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Other Reforms
By Erik Opsal – 02/01/11
Campaign finance advocates continue to push a variety of reforms to combat the effects of last year’s Citizens United ruling. In Congress, Democrats tried, and failed, to pass the DISCLOSE Act, and with a sharp shift in power on Capitol Hill, legislative reform appears off the table. A new approach seems to be taking shape, however.
Last week, Mother Jones reported on an attempt by Democrat lawmakers and interest groups to challenge the tax status of outside spending groups, specifically Crossroads GPS, Karl Rove’s group, and American Action Network.
Crossroads GPS, AAN, and similar outside spending groups are organized as tax-exempt, not-for-profits whose purpose, under the Internal Revenue Service code, is "primarily to further the common good and general welfare of the people of the community." Such a group, classified as a 501(c)4, can, however, engage in political advocacy—running ads for or against candidates, for instance—with one major stipulation: that politicking "is not its primary activity."
That distinction is crucial. Since a 501(c) group doesn't have to register as a political action committee (PAC), it need not disclose its donors and open up its books to public scrutiny. They operate, more or less, under a veil of secrecy—and so do their donors. But if the Federal Election Commission or the IRS determine a group violated the rules, it would be forced to register as a PAC and disclose the sources of its funding.
The legal avenue lawmakers like Van Hollen and Price are considering wouldn't be the first challenge to outside groups' tax status. In late October, Public Citizen, the Center for Media and Democracy, and Protect Our Elections alleged that the Iowa-based American Future Fund violated campaign finance law by not registering as a PAC after a New York Times analysis of AFF's advertisements showed that 56 percent of its TV budget went toward political ads. A similar coalition of public advocacy groups, led by Public Citizen, filed a similar complaint with the FEC against Crossroads GPS, claiming the group's "major purpose is to influence the 2010 federal elections and to elect Republicans to office." (The complaints are still pending.)
Today, Citizens for Responsibility and Ethics in Washington (CREW) joined those groups in calling for an investigation of the American Future Fund (AFF). In a letter to the IRS, CREW states:
Despite the fact that AFF repeatedly told the IRS it had not and did not plan to support or oppose candidates for office or spend any money attempting to influence elections, AFF did exactly that throughout the 2010 campaign cycle. Because of the serious nature of the tax law violations, the IRS should consider revoking the AFF’s tax-exempt status and/or impose appropriate excise taxes and penalties on the organization.
By pushing back on tax status, it’s clear some campaign finance reform advocates hope to keep the conversation focused on the drastic increase in outside spending in the 2010 election cycle. Other reform groups, such as the Brennan Center, will continue to push forward on public financing, as it did last month in New York.
Tags: Democracy, Campaign Finance Reform, Other Reforms, Public Financing
By Ciara Torres-Spelliscy – 01/21/11
“I have promises to keep, And miles to go before I sleep,” so wrote poet Robert Frost in 1923. These are words that should be ringing in the ears of elected officials one year after Citizens United. The by now infamous decision allows corporations and unions to spend unlimited amounts on political ads about candidates. One year later, corporate, securities and election laws across America remain largely unchanged. These laws must be fixed to catch up to the new reality of money in politics after Citizens United.
What is that reality? The mid-term election showed the perils of running tens of millions of new money through a disclosure system that is utterly broken. As the NYC Public Advocate noted in a post-election break down of the congressional elections, over 1/3 of the money spent in the federal election was anonymous. The reason a City official such as the Public Advocate cares about the vast spending on congressional races is he oversees the multi-billion dollar New York City pension system as a trustee. Part of his job requires him to be concerned that the interests of the pension as an investor are not being compromised by this political spending. He may be left wondering if some of that new money in politics is money from publicly traded companies traceable to pensioners’ investments, and whether that money should properly be going to retired New York City Fire Fighters and their widows, for example, instead of lining the pockets of a political consultant or enriching broadcasters who make a small fortune every election cycle on ad buys.
Shareholders large and small need to keep an eye on corporate political spending. As the Supreme Court said, such information is vital to the shareholders’ ability to check the actions of mangers and to determine whether the political spending is likely to lead to profitability. Unfortunately, most publicly-traded companies are not transparent when it comes to their political spending. This robs shareholders of their ability to exit an investment either because they fundamentally disagree with political choices of managers on deeply held ideological grounds or they think that corporate managers are foolishly wasting corporate assets which could be better spent on research and development or hiring a new employee.
Congress tried and failed to pass legislation in 2010 to bring transparency and shareholder consent into corporate political spending. There is slim hope that the new Congress will pick up the pieces and try again – federal solutions seem unlikely. In the states, Iowa was first to recognize that political spending needed some internals oversight from companies. In Iowa, they improved their law by requiring board approval of corporate political spending. Lawmakers across the nation should focus on the fact that 92% of Americans (according to polling by the New York Times) want more transparency in their elections.
Yet not every reform requires a change in the law. Rather, some of these changes could be accomplished by administrative rule makings. First, federal campaign finance regulations need to be tightened. Much could be gained if merely the directions on FEC Forms 5 and 9 were modified to require those who purchase political ads in federal elections to divulge their underlying donors. The SEC should also change companies’ annual and quarterly public reporting (Forms 10-K and 10-Q) to require periodic disclosure of political spending by publicly-traded companies. Furthermore, if political spending is going to be funneled through nonprofits, then the IRS needs the resources to track which nonprofits have abused their tax status and which are complying with the rules.
Meanwhile, back in the states, disclosure laws in both the campaign finance context and the corporate governance context need improvement. All states should require reporting of who is funding political ads. Interested legislators can refer to the Brennan Center’s Writing Reform to see how to structure these laws. And states also have nearly plenary power to change corporate laws to give shareholders a means to consent to political spending through a vote or they could adopt Iowa’s approach of board approval which is a step in the right direction.
Given how much remains to be done to respond to Citizens United after a full calendar year and a dark election, citizens must insist that our political leaders repair our broken systems – starting with providing more transparency. With the 2011 legislative sessions revving up around the country, the time to act is now.
Tags: Democracy, Campaign Finance Reform, Other Reforms, Disclosure
By Mimi Murray Digby Marziani – 01/07/11
There were some dramatic predictions for what would happen when proposals to reform the Senate’s archaic and wildly-abused procedural rules were introduced on the first day of the 112th Congress. FoxNews predicted a nuclear reaction; others had violent visions of the filibuster’s total demise. Some argued that, if any rules change occurred, the Senate would turn into the House before our very eyes.
Now the big day has come and gone, not ablaze with fire and brimstone, but awash with logic and reason. Here’s what happened.
As expected, Senator Tom Udall explained that a simple majority can stop obstruction and force an up-or-down vote on any proposal to reform the Senate’s rules on the first legislative day of the session. This “constitutional option” for rules change is of great practical significance: After the Senate has acquiesced to its standing rules (which automatically carry from session to session unless changed), it is bound by the Rule XXII now on the books, which requires two-thirds of the Senate – 67 senators – to agree before proceeding to vote on any rules change motion. (To put that high hurdle in perspective, the Constitution requires a two-thirds vote to override a presidential veto!) While the Senate’s power to force a majority vote on a rules change proposal at the start of a new session is supported by solid constitutional law and senate tradition, and has been repeatedly endorsed by leaders of both parties over the years, some still try to paint this move as illegitimate. The formal introduction of Senator’s Udall proposal did not, however, inspire fistfights or shouting – instead, most seemingly agree with Senate Udall’s reading of the Constitution and Senate history.
Then, Senate Majority Leader Harry Reid made an announcement that put an unusual, but not unprecedented, twist on this scenario. The Senate, after its first day on January 5th, will recess until January 24th, thereby preserving the constitutional option. While some predicted that this news too would inspire outrage, it was also accepted without controversy.
Next, proposed reforms were introduced and discussed in a number of thoughtful speeches. The most notable package is co-sponsored by 23 senators. This package is carefully geared to address the worse abuses of Senate procedural while encouraging actual debate and deliberation – all without “killing” the filibuster. And, despite the über -partisan spin often put on this debate, several of the reform package’s provisions have bipartisan support.
To start, the package would prohibit filibusters on motions to proceed, meaning that senators could no longer use the filibuster to prevent debate on the merits of legislation or a nominee. It would also outlaw so-called secret holds, the indefensible practice of anonymously preventing a bill or nominee to move forward for consideration. (Why this has ever been permitted is beyond me….) Both of these no-brainer reforms are supported by members of both parties.
Next, one provision would expedite the process for considering nominees by limiting additional debate on any nominee who has already passed the 60-vote threshold needed to break a filibuster. This is sorely needed: As of November 2010, President Obama had 151 vacancies in high-ranking executive posts due to a nominations back-log. And, Supreme Court Chief Justice John Roberts, decrying the numerous “judicial vacancies in critically overworked districts,” just publicly admonished the Senate to stop playing partisan games and find “a long-term solution to this recurring problem.” The nominations problem is one that we cannot continue to ignore.
The reform package also includes a provision to protect the minority’s right to offer amendments on legislation. Specifically, it would guarantee members of the minority party the chance to offer three germane amendments after a filibuster on that matter has come to an end. This allowance is geared to address the minority’s party’s biggest complaint, that the majority has repeatedly abused its power by preventing them from offering any amendments.
Finally, and perhaps most notably, the package would bring back talking filibusters – a vital reform. By insisting that objecting senators actually take the floor and continue to debate any filibustered matter, this reform would restore the filibuster to its original useful purpose – a means for a determined minority to delay final consideration of a bill or nominee when they are particularly passionate about the outcome. If senators are forced to take a public stand in order to maintain a filibuster, the filibuster will no longer be abused to block uncontroversial measures. And, talking filibusters would restore accountability to the Senate. Obstructionists would have to explain their reasons for blocking legislation or nominations that have majority support – and let the American people approve or disapprove of their decision.
In sum, these reforms would curb unprincipled obstruction while facilitating deliberation and decision-making. The filibuster would survive, and the Senate would be better-positioned to address the myriad problems of 21st Century America. While some may still be crying “wolf,” the grown-ups in the room should continue to discuss the serious issue of Senate procedural abuse in muted tones – and realize that the time to adopt reasonable, logical reform is now.
Tags: Democracy, Filibuster, Other Reforms
By Ciara Torres-Spelliscy – 07/28/10
Yesterday the threat of filibuster in the Senate killed — at least for the moment — a transparency bill the country both needs and wants. This is another example of how the continual threat — and use — of the filibuster is bringing our democracy to a halt. Tuesday’s victim? Americans who might want to know who is funding political ads in our elections.
The Constitution set up two different houses of Congress, and each governed by different rules. The House is designed for speed. The Senate, by contrast, has a different design which by its very nature slows down the pace of legislation and encourages deliberation — that’s why its members are older, serve longer, staggered terms, and why power is dispersed among committee chairs instead of being concentrated in the majority leader. As a former Senate staffer, I have seen firsthand how the Senate counters the impulsiveness of the House.
But, while debate and compromise make our country’s laws better, an overused minority veto makes progression impossible. The filibuster was never intended to be a tool for permanently derailing every piece of legislation. In recent years, the filibuster — and even the threat of a filibuster — has morphed from the exception to the rule, preventing the Senate from addressing critical policies, even those that the voters demand.
The latest casualty of the Senate filibuster was the DISCLOSE Act, which would have ensured that corporate and union political spending on future federal elections (including this fall’s upcoming election) was fully disclosed to voters. The act also would have banned foreign-owned companies from spending in U.S. elections and kept TARP recipients and large federal contractors from running campaign ads. Now, thanks to the threat of filibuster, all of these doors are wide open to abuse.
After the Supreme Court granted corporations and unions the constitutional ability to spend their treasury funds on elections in the Citizens United case last winter, polls of likely voters showed that approximately 80 percent the American public vehemently disagreed with the decision and wanted Congress to enact legislative remedies. What did the voters want? According to the polling, significant majorities from across the political spectrum wanted foreign corporate dollars to stay out of U.S. elections, shareholders to have a say on how their investments were used in politics, pay-to-play politics to stop, and real transparency of where political money was coming from. The same polls showed majorities also support the Fair Elections model of funding campaigns to empower voters and small donors over big special interest money. Happily, even in the wake of the defeat of the DISCLOSE Act, other reform options — such as the Shareholder Protection Act and the Fair Elections Now Act — remain alive for Congress to embrace as responses to Citizens United.
Read the rest at The Hill's Congress Blog.
Tags: Democracy, Campaign Finance Reform, Other Reforms, Disclosure
By Ciara Torres-Spelliscy – 07/06/10
The confirmation hearings for Supreme Court nominee Elena Kagan provided a miniature seminar on constitutional law. Kagan was asked over 500 questions and she discussed topics as diverse as gun rights to partial birth abortion. But front and center has been the January 2010 Supreme court case, Citizens United v. FEC. This was the case that granted corporations the same right to spend money on elections as a living, breathing human being.
Both Republicans and Democrats on the Senate Judiciary Committee – who will determine Ms. Kagan’s professional fate – appeared to be largely talking past her when they referenced Citizens United. For Republicans, the case is about an absolutist view of the First Amendment, which equates corporate money and individual speech. Several Republican Senators took the opportunity to repeat Senator Mitch McConnell’s debunked claim that Kagan urged book bans or would censor literature.
Meanwhile, Democrats harped on the Citizens United case as an example of a conservative Court run amuck and a danger to the integrity of the democratic process by unleashing free-spending corporations and unions into the political environment. In particular, Senator Franken among others, worried aloud that as Congress tries to adopt new environmental reforms, consumer protections or regulations of Wall St., lawmakers may be reluctant to anger corporate CEOs with buckets of money to throw into future elections.
Throughout the hearings, Solicitor General Kagan performed the common dance for judicial nominees, pledging fidelity to all Supreme Court precedents no matter how far afield from her own preferences any particular holding may be. Through most of the hearings, it was difficult for viewers to discern how Ms. Kagan personally feels about the underlying legal and social issues.
Ms. Kagan, though, may have inadvertently revealed her personal beliefs when she suggested the Court wrongly decided the Citizens United case. Ms. Kagan argued this case for the government as Solicitor General last September but nonetheless carefully provided the obligatory observation that the Court’s Citizens United opinion – which rejected her own argument on behalf of the government – is established precedent, and, that she would, of course, respect it as such. Asked whether she agreed with the government’s position in the case, she responded “[a]t least for me when I prepare a case for argument, the first person I convince is myself.” In other words, when she argued to the Supreme Court that they should follow over 60 years of federal law to keep corporate dollars out of elections, she meant it.
Thinking Citizens United is wrongly decided puts nominee Kagan in the mainstream of Americans. Polls conducted after Citizens United was decided, suggest 80% of Americans think the case was wrongly decided. The same polls show 72% of Americans want reforms to limit corporate spending, 85% of Americans want to keep foreign-owned corporations from spending on American elections, 80% of voters want shareholders to have the right to vote on future corporate political spending before managers spend corporate funds on elections, and voters support the public financing by a margin of two to one. The polls found these beliefs were held by Republicans, Democrats and independents.
Pending legislation would address Americans’ concerns about Citizens United. The DISCLOSE Act (H.R. 5175) would stop electioneering by certain foreign-owned corporations and would require more transparency with respect to political expenditures; the Shareholder Protection Act (H.R. 4790) would give shareholders a vote on future corporate political spending by managers. And the Fair Elections Now Act (H.R. 1826) would provide public financing for congressional candidates thereby empowering voters, by putting power to fund elections in the hands of small donors. Of course there is a great deal of resistance to these bills by special interests, but Congress needs to show some fortitude in marshalling them to the President’s desk for signature.
Solicitor General Kagan will likely soon be Justice Kagan. But after Congress completes its work on her nomination, it should turn quickly to the task at hand of passing the legislation that will respond to Citizens United. In reviewing these new laws, hopefully the new Supreme Court will have an opportunity to temper Citizens United’s excesses so that corporations can participate in meaningful ways without burying the electoral system under a dump truck of money.
Tags: Democracy, Campaign Finance Reform, Other Reforms, Disclosure, Public Financing
By Mimi Murray Digby Marziani – 06/30/10
RNC v. FEC: A Win for Democracy
With the General McChrystal saga, World Cup second round, Elena Kagan confirmation hearings, and imminent financial reform all making news before a long holiday weekend, you could be forgiven for missing a seemingly sleepy move by the Supreme Court on the last day of its term. On Tuesday, in a terse, two sentence order, the Court summarily affirmed the lower court’s decision in Republican National Committee v. Federal Election Commission (a.k.a., “RNC v. FEC”), thereby refusing to consider the newest challenge to campaign finance regulations. While this order has not made headlines, it represents a small but important victory for our democratic process.
The RNC case was brought shortly after the 2008 elections as a mid-term fundraising strategy by members of the Republican Party. The challengers sought to overturn the so-called “soft-money ban” of the 2002 McCain-Feingold campaign finance reform law, barring national political parties from accepting or spending unregulated campaign cash. Currently, the parties can only accept and spend “hard money” – contributions that comply with federal limitations on the amount (individuals can donate no more than $30,400) and on the source (corporations and unions are prohibited from donating). The plaintiffs argued that these regulations “severely restrict[] the ability of political parties to finance political activities” in a manner that unconstitutionally burdened their political rights.
There are two particularly striking things about this claim. First, it’s wrong on the numbers – the parties have just as much money as they had before McCain-Feingold. Empirical data from recent elections shows that political parties have had no trouble meeting and surpassing their pre-reform fundraising totals on hard money alone. To do so, both parties have substantially increased their reliance on small contributions, thereby broadening and diversifying their donor base. This result was predicted in McConnell – rather than suppressing political activity, the Court explained, the soft-money ban would simply require “political committees to raise funds from a greater number of persons.” And it makes perfect sense: When parties were allowed to ask corporations and wealthy individuals for multi-million dollar soft-money checks, why would they have bothered to solicit $20 bucks from your typical, less-endowed voter?
Second, it was a blatant attempt to take a second bite at the apple. The Supreme Court rejected this same undue burden argument just seven years ago in McConnell v. FEC. There, a five-to-four majority found that the government’s compelling interest in combating both actual and perceived corruption in the democratic process justified the “limited burdens” imposed by the hard-money restrictions. The Court pointed to 100,000 plus pages of factual record demonstrating that large soft-money donations to political parties had been routinely used to buy preferential influence over federal elected officials. For example, there were undisputed accounts that members of Congress, obligated to appease large soft-money donors, would manipulate the legislative calendar to successfully block proposed legislation. Such influence-peddling represented a clear end-run around limits on contributions directly to candidates – limitations that have been upheld for decades because they combat corruption. As the Court concluded, if these soft-money abuses were allowed to continue, “the cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in democratic governance.”
Indeed, given the law and these facts, you would also be excused for asking why the Republican National Committee thought it could successfully re-litigate McConnell in the first place. The answer, unfortunately, has much to do with the composition of the Court. Since the arrival of Chief Justice John Roberts and Justice Samuel Alito in 2005, the Court has heard four challenges to campaign finance laws – and, each time, has struck down key provisions. As my colleague Monica Youn put it, “the newly constituted majority has moved with stunning haste to dismantle decades-old safeguards intended to limit the effect of special interest money in politics.” Citizens United, decided earlier this year, marked a climax – there, by declaring that corporations have a First Amendment right to spend freely in elections, the Court rendered unconstitutional over 60 years of federal law and flatly overturned one of its own precedents.
And so, reform advocates breathed a sigh of relief when the Court refrained from reconsidering its previous ruling. This means that the national parties will fundraise under the hard-money restrictions in the 2010 mid-term elections. As a result, we can celebrate continued incentives for small-donor participation and safeguards against political corruption. Undoubtedly, a win for democracy – and for all of us.
Tags: Democracy, Campaign Finance Reform, Other Reforms
By ReformNY – 04/19/10
Last week, New York State Sen. Daniel Squadron, D-Brooklyn/Manhattan, and Assemblyman Rory Lancman, D-Queens, proposed a bill which would require shareholder approval before a New York corporation could spend in politics. The bill also requires more transparency by mandating that companies tell shareholders of their past political spending. The new bill mirrors language proposed by the Brennan Center’s Ciara Torres-Spelliscy in her report, “Corporate Campaign Spending: Giving Shareholders A Voice” which encourages Congress to make similar changes at the federal level. Congress has a similar bill called the Shareholder Protection Act (H.R. 4790). If Congress fails to act, shareholders will need protections from state laws like this New York State bill. The Senate will be holding hearings on this and other election reform bills this week.
Originally posted at ReformNY.
Tags: Democracy, Campaign Finance Reform, Other Reforms, NY Reform
By Ciara Torres-Spelliscy – 04/19/10
Today, R. Warren Langley, Retired President of the Pacific Stock Exchange, sent a letter in support of the Shareholder Protection Act (H.R. 4790) to Speaker of the House Nancy Pelosi. The letter urges the Speaker to champion this legislation as a part of Congress’ response to the Supreme Court’s January 21 decision in Citizens United v. FEC. This decision gave corporations the right to spend corporate dollars in elections. The letter notes that just as proxy rules have been changed to increase transparency on executive pay, so too should there be transparency for corporate political spending. The letter also endorses giving shareholders a way to consent to corporate political spending through a vote at the annual general meeting.
Tags: Campaign Finance Reform, Other Reforms
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