“PUBLICITY IS JUSTLY COMMENDED AS A REMEDY FOR SOCIAL AND INDUSTRIAL DISEASES. SUNLIGHT IS SAID TO BE THE BEST OF DISINFECTANTS; ELECTRIC LIGHT THE MOST EFFICIENT POLICEMAN.”
Disclosure
Disclosure of the sources of the funding of our elections and candidates, and how that money is spent, has long been considered central to the free and transparent functioning of our democracy. In fact, the Supreme Court has continued to uphold the constitutionality of disclosure laws, finding they serve broad important purposes.
“I THINK WHAT WE OUGHT TO DO IS WE OUGHT TO HAVE FULL DISCLOSURE, FULL DISCLOSURE OF ALL OF THE MONEY THAT WE RAISE AND HOW IT IS SPENT. AND I THINK THAT SUNLIGHT IS THE BEST DISINFECTANT. ”
As the Court has repeatedly recognized, disclosure provides the electorate with critical information about the candidates. For example, knowing who is financially supporting a candidate may tell voters more about where the candidate stands on issues than do party labels and campaign speeches. Researchers, the press and interested citizens can look at the relationships between contributors and the candidate, analyze patterns of giving and expose the relationship between contributions and the candidate’s positions. In addition, disclosure helps detect actual corruption and prevents the appearance of corruption by shining a light on large contributions and expenditures. Information about a candidate's most generous supporters allows us to look for any post-election special favors that may be given in return and may deter donors seeking favors. Finally, the record-keeping and reporting that is required for disclosure allows for the enforcement of the contribution limits and prohibitions.
In fact, for a long time even opponents of contribution limits argued all that was needed were disclosure laws so that the public would know who was supporting the candidates. For example, in 2000, Senator Mitch McConnell, who recently began opposing disclosure, said:
There's a serious constitutional question, whether you can require people engaged in what's called issue advocacy to disclose. But if you're going to do that, and the Senate voted to do that, and I'm prepared to go down that road, then it needs to be meaningful disclosure…And so what we ought to do is broaden the disclosure to include at least labor unions and tax-exempt business associations and trial lawyers so that you include the major political players in America. Why would a little disclosure be better than a lot of disclosure?
More recently, in 2007, Speaker of the House John Boehner called for increased disclosure: “I think what we ought to do is we ought to have full disclosure, full disclosure of all of the money that we raise and how it is spent. And I think that sunlight is the best disinfectant.”
Unfortunately, despite broad agreement in support of transparency in the funding of our elections on both sides of the aisle, disclosure is now under assault from two directions by a small group of well-funded opponents.
The New Attack on Transparency
Dark Money Groups
501(c)(4) groups—which often have a generic good-government sounding name that tells you nothing about who they are or who is funding them—are increasingly undertaking activities that support or oppose candidates in order to hide the true sources of the funds supporting that activity. The anonymity they promise their contributors is a major draw to wealthy individuals and corporations who do not want their support for a particular candidate or association with negative ads made public. Non-disclosure can also benefit a candidate who does not want to be publicly associated with certain donors. More importantly, it leaves the public in the dark as to who is financing our candidates for elected office.
These groups base their ability to operate in the shadows on the claim they are “social welfare” organizations under section 501(c)(4) of the Internal Revenue Code (IRC). While the tax laws do not require 501(c)(4) organizations to publicly disclose their contributors, political activity is explicitly excluded from the definition of promoting “social welfare.” Groups primarily involved in directly or indirectly attempting to influence elections should register as political organizations under section 527 of the IRC, which does require them to disclose the identity of anyone who contributes in the aggregate $200 or more in a calendar year. And, if their major purpose becomes influencing candidate elections, federal law and many state laws also require the organizations to register as political committees and disclose their contributors. Thus, many of these groups should be publicly disclosing their contributors.
“REQUIRING PEOPLE TO STAND UP IN PUBLIC FOR THEIR POLITICAL ACTS FOSTERS CIVIC COURAGE, WITHOUT WHICH DEMOCRACY IS DOOMED.”
The rise of the dark money groups is often attributed to the Supreme Court’s decision in Citizens United holding unconstitutional the prohibition on corporations and labor unions making independent expenditures. Therefore, it is argued, that the only solution is a change in the Supreme Court or a constitutional amendment overruling Citizens United. This is patently false.
Rebuilding the disclosure system requires proper leadership and legislative action to require enforcement of the rules in effect and enactment of new disclosure laws where needed.
Rebuilding the disclosure system requires proper leadership and legislative action to require enforcement of the rules in effect and enactment of new disclosure laws where needed.
While it is true that the ruling did fuel a dramatic increase in the use of dark money groups to influence elections for both legal and strategic reasons, Citizens United in no way undermined laws requiring the disclosure of the true funding of activity that supports or opposes a candidate. In fact, in Citizens United and other recent Supreme Court cases, such as FEC v. Wisconsin Right to Life and McCutcheon v. FEC, the Supreme Court underscored the importance of disclosure rules, even while striking down certain limitations and prohibitions on the sources of funds.
If anything, these recent Supreme Court cases should serve as a call for the enactment and enforcement of broad disclosure rules. Many of these rules are already on the books or can easily be enacted.
Even where groups do not disclose all of their contributors, federal law and many state laws require that anyone spending more than a threshold amount for an independent expenditure or electioneering communications place a disclaimer on the ad and file reports disclosing who paid for the ad. Federal and state laws also require super PACs to disclose their contributors. However, in a game of “hide the contributor,” a 501(c)(4) organization is listed as the source of the funds for an ad or contribution to the super PAC when the organization is acting as a conduit for a handful of wealthy donors—sometimes only one—who want to remain anonymous.
THOSE OPPOSED TO DARK MONEY GROUPS’ NON-DISCLOSURE PRACTICES
Unfortunately, the IRS, FEC and some state agencies have interpreted their laws to give these groups cover to argue they do not have to disclose the real source of their funds and, even then, fail to enforce their weak interpretations of the disclosure laws. At the same time, many in Congress and in the state legislatures are perfectly happy to let disclosure laws die on the vine.
The bottom line is that transparency in the financing of our elections has the full support of the Supreme Court, and the collapse of the disclosure system has, in large part, been due to weak laws and even weaker enforcement efforts. That means rebuilding the disclosure system requires proper leadership and legislative action to require enforcement of the rules in effect and enactment of new disclosure laws where needed.
% OF BUSINESS EXECUTIVES WHO SUPPORT DISCLOSURE REFORMS
This is an area where liberals and conservatives can find common ground, from New Jersey Governor Chris Christie to President Barack Obama to Chief Justice John Roberts, who said that disclosure, “promotes transparency and accountability in the electoral process to an extent other measures cannot.” A staggeringly large majority of Americans (80 percent) are opposed to these dark money groups “abusing and taking advantage” of unclear IRS rules, including 88 percent of Democrats, 84 percent of independents and 72 percent of Republicans. And 90 percent of business executives support reforms that disclose all individual, corporate and labor contributions to politics.
Dimming the Light on Existing Disclosure
Long-standing rules requiring the disclosure of contributions to candidates, political parties, PACs and other political spenders are being called into question by various politicians and advocacy groups, both in the courts and in the legislatures. While the legal challenges are generally being rejected by the courts, there is a growing political battle to limit the disclosure of the identity of those making political contributions. The opponents of transparency, a small but vocal group, now argue that wealthy donors, organizations and businesses that finance political campaigns will be harassed, embarrassed or intimidated by those who oppose their activities if their support is made public. Analogizing their situation to that of NAACP members in Alabama during the mid-1950s, they cite the case of NAACP v. Alabama, where the Supreme Court found that Alabama’s attempts to force the NAACP to make public a list of its members violated the First Amendment.
The potential for harassment for unpopular political views is a legitimate concern. But the Supreme Court in Buckley found that “[t]he governmental interests sought to be vindicated by [FECA’s] disclosure requirements” are of sufficient importance “to outweigh the possibility of infringement, particularly when the ‘free functioning of our national institutions’ is involved.” Nevertheless, according to the Buckley Court:
There could well be a case, similar to those before the Court in NAACP v. Alabama and Bates, where the threat to the exercise of First Amendment rights is so serious and the state interest furthered by disclosure so insubstantial that the Act's requirements cannot be constitutionally applied. But no appellant in this case has tendered record evidence of the sort proffered in NAACP v. Alabama. Instead, appellants primarily rely on the clearly articulated fears of individuals, well experienced in the political process.…On this record, the substantial public interest in disclosure identified by the legislative history of this Act outweighs the harm generally alleged.
Thus, according to the Court, the ability to grant an exemption from disclosure case-by-case based on specific facts is sufficient to protect the important interests at issue. However, some activists worry that the current disclosure floor of $200 may indeed discourage participation by small donors, while increasing compliance burdens for campaigns.
Laws must require the disclosure of the true sources of political spending to prevent wealthy contributors from using conduit organizations to hide their efforts to buy elections.
There are important substantive issues to be resolved with any disclosure system, such as what is the appropriate threshold for reporting individual contributions, so real reform must balance the Supreme Court’s recognition of how disclosure furthers the interests of a democracy while protecting small donors.
Laws must require the disclosure of the true sources of political spending to prevent wealthy contributors from using conduit organizations to hide their efforts to buy elections.
Elements of Effective Disclosure
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Depending on the specific context, there are several approaches to increasing transparency in the funding of our elections. Some involve working with campaign finance agencies to strengthen their rules and enforcement and others focus on changes to the law. In some cases, agencies may have to be taken to court to force them to enforce the laws as written.
There are a number of substantive issues to be considered when addressing disclosure, including the types of groups and activities covered, the level of disclosure and whether disclosure is transactional (e.g., applies to specific ads) or organizational (e.g., a group has to disclose all of its activity) or both. And while there is little current evidence of harassment due to the disclosure of large campaign contributions, the problem must be accommodated if such persecution arises. These are all important issues as they will impact the effectiveness of the disclosure rules and how vulnerable they are to constitutional challenges, as well as the level of support the reforms get.
- Defining Political Activity: There should be no question that expenditures made by a candidates, political parties or PACs are election related. However, the funding of true issue advocacy unrelated to an election by individuals and non-political groups is not subject to campaign finance disclosure laws. Therefore, one of the ways organizations try to ensure donor anonymity is to claim that they are not actually involved in trying to influence elections. Opponents of transparency argue that unless an ad “expressly advocates” the election or defeat of a candidate by use of such words as “vote for,” “elect” or “defeat,” the First Amendment prohibits any requirement that the funders of the ads be disclosed.
- However, while ads do have to be election related to fall within campaign finance disclosure rules, the Supreme Court has never read disclosure laws so narrowly as to only apply to “express advocacy.” For example, the Supreme Court upheld disclosure requirements as applied to broadcast ads that mention the name of a candidate within 30 days of a primary or 60 days of a general election and are targeted to the candidate’s electorate. Plus, when an organization coordinates an ad with a candidate, disclosure requirements can be applied to a much broader range of ads.
- Disclosing the Real Source of the Money: As discussed above, laws must be enacted and/or enforced to require the disclosure of the true sources of political spending and to prevent wealthy contributors from using conduit organizations to hide their efforts to influence elections.
- Disclosure Thresholds: Most political organizations and candidates use software to keep their financial records, so it is possible to require public reporting of most contributions, regardless of amount. On the other hand, disclosure does implicate privacy issues, and there are questions about the information value of reports that include the identity of the donor of every dollar, especially with large campaigns. Currently, at the federal level, a person’s identity must be disclosed if, in the aggregate, he or she contributes in excess of $200 to a candidate for an election or to a PAC or party committee in a year. Many states have lower thresholds for disclosure, while others have higher. Where the exact threshold is set requires the balancing of what would be the most useful type of data for the public to have to ensure true transparency with an individual’s privacy interests and any burden on a political committee.
- Frequency of Reporting: Few would seriously argue that disclosing donors only after an election results in true transparency. To serve the function of providing voters with information about the candidates and the people who support them, there must be pre-election reporting. However, depending on the nature and length of campaigns, it may be practical to require more frequent reporting in an election year than in the year when an election is not taking place. In some reporting systems, political committees may only be required to report twice a year in years in which there is no election. Whether this is adequate may depend, in part, on when the campaigns actually start and the level of activity in a non-election year. Another option is requiring quarterly reports in non-election years, moving to monthly reporting in the election year. The most transparent systems require more frequent reports (e.g., within 72, 48 or 24 hours) for contributions to a candidate right before an election and for committees making independent expenditures.
- Making the Data Public: It is not enough to require candidates and political committees to gather the data and file reports. The law should also require that the reports be made publicly available on the Internet in searchable, downloadable form as soon as possible after filing. This means that the agency that is responsible for receiving and making public the reports must be sufficiently funded and staffed and should be prepared to work with the public and the press to sort and analyze the data as it comes in. Finally, all but the smallest and underfunded campaigns should be required to file the reports electronically. It is the only way to ensure information is made publicly available quickly and, since most campaigns fill out their reports using software, it is easier on the campaigns and the disclosure agency.