Next Act for Super PACs and Dark Money Nonprofits: Lobbying to Block Compromise on the "Fiscal Cliff"

After some early success helping far-right candidates in the Republican primaries, Super PACs and dark money nonprofits failed to eke out many victories on election night 2012. But these groups are seeking to make up for lost ground by influencing policy through lobbying, issue advocacy, and the threat of attack ads against Republican legislators who compromise, particularly on negotiations over the "fiscal cliff."

"We are expecting a fundamental shift of Super PACs, especially nonprofit groups, into lobbying entities," said Craig Holman of Public Citizen.

The "dark money" nonprofits that spent millions in the 2012 elections are not required to disclose their donors, but also cannot have influencing elections as their primary purpose. As a consequence, Holman and other experts expect these groups to now spend a fortune on lobbying and issue advocacy.

Republican-aligned organizations like Club for Growth and David Koch's Americans for Prosperity groups have already set their sights on negotiations surrounding the issue dubbed a "fiscal cliff" by deficit hawks and an "austerity bomb" by progressives, and will be urging Congress to embrace severe austerity measures and oppose any tax increases. And they stand ready to discipline legislators who do not comply.

Electioneering Groups Demand Lawmakers Support Cuts, Oppose Taxes as Part of "Fiscal Cliff" Negotiations

With $500 billion in tax hikes and across-the-board cuts scheduled to kick in starting January 1 as part of the 2011 Budget Control Act, both sides are talking compromise -- but not if the groups that spent big money on the elections have their way.

"I think the word compromise is a copout," said Chris Chocola, head of Club for Growth, which spent $19 million in the 2012 elections, much of it seeking to anoint far-right Republican candidates in the primaries.

Club for Growth, along with other big election spenders like Americans for Prosperity (which spent $70 million) and Americans for Tax Reform (which spent $16 million), signed a letter dated November 9 urging lawmakers to accept the cuts contained in the Budget Control Act, and demanding deep additional cuts to Medicare and Social Security, which were largely excluded from the Act. "Congress should reject any attempts to cut less than $109 billion or worse, to replace spending cuts with tax increases," the letter says.

And these organizations have a powerful weapon in their arsenal to hold Republican legislators' feet to the fire: the threat, come election time, that they will back an uncooperative lawmaker's primary challenger.

Primary Power Means Lobbying Heft

"The purpose of the Club for Growth is to pass pro-growth policy in Congress, and we do that in two ways," said Club for Growth spokesman Barney Keller. "One is through issue advocacy: letting members of Congress know where we stand and supporting economic freedom in Congress. And the other way we do that is by electing more pro-growth votes through our Super PAC. And I think that members of Congress know that we are not afraid to replace a bad vote with a good one, if we can."

Though Republican-aligned outside spending groups saw poor returns on their investments in the general election, groups like Club for Growth saw great success in the GOP Senate primaries, where spending by their Super PAC helped replace establishment Republicans with far-right Tea Party candidates. In Indiana, Club for Growth was credited with unseating six-term moderate incumbent Dick Lugar by spending millions selectively attacking his votes for the TARP bailout bill and tax increases. In Texas, they helped Tea Party favorite Ted Cruz triumph over a more moderate Republican. The Club and similar groups achieved similar upsets in 2010 in Alaska, Delaware, Nevada, and Utah.

The threat of outside money backing a primary challenger means lobbying activities by these organizations will have extra heft, given the role the groups can play come election time.

Karl Rove has indicated that his dark money nonprofit Crossroads GPS will also wade into lobbying. Though Crossroads GPS and the associated Super PAC American Crossroads had a very poor return on the $390 million it blew on the 2012 campaign (almost all of which was spent unsuccessfully attacking Democrats), Rove says that his Crossroads groups may soon start backing primary candidates in the 2014 race, adding an extra layer of influence to Crossroads GPS' lobbying efforts.

Traditional lobbying groups have also recognized that coupling their influence-peddling with a Super PAC can provide for a powerful one-two punch. "If you're a lobbyist, you're talking with a legislator and mention you're forming a super PAC, their ears are really going to perk up just because you said the words 'super PAC,'" Shana Glickfield, a partner at public affairs firm Beekeeper Group, told Politico in September. "It's such a big, scary thing -- and can give you an extra edge of influence."

Lobbying "Imperative" to Retain Nonprofit Status

81 percent of reported dark money in the 2012 elections went to benefit Republicans, so the groups pivoting to lobbying are largely expected to promote right-wing issues.

Public Citizen's Holman notes that for the nonprofits that spent millions on the 2012 race, getting involved in lobbying and issue advocacy is "imperative if they want to operate in upcoming elections, since they cannot have electioneering activities as their primary purpose."

Under current rule interpretations nonprofits may dedicate up to 49 percent of their activities towards influencing elections, but could lose their tax-exempt status if they cross that line. Dark money nonprofits that spent millions on the 2012 race will need to show the IRS that electioneering constitutes less than half of their overall activities, which for many groups will mean balancing out their election spending by directing more of their off-season resources towards lobbying.

"The IRS is starting to take a look at these nonprofits that spent most of their money on the 2012 elections and appeared to do nothing else," Holman said. While some nonprofits will close up shop now that the election is over, "many nonprofits will get involved in lobbying to save own their own organizations from investigations by the IRS."

Despite 2012 Losses, Donors Will Give Money Anyway

Despite many big GOP donors getting a poor return on their 2012 election investments, Holman expects that these groups will not have trouble finding funds for their lobbying activities.

"If you look at who is funding the Super PACs, you see it is just a few dozen very wealthy individuals who will continue their crusade. They may have lost the election, but might see this as an opportunity to preserve the gridlock we've seen in Congress over the past few years."