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The FEC Deadlocks (Again) on Dark Money

Less than a decade ago transparency was the norm in federal elections. Today groups can spend unlimited funds and are allowed to leave their sources undisclosed.

August 1, 2014

One of the defining stories of the 2014 election has been the explosion in “dark money” — political spending shrouded in secrecy because it comes from groups who do not have to disclose their donors. Dark money’s exponential rise can be traced back to the Supreme Court’s decision in Citizens United. But while the Citizens United majority may have created the problem, they are not the ones keeping it from being fixed. Most of the blame lies with our nation’s dysfunctional campaign finance regulator, the Federal Election Commission (FEC). The FEC’s members appear to be locked in a permanent stalemate. Just this week, the agency announced it was dropping two more high-profile enforcement cases because commissioners would not agree to move forward.

Less than a decade ago, transparency was the norm in federal elections, and our democracy was stronger for it. Knowing who paid for a political ad is critical to evaluating its message. An advertising campaign bankrolled by a big oil company, for instance, will likely be received differently than one funded by a regional chamber of commerce. The same goes for communications funded by wealthy out-of-state interests rather than by members of a candidate’s own community.

Such transparency took a hit in Citizens United, when the Court ruled that corporations and unions could spend unlimited funds to run political ads. Because of myriad legal loopholes, these entities have largely been allowed to keep their political funding sources secret. 

Ironically, such secrecy is probably not what the justices who decided Citizens United intended. They have repeatedly extolled disclosure as a bulwark against “abuse of the campaign finance system.” In fact, transparency seems to be a lynch pin of their entire approach to campaign finance. As long as we have transparency, they have often suggested, many other types of regulation are unnecessary.

So if transparency is so important, why do we seem to be moving backwards toward greater secrecy? 

Some of the blame surely lies with Congress. Passage of the repeatedly-stalled DISCLOSE Act, for example, would go a long way to closing the worst loopholes that Citizens United created.  Even if the DISCLOSE Act were to pass, however, someone would need to enforce it.

That brings us to the latest stalemate at the FEC. In 2010, two nonprofit corporations — Americans for Job Security (AJS) and American Action Network (AAN) — spent a total of at least $26.5 million on federal campaign activity, amounting to well over half their respective budgets for that year. Under longstanding federal law, such activities should qualify both organizations as PACs, since their major purpose was plainly geared toward the election of federal candidates. After Citizens United, federal PAC status carries only certain relatively modest registration and reporting requirements — including the obligation to regularly disclose contributors. Because AJS and AAN did not comply, the FEC’s general counsel recommended launching an investigation.

Even when the law and facts are clear, however, the FEC cannot act without the votes of at least four of its six members — and those four votes are now virtually impossible to secure. With respect to AJS and AAN, the commission’s three-member anti-enforcement bloc overruled the general counsel and refused to move forward, based on various novel theories of law to which the FEC itself has never adhered. Their colleagues noted that these bases for inaction run contrary to a binding statement of policy that the commission itself issued in 2007 (which at least three federal courts of appeals have ratified as constitutional) — but to no avail. Thus, we will never know who was behind the millions of dollars that AJS and AAN spent on ads.

This latest impasse is part of a pattern of dysfunction at the FEC stretching back almost six years, one that has left the agency unable to play a constructive role in responding to Citizens United and other developments in campaign finance law. Apart from failing to enforce its own rules governing PAC status, the FEC has also repeatedly deadlocked over whether to close gaping loopholes in its disclosure requirements applicable to non-PACs. The agency’s inaction on both fronts is probably the single greatest proximate cause for the ongoing surge of dark money in federal elections.

To be sure, in the face of FEC paralysis, other federal agencies can step in to fill some of the void — as the Brennan Center has repeatedly advocated. An even better solution, however, would be to have a federal campaign finance regulator that would actually do its job.

(Photo: Thinkstock)