Editor’s Note: Edward J. McCaffery is Robert C. Packard trustee chair in law and a professor of law, economics and political science at the University of Southern California. He is the author of “Fair Not Flat: How to Make the Tax System Better and Simpler” and founder of the People’s Tax Page. The opinions expressed in this commentary are his own. View more opinion at CNN.
Swamps flourish in darkness. The metaphorical swamp threatening to engulf our social and political freedoms uses money in lieu of water for its sustenance. So it is no surprise that the “Creatures of the Beltway Lagoon,” as I like to refer to them, have created dark money, which are funds that can be used by nonprofits to influence politics without any need to disclose the identities of the individual donors.
As such, dark money is the perfect elixir to feed the swamp creatures’ hearty appetites. Perhaps the only part that’s even slightly surprising is that the swamp is spreading under cover of America’s tax laws. And as long as our laws, tax and otherwise, facilitate rather than prevent the infusion of dark money into our swamp, we can expect the continued power of well-dressed swamp creatures, paid for by who-knows-who, to endure.
Enter the National Rifle Association, the Godzilla of swamp creatures. The NRA is a so-called “social welfare organization,” governed by Section 501(c)(4) of the Internal Revenue Code. This means that contributions to it are not tax-deductible, although the NRA operates a sister organization, Friends of NRA, which operates as a 501(c)(3) and where the wealthy can get full tax write-offs for their support.
But the NRA’s principal tax status as a 501(c)(4) does play an important role in its work in the swamp. It means that the NRA does not have to disclose its donors. Much of its finances can remain opaque. Open Secrets, which attempts to track the role of money in politics, rightly calls the funds collected by non-taxpaying groups like the NRA “dark money.” Swamp creatures everywhere hail the absence of light, especially when it comes bearing cash.
We know that the NRA contributed more than $30 million to President Donald Trump’s election campaign in 2016. But we don’t know where those NRA funds came from. Gun manufacturers? Foreigners? Ordinary members tricked into contributing funds for political purposes?
In for a penny, in for a pound. Having gotten boatloads of dark money – $378 million in revenue in 2017 alone – the NRA has decided that facilitating massive and opaque contributions to politicians, in contravention of the spirit of campaign finance laws, was not enough for a full-sized swamp. Why not line their own pockets, too?
Hence stories have been breaking about the outsized spending of Wayne LaPierre, the chief executive of the NRA. Perhaps simply in trying to keep up with fellow well-heeled swamp creatures such as Paul Manafort, the now jailed former Trump campaign chairman – infamous, in part, for his love of ostrich-skin jackets and other fancy things – LaPierre, according to the Wall Street Journal, allegedly spent over $500,000 in NRA funds on luxury travel and men’s clothing. The NRA’s new president Carolyn Meadows, and Charles Cotton, who chairs the organization’s audit committee, defended LaPierre by calling the report “stale news” and said the entire board was “fully aware” of the issues. A NRA spokesperson responded to CNN and said LaPierre would not comment.
It was all too much for Oliver North, he of some considerable swamp-cred from his role in the Iran Contra affair of the 1980s: North claims he was removed as president of the NRA when he complained about alleged financial irregularities, after less than a year on the job.
Now we are getting a sense that North simply failed to read the memo: The Washington Post is reporting that over a dozen nominally unpaid NRA board members have been getting lavish perks and benefits from the mother ship for years, such as lucrative consulting contracts and paid gigs on NRA television, perhaps in return for their silence. (LaPierre himself did not respond to the Post’s reporting, although spokespeople for the NRA denied any misspending.) Swamps ought to be kept quiet, after all.
Investigations now abound into the NRA, as investigations seem to abound often these days. There is reason to be skeptical that anything will come of these investigations, as there is reason to be skeptical of whether anything will come from any investigation these days.
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But all that means that there is reason to be skeptical about the long-term health of our democracy.
So, what is the solution? Maybe the Bible had this one right millennia ago: “Let there be light,” as Genesis 1:3 put it. Shedding light on dark money by requiring total transparency of nonprofits’ fundraising could only help to dry up the swamp, or at least to shame its denizens into shopping at lower-priced clothing stores.