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Dem Claim on Foreign Money Lacks Evidence

The Obama administration and its allies are waging all out war on the U.S. Chamber of Commerce and Republican-leaning groups, accusing them of using foreign money to help finance political ads. Trouble is, they have no evidence.

But the mere idea, even without proof, dovetails with an underlying Democratic message that tries to tie big-business friendly Republicans to foreign interests and shifting jobs overseas.

Obama and his Democrats, in danger of losing their majority in the House of Representatives and, perhaps, the Senate in Nov. 2 congressional elections, have decided to fight back with bare-knuckles political tactics.

Democrats are in a deep hole with voters because of an anemic economic recovery from the devastating recession, stubbornly high - nearly 10 percent - unemployment and a near financial meltdown that has cost millions of Americans their homes to mortgage foreclosures and caused retirement savings to to vanish.

Election 2010: On the Campaign Trail

On Monday, the liberal group began airing an ad in Illinois against Senate candidate Mark Kirk, a Republican. The TV spot uses his support from the chamber to link him to foreign corporations that, in the ad's words, "threaten American jobs."

And in Pennsylvania, Vice President Joe Biden kept up the attack on the chamber and outside groups who are spending millions of dollars in political ads against Democrats without having to reveal their contributors.

"I challenge the Chamber of Commerce to tell us how much of the money they're investing is from foreign sources," Biden said in Scranton, Pennsylvania, where he was stumping for a House candidate. "I challenge them, if I'm wrong I will stand corrected. But show me, show me."

Republicans suggest it's more about digging up votes than digging up answers, a sign of desperation by Democrats worried that they're about to lose control of the House. And the Chamber of Commerce, which has already spent more than $20 million this year in campaigns mostly aimed at Democrats, is responding with an equally combative tone. Special Report: Election 2010

"We accept the vice president's challenge here and now, and are happy to provide our answer: Zero. As in, 'Not a single cent,"' said Tom Collamore, a senior vice president at the chamber. "We hope this clears it up, and hope the vice president keeps his word and stands corrected."

Bruce Josten, the chamber's top lobbyist, was even more pointed: "We are seeing an attempt to demonize specific groups and distract Americans from a failed economic agenda," he said in a statement.

Using foreign money to pay for political activity is illegal, and U.S. Chamber of Commerce officials say the minimal amount of money they receive from overseas is carefully walled off from political spending.

The chamber says its 115 foreign business councils, known as "AmChams," pay a total of about $100,000.

"There is no evidence at all that the chamber has done anything illegally," said Richard L. Hasen, an expert on election law at Loyola Law School in Los Angeles. But he also said the potential for impropriety exists with any organization that accepts funds that would be illegal if spent on politics.

To be sure, money is fungible and money that is segregated for other purposes can free up money that can be used political for political advertising.

But the chamber is hardly alone. A number of labor unions and advocacy groups that participate in politics have foreign affiliates and overseas donors. By law, these groups must make sure no foreign funds are used to advocate for or against political candidates. What's more, foreign companies with United States divisions can create political action committees that accept donations from their U.S. employees.

Those foreign-connect PACs have contributed more than $12 million to political candidates this election cycle, with more than half going to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks political money. PACS must itemize and identify the source of all contributions more than $200.

Nonprofit tax exempt groups, such as the U.S. Chamber of Commerce, are not required to reveal their contributors. Neither are outside groups such as Crossroads Grassroots Policy Strategies, a group created earlier this year with the help of Republican strategist Karl Rove. It, too, has become a target of Democrats for their extensive spending in Senate campaigns.

Mystery Campaign Ad Dollars

In a statement after Biden's remarks, the chamber's top lobbyist, Bruce Josten, said: "We are seeing an attempt to demonize specific groups and distract Americans from a failed economic agenda. With three weeks until Election Day, it's time to return to the discussion that Americans care most about: job creation."

The lack of disclosure makes it easier to mount an attack that suggests either illegality or outsize influence by corporations and millionaires.

The merits of the Democrats case aside, the claims of foreign influence are part of a broader message that attempts to answer Republican attacks that Democrats are not doing enough to fix the economy and improve employment.

"What you have is an effort to buy a Congress that will serve an agenda of big Wall Street banks, the big insurance companies, and other special interests that benefit from the off-shoring of American jobs," said Rep. Chris Van Hollen, the head of the Democratic congressional Campaign committee.

It's unclear whether the tactic works, and it threatens to place moderate Democrats who have business support in an awkward spot. What's more, the complexity of the message is a hard one to convey in a 30 second television ad.

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