Analysis: Hiding Texas Campaign Spending Details, Legally

By , The Texas Tribune,

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People get away with all kinds of stuff in campaign finance.

You suspected this, probably, but an item on the agenda of Monday’s meeting of the Texas Ethics Commission offers some evidence.

The title is unalarming: Expenditures involving consultants. The proposed rule sets out to require political consultants to report their spending in the same way that candidates are required to do. Consultants wouldn’t have to report everything — just the spending that’s done at the direction of the candidate or officeholder for whom the consultant is working. The rule says the candidates and officeholders filing campaign reports have to reveal what their consultants are spending as if the filers themselves were spending it.

If you buy an ad in the newspaper, you have to report it. If you pay a consultant who then buys an ad in the newspaper, you don’t. The proposed rule would require the consultant’s spending to be detailed in the candidate’s campaign finance report.

The state is trying to regulate what some have called the “campaign in a box,” when a candidate reports writing one big check to a consultant, who then handles all of the campaign spending off the books.

This is one of those times when seeing a rule or regulation opens your eyes to a vast range of tricks open to practitioners of the activity being regulated.

Campaigns can hide almost anything: how much they spent on TV, whether there’s an astrologist on the campaign staff, who stayed in what hotel in what city while they were out trying to get their candidate elected.

“It’s been going on since before I was in politics,” says Harold Cook, a Democratic consultant who’s been either watching or participating in campaigns for several decades.

This is hardly new. Campaigns have been hiding their expenses forever. Still, it’s possible under Texas law to run a campaign that makes its legally required disclosures without really telling you anything.

Honestly, most candidates don’t care if you know, eventually, what they’re spending. They don’t want their opponents to know what they’re spending — especially in a time frame when the information might be competitively important. Candidate A doesn’t want Candidate B to know how much television advertising is underway if there is still time for Candidate B to respond.

If campaigns are wars, information is ammunition. Secrets can be valuable.

The consultants are going to hate this rule. It raises the possibility that they’ll have reporting responsibilities like their clients, which is a pain in the neck. It raises the possibility that their clients might see their profit margins, which could be damaging to their bank accounts. And it means, on a competitive level, that they’ll have to find new ways to hide what they’re doing from their competitors during election campaigns.

Campaigns can hide almost anything: how much they spent on TV, whether there’s an astrologist on the campaign staff, who stayed in what hotel in what city while they were out trying to get their candidate elected.

“It’s a lot of work they’re not getting paid to do,” Cook says.

The Ethics Commission regulates Texas campaigns, but a recent federal campaign — the presidential effort by former Gov. Rick Perry — illustrates how the campaign-in-a-box gambit works. It appeared from Perry’s reports that the lion’s share of his money went to Jeff Miller — a consultant working for the candidate. That was both accurate and wrong at the same time. It’s true that Perry’s money went to Miller, and it looked on paper like that one consultant had eaten most of the pie. But Miller was paying other unnamed vendors and subcontractors and says that in the end he didn’t get any of the money himself.

Too bad for him, too bad for you. He didn’t get paid, and voters have no idea what the Perry campaign was spending its money on.

The Ethics Commission’s proposed rule is aimed at situations like that one in Texas races. It might be a fiendishly difficult regulation, and there’s sure to be a fight about whether it ought to be enacted. Like a separate debate about the unnamed donors to political nonprofits that participate in elections, it floats on the line between private business and the voters’ right to know.

“I don’t think it’s a matter of nefarious stuff,” Cook says. “But if the public wants to know where the money came from and where it went, this seems pretty basic.”

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