In February 1996, then–White House aide and current Supreme Court nominee Elena Kagan co-authored a memorandum to deputy chief of staff Harold Ickes regarding whether President Clinton should support proposed amendments to the McCain-Feingold campaign-finance bill.
The first amendment was to weaken the bill’s ban on “bundling” of contributions. The memorandum’s analysis of the proposal begins: “We have no data on which party benefits more from bundling practices.” The second amendment was to limit out-of-state contributions to candidates. The memo’s analysis begins: “The [limit] may hurt Democratic senatorial candidates.” In other words, the memo evaluated the amendments not on the basis of their benefits or harms to the public, but rather their potential to confer a partisan advantage.
This is not surprising to those who follow campaign-finance-reform efforts closely. A key goal of every “reform” bill has been partisan gain. Fast forward 14 years to January 2010, when the Supreme Court, in an eminently sensible decision in Citizens United v. Federal Election Commission, held that corporations and unions have the right under the First Amendment to speak out in political races. (The government, represented by Kagan, who was then the solicitor general, had argued that it had the power to ban books and movies if they were distributed or produced by corporations, although the solicitor general went to some length to assure the Court that in practice it would not ban books, only “pamphlets.”) The immediate response of the White House and Democrats in Congress was to assess the effect of the decision on their electoral prospects. And they didn’t like the assessment. NPR’s Nina Totenberg summed up the conventional Democratic wisdom on the ruling: “It will undoubtedly help Republican candidates since corporations have generally supported Republican candidates more.”
President Obama proclaimed that the ruling should be overturned because it was a victory for “Big Oil, Wall Street banks, [and] health-insurance companies,” his usual rogue’s gallery. Sen. Chuck Schumer (D., N.Y.) immediately began discussing legislative proposals that would “make [corporations] think twice” before getting involved in campaigns. “The deterrent effect should not be underestimated,” he added. The Washington Post noted that the Democratic proposals “are aimed at preventing corporations from hiding behind trade groups or other organizations in order to fund attack ads on political candidates.”
Rebuffing Republican requests for input into the drafting process, Schumer, the former head of the Democratic Senatorial Campaign Committee, and Rep. Chris Van Hollen (Md.), current head of the Democratic Congressional Campaign Committee, came up with a bill with the gimmicky acronym “DISCLOSE,” which stands for “Democracy Is Strengthened by Casting Light on Spending in Elections.” Critics have more accurately dubbed it “Democratic Incumbents Seeking to Contain Losses by Outlawing Speech in Elections.”
DISCLOSE’s partisanship is apparent in its different treatment of corporations and unions. Every major federal campaign-finance-reform effort since 1943 has attempted to treat corporations and unions equally. If a limit applied to corporations, it applied to unions; if unions could form PACs, corporations could too; and so on. DISCLOSE is the first major campaign-finance bill that has not taken this approach. For example, it prohibits corporations with government contracts of as little as $50,000 from making independent expenditures in elections or engaging in “electioneering communications.” This very low threshold would bar not only large contractors such as Boeing but also thousands of small businesses from exercising the rights recognized in Citizens United. Yet no parallel provision exists for unions that bargain with the government for multimillion-dollar benefit packages. Corporations that received TARP funds are prohibited from spending, but unions at those companies — which in many cases benefited far more from the bailouts than shareholders — are not.
Similarly, DISCLOSE prohibits U.S. corporations with as little as 20 percent foreign ownership from spending on elections, without placing parallel restrictions on unions (and despite the fact that a part of the Federal Election Campaign Act that was unaffected by Citizens United already prohibits spending in U.S. elections by foreign nationals and truly foreign companies). Thus Verizon Wireless, a New Jersey corporation with over 80,000 U.S. employees, is prohibited from making expenditures because the English corporation Vodafone has a minority stake in it. But the Service Employees International Union and the International Brotherhood of Electrical Workers are free to spend to their hearts’ content, even though they have foreign members and directors. (That’s what “International” stands for: SEIU has had members in Canada since 1943. IBEW has been organized in Canada since 1899, and is also in Panama and several Caribbean nations. Both have Canadians on their international executive committees.) Thus the provision not only discriminates against foreign nationals (in violation of the Constitution and countless federal statutes) — something few liberals would support in other contexts, such as limiting the right of foreign nationals to march in protest of government policies, write letters to the editor, or speak out on radio and television — but limits the rights of American shareholders to participate in the political system merely because they own property in association with foreign nationals.
Meanwhile, the disclosure provisions in the bill range from the duplicative to the patently absurd. Federal law already provides that any entity making an independent expenditure of more than $250 must file reports with the FEC that include the name of the spender, the date and amount of the expenditure, the candidate supported or opposed, and a statement that the communication was not coordinated with or authorized by the candidate. Additionally, the spender must disclose the name of any other entity that contributed funds for the communication. For “electioneering communications” — defined in current law as broadcast ads that mention a candidate and are aired within 30 days before a primary or 60 days before a general election — even more information is required, and contributors of $1,000 or more must be reported (although the reporting kicks in only once $10,000 has been spent). Additionally, “527” organizations, such as Swift Boat Veterans for Truth, must report all donors to the IRS, and political-action committees — a category including any group that spends over $1,000 and has as its major purpose influencing elections — must report all of their donors and expenditures to the FEC. Finally, current law requires all ads to include notice of who is paying for them.
Given this, it is obvious that DISCLOSE seeks less to enlighten the public than to bury would-be spenders in regulation and provide politicians with a means for intimidating their donors. DISCLOSE would require, for example, that an organization that makes independent expenditures disclose all of its members and donors contributing over $1,000. It extends this requirement even to an organization that has made no political expenditures in the current cycle but has done so in the past. It thereby provides politicians — in this year’s cycle, endangered Democratic incumbents – a weapon with which to threaten political opponents. The Supreme Court, in a 1958 case called NAACP v. Alabama, held that the government cannot compel groups to reveal their member lists and financial supporters. That may be why DISCLOSE allows groups to avoid such disclosure by establishing “campaign-related activity” accounts, essentially a new type of PAC funded by money solicited specifically to make independent expenditures. But this too runs afoul of the Court: One point of Citizens United was that the government could not require spenders to set up such additional accounts as a condition of political participation.
Some of DISCLOSE’s provisions are outright absurd. It would require that the CEO of a company or organization paying for a broadcast ad appear in the ad and state the organization’s name twice, as well as his name, his title, and his approval of the message. The largest contributor to any ad purchased by an organization, such as a trade association or chamber of commerce, would also have to appear on camera and state the organization’s name three times, as well as his name and title and his approval of the message. These disclaimers, in addition to the existing requirement of a statement as to who is paying for the ad, can take up roughly half of every 30-second commercial. The primary “benefit” to the public is that it will learn that the organization already announced as paying for the ad does, in fact, “approve” of it. We see again that the real purpose is to burden speech — or, as the sponsors wrote in their press release upon introducing the legislation, to “partly restore those limits” struck down as unconstitutional by the Supreme Court.
In fact, in key ways the bill extends the prohibition on corporate expenditures beyond what it was prior to Citizens United. Before the ruling, corporations were prohibited from funding independent expenditures (ads that “expressly advocate” the election or defeat of candidates) at any time, and “electioneering communications” (ads that did not “expressly advocate” election or defeat of a candidate but merely named him or her) within 30 days of a primary or 60 days of a general election. DISCLOSE expands the definition of “electioneering communication” to include any ad mentioning a candidate from 90 days before the primary all the way through the general election. In Illinois this year, that is a twelve-month period beginning in November; in Ohio and Indiana, it runs from the beginning of February through November. In most states, it will run at least six months. Because DISCLOSE prohibits companies with as little as 20 percent foreign ownership, or as little as $50,000 in federal contracts, from running “electioneering communications,” this means that thousands of corporations would be deprived of free speech for as much as a year.
That Congress would respond to a Supreme Court decision affirming corporations’ freedom of speech by restricting that freedom to an even greater extent than it did before the decision is remarkable. The attempt is unlikely to withstand judicial challenge, but, as Senator Schumer made clear early on, he believes the courts won’t have time to rule on the constitutionality of the act before the 2010 election is over.
Whether DISCLOSE passes depends on whether there are any Republican senators gullible enough not to filibuster a law specifically designed to give Democrats an electoral advantage. So far, even John McCain, a supporter of campaign-finance reform, has refused to sign on.
But this is the way of both “campaign-finance reform” and the Obama administration: use the law to silence your opponents. The DISCLOSE Act is a testament to the wisdom of the Supreme Court’s decision in Citizens United. The First Amendment sought to place political speech beyond the government’s control, and we can be glad that it did. Does future Justice Kagan agree?
– Bradley A. Smith is the Blackmore/Nault Designated Professor of Law at Capital University Law School, chairman of the Center for Competitive Politics, and former chairman of the Federal Election Commission. This article orginally appeared in the June 7, 2010, issue of National Review.