DISCLOSE mark-up blow-by-blow

May 24, 2010   •  By Matt Nese
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On Thursday, the nine-member Committee on House Administration held a mark-up for the “Democratic Incumbents Seeking to Contain Losses by Outlawing Speech in Elections” (DISCLOSE) Act, also known as H.R. 5175.

In a 5-3 vote, the committee approved a manager’s amendment, introduced by Chairman Robert Brady (D-Pa.). The committee also debated and eventually approved 7 additional amendments.

Brady characterized the changes in his manager’s amendment in detail—some of which were technical. Brady said the new language would:

(1) provide an avenue for claiming a hardship exemption for TV disclaimers if the ad takes up too much time (this provision, though, seems contradicted by another clause in the bill stating it will go into effect 30 days after passage, regardless of whether the FEC writes regulations).

(2) make a disclosure provision slightly less onerous, requiring speakers to post a hyperlink on their website that directly links to the Federal Election Commission’s (FEC) website. Originally, the bill mandated a duplicate posting on the organization’s website.

(3) make clear that the restrictions on U.S. subsidiaries of international companies do not apply to those companies’ political action committees (PACs). They would be permitted to exist as long as the PAC is not directed by a foreign subsidiary (which is already illegal).

(4) amend the coordination regulations to provide “safe harbor” for communications related to grassroots lobbying on legislation. Again, without providing for FEC regulations, this provision would still ensure speakers are chilled in the midterm campaigns.

Rep. Dan Lungren (R-Calif.) and the committee’s two other minority members, Rep. Greg Harper (R-Miss.) and Kevin McCarthy (R-Calif.), offered a handful of speech-friendly amendments to DISCLOSE, each of which was voted down by the Democrats—except for two technical amendments (one on Internet regulation and one on a certification issue).

Democrats beat back equal treatment for unions
In general, Lungren attempted—and failed—to insert language in the bill that would treat corporations the same as similarly situated labor unions. In disputing the “findings,” located in Section 2 of the bill, Lungren mocked the Democrats platitudinal language filled with weak assertions rather than facts justifying restrictions on government contractors and other companies.

Lungren introduced an amendment to extend the ban on expenditures by government contractors to labor unions that negotiate large employment contracts with the government. Citing a letter submitted to the committee, drafted and signed by eight former chairmen of the FEC (including CCP Chairman Brad Smith), Lungren explained the partisan motivations behind the legislation, particularly the unequal treatment of corporations and unions in DISCLOSE. To be clear, some of these amendments would not exactly be speech-friendly: but they forced Democrats to make a choice-either restrict corporations and unions equally or not at all.

Rep. Zoe Lofgren (D-Calif.) cited the lack of an explicit mention of labor unions in Citizens United as her rationale for disagreeing with the amendment. “I don’t think it’s a fair analogy,” she said. McCarthy chimed in, arguing for a “level playing field.”

Partisan divisions—and votes falling along party lines—would continue to rule the afternoon.

Harper submitted an amendment to prohibit recipients of government grants from making political contributions or expenditures (similar to the ban on expenditures for TARP recipients). It was shot down by Democratic members of the committee. Lofgren called out the measure as being “overbroad,” explaining that it was “prohibitive” and “not disclosure.” The fine line between TARP recipients and recipients of other government largesse-if such a line exists at all-is slim at best, but partisan motivations carried the debate.

Lungren sought to clear up the U.S. subsidiaries section
Similarly, Lungren attempted to secure the passage of an amendment that would help to clarify the language Section 102, the provision banning “foreign-controlled domestic corporations” (with over 20 percent voting ownership) from making political expenditures. Lungren’s amendment would have replaced this arbitrary standard with a prohibition on any foreign national directing or controlling political activity and a provision would be added, defining a “foreign national” as any entity majority-owned by a foreign government or political party. In obtaining this definition, Lungren used the existing definition offered by the FEC—ensuring the bill would be in accordance with longstanding regulations. The amendment, of course, failed.

More amendments to provide parallel rules for unions and companies failed
In another attempt to place corporations and unions on equal footing, Lungren offered an amendment to mandate that labor unions would have to certify that no dues were received from foreign nationals prior to making political expenditures. Lofgren said that employers choose their employees, but unions lack that luxury. McCarthy responded: “Do corporations choose their shareholders?” Again, the amendment was voted down-further emphasizing the intense partisan foundations behind the DISCLOSE Act.

In a subsequent attempt to ensure similar treatment of corporations and unions, McCarthy attempted to pass an amendment that would provide that no funds obtained by a union through a government-administered payroll deduction program could be used for political expenditures. Lofgren countered that the money wasn’t the government’s, but rather the union’s money for payroll. The rest of the Democrats agreed, and the amendment was voted down.

McCarthy introduced another amendment modifying the threshold for donor disclosure to align with the standard for political committees ($200). The bill currently mandates disclosure of donors above $600, which exempts the average union members’ dues ($377). Brady, who noted his strong support for unions at the hearing, explained his worry about his concern for small groups having to disclose their donors. The amendment failed.

Republicans attempted to improve the section on party coordination and the bill’s effective date
Lungren offered an amendment to replace Sections 103 and 104, which deal with coordinated communications, with a repeal of the limitations on the amount political party committees may spend in coordination with candidates. In this manner, Lungren added, parties could not hide behind closed doors-the stated intent of the Act-and candidates could communicate with their parties when they had an issue with a party action. Brady said, “I like the idea, but I can’t support the amendment.” It failed.

Harper tried to secure passage of an amendment that would set the Act’s effective date as Jan. 1, 2011—a change from the current provision, which mandates that the Act becomes effective within 30 days of the bill’s passage. In its current form, the FEC will have no time to adopt the new regulations, setting the scene for absolute chaos and confusion before midterm elections this November. Facing criminal sanctions and heavy fines, many groups will simply decide not to speak.

Capuano inadvertently reveals the bill’s true intent
Rep. Michael Capuano (D-Mass.) disputed the necessity of the amendment, saying, “Any bill that passes has questions when it’s done.” True to the Democrats’ desire to suppress political speech for certain groups—the exact opposite of the rationale behind the Citizens United ruling—Capuano exclaimed, “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.” [emphasis added]

One last time, Lungren attempted to pass a speech-friendly amendment that would replace Section 102 of the act with a prohibition on any foreign national directing or controlling political activity (a modified amendment of his earlier effort). The amendment failed by a 3-4 vote due to Democrats’ concern that it would restrict the speech of labor unions. Once more, protecting the rights of labor unions while sacrificing those of corporations was the order of the day for the panel’s majority.

McCarthy then offered an amendment to ensure that communications over the internet would remain unrestricted. It passed by a voice vote. He argued that the Internet specifically “fell short of being addressed by the manager’s amendment.” Lofgren concurred that “the barrier to Internet advertising is very low” and characterized the amendment as “sensible.” CCP is still analyzing this language. It falls short of including an Internet clause in the media exemption in the coordination language along with other traditional media.

On behalf of the Sunlight Foundation, Rep. Susan Davis (D-Calif.) introduced an amendment, which passed with bipartisan agreement by a voice vote. It mandates that independent expenditure and electioneering communications reports to the FEC must be filed electronically.

Lofgren offered three amendments, one of which made technical corrections to the bill. All three passed by voice vote. Turning to the issue of robo-calls, Lofgren’s next amendment required “Stand by Your Ad” disclaimers to be included in robo-calls, citing the need to avoid “mischief” that was “unfair to voters.” The amendment passed, enacting in the bill restrictions which requires a disclaimer at the beginning of the call stating who is making the call and listing the organization’s top funders at the end. Lofgren’s third and final amendment offered a change to the manager’s amendment increasing the threshold for government contractors who are prohibited from making independent expenditures from $50,000 to $7 million. The initiative passed with no debate.

Capuano offered three final amendments-two of which were irrelevant to the DISCLOSE Act and withdrawn after “point of order” prodding from Lofgren, who was seemingly under orders by leadership to play the adult and limit Capuano’s grandstanding. Capuano attempted to push through the Fair Elections Now Act (FENA), and a shareholder paternalism scheme (requiring a shareholder vote to approve a political spending plan), which Lofgren dismissed as “not germane to the underlying bill.”

However, Capuano succeeded in passing an amendment requiring that electioneering communications and independent expenditures in the forms of radio ads include a statement detailing the top two funders. Obviously, as with the bill in general, the burden this places on those wishing to speak out in radio ads is troubling.

On Friday, the day after the mark-up, unions announced a massive spending plan to bolster Democrats—perhaps rewarding them for their campaign finance protectionism? Two unions announced plans to spend more than $100 million helping Democrats in midterm races. The campaign will fund “a massive incumbent protection program,” Gerry McEntee, president of AFSCME, told The Hill newspaper. “We have got to protect the incumbency in the House. We have got to protect the incumbency in the Senate. It is going to be hard. Those tea-baggers are out there.”

The bill now moves to the full House. It could be voted on as soon as this week.

Matt Nese

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