Gingrich’s 527 group is a major player in this year’s elections
The following investigative report was originally published by the Center for Public Integrity and is reposted on Grist with CPI’s kind permission.
Former House Speaker Newt Gingrich isn’t running for president this year, but due to a gusher of support for his campaign to promote opening up more offshore areas to oil drilling, he’s chairing the election season’s hottest conservative advocacy group.
The slogan “Drill here. Drill now. Pay less.” is fueling Gingrich’s American Solutions for Winning the Future, a so-called 527 group not subject to federal campaign finance law and its limits on donations. So far this election cycle, it has raised $13.1 million; only two other 527 groups, both liberal, have collected more money, according to the Center for Responsive Politics.
While the sum pales beside the cash amassed by the largest of the 527s that so dominated the political landscape during the 2004 presidential race, American Solutions has raised more funds than the best-known unregulated conservative political group raised at the same point four years ago: Swift Vets and POWs for Truth. The Swift Vets, which ultimately spent $19.3 million [PDF] on TV advertising attacking Democratic nominee John Kerry’s military record, had raised only $8.8 million by the end of September 2004.
Officially, Gingrich’s organization says it does not intend to play a role similar to the Swift Vets in support of Republican nominee John McCain or any other candidate. But the reality is that the group’s signature campaign, launched one month before McCain’s call to lift the ban on federal offshore oil drilling, has already helped to shape the debate on what could prove to be a pivotal issue in the 2008 race for the presidency. And the group is poised to keep the political heat on the energy issue in the weeks ahead.
The role of American Solutions raises questions beyond the reach of current campaign finance law. The group doesn’t talk about candidates, and by all appearances strives to steer clear of danger that the Federal Election Commission would declare its “major purpose” to sway the election — a finding that would subject it to campaign finance rules. It calls itself “bi-partisan,” or even “tri-partisan,” in approach, seeking out issues that appeal to both parties and independents.
At the same time, American Solutions’ chairman, public face, and magnet for donations, Gingrich, is an outsized Republican figure on the political landscape who has declared openly, “I’m doing everything I can to be helpful to the McCain campaign.” The majority of the group’s major donors are GOP stalwarts — including at least seven of McCain’s leading fundraisers, five of them among the so-called Trailblazers who have raised in excess of $100,000.
Republicans in Congress are leading the drive to open up vast areas for offshore drilling, the issue American Solutions is pushing hardest — and McCain is echoing. “We’ve got to drill now; we’ve got to drill here,” he said in August at the nationally televised candidates forum at the evangelical Saddleback Church in Lake Forest, California. At the Republican National Convention, speaker after speaker took up the theme, and the delegates’ chant of “Drill, baby, drill” shook the rafters of the Xcel Center. “Even more than tax cuts, drilling is now the central organizing issue in the Republican coalition,” wrote political pundit Matt Cooper at Portfolio.com.
Of course, 70 million or more acres of undrilled coastal water are already open to the oil industry. And if Congress voted tomorrow to lift the protections now in place on the Atlantic and Pacific coasts and the Gulf of Mexico close to Florida, it would all but certainly be a long wait for the crude to reach the gas pumps. Drilling rig shortages assure that development would be slow. The U.S. Energy Information Administration, the federal agency that compiles official government energy statistics, says there would be no impact on prices until 2030. Even then, because the amount of oil gained would be a drop in the bucket of the global market, the impact could be “insignificant,” EIA said. But Gingrich and American Solutions have pressed their case for vastly expanding the areas open to drilling, arguing that even if no supplies reach consumers for years, the prospect of expanded U.S. oil development would lower current prices by dampening speculation in the oil futures market.
Observers from both political parties say the work of American Solutions has indeed lent the Republican candidate a helping hand. GOP pollster Matt Towery said McCain owes Gingrich a debt of gratitude, while liberal activist group Moveon.org warned its supporters in an e-mail that due in part to the leadership of Gingrich, “We could end up losing the election AND the fight for clean energy.” But election laws don’t recognize American Solutions as a political committee that’s taking sides in the race, as long as the group hasn’t raised or spent money by making a pitch for McCain.
Drilling into the energy debate
American Solutions could not be missed at the Democratic or Republican political conventions. The group sponsored a giant illuminated “Drill Here. Drill Now. Pay Less.” billboard across from Denver’s Pepsi Center throughout the Democratic convention. It had planned a similar sign for the Republican conclave, but decided against it due to Hurricane Gustav, said spokesman Dan Kotman. But with or without the outdoor advertising, American Solutions staged events at both gatherings to present the nearly 1.5 million signatures it has garnered for a petition urging Congress to open up more federal lands and offshore areas to eventual oil drilling.
The message took off with remarkably little advertising, about $100,000 worth in June and July, including buys on Fox News Network; in Roll Call, a Capitol Hill newspaper; and with Adtekmedia, an agency specializing in ad placement at gasoline pumps. But Gingrich mentioned the petition in his frequent TV appearances as an analyst on Fox News. And “it pretty much took off virally,” said Kotman. Links to the “Drill Here” petition at American Solutions appeared on numerous conservative blogs. American Solutions also reached out through online social networking sites like Facebook and LinkedIn. The web organizing is in the hands of the manager of the group’s Silicon Valley office opened earlier this year, David Kralik, who while in college in 1997 set up one of the first College Republicans websites and later managed the National Association of Manufacturers Internet programs.
The group generated so much web traffic in June that right-wing blogger Soren Dayton mused whether “Drill Now” had become “the conservative Moveon,” referring to the liberal group that has built so much support online.
Genesis of an ‘ideas’ group
American Solutions did not start out with an energy focus. Gingrich established his new nonprofit without fanfare, just before the Democratic sweep of the November 2006 election.
That election reversed the gains of the Republican Revolution of 1994, when the GOP had united behind none other but Gingrich and his Contract with America agenda for rolling back government regulation and taxes. In the 2006 election aftermath, Gingrich blasted the Bush administration for mishandling the Iraq war and for the “fiasco” after Hurricane Katrina, and also said fellow Republicans had wasted money on campaign ads.
Speculation grew rampant that Gingrich would jump into the presidential race, but he deferred a decision, and in an interview on Fox News, gave an outline of his plans for his new group. “What I’m really trying to do … is develop a new generation of solutions, American solutions, that build on what we did with the Contract with America.” He said he hoped to make his solutions “available to candidates in both parties.”
American Solutions made only glancing mention of energy at first, focusing instead on broad themes like renewing values, rooting out incompetent bureaucracy, and the need for a strong defense against the nation’s “enemies.”
Gingrich openly mulled a presidential run for months, yet never set up an exploratory committee, which would have been subject to campaign donation limits. But American Solutions paid for travel by Gingrich and his staff in 2007 to the early primary states of Iowa, New Hampshire, and South Carolina, his spokesman told the Atlanta Journal-Constitution last year. American Solutions set up a booth at the Ames straw poll with a station for Iowans to upload on YouTube ideas for “solutions to the most pressing challenges facing America.”
In late September 2007, Gingrich announced that he would not seek the presidency, and that instead he would devote himself to American Solutions. He said campaign finance law, which he opposed, made clear that he could not make a run for office while running the nonprofit. “American Solutions is in the early stages of being a genuine citizens’ movement,” he said, adding he did not want to walk out just as it was getting launched.
In November, the group unveiled the huge Platform for the American People, which included more than 90 ideas — ranging from border security to keeping the words “one nation under God” in the Pledge of Allegiance — that the group said had broad support among Republicans, Democrats, and independents. The group said it spent six months developing the ideas, based on workshops, town hall meetings, and national surveys. One of those ideas: “With appropriate safeguards to protect the environment, we should drill for oil off America’s coasts to reduce our dependence on foreign oil.”
But that one line in the platform didn’t morph into the “Drill here. Drill now. Pay less.” campaign until six months later. At the end of May, with summer travel season about to begin and the price of oil crossing $130 a barrel for the first time ever — more than double the price of a year earlier — American Solutions began its petition drive. In early June, American Solutions released its own polling data [PDF] showing that “86 percent of conservatives, 77 percent of moderates, and 74 percent of liberals backed intensified use of the U.S.’ domestic reserves.”
On June 12 on Fox’s The O’Reilly Factor, Gingrich offered this advice for McCain: “He ought to focus on the price of gasoline,” and should push steps such as releasing oil from the Strategic Petroleum Reserve and opening the coastal waters to drilling. In the same appearance, Gingrich promoted American Solutions’ “Drill Here. Drill Now. Pay Less.” petition campaign.
American Solutions’ “Drill Now” campaign merged into the presidential campaign theme on June 16, when McCain, who had supported the long-standing federal moratorium on offshore oil development during the 2000 campaign, said in a speech that he wanted to see the ban lifted as part of his energy plan. Two days later, President Bush joined in the call.
McCain adopted the American Solutions language on the campaign trail, not only at the Saddleback Church forum in August but also in numerous town hall meetings. Gingrich delighted in this development in remarks he made August 6 at a state and local issues summit organized by his old political action committee, GOPAC, in Arlington, Virginia.
“Senator McCain is now aggressively campaigning actually on this slogan,” he said. “This is not, by the way, the position of either [Senate Majority Leader] Harry Reid or [House] Speaker [Nancy] Pelosi, in case you hadn’t noticed. And Senator Obama has suggested we could do as well by inflating our tires. Which led me to suggest that their bumper sticker should be, ‘Inflate Here. Inflate now. Avoid reality.'”
At that same GOPAC summit, Gingrich was asked who he favored as a Republican vice president. He said his first choice was Louisiana Governor Bobby Jindal. But then Gingrich spoke at length about a candidate on few people’s minds at that time. His second choice, he said, would be Governor Sarah Palin of Alaska, “who is, I think, very smart and very much of a reformer and has had a very good track record of trying to change things.” McCain, he said, “could use a lot of help in broadening the party, which I think that Jindal would do,” and he felt Palin could widen his lead with women. “Plus she is a maverick,” said Gingrich. He thought the candidates then being most discussed, like Minnesota Governor Tim Pawlenty and former Massachusetts Governor Mitt Romney “are all terrific people,” but each “looks like a Republican.”
“We need to be a party where you look up and see the campaign campaigning and you think, ‘Gosh, that’s interesting,'” he said.
When McCain ultimately chose Palin, Gingrich called it “a home run.” The governor of one of the nation’s leading petroleum states will be sure to keep the campaign focus on exploiting more federal lands for oil, and even favors going further than McCain would go — opening up the Arctic National Wildlife Refuge. “Our opponents say, again and again, that drilling will not solve all of America’s energy problems — as if we all didn’t know that already,” Palin said in her speech at the Republican National Convention. “But the fact that drilling won’t solve every problem is no excuse to do nothing at all.”
Although American Solutions spokesman Kotman said the group takes credit for pushing the issue — “We are definitely the ones who started this debate” — he said the organization is not working to bolster any candidate. “From day one we’ve always been positive and solutions-oriented,” he said. “We’re not going to go negative on anyone. We’re just presenting issues that a majority support. Drilling obviously is one of the most pressing issues right now, but we have a whole range of issues listed in our platform that are supported by a majority of Democrats, Republicans, and independents. We’re going to keep talking about those issues that unite the American people.”
But outside observers see American Solutions as playing a role in tipping the political scales. “If John McCain and the GOP want to thank someone for helping turn around what seemed a dead-in-the-water campaign in a matter of weeks, they can thank former House Speaker Newt Gingrich,” wrote Matt Towery, the former Georgia state lawmaker who runs the media and polling firm InsiderAdvantage, in an Aug. 21 column at the conservative website, Townhall.com. “[Gingrich’s] decision to use his ‘think tank’ American Solutions organization to push for a ‘Drill Here, Drill Now’ petition back in the spring is likely the source of John McCain’s miraculous rebound in the polls.”
And both American Solutions and Gingrich will be keeping the drilling debate alive as the presidential campaign revs up this fall. In mid-September, the conservative publishing house Regnery will release Gingrich’s Drill Here, Drill Now, Pay Less book, which the publisher said “is sure to become the talk of the presidential campaign season.” (Regnery, which has published two other Gingrich books, put out the anti-Kerry Swift Vets book, Unfit for Command, in 2004, and this year has The Case Against Barack Obama on the bestseller list.) A movie, We Have the Power, based on Gingrich’s book, will be unveiled at American Solutions’ Solutions Day event at the Cobb Galleria in Atlanta on September 27, which will also be webcast. Gingrich says the goal of Solutions Day (where he said new ideas will also be featured) is “really setting the stage for the October finale of the presidential and congressional and gubernatorial and local campaigns.”
American Solutions is extending its web-organizing success by hosting a contest for “Drill Here, Drill Now” videos to appear on YouTube — with a year’s free gasoline as a prize. It will also urge its growing network of supporters to flood Congress with calls to force a vote to lift the 27-year-old federal moratorium on offshore drilling in September. Meanwhile, Gingrich is blasting efforts on Capitol Hill to forge a bipartisan compromise on drilling that could defuse the issue’s potency as an election issue. Instead, he is vocally backing conservatives who have threatened, in a tactic that hearkens back to Gingrich’s own heyday in power, to use a budget showdown to shut down the government at the end of September over oil drilling.
Funded by GOP donors
American Solutions calls itself a “new, innovative, and nonpartisan political organization.” According to the group’s required filings with the Internal Revenue Service, some of its first donations came from Gingrich friends and longtime backers. But the ball really got rolling with two $1 million donations in late 2006 and early 2007 — from Las Vegas casino billionaire and patron of conservative causes, Sheldon Adelson, and North Carolina real estate developer Fred Godley, who had not been active in politics previously.
Although the two remain American Solutions’ top backers (Adelson, with contributions that now total $4.6 million), the group has since widely expanded its supporter base to thousands of donors, with fundraising hitting $3.75 million in June and July. About 44 percent of the money this summer came in small donations — from contributors who kicked in less than $200 each. Some of the fundraising undoubtedly is the work of the call-center operation InfoCision Management, of Akron, Ohio (“specializ[ing] in political, Christian, and nonprofit fundraising,” according to its website), which has raked in more than $2 million in fees from American Solutions, the group’s biggest expenditure so far. Still, just 40 big donors, including five businesses, account for $8.9 million, or 68 percent, of American Solutions’ funding. Also, there are signs that the movement might have broadened as far as it can. Fundraising was down from June to July, as was web traffic. And the group fell short of the goal it stated in a July e-mail to supporters of gathering 3 million “Drill Now” petition signatures by the political conventions.
At least one environmental group, the Alaska Wilderness League, has argued that American Solutions is “funded by Big Oil,” but in fact the top donors have few apparent direct links to major oil companies. Peabody Energy, the world’s largest private sector coal company, is the only energy company among American Solutions’ big donors, with a $250,000 contribution in June.
If there is any glue binding the top donors of American Solutions, it is their past generosity to Republican candidates. American Solutions’ biggest supporters include seven top McCain fundraisers:
- Adelson, chairman of the Las Vegas Sands casino company, bankrolled the nonprofit advocacy group Freedom’s Watch, which advocated continued involvement in the Iraq war. A McCain Trailblazer, he was among a clique of fundraisers who met with the candidate in Aspen last month.
- Carl Lindner III, the co-chief executive of American Financial Group in Cincinnati and another Trailblazer, held a fundraiser for McCain at his home in June. He and his father, Carl Jr., the United Dairy Farms tycoon, were both among President George W. Bush’s top fundraisers, known as Rangers.
- Richard Farmer, founder and chairman of Cintas, the giant corporate uniform company in Cincinnati, also a former Bush Ranger, co-chaired the June fundraiser at Lindner’s home.
- Robert Wood “Woody” Johnson IV, owner of the New York Jets, and an heir to the Johnson & Johnson fortune, hosted in May what was then the single largest fundraiser to date for McCain, raking in $7 million. The close to $10 million he raised for the RNC convention earned him his own hospitality suite in St. Paul.
- Gordon Smith, a real estate developer in suburban Washington, D.C., raised nearly $100,000 for McCain by tapping friends, colleagues, and people he “had done favors for,” he recently told the University of Maryland’s Capital News Service.
- Stephen Brauer, president of Hunter Engineering in St. Louis, gave to American Solutions a month before hosting a fundraiser at his St. Louis estate in July that reportedly netted $1.6 million for McCain and the Republican National Committee. A Bush Pioneer in 2000 (having raised more than $100,000), Brauer was appointed ambassador to Belgium by Bush in 2001. He was a Bush Ranger in 2004.
- Fred Malek, the private equity tycoon who is McCain’s national finance co-chairman and a Trailblazer, isn’t in the top tier of American Solutions’ contributors, but he did give $5,000 to Gingrich’s group a year ago.
One other notable American Solutions donor: The group’s biggest haul in July was a $250,000 donation by Crow Holdings, the Dallas-based international investment company chaired by big Republican benefactor Harlan Crow, a trustee of the George H.W. Bush Presidential Library Foundation. In 2004, Crow Holdings kicked in $100,000 to the Swift Vets group near the start of its television advertising campaign.
All in all, of the 35 individual donors who gave American Solutions $25,000 or more [PDF], 32 gave to McCain or one of his Republican challengers during this presidential campaign — many having reached the maximum amount federal election law allows individuals to contribute directly to candidates. Only five of the 35 gave to Obama or another Democratic presidential candidate, and four of those five gave to Republicans as well.
Non-partisan group, partisan chair
American Solutions, as a political group formed as a nonprofit under section 527 of the tax code but not registered with the Federal Election Commission as a political action committee, falls into a murky area of campaign finance law. Such 527s are not barred from taking corporate money nor do their donors face any limits on how much they can give. But a 527 can cross the line if the FEC determines it has as its “major purpose” the election of a candidate to office. Indeed, two years after the 2004 election, the FEC fined the Swift Vets and several other 527s for their activities during that campaign.
Because of the FEC rulings in those cases, and the antipathy that both Democratic nominee Barack Obama and McCain have expressed for the role of outside political groups, conventional wisdom has been that 527s will play a limited role in the 2008 race. But even if American Solutions hews to its stated non-electoral purpose, “to build a movement which focuses on developing and implementing a generation of solutions for winning the future both here at home and abroad,” its chairman, Gingrich — frequently dipping back and forth between speaking on his organization’s behalf and his own — has made no secret that he takes sides in the presidential race.
In an Aug. 13 appearance on Fox’s Hannity & Colmes show, Gingrich said flatly, “I’m doing everything I can to be helpful to the McCain campaign … because I think they’re dramatically better for America.” During the same appearance he also said he was glad that Obama is “weakening on drilling,” and that House Speaker Nancy Pelosi also was voicing some support for expanded oil development on federal lands and coastal waters. “So maybe what we’re doing at American Solutions with ‘Drill Here. Drill Now. Pay Less.’ with that petition that has almost 1.5 million signatures, maybe it’s having an effect,” Gingrich said. “And I think that’s good for the country.”
But Gingrich has been hostile to the efforts to strike a compromise on drilling that both Republicans and Democrats — including Obama and Pelosi — have indicated they could accept. In a column on the conservative Human Events website, Gingrich decried the efforts by the so-called “Gang of 10″ senators — five Republicans and five Democrats — who have mapped out a deal. Their proposal would open some new offshore areas to oil and gas drilling while giving a boost to renewable energy by passing the long-delayed extension of their tax credits, and pay for it by rolling back oil industry tax breaks. Gingrich called it “an $85 billion tax increase disguised as an energy bill.” Gingrich’s personal spokesman, Rick Tyler, said the speaker opposes the Gang of 10 approach because it wouldn’t lower gas prices: “From an economic perspective, corporations don’t bear the burden of taxes; customers do.” And Tyler said the compromise would still limit drilling 35 miles further than necessary, in Gingrich’s view, to preserve the sight lines of shore.
Instead, Gingrich is actively supporting GOP hardliners who want federal restrictions on offshore drilling lifted altogether. President Bush helped turn up the heat on Congress in July, when he officially lifted the presidential order against drilling on the Outer Continental Shelf that had been implemented by his father when he was president. That meant that the only remaining bar was the congressionally imposed moratorium due to expire at the end of the fiscal year in September. Republican pollster Towery, a friend of Gingrich’s who served as his congressional campaign manager in the early 1990s, wrote in his Townhall.com column that the former House speaker “met several times” with the House Republican Conference and “encouraged them to dig in their heels” on forcing a vote to lift the moratorium. Gingrich joined the holdouts at a news conference outside the Capitol in early August, with the former speaker declaring he was “very proud” of their efforts.
Turning up the heat on Capitol Hill
The stage is set for a standoff when the fiscal year ends on Sept. 30. The drilling moratorium has been extended each year as a provision attached to a spending bill lawmakers have to pass to keep the government running. But hard-line Republicans, led by South Carolina Senator Jim DeMint, are rallying support to block the budget bill if it includes the drilling moratorium — a move that would shut down the government and force a high-profile battle over oil drilling just weeks before the election. The last time such a ploy was executed on Capitol Hill was in 1995, when then-House Speaker Gingrich led a budget showdown against President Clinton.
Kotman said that American Solutions aims to stay in the forefront on the moratorium issue. “We’ll certainly stay at the center of this debate,” he said. “The next big moment will be whether Congress lets the offshore drilling ban expire,” he said. “We’ll certainly be watching that and encouraging all of our activists to contact their member of Congress.”
Democratic pollster Mark Mellman, a leading energy issues researcher for the party, views Gingrich’s opposition to the Gang of 10 drilling compromise as a tip-off to his motivations and those of his supporters. “If they were interested in supporting drilling, they’d support this package because compromise is the only way that you’re going to get drilling done in Congress,” Mellman said in an interview. “Without a doubt, they are looking at the political calculations, not looking at reducing gas prices.” Nevertheless, Mellman said he sees no evidence that the drilling issue had eroded Democratic support in either the national presidential race or in the congressional races. “If you look at the polling,” Mellman said, “there is no question there is a different attitude toward drilling today than a few years ago, with the majority in support of some kind of drilling — but it is also true that they only think that’s part of the answer and that it’s not necessarily the best answer.” He said most people favor drilling as part of an array of energy solutions, including alternative energy and greater efficiency.
There are signs that Gingrich has seen those same polls. In his news conference with GOP House members in early August, he said he foresaw “a majority in the House in favor of drilling — but beyond drilling, a majority in favor of wind, of solar, of hydrogen, of nuclear, of flex-fuel cars, of biofuels, because the Republicans’ ‘all of the above’ bill is about really beginning to solve America’s energy problem.” Yet the package he favors would include a wholesale lifting of the federal protections against oil industry development on the coasts, so sweeping it is sure to generate opposition in California and Florida and create a firestorm on Capitol Hill.
It remains to be seen whether turning up the heat over the protected coastal areas is a strategy that will hurt Democrats in the end, by backing them into the corner of appearing to favor environmental protection over affordable energy. American Solutions doesn’t blast Democrats, but assails “the anti-energy elites” in its e-mails to supporters. Yet there’s no question that some American Solutions donors — even if they haven’t been too enthusiastic about McCain — are hoping that their support of the Gingrich group will help defeat Obama.
Bill England, who runs a used tire business in the Dallas/Fort Worth area, gave $200 to American Solutions in July after getting a telephone solicitation; he said in an interview that he was inspired by the “Drill Here, Drill Now” campaign and by Gingrich. (England views Gingrich’s 1994 Contract With America as “one of the greatest things we have ever seen.”) England had been a supporter of Fred Thompson, and about McCain he said, “I don’t know that he is that much of a conservative.” But he wants to see Obama defeated. “I really can’t see that Democratic representation of ‘Don’t drill, bigger government, I want to take care of you, I want to be your daddy and let the government take care of you.'”
Scott Buzby, a retiree in Vero Beach, Florida, gave a total of $1,100 to American Solutions, inspired by his admiration for Gingrich, whom he had hoped would run for president. Buzby said in an interview that when Gingrich announced last fall that he would not run, he understood that Gingrich “can do more from the outside — he’s freer. He doesn’t have to worry about the nuances of what he says.” Buzby, who donated to Rudolph Giuliani in the fall and has donated to the Republican Party, but not directly to McCain, said he views Obama as “all style and not substance, a great tap dancer.”
“He’s got a glass jaw and I think McCain can knock him out,” Buzby said, but only if he is “smart” and heeds the advice of better communicators like Gingrich. Buzby said he gave to American Solutions in the hope the group would help sway the direction of the presidential campaign. “Democracy is not a spectator sport,” he said. “You’ve got to get on the field and play.”
Matthew Lewis assisted with the research for this story.