HOW CAMPAIGN DONOR SECRECY IS MAINTAINED AND WHAT YOU CAN DO ABOUT IT

Republicans in Congress, and particularly Senate leader Mitch McConnell, have made preventing increased disclosure of campaign donors a top priority. They have refused to act on the DISCLOSE Act that would require disclosure of donors to political spending by outside groups. They have added riders to must-pass bills prohibiting the Securities and Exchange Commission (SEC) from issuing a rule requiring disclosure of corporate political spending. They have blocked the Internal Revenue Service (IRS) from regulating the political activity of non-profits that do not have to disclose donors. They are also attempting to block a presidential executive order that would require federal contractors to disclose political spending. Furthermore, they have actually proposed weakening existing regulations on campaign spending, including allowing coordination between super PACs and candidates’ campaigns, as well as removing limits on how much political parties can spend in coordination with candidates’ campaigns. [1]

The Securities and Exchange Commission has failed to write rules for corporate disclosure of political activity, which it was required to do by the financial sector reforms after the 2008 crash. The head of the SEC has delayed work on these rules despite investors’ interest in having corporate political spending disclosed. The SEC’s failure to write these disclosure rules led Senator Elizabeth Warren to call on President Obama to fire Mary Jo White, the head of the SEC. [2]

The US Chamber of Commerce, a top source of dark money and a close ally of Congressional Republicans, is a strong opponent of any disclosure of corporate political spending, even voluntary disclosure. Nonetheless, nearly half of the S&P 500 largest corporations have voluntary disclosure policies. They see transparency as an antidote to possible negative repercussions and as a buffer against pressure from various groups and individuals to contribute to political activity. [3] The Chamber of Commerce apparently believes that secrecy is necessary to allow it to continue to wield power and influence with our elected officials.

A final indication of the desire for secrecy by wealthy campaign donors, as well as the lengths they will go to to maintain secrecy, was the drop-off in activity, particularly TV ads, by dark money groups when the Federal Election Commission’s (FEC) more stringent reporting requirements went into effect. Sixty days before the election, spending on all TV ads that mention a candidate must be reported to the FEC. Prior to that cut-off date, only ads that explicitly call for voting for or against a candidate have to be reported.

The non-profit called One Nation is the most dramatic example of avoidance of this expanded reporting. It is run by a former top aide to Republican Senate leader McConnell and through August it had spent over $23 million running TV ads in competitive Senate races – spending more than any other entity active in Senate races. However, since the Sept. 9^th cut-off date for stricter FEC reporting, it has spent only $2 million despite the increasing competitiveness of the Senate races and shrinking time until Election Day. [4]

Overall, the drop-off in activity by dark money groups is reflected in their having paid for 42.5% of the TV ads by outside groups in competitive Senate races through 9/15, but only 11% of ads since then. In the tight Pennsylvania Senate race, dark money sponsorship of ads has dropped from 33% to 9%. In Ohio and Illinois, rates have dropped from 28% and 36%, respectively, to zero.

Reducing activity when it would have to be reported to the FEC helps preserve the secrecy of the groups’ activities. It also helps these non-profit groups claim to the IRS that political activity is not their primary activity, because activity reported to the FEC is clearly political. Some of these group are shifting their activity to on-line ads because these ads are exempt from FEC reporting due to a regulatory loophole.

Anonymous campaign spending is anathema to democracy. All campaign donors should be disclosed so voters can make informed decisions with full knowledge of who is trying to influence their votes and curry favor with candidates. Apparently, our elected officials who are blocking disclosure of donors believe that secrecy allows them to continue to reap the financial support that leads to their election or re-election and the power that comes with it. Given the secrecy, it is impossible for voters and even law enforcement to know what favors elected officials are doing for donors and whether outright corruption is occurring. However, you can be certain that the donors make sure the politicians know of their financial support.

I encourage you to contact your US Representative and Senators to urge them to pass the DISCLOSE Act and ensure full disclosure of all campaign donors.

[1] Miller, J., 12/11/15, “GOP budget rider takes aim at campaign-finance rules,” The American Prospect (http://prospect.org/blog/checks/gop-budget-rider-takes-aim-campaign-finance-rules)

[2] Prupis, N., 10/14/16, “Sen. Warren urges Obama to fire ‘unapologetic’ SEC chief for ‘brazen conduct,’” Common Dreams (http://www.commondreams.org/news/2016/10/14/sen-warren-urges-obama-fire-unapologetic-sec-chief-brazen-conduct)

[3] Miller, J., 10/28/16, “More corporations embrace disclosure, despite conservative opposition,” The American Prospect (http://prospect.org/blog/checks/more-corporations-embrace-disclosure-despite-conservative-opposition)

[4] Balcerzak, A., 10/19/16, “Dark money ads plunged when reporting requirement kicked in,” Center for Responsive Politics, OpenSecrets blog (https://www.opensecrets.org/news/2016/10/dark-money-ads-plunged-when-reporting-requirement-kicked-in/)

CAMPAIGN DONOR SECRECY IS ESCALATING

The disclosure of who is giving money to candidates for public office has long been a basic tenet of our elections. Even with the rise of outside spending, (supposedly) independent of candidates’ campaigns, disclosure of donors was assumed. In the Supreme Court’s 2010 Citizens United decision (which ruled that wealthy individuals, corporations, and other organizations could engage in unlimited outside spending), the five justices who supported the ruling believed that the independence of the spending and the disclosure of the donors would prevent corruption of candidates who benefitted from the unlimited campaign spending.

However, wealthy individual and corporate campaign donors are typically anxious to hide their identities. This protects them from negative repercussions from, for example, sponsoring TV ads that are typically negative and sometimes outright nasty or untruthful.

As a result, “dark” money spending in campaigns, where the true donors are hidden, is growing dramatically. Dark money in the 2016 elections is up 34% over this point in the 2014 Congressional elections and is 5 times what it was at this point in the last presidential election in 2012. [1] Donor secrecy means there is no accountability, typically for negative or questionably truthful TV ads. It also prevents voters from knowing who is behind the political ads and messages that are trying to influence their votes. This means voters can’t assess the interests and biases of the sponsors of the ads, or even tell if there are conflicts of interest or a potential for corruption.

Large donors have found multiple ways to keep their identities secret. The two main strategies are engaging in political activity through non-profit organizations that don’t have to disclose their donors and laundering money through multiple entities to make it hard (if not impossible) to trace the actual donor. These strategies come on top of the fact that enforcement of existing disclosure laws has been weak at best. The Federal Election Commission (FEC), the primary enforcer of election laws, is hamstrung by the intense partisanship in Washington.

As required by Internal Revenue Service (IRS) regulations, the non-profit organizations that are being used for political activity maintain that political activity is not their primary purpose. However, for many of them, this fiction can only be maintained because the IRS’s regulations and enforcement are weak. The IRS’s efforts in this area have been undermined by political attacks, including claims that its efforts to control the illegal political use of non-profit groups reflect partisan bias.

The other major strategy for hiding the identities of donors is money laundering. This is accomplished by passing money for political spending through a series of groups, typically non-profits and super PACs. When the final entity that actually engages in political activity (e.g., pays for the TV ads) reports its donors, they are super PACs and non-profits not the actual original donors.

Some of the campaign money laundering is done through “ghost” organizations. These are typically corporations that are established solely for the purpose of channeling money to super PACs. Many of these ghost corporations make large donations, e.g., hundreds of thousands or millions of dollars, only days after they are created. Little information is available about them and sometimes they are disbanded shortly after making their donations. Hence, tracing the donors of this money is extremely difficult if not impossible. [2]

Many election law experts consider the use of ghost organizations a violation of the long-standing federal ban on straw donors, i.e., one person giving money to another person or entity to use to make a political contribution. However, with the regulatory agencies, particularly the FEC, politically deadlocked, enforcement and even investigation of such activity is lacking.

The explosion of campaign spending where donors are secret is particularly insidious and damaging to democracy. Voters are not be able to consider the credibility and motives of the funders behind these efforts to sway their votes. Moreover, the megaphone that unlimited outside money provides to wealthy corporations and individuals can drown out other voices that provide important information to voters.

Unlimited election spending by a tiny slice of our society, coupled with secrecy about who is paying for the messages being disseminated, means that voters will receive skewed information and will be unable to evaluate its credibility. Furthermore, they may be discouraged from voting because the bulk of these messages tend to be negative messages that attack the quality of candidates and the effectiveness of our government.

To support well informed voting, full disclosure of all donors to campaign spending is essential. Furthermore, unlimited spending by wealthy interests in our elections undermines the basic principle of democracy – that government is of, by, and for all the people.

My next post will provide more information on how wealthy campaign donors are maintaining their secrecy and what you can do about it.

[1] OpenSecrets.org, retrieved 10/22/16, “Top election spenders: Who are the biggest dark money spenders?” Center for Responsive Politics (https://www.opensecrets.org/dark-money/top-election-spenders)

[2] Gold, M. & Narayanswamy, A., 3/18/16, “How ‘ghost corporations’ are funding the 2016 election,” The Washington Post

HOW OUR ELECTIONS ARE RIGGED

Donald Trump has been claiming that our elections are rigged. He’s right. They are rigged – but not in the manner he suggests. Our elections are rigged to benefit wealthy interests and Republicans in three ways:

Campaign finance laws allow unlimited and even secret spending by wealthy interests,
States have made voting more difficult for low-income citizens, minorities, students, and some elders, and
Republicans have gerrymandered Congressional Districts and state legislative districts to their benefit.

I’ve covered the first topic in a recent post (and other posts under the Campaigns category), so I’ll address the other two topics here.

Making voting more difficult: 20 states have put new laws making voting more difficult in place since 2010. The new laws range from photo ID requirements to reductions in early voting. These new laws are part of a broad effort to curtail voting by Democratic-leaning groups and individuals. [1] State lawmakers spanning almost all states have introduced hundreds of measures that would make it harder to vote. This is part of a strategic plan by conservatives and Republicans to shift election results. The effort has been spearheaded by the American Legislative Exchange Council (ALEC), a right-wing and corporate-funded organization that develops templates for state legislation, including ones on voter suppression. [2] In a democracy we should be encouraging voting, not suppressing it!

Laws requiring specific types of IDs to vote are a key tactic. The supposed rationale for the voter ID laws has been to prevent voter fraud. However, every credible source that has examined this has documented that voter fraud is non-existent. In addition, to requiring IDs to vote, some states have made it hard or expensive to get an acceptable ID. For example, Texas does not allow the use of a student ID (but a firearm ID card is acceptable). These laws can be quite effective in suppressing voting. Wisconsin’s voter ID law is estimated to have kept 300,000 citizens from voting. [3]

In addition to changes in law, there are numerous examples of other efforts to suppress voting. Some states have reduced the number of polling places in minority neighborhoods, resulting in long waiting lines that prevent some people from voting. This was evident in Arizona’s September primary elections where the number of polling places in Latino neighborhoods was greatly reduced and created 5-hour waiting lines. North Carolina has reduced the number of hours and locations for early voting for the November 8^th election. [4]

Another tactic has been to purge names from lists of registered voters, thereby preventing people from voting when they show up at the polls. This tactic is used in ways that target Democratic voters, as it was in Florida before the Bush vs. Gore election in 2000. So, it’s not a new technique, but it continues to be used today. Most recently, it has surfaced in multiple counties in North Carolina. [5] In Ohio, the Secretary of State is being sued for having improperly purged 2 million voters from the voting lists.

Trump has repeatedly talked about having “poll monitors” in certain (minority) areas. His “Vote Protectors” effort reportedly plans to send volunteers to monitor polling places in nine cities with high minority populations. The group is creating official-looking ID badges for its volunteers to wear and they plan to videotape voters. Using volunteer “poll monitors” is an old tactic but election experts say it does intimidate voters and keeps them from voting. [6]

Gerrymandering: Republicans and corporate America engaged in a very concerted effort to gain control of state redistricting efforts that followed the 2010 Census. They created the Redistricting Majority Project (REDMAP) and raised $30 million to fund it. State legislatures typically redraw district lines based on new Census data every ten years. So, in 2010, REDMAP’s creators succeeded in taking control of legislatures in 20 states. They then used this control of the redistricting process to gerrymander state legislative districts and the 193 Congressional districts in those states (out of 435 nationwide) to favor Republicans. While gerrymandering of districts is not a new phenomenon, they took it to new levels of aggressiveness, aided by computer mapping technology not previously available. [7]

Their gerrymandering significantly skewed results for the US House of Representatives in 2012. For example, in Pennsylvania, Democratic House candidates statewide had 100,000 more votes than Republicans, but Republicans won 13 House seats to the Democrats’ 5. In Michigan, Democrats won 240,000 more votes overall, but only 5 House seats to 9 for Republicans. In Ohio, Republicans got 52% of the overall vote, but 12 of 16 House seats. And so forth. This was accomplished by designing districts that Republicans could win comfortably but with a relatively small margin, while leaving a few districts where Democrats would win overwhelmingly. In other words, they crammed as many Democrats as possible into as few districts as possible. The result was that, despite President Obama’s overwhelming 2012 Democratic national victory, Republicans had a 234 to 201 advantage in the House of Representatives – even though Democratic House candidates nationwide garnered 1.7 million more votes than Republicans.

To fix this, the redistricting process should be performed by a non-partisan redistricting commission so that election results fairly reflect voters’ overall preferences. Eight states have already done this: Arizona, California, Hawaii, Idaho, Iowa, Montana, New Jersey, and Washington. The others need to follow suit.

To stop targeted voter suppression efforts, key provisions of the Voting Rights Act (VRA) that were rendered unenforceable by a 5 to 4 Supreme Court vote in 2013 need to be reinstated. These would prevent states from enacting discriminatory voting laws and practices, which the VRA did quite effectively before the Supreme Court’s ruling.

[1] Brennan Center for Justice, retrieved 10/29/16, “New Voting Restrictions in Place for 2016 Presidential Election,” New York University School of Law (https://www.brennancenter.org/voting-restrictions-first-time-2016)

[2] Center for Media and Democracy, retrieved 10/29/16, “ALEC exposed,” (http://www.alecexposed.org/wiki/ALEC_Exposed)

[3] Fitrakis, R.J., & Wasserman, H., Fall 2016, “War on the dispossessed,” Justice Rising, Alliance for Democracy (http://www.thealliancefordemocracy.org/pdf/AfDJR6404.pdf)

[4] Pitney, N., 10/26/16, “This is what actual voter suppression looks like, and it’s appalling,” The Huffington Post (http://www.huffingtonpost.com/entry/voter-suppression-2016_us_581028c2e4b02b1d9e63bcd2)

[5] Berman, A., 10/27/16, “North Carolina Republicans tried to disenfranchise a 100-year-old African-American woman,” The Nation (https://www.thenation.com/article/north-carolina-republicans-tried-to-disenfranchise-a-100-year-old-african-american-woman/)

[6] Wilkie, C., 10/25/16, “Trump loyalists planned voter intimidation using fake id badges, fake exit polling — until Huffpost asked them about it,” The Huffington Post (http://www.huffingtonpost.com/entry/vote-protectors-voter-intimidation_us_580e4e63e4b0a03911ee03bc?section=us_politics)

[7] Tarbell, J., Fall 2016, “Gerrymandering: The civil war over public policy,” Justice Rising, Alliance for Democracy (http://www.thealliancefordemocracy.org/pdf/AfDJR6405.pdf)