The Magazine of Corporate Responsibility

Democrats Introduce Political Contributions Legislation

by James Hyatt

Senate Democrats officially launched their long-expected legislative response to the Supreme Court’s January ruling freeing up corporations, unions and other groups to make political contributions.

Sen. Charles Schumer and Rep. Chris Van Hollen (File Photo)

Sen. Charles Schumer and Rep. Chris Van Hollen (File Photo)

The 5-4 Citizens United decision had prompted a variety of proposals to blunt or cancel its effect.

Today (April 29) five U.S. Senators officially released their version of the DISCLOSE Act – an acronym for  the “Democracy is Strengthened by Casting Light on Spending in Elections” Act.

The sponsors said their goal is to pass the new measure by July 4 “so the law can take effect in time for the 2010 midterm elections.”

Sen. Charles Schumer (D-NY) declared “If we don’t act quickly to confront this ruling, we will have let the Supreme Court predetermine the outcome of next November’s elections. It won’t be Republicans or Democrats; it will be Corporate America and other special interests.”

The proposal would bar foreign-controlled corporations, government contractors and companies that have received government assistance from making political expenditures – and also require corporations, unions, and other organizations that make political expenditures to disclose their donors and stand by their ads.

“If the Supreme Court wants to treat corporations as individuals then we will hold those entities to the same standards of accountability that we do individuals, which means requiring that CEO's, labor leaders and even political consultants stand by their ads," declared Sen. Ron Wyden (D-Or).

Other sponsors include Sens. Russ Feingold (D-WI), Evan Bayh (D-IN), and Al Franken (D-MN).

An announcement from the Senate sponsors said:

“Under the Senators’ proposal, the heads of any organization sponsoring an ad—including corporate CEOs—would be required to appear during the ad, as is currently required of candidates for federal office. In cases where special interests funnel their money into shell groups, the top five organizations that have donated to the group would have to be identified on screen during any ad sponsored by that group. The CEO of the group’s top funder for that particular advertisement would also be required to appear on screen to deliver a “stand by your ad” disclaimer.”

They said the measure would also require corporations and advocacy groups that make political expenditures to “establish easy-to-track campaign accounts,” including having all donations exceeding $1,000 and all expenditures to be reported within 24 hours to the Federal Election Commission, on public websites, and to shareholders in corporate filing statements.

House Version

A similar measure was introduced in the House by two Democrats – Rep. Chris Van Hollen (D.-Md) and Rep. Robert Brady, (D.-Pa) and two Republicans -- Rep. Walter Jones (R-NC) and Rep. Mike Castle (R-De.)

“Every citizen has a right to know who is spending money to influence elections, and our legislation will allow voters to follow the money and make informed decisions,” Rep. Van Hollen said.

Rep. Jones said: “I don’t know many people in Eastern North Carolina who believe that transparency is a bad idea, or that Chinese or Russian-flagged companies should be able to spend unlimited amounts to influence U.S. elections, or that Wall Street banks should be allowed to spend their bailout money on campaign ads.  This bill would address those issues.”

It would prohibit bailout beneficiaries from making campaign-related expenditures, although the restrictions would be lifted once the money is repaid.

The Senate proposal would extend existing prohibitions on contributions and expenditures by foreign nationals to include domestic corporations,

1.      If a foreign national owns 20% or more of voting shares in the corporation, which is modeled after the control test in many states, including Delaware;

2.      If a majority of the board of directors are foreign nationals;

3.      If one or more foreign nationals have the power to direct, dictate, or control the decision-making of the U.S. subsidiary; or

4.      If one or more foreign nationals have the power to direct, dictate, or control the activities with respect to federal, state or local elections

President Obama on several occasions has called for steps to roll-back the Citizens United decision.

Chamber Speaks Out

Supporters of the decision promptly criticized the proposals.

Thomas J. Donohue, president of the U.S. Chamber of Commerce, called the measure “nothing more than a brazen attempt to tilt the playing field in favor of the incumbent party in this fall's elections, silence constitutionally protected speech, and abridge First Amendment rights.” And Theodore Olson, U.S. Chamber Counsel, said “the plain intent of the Schumer and Van Hollen legislation—the purpose invoked by its sponsors—is to discourage people from exercising their constitutional right to free speech. One can understand why today's party leaders may want to silence discussions on their continued fitness for office, but the First Amendment simply does not tolerate it."

Political website Politico.com quoted various union groups as being disappointed that the measures didn’t provide more language giving shareholders a say over political expenditures.

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

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