,498 and spent only $3,621,896 supporting candidates.
And who is Constitutional Rights’ treasurer? My old boss Dan Backer. Backer also serves as treasurer to TPLF, and many others. An analysis found 10 conservative PACs whose treasurer was Scott MacKenzie spent 92 percent of the $17.5 million they raised on operating expenses, and less than 1 percent on candidate support.
PACs are not legally obliged to responsibly spend their loot. As former FEC enforcement officer Kenneth Gross stated, “If I have a PAC and want to spend it on a trip to Atlantic City, that’s fine,” provided it’s accurately reported. Unlike nonprofits they are not governed by a board, have no fiduciary duty to their donors and are not subject to IRS audits.
The PACs keep cash flowing by trolling the news for supposed apostasy. The government botches the rescue of employees in a foreign embassy? “Stand with us for Benghazi!” A bunch of kids are murdered in Connecticut? “Help us defend your Second Amendment rights!” “Sign our petition!”
Another favorite tactic is the “Draft Committee.” Pick a popular figure then start a committee to “draft” him or her to run for office. TPLF “drafted” Sarah Palin for Senate in Alaska and Backer “drafted” Newt Gingrich for Senate in Virginia. After I left his firm, Backer “drafted” new Texas resident Allen West for Senate in Florida. None of these candidates were remotely interested or associated with the effort, and in fact could not be by law. But there were signatures to collect and donations to request. (As a litigator, I rarely participated in the conduct described here. I nonetheless knew these schemes paid most of my salary.)
The “draftees” or their campaigns often send cease-and-desist letters, as Gingrich and Palin did. This cycle, Backer and MacKenzie have kept Trump’s lawyers busy. Despite Trump’s constant protests about “corrupt” super PACs, MacKenzie started “Patriots for Trump” and Backer founded “TrumPAC.” MacKenzie shuttered Patriots when the Trump campaign complained, although the Facebook page remains active. The campaign persuaded Backer to change TrumPAC’s name to “Great America PAC.” But the PAC begged off requests to shutter and “refund any funds raised” based on Trump’s candidacy. Jesse Benton, Great America’s chief strategist and formerly a Ron Paul operative, explained the PAC would remain active because Trump would need “a robust and effective finance organization … after he secured the nomination.” By law, the campaign can have no say in how this “finance organization” spends its money, though its website still prominently features the candidate and his trademark slogan. It pledged to raise $20 million dollars before the Republican convention.
PACs exploited a reservoir of goodwill toward minority candidates in particular to raise money for themselves. After his razor-thin 2012 congressional defeat, Allen West, an African-American former Florida congressman, filed a complaint with the FEC against PACs raising money off his race but doing nothing to help him. The FEC concluded it lacked authority to police such efforts. “Draft Ben Carson” paid off well for the North Carolinian who took a $236,000 salary and sent gobs more to a company comprised only of him. After Carson’s campaign ended “The 2016 committee”—the successor to Draft Ben Carson—sought to keep the money flowing, stating it would now promote the surgeon for vice president. It finally shuttered after a barrage of scam accusations. (In fairness, Carson’s entire campaign could credibly be explained as just a list-building operation.)
Challenged about spending allocations by POLITICO, Backer responded that it’s a misinterpretation of FEC reports to suggest that the PACs he helps oversee have spent more on their own operating expenses than on their stated causes. As for Great America PAC, he said it’s “probably the best most effective steward of donor funds. This PAC does stuff, whereas nobody else does.”
From my vantage point, I would occasionally hear disquieting remarks that gave me pause. Rumors about the legitimacy of our operations would sometimes flare up in our small office. When a campaign manager would lash out about PACs using the candidate’s name to make money, I wondered if he was talking about us. When I eventually opened my own firm I vowed never to have such doubts about what I was doing.