This is the thirteenth blog in our election integrity series.
In 2014, professors Martin Gilens of Princeton University and Benjamin Page of Northwestern University studied more than 20 years of data to find out whether the U.S. government really represents the people. They analyzed nearly 2000 public opinion surveys to find out what the people wanted, and they compared those results to what the government actually did. What they found was that the wishes of people whose incomes were in the bottom 90% had approximately zero impact on what the government did. To quote from the study: “The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Only the opinions of the economic elites, business interests, and people who could afford lobbyists had significant influence. This is because in the United States, purchasing political influence is perfectly legal. Here is an example of how the system works:
Let’s say a big bank wants a law that would force taxpayers to bail them out again if they repeat the exact same reckless behavior that crashed the global economy in 2008. It’s perfectly legal for our bank to hire a team of lobbyists whose entire job is to make sure the government gives the bank what it wants. Then, those lobbyists can track down members of Congress who regulate banks and help raise a ton of money for their re-election campaigns. It’s also perfectly legal for those lobbyists to offer those same politicians million-dollar jobs at their lobbying firms.
You can watch a You Tube with an excellent graphic explanation of this system here.
The Princeton study concluded:
…our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened
In fact, in 2016, the Economist Intelligence Unit downgraded the United States from a “full democracy” to a “flawed democracy,” putting it in the same category with Poland, Mongolia, and Italy, and it has remained in that category since then. “Popular trust in government, elected representatives and political parties has fallen to extremely low levels in the U.S.,” the paper’s authors wrote. “This has been a long-term trend and one that preceded the election of [Donald] Trump as U.S. president in November 2016.”
Former president Jimmy Carter called the United States “an oligarchy with unlimited political bribery.” “The incumbents, Democrats and Republicans, look upon this unlimited money as a great benefit to themselves,” Carter said. “Somebody’s who’s already in Congress has a lot more to sell to an avid contributor than somebody who’s just a challenger.”
Types of money in politics
State and local elections are governed by state and local laws. Campaign finance laws for federal elections are enacted by Congress and enforced by the Federal Election Commission (FEC).
Public and private money
Most campaign spending is privately financed. Public financing is available for both the primaries and the general election, but the funds are subject to spending limits and other restrictions. Since the program’s inception in 1976, most presidential candidates accepted public matching funds, but in 2008, Barak Obama rejected public financing, saying that the system was “broken” and blaming Republican groups like 527s, “who will spend millions and millions of dollars in unlimited donations.” Since that time, major candidates have refused public financing because the program has spending limits and restrictions that prevent their campaigns from being competitive. Probably the biggest blow to public funding was the Supreme Court’s 2010 Citizens United decision. This and other campaign finance cases paved the way for the creation of super PACs that were permitted to raise unlimited funds from both corporations and individuals.
Hard money, soft money, and dark money
Hard money refers to political donations that are made directly to political candidates. These contributions may come from individuals, candidate committees, political parties, and from traditional political action committees (PACs), and they must follow limits set by the FEC. For example, in 2018, the maximum amount that an individual could contribute to a presidential candidate or committee was $2700 per election, and a PAC could contribute $5000 per year. Corporations, labor organizations, federal government contractors, and foreign nationals may not contribute to candidates. Hard money donors must be disclosed; this is not dark money.
Soft money is not regulated by the FEC. It can be contributed to a political party in unlimited amounts by wealthy individuals, PACS, and other sources such as corporations, nonprofits, and labor unions. These donations can be used for political activities, such as buying ads that advocate for or against a candidate, canvassing door to door, or running phone banks. However, these organizations are not allowed to coordinate their spending with political candidates or parties. Unfortunately, the non-coordination rule is unlikely to be enforced.
Dark money refers to political spending where neither the donor nor the source of the money is disclosed. While some soft money groups, such as super PACs, are required to disclose their donors, others are not. Non-disclosing organizations are referred to as dark money groups. Dark money groups are growing in size, scope, and share of election spending with each election cycle. Using dark money makes it nearly impossible to trace how funds are being spent during political elections.
Groups that finance campaigns
Following are the main types of groups that were active in financing the 2016 presidential campaigns.
Political party committees may contribute funds directly to candidates, subject to contribution limits. National and state party committees may make additional “coordinated expenditures,” subject to limits, to help their nominees in general elections. National party committees may also make unlimited “independent expenditures” to support or oppose federal candidates. An independent expenditure is an expenditure for a communication, such as a website, newspaper, TV or direct mail advertisement, that advocates the election or defeat of a clearly identified federal candidate; but is not coordinated with a candidate, or candidate’s committee. Such expenditures are not subject to contribution or coordinated party expenditure limits.
Presidential candidates have committees funded by individuals and PACs, and the funds are controlled by the candidate. Contributions from corporations, labor unions and foreign nationals are banned. The limit is $2,700 per election, or $5,400 including primaries and the general election.
Political action committees
Traditional PACs allow businesses to get around the restrictions on corporate giving to candidates. Employees of a company can make contributions of up to $5,000 to the PAC, and the PAC, often controlled by a corporate lobbyist, can make contributions to candidates of $5,000. There are non-business PACs as well.
Super PACs were made possible by two judicial decisions. First, in January 2010 the U.S. Supreme Court held in Citizens United v. Federal Election Commission that government may not prohibit unions and corporations from making independent expenditures for political purposes. Two months later, in Speechnow.org v. FEC, the Federal Court of Appeals for the D.C. Circuit held that contributions to groups that only make independent expenditures could not be limited in the size and source of contributions to the group. Technically known as independent expenditure committees, super-PACs are political committees that may raise and spend an unlimited amount of money and accept contributions from corporations, nonprofits, labor unions and individuals. They may not give money directly to candidates, and they’re prohibited from coordinating most communications with a candidate committee. They are required to report the identity of their donors, but may accept money from “dark money” nonprofits and “shell” corporations who may not have disclosed their donors. As a result, some super PACs use secret money to advocate for and against political candidates.
Hybrid PACs or Carey Committees
A relatively new type of political committee, a hybrid PAC has the ability to operate both as a traditional PAC, contributing funds to a candidate’s committee, and as a super PAC that makes independent expenditures. It must have a separate bank account for each source of funds. While it can collect unlimited contributions from almost any source for its independent expenditures account, it may not use those funds for its traditional PAC contributions.
501(c) Groups / Political Nonprofits
These are nonprofit, tax-exempt groups organized under section 501(c) of the Internal Revenue Code. These groups can engage in political activity, and because they are not technically political organizations, they are not required to disclose their donors to the public. When they choose not to disclose, they are considered dark money groups. These groups, like super PACs, may not coordinate with political parties or candidates, and therefore they are allowed to raise unlimited sums of money from individuals, organizations and corporations.
One of the biggest problems with nondisclosure is that citizens who are barraged with political messages may not be able to consider the credibility and possible motives of the wealthy corporate or individual funders behind those messages.
Types of 501(c) Organizations
There are a number of different types of 501(c) organizations. Their structures, uses, and capabilities vary slightly, but they are all dark money groups. None of these organizations are required to publicly disclose the identity of their donors or sources of money.
This is the designation the Internal Revenue Service uses for charities, hospitals, universities and educational groups, and is the most restrictive when it comes to political activities. Some small amount of lobbying is allowed, but spending on behalf of a candidate is absolutely against the law. Such groups must fulfill some sort of charitable or educational purpose to keep their tax status, and donations are tax-deductible. Examples include NAACP, Center for American Progress, Natural Resources Defense Council, and the Center for Responsive Politics
These are commonly referred to as “social welfare” organizations. Unlike 501(c)(3) charitable organizations, they may also participate in political campaigns and elections, so long as the organization’s “primary purpose” is the promotion of social welfare and not political advocacy. The IRS has never defined what “primary” means, or how a percentage should be calculated, so the current de facto rule is 49.9 percent of overall expenditures, a limit that some groups have found easy to circumvent. Donations to these groups are not tax-deductible. Like super PACs, they can collect unlimited contributions from most any source, but unlike super PACs, they are not required to disclose their donors. This makes them the vehicle of choice for so-called “dark money” groups. Examples of 501(c)(4) groups include The National Rifle Association, Planned Parenthood, and the Sierra Club.
These are labor and agricultural groups that may engage in political activities, as long as they adhere to the same general limits as 501(c)(4) organizations. Donations to these groups are not tax-deductible. Examples include: Service Employees International Union (SEIU), American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and American Federation of State, County and Municipal Employees (AFSCME).
These are business leagues, chambers of commerce, real estate boards and boards of trade, which may engage in political activity, as long as they adhere to the same general limits as 501(c)(4) organizations. They can act in essentially the same way as social welfare groups. Donations to these groups are not tax-deductible. Examples include: The US Chamber of Commerce, The American Medical Association (AMA), and The Pharmaceutical Research and Manufacturers of America (PhRMA).
Benefits of being a 501(c) organization/political nonprofit
They don’t have to pay taxes and they can operate with considerable secrecy. Because they can operate with dark money, they can hide their political activities, and they can also hide the political activities of individual or corporate donors who might not want their political activities to become public.
Limited Liability and Shell Companies
Limited Liability Companies (LLC) perform a number of necessary business functions. However, their unique structure can easily be abused or utilized in order to hide shady activity. In politics, LLCs are sometimes established to help disguise the identity of a donor or source of money spent on behalf of a political candidate.
LLCs are governed by state law, but generally, minimal information is necessary to file the required articles of incorporation. While most states require the LLC name, address and a registered agent/founding member, in Delaware and a few other states an LLC can be incorporated without even having to name a registered agent.
A 2006 report by the Department of Treasury condemned LLCs’ lack of transparency, especially in states that allow anonymous ownership, saying they are “inherently vulnerable to abuse,” and can facilitate the movement of billions of dollars for everything from credit card fraud to terrorist financing. These same loopholes have made LLCs attractive vehicles with which to move political money into organizations while protecting the identity of the donor or source of money. Their complete lack of transparency and accountability makes LLCs the darkest of the dark money groups.
Current federal campaign finance law requires candidate committees, party committees, and PACs to file periodic reports disclosing the money they raise and spend. Federal candidate committees must identify, for example, all PACs and party committees that give them contributions, and they must provide the names, occupations, employers and addresses of all individuals who give them more than $200 in an election cycle. They must also disclose expenditures to any individual or vendor. The FEC maintains this database and publishes the information about campaigns and donors on its web site. Various other organizations, such as the Center for Responsive Politics, aggregate data on political contributions to provide insight into the influence of various groups. In August 2014, a new smartphone app called “Buypartisan” was released to allow consumers to scan the barcodes of items in grocery stores and see where that corporation and its leaders directed their political contributions.
As we have seen, some outside groups, such as super PACs, are required to disclose their donors; others, such as 501(c)(4)s, are not. Even groups that are required to disclose their donors do not disclose them in real time. In many cases, much of the money that has been donated is not disclosed until long after the election cycle.
History of campaign finance in the USA
(The following history is taken from Britannica)
There have been four major periods of U.S. campaign-finance regulation in the past century: the era before the Federal Election Campaign Act (FECA) of 1971 and its subsequent amendments; the era from 1974 to 2002, when FECA regulated campaigns; the era following the enactment of the Bipartisan Campaign Reform Act (BCRA) of 2002; and the era following Citizens United v. Federal Election Commission (2010), the U.S. Supreme Court ruling that struck down crucial provisions of the BCRA.
Before FECA, campaign-finance laws were mainly addressed to particular types of contributors. By 1947, federal employees, corporations, and labor unions were barred from making contributions to candidates. Unions and corporations responded by forming political action committees (PACs), which aggregated voluntary contributions by individual members or employees.
FECA established limits on candidate spending; on the contributions of individuals and PACs to candidates, parties, or political committees; and on the amount of money candidates could spend on their own campaigns. As amended in 1974, FECA also created the Federal Election Commission (FEC) to enforce and clarify campaign-finance laws.
In Buckley v. Valeo (1976), the Supreme Court ruled that restrictions on candidate spending and candidate self-financing violated the First Amendment’s guarantee of freedom of speech. The court allowed the limits on spending in presidential campaigns to stand, because such limits were contingent on receipt of public funds. And the court upheld the limits on contributions from individuals or PACs; thus, from the passage of FECA in 1971 until 2002, individuals and groups were limited to contributing no more than $1,000 to a candidate, up to a total of $25,000, and PACs were limited to contributing no more than $5,000 to a candidate.
Many election observers contended that FECA abetted the development of PACs and increased the reliance of congressional candidates on PACs. FECA was also said, however, to have reduced the reliance of candidates on individual donors or organizations. At the presidential level, FECA also restrained spending: all major party nominees abided by FECA’s spending limits in their primary campaigns from 1976 through 1996, and public funding of general election campaigns ensured that candidates could not outspend each other.
During the 1990s, two major developments took place that tended to undermine FECA’s restrictions. First, although corporations and labour unions could not make direct contributions to candidates, FECA did not prohibit them from contributing to political parties as long as such money was used for “party-building” activities. During the 1990s, political parties began to solicit such “soft money” donations from corporations, labor unions, and wealthy individuals. Because those funds were not distributed by the parties to candidates or used to advocate the election or defeat of a candidate, they were not subject to contribution limits. Second, in the 1990s several ostensibly independent advocacy organizations evaded FECA’s limits on spending money in a coordinated fashion with a campaign by funding television advertising on behalf of particular candidates that simply omitted certain “magic words”—such as “support” and “oppose.”
The BCRA of 2002 (also known as “McCain-Feingold”, after its sponsors) was a response to both developments. The two major components of the law were a ban on soft-money contributions to the national parties and severe restrictions on so-called “electioneering communications” (political advertising) by advocacy groups. The latter provisions prohibited organizations that received corporate or labor funding from broadcasting advertisements that referred to a particular candidate within 30 days of the relevant primary election or within 60 days of the general election. The BCRA also doubled individual contribution limits and indexed them to inflation. All major provisions of the law were upheld by the Supreme Court in McConnell v. Federal Election Commission (2003).
In Citizens United, however, the court partly overturned McConnell by invalidating the BCRA’s restrictions on political advertising as an unconstitutional infringement of the free-speech rights of corporations and unions. Four years later, in McCutcheon v. Federal Election Commission (2014), the court partly overturned Buckley by striking down FECA’s aggregate limits on monetary contributions by individuals to multiple federal candidates, party committees, and noncandidate PACs.
Supreme Court Justice Ruth Bader Ginsburg was one of the four justices (Ginsburg, Sotomayor, Breyer, and Stevens) who disagreed with the Citizens United ruling that erased campaign spending caps. She called the ruling the “most disappointing” in her 22-year tenure on the court “because of what has happened to elections in the United States and the huge amount of money it takes to run for office.”
Campaign Finance Reform
We have already noted the Princeton study, which says that 90% of the population is not represented by their “elected representatives,” who instead represent the big donors. This is a direct result of our current system of campaign finance. A second result is that it’s not feasible to become a candidate for the House or Senate (from which we usually get presidential candidates) or for many state and local offices without having either vast personal wealth or a willingness to engage in nonstop fundraising. This reduces the pool of candidates to those who have more in common with donors than they do with voters. It’s not surprising that many people in the unrepresented group see little point in voting.
A recent Pew Research Center report finds widespread bipartisan agreement that people who make large political donations should not have more political influence than others, and there is extensive support for reining in campaign spending: 77% of the public (85% of Democrats and 71% of Republicans) say “there should be limits on the amount of money individuals and organizations” can spend on political campaigns; just 20% say they should be able to spend as much as they want. So what is the next step?
Change the Supreme Court
One way to reduce the influence of money in politics would be to appoint liberal Supreme Court justices to reverse rulings like Citizen’s United. However, this will not be happening any time soon, so we can rule it out for now.
Pass a constitutional amendment
Another way would be a constitutional amendment. In fact, several organizations, such as Move to Amend, have campaigned for this, and several state legislatures across the country have put forward measures to form committees to review the ruling and call on the United States Congress for a constitutional amendment to overturn Citizens United v. FEC and McCutcheon v. FEC. While most of the legislation has not moved forward, some states, such as Illinois, have had such legislation passed by both houses of the state legislature. However, altering the Constitution is not easy. An amendment must be proposed either by Congress with a two-thirds vote in both the House of Representatives and the Senate or by a convention of states called for by two-thirds of the state legislatures. If the amendment passes that hurdle, it must then be ratified by three-fourths of the states. This is also not going to happen any time soon.
Since it appears impossible in the foreseeable future to block big money donors, we can try to make elections fairer by increasing the influence of small-money donors. Bernie Sanders raised more than $200 million for his primary campaign from donors giving an average of $27 each; only 2% of his money came from Wall Street. However, it seems unlikely that voters’ enthusiasm for Bernie could be shifted to mainstream Democrats. Knowing this, mainstream Democrats are likely to continue their reliance on the tried and true big-donor approach.
Use public money
Another idea is to try to increase the influence of small donors by using public money. The problem is that the flood of private money after Citizen’s United has rendered public financing insignificant. One way to counter this is to use matching funds. For example, Arizona had a system that established public financing for campaigns for statewide offices. If a candidate who qualified for public funds was outspent by an opponent who was not participating in public financing, then the participating candidate received added government money (sometimes called “rescue funds”) to match the amount raised by the opponent. However, in 2010, the U.S. Supreme Court ruled in its usual 5-4 lineup that the use of rescue funds was unconstitutional (McComish v. Bennett). This decision also destroyed public financing in other places, including the city of Albuquerque. In 2005, Albuquerque approved a method to publicly finance local candidates. Through this program, eligible candidates who agreed not to take private donations got $1 for each voter in their constituency per year, from a special fund in the city budget. Candidates were also entitled to additional funds to compete with privately financed opponents, but that part of the program was struck down by the Supreme Court’s decision in McComish v. Bennett. With that part of the program gone, publicly financed candidates in Albuquerque could no longer compete with candidates who accepted money from big donors.
In 2017, the city of Seattle rolled out a pilot program, funded through property taxes, called “democracy vouchers.” Eligible residents would receive vouchers totaling $100, which they could donate to local candidates of their choice, subject to guidelines. The intent was to enable constituents who don’t usually have the resources to support candidates, such as people on low incomes or homeless, to participate in the political process. It was also hoped that the program would help to mitigate the vast influence wealthy campaign donors have on local elections. A recent analysis found that the program did boost political participation among low-income and younger voters, and created a more ethnically diverse pool of voters in their last election, although it does not seem that it kept big money out of the election.
In 2015, South Dakota and Washington state passed versions of “democracy vouchers,” as part of larger anti-corruption packages favored by voters, and both received pushback. In the case of South Dakota, a judge blocked the ethics overhaul of which the vouchers were a part, and then the Republican state legislature ended up repealing it altogether. Seattle’s measure also faced legal obstacles after a libertarian law firm sued on behalf of property owners. Citing Supreme Court precedent, it argued that the program was “grossly inefficient, wasted taxpayer money,”and violated the First Amendment because residents’ taxes were going to fund candidates they didn’t support.
In a 2011 op-ed in The New York Times, Lawrence Lessig, a professor of law at Harvard, vouched for democracy voucher programs saying, “It’s also my money, or your money, used to support the speech that we believe: this is not a public financing system that forces some to subsidize the speech of others.” In response, a blog post from the libertarian Cato Institute called his argument “old wine in new bottles, barely masking the fact that it puts the government in the business of promoting political speech.”
In the case of Seattle, lawyers and political experts predicted that the libertarian argument wasn’t likely to stand in court, and so far they’ve turned out to be right. In November 2017, a Superior Court judge upheld Seattle’s program, ruling that it was a “viewpoint neutral method” for achieving political participation. In other words, it did not violate free speech rights, but corrected for an existing imbalance.
Other cities are showing interest in the idea. This includes Albuquerque, New Mexico, after the McComish decision shut down its public financing, as well as Austin, Texas. Other local governments, including those in Maryland, Oregon, Missouri, and California, are working on campaign finance at the local level. In New York, there are calls to use the city’s ongoing charter revision to strengthen public financing. Given that campaign finance laws at the national level are likely to be further weakened in the future, activists are hopeful that change can take place at the city-level.
Fair Elections Now Act
Democrats in the Senate have introduced a Fair Elections Now Act every year since 2007, and there is a companion bill in the House, called the Government by the People Act .
The following description is taken from the website of Dick Durbin (D-IL), who introduced the Act in the Senate:
The Fair Elections Now Act amends the Federal Elections Campaign Act of 1971 to establish a voluntary method for financing Senate campaigns. The Fair Elections system is composed of three stages:
1) To participate, candidates would first need to prove their viability by raising a minimum number and minimum dollar amount of small-dollar qualifying contributions from in-state donors. Once a candidate qualifies, that candidate must limit the amount raised from each donor to $150 per election.
2) For the primary, participants would receive a base grant that would vary in amount based on the population of the state that the candidate seeks to represent. Participants would also receive a 6-to-1 match for small-dollar donations up to a defined matching cap. After reaching that cap, the candidate could raise an unlimited amount of unmatched $150 contributions if needed to compete against high-spending opponents, as well as contributions from small-donor People PACs.
3) For the general election, qualified candidates would receive an additional grant, small-dollar matching, and media vouchers for television advertising. The candidate could continue to raise an unlimited amount of $150 contributions if needed, as well as contributions from small-donor People PACs.
The bill also establishes a “My Voice Tax Credit” to encourage individuals to make small donations to campaigns. The maximum refundable amount for the tax credit would be $25 for individuals and $50 for joint filers. To ensure that the tax credit targets small donors, it is only available to individuals who do not contribute more than $300 to a candidate or political party in any given year.
The bill also creates a type of small-donor political action committee, known as a “People PAC.” In contrast to traditional federal PACs that can accept contributions of up to $5,000 per year from individuals or Super PACs that can accept unlimited contributions, People PACs would only be permitted to accept contributions of $150 or less per election from individuals. People PACs would thus allow average citizens an opportunity for making their collective voices heard. Small donors would be able to aggregate their funds in a People PAC to make campaign contributions of up to $5,000 per election to qualified Fair Elections candidates. Coupled with the Fair Elections public financing system, People PACs would elevate the views and interests of a diverse spectrum of Americans, rather than those of the traditional, wealthy donor class.
Special rules would apply for runoff and uncontested elections. Participating candidates would receive enough funding to compete in every election, without having to spend most of their time raising money.
The Fair Elections Now Act wouldn’t add a dime to the deficit. It would be financed by a 0.5 percent fee on annual federal contracts over $10 million, with a maximum annual fee of $500,000 per contract.
I imagine that the future of these kinds of reforms depend on Democrats gaining control of the House and Senate.
Some groups are working on broader anti-corruption goals, of which campaign finance is a part.
A Better Deal for Our Democracy
In May 2018, Democrats rolled out their campaign platform for the midterms, taking aim at corruption and pay-to-play politics in Washington under the Trump administration.
“A Better Deal for Our Democracy” is a spin on their economic platform, “A Better Deal.” It includes proposals to protect and improve voting rights, new ethics laws, and campaign finance reforms, including policies that would make lobbyists’ activities more transparent and tighten rules around bribery and fraud convictions.
1) Democrats are focusing on voting rights. Their platform ranges from access to polling places and gerrymandering to concerns about hacking on Election Day. They’re pushing to bolster the Election Assistance Commission’s resources and implement automatic voter registration and gerrymandering reform. House Democrats will propose mandating independent commissions across the country to ensure district lines are not partisan.
2) They’re highlighting corruption and ethics violations in the Trump administration. Democrats plan to hit the campaign trail with policy proposals aimed at tightening lobbying rules.
Among these proposals would be legally requiring presidential candidates to disclose their tax returns. That’s a direct reaction to Trump, who has yet to release his financial records, bucking decades of political precedent and breaking his own promises of transparency.
There is also a proposal that would tighten lobbying rules and institute statutes against former lobbyists becoming Cabinet officials in agencies that have oversight over industries that previously employed them.
3) Democrats take a swing at campaign finance reform. This third pillar focuses on transparency in campaign donors. Sarbanes also cited a proposal that would create a 6-1 small-donor match program — a federal public financing system aimed at bolstering donations under $175.
The Disclose Act
The Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act was first introduced in 2010 In response to the Supreme Court’s decision in Citizens United v. Federal ElectionCommission, and it is a key part of A Better Deal for Our Democracy—the Democratic plan to end corruption in Washington. In June 2018, all Senate Democrats and 145 House Democrats introduced an updated DISCLOSE Act.
The DISCLOSE Act of 2018 takes a number of steps to ensure disclosure of dark money spending. Among those steps is a requirement for organizations spending money in elections – including super PACs and certain nonprofit groups – to promptly disclose donors who have given $10,000 or more during an election cycle. The bill includes clear transfer provisions to prevent political operatives from using layers of shell corporations and front groups to hide donor identities. Among new features of the bill is a “stand by your ad” provision requiring corporations, unions, and other organizations to identify those behind political ads – including disclosing an organization’s top five funders at the end of television ads.
The bill protects against foreign spending in American elections. Under current law, foreign nationals and foreign corporations are prohibited from engaging in any election spending. However, domestic companies with significant foreign ownership are not subject to the same restrictions, and dark money channels are available to foreign interests. The DISCLOSE Act would prohibit domestic corporations with significant foreign control, ownership, or direction from spending money in U.S. elections. Shell corporations would also be required to disclose their true owners. A full summary of the bill is available here. Bill text is available here. Of course, the DISCLOSE Act has no hope of becoming law in the current Congress.
In 2017, California passed a state DISCLOSE Act, which took effect January 1, 2018. The law requires that some form of “paid for by” statement appear on almost every advertisement. It also requires that ballot measure ads and some outside candidate advertising carry prominent disclosures of the sponsor’s top funders. Finally, the law alters the rules for “earmarked” contributions, with the goal of disclosing the real source of a group’s funds. More controversially, it also allows undisclosed earmarks for certain small contributions of less than $500 per year.
Proponents of the Act were initially inspired by the 2010 federal DISCLOSE Act bill that came within one vote of passing but couldn’t break the GOP’s filibuster. They hope that the Act’s success in California will create pressure on Congress and on other states to take similar action.
Sen. Elizabeth Warren’s Anti-Corruption and Public Integrity Act
In August 2018, Sen. Elizabeth Warren released the Anti-Corruption and Public Integrity Act, a wide-ranging new bill designed to reduce Washington corruption and undue influence from lobbying. It goes beyond campaign finance to try to end the influence of money on all three branches of government — legislative, executive, and judicial. The bill would institute a lifetime ban on the president, vice president, Cabinet members, and congressional lawmakers becoming lobbyists after they leave office. It would place restrictions on other government workers entering lobbying firms. The act would also bar federal judges from owning individual stocks or accepting gifts or payments that could potentially influence the outcome of their rulings.
Warren’s bill would require presidential and vice presidential candidates to, by law, disclose eight years’ worth of tax returns and place any assets that could present a conflict of interest into a blind trust to be sold off (neither of which President Donald Trump has done). Members of Congress would have to do the same with two years of tax returns.
Of course, there’s no way Warren’s bill will pass the current Congress. This bill is more of a mission statement as Warren explores a 2020 presidential run, as well as a challenge for other 2020 Democrats.
American Anti-Corruption Act
The American Anti-Corruption Act (AACA) is a piece of model legislation designed to limit the influence of money in American politics by overhauling lobbying, transparency, and campaign finance laws. It was crafted in 2011 by former Republican Federal Election Commission chairman Trevor Potter in consultation with dozens of strategists, democracy reform leaders and constitutional attorneys from across the political spectrum. The Act was unveiled in 2012 and is supported by reform organizations such as Represent.Us, which advocate for the passage of local, state, and federal laws modeled after the AACA. It is designed to limit or outlaw practices perceived to be major contributors to political corruption. Its provisions cover three areas:
- Stop political bribery by overhauling lobbying and ethics laws
- End secret money by dramatically increasing transparency
- Give every voter a voice by creating citizen-funded elections
The AACA’s authors state that its provisions are based on existing laws that have withstood court challenges, and are therefore constitutional.
The stated– goal of the Anti-Corruption Act is to serve as “model legislation that sets a standard for city, state and federal laws that prevent money from corrupting American government.” Organizations such as Represent.Us advocate for state and local laws that reflect the provisions of the AACA, often using the ballot initiative process. Since the provisions of the AACA are likely to be found constitutional, this differs from the approach taken by other electoral reform groups such as Move to Amend, which advocate for a constitutional amendment to overturn Supreme Court decisions such as Citizens United v. FEC and Buckley v. Valeo.
The AACA has already been influential; the following laws have been modeled after the AACA:
Tallahassee Anti-Corruption Act (2014):
A city charter amendment that established a city ethics board, created public rebates for political donations up to $25, instructed the board to create an ethics code within six months of the referendum’s passage, and lowered the acceptable value of political contributions to city candidates to $250 per donor. Interestingly, the initiative passed with the support of a politically diverse coalition of local advocates, including the Chair of the Florida Tea Party Network, the former President of the Florida League of Women Voters, and the Chairman of Florida Common Cause.
Registration Fee and Monthly Reports for Expenditure Lobbyists, Proposition C: San Francisco (2015):
Requires lobbyists to register with the city’s Ethics Commission, pay a $500 registration fee, and file monthly disclosure reports of their lobbying activities. It also expands the definition of a lobbyist to include a new category — an “expenditure lobbyist” — that includes persons who spend more than $2,500 in a month to influence legislation or city administrative action. In addition, Proposition C prohibits expenditure lobbyists from making gifts worth more than $25 to city officers.
Honest Elections Seattle (2015):
In 2015, voters in Seattle, Washington approved Initiative 122, the “Honest Elections Seattle” initiative, which made alterations and additions to Seattle’s election code. New sections to the city’s election code and their titles are as follows:
- SMC 2.04.601 — Limits Contributions from City Contractors
- SMC 2.04.602 — Limit Contributions from Persons Who Pay City Lobbyists
- SMC 2.04.606 — Paid Signature Gatherers
- SMC 2.04.607 — Former Elected Officials
- SMC 2.04.620-690 — Democracy Voucher Program
Mandated disclosures for political consultants.
Miami-Dade County (2016):
County commissioners passed a memorandum requiring that all candidates register when they raise money for PACs.
Proposition T Restricting Gifts and Campaign Contributions from Lobbyists (San Francisco, 2016):
Requires lobbyists to identify which agencies and officials they intend to target during the city’s registration process, prohibits them from making campaign contributions to officials they are registered to lobby and making gifts to any city elected official, and prohibits the facilitation of third-party donations by lobbyists: a process known as “bundling.
The major features were campaign finance reform, including lowering contribution limits and requiring additional disclosures; the creation of a public financing program for state and legislative candidates; the creation of an ethics commission; and the implementation of “cooling off” periods that establish a duration former legislators must wait before taking work as a lobbyist. However, South Dakota’s Sixth Circuit enjoined the law on the grounds that it was unconstitutional. It was repealed, but five replacement bills became law that contained key parts of what had been repealed.
Limits contributions, expenditures, (and) requires disclosure in Multnomah County candidate elections.
Approved a small-donor matching program, dubbed Open and Accountable Elections.
Anti-Corruption Resolutions are public mandates calling for Anti-Corruption legislation at the state and federal level. On July 14, 2014, Princeton, NJ, “became the first municipality in the country to adopt an Anti-Corruption Resolution sponsored by Represent.Us“. Since then, Anti-Corruption Resolutions have been passed in 54 locales.
You can get involved by joining a chapter or starting a chapter at Represent.us. RepresentUs chapters are local groups of people (like you!) who power the anti-corruption movement. Chapters are strategic and focused on winning real change: RepresentUs volunteers have helped win more than 80 Anti-Corruption victories across America. Chapters start with 3-4 people and have grown to be as large as 30-40 and beyond. Read more.
RepresentUs members aren’t waiting for Congress to fix corruption – we’re doing it ourselves by passing Anti-Corruption Acts in cities and states across America. Our members win because they work across the political spectrum to build power in their communities. Conservatives and progressives worked together to pass America’s first citywide Anti-Corruption Act in Tallahassee, Florida in 2014, and in 2016, RepresentUs members passed the first statewide Act in South Dakota (learn more). Now, voters have passed more than 75 Anti-Corruption Acts and Resolutions across America.