What's Next for Campaign Finance Reform? (The Huffington Post)

Meredith McGehee
Sep 19, 2014
Share:

The constitutional amendment to overturn the Supreme Court's Citizens United decision came up short in the Senate. Such things are no easy lift. But while it failed to garner the supermajority vote, the Senate's consideration and debate provided an avenue to keep people who are appalled by the current campaign finance system energized and engaged. Now it is time to harness that energy for some shorter-term battles that are worth fighting even though we have five Supreme Court Justices who have taken the position that the selling of access and influence by American lawmakers is not a problem. Increased disclosure, curbing coordination, preventing rampant abuse of the tax code and updating other federal regulations will help bring reality closer in line with the "Wonderland" described in Justice Anthony Kennedy's Citizens United decision.

There are opportunities before Congress, the Federal Election Commission (FEC), Internal Revenue Service (IRS), Federal Communications Commission (FCC) and the Securities and Exchange Commission (SEC) to push for meaningful reforms to increase transparency in our political process. Americans are fed up with the out-of-control system handed down by the Supreme Court and here are some battles worth having during the next two years to fight back.

➢ Congress can pass the DISCLOSE Act and update the definition of "coordination."

The second part of the Citizens United decision focused on whether disclosure requirements on those groups making expenditures to influence the outcome of elections are constitutional. By an 8-to-1 margin, the Court held that "transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."

Unfortunately, current laws and regulations do not live up to the policy position pronounced by the Court. "Dark money" groups are spending millions of dollars on TV ads and taking advantage of inadequate and outdated laws and regulations to evade disclosure. Disclosure legislation fell just one vote short of passage in the Senate in 2010. The DISCLOSE Act, reintroduced in the 113th Congress by Senator Sheldon Whitehouse (D-RI) and Representative Chris Van Hollen (D-MD), seeks to ensure public disclosure of large donors to entities that make significant expenditures to influence federal elections. The bill proposes a common-sense set of standards to ensure the U.S. statutes achieve the transparency promised by the Supreme Court.

Rep. Van Hollen also has proposed updating the definition of "coordination" -- a key concept in maintaining the line between supposedly independent expenditures, and corporation and labor contributions given directly to candidates. Somehow the Court in Citizens United decided that independent expenditures could not corrupt but direct contributions could corrupt. Since 2010, we have seen a growing number of supposedly independent Super PACs run by candidates' family members and key former staffers. We have seen Cabinet officials attend fundraisers for supposedly independent Super PACs. We have seen candidates and supposedly independent Super PACs use common vendors, and supposedly independent Super PACs run by a candidate's former staffers. Because the current legal definition of "coordination" is so inadequate it has become essentially meaningless and easily evaded. Fixing the current statute is not brain surgery. It is just a matter of political will.

➢ Members of Congress can support legislation to increase the number of small dollar contributors in our elections, eliminate loopholes that benefit Super PACs and that get lobbyists out of the business of bundling contributions.

In the post-Citizens United world, all of the incentives for how to gather the money needed to run a meaningful campaign are upside down and in conflict with core democratic principles. In that case and in McCutcheon, the narrow Court majority have equated money with speech in the eyes of the law and have explicitly rejected the idea of "leveling the playing field" as a constitutional basis for regulating campaign money. As a result, a small number a wealthy individuals account for the vast majority of the money spent in our elections. Fewer than one-third of one percent of all Americans give $200 or more, which means that 99 and 2/3rs percent of all Americans are not participating at a recognizable level in the current system. The elite club of wealthy donors giving to Super PACs is even more striking--a mere 1,578 people were responsible for more than $760 million given to Super PACs in 2012, each giving at least $50,000. In the campaign finance context the principle of "one person, one vote" is laughable as the Koch Brothers, Tom Steyer and a collection of other billionaires have a disproportionate ability to influence the outcome of not only our elections but our national discourse.

There are good bills that have been introduced in Congress that seek to change the current disincentives. Two bills have been introduced that would provide matching funds for small contributions. The Empowering Citizens Act introduced by Representatives David Price (D-NC) and Chris Van Hollen (D-MD) would enact a more realistic definition of "coordination," end individual candidate Super PACs, and repair the presidential financing system. The Government by the People Act, introduced by Representative John Sarbanes (D-MD), which proposes a matching system, has 159 House cosponsors. In the Senate, Michael Bennet (D-CO) has introduced legislation that would curb the ability of lobbyists to obtain influence by bundling contributions to Members of Congress. Sadly, none of these bills is expected to move in a Republican-controlled Senate, but Americans of any stripe who believe the current campaign finance system is an out-of-control mess and that average Americans should play a greater role in elections should voice their support for these efforts and make sure their Representatives know their views.

➢ Congress can update the Lobby Disclosure Act.

These days, too many former Members and staff are engaging in activities most Americans see as lobbying, but instead claim they are simply providing strategic advice or, in one case, acting as the world's best paid "historian." Their influence on legislation is undeniable and they should be registering as lobbyists.

In 2011, the American Bar Association put together a bipartisan Task Force on Lobby Disclosure Reform headed by Charles Fried, former Solicitor General in the Bush Administration, Trevor Potter, former Republican Chair of the Federal Election Commission and Rebecca Gordon of Perkins Coie, a K St. law firm. Much of the concern focused on how the current law does not ensure accurate disclosure the lobbying activity that is going on Washington. The Task Force recommended a series of reasonable, common sense reforms that will not impinge on the right to lobby and redress grievances while providing the public with a more accurate picture of who is spending what in their attempts to influence public policy.

The Task Force recommendations, which include replacing the 20% of one's time threshold with a 12-hour quarterly minimum, have strong bipartisan support and pass constitutional muster.

The recommendations have been drafted into a legislative proposal that is expected to be introduced in the 114th Congress.

➢ The FCC can improve sponsorship identification rules and make the new online political files more useful.

The flood of post-Citizens United money is most keenly felt - and seen - on America's television sets. Joining candidates in running ads are Super PACs and "dark money" groups that are pushing spending to new record levels for off-year elections.

For viewers, it is often impossible to know who is providing the funding to run the ads. While current FCC regulations require stations to disclose the sponsor of the ad, a growing number of political ads are run by groups with unedifying names that don't provide viewers with accurate information about the underlying source of the money. The good news is that existing law, Section 317 of the Communications Act, already requires on-air identification of the sponsor of all advertisements. In fact, currently the FCC requires disclosure of the "true identity" of the ad's sponsor. The FCC has stated, "Listeners are entitled to know by whom they are being persuaded."

Unfortunately, these regulations did not anticipate the kinds of groups hiding behind innocuous sounding names.

A petition has already been filed at the FCC requesting that the agency update the rules to require on-air disclosure of the top funders of these ads. Congress does not need to act. The decision to move forward rests in the hands of the FCC Chairman Tom Wheeler, an Obama appointee.

The FCC should also move to make the online political files more helpful by extending the obligations to cable, satellite and radio outlets and by requiring the outlets to upload the data from the political file in a searchable, sortable, downloadable database format instead of pdf's.

➢ The IRS can act to update the 1959 rules governing the tax treatment of nonprofits that engage in political activity.

Post-Citizens United, a significant chunk of the political spending, especially on television, is being funded by organizations that, unlike PACs and Super PACs, don't register and disclose with the FEC. Instead, a growing number of organizations are operating under the nonprofit provisions of the tax code, claiming they are a Section 501(c)(4) "social welfare" organization. The conventional wisdom is that the IRS will allow these groups to spend up to 49% of their money on political activity and still be treated as a "social welfare" organization instead of a political committee. The significance of claiming this status is that the (c)(4) organizations do not pay taxes on the donations they receive and do not have to disclose the source of their funds, allowing millions of dollars in anonymous spending to influence the outcome of American elections.

Coming under pressure to update its outdated regulations, the IRS issued an initial set of proposed changes last year. The first effort was roundly criticized from the right and left, and now the IRS is expected issue a new notice or proposed rulemaking next year that will set forth a revised proposed rule.

The IRS, in response to public pressure, can adopt a final rule expeditiously in order to prevent further abuse of the law in the 2016 election cycle by groups claiming to be social welfare organizations in order to hide the donors financing their campaign activities.

➢ The SEC can enact regulations requiring corporations to disclose their political expenditures to their shareholders.

Pending before the SEC is a rules change that would require publicly traded companies to disclose their political spending. The proposal came in response to the Citizens United decision that permitted corporations to spend the treasury funds to influence the outcome of American elections. While a small number of corporations have engaged in independent expenditures or given to Super PACs, more are giving to "dark money" groups that, under the current regulatory regime, are able to keep their donors anonymous.

More than 1 million comments have been filed with the SEC, most of them in support of the proposed rule. In early 2013, the SEC placed the proposal on its regulatory calendar. Such a move usually indicates the agency is moving toward a formal rule. However, since that time, the SEC has a new head, Mary Jo White, who has made no commitment on the issue, and the proposal was removed from its calendar.

Not surprisingly, the U.S. Chamber of Commerce is among those groups opposing the disclosure proposal. A number of the top companies of the Standard & Poor's Top 500 already provide some of this information to their shareholders .

➢ President Obama can nominate new Commissioners to the FEC and use his bully pulpit to highlight the Commission's inaction on new coordination rules.

Unlike most other federal agencies, Congress purposefully designed the six-member Federal Election Commission to have an equal number of Republicans and Democrats, almost guaranteeing it would be a toothless tiger. The agency needs a full overhaul and redesign; however, in the meantime President Obama should appoint new Commissioners to replace the four Commissioners serving expired terms and he should nominate individuals willing to enforce the laws on the books.

The Commission, mired in partisan deadlock, is rumored to only now be ready to issue regulations interpreting the radical Citizens United decision, which changed more than 100 years of jurisprudence in the campaign finance area. And it appears the only way the deadlock was broken was when, in secret negotiations, a Democratic commissioner agreed to go along with the Republicans' demand that the new rules only cover the Supreme Court's striking down the ban on corporate political expenditures, but ignore the Court's finding rules requiring disclosure of those expenditures are constitutional.

President Obama, in spite of his rhetoric on the campaign trail in 2008, has not provided meaningful leadership, or made use of his bully pulpit, to advance the reforms that are essential to repairing the nation's campaign finance laws. In his last two years in office, the President should step up to the plate and spend some of his remaining political capital to make repairing our broken campaign finance system a priority. The critical test for the President now is not how he has operated within the boundaries of the current flawed campaign finance system, but what he is prepared to do to fix the system.

None of these proposals constitute a silver bullet to solve the problems plaguing our campaign finance system. But then neither is the constitutional amendment.

But this is the work of democracy -- the long slog of incremental fixes -- at least until the political dynamics change because of a scandal, a national crisis or a change in the composition of the Supreme Court. This is the well-worn path taken by the civil rights movement.

The struggle against the oligarchic tendencies in America is part of our nation's DNA, re-fought every generation or so when the large aggregations of wealth seek to concentrate as much power as they can. President Theodore Roosevelt's struggle against corporate monopolies' grip on the political system is being echoed today. We have a major political party - Teddy Roosevelt's party - that embraces the proposition money is speech.

Poll after poll shows that a majority of the American people oppose the Citizens United decision. These majorities believe it is important for our elected leaders to reduce the influence of money in elections. And, there is more activity than ever fighting back against a system that is so tilted to the monied interests. In Congress and before federal agencies and in state capitals around the country, thousands of Americans are speaking out against a system they see as too dominated by big money.

While it would be nice to be able to wave a magic wand or pass a sweeping bill to fix the system, it's just not going to happen. Now is the time for determined and steadfast battles on several fronts -- an effort that doesn't take no for an answer and that doesn't give up even when discouraged. We can't expect "big money" interests just to voluntarily give up the privileges and access to power they currently enjoy. Under the current politics, the smart move is to chip away, look for openings, and identify the scandals that are happening every day and to be ready for the opportunities to turn the ship of state in a more democratic direction.

Meredith McGehee is Policy Director at the Camp[aign Legal Center. This opinion piece originally ran in the HuffPost Politics section on September 19, 2014. To view it there, click here

Get Updates

Visit Our YouTube Page

For more Campaign Legal Center videos, visit our YouTube channel.