New legislation offered to limit corporate speech

Congressman Michael Capuano (D-Mass.) will today introduce legislation to curb the First Amendment rights of for-profit corporations that were recognized and restored (along with those of unions, nonprofit organizations, and other forms of association) in the Supreme Court’s Citizens United decision.

One thing should probably be noted upfront – while most of the self-anointed campaign finance ‘reform’ community engage in verbal gymnastics worthy of Mary Lou Retton to avoid sounding like they want to silence certain voices in the political process, Congressman Michael Capuano is refreshingly straightforward on this subject. During hearings for the thankfully-failed DISCLOSE Act last year, Capuano had the following to say about the chilling effect the bill would have on speech:

“I hope it chills out all-not one side, all sides! I have no problem whatsoever keeping everybody out. If I could keep all outside entities out, I would.”

While Representative Capuano’s commitment to the First Amendment may be suspect, his honesty on the subject is not.

The so-called “Shareholder Protection Act” is less forthright, although it isn’t hard to discern what the intent is.

Filed Under: Blog, Disclosure, Disclosure Press Release/In the News/Blog, DISCLOSE, Disclose Act

Freedom to spend money levels playing field against ‘bully pulpit’

The Atlantic published an article by Reid Wilson last week discussing how independent groups like American Crossroads and Priorities USA are participating in the current political debate over the debt limit, and what a difference this is from past occasions.

Outside Groups Deflate Obama’s Bully Pulpit

With groups like American Crossroads spending millions to control the national debate, what’s a president to do?

… this month may prove to be the critical moment of Obama’s first term, when he and congressional Republicans negotiate an increase in the nation’s debt ceiling… Were Obama’s the only message Americans heard every day, it would have a powerful impact… But the new political reality is that Obama’s is not the only voice, even with his bully pulpit, that is delivering a single message to voters. Instead, outside groups are playing a bigger role than at any time in the last decade, complicating Obama’s ability to deliver an uninterrupted narrative…

 The group [American Crossroads] is in the middle of a $5 million advertising campaign that backs up the Republican message. The goal, [American Crossroads president Steven] Law said, is to give Republicans something like the booming voice Obama’s office gives him.

“In these kinds of crisis confrontations, the power and value of the bully pulpit increases exponentially and gives the president asymmetric power to control perceptions of events as they unfold,” Law said. “We felt it was vitally important that outside groups try to balance that out…”

The sub-headline provocatively suggests that outside groups like American Crossroads and Priorities USA are able to ‘control the national debate,’ but reading the full article it’s clear that it is these very outside groups that ensure nobody is able to control the debate.

And that’s the way it is supposed to be, thanks to the First Amendment. The so-called campaign finance ‘reform’ community seek to limit independent voices  and would seemingly prefer to have only a few ‘authorized’ voices heard by the American public (mostly after being filtered by the media). But the freedom of citizens to donate and spend money to support their political beliefs ensures that those with a “bully pulpit” are not the only ones that will be heard.

It’s the freedom to spend money in politics, not the restraint of money spent in politics, that helps to provide a more level playing field for competing ideas and candidates in our political system.

Filed Under: Blog

CCP Academic Advisor Joel M. Gora on Citizens United

CCP Academic Advisor and First Amendment champion Joel M. Gora, a Professor of Law at Brooklyn Law School, has written a stellar analysis of the much maligned Supreme Court decision in Citizens United v. Federal Election Commission.

In “The First Amendment…United,” Gora thoroughly recounts the outcomes of the case, defending it as an endorsement of First Amendment protections for the political speech of corporate, labor, and non-profit entities. The decision reversed statutes which had previously made it illegal for these groups to speak out in elections. Aside from the more minor immediate effects, Gora explains that the lasting legacy of Citizens United lies in its enthusiastic support for the First Amendment.

Filed Under: Blog

Will ‘reformers’ protest ‘secret’ meeting of Democratic Senate donors??

Senator Patty Murray, current chair of the Democratic Senatorial Campaign Committee (DSCC), is in a bit of an embarrassing situation right now. It seems that in her role as chief fundraiser for the  DSCC, she sent a letter to Koch Industries, or executives there at least, asking for a “five figure” contribution to the DSCC.  She then followed up with a phone call, and wound up leaving a voice message.

The folks at Koch seem to be alternating between surprised and amused at this. They have sent a letter back to Senator Murray:

Letter to Senator Patty Murray, Chair Democratic Senatorial Campaign Committee

Senator Patty Murray, Chair
Democratic Senatorial Campaign Committee

Dear Senator Murray:

For many months now, your colleagues in the Democratic Senatorial Campaign Committee leadership have engaged in a series of disparagements and ad hominem attacks about us, apparently as part of a concerted political and fundraising strategy. Just recently, Senator Reid wrote in a DSCC fundraising letter that Republicans are trying to “force through their extreme agenda faster than you can say ‘Koch Brothers.'”

So you can imagine my chagrin when I got a letter from you on June 17 asking us to make five-figure contributions to the DSCC. You followed that up with a voicemail* indicating that, if we contributed heavily enough, we would garner an invitation to join you and other Democratic leaders at a retreat in Kiawah Island this September…

Most folks, understandably, are focusing the sheer hilarity of the DSCC beating up on the Charles and David Koch on one hand while soliciting large campaign contributions from them on the other. As someone who has raised money for a Senate candidate before, I tend to be a little more forgiving – these types of mistakes happen, the wrong people get solicited for gifts, and while mildly embarrassing or amusing, depending on where one stands, it’s really not that big of a deal.

But what did jump out at me was the invitation to a retreat in Kiawah Island for donors, made all the more ironic given the hysteria by self-styled campaign finance ‘reformers’ over meetings the Koch brothers hold with likeminded donors to conservative and libertarian causes.

Filed Under: Blog

IRS won’t tax donations to 501(c)4 groups

For the last few months there has been some concern that the IRS might be targeting donors to 501(c)4 organizations by applying the gift tax to their donations. The New York Times reported on this in May:

I.R.S. Moves to Tax Gifts to Groups Active in Politics

Big donors like David H. Koch and George Soros could owe taxes on their millions of dollars in contributions to nonprofit advocacy groups that are playing an increasing role in American politics.

Invoking a provision that had rarely, if ever, been enforced, the Internal Revenue Service said it had sent letters to five donors, who were not identified, informing them that their contributions may be subject to gift taxes depending on whether the donations exceeded limits under the tax laws.

These advocacy groups have been drawing more scrutiny, from President Obama as well as others, as they have proliferated and funneled vast sums of money in support of campaigns and causes, without having to publicly disclose their donors.

So-called campaign finance ‘reformers’ were giddy at the prospect of taxing donors to 501(c)4 groups, thinking it would reduce their speech and punish Karl Rove. Common Cause of New York released the following statement:

“We are pleased to learn that the IRS has taken action to enforce existing rules that are meant to address the misuse of an important tax-exempt status – 501(c)4 – to further partisan political goals and to make an end run around campaign finance laws. The practice has made a mockery of this tax status and damaged legitimate non-profits in the public interest for narrow political gain…

But this just doesn’t seem to be the ‘reformers’ year, or decade, or maybe even century. Today the IRS released a memo stating that they would not be applying gift taxes to donations made to 501(c)4 organizations.

Questions have been raised regarding the application of gift tax to contributions to I.R.C. § 501 (c)(4) organizations…

Until further notice, examination resources should not be expended on this issue. It is anticipated that any future examination activity would be after the coordination described above and would be prospective only after notice to the public…

In plain language (something the IRS is maybe not known for), it looks like the IRS has decided not to apply gift taxes to any donations made in the past to 501(c)4 organizations, and while they may decide to do so in the future, it would only apply to future gifts made after the IRS has released clear guidance on the issue.

This is great news, and means that donors to organizations speaking out on politics and public policy issues will not see have to pay the taxman in order fund speech.

Filed Under: Blog

Interesting, well written, and pointless study on campaign contribution matching programs

The Campaign Finance Institute (CFI) is an unusual organization in the so-called campaign finance ‘reform’ community. Founded and led by Michael Malbin, it’s one of the few groups in the ‘reform’ constellation that isn’t utterly hysterical on the subject of money in politics, and its research tends to rely on sound data that at the very least makes interesting points. And unlike its fellow travelers, CFI has been willing to think beyond the simple sloganeering and dogma of the ‘reform’ movement.

That said, CFI’s research (or at least their analysis and recommendations) suffer from the fact that it makes assumptions that have no real basis in fact or reason to believe they are correct, and in fact there is often ample evidence suggesting that their core assumptions are faulty.

Yesterday’s release of a new study by CFI drives this point home. Titled Public Financing of Elections After Citizens United and Arizona Free Republic, the study assumes up front that campaigns funded primarily by donors making small contributions are inherently superior to campaign funded primarily by donors making large contributions. The beneficiary of these supposedly superior campaigns are the general public.

But there is little reason to believe this assumption is true.

Filed Under: Blog, Maine

IRS Decides Not to Pursue 501(c)4 Investigations

Dateline: 7/6/2011

Contact: Sarah Lee, Communications Director, Center for Competitive Politics, 770.598.7961


Alexandria, Va. – In a victory for free speech, the Department of the Treasury sent a memo today indicating they would suspend investigation into whether donations to 501(c)4 organizations should be taxed.

The question of whether donations to this kind of organization began emerging several months ago when the IRS sent five letters to large donors to 501(c)4 organizations warning of potential gift tax liabilities.

The office of Steve T. Miller, Deputy Commissioner for Services and Enforcement with the Department of the Treasury, released a memo today in response noting that, “Until further notice, examination resources should not be expended on this issue [and] any future examination activity would be … prospective only after notice to the public.”

Brad Smith, CCP founder and former Federal Election Commission Chairman commented on the wisdom of the decision. “We think the IRS is wise not to make such a controversial change in its enforcement policies without substantial public input and notice,” he said.

CCP President Sean Parnell added that the decision will mean more speech in the 2012 campaigns focused on issues and candidates. “The IRS decision means that donors to 501(c)4 organizations will see their money go to speak out on issues and candidates, not the taxman. This means more speech, and should be welcomed by supporters of robust and unfettered political speech.”

Filed Under: External Relations Press Releases, External Relations Sub-Pages, Press Releases

Stephen Colbert, the FEC and ColbertPAC

The Cato Institute has produced a short video that provides a succinct explanation of Stephen Colbert’s successful attempt to create an eponymous PAC. While no one should take Colbert’s SuperPAC effort too seriously — it’s mostly just part of a larger act that attempts to skewer last year’s Citizens United ruling — the video does a good job explaining why Colbert himself should have taken it a bit more seriously. In the end, he may just have proven why the Citizens United ruling was necessary, something he almost certainly didn’t intend to do.


Filed Under: Blog

‘Reformers’ try getting corporations to dump First Amendment rights voluntarily

I’ve been reading a report from the Center for Political Accountability titled Hidden Rivers: How Trade Associations Conceal Corporate Political Spending, Its Threat to Companies, and What Shareholders Can Do, published in 2006 by the Center for Political Accountability (CPA). As one might expect from a group focused on limiting corporate involvement in the political process, the report is filled with the sort of odd leaps of logic and serious omissions of fact that are the stock-in-trade of the so-called campaign finance ‘reform’ community.

The report identifies “18 leading companies whose donations jeopardized both their business and reputation. These companies… have personnel policies regarding gay employees that were in direct conflict with the positions of judicial candidates who the companies directly or indirectly supported or provided help in 2004. Opposition to gay rights was a key part of their campaign…”

This is, of course, ridiculous. Companies have a whole host of issues that are of concern to them, with gay rights in almost all cases being far below issues like taxes, regulation, legal liability, collective bargaining, and other issues that directly relate to the companies’ profitability. Elections tend to be binary affairs, usually featuring two major candidates who tend to have sharply contrasting views on these more important and relevant issues, as well as gay rights.

Regardless of this plain fact, CPA simply assumes that a gay-friendly company siding with a candidate that offers views on taxes, regulations, and other high priority items beneficial to the company is somehow working against the company’s best interests if that candidate also is unsympathetic to gay rights.

Filed Under: Blog

In the News: NY Post: Will NYC campaign law be next to fall?

Will NYC campaign law be next to fall By Bradley A. Smith Last week, the Supreme Court struck down an Arizona law that subsidized political candidates’ campaigns based on amounts spent by their unsubsidized challengers. The ruling poses serious problems for New York City’s government subsidies to campaigns. Yes, the city Campaign Finance Board rushed […]

Filed Under: State In the News, Tax Financed Campaigns Press Release/In the News/Blog, Tax Financed Campaigns State, New York

The Center for Competitive Politics is now the Institute for Free Speech.