Pass a disclosure act, not the DISCLOSE Act

In 2000, Congress required so-called 527 political organizations to report the identity of major donors. Ironically, that requirement was a primary factor in making 501(c)(4) organizations vehicles of choice for corporations wanting to fund political advertisements in the 2010 election.

Some favoring the new status quo will argue that increased disclosure will chill political spending. That is a choice that prospective donors will have to make. But opponents will not be able to rely on the First Amendment as a defense. The Court was clear that disclosure requirements are constitutional.

Not requiring the reporting of expenditures that finance express advocacy — communications that advocate the election or defeat of a candidate — is fundamentally inconsistent with the laws and spirit that govern the current campaign finance system.

If greater disclosure was the goal, Congress may have missed its opportunity immediately after the Citizens United decision when the House and Senate proposed the DISCLOSE Act. While provisions of that legislation would have required the disclosure of corporate political expenditures, most of its language was designed to limit corporate speech. Included were provisions to expand the definition of “independent expenditure” thus bringing more activity under government control, require CEOs to personally acknowledge their approval of a communication that their corporation funded, and appear in political advertisements similar to what candidates must do, and expand the existing and effective prohibition on political expenditures by government contractors and foreign nationals. These provisions, extraneous to disclosure and clearly designed to restrict corporate speech, made opposing the legislation an easy choice. A better name for the legislation would have been the “Discourage Act.” 

Today, the Federal Election Commission is deadlocked, unable to issue regulations addressing Citizens United.  

If disclosure of corporate activity is still deemed a worthwhile goal by the sponsors of the DISCLOSE Act (as it should be), they should regroup and introduce a straightforward disclosure bill and challenge the new Congress to pass it.  

Current FEC regulations require individuals who make independent expenditures to report them. Corporations should be required to do the same. Seems simple enough.  

The more difficult task is addressing indirect expenditures — contributions given to third party groups, such as tax exempt organizations, who use those funds for express advocacy communications. Under Internal Revenue Service rules, these entities are not required to make the identity of their donors public. Congress should require these organizations to do so, but only for contributions that are used for political purposes. In practice, this would affect 501(c)(4) and (c)(6) organizations. 501(c)(3) charitable organizations are already prohibited from engaging in political activity.

The standards used to determine whether a contribution is used for political purposes should be the same as those currently controlling the disclosure of contributions under the Federal Election Campaign Act. This will continue to allow issue-advocacy to be distinguished from express-advocacy and allow donations for the former to remain unreported.

Such a proposal would not address the concerns of those who oppose corporate political speech but that will not change absent a constitutional amendment. Therefore, the best that can be hoped for is greater information about the sponsors of political speech.  

For those who think that a Republican-controlled House would never pass such legislation, think again. Leading Republicans have called for increased disclosure, and perhaps for good reason. History shows that a party out of power has a greater ability to raise contributions than the one trying to protect its turf. New groups already are being formed to impact the 2012 elections. Only now, it could be wealthy liberals and labor unions that want to make large, anonymous contributions, not corporations.

Spulak is a King & Spalding partner and chair of the firm’s Government Advocacy and Public Policy Practice Group. He served as Democratic staff director and general counsel of the House Committee on Rules, and as general counsel to the House.