DISCLOSE Act blocked in Senate

July 27, 2010   •  By Jeff Patch
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In a key victory for supporters of free political speech, the DISCLOSE Act failed on a procedural vote today.

Majority Leader Harry Reid invoked cloture on the bill designed to circumvent the Supreme Court’s decision in Citizens United v. Federal Election Committee, but the legislation stalled on a party-line vote.

“This bill wasn’t about disclosure, it was an attempt by the majority to legislate an electoral advantage fewer than 100 days before the midterm elections,” said Center for Competitive Politics Chairman Bradley A. Smith, a former FEC Chairman. “Senators who support free speech in politics must remain vigilant to make sure these campaign finance restrictions aren’t pushed through on a later vote or in a lame duck session.”

Despite the removal of one of the bill’s special deals for unions—an exemption for transfers among affiliate groups—the bill would have included several provisions to curb the political speech of business groups while leaving unions largely unscathed. Although the disclosure provisions would have impacted labor unions, the $600 threshold was designed to effectively exempt unions.

The DISCLOSE Act (S. 2628) also included prohibitions on the political speech of government contractors and companies with a minimal amount of foreign investment-bans that only would have impacted corporations. Labor unions with an interest in taxpayer dollars-such as unions representing employees at government contractors or public employee unions-and unions with foreign membership would not have been affected. These provisions would have prevented ads merely mentioning a candidate’s name up to a year before an election—political speech that was legal even before Citizens United.

The bill also included a gaping carve out for the National Rifle Association and other large, established interest groups, setting up a two-tiered First Amendment: one set of rights for the most powerful organizations and other set of rights for other grassroots groups.

“The DISCLOSE Act exemplifies what skeptics of campaign finance regulation have been saying for years: ‘reform’ is often a self-serving effort to benefit those writing the laws,” said Center for Competitive Politics President Sean Parnell. “This bill was written largely in secret, included backroom deals cut with powerful interests, and was designed to favor the political interests of the majority party by silencing Americans who would dare to speak out in the upcoming elections.”

Foreign corporations and governments will not be able to spend on politics and an effective system of disclosure remains in place, despite recent statements by President Obama and other supporters of the bill demagoging these issues.

Disclosure regulations already exist
Independent expenditures over $250 are already subject to disclosure under current law [2 U.S.C. 434(c)]. Any individual who contributes more than $200 for the expenditure must be disclosed. Similar contributions must be disclosed for electioneering communications [2 U.S.C. 434(f)]. In addition, if a group accepts more than $1,000 in contributions or makes more than $1,000 in expenditures and has a “major purpose” of influencing elections, it must report all its contributions of more than $200 [2 U.S.C. 434(a)]. Groups organized as 527s with the IRS must report all of their donors above $200. Finally, any person, company or union airing a political ad must include the name of the group or person paying for the ad and broadcast ads must include a spoken disclaimer [2 U.S.C. 441(d)].

Despite these existing laws, pro-regulation groups are falsely claiming that without the DISCLOSE Act, Americans will not know who is attempting to influence political debates. The DISCLOSE Act would not have provided meaningful disclosure beyond current law; it would have burden grassroots groups with onerous, vague regulations.

Political spending by foreign groups is already prohibited
In President Obama’s brief remarks from the Rose Garden yesterday, he again falsely asserted that “big corporations—even foreign-controlled ones—are now allowed to spend unlimited amounts of money on American elections.” A corporation headquartered or incorporated outside of the United States is already prohibited from spending money on any U.S. political campaign [2 U.S.C. 441(e)]. Furthermore, Federal Election Commission regulations prohibit any foreign national from even being involved in any decision-making about political spending—such as providing advice [11 C.F.R. 110.20(i)]. Claims that Venezuela’s Hugo Chavez could pour money into U.S. politics through a U.S. subsidiary to influence American elections, as Sen. Evan Bayh (D-Ind.) asserted in a Politico op-ed, are blatantly untrue. DISCLOSE would not inhibit foreigners, it would strip away the First Amendment rights of Americans by prohibiting U.S. shareholders from spending on politics if a minority (20 percent) of foreign nationals hold shares in the company.

The Center for Competitive Politics is a nonpartisan, nonprofit group dedicated to protecting First Amendment political rights. CCP seeks to promote the political marketplace of ideas through research, litigation and advocacy.

Jeff Patch

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