As Political Campaign Spending Explodes, Disclosure Remains Hazy

Monday, March 14, 2016
(photo: Getty Images)

By Mary Spicuzza and Jeremy B. White, Associated Press


Politicians in Mississippi have used campaign money to pay for such things as a BMW, an RV and $800 cowboy boots.


In Wisconsin, a railroad executive was caught violating contribution limits after an ex-girlfriend he met on a "sugar daddy" dating website reported him for illegally funneling cash to Gov. Scott Walker's campaign. Key to the investigation, election officials say, was a requirement that donors disclose their employers — but Republican lawmakers have since wiped out the rule.


Meanwhile, "dark money" spending by outside groups that aren't required to disclose their donors is expected to explode during this presidential election year. States can take action to stem the tide at the local level, but few have. Congress could require more disclosure about who is financing campaigns, but it has made no move to do so.


Disclosure may be the public's best and often only remaining way of knowing who is supporting political candidates in the wake of recent court decisions.


"Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed," the late Supreme Court Justice Antonin Scalia once wrote in an opinion in favor of disclosing petition signatures.


The U.S. Supreme Court repeatedly has ruled in favor of public disclosure of campaign contributions, even in its earth-moving Citizens United (pdf) decision. The 2010 ruling found that political spending is protected under the First Amendment, and said that corporations and unions can spend unlimited amounts of money on political activities.


It effectively wiped out key campaign finance regulations that had been in effect for decades. But it also upheld disclosure requirements.


That and other Supreme Court decisions have resulted in unprecedented amounts of money pouring into elections. Because Congress has not acted to require further disclosure, the old limits are gone and new rules have not been passed to take their place, leaving citizens more in the dark than ever about whether elected officials are working for them or for special interests behind their campaigns.


Richard Hasen, a professor of law and political science at the University of California, Irvine, said that despite the highest court's support for disclosure of campaign donors, the Federal Election Commission and Congress remain frozen when it comes to requiring greater transparency about who is funding political groups.


"Political operators often look for ways to shield their donors," Hasen said. "The laws have to be constantly updated."


Congress could quickly require more disclosure, "if there was the political will to do so," said Hasen, author of the book "Plutocrats United: Campaign Money, the Supreme Court, and the Distortion of American Elections."


Groups that advocate for more transparency say the federal stalemate has driven reform efforts to the local level in some states, where they see greater opportunity to push for change.


Targeting states "seems like the only outlet for making change at this level," said David Donnelly, CEO of Every Voice, an organization working to advance state ballot initiatives that would require more disclosure about money in politics.


Donnelly argues state-level efforts, if successful, could restore the faith of voters who perceive an uninhibited flow of money into politics. The changes also could generate interest that would "build the political power, around the country, to eventually press Congress" to require some reporting of donors in national elections, he says.




Efforts to change state disclosure laws are not just a function of opportunity, advocates say. They also are a necessity, given a state-level influx of dark money paralleling the federal flood.


Attempts to force more disclosure from outside special interest groups have succeeded in some states.


California enacted a law requiring information about donors who give above a certain amount to nonprofit organizations that engage in political campaigns. The law, signed by Democratic Gov. Jerry Brown in 2014, requires nonprofit groups to disclose the names of donors who give them $1,000 or more to fund political activity in California, if the group spends more than $50,000 in a year, or $100,000 over four years, to advocate for or against a candidate or ballot initiative.


Supporters praise the law as a turning point that helps shine light on special interests working to influence elections, and say it serves as a national example. Critics say it violates First Amendment rights.


Disclosure advocates also laud Hawaii and Washington as having exemplary donor reporting laws. The states treat outside groups focused on advocating for or against a candidate or ballot initiative as "political" actors and requires them to identify their contributors. Laws in both states withstood legal challenges in recent years.


But there's a limit to what states can do, since they don't have oversight of spending on federal races — such as presidential and Congressional contests, which are consistently the costliest elections.


While some state election agencies have moved to make more donor information public, they often struggle to win support from lawmakers, said Denise Roth Barber of the National Institute on Money in State Politics.


"A lot of the changes that need to take place require money, and most state budgets are tight," Barber said. "It's hard to set aside money to give to an agency to improve disclosure."


Barber's group is a nonprofit, tax-exempt organization — known as a 501(c)3 — which isn't required to publicly disclose its donors but voluntarily identifies major contributors.


In a number of other states, lawmakers have rejected bills seeking to expand disclosure requirements to politically-active groups. Some cheer that result.


"Since Republicans are in the majority in most state legislatures, these efforts have often failed," said Bradley Smith, founder and chairman of the Center for Competitive Politics.


The center, a group that also isn't required to publicly disclose its donors, opposes campaign contribution limits, public financing of political campaigns and many disclosure requirements for private groups, as well as campaigns.


State lawmakers in Arizona are working to pass a bill stating that nonprofit groups cannot be categorized as seeking to influence elections and thus cannot be compelled to disclose their donors.


The legislation also would change what share of money some outside groups can spend on ballot measures without being required to register as a political committee. But their spending would still be disclosed.


"There's definitely a push to get more disclosure — that is a trend," said Smith, a former Federal Election Commission chairman. "But the reverse side is that it has been to a large extent unsuccessful, and I think that reflects the fact that disclosure has been abused and made into a partisan issue."




More than a century ago, Congress created the legal framework for nonprofit groups devoted to social welfare. Those groups did not have to disclose their donors. But in the 1950s, regulators expanded the exemption from disclosure. Instead of applying only to groups focused exclusively on social welfare, the exemption applied to groups "primarily" engaged in such activities.


In the wake of Citizens United, which allowed these groups to spend unlimited amounts of money on political activities, they have become increasingly popular with donors who want to keep their spending secret.


Candidates themselves are required to provide basic information about donors to their own official campaign coffers: names, addresses and the amounts of their contributions. In many states, those who make contributions over a certain amount must list their employers.


Smith said information about political donors was being used to harass or intimidate them, citing boycotts, Twitter mobs and other activities he believes push "ordinary people" to decide not to contribute.


James Bopp Jr., a conservative attorney based in Indiana, said he supports transparency for public officials, but that it's another matter when people obtain and use information about donors to "punish them and harass them."


"It's a completely different agenda, and what it does is turn the First Amendment on its head," said Bopp, who was part of the Citizens United legal team and represented Wisconsin Right to Life in a case that unraveled provisions of the McCain-Feingold (pdf) campaign-finance law.


But the requirement that donors disclose their employers played a key role in a Wisconsin case that led to the 2011 conviction of former Wisconsin & Southern Railroad Co. CEO William Gardner. He was convicted of two felonies for exceeding campaign finance limits and giving personal and company funds to railroad employees so they could make political donations to Walker and other Republicans.


In another case, Wisconsin residents learned by accident that a mining company had given $700,000 to an outside group to help Walker and Republican lawmakers during recall elections. Shortly after those elections, the lawmakers and governor approved new laws easing state mining regulations.


The mining company contributions became known only because a Chicago federal appeals court accidentally released a sealed document in a court case challenging a secret criminal investigation into accusations of illegal coordination between Walker's campaign and conservative groups.


A lawsuit by one of the groups argued that the campaign finance investigation was a politically motivated attempt to intimidate Republican activists and limit their free speech rights. The state Supreme Court agreed and ended the investigation, ruling that private groups could coordinate with campaigns, so long as the groups didn't formally endorse candidates with words such as "vote for" or "vote against."


More than $308 million in dark money was spent during the 2012 election cycle, according to a Center for Responsive Politics analysis. Of that, about 86 percent was spent by conservative groups, 11 percent by liberal groups and 3 percent by others.


The center found that, as recently as the 2006 cycle, dark money spending tallied only about $700,000. Four years later, for the 2010 cycle, it reached $127 million.


Smith estimates that dark money makes up only a tiny fraction of total political spending, saying most is still done by candidates and parties.


But Fred Wertheimer, president of the government transparency group Democracy 21, argues there is nowhere near enough information about money in politics.


"Unlimited secret contributions are the most dangerous money in American politics," he said. "There's no way of knowing whether that individual is getting government benefits in return."


Even though the Citizens United ruling upheld disclosure, the 2010 decision triggered a flood of more than $500 million in secret contributions in the various elections following the ruling, Wertheimer said.


When Wisconsin lawmakers passed a measure that formalized the provisions of the state Supreme Court ruling that allowed coordination, they also ended the requirement that donors to candidates provide information about their employers.


Smith applauded Wisconsin's new law, and said he hopes to see further limits to disclosure, such as raising the threshold for when donors need to be made public at all.


"People don't really care about the associate who gives $500. They care about the millionaire," he said. "At least we could raise the (disclosure) limit to $2,000."


But Kevin Kennedy, director and general counsel of the Wisconsin board that oversees ethics and elections, echoed Scalia's comments about the importance of disclosure in politics.


"When we talk about more speech, maybe there should be more disclosure, too," he said. "It's an act of political courage. It's something we foster. You're judged by the company you keep."


Scalia's death has raised new questions about the Citizens United decision, and whether a Democratic nominee to the Supreme Court could mean significant changes to campaign finance law that essentially would overturn the ruling.


"I do think that is a definite possibility," Hasen said.


To Learn More:

New Budget Deal Would Stop IRS from Investigating Secret Campaign Donors (by Steve Straehley, AllGov)

California Tries to Shine a Little Light on Political “Dark Money” (by Ken Broder, AllGov California)

U.S. Appeals Court Rules Political “Charities” Must Disclose Donors to California (by Ken Broder, AllGov California)

Koch Brothers Group Sues State to Keep Political Donor Names Hidden (by Ken Broder, AllGov California)

11 TV Stations Still Fighting Disclosure of Political Ad Details Despite Legal Requirement (by Noel Brinkerhoff, AllGov)

Appeals Court Approves Secrecy for TV Political Ad Donors (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Republican Senate Minority Blocks Corporate Campaign Finance Disclosure Bill (by Noel Brinkerhoff, AllGov)


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