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Policy Solution

Transparency for Corporate Political Spending: A Federal Solution

In an era of skyrock­et­ing elec­tion spend­ing, corpor­a­tions have the abil­ity to secretly spend millions of dollars on polit­ics. Demand for inform­a­tion about corpor­ate polit­ical spend­ing has increased among investors and the general public in the years since Citizens United was decided. A new Bren­nan Center for Justice report details the extent of the prob­lem of anonym­ous polit­ical expendit­ures and advoc­ates for a viable solu­tion. The Secur­it­ies and Exchange Commis­sion should issue regu­la­tions requir­ing publicly traded compan­ies to include inform­a­tion about their polit­ical spend­ing in their mandat­ory disclos­ures.

Intro­duc­tion

Amer­ican elec­tions are awash in cash as never before. Spend­ing in the 2012 pres­id­en­tial elec­tion will shat­ter all historic records, as will spend­ing in Congres­sional races. But the most signi­fic­ant money won’t be in the candid­ates’ campaign coffers. The money trans­form­ing contem­por­ary elec­tions is that flow­ing into — and being spent by — outside groups that are legally inde­pend­ent of the candid­ates. Many of these outside groups are able to raise funds in unlim­ited amounts from wealthy indi­vidu­als, unions, and corpor­a­tions.

As the law stands today, corpor­a­tions and unions can spend unlim­ited amounts of money in order to influ­ence the outcome of elec­tions. If indi­vidu­als, unions, or corpor­a­tions choose to spend polit­ical money directly — by produ­cing tele­vi­sion advert­ising and buying air time, for example — they must publicly disclose the expendit­ures and their contrib­ut­ors. But it is easy to evade such disclos­ure by simply rout­ing polit­ical contri­bu­tions through inter­me­di­ary groups that purchase the ad time. The end result is that wealthy indi­vidu­als, corpor­a­tions, and unions can spend millions on polit­ical advert­ising to influ­ence voters’ choices at the ballot box, without disclos­ing this spend­ing to the public.

After the Supreme Court decided Citizens United v. FEC, Amer­ic­ans were outraged at the invit­a­tion exten­ded to corpor­a­tions to spend unlim­ited sums to influ­ence elec­tions. But in addi­tion to expand­ing corpor­a­tions’ abil­ity to make polit­ical expendit­ures, Citizens United strongly approved of disclos­ure require­ments. The court emphas­ized the import­ance of such disclos­ure, explain­ing that through it “[s]hare­hold­ers can determ­ine whether their corpor­a­tion’s polit­ical speech advances the corpor­a­tion’s interest in making profits, and citizens can see whether elec­ted offi­cials are ‘in the pock­et’ of so-called moneyed interests.”

Unfor­tu­nately, a disclos­ure regime that would accom­plish these goals did not exist at the time Citizens United was decided. Nor does it exist now: more than two years after Citizens United, Congress has done noth­ing to improve our nation’s disclos­ure laws. The DISCLOSE Act of 2012, which would have required groups spend­ing more than $10,000 during an elec­tion cycle to identify donors of more than $10,000, was fili­bustered in the Senate.

But the fail­ure of Congress to act does not neces­sar­ily mean that Amer­ic­ans’ calls for account­ab­il­ity in polit­ical spend­ing must go unanswered. Instead, the Secur­it­ies and Exchange Commis­sion (“SEC”) can take action, having both the author­ity and the respons­ib­il­ity to protect share­hold­ers and the public by mandat­ing the disclos­ure of polit­ical expendit­ures by publicly-traded corpor­a­tions. Indeed, one of the SEC commis­sion­ers, Luis Aguilar, recently came forward in support of disclos­ure rules and urged the full Commis­sion to act. The rest of the Commis­sion should follow his lead.

In an era of skyrock­et­ing elec­tion spend­ing, corpor­a­tions have the abil­ity to secretly spend millions of dollars on polit­ics. Demand for inform­a­tion about corpor­ate polit­ical spend­ing has increased among investors and the general public in the years since Citizens United was decided. A new Bren­nan Center for Justice report details the extent of the prob­lem of anonym­ous polit­ical expendit­ures and advoc­ates for a viable solu­tion. The Secur­it­ies and Exchange Commis­sion should issue regu­la­tions requir­ing publicly traded compan­ies to include inform­a­tion about their polit­ical spend­ing in their mandat­ory disclos­ures.