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Elimination of Contribution Limits Would Not Stop Secret Spending

Some members of Congress who have been stung by ads funded by secret donors are beginning to express support for laws that would require outside groups to publicly report where their money comes from. 

October 30, 2012

Crossposted on The Huffington Post.

Some unlikely lawmakers are considering new restrictions on campaign spending following the onslaught of negative ads from outside groups in this election. Members of Congress who have been stung by ads funded by secret donors are beginning to express support for laws that would require outside groups to publicly report where their money comes from. While greater disclosure would certainly strengthen democracy, the other part of proposals to curb outside spending reads more like a work of fiction.

Outside spending so far this cycle has reached over $517 million, which is more than the amount spent up to this point in every election cycle going back to 1990, combined. A new analysis from the Brennan Center for Justice shows that, in the most hotly contested House races, outside groups have spent as much money as the political parties. Another recent analysis found that over half of outside spending has come from “dark money” organizations that do not disclose the identities of their donors.

Rep. Dan Lungren (R-CA) thinks the answer to the flood of outside spending is to remove the limits on individual contributions to candidates (currently $5,000 per cycle in the federal system) and just require those contributions to be reported immediately. Lungren believes super PACs and dark money groups will see their funding streams dry up once individuals are free to give unlimited amounts to candidates. And he’s not the only one.

Ilya Shapiro at the Cato Institute also believes that eliminating contribution limits and requiring disclosure of big donations will require donors to face the potential consequences of their political giving, such as boycotts of their companies. Ron Faucheux, a public opinion analyst, also claims this strategy will help address nasty super PAC ads.

The problem with this story is that the genie is not going to be so willing to get back in the bottle: deep-pocketed donors are not going to curb their secret spending or disclose their identities. As this election has shown, there is a class of big-money political donors who greatly value secrecy. The behavior of these donors under the current rules provides plenty of evidence that big spenders prefer anonymity even when other options are available.

Crossroads GPS, for example, is a tax-exempt group founded by Karl Rove that has spent over $123 million in this year’s election but is not required to reveal its donors. Officials with Crossroads GPS and its affiliated super PAC have acknowledged that their donors’ demand for anonymity is the reason they created the organization. Super PACs are required to disclose their donors, but tax-exempt groups like Crossroads GPS are not. There seem to be plenty of donors that prefer the secrecy of giving to Crossroads GPS, since it has outspent its affiliated super PAC by a large margin.

When a court decision in March resulted in a requirement that groups who run a certain type of political ads called “electioneering communications” must disclose their donors, groups like Crossroads GPS stopped using that type of ad. But last month, when an appeals court overturned the March decision, outside spenders resumed their electioneering communications.

In reality, the elimination of contribution limits to candidates would have little or no effect on secret political giving to outside spenders. It would, however, likely result in candidates accepting large donations and therefore owing a few individuals correspondingly large favors.

Even under a system of mandatory disclosure of contributions to candidates, any donors who wanted to remain anonymous — or wanted to run a mudslinging ad that their favored candidate could deny involvement in — would still do so through outside spending.

Lundgren’s attempt to use the appearance of reform to dismantle already weak campaign finance laws would actually increase the influence of big-money donors in politics. His solution is not a solution at all.