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Analysis

Corporations and Fixing Campaign Finance

Some companies scaled back political donations following the Capitol riot, but that doesn’t address far larger problems.

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In the wake of the attack on the Capitol, some of the nation’s biggest corporations, including Marriott, Walmart, and AT&T, announced they will pause or end corporate political action committee, or PAC, contributions to lawmakers who voted against the certification of the 2020 presidential election. It may be the first time in American history that so many major companies have sworn off direct contributions to such a large portion of Congress.

For powerful companies to publicly shun elected officials like this is noteworthy, and it underscores how extreme the attempt to subvert our democracy was. But direct contributions represent only one of the channels through which corporate money flows, legally, to campaigns.

It is not yet clear how much this will cost the offending politicians because they can still benefit from corporate-funded spending by super PACs and other third-party groups that have sprouted up since the Supreme Court’s 2010 ruling in Citizens’ United v. FEC. Some of those money trails are hidden from public record. If we want our campaign finance system to promote true accountability, we must change the law to make it so.

The corporate PACs that are the main focus of scrutiny — which are funded by corporate employees and shareholders — are the most visible pipelines companies have to direct money to Senate and House races. But if a corporation really wants to help a preferred candidate, its best bet is to donate directly to a super PAC or other third-party group that can run its own ads in key races and is not subject to contribution limits. While they are supposed to operate independently of candidates and parties, weak rules allow these groups to work closely with the candidates who benefit from their spending.

These groups wield serious clout. Take the two Georgia contests that determined control of the Senate. Super PACs and other third-party groups spent almost $$460 million on these races, nearly equivalent to what the candidates themselves raised and spent. The Senate Leadership Fund, a super PAC closely aligned with Senate GOP leader Mitch McConnell, alone spent more than $90 million. It was also a major 2018 backer for Sen. Josh Hawley, a ringleader of the effort to deny certification. Its House counterpart, the Congressional Leadership Fund, also backed dozens of members who voted to overturn the election result (there are equivalent groups on the Democratic side as well).

Both the Senate Leadership Fund and the Congressional Leadership Fund raised hundreds of millions of dollars directly from corporations in the 2018 and 2020 election cycles, plus an unknown amount indirectly in the form of donations from certain political nonprofits that do not disclose their donors (known as “dark money” groups). And therein lies the rub: because it is so easy for third party groups to hide their donors, it can be difficult or impossible to tell who is truly behind the contributions allowing them to carry out their work. Corporate donations that wind up in super PAC coffers could be used to fund campaign ads in support of the very same lawmakers from whom corporations are now proclaiming they will withhold corporate PAC donations — and the companies’ employees, shareholders, and customers wouldn’t have a clue.

Although not all campaign spending is disclosed, we know that PACs, third-party groups, and other big donors dominate candidates’ funding. The donations from of people who can’t spend as much mean very little by comparison. In 2020, the 5,000 donors able to give $100,000 or more in contributions spent nearly $2.8 billion — almost twice the total amount the 14 million Americans who made small donations of $200 or less. This translates into an outsized role in shaping government policy on a whole host of issues, from tax policy to healthcare to (imaginary) voter fraud, often in ways that conflict with what most Americans want.

Ultimately, fixing these problems will require more than the pledges corporations have made in recent days, or even promises to stop donating either directly or indirectly to super PACs. If we want a clean break from our broken campaign finance system, one that will result in more accountability to the American public, Congress must pass the kind of reforms found in the For the People Act (H.R. 1/S. 1).

The bill expands voting rights and ends partisan gerrymandering. It also requires transparency of political spending: organizations like super PACs must disclose donors, including corporations, who give more than $10,000, directly or indirectly. It tightens rules to end loopholes that allow supposedly independent groups to actually work hand-in-glove with candidates. And it gives candidates an option to finance their campaigns through a voluntary public financing program that matches small donations, helping lawmakers raise sufficient funds to mount viable campaigns without having to take into account the interests of megadonors.

These reforms would go a long way toward making our democracy more accountable to the people and more responsive to their needs. While it’s worth applauding the actions of some corporations to condemn members of Congress who abetted the assault on the Capitol, that is no substitute for bold action by Congress to strengthen our democracy at this perilous moment.