Congress Fails to Address Corporate Political Spending before August Recess
Recent congressional actions highlight concerns over corporate involvement in elections. Before the August recess, Congress made several attempts to regulate corporate electoral involvement, including the Senate’s failed attempt to pass the DISCLOSE Act and the House Financial Services Committee’s approval of the Shareholder Protection Act. Though some lawmakers worked around the clock, Congress ultimately failed to follow through on reform before the recess.
Senate Votes Against Debating the DISCLOSE Act
On July 27, the Senate fell one vote short to debate the DISCLOSE Act (the Democracy Is Strengthened by Casting Light On Spending in Elections Act), legislation designed to mitigate the effects of the January U.S. Supreme Court decision in Citizens United v. Federal Election Commission. The DISCLOSE Act is meant to increase disclosure requirements for election-related spending and restrict such activity by government contractors and foreign-controlled companies.
The Senate vote was not unexpected, but there was still hope among those who favor campaign finance reform that the Senate would move forward in debating the DISCLOSE Act. Various provisions were added to the bill that caused some groups that would normally favor increased disclosure, such as the American Civil Liberties Union, to lobby against the bill. However, other groups, such as Public Citizen, saw the legislation as necessary to limit corporate influence in elections, despite the fact that they had some concerns with the bill.
One such contentious provision allowed a disclosure exemption for large, membership-based organizations (the criteria in this exemption were so specific that only a few groups, such as the National Rifle Association and the Humane Society of the United States, would have qualified). On the flip side, the bill also included a requirement that all Senate candidates file campaign finance disclosures electronically, as House and presidential candidates are already required to do.
Rick Hasen, professor at Loyola Law School and moderator of the Election Law Blog, notes that "[e]nhanced disclosure is especially needed now that the FEC has voted to allow corporations, labor unions and other entities to make unlimited contributions to independent expenditure committees. We have never had the situation before on the federal level where people, and now presumably corporations and labor unions, could make large – indeed unlimited – contributions to fund independent expenditures."
The Senate vote fell largely along party lines. According to The Washington Post, Democrats "portrayed the legislation as an attempt to force transparency on political advertising by outside groups and corporations, activity that is often cloaked in anonymity and is now largely unrestrained by campaign finance restrictions." Republicans, however, portrayed it as "a partisan effort" to protect "incumbent Democrats from criticism ahead of the November election," according to a statement by Senate Minority Leader Mitch McConnell (R-KY).
The Senate’s failure to pass the DISCLOSE Act has the potential to result in massive amounts of corporate money being used in political ads, and the public will not have the ability to know who funded the ads.
Sen. Chuck Schumer (D-NY), who introduced the DISCLOSE Act along with Rep. Chris Van Hollen (D-MD), said he plans to try to push the legislation again after the August recess. According to the Post, Schumer is open to changes to attract Republican support.
The House passed the DISCLOSE Act months ago, approving the bill on a 219-206 vote on June 24. The House debate on the bill erupted in controversy when exemptions similar to those found in the Senate version of the DISCLOSE Act were introduced. Concerns about nonprofit donor disclosure also weighed heavily on the debate in the House. For more details on the controversy surrounding the House bill, see the June 29 edition of The Watcher.
House Committee Approves Shareholder Protection Act
On July 29, the House Financial Services Committee approved the Shareholder Protection Act, another attempt by House Democrats to mitigate the effects of the Citizens United decision. The bill, which was introduced by Rep. Michael Capuano (D-MA), requires shareholder approval of a corporation's political spending for federal races. The Securities and Exchange Commission (SEC) would be mandated to issue rules requiring corporations to disclose any materials for political activities created with or purchased using company money.
According to Congressional Quarterly, the "bill would allow shareholders to vote on the total amount of proposed political expenditures for that fiscal year. It would require corporations to include in its bylaws a requirement for a shareholder vote on political expenditures in excess of $50,000 or any expenditure that would make the total amount spent by the corporation more than $50,000. A majority vote would be required for approval."
In an editorial in Roll Call, Craig Holman, government affairs lobbyist for Public Citizen, wrote that the "Shareholder Protection Act will not solve all the problems of unlimited corporate political spending, but it will help bring openness and accountability into corporate finances – and reduce corporate managers’ ability to use shareholders’ money for their own political purposes."
The Shareholder Protection Act now moves to the full House and may be considered in September. The Senate did not act on the legislation before the August recess.
Corporate Involvement in 2010 Elections
The impact of corporations’ newfound ability to donate to political candidates became apparent when Target and Best Buy recently came under fire for donating $150,000 and $100,000, respectively, to MN Forward, a Minnesota political group supporting a conservative gubernatorial candidate, Minnesota state Rep. Tom Emmer.
"After the group disclosed the contribution in a state filing, gay rights groups and other left-leaning organizations had expressed outrage at the donation – made possible by the Supreme Court ruling – since the candidate has been a vocal opponent of gay-rights initiatives," according to CNN. Many groups also threatened to boycott Target and Best Buy.
The firestorm that occurred after the donations became public caused Target’s chief executive, Gregg Steinhafel, to write a letter to employees apologizing for the donation. Steinhafel says Target made the donation due to Emmer’s economic stances, not his positions on social issues, according to the Associated Press. The Associated Press further noted that "Target is known in Minnesota for helping sponsor the annual Twin Cities Gay Pride Festival."
Another example of corporate political spending comes from the Americans for Prosperity Foundation, a conservative advocacy group that on Aug. 16 announced a $4.1 million ad campaign in 11 states and two dozen of the most competitive congressional races, slamming "wasteful federal spending." The ads do not mention individual candidates in the November election. President Obama described the AFP campaign as another reason why Congress should pass the DISCLOSE Act.
Editor's Note: This article has been modified since its original publication date to clarify the possible impacts of Citizens United v. Federal Election Commission.