ABA Supports Disclosure of Secret Political Spending

February 14, 2013

This week, the American Bar Association (ABA) weighed in on the dark money problem in American politics, urging public disclosure of all election spending. The ABA’s House of Delegates passed a resolution calling on Congress to require timely disclosure of both political expenditures and the sources of funds spent on politics, from every type of organization that engages in such spending. The proposal is promising, but it will be furiously attacked by those who want to protect their ability to secretly influence elections.

Currently, the Federal Elections Commission (FEC) requires different levels of disclosure from different organizations depending on how they are structured. Candidates’ campaign committees and political action committees (PACs), including Super PACs, are required to disclose expenditures on political ads and the identities of their donors. But if an organization is set up under section 501(c)(4) of the tax code, it is considered a “social welfare” organization rather than a political organization, and it faces no requirement to reveal its donors. These 501(c)(4)s eventually have to report their expenditures, but even that can be delayed until many months after the election. The same is true of trade organizations like the U.S. Chamber of Commerce.

Even worse, a 501(c)(4) can be used to evade the disclosure requirements on Super PACs. Donors can give anonymously to the 501(c)(4), which then hands the money over to a Super PAC. The Super PAC’s donor disclosure will list only the 501(c)(4), not the ultimate source of the money. 

These outside spenders, which are supposed to be independent from candidates and political parties, were responsible for more than $1 billion in election spending last year. Much of that money came from donors that were never disclosed to the public.

The ABA has proposed eliminating this inconsistent regime, replacing it with a system where political spending triggers disclosure, regardless of the type of organization. So any organization that pays for a political ad would need to disclose its donors and expenditures. And by including transfers between organizations, the ABA’s proposal would eliminate a donors’ ability to hide by giving to one organization that passes on the money to another.

The ABA’s proposal shares some characteristics with the DISCLOSE Act of 2012, which was filibustered by Senate Republicans after furious opposition from their leader, Mitch McConnell. Sen. McConnell repeatedly and inaccurately argued that the DISCLOSE Act would violate the First Amendment, despite the Supreme Court’s strong endorsement of disclosure as a constitutional method of regulating campaign finance. If the ABA proposal becomes legislation, it will face similarly feverish resistance.

There are those in our society who want to influence elections from behind a curtain, without standing up and taking responsibility for their actions. They will always fight efforts to eliminate secret spending in elections. The ABA has added its voice to the chorus of reformers who recognize that transparency is an essential democratic value and that well-informed voters must know the sources of political speech.

Photo by 401(K) 2013.