Fact Check: Is Foreign Money Behind U.S. Chamber of Commerce Ads?

WASHINGTON, Oct. 11, 2010— -- To many Democrats, the accusation by President Obama and other party leaders that foreign money might be bank rolling some pro-Republican political attack ads sounds both compelling and ominous -- but is it fair?

"We learned that one of the largest groups paying for these ads regularly takes in money from foreign sources," President Obama said last week, referring to the U.S. Chamber of Commerce, the second biggest spender in the midterm elections, behind only the National Republican Congressional Committee, according to the Center for Responsive Politics.

"Are you going to let special interests from Wall Street and Washington and maybe places beyond our shores come to this state and tell us who our senator should be?"

Democrats and liberal groups take the argument further.

A Democratic National Committee TV ad warns conservative third-party groups like the Chamber are "stealing our democracy" and spending millions in "secret foreign money to influence our elections."

And, an ad by the liberal group MoveOn.org asks "Where has the Chamber been getting some of their money lately? From foreign corporations in countries like China, Russia and India -- the same companies that threaten American jobs."

Yet while Obama is trying to tie Republicans and some of their backers to the specter of foreign interference in U.S. elections, an examination of the evidence provides little support for the claims.

"We have no idea if the Chamber or any 501(c) organization as defined by the IRS code, is taking foreign money for the purposes of playing politics," said Dave Levinthal of the Center for Responsive Politics. "Saying that that foreign money is actually going toward attack ads or any type of messaging in the political realm, you just don't know. It's speculation and nothing more."

Some funding for the Chamber of Commerce does come from foreign companies and foreign-based Chamber affiliates (called "AmChams") similar in operations of some international nonprofit groups and labor unions.

Chamber of Commerce director of media relations J.P. Fielder said that money goes to the group's general fund and then to the international division, keeping it away from any political activities.

"No foreign money is used to fund our political activities," the Chamber said in a statement, citing the rules established by Congress more than a century ago.

"We are seeing an attempt to demonize specific groups and distract Americans from a failed economic agenda," said the Chamber's vice president for government affairs Bruce Josten of the charges.

"They have not one shred of evidence to back up that baseless lie," said Republican strategist Karl Rove of the claims.

But the White House, which has leaned heavily on a report by the liberal group ThinkProgress in making its case, says the lack of transparency makes it impossible to know for certain whether foreign funds are being kept separate -- a claim which is largely true.

"All you have to do to clear up the questions is reveal who your donors are from," said senior White House adviser David Axelrod.

"It is an insidious, dangerous thing when people can contribute huge sums of money to run negative ads in campaigns and never confess or allow to their participation. It opens the door to all kinds of chicanery," he said.

White House 'Grasping at Straws'?

The Obama administration has decried the lack of constraints on campaign spending by third-party groups this campaign season after the Supreme Court's Citizens United decision.

While individual campaign contributors have limits on how much they can contribute and have to disclose any donation larger than $200, corporations now have no such limits. Some third party groups also don't have to disclose their sources of funding for political activities.

"The Chamber is throwing tons of money at these races and they haven't done that before and you can't disaggregate it," said Dartmouth College political scientist Ronald Shaiko, who's an expert in third party political groups.

"But the Chamber appears to be meeting the letter of the law in what they're doing. Plus, they've got plenty of money and they really don't need to be bringing in foreign money to be doing what they're doing," he said.

Shaiko also points out that foreign corporations and interest groups, with the exception of foreign governments, are not required to disclose their members or donors or register with the State Department in order to lobby U.S. lawmakers on matters of policy.

"For over a decade now we've had the door open to foreign influence in the political process, policy process," Shaiko said. "If we're equating political influence via lobbying with political influence via elections, I wouldn't want to draw the distinction."

So why is the Obama administration making these claims?

"Any interest group can write a $10 million check to try to defeat a candidate and no one will ever know exactly what their involvement was," said Axelrod.

By some accounts, the Chamber is planning on spending more than $75 million to help Republican candidates it perceives as business friendly -- the second biggest spender this election cycle only to the Republican National Committee.

All these rules are equally applicable to many groups on the left -- but they are not spending money like their conservative counterparts this year.

"This isn't going to help the White House win votes by doing this," said Shaiko. "They're grasping at straws."