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Policy Solution

Getting Foreign Funds Out of America’s Elections

Summary: How to protect our elections from foreign political spending.

Published: April 6, 2018

Russia-linked polit­ical ads on every major inter­net plat­form. The alleged flow of Russian money to the NRA. The Trump campaign’s soli­cit­a­tion of dona­tions from foreign sources. Reports that Robert Mueller is invest­ig­at­ing whether Russian olig­archs funneled money into the 2016 campaign. Each of these has broken as a separ­ate news story, but in one import­ant sense, they all belong to one same thread: Our coun­try’s long­stand­ing ban on polit­ical spend­ing by foreign actors is in tatters.

This report is the first compre­hens­ive pack­age of campaign finance reforms to address the threat of foreign spend­ing in Amer­ican elec­tions. It shows that plat­forms like Face­book, Twit­ter, and Google are just a few of the many conduits hostile states can use to circum­vent the ban on foreign polit­ical spend­ing. And it lays out a roadmap that Congress, states and the social media compan­ies can follow to proact­ively protect the integ­rity of our demo­cracy from polit­ical spend­ing.

INTRO­DUC­TION

In the months lead­ing up to Elec­tion Day in 2016, a hostile foreign power attacked the United States with a multi­fa­ceted campaign designed to influ­ence the elec­tion. Among other things, this elec­tion inter­fer­ence included covert Russian spend­ing on online polit­ical ads designed to sway public opin­ion. In Febru­ary, a grand jury indicted 13 Russian nation­als and three busi­ness entit­ies with ties to the Krem­lin for their part in this effort. Their scheme relied on inter­net ads to fuel divis­ive con­tro­ver­sies, drive attend­ance at rallies held in the U.S., and attempt to influ­ence the outcome of the pres­id­en­tial elec­tion. Yet even after the indict­ment, we still do not know the full extent of Russi­a’s online influ­ence effort.

The menace is only likely to intensify in upcom­ing elec­tion cycles. The 2018 World­wide Threat Assess­ment of the US Intel­li­gence Community, presen­ted to Congress in Febru­ary, predicted that Russia will “continue using propa­ganda, social media, false-flag perso­nas, sympath­etic spokespeople, and other means of influ­ence to try to exacer­bate social and polit­ical fissures in the United States.” We must also be ready for poten­tial copycat inter­fer­ence from other states like China, Iran, or North Korea, or even non-state terror­ist groups like ISIS.

Regard­less of whether it affected the outcome of the elec­tion, the Krem­lin’s activ­ity repres­ents a threat to national secur­ity and popu­lar sover­eignty — the exer­cise of the Amer­ican people’s power to decide the course their govern­ment takes. Yet despite the decades-old federal ban on foreign spend­ing on elec­tions, 21st century upheavals — namely the rapid devel­op­ment of the inter­net and the drastic dereg­u­la­tion of campaign finance — have created huge weak­nesses in the legal protec­tions against foreign meddling. These loop­holes must be closed to make the ban work as inten­ded.

There are three key areas where Amer­ican elec­tions are most vulner­able to polit­ical spend­ing direc­ted by foreign powers: the inter­net, dark money groups that do not disclose their donors, and corpor­a­­tions and other busi­ness entit­ies with substan­tial foreign owner­ship.

The first vulner­ab­il­ity stems from the quick rise of the inter­net as a mass medium and the fail­ure of regu­la­tion to keep up. As the amount of time Amer­ic­ans spend online has jumped, so has the impor­tance of the inter­net as a medium for polit­ical advocacy. Campaign spend­ing online has increased dramat­ic­ally; the $1.4 billion spent online in the 2016 elec­tion was almost eight times higher than in 2012. It’s not surpris­ing that foreign powers would look to the inter­net to meddle.

Russi­a’s inter­fer­ence in the 2016 elec­tion provides a stark illus­tra­tion. The Krem­lin’s oper­at­ives bought online ads through fake accounts whose owners preten­ded to be Amer­ic­ans, and messages from the fake accounts were seen by hundreds of millions of people in the United States. The ads appeared on all the major inter­net plat­forms, includ­ing Face­book, Gmail, Google’s search engine, Twit­ter, and YouTube. There is reason to believe that what has been revealed to date is just the tip of the iceberg.

The second key weak­ness comes from the abil­ity of some polit­ical spend­ing groups to hide their donors’ iden­tit­ies. These dark money organ­iz­a­tions have flour­ished since a series of Supreme Court rulings inval­id­ated many campaign finance regu­la­tions and the Federal Elec­tion Commis­sion (FEC) has become dysfunc­tional due to partisan stale­mate.

While there is currently no public evid­ence that Russia viol­ated the ban on foreign national spend­ing by illeg­ally direct­ing funds to dark money groups, the FBI is reportedly invest­ig­at­ing whether a Rus­sian banker with ties to Pres­id­ent Vladi­mir Putin used the National Rifle Asso­ci­ation’s dark money arm to secretly spend on the 2016 elec­tion. It remains to be seen whether the scheme exis­ted. But as a general matter it would be naïve to think that the power behind a large online influ­ence campaign like Russi­a’s would­n’t be will­ing to use other spend­ing aven­ues like dark money to spend on elec­tions — in the near future, if not already.

Third, corpor­a­tions and other busi­ness entit­ies are currently allowed to spend on Amer­ican elec­tions even when their owners would be preven­ted from doing so by the foreign spend­ing ban. There are vari­ous examples of foreign nation­als using domestic compan­ies to engage in secret elec­tion spend­ing. In fact, the St. Peters­burg “troll farm” indicted for its online elec­tion inter­fer­ence was organ­ized as a busi­ness corpor­a­tion. And recent revel­a­tions about Cambridge Analyt­ica, a company that alleg­edly made improper use of user data from Face­book in its polit­ical consult­ing work, raise the ques­tion of whether its elec­tion activ­ity was direc­ted by its corpor­ate parent, the Brit­ish firm SCL Group, or foreign employ­ees.

This report offers prac­tical solu­tions to make it far more diffi­cult for any foreign power to engage in polit­ical spend­ing in Amer­ican elec­tions in each of these three areas. All these reforms are permiss­ible under current Supreme Court doctrine. Most import­antly, the Bren­nan Center recom­mends lawmak­ers take the follow­ing steps:

  • Update polit­ical spend­ing laws for the inter­net with the frame­work used for tele­vi­sion and radio ads requir­ing disclos­ure of fund­ing sources and expli­citly banning foreign spend­ing for ads that mention candid­ates before an elec­tion.
  • Elim­in­ate dark money by requir­ing any organ­iz­a­tion that spends a signi­fic­ant amount on elec­tions to disclose its donors.
  • Extend the ban on foreign spend­ing to domestic corpor­a­tions and other busi­ness entit­ies that are owned or controlled by foreign interests.
  • Invig­or­ate enforce­ment in all these areas by reform­ing the Federal Elec­tion Commis­sion.        

Members of Congress have intro­duced bills that incor­por­ate some of these policies. In this paper, we make recom­mend­a­tions that can bolster their propos­als, offer­ing the first compre­hens­ive frame­work to defend against the threat of polit­ical spend­ing by foreign powers in Amer­ican elec­tions.

To be sure, the 2016 elec­tion showed that Amer­ican elec­tions are vulner­able to foreign manip­u­la­­tion in other ways, beyond expendit­ures on polit­ical ads. The Bren­nan Center has already detailed the reforms needed to protect against hack­ing and other attacks on elec­tion infra­struc­ture in a prior report. The Russian propa­ganda campaign also made extens­ive use of free posts on social media as well as paid ads. But, as the Febru­ary indict­ment shows, paid ads were a lynch­pin for the scheme, driv­ing new audi­ences to unpaid content.

Although the danger of inter­fer­ence by foreign govern­ments is our primary motiv­a­tion, the reforms we propose address expendit­ures by all foreign nation­als, mean­ing all foreign citizens (includ­ing corpor­a­­tions they control) other than lawful perman­ent resid­ents living in the United States. This is the line Amer­ican law has drawn to protect U.S. sover­eignty for 50 years.

This report focuses on federal policy, but state govern­ments should also act. State elec­tions warrant similar protec­tions to those we recom­mend at the federal level. And large states have the poten­tial to set de facto nation­wide stand­ards for inter­net compan­ies, analog­ous to the way Cali­for­ni­a’s environ­­mental regu­la­tions have induced compan­ies to change their beha­vior nation­wide.

The private sector also has a role to play through volun­tary action. Even if Congress and the states fail to act, inter­net compan­ies can and should volun­tar­ily adopt the policies we recom­mend for legis­la­­tion, such as main­tain­ing a public data­base of all online polit­ical ads. Private action would be most effect­ive if the plat­forms come together to agree on industry-wide stand­ards. In April, Face­book announced it would take steps to verify advert­isers’ iden­tit­ies, among other changes, but such reforms are piece­meal at best, revoc­able at worst.

Never­the­less, if the ban on foreign elec­tion spend­ing is to continue to have mean­ing, reforms by the govern­ment are neces­sary. The attacks by the Krem­lin make that clear. As Sen. John McCain has noted, it is “more import­ant than ever to strengthen our defenses against foreign inter­fer­ence in our elec­tions.” Former CIA Deputy Director Michael Morell and former House Intel­li­gence Commit­tee Chair­man Mike Rogers (R-Mich.) have advoc­ated for deter­ring elec­tion meddling, includ­ing social media spend­ing, with “policies that prevent adversar­ies from achiev­ing their object­ives.” Most recently, Repub­lican members of the House Intel­li­gence Commit­tee issued a summary conclu­sion of their Russia invest­ig­a­tion that recom­men­ded improve­ments in “campaign finance trans­par­ency.”

In this report, we offer a compre­hens­ive set of reforms that answers these calls to strengthen Amer­ica’s defenses against foreign powers spend­ing on polit­ical messages.