Senate Votes Down DISCLOSE Act

7/24/2012

The Senate held two votes on the DISCLOSE Act on July 16 and 17 but failed to pass the legislation each time. The bill would have created new campaign finance disclosure requirements and made public the names of super PAC contributors. In an effort to control the rising tide of "secret money" – political campaign spending by unknown donors – the bill attempted to make the federal election process more transparent.

DISCLOSE Act

The Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act was first introduced in the Senate by Sen. Charles Schumer (D-NY) in July 2010. The legislation would require individuals, corporations, labor unions, and tax-exempt charitable organizations to report to the Federal Election Commission each time they spend $10,000 or more on campaign-related expenditures. The legislation would also require all outside spending groups, including super PACs, to report the names of donors. Additionally, the legislation sought to increase the transparency of political advertising with "Stand By Your Ad" requirements, where super PACs and other outside campaign groups that produce ads on TV or radio would have to disclose the top funders in the ad. The CEO or highest-ranking official of an organization would also be required to appear in the ad and officially "approve" the message.

The first vote on July 16 went along party lines, with 51 Democrats voting for the legislation and 44 Republicans against it. Senate Democrats failed to obtain the 60 votes needed to overcome a Republican filibuster. The following day, another attempt was made, and Democrats still fell short with 53 in favor and 45 against. The bill was not expected to pass, but Democrats pushed for the votes anyway, demanding an official record of each senator’s position. They apparently believe Republicans may suffer some political damage in the upcoming elections as a result of voting against disclosure.

The bill is based on the assumption that making campaign spending information public will result in more accountability for donors and candidates, that when the public has complete information about who is behind campaign-related expenditures, including those trying to hide their activities by donating to an intermediary organization, they will consider this information when they go to the polls.

The bill also seeks "to prohibit foreign influence in Federal elections [and] to prohibit government contractors from making expenditures with respect to such elections." Large amounts of money from unknown donors outside the United States have been pouring into the federal election this year.

Citizens United

The DISCLOSE Act is a direct response to the U.S. Supreme Court’s landmark 2010 decision in Citizens United v. Federal Election Commission. The ruling struck down parts of the Bipartisan Campaign Reform Act (BCRA) that prohibited corporations (including nonprofit organizations) and labor unions from airing any "electioneering communications" – i.e., broadcast messages that refer to a federal candidate in the weeks before a general election or primary. The Court also ruled that corporations can use unlimited funds from their general treasuries to expressly advocate for the election or defeat of candidates for federal office as long as the actions are independent of campaigns.

The ruling opened the floodgates for wealthy donors and corporations to establish super PACs to raise and spend unlimited funds from any source. The result has been a large spike in political advertising funded by unknown donors. According to a study done by the Center for Responsive Politics, "72 percent of political advertising spending by outside groups in 2010 came from sources that were prohibited from spending money in 2006."

Reactions to Senate Votes

"[I]n a post-Citizens United world, the least we should do is require groups spending millions on political attack ads to disclose their largest donors. We owe it to voters to let them judge for themselves the attacks – and the motivations behind them," said Senate Majority Leader Harry Reid (D-NV).

Sen. John McCain (R-AZ) and Republicans voted against the bill, citing its lack of provisions toward increased disclosure for labor unions. McCain called on the Democrats "to go back to the drawing board and bring back a bill that is truly fair, truly bipartisan, and requires true full disclosure for everyone." Echoing these sentiments, Senate Minority Leader Mitch McConnell (R-KY) claimed the bill would "send a signal to unions that Democrats are just as eager to do their legislative bidding as ever," and that it "amounts to nothing more than member and donor harassment and intimidation."

Sunlight Foundation Executive Director Ellen Miller said that in the failure to pass the DISCLOSE Act, the Senate is "thumbing their noses at the very notion of democratic elections."

Supreme Court’s Second Swing

Supporters of the DISCLOSE Act had hoped the Supreme Court would narrow the scope of the Citizens United decision through its recent ruling on American Tradition Partnership, Inc. v. Bullock. That case revolved around Montana’s Corrupt Practices Act of 1912, which banned corporate spending in political campaigns. The conservative group American Tradition Partnership, "dedicated to fighting environmental extremism," brought a legal challenge to the century-old state law.

On Dec. 30, 2011, the Montana Supreme Court upheld the law, saying it was necessary to ensure that Montanans and their elected representatives, rather than corporations, were governing the state. "Clearly the impact of unlimited corporate donations creates a dominating impact on the political process and inevitably minimizes the impact of individual citizens," the decision reasoned. The court found that "the free speech rights of the corporations are no more important than the due process rights of litigants in Montana courts to a fair and independent judiciary, and both are constitutionally protected."

Though no one expected the U.S. Supreme Court to completely reverse its position, some thought it might temper its earlier ruling and permit some limitations or controls over corporate spending. The Court premised its ruling in Citizens United on the belief that corporate spending did not give rise to corruption or the appearance of corruption. However, the Montana law was established because of well documented corruption scandals involving mining barons in the state’s early history. On June 25, the Court overturned the Montana law on a 5-to-4 ruling without even hearing oral arguments in the case. To the question of whether Citizens United supersedes Montana state law, the Court said, "There can be no serious doubt that it does."

Alternative Efforts to Increase Disclosure

Beyond legislation and litigation, open government groups have encouraged executive action to increase disclosure. On July 16, 13 organizations including OMB Watch wrote to the Securities and Exchange Commission (SEC) encouraging the agency to adopt a new rule "that would require disclosure of corporate political spending above a de minimis threshold." Sixteen organizations have also signed onto a letter to the National Association of Insurance Commissioners (NAIC) urging them to "requir[e] insurance companies to disclose all political spending from corporate funds." However, even if the SEC and NAIC adopt such rules, it would fall far short of a full solution because the agencies only have authority over a limited range of companies.

The Federal Communications Commission (FCC) has taken steps to improve the transparency of political advertisement spending. On April 27, the FCC approved reforms to modernize the disclosure requirements for broadcasters operating on the public airwaves. The rule will create an online database of TV stations' public files – previously available only by appearing in person at station offices – expanding public access to information about the stations' content, including political advertisements. The FCC’s new rule went into effect on June 6, though a legal challenge has already been brought by the National Association of Broadcasters. (Broadcasters don’t want to publish their advertising rates and revenues.)

Constitutional Amendments

Some of those who oppose the Citizens United decision have proposed amending the U.S. Constitution to settle the matter conclusively. For example, Rep. Adam Schiff (D-CA) has already introduced a resolution (H.J. Res. 111) to amend the Constitution with an article that would make clear that Congress and the states have the authority to impose limitations on independent campaign expenditures. Montana is likely to have a measure on the ballot in November that would establish that corporations are not people and would call on Montana’s congressional delegation to support a federal constitutional amendment to overturn Citizens United. Public Citizen has launched “Amend 2012”, a grassroots campaign to build support for a constitutional amendment that would specify that corporations are not people. Other officials and organizations around the nation are pursuing similar efforts.

Conclusion

Corporations and wealthy individuals have moved quickly to take advantage of the new freedom of unrestricted spending. While legislators, lawyers, democracy activists, and even state and local governments are trying to reduce the impact of money on elections and government decision making, the money continues to flow – without attribution.