Comments on Bundling Disclosure Now at the FEC
Among the potentially meaningful and important changes to the law in the Honest Leadership and Open Government Act is a provision that requires candidates for federal office to report the bundled contributions they receive from lobbyists. Bundled contributions are among the most insidious sources of campaign money because they give a single donor the opportunity to get credit for raising contributions that are often hundreds of times greater than the legal limits applied to individuals. The massive contributions no doubt result in greater access to elected officials. At Sunlight, we believe bundled contributions from any party-CEOs, non-lobbyist lawyers and law firms-should be publicly disclosed. But, the new law limits such disclosure to registered lobbyists, which at least begins to get to the heart of the problem.
The key to this well-intended provision is to ensure that when it is applied, it is not so full of loopholes that any lobbyist worth her $500 an hour fee finds a way to avoid reporting the bundled contributions she forwards to candidates. The Federal Election Commission has the responsibility of crafting regulations that carry out the intent of the new law. The FEC asked for public comment on its proposed rules, and made those comments available yesterday. The comments came from three Members of Congress, groups that champion ethics reform, and others who, for reasons of their own (or their clients) seem to want to keep bundled contributions hidden in the shadows.
To focus on the positive, we applaud Sen. Feingold and Sen. Obama and Representative Van Hollen for their joint comments reminding the FEC that it has a statutory duty to provide "the broadest possible disclosure" of bundled contributions. This group’s comments make clear that they will oppose narrow reporting requirements that would allow bundlers to easily skirt disclosure. For example, when an individual who is not registered as a lobbyist bundles contributions from, say, a group of employees of a corporation that lobbies, the comments submitted by the Members of Congress make clear that those bundled contributions must be disclosed if the corporation’s lobbyist gets credit from the campaign for bringing them in. Comments that were submitted by lawyers for candidates argue that the bundling reporting requirements should apply only when registered lobbyists bundle. They claim the law was not intended to cover people who are clearly acting as the lobbyists’ agents. It doesn’t take a rocket scientist to see that such a limitation would provide a foolproof way for lobbyists to skirt the disclosure provisions of the law.
Another recommendation proffered by a representative of business interests would similarly provide an instant loophole to the disclosure provisions. The argument is that when lobbyists hold fundraisers, the total amount raised should be pro-rated among the number of hosts. Again, it’s not a stretch to imagine that enough lobbyist "hosts" could be added to every fundraiser so that, when the total amount raised is divided among the hosts, the $15,000 disclosure threshold would never be met. We agree with Senators Feingold, Obama and Congressman Van Hollen that the total amounts raised should be attributed to each host. A disclosure form could easily be crafted to ensure there is no risk of over-reporting the actual total amount brought in at each fundraiser.
On one final issue, we would again urge the FEC to listen to the drafters of the legislation rather than the lawyers looking to game the system. Politicians have multiple ways of knowing whom to credit for delivering bundled contributions, not the least of which is when the chief fundraiser says to the candidate, "Lester Lobbyist brought in $50,000 last week." This type of credit is not documented, nor does it need to be, as when Lester wants to make an appointment with the Senator, the Senator will surely remember the bundled contributions. The authors of the legislation recognize that "campaigns could easily avoid [disclosure] by simply forgoing documentation, and the goal of shining a public spotlight on fundraising by lobbyists would be foiled." Granted, we at Sunlight have a hard time seeing how this particular provision will be enforced, but at the very least the rule should be crafted in a way that recognizes the reality of how bundled contributions work.
The FEC expects to have its final regulations completed by March. We hope they take their advice from the parties who have long demonstrated a commitment to improving disclosure rather than those who have everything to gain by keeping bundled contributions in the dark.