Another Victory on the DISCLOSE Act

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Despite pressure from a number of powerful corporate interests, the House passed the DISCLOSE Act yesterday in a vote of 219 to 206. The success in the House was a huge step towards ensuring transparency around the corporations, unions and shadow groups who choose to spend big money on election ads. Also important was a Sunlight amendment included in the bill that would ensure that any required disclosures are online, in real time, in a single searchable sortable database. We hope that amendment serves as a precedent for future legislation and that next time a bill requires public disclosure of government information, the drafters will not need to amend the legislation and instead will automatically include a provision providing for searchable, sortable, online public access to the data. After all, it’s not “public” if it’s not online.

The narrow victory in the House indicates just how controversial the DISCLOSE Act is. In our view, arguments that the bill will chill free speech are red herrings, designed obscure the real effort by some organizations to ensure that political spending remains hidden from public scrutiny. After all, many groups and individuals involved in the political process—from campaign contributors to lobbyists—must already disclose their activities and there is no shortage of speech on the airwaves or in the halls of Congress. The more money that finds its way into the political system, the more critical the disinfecting power of sunlight becomes in order to prevent corruption and ensure openness that leads to greater trust in government.

But there are those who will use their financial and political power to try to stop the forward progress of this bill, and while we believe a majority of Senators will support the bill—49 Senators have joined Sen. Schumer as cosponsors—getting to a filibuster-proof sixty votes in the Senate may be even more challenging than getting to a passing vote in the House. It seems that any Senator who voted in favor of the Bipartisan Campaign Reform Act of 2002—also known as the McCain/Feingold bill—should support this campaign finance disclosure bill. The Senate DISCLOSE Act does not yet have any Republican supporters, and we would hope to see former champions of campaign reform, including and perhaps especially Senator McCain, but also Senators Snowe, Collins, Cochran and Lugar, join the effort for greater transparency.

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  • Elaine

    Oh gee. Here is another reason this bill is diabolical.

    1. the disclosures required in this bill are exceptionally onerous. The head of an organization paying for an ad must identify himself or herself by name and title and state the name of the organization twice. If there is a `significant funder’ that person must also identify himself or herself by name and title and state the name of their organization three times. The result can be–in addition to the currently required disclosure of who paid for the ad–two names, two titles, and no fewer than five recitations of organizational names. One could reasonably expect this to consume more than half of a 30-second ad, and our experiments show that indeed it does.

    In the substitute amendment offered by the majority there is a feeble attempt to mitigate this burden on speech by calling on the FEC to promulgate regulations to determine when the disclaimer constitutes a hardship by consuming a disproportionate amount of the ad’s content. This is another example of the bill’s politically-motivated sleight-of-hand–the disclaimer rule becomes effective 30 days after enactment, but this hardships exemption is not effective until the FEC issues regulations. Thus the exemption is likely to be nonexistent during the 2010 elections.

    Perhaps the Chicago Tribune summarized H.R. 5175 best: `Though DISCLOSE has some tolerable provisions, it is on the whole a vast and unconstitutional infringement on a key American freedom.’

  • Elaine

    Oh and of course the bill now allows children to make political contributions.

    Can anyone explain the rational behind that?

    (Sec. 103) Repeals the prohibition against contributions by individuals age 17 or younger.

  • Elaine

    I don’t believe you supported this bill!

    Did you READ it?

    It is clearly an attack on freedom of speech and another way to punish corporations.

    Here are just a few examples of why this bill should never have been supported by anyone who believes in a democratic republic.

    1. The bill becomes effective 30 days after its enactment, whether or not the Federal Election Commission has promulgated regulations.

    2. Section 102 of the bill defines as a foreign national any corporation in which another foreign national `directly or indirectly owns 20 percent or more of the voting shares.’ The phrase `directly or indirectly’ is not defined, leaving it to those who wish to express views on issues and candidates to determine whether it means corporations must look through institutional owners such as mutual funds and trusts to determine whether their ultimate owners are foreign nationals with `indirect’ interests. This analysis of multiple levels of ownership would be highly burdensome or even impossible, and the mere possibility that it is required likely would be enough to prevent speech. That, of course, appears to be precisely the sponsors’ intent.

    Even aside from institutional owners, companies would have to determine whether 20% or more of their shares are owned by foreign nationals as defined in the legislation. For a publicly-traded company this task would not only be difficult and expensive, but subject to constant change. The lack of any regulations or explanation on how to comply will mean the most likely outcome is, again, a decision not to speak for fear of violating a vague law. What chief executive will sign a certification under penalty of perjury when his counsel cannot advise what standard the certification will be judged against?

    This problem extends beyond corporations trying to identify the nationality of their shareholders. The bill also defines as foreign nationals any corporation whose board of directors has a majority of foreign nationals. Many political committees of candidates and parties are incorporated entities. Under the standard set out in this bill, the chief executive of those committees will have to sign a certification under penalty of perjury that they do not have a majority of foreign nationals serving on the board of directors. To do this prudently, incorporated entities such as the Democratic National Committee and the Democratic Congressional Campaign Committee will have to ask each of their directors to verify their nationality–at least in the absence of a clarifying regulation from the FEC.

    3. If the intent to change election outcomes were not clear enough already, Section 401 makes it even clearer. Here the bill writes rules for judicial review that are different from both the Federal Election Campaign Act and the Bipartisan Campaign Reform Act, both of which are amended in this bill. The result is not only the longest possible process for judicial review, but the possibility of lengthy collateral litigation to decide which of the three processes should apply. So, in addition to the bill being rushed into effect, the opportunity for a court to review its compliance with the Constitution is delayed. This represents the maximum possible effort to leave unconstitutional provisions in effect as long as possible.

    4. In its first substantive section, the bill bans independent expenditures and electioneering communications (which we will call `political spending’ or `political expenditures’) by companies holding a government contract worth $50,000 or more (an amount revised to $7,000,000 in the Committee markup). The bill claims in its findings that this will prevent government officials from influencing the contracting process based on political spending, and will prevent contractors from feeling pressure to make political expenditures.

    What the bill ignores is that those arguments apply with equal or even greater force to unions representing government employees. Those unions negotiate directly with the government on the terms and conditions of employment, and their own revenues depend on having government employees pay them for this service. As such, union representatives have exactly the same incentives to influence contract decisions by government officials and exactly the same risks of being subjected to pressure to make political expenditures.

    Despite this symmetry of potential for corruption or its appearance, the bill singles out corporate government
    contractors and ignores unions. While the bill prohibits political spending by corporations based on the nationality of their owners or directors, it includes no similar provisions to ensure that the massive political spending by labor unions is untainted by foreign influence.

    5. The bill includes another attempt to stifle speech that masquerades as adding information for the public. The new `stand by your ad’ requirement for organizations making political expenditures gives every appearance of being designed to restrict speech. The rule is modeled on one in BCRA for candidates. In a 2007 article, Bob Bauer (then a campaign finance lawyer for Democrats including candidate Barack Obama, now the White House Counsel) said of the BCRA rule, `this requirement makes sense only if its true use is clearly identified: to regulate the content of ads.’

  • Lisa Rosenberg

    As a matter of clarification, the ACLU’s position on the potential impact the DISCLOSE Act may have on speech are completely in sync with that group’s long held positions. We respectfully disagree, but didn’t mean to lump that group in with the deeper pocketed opponents of the bill who may see the Supreme Court’s decision in Citizens United as a way to further their political agenda without full disclosure. Thank you to John on giving us this chance to clarify.

    There are many distinctions between DISCLOSE and the poison pill amendment we opposed. First is that DISCLOSE is mindful of the NAACP case. It does not require disclosure of membership lists and exempts disclosure of contributors below a certain level. Second, in NAACP the court found there was no compelling state interest to disclose the NAACP’s donors to the public. On the other hand, the disclosures required by the DISCLOSE Act are compelled by the need to prevent and expose corruption or the appearance of corruption of the political process. Along those lines, there is no possibility that the money behind a group filing an ethics complaint will have a corrupting impact on an elected official. Just the opposite: the complaints are intended to ferret out corruption. The money behind political ads may have a very corrupting influence, which more than justifies the need for the disclosure of large sums of corporate and union money when used to pay for such ads.

    The DISCLOSE Act ensures that all contributions to political ads are public and that secret slush funds won’t be used to affect elections. The ethics proposal we oppose would do the opposite, by allowing political opponents or targets of ethics queries to attack those trying to expose corruption. As a matter of policy, the two concepts are worlds apart.

  • Daniel Schuman
  • Daniel Schuman

    John,

    We already discussed this exact point regarding right of association in a previous blogpost.

    For a discussion on why the right of association is inapt here, please check out the Constitution Annotated’s explanation of that legal concept: http://caselaw.lp.findlaw.com/data/constitution/amendment01/12.html

    The previous blogpost is here: http://blog.sunlightfoundation.com/2010/06/25/another-victory-on-the-disclose-act/#comments

  • John Thacker

    Why is requiring organizations that file ethics complaints to reveal their donors an obviously evil poison pill, but requiring organizations that engage in independent political activity to reveal their donors obviously right and any objection to it a red herring?

  • John Thacker

    I do wish that the Sunlight Foundation would at least address the ACLU’s argument, instead of hiding behind strawmen and ad hominem attacks on those who oppose the bill. Here’s the ACLU’s press release called “DISCLOSE ACT Passed By House Today Compromises Free Speech.”

    Sadly, I’m forced to conclude that this sort of dishonest rhetoric is simply par for the course at the Sunlight Foundation.

  • John Thacker

    “In our view, arguments that the bill will chill free speech are red herrings, designed obscure the real effort by some organizations to ensure that political spending remains hidden from public scrutiny. ”

    So you’re calling out the ACLU for being dishonest?

    “It seems that any Senator who voted in favor of the Bipartisan Campaign Reform Act of 2002—also known as the McCain/Feingold bill—should support this campaign finance disclosure bill.”

    So? It seems that any organization that supports NAACP v. Alabama– like the Sunlight Foundation— should oppose this bill. Perhaps in both cases people have a reason for distinguishing their views.