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July 17, 2012

DISCLOSE Act - Yet Again, No Profiles in Courage in the U.S. Senate

By Jeremy Miller

Citizens UnitedFor the second day in a row, not a single Senate Republican voted in favor of a procedural motion to merely debate the DISCLOSE Act. 

The back and forth between Republicans and Democrats, not surprisingly, has been like two ships passing each other in the night.  The uphill fight against secret money influencing our elections, the fallout from Citizens United, marches forward.  In the meantime, CREW has taken action on multiple fronts to highlight the critical need for this legislation to become law. 

Our report released today – Hit and Run: How one Supposed Non-Profit Spent Millions on Campaign Ads, Broke the Law, then Disappeared – is Exhibit A in how broken the system really is.  No group better illustrates the disastrous unintended consequences of the Supreme Court’s Citizens United decision than the Commission on Hope, Growth, and Opportunity (CHGO), which over the course of a few months in 2010 launched a multimillion-dollar assault on a dozen Democratic candidates.  In its short lifetime, CHGO failed to report a dime of its political spending to the Federal Election Commission (FEC), falsely told the Internal Revenue Service (IRS) it didn’t do any political spending at all, violated its tax-exempt status, and failed to register as a political committee, which would have required it to disclose the names of its donors.  Faced with multiple FEC and IRS complaints, the group went out of business, leaving the public and regulators with no one to hold accountable.

In Roll Call today, CREW Executive Director Melanie Sloan argues why tax-exempt “social welfare” groups – known under the tax code as 501(c)(4) and 501(c)(6) organizations – should be banned from all political spending activity.  The most infamous of these organizations include Crossroads GPS, American Action Network, and the U.S. Chamber of Commerce.  As we have repeatedly documented, corporations like Aetna are using these organizations as conduits to secretly influence our political system without any accountability.  Under current law, engaging in political activity cannot be the primary purpose of these groups, which is generally assumed to involve spending less than 50 percent of their budgets.  These organizations should still be permitted to engage in lobbying, education, and grassroots activity, but it’s high time to draw a clear line between political and policy-related activities.  If organizations or their funders want to participate in political activity, they should do so out in the open through bona fide political entities that are required to disclose their donors and expenditures.

Our letter to the National Association of Insurance Commissioners (NAIC) piggybacks on our recent discovery that insurance giant Aetna funneled more than $7 million to conservative conduits American Action Network and U.S. Chamber of Commerce in the 2011 election cycle.  Part of the NAIC’s mission is to promote the public interest and support competitive markets.  Toward that end, the NAIC develops disclosure guidelines that state insurance commissions adopt as mandatory.  We have asked the NAIC to adopt a model rule or additional questions to its annual statement requiring disclosure of political spending by member insurance companies.  This step would further the strong public interest by shining a light on whether shareholder and policy holder monies are being used to influence elections. 

A second letter follows up on our corporate accountability coalition request in January 2012, urging the SEC to adopt a rule requiring disclosure of corporate political spending.  We’re not alone.  Shareholders overwhelmingly favor disclosure and transparency as a way to maintain widespread support from individual and institutional investors.  It’s also good for business:  according to a 2006 survey, 87% of shareholders would have more confidence investing in a corporation that has adopted rules providing for transparency and oversight in political spending.

Finally, we’ve sent out an action alert to our followers urging them to support and pass the DISCLOSE Act and oppose any efforts to block consideration and debate of this critical legislation.  If you’d like to do the same, click here

CREW will continue the battle to bring greater transparency and accountability to our electoral process.  Join us on Twitter and Facebook for future updates. 

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