DISCLOSE 2012 Will Make Mandatory Disclosure Mandatory

April 16, 2012

For decades, the one piece of campaign finance reform that Democrats and Republicans agreed about was the importance of disclosure. For example, in 2000, House Republican Amo Houghton explained that "[w]e need disclosure by section 527 organizations, but when 501(c) groups intervene in the political process, they should disclose what they are doing and who is paying for it as well.” Lately, though, the GOP has changed its mind about political transparency, and the current debate over increased disclosure requirements for independent election spending has sharply divided on partisan lines.

Given the huge volumes of money being spent to swing the 2012 election — with millions being spent by non-profit 501(c) groups with secret donors — it’s long past time for a new bipartisan consensus in favor of transparency. Democrats like Sen. Sheldon Whitehouse (D-RI), who recently introduced the DISCLOSE Act of 2012 in the Senate, are leading the way, but they need a new generation of Republican leaders to join them.

The DISCLOSE Act of 2012 represents a promising first step in implementing what both parties used to call for: making sure that all politically active groups — including super PACs, “social welfare” 501(c)(4) groups, unions, trade organizations, and corporations — disclose who funds their political activities. The new DISCLOSE Act is a simplified version of legislation proposed in 2010, which passed the House but, despite the support of 59 Senators, fell one vote shy of overcoming a Republican filibuster in the Senate. The new bill strips out the provisions that led to GOP opposition in 2010, and should have broad support.

The new DISCLOSE Act aims at a major problem with current disclosure law — the fact that disclosure of political activity is now essentially optional. Groups like 501(c)(4)s and unions that spend money on electioneering exploit a loophole created by an FEC rule. The regulation says these groups are only required to file a report if that donor expressly indicates that their contributions were made for a particular ad. Vanishingly few contributors do so, meaning that the voting public is bombarded by campaign ads funded by these groups, without any idea who is paying for the ads.  

While super PACs have to report their contributors, a super PAC donor who wants to remain anonymous simply has to route their money through a non-profit group to ensure that the ultimate source of the money stays secret. For example, during the 2010 election cycle, the Environment Colorado Action Fund, a super PAC, received about 99 percent of its funding from Environment Colorado, a 501(c)(4) organization. The super PAC discloses that all its donations came from the (c)(4) groups, but the real donors to the super PAC remain secret. Donors just give to the (c)(4), remain anonymous, and know the money ends up being used by the Super PAC. Disclosure defeated.

The DISCLOSE Act of 2012 solves this problem. It ensures that funds used to influence the political process and voters themselves are accounted for and donors are made public. It also makes the leaders of shadowy groups involved in electioneering “stand by their ads,” by requiring disclaimers like those for candidates, who have to approve each commercial’s message.

The Act also protects donors who want to support a group’s mission, but not its political ads. The Act allows a donor to remain anonymous by earmarking their contribution not to be used for political advertisements. This protects people who want to support nonprofit groups but do not want their money to fund campaign ads or other regulated political activity.

The DISCLOSE Act 2012 is an important first step toward transparency in elections. As Congress returns from recess this week, and the general election heats up, it should be a first priority. Sen. Chuck Schumer (D-NY) held a hearing before the Senate Rules Committee, and it’s time for the full Senate to consider the bill. The House should take up a parallel bill introduced by Rep. Chris Van Hollen (D-MD).

As politically active groups continue to find new ways to circumvent disclosure laws, it is Congress’s duty to close the loopholes that allow them to do so. Democrats and Republicans should come together on political transparency — their constituents uniformly support it, by substantial margins. By passing DISCLOSE 2012, Congress can show American voters that it is serious about giving them what they want: a political process open to voters so they can make informed choices in the political marketplace. Democracy depends on it.