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Super PAC Disclosure Statements Disclose Little

Congress must pass legislation that takes power out of the hands of the shadowy deep-pocket donors, and puts it back in the hands of those who actually cast the ballots.

February 14, 2012

One might guess that groups with names like Restore Our Future, Priorities USA, and Winning Our Future would all be campaigning for the same thing — but that could not be further from the truth. These similarly named groups are the Super PACs who are fighting each other in the presidential election. Their confusing names are paltry in comparison to the biggest concern: many of their real donors remain hidden from the public eye.

With unlimited contributions made possible by the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission and subsequent court decisions, the groups have already raised millions of dollars from wealthy individuals, corporations, unions, and nonprofits. While President Obama is not immune from the Super PAC trend, the Republican nominees have raised more money in much larger amounts. Twelve billionaires donated to Restore Our Future, the Super PAC supporting Mitt Romney, with contributions ranging from $50,000 to $1 million. This prompted Bill Allison, editorial director of the Sunlight Foundation, to describe Super PACS as “a vehicle for the 1-percent.” These huge donations circumvent contribution limits on regular PACs and candidate committees, allowing the most affluent Americans to wield a disproportionate amount of power in our elections.

Despite reporting requirements, the most recently filed disclosures still leave many questions unanswered. Restore Our Future raised $5.8 million from corporations in the last six months of 2011. Some of these corporations have easily identifiable roots, such as Jonathan W. Bullen, the national finance chairman for Romney’s 2008 campaign, who donated $100,000 through the company he owns, Slocum and Associates. Other corporations appear to be shell companies set up to shield the original donors. Glenbrook LLC, for example, donated $250,000, but its records lead to a public accounting firm by another name and a wealth management firm that denies any connection to the money.

This lack of transparency crosses party lines, despite President Obama’s denouncement of Citizens United and the huge amount of money in politics. According to NPR, “the president does not support today’s rules but realized belatedly he must play by them to give himself a competitive chance at a second term.” Priorities USA Action, the Super PAC supporting him, received its biggest donation, $1 million, from the Service Employees International Union whose members are anonymous. Its second biggest contributor ($190,000) is an affiliated nonprofit, Priorities USA, that doesn’t disclose its donors.

Priorities USA is a 501(c)(4) nonprofit, which takes advantage of provisions in the tax code that let it not disclose its donors. In this way, 501(c)(4)s can function similarly to shell corporations – passing money to Super PACs and disguising the true source of the money. For example, ProPublica reports that the nonprofit Citizens for Strength and Security donated almost $72,000 to a Democratic Super PAC by the same name, and is identified only as a PO box at a UPS store.

Super PAC disclosures that conceal real donors expose the serious deficiencies in federal campaign finance laws. Wealthy donors, unions, and big businesses are able to exert significant influence over elections while leaving voters in the dark as to what interests are truly being represented. Voters are bombarded by television ads that are part of important and often successful television campaigns without knowing the source of their funding. This is a real danger: Without transparency and accountability, the large influx of money in politics can interfere with the democratic process. These loopholes are threatening the possibility of full and consequential transparency necessary for an informed electorate.

Some don’t see disclosure reform as a priority. FEC Chairman Caroline Hunter (R) is satisfied with the current system. Former FEC Chairman Brad Smith believes this issue has been blown out of proportion.

Hunter and Smith are mistaken. As the FEC’s Vice Chairman Ellen Weintraub (D) told Politico, Super PACs are “functioning pretty much as the alter-ego of candidate committees, so they probably ought to be on the same reporting schedule.” The recent FEC filings of Super PACs like Restore Our Future and American Crossroads drive the point home, showing total contributions of almost $18 million and $12 million, respectively. Notably, these disclosures represent only a fraction of the money that will pour into the 2012 presidential election and have already been trumped in amount, and arguably in importance, by unreported January donations made to support Republican candidates in key primary races.

Congress must pass legislation to close these loopholes and strengthen disclosure requirements. Important disclosure legislation introduced by Rep. Chris Van Hollen and Rep. Robert Brady is a step in the right direction to ensure proper regulation of Super PACs. These groups are operating much like political and candidate committees, even taking over some of the tasks those committees have traditionally performed — they should be regulated as such.

The record amount of money in campaigns perverts the democratic processes that we as Americans consider fundamental. Without proper regulation and transparency, voters are unable to gain the information they need to make their participation in elections meaningful. Congress must step in and pass legislation that demands accountability and takes power out of the hands of the shadowy deep-pocket donors, and puts it back in the hands of those who actually cast the ballots.