As Senators Prepare for Debate, Background and Insights from Common Cause

To: reporters and opinion writers:

Below for your convenience is a memo on the DISCLOSE Act, slated for debate early next week in the US Senate.

Senate leaders have set aside Monday and possibly Tuesday, July 16 and 17, for debate on a new and simplified version of the DISCLOSE Act (S. 3369). Introduced by Sen. Sheldon Whitehouse (D-RI), and co-sponsored by 27 other senators, the bill would impose new, sorely needed requirements for the public release of information about political spending by corporations and unions in federal elections. The improved disclosure standards would close loopholes in current law that have allowed so-called Super PACs to shield the true sources of their income from public view. This memorandum aims to outline the rationale for and basic provisions of the legislation and its importance to our political system.

BACKGROUND

Since January 2010, when the Supreme Court decided in Citizens United v. FEC that corporations and labor unions can draw unlimited amounts of money from their treasuries to influence elections, advocates of campaign finance reform have made strengthened disclosure requirements their top priority. In 2010, “independent” groups that shielded their donors from disclosure made more than $132 million in campaign-related expenditures, according to the Sunlight Foundation. A flood of secret spending in the 2012 presidential primaries appears certain to grow into a tsunami by this fall.

The Democracy is Strengthened by Casting Light on Spending in Elections Act of 2010 (DISCLOSE Act), drafted shortly after the Citizens United decision, passed the House of Representatives on a bipartisan vote (219-206) in 2010 and was supported by 59 of 100 senators; it died when supporters in the Senate could not muster a 60th vote to break a Republican-led filibuster. While S. 3369 differs from the 2010 legislation in significant respects (detail below), all the changes have been tailored to address specific objections from senators who opposed the previous version; because of that, the new bill is likely to garner majority support and is threatened chiefly by obstructionists using the Senate’s filibuster rule.

HIGHLIGHTS OF S. 3369

The bill requires organizations – unions, corporations, political action committees Super PACs – that make more than $10,000 in “campaign-related disbursements” to disclose the name of any donor providing $10,000 or more to finance that spending. This requirement would close a loophole in current law that allows tax-exempt “Super PACs” and groups including the U.S. Chamber of Commerce to shield the identities of the donors financing their political spending.

The bill would not take effect until Jan. 1, 2013.

CHANGES FROM 2010 LEGISLATION

S. 3369 is a “clean” bill; provisions from the 2010 legislation banning political spending by government contractors, placing additional disclosure requirements on political spending by lobbyists, and limiting political spending by U.S. corporations that are partially owned by foreign firms, have been stripped out of S. 3369. Also gone are “Stand by your ad,” provisions that would have required independent groups broadcasting political ads to list the names of their top donors within each ad.

PRO AND CON

The DISCLOSE Act is grounded in the principle expressed by the late Supreme Court Justice Lewis Brandeis that “sunshine is the best disinfectant.” DISCLOSE supporters argue that secret money in politics is an invitation to corruption and that public release of the identity of donors makes elected officials less inclined to risk the negative publicity and potential criminal prosecution that would follow attempts to reward those donors. For the same reason, disclosure makes donors less likely to seek political favors, they assert. DISCLOSE supporters also believe that in evaluating messages from and about political candidates, voters have a right to know who is paying for those messages.

In Citizens United, an 8-1 majority of the Supreme Court declared disclosure requirements constitutional. “The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and message,” the Court said. In Doe v. Reed, a case decided shortly after Citizens United, Justice Antonin Scalia eloquently made the case for disclosure: “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed. For my part, I do not look forward to a society which.campaigns anonymously.and even exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism. This does not resemble the Home of the Brave.”

Senate Republican Leader Mitch McConnell and the U.S. Chamber of Commerce have emerged as the most prominent opponents of disclosure. Both argue that the DISCLOSE Act would place burdens on corporations that do not apply to unions and that its real purpose is to push corporations out of the political arena; they contend that rather than risk boycotts from consumers who disagree with their political spending or retribution from elected officials targeted by it, corporations will opt to close their checkbooks and remain silent.

The DISCLOSE Act “is nothing less than an effort by the government itself to expose its critics to harassment and intimidation, either by government authorities or through third-party allies.” McConnell said in a widely-publicized speech last month. “Those pushing the DISCLOSE Act have a simple view: if the Supreme Court is no longer willing to limit the speech of those who oppose their agenda, they’ll find other ways to do it.”

ANALYSIS

The arguments against DISCLOSE do not stand up to scrutiny. Disclosure laws already on the books protect individual and corporate speakers from harassment and allow those who can show they’ve been injured to seek an exemption from disclosure requirements. Consumer boycotts by individuals who disagree with a particular corporation’s speech are not harassment and are themselves a constitutionally-protected form of free expression.

The DISCLOSE Act treats corporate and union political spending identically. If a union engaging in political spending charges any member dues of more than $10,000 or accepts donations totaling more than $10,000 from that member, disclosure would be required. Similarly a corporation or Super PAC engaging in political spending would be compelled to disclose only the names of donors giving at least $10,000.

The Supreme Court has repeatedly rejected any arguments that disclosure requirements silence speech, and has long upheld them as constitutional because they serve an important governmental interest of giving voters critical information about those who are trying to influence our elections. As Justice Kennedy said in Citizens United, disclosure lets “citizens see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”