Small super PACs worked under the radar

(CBS News) NEW YORK - When Ron Paul dropped out of this year's race for the Republican presidential nomination, John Ramsey was looking for an outlet for his political energy.

The lanky 22-year-old Texan college senior had volunteered for the Paul campaign and wasn't too excited about Mitt Romney. Luckily for Ramsey, politically and personally, two years ago he inherited millions of dollars from his late grandfather and mentor, Justin Robert Howard, who'd made his fortune in banking and real estate.

This spring, Ramsey hooked up with Preston Bates, a fellow twenty-something Paul campaign volunteer from Kentucky yet to finish college, and they launched Liberty For All super PAC, a political action committee allowed to raise and spend unlimited sums of money. There are now 940 super PACS registered with the Federal Election Commission.

"We did this to get in the business of freeing America from your phonies and cronies that dominate the political establishment," Ramsey said. "With a Super PAC, you're able to facilitate a conversation. You're able to provide voters access to information."

Bates said, "All we can do is give people information. They have to go drive themselves to the voting booth or mail in their absentee ballot. We can't vote for them. They have to make the choice."

This year's campaigns for federal office -- the House of Representatives, the Senate, and the Presidency -- cost $6 billion, according to the Center For Responsive Politics. The tab was inflated by independent groups -- the two major political parties, unions, nonprofits, and "super PACs" -- which spent at least $1 billion.

Super PACs alone spent more than $630 million, according to the Sunlight Foundation. Thousands of donors contributed, but in some cases a super PAC's money came mostly from one person, like Ramsey, who seeded Liberty For All with $2.8 million.

Ramsey said, "I think Americans are sick and tired of Pepsi-Coke elections. That's not just for the presidential, but Democrats and Republican in general, I think, they are a lot of the same. They both spend a lot of money -- one borrows and spends; the other taxes and spends. The common denominator is 'spends.'

As a self-described Libertarians, Ramsey and Bates believe in lower taxes, less government spending, and more civil liberties. In Robert Massie, they found their first soul mate to support. The super PAC spent $600,000 to support Massie in a competitive Republican primary in northern Kentucky's 4th congressional district. He cruised to victory on Tuesday with 62 percent of the vote.

"It's easier to play in primaries, and you can stretch you dollar much further in primaries," Bates said. "People like us, who weren't really part of the political establishment, can raise and spend money and impact elections."

The second candidate their super PAC backed was Republican Kerry Bentivolio, a quirky former school teacher, reindeer farmer, and a political novice focused on lowering the federal debt and refusing to raise the debt ceiling.

"I believe you are smarter with your money than government bureaucrats," Bentivolio told a recent gathering in Lithonia, Michigan. "I'm going to promise not to spend your money. I'm never ever going to raise taxes unless there is a war."

Bentilvolio had never met Ramsey before Liberty For All spent $800,000 to support his congressional run in Michigan's 11th congressional district, which covers Detroit's western suburbs.

"Manna from heaven. God bless them. Because it was wonderful," Bentivolio said.

He won election this week with 51percent of the vote in a five-candidate field.

Bates said, "I frankly think the only way to think that super PACs are not good for democracy is if you are an incumbent and scared about your election."

Incumbent congressman Tim Bishop never admitted if he had been worried about his re-election.

The five-term New York Democrat found himself in a rematch with Republican Randy Altschuler, who Bishop beat in 2010 by just 593 votes out of 200,000 cast. This time, each candidate raised more than $2 million, but Altschuler got outside help from a single-minded Super PAC.

On the eastern end of Long Island, Bishop was hit by $1 million in negative ads and direct mail from Prosperity First, a super PAC created essentially top removed Bishop from office. Its funds largely came from one donor and Bishop constituent, Robert Mercer, a manager of Renaissance Technologies, a hedge fund based in New York.

Mercer seeded the group with $750,000. This year, he also gave $1 million to the pro-Romney Restore Our Future super PAC, $1 million to American Crossroads, the pro-Republican group co-founded by Karl Rove, and $600,000 to the anti-tax Club For Growth.

Though a spokesman, Mercer declined to be interviewed or to answer questions from CBS NEWS. But Bishop believed Mercer might have been motivated by Bishop's vote in the 112th Congress for the financial industry regulation law known as Dodd-Frank.

"What it was designed to do is to fix some of the systemic problems that resulted in the worst financial collapse this country has had since the Great Depression," Bishop said. "Without it, we remain exposed to the very same forces that darn near brought our economy to its knees."

Bishop's was one of 63 House races this year where outside groups like super PACs spent $1 million or more, according to the Sunlight Foundation. The National Republican Congressional Committee also spent $657,000 opposing Bishop. The Democratic Congressional Campaign Committee spent little opposing Altschuler, but Bishop benefited from $851,000 spent by the pro-Democratic House Majority PAC opposing Altschuler.

"What I fear we're approaching is a process in which elections are bought and sold, as opposed to won and lost," Bishop said.

Joe Ricketts, the founder and former CEO of the online brokerage TD Ameritrade, was the primary donor of a conservative super PAC called the Ending Spending Action Fund, contributing more than $12 million, according to FEC reports. The group backed only Republican candidates and provided crucial early support for Debra Fischer in her Republican Senate primary in Nebraska; she went onto to win election Tuesday.

Leo Linbeck, the president and CEO of Aquinas Enterprises, a Houston-based construction and real estate firm, was the primary donor to the Campaign For Primary Accountability, giving $1.5 million to a super PAC which opposed certain congressional incumbents. Its funds targeted several House incumbents who lost primaries this year, such as Democrats Silvestre Reyes of Texas and Jeanne Schmidt of Ohio and Republican Donald Manzullo of Illinois.

Still, Ricketts' and Linbeck's super PACs both contributed to more losers than winners.

In New York, Bishop was able to hold onto his House seat with 52 percent of the vote, while widening his margin to 19,000 votes.

"Big hearts beat big checks every day of the week," Bishop said.

In addition to their two winning House candidates, Massie and Bentivolio, Liberty For All spent $475,000 in support of Arizona's Jeff Flake, during his competitive Republican Senate primary. Flake also won election on Tuesday.

With the Supreme Court having sanctioned no limits on political speech, John Ramsey bristles at the notion that super PACs like his imperil democracy.

Ramsey said, "The Establishment's been able to do this for years now. Now that other individuals and small groups like ours are able to push back a little bit, the only people that should be shaking are enemies of freedom."