Neither the IRS nor the Department of Justice have prosecuted flagrant violations of campaign finance and related tax laws, despite both agencies’ authority to take legal action against those who stealthily funnel dark money into our elections. At a hearing of the Senate Judiciary Committee’s Subcommittee on Crime and Terrorism yesterday, Senator Whitehouse, the subcommittee chair, made a compelling argument that under current law, the IRS and DOJ could be doing more to prosecute those who willfully misuse their tax-exempt status to influence our elections. Instead, both agencies are, as he said, “complicit in the mockery that is made of these tax laws.”

With the exception of Sen. Whitehouse himself, Senators are also complicit in condoning violations of the law. Only one other subcommittee member—Ted Cruz—bothered to show up for the hearing, and he was there to channel dark money champion Mitch McConnell, blithely ignoring the corrupting influence of anonymous campaign contributions while disregarding the rights of voters to know who is influencing their elected officials.

Had they been in attendance, senators would have a better understanding of how enforcement of the laws that remain valid even after Citizens United could mitigate the impact of dark money on our elections. Specifically, laws that make it illegal to make false statements to the US government and laws that make it illegal to make campaign contributions in the name of another could be used to penalize those using shell organizations to hide their electioneering activity.

If the IRS or DOJ were serious about ensuring that so-called social welfare organizations are not abusing their tax-exempt status by engaging in political activities, they could start by taking a close look at IRS forms 990 and 1023, both of which have to be filed by groups claiming to be social welfare organizations. The 990—the return required by nonprofits—requires filers to provide a yes or no answer to the question, “Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office?” The 1023—the application for tax exemption—asks, “Do you support or oppose candidates in political campaigns in any way?” and goes on to explain the answer should pertain to any past, present, and planned activities.

We don’t have to guess that many of the sham social welfare organizations that funneled money into the 2012 elections lied on either of these forms. Thanks to Propublica, we know they did. Its investigation on nonprofit spending on elections found many discrepancies between what groups said on their tax forms and what they actually did. In one example, the American Future Fund mailed its application for nonprofit status to the IRS, checking the “no” box on whether it planned to participate in politics. That same day, the group put an ad on YouTube, praising a Republican Senator. In 2012, the group reported more than $8 million in political spending.

Likewise, when Propublica compared applications from 72 501(c)(4)s with tax returns they filed later, they found that nearly half of the groups that initially said they would not participate in politics later filed tax returns showing they engaged in electioneering activities.

Forget what you think about campaign finance disclosure—these groups are lying to the federal government and, apparently, getting away with it.

Evidence also suggests that the prohibition against making campaign contributions in the name of another is being violated with no ramifications. As citizens, we are entitled to know who is contributing to our elected officials. Longstanding laws have therefore prevented contributors from using straw donors to make contributions. But, in the case of SuperPACs, which are required to disclose their donors, contributions—including possibly foreign contributions—are easily laundered through shell organizations set up for the purpose of disguising donors.

Representatives from DOJ and IRS testified at the hearing, but had little to say in defense of their apparent non-action. Mythili Raman, DOJ’s Acting Assistant Attorney General for the Criminal Division, did acknowledge that the Justice Department’s job is made harder due to the lack of disclosure since Citizens United and other cases were decided. Patricia Hanes, the IRS Deputy Chief, Criminal Investigation, on the other hand, would not even speak directly to election-related activity of nonprofits. Instead, she chose to limit her testimony to broader IRS enforcement issues and how the IRS interacts with DOJ. The agency’s failure to address the issue of violations of tax law by nonprofits engaging in politics should not come as a surprise, as it has never had much appetite to address the growing abuse by nonprofits engaging in political activity.

The Sunlight Foundation continues to support the enactment of strong legislation that would improve the disclosure of electioneering activities by outside groups. But as yesterday’s hearing made clear, there are tools already available to the enforcing agencies that, if they were enforced, would prevent some of the most flagrant violations of the law by dark money groups.

I recently returned from Croatia, where I was invited to speak about what works and what doesn’t in terms disclosure of money in politics in the United States. I was certain that the portion of my talk advocating disclosure of all election-related spending would lead to questions about whether, in some cases, anonymity is necessary to protect those who want to make financial contributions for election related activities. After all, Croatia is in a part of the world where, until recently, exercising one’s right to free speech could have serious consequences. I had come armed with answers to respond to questions about whether some level of anonymity associated with political contributions is ever appropriate.

My answers remained in my briefcase. I did not need to share that even the extremely conservative Justice Scalia understands that, "harsh criticism, short of unlawful action, is a price our people have traditionally been willing to pay for self-governance. Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed." For this audience, it was a given that the sources of money behind election-related activities must be public. Needless to say, the acceptance of disclosure by those attending a conference on election innovations does not make transparency a region-wide or even a countrywide trend. But that no one even raised the issue of anonymity as a necessary condition for financial political participation was a stark and telling contrast to the debate over dark money in this country.

Since the Citizens United decision, there has been a vocal camp decrying disclosure, despite the Supreme Court’s own recognition that “disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way [and] transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” But compared with the recent and real histories of new and emerging democracies, where free speech has been met with government intimidation, harassment and punishment, the parade of horribles spelled out by Mitch McConnell and others seems almost laughable.

In this country, there are protections for those who can establish a real and legitimate threat as a result of their positions. The Socialist Workers Party, for example, has for years asked for and received an exemption from having to report its contributors based on demonstrable harassment. Such exemptions, given on a case-by-case basis, are narrowly tailored to address actual harm and are a far cry from McConnell’s proposition, which would grant blanket anonymity to corporations and wealthy individuals to protect them from harsh criticism and potential boycotts of their products. (Never mind that boycotts and criticism are also protected by the first amendment.) Pre-emptive anonymity as a method to stave off any possible bad reactions is not only unnecessary, but it places all political speech on a slippery slope toward secrecy. Why stop with dark money? If we are willing to provide contributors to outside groups with blanket protection for phantom threats, shouldn’t all contributors to political candidates and parties be similarly hidden from public view?

For those of us who work on political finance transparency issues in the U.S., it is disheartening to have protect against a system of clandestine influence buying while, at least to us, it appears that parts of world where secrecy had been the norm are now moving towards greater transparency. On the other hand, perhaps it is a matter of perception. Do newer democracies look at the U.S. as at least having a system of disclosure, however flawed? In some countries, is the issue of political finance transparency so new that any debate around the issue of anonymity is yet to come? For those of you exploring political finance transparency around the globe, we’d love to start a dialogue. Please share your experiences, thoughts and perceptions in the comment space below.

The Center for Public Integrity has an important story today on Organizing for Action's money in politics problem:

Organizing for Action, launched by former Obama campaign officials earlier this year, confirms it will not publicly release donors' employer and occupation data despite collecting it through its online donation form.

Lisa Rosenberg made a similar observation recently, in adding incomplete disclosure to the list of problems with the President's dark money group. To reiterate: OFA allows the President to accept unlimited donations (in the name of grassroots organizing), to build political power for the President, while avoiding the reach of campaign finance laws.

Here is President Obama in 2010 (video, transcript), talking about the DISCLOSE Act:

These shadow groups are already forming and building war chests of tens of millions of dollars to influence the fall elections. Now, imagine the power this will give special interests over politicians.  Corporate lobbyists will be able to tell members of Congress if they don’t vote the right way, they will face an onslaught of negative ads in their next campaign.  And all too often, no one will actually know who’s really behind those ads.

Now it's 2013, Obama has his own "shadow group." We already knew OFA's "voluntary disclosure" was ultimately unreliable. (It's voluntary, and there's a reason campaign finance laws aren't designed to be self-enforcing. On top of that, even if they know the donor's identity, donors are still quite capable of laundering their donations.)

And now we get official confirmation that even though OFA collects important information about donors, and they plan not to release that information publicly.  Why would Obama's group want to know this information, while at the same time keeping it from the public? Why does the President seem to have no plan for OFA's structure, apparently making it up as they go?

The President who was so concerned about the corrupting effects of unlimited contributions is surprisingly unconcerned about the effects of unlimited contributions on himself, and his c4 reflects it. OFA's ability to broker access to the President and tap into large donors is only being held back by the threat of public blowback, and not at all by any Presidential sense of accountability. If OFA's structure were motivated by accountability, we'd see a coherent policy about campaign finance disclosure, empowering public oversight of his group's finances and donors. Instead, we see conflicting messages about what kind of access a $50K donor can expect, and a disclosure policy that exists only in proportion to public outrage about Obama's dark money.

President Obama should be leading the way in creating accountability in our politics. Instead he's leading politics to a place with little accountability.

Less than a week after Organizing for Action chairman and former Obama campaign strategist Jim Messina assured the public that OFA would not guarantee access to the president, we learn that a $50,000 contribution to the group will buy an invitation to a “founders’ summit” tomorrow, where the President will be the featured speaker.

We know that $50,000 will buy a seat at the table, but we don’t know who will be sitting at it. That’s because OFA has committed to disclosing contributors’ names only on a quarterly basis.

OFA’s minimal promises of quarterly disclosures of contributors’ names do not go far enough to rid the group of its dark money patina. Rather than delay disclosure, OFA should make public the names, occupations and employers of every donor within 24 hours of receipt of a contribution of $250 or more. The group should also disclose, in real time, all of its expenditures. Since there are no rules to enforce OFA’s voluntary assurances of accountability, public scrutiny is the only mechanism to ensure OFA is living up to its claims that it is not taking corporate or foreign money, that it is not engaging in electioneering activities and that it is not funneling money to other dark money groups.

Selling access to the president is nothing new. Bill Clinton had the Lincoln Bedroom and George W. Bush had his Rangers and Pioneers. It shouldn’t be condoned regardless of the mechanism, but the former presidents’ money men traded cash for time with the Commander in Chief within the purview of a campaign finance regime with legally enforceable limits on the amount and source of contributions as well as mandatory disclosure of contributions and expenditures. OFA is structured so that no legally enforceable contribution limits or public disclosure requirements apply.

Real time online disclosure of OFA’s contributions and expenditures is in the best interest of both the organization and the president, as it is only through comprehensive and immediate transparency that the public can determine whether OFA is living up to its promise to “rebalance the [special interest] power structure” rather than reinforce it.

Organizing for Action (nee Obama for America), the campaign committee that morphed  into an outside money haven, is trying change its image from a that of dark money group selling access to the president to a squeaky clean issues-centric organization.  But this is a tiger that can’t change its stripes.

After pushback from the reform community, OFA today reversed course, announcing that, “we have now decided not to accept contributions from corporations, federal lobbyists or foreign donors.” This is a far cry from initial reports that not only would OFA take money from corporations, it might do so in exchange for meetings with the President.  It also begs the question:  Was OFA originally planning to take money from foreign donors?  We’ve long argued to an apparently indifferent political class that foreign money could easily be laundered through the dark money system that evolved after the Citizens United decision.  OFA’s announcement is at least tacit acknowledgment that foreign money can easily find its way into our political process.

But with today’s announcement that OFA will limit who it takes money from and that it will disclose donors of $250 or more on a quarterly basis, why aren’t we applauding them for seeing the light?

OFA’s Disclosures are neither Timely nor Complete

As long as OFA is making up the rules as it goes along, there is no reason it shouldn’t meet or surpass the disclosure requirements that apply to political parties. Disclosure delayed is disclosure denied, and the quarterly reporting of donors promised by OFA allows them to hide donors—at least temporarily—in an age when technology could easily facilitate real time online disclosure.  Moreover, OFA is not disclosing details normally associated with political contributions—specifically the address, occupation and employer of the donor that not only help identify the donor but the industry or interests that might be important to him. There is no disclosure of bundlers either—a big donor could deliver a fat wad of checks to OFA from his fat cat friends, and while OFA’s chairman and former Obama campaign manager Jim Messina will know who to thank, the public will remain in the dark.

OFA is a Mechanism for Fat Cat Access

Messina took great pains to address the unseemly specter that OFA is a vehicle to sell access to the president to the highest bidder, stating, “we can't and we won't guarantee access to any government officials.” But while he did not guarantee access, nor did he rule it out.  Quite the contrary.  “Just as the president and administration officials deliver updates on the legislative process to Americans and organizations across the ideological spectrum, there may be occasions when members of Organizing for Action are included in those updates.”  Will the members of OFA who give $50 be included in those updates, or only the members who give $50,000 or $500,000?

There is no Accountability

Under OFA’s “voluntary” system of disclosure, there is no enforcement mechanism to ensure that big money donors will be disclosed, or whether the group is sticking to its commitment to prohibit corporate and foreign contributions. There is nothing to prevent a CEO from writing a big check to OFA, only to be reimbursed from her corporate coffers—laundering a corporate contribution. The only legally enforceable rules that apply to OFA are the same ones that apply to every other dark money 501(c)(4) organization—and we know how well those work.

OFA is the Antithesis of Campaign Finance Reform

In his 2010 State of the Union Address the president vociferously decried special interest money taking over our elections:  “Last week, the Supreme Court reversed a century of law to open the floodgates for special interests -- including foreign companies -- to spend without limit in our elections. Well, I don’t think American elections should be bankrolled by America’s most powerful interests, and worse, by foreign entities. They should be decided by the American people, and that’s why I’m urging Democrats and Republicans to pass a bill that helps to right this wrong.”

OFA, by design, will “open the floodgates for special interests” to be “bankrolled by American’s most powerful interests,” with only Messina’s word that it will not accept corporate or foreign contributions.  It’s an end run around what remains of the current campaign finance system, giving donors an option to avoid the limits and disclosures that apply to contributions to political parties and PACs.  It is another sad example of the Obama team’s willingness to funnel more money, not less, into our political system.

The Obama administration should be trying to clean up the current campaign finance disaster by making passage of the DISCLOSE Act a priority, by naming an IRS commissioner committed to new rules that would shut off the dark money spigot, and by replacing FEC commissioners with individuals willing to enforce rules that enhance disclosure. Instead of working toward reform, however, his team has created a new tool for moneyed interests to buy access and influence in our political system.

It’s axiomatic that the Sunlight Foundation believes transparency can deter corruption, foster accountability and increase the public’s participation in government.  But that is not to say that in all cases transparency alone is sufficient to ensure a cleaner, fairer democracy.  That is why it is troubling when people in the position of shaping public debate blithely remark that contribution limits should be tossed out in exchange for greater transparency.

David Axelrod, the president’s former top strategist and newly minted NBC pundit did just that through a series of tweets. As compiled by Politico, Axelrod tweeted, “Campaign finance system is a mess. Limits have just created a cottage industry for lawyers who devise schemes to circumvent them. Too much money in politics. But if it’s inevitable, let it flow directly to candidates and demand full disclosure, with stiff penalties. And end the SuperPac and faux SuperPac game that too often allows donors to elude detection and candidates to deny responsibility."

Too much money in politics. But if it's inevitable, let it flow directly to candidates and demand full disclosure, with stiff penalties.2/3

— David Axelrod (@davidaxelrod) February 20, 2013

Exchanging candidates’ unfettered access to the deepest pockets for greater transparency is not a fair trade.  We need disclosure and limits.  Knowing a driver is going 200 miles per hour does not mean it is safe for him to do so.  Similarly, knowing a candidate received $100,000 or $1,000,000 from a single donor does not make that candidate less corrupted or corruptible.  Nor does it foster any faith in our system. As the Supreme Court noted in Buckley v. Valeo, contribution limits are one of the law’s “primary weapons against the reality or appearance of improper influence” on candidates by contributors.  The Court found that these limits “serve the basic governmental interest in safeguarding the integrity of the electoral process."

A campaign finance system that permits unlimited contributions to candidates would encourage an arms race between candidates, each promising access and influence to any sugar daddy willing to fork over a six or seven figure contribution.  A plutocracy would evolve, with voters’ and small donors’ voices drowned out by the amplifying power of unlimited contributions from a few.

We share Axelrod’s frustration with the current dark money system and understand that only the thinnest veneer exists between third party groups and the candidates they support. But rather shredding that veneer, laws should adopted to fortify it.  As a first step, Axelrod’s own proposal of “full disclosure, with stiff penalities” should apply to the Super PACs and 501(c) groups that engage in political activities with unlimited funds. The DISCLOSE Act would have provided such disclosure, had it not been killed in Congress. (It should be noted that, consistent with his continued disappointing actions on transparency and reform, the president failed to use any political capitol to ensure passage of a robust dark money transparency bill.)

Our campaign finance and disclosure system is in desperate need of repair. But giving up on it is not the answer. We need to shine a bright light on all the money already in the system, without opening up the floodgates for still more.

Last week, the US Court for the District of Columbia rejected a challenge to a longstanding federal law that bans federal contractors from contributing directly to candidates in federal elections. The decision by the court recognizes the constitutionality of imposing restrictions on political contributions in order to prevent corruption and the appearance of corruption. It should embolden legislative and executive branch efforts towards greater transparency, specifically disclosure of dark money contributions by federal contractors.

As the law currently stands, federal contractors who are prohibited from giving directly to candidates may use the wide-open back door provided by Super PACs and 501(c) groups to funnel unlimited contributions to elections. Because there is no disclosure in place, we don’t know how much of the $1 billion of outside money in this election came from federal contractors or what those contractors might expect in return for their investment.

There are two avenues to achieve disclosure of dark money by federal contractors. The first is legislation, like the DISCLOSE Act. If courts are willing to uphold legislatively created bans on contributions from contractors as constitutional, the much more minimally invasive approach of disclosure would also be upheld.

The second option for disclosure of dark money contributions by federal contractors is a presidential executive order requiring anyone who receives a government contract, grant or loan to disclose political contributions to third parties engaged in electioneering communications. A draft executive order requiring such disclosure has been languishing on the President’s desk for too long. To demonstrate his commitment to transparency in his second term, President Obama should issue that order immediately.

The receipt of taxpayer dollars in the form of a federal contract always comes with conditions, including reporting requirements. Disclosure of dark money contributions is a minimally intrusive yet critical tool to provide an additional layer of accountability in the contracting process.