Consulting firms double-dipping in political candidates rake in more than $1B
Consulting firms employed by candidates and party committees are simultaneously raking in huge sums by working on the same races for independent political groups, a new report shows.
Why it matters: The Supreme Court's Citizens United decision allowed limitless campaign spending by groups that don't coordinate with candidates or national parties. For leading political vendors working on high-profile races, that's meant a huge new revenue stream.
- Those vendors can work for both campaigns and supportive political groups with which they're legally barred from coordinating, as long as they establish internal firewalls separating that work.
- For firms doing large ad buys and messaging efforts for party committees and high-dollar campaigns, that means an entirely separate pool of potential clients — with lots of cash on hand.
- President Biden and congressional Democrats are pressing for legislation that would restrict the practice.
By the numbers: A new report from the group Public Citizen finds extensive overlap in the vendors employed by "regulated" political entities — such as campaigns and party committees — and "unregulated" groups, which include super PACs and 501(c)(4) nonprofits, often called "dark-money" groups.
- Vendors that worked for both categories of groups in the same races, on their own or through affiliated firms, were collectively paid about $1.4 billion for that work during the 2018 and 2020 election cycles, the report found.
- Much of that was for ad-buying services, meaning the firms didn't just pocket the funds. The sum nonetheless shows the scale of the vendor overlap.
Between the lines: Public Citizen says the arrangement raises potential legal red flags.
- "Political consultants are well positioned to harmonize messaging and spending strategies between super PACs and regulated political committees, thus facilitating coordination even if the leaders of the super PACs do not communicate with the campaign or party leaders," the report said.
- A network of seven affiliated firms the report dubs the Slaters Lane entities is at the center of an ongoing lawsuit alleging the National Rifle Association and a pair of GOP campaigns used those vendors to circumvent coordination rules.
Be smart: That sort of end-run around federal campaign finance laws is a concern, but firms that work on both sides of the campaign-super PAC divide are generally careful to erect internal firewalls.
- While there's an obvious legal incentive to do so, it also allows them to dip into pools of resources that, by law, must be allocated independently of each other.
- It's common for vendors to rely on affiliated but legally distinct entities for their campaign work and their super PAC work.
- Democratic firm GMMB set up a pair of ad-buying affiliates, Waterfront Strategies and Great American Media, in part to "keep clear lines between staff and different projects while being in full compliance with all regulations," according to Eric Conrad, a spokesperson for the firm.
- Together, the GMMB companies got nearly $450 million from campaigns and party committees during the 2018 and 2020 cycles. They pulled down another $483 million from independent spenders working on the same races.
What they're saying: "GMMB, Waterfront and Great American Media are separate companies with a strict firewall policy between them that is designed by legal counsel to comply with the letter and spirit of the law," Conrad told Axios in an email.
- "In addition, relevant staff go through training conducted by legal counsel to further ensure careful compliance with regulations.”
- The other vendors identified as the most prolific double-dippers either declined to comment or did not respond to comment requests from Axios.
The big picture: Super PACs can raise and spend unlimited sums, including from corporations, unions and nonprofits. But they generally pay higher rates for TV ads, and coordination restrictions can make them cumbersome political vehicles.
- Their unique characteristics mean vendors working with those groups employ different tactics than they would with campaigns or party committees.
- Vendors large enough to do both, or that have affiliated firms with specialized expertise, are primed to cash in on both ends.
- Of the $1.4 billion in shared-vendor payments identified in Public Citizen's report, nearly all — about $1.3 billion — went to the 10 most highly compensated firms.
Looking ahead: Sweeping election reform legislation currently in the Senate would dramatically restrict the shared-vendor arrangement.
- Under the Freedom to Vote Act, super PACs would be barred from paying a vendor for expenditures in support of a candidate if the vendor worked with that candidate during the prior two years.