American Taxpayers Alliance

<a href="http://www.workingforchange.com/article.cfm?ItemID=11880" target="_blank" style=" font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);">http://www.workingforchange.com/article.cfm?ItemID=1188...</a><span style=" color: rgb(0, 0, 0); font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline !important; float: none;">  404<br style=" color: rgb(0, 0, 0); font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);" />

<i style=" color: rgb(0, 0, 0); font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);">September 7, 2001

If you live in or have been to California during the past few months, you may have seen or heard Governor Gray Davis blasted for his handling of California's energy crisis. "Grayouts from Gray Davis," is the tag line of one of the television ads being run by the American Taxpayers Alliance. ... The American Taxpayers Alliance (ATA) i<i style="color: rgb(0, 0, 0); font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-variant: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);">s one of three so-called citizens<i style=" color: rgb(0, 0, 0); font-family: Verdana, Arial, Helvetica; font-size: 12.800000190734863px; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);"> groups currently going after Davis. What is the ATA and why is it saying such nasty things about Gov. Davis?

Scott Reed is a Republican campaign consultant and former campaign manager for Bob Dole's 1996 presidential campaign who runs ATA. He told The New York Times that his organization "is on a political mission; to shield vulnerable Congressional Republicans from any blame for how Washington responds to California's energy crisis and to put the focus on Mr. Davis." Thus far, they have spent more than $2 million making life miserable for the governor.
<snip>

Scott Reed is not your run of the mill political operative. Like his surnamesake Ralph Reed, Scott began his career with Pat Robertson's Christian Coalition. In addition to his service to Dole, a 1996 USA Today profile noted that Reed was deputy regional political director for Ronald Reagan's presidential campaign in 1984; the next year, he became the youngest regional political director for Republican National Committee (RNC); he then helped run Jack Kemp's Republican presidential campaign in 1988; and from 1989-92, he served as chief of staff to HUD Secretary Jack Kemp. In 1993, Reed was chief of staff for the RNC.</snip>

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   In a televised speech to California residents on April 5, 2001, Davis resisted Cheney's and Hebert's calls to increase electricity rates for average consumers to keep the state's public utilities afloat, opting instead to increase electricity rates of the state's largest power customers such as manufacturing plants. The next morning PG&E filed for Chapter 11 bankruptcy protection.

   Davis publicly railed against the Bush administration's refusal to launch an investigation into wholesale energy companies trading practices, and its position on price caps. Davis's rhetoric started to impact the Bush administration's approval ratings. Rove, working closely with Cheney, entered into discussions on how the White House would respond to criticism by Davis that the Bush administration was turning its back on California.

"Karl [Rove] started to talk about using the resources of former Republican National Committee staffers to put together an attack campaign against Davis, and pin the power problems on the governor and his administration," according to one former high-level Energy Department official who was privy to the conversation between Rove and Cheney.

Rove enlisted the help of former RNC staffers Ed Gillespie, then a lobbyist who was working for Enron and other energy companies, and Scott Reed, who used to work for the RNC and was the former manager of Robert Dole's presidential campaign, to start devising a strategy to attack Davis and lead people to believe that the energy crisis was entirely his fault. Gillespie was recently tapped by President Bush to replace Dan Bartlett as White House counselor.

Reed and Gillespie, who was doing double duty advising Cheney's energy task force on behalf of Enron, advised Rove and the vice president that the PG&E bankruptcy left Davis vulnerable and the best course of action for the White House was to take advantage of Davis's vulnerability by stating that Davis single-handedly, in refusing to raise electricity rates, caused one of the largest bankruptcies in American history. Gillespie went a step further, according to Energy Department officials familiar with his conversations with Rove and Cheney, by suggesting that the White House start courting Republican gubernatorial candidates to replace Davis in the 2002 election.

At the White House in April 2001, Rove met with Brad Freeman, President Bush's California finance chairman during the 2000 presidential campaign, and Gerald Parsky, an investment banker, who was Bush's top adviser in California. The discussion centered on Parsky and Freeman's interest in courting actor Arnold Schwarzenegger to discuss his bid for governor in 2002.

   "That would be nice," Rove said about the possibility of Schwarzenegger, a Republican, to replace Davis as governor, according to people who were briefed about the meeting. "That would be really, really nice."

   Davis said he could see now see how the energy crisis created a political opportunity for the White House in California.

"In retrospect I could see how that happened," Davis said. "There's no question that the energy companies saw me as an adversary when I wouldn't buckle under their demands. I was vulnerable and the [energy companies and the White House] took advantage of it. This crisis took place in the early days of the Bush administration. I figured these guys are too busy picking out furniture for their offices. I didn't think they [the Bush administration] were spending their days in office involved in some full-scale conspiracy. But it turns out they were."

Cheney Takes Aim at Davis

   Meanwhile, Cheney continued to meet with energy company officials who were instrumental in drafting key aspects of the National Energy Policy. At the same time, the usually reclusive vice president was granting interviews to numerous reporters discussing his take on the California energy crisis which continued to spiral out of control.

   In May 2001, the PBS news program "Frontline" interviewed Cheney who was asked by a correspondent whether energy companies were acting like a cartel and using manipulative tactics to cause electricity prices to spike in California.

   "No," Cheney said during the "Frontline" interview, even though he was personally briefed about energy companies manipulating the state. "The problem you had in California was caused by a combination of things - an unwise regulatory scheme, because they didn't really deregulate. Now they’re trapped from unwise regulatory schemes, plus, not having addressed the supply side of the issue. They've obviously created major problems for themselves and bankrupted PG&E in the process."

The same month, May 2001, Davis met with Bush at a Century City hotel, not far from the offices he now works at as an attorney. He pleaded with Bush one last time to put price controls in place. Bush refused.

Behind the scenes, while Bush and Davis discussed the state of the energy crisis, Gillespie was emailing Enron officials on the status of Cheney's energy policy. He alerted Enron executives to the exact language that would appear on one of the hot-button issues revolving around price caps in California and the west and allowing energy companies free access to the nation's transmission lines.

"I believe this is the exact language that will appear under the 'energy supply' section of the report," Gillespie wrote. "Recommends that the President encourage the FERC to use its existing statutory authority to promote competition and encourage investment in transmission facilities," which Enron was lobbying heavily for. "Please keep this under wraps. We do not want to circulate this beyond the folks listed on this email. Please let me know any concerns. As we have known for several weeks, the report is not as explicit as we would want, but the White House, vice president, and [Department of Energy] have repeatedly but verbally assured us that they are making clear to FERC exactly what this means."

   Another email Gillespie forwarded Enron officials, dated May 17, 2001, came from Cheney's spokeswoman, Juleanna Glover, who told Gillespie "you're really relied upon around here ... hear your name all the time in connection w. tough issues, but you know that already."

   On May 21, 2001, five days after unveiling his energy policy, Cheney told Tim Russert on "Meet the Press" that Davis was to blame for the energy issues in the state.

"They knew over a year ago they had a problem, and Gray Davis refused to address that problem," Cheney said. "[They] kept putting it off and putting it off and putting it off, with the notion that somehow price caps could be maintained. Now, today, where are they in California?"

GOP Front Group Attacks Gray Davis, Shields Bush, Cheney

At the same time, Reed informed Rove and Cheney that his nonprofit, the American Taxpayers Alliance, a Republican front organization, would begin to air a series of scathing radio commercials taking aim at Davis's failure to tame the energy crisis in June 2001. The ads, Reed said, were aimed to shift attention away from Republicans in Washington and "back to Sacramento where it belongs." Reed added that the ads would leave Davis "bleeding like a stuck pig."

   The ads, which began to air in June 2001, did in fact make an impact:  [Ken and ----?]

"He's pointing fingers and blaming others. Gray Davis says he's not responsible for California's energy problems; after all, the Public Utilities Commission blocked long-term cost-saving contracts for electricity. But who runs the PUC? The people Gray Davis appointed - Loretta Lynch and other Davis appointees who left us powerless. That's why newspapers say he just ignored all the warning signals and turned a problem into a crisis. Grayouts on Gray Davis."

   The ads and the negative press Davis received helped set in motion a chain of events that would lead to a historic recall campaign and put Schwarzenegger in office.

What the public didn't know, however, is that Cheney and Rove recommended that Reed approach Reliant Energy, the firm that one of Cheney's energy task force advisers, Joseph Allbaugh, was affiliated with via his wife's lobbying for the company, to fund the radio spots, according to former Reliant executives involved in the matter. Reliant donated nearly $2 million of Reed's $3.2 annual budget, yet the company only reported spending a total of $340,000 on government lobbying in apparent violation of the law, according to the company's public records.

Gillespie also launched a public relations campaign against Davis. He took ads out in print publications attacking Davis. The ads were paid for by Gillespie's 21st Century Energy Project, which he formed in close coordination with Karl Rove less than a month after the National Energy Policy was released in May 2001, according to former Enron executives who worked closely with Gillespie. Enron funneled at least $75,000 to Gillespie to pay for the ads through Grover Norquist's Americans for Tax Reform, according to documents obtained by Truthout.

Russ Schriefer, who worked with Gillespie on Bush’s presidential campaign and formed Mosaic Media with Quinn Gillespie in February 2001 to produce advocacy ads for Republicans, wrote the Davis ads. The ads aired on ABC, Fox and CNN.

Norquist, a longtime friend of Cheney's, was personally tapped by Rove to assist Gillespie with the ad campaign. Norquist may be best known for his close relationship with disgraced lobbyist Jack Abramoff. One of Abramoff's clients, Raul Garza, chief of the Kickapoo Traditional Tribe of Texas, donated $25,000 to Norquist's organization in order to obtain an invitation to a reception with President Bush on May 9, 2001. Norquist and Abramoff were also in attendance and a photograph of Garza standing alongside Bush with Abramoff in the background was kept from public view when the Abramoff scandal blew up. Bush had denied publicly that he ever met Abramoff.

At the time, Gillespie said the ads were necessary "because Davis put all his time and energy into trying to shift responsibility and President Bush spent all his time and energy trying to accept responsibility. The president is trying to change the tone, but others of us have to point out that the crisis developed on the watch of Governor Davis and President Clinton."

Executive Privilege

Immediately following reports that Cheney relied upon the recommendations of 400 energy industry executives to draft the National Energy Policy, lawmakers began to demand that the vice president turn over documents regarding his task force meetings to Congress. The vice president vehemently refused.  j leopold

<a href="http://www.stealthpacs.org/profile.cfm?org_id=106">http://www.stealthpacs.org/profile.cfm?org_id=106</a>

<table align="center" border="0" cellpadding="0" cellspacing="0" width="95%"><tbody><tr><td style=" text-align: left;">American Taxpayers Alliance (ATA)

</td></tr><tr><td style=" text-align: left;">Stated Purpose:</td></tr><tr><td style=" text-align: left;">Protect American taxpayers from new and onerous financial obligations. Harnesses taxpayer anger at unwise decisions by government leaders.</td></tr><tr><td style=" text-align: left;">

Tax Status:</td></tr><tr><td style=" text-align: left;">501(c)(4)</td></tr><tr><td style=" text-align: left;">

Political Orientation:</td></tr><tr><td style=" text-align: left;">Republican</td></tr><tr><td style=" text-align: left;">

Profile:</td></tr><tr><td style=" text-align: left;">September 2004 — The American Taxpayers Alliance (ATA) has made a practice of stirring controversy by broadcasting attack ads while refusing to disclose its funding sources. But press reports and tax documents show that at least some of the group's funding has come from electric utility firms and the <a href="http://www.stealthpacs.org/profile.cfm?org_id=43"> U.S. Chamber of Commerce</a>.

After the ATA ran ads blaming Democratic Gov. Gray Davis for California's energy crisis in the summer of 2001, Davis sued the group, claiming it had violated state law by failing to register as a political committee and refusing to disclose its contributors. A San Francisco judge sided with Davis, but an appeals court overruled that decision because the ATA had not crossed the "express advocacy" threshold of sying to "vote for" or "vote against" a candidate.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#1">1</a> Davis' campaign subsequently paid the ATA $100,000 to cover legal fees.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#2">2</a>

Newsweek later reported that two energy companies, Reliant Energy and Duke Power, funded the ATA's entire $1.8 million ad campaign.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#3">3</a> The ATA's filing with the IRS reported that two individuals or organizations contributed nearly $2 million and $600,000, respectively, to the group in 2001, accounting for 79 percent of the group's revenue.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#4">4</a>

In 2002, the Sangamon County (Ill.) Democratic Party filed a complaint with the Illinois State Board of Elections charging that ATA-sponsored attack ads against Democratic state Supreme Court candidate Sue E. Myerscough amounted to a campaign contribution to her opponent. The board deadlocked 4-to-4 along party lines.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#5">5</a> In response to ads aired by the ATA and the <a href="http://www.stealthpacs.org/profile.cfm?org_id=175">Law Enforcement Alliance of America (LEAA)</a> in 2002, the Illinois legislature passed a law stipulating that independent groups that spend more than $3,000 on communications mentioning candidates' names in the two months before state elections must file as political committees, which requires disclosure of revenues and expenditures.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#6">6</a>

In October 2002, the ATA funded automated telemarketing messages that flashed "Win $100,000 Cash" on the caller ID displays of Missouri residents' telephones. Those who answered their phones then heard a recording asking them to thank Jim Talent for working to cut taxes. Talent, a former Republican congressman, was challenging incumbent Democrat Jean Carnahan to represent Missouri in the U.S. Senate. (ATA said the win-cash message was inadvertent.)<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#7">7</a>

The ATA also was among three groups that reportedly combined to spend $1 million in Mississippi's 2003 races for governor, lieutenant governor and attorney general.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#8">8</a>

The ATA is led by Scott W. Reed, a lobbyist and Republican operative. Reed managed Bob Dole's 1996 presidential campaign, served as executive director of the Republican National Committee under Haley Barbour (who received ATA's assistance in his 2003 Mississippi gubernatorial bid), and established the Republican Leadership Coalition, a 527 organization that aimed to win Hispanic support for Republican candidates.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#9">9</a> <a href="http://www.stealthpacs.org/profile.cfm?org_id=106#10">10</a>

Though the ATA resisted Gray Davis' lawsuit to avoid disclosing its funders in 2001, the group revealed its major 2002 contributors' names (most likely mistakenly) in the 2002 tax form it provided Public Citizen. Its top contributor that year was the <a href="http://www.stealthpacs.org/profile.cfm?org_id=43">U.S. Chamber of Commerce</a>, which gave $2.6 million. The ATA received about $2.3 million of that donation in the month before Election Day.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#11">11</a> The Chamber reportedly employed a strategy of funding outside groups to influence judicial elections in 2002, making its role more discrete than in 2000 when it broadcast ads under its own name.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#12">12</a>

For each of the years 2000, 2001 and 2002, the ATA reported to the IRS that it made zero political expenditures.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#13">13</a> In contrast to the express advocacy standard the California court relied on to rule in the Gray Davis case, the IRS defines a "political" expenditure as any that aims to influence the outcome of an election.<a href="http://www.stealthpacs.org/profile.cfm?org_id=106#14">14</a> Thus, the ATA's disclosure of zero political expenditures effectively claimed to the IRS that none of its advocacy communications were intended to influence the outcomes of elections. That claim seems particularly dubious in the case of the message praising Talent, who held no political office when the ATA sent out its laudatory telemarketing calls.

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<table align="center" border="0" cellpadding="0" cellspacing="0" width="95%"><tbody><tr><td colspan="2" bgcolor="000000" height="1" style=" text-align: left;"><img src="/f5945e63-de28-57fd-823a-9ec3c1d8aa83.gif"/></td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="1" href="http://www.stealthpacs.org/profile.cfm?org_id=106#1" name="1">1</a>  </td><td class="small" valign="top" style=" text-align: left;">David Kravets, "Group That Attacked Governor Avoids Disclosure," Associated Press, Sept. 27, 2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="2" href="http://www.stealthpacs.org/profile.cfm?org_id=106#2" name="2">2</a>  </td><td class="small" valign="top" style=" text-align: left;">Mark Sherman, "Davis Pays $100,000 For Lawsuit Over Television Ads," Associated Press, May 13, 2003.</td></tr><tr><td class="small" valign="top" style=" text-align: left; height: 20px;"><a id="3" href="http://www.stealthpacs.org/profile.cfm?org_id=106#3" name="3">3</a>  </td><td class="small" valign="top" style=" text-align: left; height: 19px;">Michael Isikoff, "Winks, Nods & Corporate Cash; One Wired GOP Lobbyist's Playbook for Wielding Influence," Newsweek, Feb. 25, 2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left; height: 28px;"><a id="4" href="http://www.stealthpacs.org/profile.cfm?org_id=106#4" name="4">4</a>  </td><td class="small" valign="top" style=" text-align: left; height: 27px;">American Taxpayers Alliance 990 form, 2001.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="5" href="http://www.stealthpacs.org/profile.cfm?org_id=106#5" name="5">5</a>  </td><td class="small" valign="top" style=" text-align: left;">Bernard Schoenburg, "Election Board Delays Ruling on Garman Ads," The (Springfield, Ill.) State Journal-Register, Nov. 5, 2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="6" href="http://www.stealthpacs.org/profile.cfm?org_id=106#6" name="6">6</a>  </td><td class="small" valign="top" style=" text-align: left;">Rupert Borgsmiller, Illinois State Board of Elections Director of Campaign Disclosure, Interview with Public Citizen Senior Researcher Taylor Lincoln June 24, 2004.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="7" href="http://www.stealthpacs.org/profile.cfm?org_id=106#7" name="7">7</a>  </td><td class="small" valign="top" style=" text-align: left;">Deidre Shesgreen, "Group's Appeal on Behalf of Talent Advertised $100,000 Prize on Caller ID," St. Louis Post-Dispatch, Oct. 25, 2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="8" href="http://www.stealthpacs.org/profile.cfm?org_id=106#8" name="8">8</a>  </td><td class="small" valign="top" style=" text-align: left;">"Three Groups Spend More than $1 Million on Election Ads," Associated Press, Oct. 13, 2003.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="9" href="http://www.stealthpacs.org/profile.cfm?org_id=106#9" name="9">9</a>  </td><td class="small" valign="top" style=" text-align: left;">Public Citizen's analysis of data contained in the New Stealth PACs database. Data collected from groups' Web sites and annual tax forms, press reports, academic papers on activities of independent political groups and interviews by Public Citizen research staff.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="10" href="http://www.stealthpacs.org/profile.cfm?org_id=106#10" name="10">10</a>  </td><td class="small" valign="top" style=" text-align: left;">Ron Fournier, "Republican Strategist Behind Drive to Court Hispanics," Associated Press, Oct. 17, 1999.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="11" href="http://www.stealthpacs.org/profile.cfm?org_id=106#11" name="11">11</a>  </td><td class="small" valign="top" style=" text-align: left;">American Taxpayers Alliance 990 form, 2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="12" href="http://www.stealthpacs.org/profile.cfm?org_id=106#12" name="12">12</a>  </td><td class="small" valign="top" style=" text-align: left;">Robert Lenzner and Matthew Miller, "Buying Justice; For Years Trial Lawyers Owned State Courts. Now Big Business Is Striking Back," Forbes, July 21, 2003.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="13" href="http://www.stealthpacs.org/profile.cfm?org_id=106#13" name="13">13</a>  </td><td class="small" valign="top" style=" text-align: left;">American Taxpayers Alliance 990 forms, 2000-2002.</td></tr><tr><td class="small" valign="top" style=" text-align: left;"><a id="14" href="http://www.stealthpacs.org/profile.cfm?org_id=106#14" name="14">14</a>  </td><td class="small" valign="top" style=" text-align: left;">IRS Form 990 Instructions, Line 81, 2003. (Available at www.irs.gov.)</td></tr></tbody></table>