Peeling Back the Layers of Super PACs

March 29, 2012

Russian dolls are an attractive toy for children — peel back the layers of wooden figurines until the smallest doll is revealed. But imagine a campaign finance system in which the identity of political donors is shielded from public knowledge. Peel back the layers of this doll and rather than learning who is financing a political advertisement, all you get is the name of a benign-sounding group. Such is the state of disclosure laws today, which were made worse after the influx of new money allowed by Citizens United. The DISCLOSE Act of 2012, being considered today by the Senate Committee on Rules and Administration, goes a long way to remedy this problem — as Brennan Center testimony illustrates.

Under the current iteration of the FEC’s disclosure rules, politically active nonprofits (usually organized under section 501(c)(4) or (c)(6) of the tax code) can easily hide the identities of their donors. And, while Super PACs must reveal their contributors, they may receive unlimited donations from these dark groups. Thus, many — if not most — Super PACs now operate with an affiliated nonprofit to give camera-shy donors a means to contribute large sums of money without public scrutiny. Not surprisingly, the Center for Responsive Politics found that thus far during the 2012 election cycle, at least five Super PACs received almost all of their funding this way.

The DISCLOSE Act would plug this loophole. Under the bill, major donors — those who have contributed more than $10,000 to a group spending money on campaign ads during an election cycle — must be named in public reports to the FEC. Indirect campaign spending, called “covered transfers,” must also be reported.

And what of disclaimers? Federal disclaimers currently identify only the funding organization. Now, picture the Yellow Pages if it permitted fake names and addresses — useless. One New York Times reporter found that the “Coalition to Protect Seniors” identifies itself as an address at a Mail Boxes Etc. store in Wilmington, Delaware. Similarly, the Sunlight Foundation found that “Citizens for Strength and Security,” which spent nearly $3 million in 2010 to benefit Democratic candidates, lists only a UPS store on M Street in Washington.

The DISCLOSE Act helps remedy this problem by enhancing disclaimer requirements on radio and television campaign advertisements. The highest-ranking official of the spending organization must expressly approve the message and list the top funders who paid for the advertisement.

Strong disclosure rules should be a no-brainer for Congress — after all, voters have a right to know who is spending the big bucks to influence elections. That is why the vast majority of the Supreme Court voted — eight to one — to uphold challenged disclosure requirements in Citizens United. Since then, lower federal courts spanning the nation have robustly defended the constitutionality of campaign finance disclosure laws. And, at one time or another, politicians of all strokes have agreed that transparency of money in politics is vital to the success of our democratic system.

The Senate Rules Committee today is taking a meaningful step towards bringing necessary disclosure requirements into federal law. Following this hearing, Congress should pass the DISCLOSE Act without delay.