It seemed like just another campaign appearance - Mitt Romney taking time from the trail to address a ballroom full of well-heeled donors.
It was anything but. When Romney spoke last summer at fund-raisers for a super PAC run by three of his former top aides, it marked a turning point in his campaign and, in some ways, in the modern history of campaign finance.
The group, Restore Our Future, capitalized on Romney’s support to raise $57 million by the end of April and has become one of the most powerful forces in the race for the White House - the financial engine behind the fusillade of broadcast ads, most of them harshly negative, that felled his GOP challengers one by one.
No candidate in the 2012 race adapted more swiftly and effectively to the rise of the super PACs in the wake of US Supreme Court and other rulings that effectively removed any barriers to individual and corporate donations to such so-called independent groups.
The other GOP contenders’ backers raised not nearly as much, and President Obama, long a harsh critic of super PACs, only recently urged his supporters to get into the game.
Romney’s appearances at the fund-raisers offer a compelling case study of just how fuzzy the line between a candidate and the purportedly independent committees backing him has become. Romney says he has carefully adhered to the new rules, which allow candidates to be a “featured guest’’ at fund-raisers.
But others view the matter more skeptically. A public interest group, Democracy 21, recently asked the Justice Department to investigate what it called “illegal coordination’’ between Romney’s campaign and Restore our Future. Spokesmen for the Romney campaign and the committee have dismissed the complaint as baseless.
What is not in dispute is that super PACs, both those supporting Romney and President Obama, are changing the face of presidential campaigns and could well determine who becomes president.
The result is that the presidential campaign is operating on two tracks: one in which a campaign can collect no more than $5,000 per donor and is responsible for its ads, and shadow campaigns in the form of super PACs, which can receive millions of dollars from a single donor and run ads for which the candidate can claim no responsibility.
The story of Restore Our Future provides a unique window into this still-evolving world. It is the story of several former Romney aides who were frustrated by the way he lost his 2008 campaign and had an epiphany about how to win in 2012.
For the aides, the issue in 2008 was Romney’s refusal to run a very tough ad in Iowa against Mike Huckabee - a decision they believe contributed to Romney’s defeat. Huckabee had an independent group behind him, a group that spent $1 million blasting Romney’s flip-flop on abortion.
Romney had no similar support, and he wasn’t prepared to run the ad that attacked Huckabee for supporting, as Arkansas governor, a parole board’s decision to release a rapist who went on to rape and murder a woman.
Thus was planted the idea for what eventually became Restore Our Future - an independent committee that would not hesitate, and would have the means, to vigorously attack Romney’s opponents. Among the founders of Restore our Future was Larry McCarthy, who worked on some of Romney’s ads for the 2008 campaign and knew, as well as anyone could, what a well-targeted negative ad can do. McCarthy had created the infamous “Willie Horton’’ ad in 1988 for an independent group called Americans for Bush.
Targeting Michael Dukakis, the Massachusetts governor who was the Democratic presidential nominee, the ad showed a picture of Horton, a convicted murderer who, while on a furlough approved by the Dukakis administration, had raped a Maryland woman. McCarthy’s ad stirred some backlash, but is widely credited with helping George H. W. Bush defeat Dukakis.
McCarthy was elated when he heard that a landmark campaign finance case was to be decided by the Supreme Court in 2010. The case was called Citizens United, and the court’s ruling was that any corporation or union had a constitutional free-speech right to spend unlimited funds on election-related ads, movies, or similar productions.
Following the ruling, a lower court further widened the field, saying individuals could give unlimited amounts of money to independent committees that could advocate for the election or defeat of a candidate.
The combination of these two decisions - one clearing the field for corporations and unions, the other for individuals - gave rise to super PACs and, soon enough, to Restore Our Future.
The new group was free to raise money and run any ad it wanted, without Romney’s interference.
“It is a much smaller decision-making loop . . . you have more control. We basically decide what we want to do and it doesn’t involve 30 people,’’ McCarthy said in an interview. He wasn’t troubled by criticism of his past ads. Asked whether he had regrets about the Horton ad, for example, he responded, “None . . . this sounds deceptively simple, but you do an ad to move numbers.’’
The legal brain behind Restore Our Future was Charles Spies, the lawyer who had been the chief financial officer and counsel for Romney’s 2008 campaign. Spies had long believed that post-Watergate limitations on campaign contributions were threats to free speech.
He co-wrote a 1998 law review article that said “nothing in American history . . . matches the menace to the First Amendment posed by the campaign ‘reforms’ advancing under the protective coloration of political hygiene.’’
The third cofounder was Carl Forti, who had been Romney’s political director in 2008. Forti, who declined comment for this article, became a protégé to Republican strategist Karl Rove, who has described Forti as “one of the smartest people in politics you’ve never heard of.’’ Forti now helps run two independent groups run by Rove, Crossroads and Crossroad GPS, which are collecting hundreds of millions of dollars that will be spent during the 2012 campaign.
The birth of Restore Our Future and similar super PACs represented the climax of a 40-year effort by opponents of restrictions on campaign donations to weaken or eliminate federal election finance rules enacted since the Watergate scandal. Much of that effort involved the creation of independent committees that avoided some of the restrictions placed upon campaigns.
In 2004, a group called Swift Boat Veterans for Truth ran ads that attacked the Vietnam War record of Senator John F. Kerry, another Democratic presidential candidate from Massachusetts.
The Swift Boat group asserted it didn’t have to abide by limits on donations, because it was not expressly advocating the election or defeat of a candidate, and collected contributions as large as $4.5 million. But the Federal Election Commission fined the group $300,000 on grounds that it should have registered as a political committee, saying that the group had overtly attacked Kerry and exceeded a $5,000 contribution limit.
The other longstanding legal limitation on independent committees was that there be an “absence of prearrangement and coordination’’ between an independent committee and a campaign.
But in the aftermath of Citizens United, that definition of coordination was quickly watered down by the Federal Election Commission. The agency, for example, announced on June 28, 2011, that a candidate could be a “featured guest’’ at fund-raisers for super PACs.
Romney quickly took advantage of the ruling. He appeared at a New York City fund-raiser on July 19, 2011 for Restore Our Future, according to the nonpartisan Center for Public Integrity, and committee officials have said he went to at least one other event.
The money started rolling in. The biggest donor was a home building magnate named Bob Perry, a huge backer of the Swift Boat effort who had given Restore Our Future $4.7 million by the end of April. Perry spokesman Anthony Holm said “Mr. Perry has always been very transparent with his donations’’ and contributed to Restore Our Future as allowed “under reformed campaign laws.’’
The restrictions on coordination had been diminished to the point that Romney could appear at a super PAC fund-raiser and thank donors as long as he didn’t specifically ask for unlimited contributions. The only major restriction was that Romney could not talk with Restore Our Future about the content or timing of advertisements.
So, when the cofounders of Restore Our Future greeted Romney at their fund-raiser, they were careful not to discuss specifics. “We didn’t need to,’’ McCarthy said. “We knew what needed to be done. We all came out of Romney World.’’ As for Romney, McCarthy said, “clearly he knew of the group, liked the group, hoped they did good things.’’
But officials at Democracy 21, the public interest group that has asked the Justice Department to investigate what it called “illegal coordination,’’ said a line had been crossed, noting that former top Romney aides had created the committee and that other former Romney aides who likely had “insider information’’ about the campaign had gone to work for it.
“The super PACs are not operating independently of the candidate,’’ said Don Simon, the counsel for Democracy 21, which has also asked the Justice Department to investigate the Obama campaign and Democratic super PACs. (The Justice Department did not respond to questions about whether it has launched a probe.)
Spies said Restore Our Future has operated legally and carefully adhered to the Federal Election Commission rules on coordination.
“The legal rules for independent communications by a super PAC are that you can’t speak with the campaign about the content, timing, or mode of a communication,’’ he said. “For example, an independent group could not discuss with a campaign that the group planned to run ads targeted to Christian radio in Iowa.’’
Much of the money given to Restore Our Future has come from mega-donors. Among those who contributed at least $1 million were several former associates from Romney’s days running Bain Capital, prominent hedge fund managers, and the chairman of Marriott International, where Romney once served on the board.
By the fall of 2011, a surging Newt Gingrich polling showed voters knew vaguely that Gingrich had negative “baggage,’’ but they weren’t sure what it was.
Using that information, McCarthy developed an ad that was perhaps the most important of the primaries. Pieces of baggage on an airport carousel would be used to remind voters of various Gingrich controversies, including his payments from the quasi-government lending agency, Freddie Mac.
Gingrich complained that Restore Our Future was exaggerating or lying and urged Romney to stop the ads. But Romney said he was powerless to do anything.
“Super PACs have to be entirely separate from a campaign and a candidate. I’m not allowed to communicate with a super PAC in any way, shape or form,’’ Romney said on MSNBC’s “Morning Joe,’’ saying he otherwise risked going to the “big house’’ - jail.
But later, Romney did freely acknowledge he had helped the committee raise money. “We raise money for super PACs. We encourage super PACs,’’ Romney said. “Each candidate has done that.’’
Rick Tyler, who ran a super PAC that backed Gingrich, said Romney was disingenuous in saying he couldn’t communicate with Restore Our Future.
“The truth was you could talk to the campaign every single day,’’ Tyler said in an interview. “What you couldn’t do is coordinate expenditures.’’
But Tyler said he didn’t need to talk directly to the campaign about expenditures because he could convey that information by giving an interview and revealing his strategy. “You could tell the campaign what you were doing as long as you told the whole world,’’ Tyler said. “It is all a joke, it’s all laughable.’’
Tyler’s conclusion is that, even though he was at the forefront of creating a super PAC, “We are in the worst of all worlds.’’ Unlimited donations are pouring into super PACs but the candidate can absolve himself of any responsibility for the super PAC’s actions.
Lawrence Noble, who served as general counsel of the Federal Election Commission from 1987 to 2000, said the reforms enacted after the Watergate scandal are being obliterated. “I remember watching the Watergate hearings. At one point a big donor was someone who gave $1,000,’’ Noble said. “We have pretty much had the collapse of the campaign finance system.’’
But Theodore Olson, the lawyer who successfully argued Citizens United before the Supreme Court, said the case “has been grossly misunderstood’’ and stressed the importance of limiting the government’s ability to limit political discourse. “Where does the government stop?’’ Olson said. “We have to remember what the alternative is: government control of election speech.’’
The work of Restore Our Future, meanwhile, is just beginning. It is now focused on collecting as much as $100 million for the general election, much of it to come from some of the nation’s wealthiest people, and plans to spend most of that on ads boosting Romney and attacking Obama.
Democrats are rushing to catch up. Obama, who initially criticized the Citizens United decision for giving “a green light to a new stampede of special interest money in our politics,’’ has authorized top aides to appear at fund-raisers for super PACs on grounds that he didn’t want to be at a disadvantage compared with Republicans. The pro-Obama super PAC, Priorities USA Action, which had raised $11 million by the end of April, recently paid for a television commercial that echoed an attack on Romney’s work at Bain Capital made a day earlier by the Obama campaign.
Romney, meanwhile, has cast himself as a reformer. He has proposed that campaigns be allowed to receive unlimited donations. That would lead to the withering away of super PACs, which he said have been a “disaster.’’
“Campaign finance law has made a mockery of our political campaign season,’’ Romney said. “We really ought to let campaigns raise the money they need and just get rid of these super PACs.’’