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Dollars and Sense: Stopping Secret Political Spending

Liz Kennedy

At a Senate hearing today, retired Supreme Court Justice John Paul Stevens will testify about the rise of dark money and the impact of what he’s called the “grossly incorrect” decision in McCutcheon v FEC.

This truth-teller, who correctly characterized the majority opinion Citizens United v. FEC as a “glittering generality,” has pulled no punches indicting Chief Justice Roberts’ opinion in McCutcheon, saying “the voter is less important than the man who provides money to the candidate. It’s really wrong.”

About the only thing the Supreme Court got right in its Citizens United and McCutcheon decision was its repeated affirmation that transparency for political spending is critical in a functioning democracy in order for voters to make educated judgments about different messages, and to prevent corruption. But though the Supreme Court continuously upholds disclosure requirements, our government has not yet adopted an effective system of disclosure requirements, and dark money is on the rise.

Sophisticated political actors have exploited loopholes and abused the system to hide the identities of their financial supporters and shield them from accountability. More than $300 million in secret political spending influenced the 2012 elections. That’s over twice as much as the $130 million in dark money in the 2010 elections, the first after Citizens United. According to, $256 million came from 501(c)(4) groups, and $55 million came from 501(c)(6) trade associations, neither of which disclose the identities of their financial supporters.

The Court was wrong to assume, as it did in Citizens United, that “with the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.” While the Court rightly recognized that “disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way,” and that transparency “enables the electorate to make informed decisions and give proper weight to different speakers and messages,” the rules that would compel this information aren’t in place. It is ironic that a decision extolling and relying upon disclosure has led to a significant reduction in the transparency of overall political spending.

The Court failed to recognize the reality of the rise of dark money and secret political spending again in McCutcheon, where Chief Justice Roberts wrote that “with modern technology, disclosure now offers a particularly effective means of arming the voting public with information.” But secret political spending breeds unaccountable political favoritism, undermining the health of our political processes and representative democracy. The Supreme Court recognized in its seminal campaign finance case Buckley v Valeo, that “a public armed with information about a candidate’s most generous supporters is better able to detect any post-election special favors that might be given in return.”

In this moment, though the Supreme Court has damaged our ability to prevent big money and special interest donors from dominating the political discourse and silencing the rest of us, there is an urgent need to require that this political spending at least be transparent and accountable. If the voices of the wealthiest are those being heard by our government, at least the rest of us will know who our government is listening to if political spenders are required to reveal their identities.

Congress and the executive branch must act swiftly to prevent further secret political spending from influencing our elections. There are several opportunities to respond to the growing crisis of dark money in our democracy and protect the interests of voters in knowing who is behind political messages meant to influence their votes and elections and the interests of citizens in seeing their government business conducted in an above board and accountable manner.

Huge, bi-partisan majorities of Americans support transparency for political spending, and Congress should pass comprehensive disclosure legislation. The DISCLOSE Act would have established such a system in 2010 on the heels of Citizens United had it not failed by 1 vote to overcome a party-line filibuster.

The Securities and Exchange Commission has the authority and responsibility to respond to the new circumstances for corporate political spending by issuing a rule to require that all corporate political spending be disclosed to shareholders. Presently, shareholders don’t even know how the companies they’re invested in may be spending money to influence elections. Investors have a right to this information so they can make informed investing decisions and avoid undue risk.

The Internal Revenue Service should continue with its rulemaking to stop the abuse of the tax exempt form by political nonprofits seeking to hide their donors by masquerading as social welfare groups. And President Obama should increase transparency for political spending, and prevent abuse, by issuing an executive order requiring disclosure of political spending by government contractors.

Congress, the SEC, the IRS, the FEC, and President Obama can and should all take immediate action to bring an end to the scandal of secret political spending in the interests of voters and our free democratic society.