With Roger Sollenberger, Political Reporter

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The Big Dig this week… How MAGA’s Answer to the ACLU Is Blowing Its $35 Million Budget on Advertising

A prominent MAGAworld legal nonprofit run by a top Donald Trump aide has credited itself for gathering “some of the nation’s best legal, political, and strategic thinkers” to fight “anti-white bigotry” in the courts, spending a staggering $35.2 million to initiate dozens of culture-war lawsuits against the Biden administration, universities, and corporations last year.

But tax filings show that the group, “America First Legal,” isn’t exactly spending all that money on lawsuits. In fact, the lawsuits account for a very small percentage of the $35 million budget. That’s because America First Legal blew nearly all of that money, about $30 million—more than 85 percent of the budget—on advertising.

About four percent of the group’s expenditures, less than $1.5 million, went toward the namesake “legal” services, while about 7.5 percent—$2.7 million—was spent on salaries and compensation.

Advertising First

America First Legal was co-founded by Trump’s racist-rhetoric-wielding speechwriter Stephen Miller and former chief of staff Mark Meadows, and it operates as a sister organization under the Conservative Partnership Institute’s sprawling MAGA umbrella. Last year, AFL posted eye-popping fundraising numbers, with its tax returns revealing $44 million in contributions—a massive jump from the $6.4 million raised in 2021, the group’s first year in existence.

For whatever reason, AFL—which is registered with the Internal Revenue Service as a 501(c)(3) charity—clearly prioritized its donations for marketing, as opposed to the “legal” concerns that serve as the group’s stated raison d'être. In all, advertising expenses were roughly six times the size of the group’s total other costs combined, and about 30 times higher than the $1 million AFL paid the five in-house lawyers it lists as key employees. 

While the group styles itself as a conservative version of the American Civil Liberties Union—“the long-awaited answer to the ACLU”—AFL spent twice as much on ads as the ACLU in 2022, operating with one-fourth the ACLU’s budget. AFL also spent three times as much on ads as the ACLU’s 501(c)(3) arm, while boasting a budget three times smaller.

Big Flex

The $30 million ad budget was split almost entirely between three entities—PG Placements, Jamestown Associates, and FlexPoint Media. Ohio-based PG Placements was the top earner, receiving about $12.8 million. Next was Jamestown Associates—a political marketing and media production firm whose alums include Trump campaign royalty Jason Miller and Bill Stepien—which was paid roughly $11.7 million. And FlexPoint Media received a flat $5 million.

However, Virginia business records show that PG Placements doubles as a pseudonym for FlexPoint Media, meaning that AFL really only paid two companies, with PG/FlexPoint raking in nearly $18 million combined in 2022. That’s almost three times AFL’s total revenue the prior year.

While the full scope of those marketing services is unclear, AFL did run a number of well-publicized ad campaigns in 2022. (The promotions were blasted as “vile,” “racist,” “hateful,” and “hate mail.”) Colloquially, those ads could be described as blatantly political. But as a 501(c)(3) charity, AFL is barred from participating in “political activity” of any kind—a narrow definition for tax status purposes, which essentially only captures attempts to influence specific elections. So while many of AFL’s promotions bashed Democratic policies and championed positions specific to Trump’s agenda, they stopped short of denouncing or endorsing the election of any specific candidate or ballot measure.

New Coke

When The Daily Beast asked why AFL’s promotional budget was so high while legal expenses were so low, AFL general counsel Gene Hamilton downplayed the advertising binge and called the question “a complete mischaracterization of the contents of the 990.”

“There were advertising expenditures related to a public education campaign last year about systemic racial discrimination and other matters, but nearly all of our operating budget aside from those expenses went to legal work,” Hamilton wrote in an email, specifying that legal work included “salaries, internal operating expenses, etc.”

Hamilton said AFL’s outside counsel spending doesn’t reflect the group’s “team of in-house attorneys and other work,” adding that extrapolating their legal efforts from one line item is “like looking at how much money Coca-Cola spent on syrup and saying that’s their budget for Coke in a year.”

While it’s true that the “legal” line item captures outside counsel services, Hamilton’s explanation doesn’t account for the massive delta between AFL’s $30 million ad spending and its operating costs as a legal group.

Law firms and public interest groups like AFL hire outside counsel for a number of reasons—to offset work burdens, conduct research, serve as local representation in court, provide specialized expertise, and fill internal knowledge gaps. The size of outside counsel fees is therefore frequently commensurate with internal caseload.

In 2021, when AFL raised $6.4 million, it reported paying roughly $580,000 for legal services and about $650,000 for employee compensation, while spending less than $70,000 on ads and promotions.

Read the full story here.

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From Roger’s Notebook...

Salary hike. In a move designed to diversify the candidate field, the Federal Election Commission approved new rules on Thursday that allow candidates to pay themselves a limited salary with their campaign donations—federal officeholders not included.

Democratic FEC chair Shana Broussard said that the new measures “will help ordinary, working-class Americans to represent their communities by running for federal office.” The agency had been weighing the move for years, and on Thursday it won a 5-1 majority from the six commissioners.

While candidates could previously pay themselves salaries through their campaigns, the FEC limited those payments to mitigate concerns about candidates converting donor funds to their personal use. But progressives have argued that those limits also deterred people without resources from running for office, such as the unemployed, young people, and caregivers—most specifically women.

Rep. Maxwell Frost (D-FL), the first member of Generation Z elected to Congress, testified in favor of the new rule earlier this year.

“I was able to slum it out for a year and a half, but it was difficult. I put myself in a bad financial place. But, I’ll be honest, if I had a family to take care of I probably would have had to drop out midway through the race,” Frost told the FEC at a public hearing in March.

The new rules allow candidates to tap campaign funds to pay themselves an annual salary that is either the average of their annual income over the last five years, or 50 percent of the salary for a member of the House—whichever is lower. With the current House salary at $174,000, the most a candidate could earn from their campaign is $87,000. The rule doesn’t apply to current federal officeholders.

While the rules capped the salary amount, they also expanded the length of time candidates can pay themselves, extending it over the full campaign. Candidates can begin drawing payments when they file their statement of candidacy with the FEC—previously they had to wait until filing deadlines dictated at the state level, which weren’t uniform—and can continue taking a salary until 20 days after winning or losing an election, or dropping out.

At the same hearing where Frost testified, Brad Smith, founder of the Institute for Free Speech, panned the proposed changes. Smith backed the initial 2002 candidate salary rule when he was FEC commissioner, but in March he called that decision “a mistake,” arguing that candidate salaries carry risk for potential corruption.

“I don’t know what you can call giving campaign funds to a candidate to cover personal living expenses other than a conversion to personal use,” he said at the hearing. (The FEC on Thursday also passed an expansion of the personal use ban, extending the prohibition to “any political committee”—a development that might ruffle Trump, who treats his “Save America” leadership PAC like a personal account.)

But progressives like Tom Moore, senior fellow at the Center for American Progress and former counsel to Democratic FEC commissioner Ellen Weintraub, lauded the improvement.

“These rules will help more Americans of modest means run for Congress,” Moore said in a statement on Thursday, observing that the old guidelines were “practically unusable for many candidates.”

“Over time, these changes will give the country a Congress that looks a lot more like America,” he said.

Bull market. A new report from GroupM, one of the world’s largest ad agencies, projects that in 2024, the U.S. political advertising market will itself be the tenth-largest ad market globally—larger than the entire ad market for Australia.

The report, which Axios reported, predicts $16 billion will be spent next year on ads related to elections and political advocacy—a 31.2 percent jump from the last presidential election cycle in 2020, and nearly double the $8.9 billion spent during the 2022 midterms.

Axios noted a few main drivers of growth, noting that the GOP presidential primary has already supercharged the spending cycle, with more than $100 million in ad buys through September.

Still, GroupM’s forecast is much higher than projections from other firms, which have predicted a 2024 market of about $10 billion. But GroupM’s report also included issue-based ads from super PACs and outside groups, and considered a broader scope of medium. Axios noted that the diffuse channels of the internet and connected devices provide “infinite inventory for campaigns to place ads with few regulations.”

Stupor PAC. The powerful super PAC backing Ron DeSantis’ presidential campaign is raising even more concerns that it has crossed legal lines—and this time the calls are coming from inside the PAC.

On Tuesday, the Associated Press reported that sources with the “Never Back Down” super PAC are expressing unease with the control that the Florida governor has been trying to exert over the nominally outside group. Specifically, DeSantis and his wife, Casey DeSantis have reportedly expressed “messaging concerns” about Never Back Down. The DeSantis campaign has reportedly been sharing those concerns with the super PAC’s board, which passed them along to super PAC staff.

Federal law bars campaigns from coordinating with super PACs. Adav Noti, legal director for watchdog group Campaign Legal Center, told AP that the groups appeared to be blatantly breaking the law.

“To actually have a conversation with the candidate’s agents and the super PAC’s agents about strategy—there is no plausible argument that that is legal. This is not a gray area,” Noti said.

This spring, CLC filed a complaint alleging that DeSantis and the super PAC broke coordination laws by directing more than $80 million in state PAC funds to Never Back Down.

More From The Beast’s Politics Desk

Taking stock. We revealed earlier this week that Rep. Mike Garcia (R-CA) sold up to $50,000 of Boeing stock just weeks before the Transportation and Infrastructure Committee, of which Garcia was a member, released a damning report on Boeing 737 crashes. Perhaps even more troubling, Garcia blew the deadline to report the trades and only disclosed them after Election Day. Garcia won by 333 votes. Read all about it here. 

Smudge on the whiteboard. Rep. Katie Porter (D-CA) is running for Senate, and has touted a clean record when it comes to taking corporate money. But Sam Brodey found that, as is the case with many politicians who swear off corporate funds, the money has somehow found its way to her anyway. Check out Sam Brodey’s report here.

America’s Mayor. It’s the beginning of the end for Rudy Giuliani, as he’s about to face a multimillion dollar judgment against him for defaming two poll workers. But that’s just the beginning of his troubles. Jose Pagliery has cataloged Giuliani’s ups and downs, as well as his current predicament.  

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