The Wall Street Journal-20080204-Campaign -08- Stealthy Groups Shake Up Races- Independent Outfits Avoid Disclosing Donors- Phone Calls for Huckabee

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Campaign '08: Stealthy Groups Shake Up Races; Independent Outfits Avoid Disclosing Donors; Phone Calls for Huckabee

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COLORADO SPRINGS, Colo. -- Election results from Florida were still rolling in last Tuesday evening when Patrick Davis began plotting to help his candidate, former Arkansas Gov. Mike Huckabee, in tomorrow's slate of Super Tuesday contests. He checked campaign finances, analyzed polls and edited phone-call scripts to solicit votes and bash opponents.

But Mr. Davis doesn't work for the Huckabee campaign. In fact, Mr. Huckabee has called for Mr. Davis to halt his activities, which are funded by undisclosed donors.

Mr. Davis is the campaign manager for an outfit called Trust Huckabee, one of a new breed of sophisticated campaign organizations that have sprung up amid the many groups pumping money into the presidential primaries. Like independent groups in the past, they are unafraid to attack opponents and aren't subject to limits on campaign contributions. Unlike the older groups, the new ones don't identify their donors and can directly ask people to vote for and against candidates.

The groups are employing a legal loophole: Saying elections aren't their "primary purpose," they've interpreted a 22-year-old Supreme Court ruling to help them wage aggressive campaigns. That ruling originally applied to a small group of issue-advocacy organizations, but increasingly it is being used by groups like Trust Huckabee in elections. Campaign-finance authorities aren't likely to review its legality until after the November election.

Overall, independent political organizations -- drawing funding from wealthy individuals, labor unions, corporations and other interest groups -- are expected to spend $18 million on election communications by Super Tuesday, compared with $1 million in the entire 2000 primary season. These groups' influence has surged since campaign-finance reforms limited donations to political parties in 2002, and they could help determine the winners of tomorrow's primaries and the November elections.

As a subset of that effort, groups such as Mr. Davis's are beginning to emerge as an especially opaque force on both sides of the aisle. The big fund-raiser Club for Growth plans to use the obscure exemption to advocate for socially conservative candidates, while a West Coast backer of Sen. Barack Obama who claims the exemption is doing a $4 million vote-getting effort for Super Tuesday over the Obama campaign's objections.

"Money in politics is like water running down a mountain," Mr. Davis says. "It will find a way around a boulder: Over, under, through or around."

Earlier independent organizations -- such as the Swift Boat Veterans group that questioned Democrat John Kerry's war heroism in 2004 -- were required to disclose their donors, couldn't campaign for votes and spent most of their money on television commercials. Following different rules, groups such as Trust Huckabee run full-scale campaigns parallel to their candidates, except that by law they're not allowed to talk to the candidates.

Trust Huckabee sponsors television advertisements, recruits volunteers to work the polls and pays for automated phone calls. Visitors to Mr. Davis's Web site, www.trusthuckabee.com, can watch videos of Mr. Huckabee's speeches or buy a Trust Huckabee button for $2.49. As the Florida results came in, Mr. Davis, 40 years old, kept one eye on cable news while he punched figures into a spreadsheet of delegates on his computer to figure out how to spend his remaining resources to help Mr. Huckabee lock up delegates.

Polls show the former Arkansas governor running close behind the Republican front-runner, Arizona Republican Sen. John McCain, in several Southern states tomorrow. While Mr. Davis doesn't expect the former Arkansas governor to win the presidency outright during the primaries, he's also been mentioned as a vice-presidential contender and Mr. Davis wants to help make him a powerful force at the convention.

Trust Huckabee was formed by an organization called Common Sense that was originally underwritten in part by Carl Lindner, the chairman of American Financial Group Inc., and some former executives at Procter & Gamble Co. It restarted last year as a national organization and is now run by Mr. Davis. Trust Huckabee was behind one of the most controversial campaign gambits so far this election cycle: automated phone calls that rival campaigns call thinly disguised efforts to slander foes.

Using voice-recognition software, the calls ask voters to indicate their favorite candidates. If they support Mr. Huckabee, they are reminded to vote and asked to volunteer. If they choose other candidates, they hear a negative message. "Does knowing that Sen. John McCain has refused to support a federal marriage amendment defining marriage as between one man and one woman make it less likely for you to support him?" asks one call.

Sen. McCain and former Massachusetts Gov. Mitt Romney called the tactic unscrupulous. Mr. Huckabee, prohibited by campaign laws from talking to the group or any independent campaign organizations directly, issued a public appeal for them to stop their activities on his behalf.

The group declined. It's their First Amendment right to campaign, says Mr. Davis. He defends the group's phone messages as just "like a television ad on a telephone call." The calls "provide information about your opponent and give positive information about your candidate."

Mr. Obama similarly failed to dissuade a San Francisco-based backer, Steve Phillips, who plans to spend about $4 million on Super Tuesday efforts for the Illinois senator. The groups will air commercials, register black voters and pay campaign workers to knock on doors searching for supporters. An Obama campaign spokesman said publicly that the groups, PowerPAC and Vote Hope, should halt because their funding undermines his campaign message "against the well-heeled lobbyists and interest groups in Washington." The groups declined. "We respect the senator's position on trying to limit the outside spending, but also recognize the outside spending on behalf of his opponents," says spokesman Adam Alberti. "We view our work as leveling the playing field."

For Mr. Huckabee, Mr. Davis has concentrated his Super Tuesday efforts on Missouri, where Mr. Huckabee is vying for the lead, and Georgia, where he has strong pockets of support. If he decides he has enough money, he may blanket Tennessee, West Virginia and Oklahoma with phone calls for Mr. Huckabee in the final hours.

Trust Huckabee is hardly alone in its status. Issue-oriented political groups -- including the abortion-rights group NARAL Pro- Choice America and the League of Conservation Voters, an environmental-advocacy organization -- have long employed the exemption under the 1986 Supreme Court decision. The ruling gives interest groups broad flexibility to wage election campaigns if they don't take money from unions or companies and if funding political campaigns isn't their primary objective. The groups have interpreted that to mean they can't spend the majority of their funds explicitly calling for the election of a candidate.

Since the 2002 campaign-finance reforms, people who want to influence elections have looked for new ways. Most of their early organizations, like the Swift Boat group, were formed under section 527 of the tax code. They could spend unlimited dollars on elections, but had to disclose their donors. They also weren't allowed to directly ask people to elect or defeat candidates.

Campaign finance lawyers next employed section 501(c)4 for "social welfare" groups, which don't have to disclose their donors. But most still can't advise people to "vote for" or "vote against" a candidate -- though they can challenge candidates' stands.

Then the lawyers began suggesting outside groups can have the best of both worlds if they start a 501(c)4 group and claim an exemption under the 1986 Supreme Court case. They can hide their donors -- though they can't take union or corporate money -- and can directly call for the election or defeat of candidates. They just have to attest that they spend a majority of their funds on issues instead of candidates. "I've been recommending this to people for years," says Cleta Mitchell, a campaign-finance lawyer who advises Mr. Davis.

The Federal Election Commission hasn't tracked the number of groups claiming the exemption, or their spending. Just a handful showed up in a sample of electronic FEC filings reviewed at The Wall Street Journal's request; their spending increased by 43% between the 2002 and 2006 congressional elections, to about $509,000, while in the 2004 presidential election they spent just under $1 million. No reliable figures for the 2008 election are yet available.

Groups such as Trust Huckabee "break new ground," says Ken Gross, a campaign-finance attorney with Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates. Steve Weissman, associate director of policy at the Campaign Finance Institute, a nonprofit organization that tracks spending by nonprofits in elections, says it looks like the groups are violating their legal authority, but laments that authorities haven't taken visible interest. "None of these groups seem to have had any difficulty with the FEC or [Internal Revenue Service] even though they appear to be all election-oriented," he says.

Trust Huckabee's Mr. Davis says the lines between election and educational expenses are bright. But they can appear blurry. Take the Trust Huckabee phone-call campaign. Most of the 60-second call tells voters where Mr. Huckabee and his rivals stand on issues like abortion and gay marriage. In the final seconds, people are asked to vote for Mr. Huckabee. Mr. Davis says only about one in 10 people stay on the call long enough to hear the plea to vote for Mr. Huckabee.

So Mr. Davis considers 90% of the call to be educational and 10% to be election-oriented. As a result, Mr. Davis reports to the FEC just 10% of the costs. According to those forms, Mr. Davis has spent just $20,000 on those calls. Overall, Trust Huckabee has disclosed $167,000 in spending on the election.

FEC officials couldn't be reached for comment.

When Mr. Davis tells antiabortion Republicans that Mr. Romney once supported abortion rights, he doesn't consider that election activity and doesn't report it to the FEC

Before hiring Mr. Davis, Common Sense spent $4 million in the final weeks of the 2006 election to help several Republican Senate candidates. It hired Mr. Davis in early 2007 to help remake the group as a national political organization for 2008.

Mr. Davis spent a career running traditional campaigns and independent efforts by interest groups. After college, he accepted a $20,000-a-year job with the 1992 reelection bid of President George H.W. Bush. After Mr. Bush lost, Mr. Davis couldn't find a political job in Washington. He worked for two years in sales at Crate & Barrel. Eventually, he began working for an arm of the Republican Party that oversees campaigns for the U.S. Senate, then for an anti-abortion group in South Dakota.

Soon after Mr. Davis took over, Common Sense decided to endorse Mr. Huckabee and start Trust Huckabee, even though Mr. Lindner was a Romney backer. Mr. Lindner no longer contributes to the organization, according to his office. Mr. Davis says that most of the group's backers believed that Mr. Huckabee was the candidate most willing to fight for conservative principles such as the right to bear arms and opposition to abortion and gay marriage.

Keet Lewis, a self-employed Dallas businessman, says he has raised about $1 million for Trust Huckabee from people who have already donated the maximum amount allowed by law to Mr. Huckabee's official campaign. "This is not to detract from the Huckabee campaign, but for those who want to do more, I want them to know that they can go to Trust Huckabee," Mr. Lewis says.

Mr. Davis works from a small, carpeted office in his home at the foot of the Rocky Mountains. The office is decorated with framed pictures of Mr. Davis with President George Bush and Vice President Cheney, and a pair of paintings by his two young children. He spends long hours working the phones and a pair of computers while his two Labrador dogs lie at his feet. People who donate are asked to send checks to a post-office box in Cincinnati that is checked each day by a Trust Huckabee volunteer.

In December, Mr. Davis set his sights on winning Iowa for Mr. Huckabee. Just a week before the Jan. 3 caucus, Mr. Huckabee trailed Mr. Romney. Then Trust Huckabee spent $50,000 on television advertisements trashing Mr. Romney for switching his position on abortion. It launched calls to every Iowa household.

In Iowa, Mr. Huckabee said the attack-call method "really defeats the kind of politics that I want the campaign to be a part of." Mr. Davis kept it up. "Our bigger goal is to raise the awareness of these important issues," he says. Mr. Huckabee won Iowa by 9 percentage points.

Mr. Huckabee hasn't done as well since, finishing behind the winners in New Hampshire, Michigan, Nevada and Florida. Mr. Davis says that he and his financial backers plan to spend between $5 million and $8 in the November election even if Mr. Huckabee isn't the nominee, but the string of losses has hurt fund raising.

Mr. Davis hopes to help Mr. Huckabee win Super Tuesday states where he has high poll numbers and a natural constituency of social conservatives. The automated phone calls remain the foundation of the campaign. People who agree to volunteer become "Trust Huckabee captains" who dial through lists of other numbers to encourage supporters to vote.

As Mr. Davis's polling data for Super Tuesday trickled in during the Florida primary, he decided that Mr. Huckabee could prevail in the winner-take-all states of Missouri, Arkansas, Tennessee, Oklahoma and Mississippi. He figured Mr. Huckabee could win in pockets of three states that allocate delegates on a proportional basis: Georgia, Illinois and Texas.

Just then, Mr. Huckabee appeared on television to give his concession speech. "There's our boy," Mr. Davis says. Mr. Huckabee delivered just the message Mr. Davis wants to hear: "We're playing all nine innings," Mr. Huckabee said. That delights Mr. Davis.

Later, Mr. Huckabee publicly named the half-dozen states where he planned to campaign before Super Tuesday. That's critical intelligence to help Mr. Davis synchronize his activities. "He's really good about speaking plainly, you can read quotes in the newspaper and see good clues about his strategy," Mr. Davis says.