2012 Election

The Futile Quest to Reveal Political Nonprofits' Donors


U.S. Sen. Sheldon Whitehouse (D-RI) speaks during a news conference about disclosure of Super PAC donors on Capitol Hill

Photograph by Pete Marovich/Getty Images

U.S. Sen. Sheldon Whitehouse (D-RI) speaks during a news conference about disclosure of Super PAC donors on Capitol Hill

(Updates with the bill’s second Senate defeat on Tuesday.)

The Senate debated late into the night on Monday over a bill that would cast light on the millions of dollars in secret political donations funding an avalanche of advertising this election cycle. Many of the attack ads are downright nasty, and viewers often have no way of knowing who is paying for them.

The bill, sponsored by Senator Sheldon Whitehouse, a Rhode Island Democrat, closes a loophole through which corporations, unions, individuals, and other organizations can make anonymous contributions to tax-exempt nonprofit organizations, known as 501(c)(4)s under the Internal Revenue Code. Unlike political candidates, parties, PACs, and super PACs, these nonprofit groups are not required to reveal their donors. Whitehouse’s bill would make organizations divulge any donation greater than $10,000 to the Federal Election Commission within 24 hours. (Current disclosure requirements are quarterly, which means voters sometimes don’t find out who spent what until after the election.)

Republicans opposed the measure, but Senate Democrats sought to keep the issue alive for several news cycles.

In the wake of the Supreme Court’s 2010 Citizens United ruling, public concern over the outsize role that wealthy individuals and corporations would play in elections had focused on super PACs, which can accept unlimited donations. But so far, super PACS have not been the preferred vehicle for corporate political spending. While it’s impossible to track how many groups there are—the nonprofits don’t have to register as political groups with the FEC—there’s mounting evidence that corporations prefer to donate anonymously to the tax-exempt groups. (There’s also some evidence that since the ruling, corporate boards have been pushing for more disclosure about how treasury money is being spent.)

Ostensibly, 501(c)(4)s cannot be set up solely to influence elections. By law they can run issue advertisements that purport to be “educational” in nature but can go so far as to mention candidates by name. The line between what’s expressly political and what isn’t is far from clear. Crossroads GPS, a group co-founded by Republican strategist Karl Rove, began a $25 million advertising campaign, carefully shaped with focus groups of undecided voters, that attacks President Barack Obama for increasing the federal deficit and urges him to cut spending. That campaign will run for about a month, according to the group.

Whitehouse’s bill had almost zero chance of passing, falling to a 51-44 filibuster vote by Senate Republicans on Monday. Some of those Senators, notably Arizona Republican John McCain, had joined Democrats in passing a similar bill 12 years ago by a huge margin.

But that did not stop Senate Majority Leader Harry Reid (D-Nev.) from bringing the bill up for another vote—and a second defeat, 53-45, on Tuesday afternoon. Reid’s act of political theater was intended to fire up voters who believe Republicans are allowing secret special interest money to co-opt the political process. Democrats fear that more of the money will go to Republicans, as it did in 2010, according to the Center for Responsive Politics.

If that’s the case, their best hope is to keep the issue alive in news coverage, which is, of course, its own form of free airtime.

Dwoskin is a staff writer for Bloomberg Businessweek in Washington. Follow her on Twitter: @lizzadwoskin.

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