Torres-Spelliscy: How to End the Game of Corporate Political Dollars

Posted June 24, 2010 at 10:10am

Two recent articles in the Washington Post highlighted the way money and politics go together like peanut butter and jelly. One piece, “New Records Show Some Lobbyists Are Top Fundraisers for Political Candidates,” discussed how much money lobbyists raise for federal candidates. The other article, “Political Ads Are Tough Sell for Image-Conscious Corporations,” argued that corporations are gun-shy about exercising their new right under the Citizens United v. Federal Election Commission Supreme Court ruling to buy political ads for fear that the political spending might injure the company’s brand. The clever solution: funneling corporate money through front groups such as trade associations or other nonprofits so that investors, customers, workers and voters are none the wiser about the true corporate source of the political ads.

[IMGCAP(1)]Both articles highlighted how money drenched federal campaigns have become. Reports from sources such as opensecrets.org show this is true. Winning candidates for the House of Representatives spent on average $1.2 million in the past few election cycles. And all too often, the candidate who spent the most money won. Where does this money come from? A mix of individuals, political action committees and political parties. Some of the biggest corporate political action committees have given millions election after election to federal candidates. Elections have turned into a fundraising arms race where any source of funds — including the people who lobby before the Member and his/her committees — are fair game.

Yet these two articles highlighted a key distinction as well. How is it that Washington Post reporters can track the political money handled by lobbyists but not by front groups? It all comes down to the law. In the case of lobbyists, Section 204 of the Honest Leadership and Open Government Act of 2007 requires them to report how much they have bundled once they have crossed the $16,000 reporting threshold. Therefore, an enterprising reporter can tell how much lobbyists have bundled with minimal effort.

This transparency has not been imposed on front groups — yet. If the front group is organized as a tax-exempt organization such as a social welfare organization [501(c)(4)] or a trade association [501(c)(6)] instead of a PAC, then it is nearly impossible for an outsider such as an investigative journalist to tell where the money came from. One way to look at it is a lobbyist who bundles contributions just puts a pile of checks together and then hands the pile to the candidate’s campaign treasurer. It is clear to the candidate that the lobbyist did not write each individual check. Trade associations can be abused to, in effect, launder political money. Corporate money goes into the trade association, and ads come out, but the public can’t tell which source paid for which ad. Right now, this lack of transparency is perfectly legal.

The disclosure law for tax-exempt front groups could and should be changed so that it is as easy to follow the political money through front groups as it is through lobbyists. The pending DISCLOSE Act would make it clear who exactly is behind a political ad. This would end the game of hide-and-go-seek around corporate political spending through trade associations. Is it any surprise that the U.S. Chamber of Commerce (a politically powerful trade association) is fighting this new legislation tooth and nail?

But the deeper pathology of how we fund political campaigns is not just the secretive corporate dollars or the pile of checks from lobbyists, it’s that we rely on private dollars to elect, re-elect and defeat candidates for federal office. The way out of this tangled mess of corporations, their lobbyists and their high-dollar fundraisers is a paradigm shift from privately funded to publicly funded campaigns. As one lobbyist quoted by the Post said, he would gladly give up fundraising in favor of publicly financed campaigns. Federal candidates need access to publicly financed campaign dollars so that candidates from all along the political spectrum can run for office and stake out policy positions without worrying about which narrow special interest is footing the bill for the next campaign — which in the case of House Members is an exhausting, never-ending process. The Fair Elections Now Act (H.R. 1826) would do just that: put an end to this private money arms race. And its prompt passage should be this Congress’ priority.

Ciara Torres-Spelliscy is an attorney with the Brennan Center for Justice at NYU School of Law.