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Overview:

 
Citizens for a Sound Economy (CSE) / Freedom Works

Stated Purpose:
Fights for lower taxes and less regulation.

Tax Status:
501(c)(4)

Political Orientation:
Republican

Profile:
September 2004 — Note: Citizens for a Sound Economy merged with Empower America in July 2004 to form a new group called Freedom Works.

Citizens for a Sound Economy (CSE) made no secret of its efforts to influence the outcomes of the 2002 elections, despite reporting otherwise to the IRS. The organization has continued its involvement in electioneering activities in 2004.

A CSE press release issued on Election Day 2002 boasted that the group "let voters" in at least nine states "know which candidates will fight for lower taxes, less government, and more freedom."1 The group was especially active in four heated U.S. Senate races.2 But CSE reported to the IRS that it made zero political expenditures from 2000 to 2002, the most recent year for which its tax information is available.3 In effect, CSE claimed that none of its mailings, radio advertisements and telemarketing campaigns were intended to influence the outcomes of elections.4

This claim was further undercut by CSE's praise or criticism of several candidates who were not public officials at the time. The IRS is less likely to deem a message "political" if it identifies a candidate who is a government official in a position to act on a public policy issue covered by the message.5 None of the major party candidates for the U.S. Senate in North Carolina and Texas, where CSE was active, held federal office at the time of CSE's communications.

CSE's apparent electioneering activities included mailing brochures to 25,000 North Carolinians quoting Republican U.S. Senate candidate Elizabeth Dole as saying "To our seniors on Social Security, I will never vote to reduce your benefits." The group also broadcast a radio ad in which a volunteer told an elderly voter that "it's Elizabeth Dole who will protect Social Security” and "her opponent [Democrat Erskine Bowles] has been trying to frighten seniors – and that's wrong."6

In New Hampshire, CSE's activities included running a radio advertisement calling Democratic U.S. Senate candidate Jeanne Shaheen a "taxing machine," and mailing 75,000 flyers stating that "Governor Jeanne Shaheen Jeopardizes America’s Energy Security."7 8 CSE also ran a telemarketing campaign in South Dakota criticizing the positions of Democratic Sen. Tim Johnson on gas taxes and oil exploration. In Texas, the group made 17,000 "targeted phone calls to registered voters statewide."9 10 11

CSE's chairman is former House Majority Leader Dick Armey (R-Texas) and members of its board of directors include C. Boyden Gray, former counsel to President George H.W. Bush and a spokesman for the Electric Reliability Coordinating Council, an industry group that has pushed for relaxed requirements for power plants to install modern pollution controls.12

CSE also has close ties to the libertarian Cato Institute. CSE co-founder David H. Koch is a member of Cato's board of directors.13 Koch is also executive vice president of Koch Industries, an oil and gas company that paid a $35 million fine in 2000 (the largest civil penalty ever imposed under the Clean Water Act) for failing to stop more than 300 leaks that spilled 3 million gallons of oil over a seven-year period.14

CSE claims on its Web site to represent "280,000 members" who "have been fighting for lower taxes, less government, and more freedom."15 From 2000 to 2002, however, 79 percent of the group's funding has come from an average of 56 donors per year who have each given at least $5,000.16 Though the group does not publicly disclose the names of its donors, a copy of CSE's 1998 budget obtained by Public Citizen revealed that CSE's big contributors that year included Philip Morris ($945,550), U.S. West Communications ($690,500) and Koch Industries ($374,000) as chronicled in this Public Citizen report:17 Corporate Shill Enterprise: A Public Citizen Report on Citizens for a Sound Economy, a Corporate Lobbying Front Group. 

CSE is active again in 2004. The group claimed that it was targeting more than 25,000 voters in the closing days before the Pennsylvania Republican U.S. Senate primary matching Sen. Arlen Specter and Rep. Pat Toomey with pro-Toomey messages in an effort to "educate likely Republican primary voters about the key differences between" the two candidates.18

The group held an event in June 2004 to assist independent presidential candidate Ralph Nader's bid to win a spot on the Oregon presidential ballot. "Ralph Nader needs 1,000 signatures to qualify for the ballot, and we need to make sure he gets them," the script of a CSE telemarketing message said. "Ralph Nader is undoubtedly going to pull some crucial votes from John Kerry, and that could mean the difference in a razor-thin presidential election."19


1   "CSE Connects Directly with Over 1.7 Million Voters," Citizens For a Sound Economy press release, Nov. 5, 2002.
2   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.
3   Citizens for a Sound Economy 990 forms, 2000-2002.
4   IRS Form 990 Instructions, Line 81, 2003. (Available at www.irs.gov.)
5   Internal Revenue Bulletin: 2004-4, Internal Revenue Service, Jan. 26, 2004.
6   "North Carolina Ad Blitz: Seniors Trust Dole on Social Security!" Citizens for a Sound Economy Press Release, Oct. 31, 2002.
7   "New Hampshire Ad Blitz: 'Jeanne Shaheen is a Taxing Machine!" Citizens for a Sound Economy press release, Oct. 31, 2002.
8   "CSE Principles for Reliable Energy," Citizens for a Sound Economy brochure, October 2002. (Available at www.cse.org/reports/shaheen_brochure.pdf. Accessed on June 3, 2004.)
9   "CSE Mobilizes Voters in South Dakota," Citizens for a Sound Economy press release, Nov. 4, 2002.
10   "Election 2002 Round Up," Citizens for a Sound Economy press release, Nov. 8, 2002.
11   "CSE Mobilizes Voters in New Hampshire," Citizens for a Sound Economy press release, Oct. 29, 2002.
12   Citizens for a Sound Economy Web site. (Available at www.cse.org. Accessed on May 21, 2004.)
13   Citizens for a Sound Economy Web site. (Available at www.cse.org. Accessed on May 21, 2004.)
14   "Pipeline Operator Agrees to Huge Fine; Texas Leaks Covered by $35 million penalty," Ft. Worth Star Telegram, Jan. 14, 2000.
15   Citizens for a Sound Economy Web site. (Available at www.cse.org. Accessed on May 21, 2004.)
16   Citizens for a Sound Economy 990 forms, 2000-2002.
17   "Corporate Shill Enterprise: A Public Citizen Report on Citizens for a Sound Economy, a Corporate Lobbying Front Group," Public Citizen, Oct. 6, 2000.
18   "In Toomey vs. Specter Race, CSE Tells the 'Tale of Two Candidate,'" Citizens for a Sound Economy Press Release, April 26, 2004. (Available at www.cse.org. Accessed on May 26, 2004.)
19   CSE Telemarketing Script, "Nader Event," June 26, 2004.



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