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Legacy Content / RULES OF THE GAME

Another Year, More Secret Spending

A Bill That Would Impose New Disclosure Rules Is Having Trouble Gaining Traction

June 1, 2010

Critics have found a lot to hate about the so-called Disclose Act, the new campaign finance bill that congressional Democrats are pushing to enact by July 4.

Business leaders and conservative activists have launched a full-bore attack on the bill, which would impose new disclosure and disclaimer rules on politically active corporations and unions. Sen. Charles Schumer, D-N.Y., and Rep. Chris Van Hollen, D-Md., wrote the legislation as an antidote to the Supreme Court's January ruling to overturn the longtime ban on direct corporate and union campaign spending.

In a breakfast briefing Friday, U.S. Chamber of Commerce President and CEO Thomas J. Donohue assailed the Disclose Act as unconstitutional and tilted toward unions. A chamber letter to House members, signed by more than 80 leading business and trade associations, promises to include the Disclose Act in its "How They Voted" scorecard.

 

It's easy to see why the Disclose Act has stirred controversy. In addition to reporting and disclaimers, it treads into some complex areas. These include new limits on corporations that have 20 percent or more foreign ownership, on government contractors and on recipients of government bailout money.

In a global economy, measuring foreign ownership precisely can be tricky. The government contractor rules could prove vulnerable to constitutional challenge, legal experts say. And the political hats that the bill's authors wear -- Schumer previously chaired the Democratic Senatorial Campaign Committee, and Van Hollen heads the Democratic Congressional Campaign Committee -- have excited partisan suspicions.

The legislation sets out to intimidate corporations and "ignores completely the immense political influence of organized labor," said R. Bruce Josten, the chamber's executive vice president for government affairs, at a press briefing last week. The bill actually does not differentiate between corporations and unions. But certain provisions, such as the limits on foreign-owned corporations, effectively would not apply to organized labor.

The bill is short on votes in the Senate, Josten maintained, where most senators regard it as "a very problematic piece of legislation."

Indeed, the bill's authors have only token GOP backing in the House and none in the Senate. Reform advocates say they remain optimistic that some Republican senators will sign on. They note that historically, GOP leaders have pointed to full disclosure as the solution to the campaign finance mess.

But Democrats are quickly running out of time to enact the bill by this fall's election. A crowded legislative calendar delayed a scheduled House Rules Committee markup last week. When it finally does take up the bill following recess, the rules panel must contend with close to 40 amendments on everything from earmarks to shareholder protections and ending contribution limits.

And Republicans, who once touted disclosure as a silver bullet, have changed their tune. Conservative activists have mounted a series of lawsuits challenging state-level disclosure laws, including one recently argued before the Supreme Court. For all their beefs with the Disclose Act, moreover, business leaders have stayed largely mum about their biggest complaint: The bill would make it harder for them to raise money. This helps explain why some have gone to extraordinary lengths to hide their donors.

In one Ohio judicial race, the state Chamber of Commerce engaged in a four-year legal battle to shield the names of its contributors. When a county judge finally forced the state chamber to reveal who had paid for $2.4 million in attack ads targeting a candidate for the state's highest court, the donor list turned up multiple six-figure contributions from leading corporate and insurance giants.

The activist group Citizens United, which brought the challenge that led to the Supreme Court's recent landmark ruling, is still lobbying for the right to raise money in secret. While the Supreme Court upheld the group's right to spend money independently, it rejected 8-1 its challenge to the existing disclosure laws.

Now Citizens United has asked the Federal Election Commission to treat it as a press entity exempt from disclosure rules as a media corporation, on the grounds that it has produced a dozen documentary films since 2004. Reform advocates question this, since the group has spent only about a quarter of its budget on movies.

Even organizations that don't seek special relief have little trouble hiding their donors, said former Federal Election Commissioner Scott E. Thomas at a recent press briefing hosted by the Campaign Legal Center. That's because loosely written FEC regulations require those making independent campaign expenditures to disclose only those donors who specifically earmarked their contributions for such ads.

"This is a good opportunity for everyone in the legislative process to focus on the fact that the current disclosure standard is nonsense," said Thomas, who heads the political law practice at Dickstein Shapiro. "It can allow for total non-disclosure."

The Disclose Act is clearly a work in progress. But secret campaign spending is patently not what the Supreme Court envisioned when it freed up corporate and union money in Citizens United. In the court's majority opinion, Justice Anthony Kennedy stated unambiguously that "the public has an interest in knowing who is speaking about a candidate shortly before an election."

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