WASHINGTON: For months, the centrist group No Labels has stockpiled cash and diligently worked to secure ballot access for a potential third-party presidential bid, striking fear among allies of President Joe Biden that the effort could siphon away votes and hand the White House to Donald Trump.
Now, with a rematch between Biden and Trump looking likely, two Democratic-aligned groups this week filed campaign finance complaints, hoping to crimp No Labels’ pipeline of campaign cash and force the group to follow the same rules as formal political parties.
The complaints, filed by the groups End Citizens United and Accountable, are part of a broader Democratic effort to ramp up legal scrutiny and elicit public scorn for No Labels as it teases a possible White House run by an as-of-yet unannounced ticket that many Democrats worry will play electoral spoiler.
“We are continuing to work every single avenue with our partners to hold (No Labels) accountable legally, to expose them publicly and to make sure they are playing by the same rules as everyone else,” said Tiffany Muller, the president of End Citizens United. “I don’t think it’s any secret that No Labels is a threat to our democracy if they run a third-party (candidate). That’s going to siphon off votes from President Biden and reelect Donald Trump.”
In a statement, No Labels on Wednesday disputed any suggestion that the group had done anything improper and dismissed the complaints as part of a “coordinated conspiracy to subvert No Labels’ ballot access and limit Americans’ choices.”
No Labels regularly promotes itself as a “common sense” centrist political party with bipartisan support. But it is actually registered as a nonprofit with the IRS — not a formal political party. That has enabled No Labels to operate with limited transparency while accepting unlimited sums from an anonymous set of donors — a source of financing often referred to pejoratively as “dark money.”
If the Democrat-aligned groups are successful, No Labels would not only be compelled to register as a formal political party with the Federal Election Commission, but it would also have its tax-exempt status revoked, be forced to abide by the same donation amount limits as other political parties and be required to reveal its big-money donors.
That’s a big if.
Both the FEC and the IRS have been hesitant in recent years to police groups that push the boundaries of campaign finance law. The FEC board, which is split evenly between those aligned with Democrats and those aligned with Republicans, frequently deadlocks. The IRS, meanwhile, has largely shrunk from enforcement ever since attempts to crack down on tea party groups during Barack Obama’s presidency drew massive backlash.
Still, campaign finance experts say many of the legal arguments made by the Democratic groups are solid.
Under a widely held interpretation of IRS rules, political nonprofit groups are limited to making political activity 50% of their activity. End Citizens United argues in its complaint that No Labels appears to primarily be engaged in political work “to oppose the candidacies of Joe Biden and Donald Trump.” It also argues that No Labels runs afoul of a separate provision against the activities of the group primarily benefiting a private party — in this case, No Labels. End Citizens United also plans to forward the complaint to authorities in states where No Labels operates, hoping that local officials may consider pursuing the matter.
The group’s complaint filed with the FEC argues that No Labels’ level of spending and advocacy against the election of Biden and Trump triggers requirements in federal campaign finance law that demand it to register as a political party.
“It sounds like they have a strong argument. There’s no doubt that, under any normal situation, what No Labels is doing makes them a political party,” said Adav Noti, the executive director for the nonpartisan Campaign Legal Center in Washington and a former FEC attorney.
The group Accountable filed its complaint in Colorado, where No Labels has qualified for party status, arguing that the group has failed to file quarterly campaign finance reports, as required under state law. It aims to force No Labels to reveal who its donors are.
Colorado includes an exemption for groups that are also registered with the FEC. But the complaint argues that No Labels’ efforts to “hide behind” its national organization “would create a dangerous gap in Colorado’s campaign finance law, and allow national groups to funnel dark money into Colorado’s elections via state-level organizations.”
No Labels chief strategist Ryan Clancy disputed the suggestion that the group had run afoul of campaign finance law. He pointed to a federal case called Unity08 v. FEC, which he said established a precedent sanctioning its approach.
Clancy said No Labels is not required to register as a political committee “so long as we are not actively supporting any specific candidate.”
But Noti, who was one of the attorneys who argued the case, said there are key differences between the 2010 case and what No Labels is doing now, characterizing the current argument as a bit “too cute.” In this instance, while No Labels may not be advocating for a specific candidate, they are advocating against both Biden and Trump, who are.
“I think we’re past the too cute phase, and now the activity is openly illegal, and they are just trying to run out the clock before enforcement can kick in,” Noti said.
Cooper reported from Phoenix.
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