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DISCLOSE Act Crucial to Transparency of Federal Election Spending

The DISCLOSE Act is crucial to ensuring voters know who is trying to influence their votes on Election Day — and the votes of their representatives in Congress after the election is over.

  • David Earley
July 23, 2014

Cross­pos­ted on The Hill.

The Senate Commit­tee on Rules and Admin­is­tra­tion today will hold a hear­ing on the DISCLOSE Act of 2014, a bill to improve disclos­ure of polit­ical spend­ing in federal elec­tions. The meas­ure, cosponsored by 50 senat­ors, is crucial to ensur­ing voters know who is trying to influ­ence their votes on Elec­tion Day — and the votes of their repres­ent­at­ives in Congress after the elec­tion is over.

Since the Supreme Court’s 2010 Citizens United decision, outside spend­ing in federal elec­tions has skyrock­eted. Outside groups spent over $1 billion in the 2012 federal elec­tions — the most ever. Shock­ingly, 2014 could have a compar­able figure, despite the lack of a pres­id­en­tial elec­tion. 

This explo­sion of outside spend­ing includes a dramatic rise in undis­closed elec­tion spend­ing. This anonym­ous spend­ing occurs in three ways, all of which the DISCLOSE Act addresses.

First, due to loop­holes in federal elec­tion and tax laws, some polit­ic­ally active groups, primar­ily social welfare nonprofits, are not required to disclose their donors. The amount spent by these groups quad­rupled from 2008 to 2012 — rising from less than $70 million to over $310 million. So far in 2014, over $35 million has been spent by nondis­clos­ing groups, which is almost triple the amount of undis­closed spend­ing at this time in the 2012 elec­tion cycle. 

The DISCLOSE Act would require all groups that engage in more than $10,000 in polit­ical spend­ing, includ­ing for-profit corpor­a­tions, labor unions, and social welfare nonprofits, to disclose their donors. 

Second, some spend­ers, like super PACs, must disclose their donors, but that disclos­ure is effect­ively mean­ing­less because the entit­ies disclosed are some­times shell organ­iz­a­tions. For example, suppose donor A contrib­utes to shell corpor­a­tion B, which then contrib­utes to super PAC C, which then engages in polit­ical spend­ing.  Even though super PAC C must disclose all its donors, only shell corpor­a­tion B will be listed on its reports; in this way, donor A will remain anonym­ous.

Under the DISCLOSE Act, if an organ­iz­a­tion trans­fers over $50,000 to another organ­iz­a­tion while know­ing the money will be used for polit­ical spend­ing, the donat­ing organ­iz­a­tion must disclose its under­ly­ing donors to the recip­i­ent organ­iz­a­tion, which in turn must list those donors on its disclos­ure reports. 

Third, some polit­ical spend­ing isn’t recor­ded at all.  If a polit­ical ad is run on tele­vi­sion or radio, but outside the “elec­tion­eer­ing commu­nic­a­tions window” (30 days before a primary elec­tion or 60 days before a general elec­tion) and does­n’t expressly call for the elec­tion or defeat of a candid­ate (by using words like “vote for Senator Smith”), no disclos­ure is required at all. Consequently, not only are the organ­iz­a­tion’s under­ly­ing donors not disclosed, but the amount spent goes undis­closed as well. 

The DISCLOSE Act would expand the elec­tion­eer­ing commu­nic­a­tions window.  For the pres­id­en­tial elec­tion, most tele­vi­sion or radio ads that mention a candid­ate run up to 120 days before any elec­tion would have to be disclosed. For congres­sional races, the same would be true for any tele­vi­sion or radio ad that mentions a candid­ate on or after Janu­ary 1 of an elec­tion year. The under­ly­ing donors that paid for these advert­ise­ments would also have to be disclosed.

The Supreme Court has endorsed strong disclos­ure provi­sions similar to the DISCLOSE Act. In the lesser-known second half of Citizens United, an 8–1 major­ity of the Court explained that prompt disclos­ure is needed “to hold corpor­a­tions and elec­ted offi­cials account­able for their posi­tions and support­ers.”  Moreover, just last month, the Supreme Court reaf­firmed the import­ance of disclos­ure in its McCutcheon decision, explain­ing that disclos­ure helps prevent “abuse of the campaign finance system.”

Though the DISCLOSE Act is the best way of address­ing dark money in our elec­tions, other solu­tions exist.  IRS Commis­sioner John Koskinen recently announced that the IRS intends to clamp down on polit­ic­ally active social welfare nonprofit groups.  Under the proposal, if a social welfare nonprofit spends a substan­tial amount on polit­ical activ­ity, the organ­iz­a­tion would lose its special tax status and would have to disclose its donors. 

Addi­tion­ally, the SEC has been asked to create a rule requir­ing publicly-traded compan­ies to disclose their polit­ical spend­ing to share­hold­ers. This would prevent these compan­ies from anonym­ously giving to polit­ic­ally active busi­ness leagues, most notably the U.S. Cham­ber of Commerce, which are not required to disclose their donors.

Disclos­ure helps voters under­stand the messages they receive before they go to the ballot box and guard against improper rela­tion­ships that might form between elec­ted offi­cials and their polit­ical bene­fact­ors. The DISCLOSE Act is the best way to address secret spend­ing in our elec­tions and Congress should enact it without delay.

(Photo: Morgue­file)