As rules change, so do money dynamics

When two former Obama White House aides recently announced that they were forming an independent group to raise tens of millions for Democrats in 2012, one name they put forth as offering seed money was Jeffrey Katzenberg.

It was certainly no surprise that a Hollywood figure, particularly one who has been such a prolific donor, would appear on the list of those backing the org, called Priorities USA. But his involvement, along with other outside groups, could very well change are the dynamics of political fund-raising in show biz in the next cycle.

High-profile donors, a sizable chunk of whom are expected to quickly max out on the $5,000 they can give to President Obama’s reelection committee, will have another option where they can give unlimited sums and, if they so choose, do it anonymously.

That could put a new degree of importance on the very wealthy donors, who can afford to write seven-figure checks, as opposed to the “bundlers,” or those fund-raisers tasked with tapping their network of contacts to round up donors to write four- and five- figure sums for individual candidates.

David Levinthal, spokesman for the Center for Responsive Politics, calls it “the beginnings of a political arms race.”

While independent groups have been around for some time, what is new is the campaign easing of restrictions on how and when they can spend their money in the wake of the Supreme Court’s Citizens United decision last year — along with a maneuver in which donors can contribute without having their identities disclosed.

Outside groups like Priorities cannot coordinate with with official campaigns, but they have some leeway in running their own ad spots designed to boost Obama and other candidates, or to attack their opponents.

Priorities, set up by former White House officials Bill Burton and Sean Sweeney, has established two groups under the tax code, both of which will be allowed to collect unlimited contributions. One, called Priorities USA Action, is set up under section 527 of the tax code, but it will be required to regularly disclose the identities of donors. The other, called simply, Priorities USA, is registered as a 501(c)(4), which allows them to keep the identies of donors secret.

Obama took aim at such outside groups, particularly in the last cycle, when Karl Rove helped set up an organization called Crossroads that offered donors the same disclose vs. non-disclose option. The result was that Democrats found themselves dramatically outgunned when it came to outside spending .

Hollywood has some history of frowning on big money in politics. The Hollywood Women’s Political Committee, a once influential org that was a regular stop for progressive candidates, disbanded in 1997 in part to protest the role of money in politics.

That didn’t halt the flow of candidates coming to town, trolling for dollars, and there’s little sign that the money race will slow this time around. The one thing that may stem the flow of contributions to outside groups are recent IRS efforts to collect hefty “gift taxes” from those who have given in the past to 501(c)(4)s.

“Groups that generally support Democrats are still stinging from their royal butt-kicking last year, and they’re already gearing up to raise tens, if not hundreds of millions of dollars this cycle to promote Democrats or fight against Republicans,” Levinthal says. “And the Republican supporting groups, for their part, will come back this cycle even stronger.”

That why, despite criticism of outside spending, Burton and Sweeney are adamant that their move is needed to level the playing field. Katzenberg, who didn’t mind his name being disclosed, will be helping the raise money in Los Angeles and other cities along with his political consultant, Andy Spahn. Spahn says that their decision to participate was motivated by “concern over the efforts by extreme right wing Republicans like Karl Rove and the Koch brothers.”

Last month, more than 100 donors shelled out $35,800 each at two separate Hollywood-centric dinners for Obama, with Steven Spielberg, Tom Hanks, George Clooney and Berry Gordy among those attending.

Yet even in Hollywood, the universe narrows when it comes to those ready to contribute six- and seven-figure sums. It’s not hard to guess who they are. In the last cycle, producer Marcy Carsey gave a total of $300,000 to two liberal leaning orgs, CommonsenseTen and America’s Family First Action Fund, according to the Center for Responsive Politics.

The expected influx of outside spending may evoke the way that money was raised when so-called “soft money,” which allowed for unlimited donations to political parties, was still legal, one of the major differences being disclosure requirements. Producer Steve Bing in 2002 gave a $5 million check to the Democrats to build a new headqarters, in what was then thought to be the largest single donation to the party. But he was soon topped by Haim Saban, who wrote a check for $7 million.

You can bet they will be tapped again this time around.

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