The Rise of Dark Money and the Koch Party

It's time for 21st-century campaign finance reform: No limits, instant disclosure.

David Koch and co. don't want their name tied to the Keystone XL Pipeline. (National Journal)

This week may be remembered as the birth of the Koch Party. A usurper of the GOP and a rival to Democrats, the network of conservative advocacy groups backed by Charles and David Koch pledged Monday to spend $889 million on the 2016 election.

Financially, the tax-exempt Koch coalition could be as big as either of the two major parties, spending more than the combined 2004 campaign budgets of President George W. Bush and Democratic challenger John Kerry. Koch operatives will poll, track, and target voters—mirroring the activities of a traditional political party.

Except for one thing: dark money.

The Democratic and Republican parties are required by law to disclose their donors. Not so for outside groups. While the Koch alliance disclosed some of its contributors last year, most of its money comes from anonymous sources. Secrecy breeds distrust, if not corruption, as voters are left to guess what politicians do to repay their donors.

The nation is experiencing a crisis of confidence in its political and government institutions, a decades-long depression with seeds in Watergate, where a corrupt and paranoid president financed his schemes with dark money. Then came a generation of loopholes bored into post-Watergate reforms, including the 2002 McCain-Feingold legislation, and the final blow: In 2010, the Supreme Court ruled that campaign spending limits violated the First Amendment.

Now we have the worst of all worlds: Gobs of money showered over Democratic and Republican candidates with precious little transparency. The 2016 presidential campaign will give rise to the next grim iteration of dark money: "The arrival of candidate-specific nonprofits, personalized vehicles for a politician's supporters to raise and spend unlimited cash—completely clandestinely," writes my colleague Shane Goldmacher.

It is poised to yield a campaign season more dominated by secret money than any election since Watergate, according to more than two dozen campaign strategists, election lawyers, donors, and worried watchdogs.

What's the solution? Spending limits are off the table; like it or not, the Supreme Court is unlikely to reverse itself anytime soon. That leaves transparency as the issue to tackle. Mindful of potential First Amendment problems, Congress should revisit a policy Republicans offered in defiance of McCain-Feingold: Unlimited donations coupled with immediate transparency.

What could be a more modern, tech-fueled reform than requiring political candidates and groups to simultaneously deposit and disclose? Open-government groups could develop apps enabling voters to track donations to certain members of Congress or from specific interest groups, with customized alerts sent to their mobile devices.

We can't stop a senator from being in the pocket of Big Tobacco or Big Labor, beholden to a Koch or a Soros. But we could see it—instantly. The fierce urgency of accountability. Chuck Todd, host of NBC's Meet the Press, read the first version of this column and suggested an amendment to the deposit-and-disclose concept to encourage big donors to self-limit their spending.

If history is a guide, nothing like this will happen until there is a major scandal like Watergate or a major embarrassment, like what happened to Theodore Roosevelt in 1904.

It was a time not unlike ours—wrenching economic change, new technologies, outdated social institutions, and a collapse of confidence in politics and government. Roosevelt tapped voter unease by establishing himself as a trust-buster, railing against the influence of giant corporations. After a successful start, Roosevelt raised $2.2 million ($52 million in today's dollars) for his 1904 reelection, mainly from corporate leaders who feared his wrath.

Democratic challenger Alton Parker accused the corporations of attempting to buy the president. Roosevelt called the charge "a wicked falsehood," breezed to reelection, and embraced campaign finance reform as a way to repair his reputation.

In 1907, Congress banned corporate contributions—and that was the law of the land until 2010, when the Supreme Court asked political leaders to think anew. Rather than respond to the challenge and create a new set of rules that fit the times, Democrats demonize the ruling and conservatives exploit it.

These so-called leaders claim they want open and honest government, but don't believe their innocent plea. It's a wicked falsehood.