THE RUSH TO BAN SPEECH INDIRECTLY
The bill's sponsors appear to believe that by making disclosure its most prominent--and even eponymous--purpose they can perform an act of legerdemain and convince people that its purpose really is disclosure. No one should be fooled.
Under current law, most organizations that engage in the political process already are subject to extensive reporting and disclosure requirements. Political committees--including candidate committees, party committees, PACs, and others--must report regularly to the FEC on their receipt and disbursement of funds. They must itemize contributions from donors giving more than $200 per year. In most cases they must file electronically, and as the election becomes closer their reports become more frequent. Groups organized under section 527 of the IRS code, if they are not already covered in the category above, must file as though they were political committees.
In addition to these en ies that must report all of their activity regularly to the FEC, anyone making an expenditure for an independent expenditure (over $250) or an electioneering communication (over $10,000) must report that expenditure to the FEC. In sum, there is no shortage of reporting and disclosure required under current law.
With political committees and 527s covered by existing law and 501(c)(3) charitable organizations banned from political activity, the remaining targets of this bill's disclosure requirements are 501(c)(4) social welfare organizations and 501(c)(6) trade associations. While these organizations are permitted to make political expenditures under the tax code and retain their tax-exempt status, such expenditures may not be their primary activity. As such, 501(c) organizations by definition are engaged in extensive non-political activities that form their primary activity and establish their iden y (shown, for example, by the clearly identified interests of 501(c)(4) organizations such as the Sierra Club and the National Rifle Association). The sponsors have not explained why this iden y is not enough information for voters, and must be supplemented by delving into the organizations' sources of funds--especially when donations identified for use in political spending already must be disclosed.
This very effort to force disclosure of sources of funds raises serious cons utional concerns. The Supreme Court found in NAACP v. Alabama that the government could not compel these organizations to reveal their donors publicly; the only exception to this rule has been where the donation is given specifically for use in a political expenditure. The bill turns this presumption on its head--the new rule is that donations above a certain amount must be disclosed unless they are specifically excluded from use for political expenditures.
In an effort to avoid this cons utional limitation, the bill's authors create a new category or political en y with reporting obligations: the `Campaign Related Activity Account' (`CRAA'). Depending on a convoluted set of cir stances, the threshold above which disclosure is required may be $6,000 or $10,000 if an organization established a CRAA and $600 or $1,000 if it does not. In an effort to partially mitigate the new compliance burden of this system and slightly reduce the legal thicket one must navigate to comply with the campaign finance law, Representative McCarthy offered an amendment to set the disclosure threshold for organizations with a CRAA at the same level as the current threshold for itemized disclosure by political committees. This amendment was rejected on a party-line vote.
The most likely effect of this bill's disclosure regime is not to provide the public with useful information, but to impose still-higher compliance costs and deter political speech. Indeed, from the statements of the sponsors it appears that is precisely the intent. We commend attention to the detailed critique of this regime in the letter from eight former FEC commissioners that is part of the markup record. We also condemn the use of a salutary goal--disclosure of money spent to influence politics--to conceal an effort that is actually designed to stifle political speech for partisan gain.
The bill includes another attempt to stifle speech that masquerades as adding information for the public. The new `stand by your ad' requirement for organizations making political expenditures gives every appearance of being designed to restrict speech. The rule is modeled on one in BCRA for candidates. In a 2007 article, Bob Bauer (then a campaign finance lawyer for Democrats including candidate Barack Obama, now the White House Counsel) said of the BCRA rule, `this requirement makes sense only if its true use is clearly identified: to regulate the content of ads.' 4
[Footnote] Bauer argues that the disclosure provides no benefit to the audience, which assumes the ad is approved by the candidate who paid for it. Likewise, existing law will require the sponsors subject to this bill's `stand by your ad' rule to disclose that they paid for the ad, so there is no added disclosure benefit to the viewer.
[Footnote 4: `Disclosure in an Expanded Regulatory System,' 6 Election Law Journal 38, 45-46 (2007).]
On the other hand, the disclosures required in this bill are exceptionally onerous. The head of an organization paying for an ad must identify himself or herself by name and le and state the name of the organization twice. If there is a `significant funder' that person must also identify himself or herself by name and le and state the name of their organization three times. The result can be--in addition to the currently required disclosure of who paid for the ad--two names, two les, and no fewer than five recitations of organizational names. One could reasonably expect this to consume more than half of a 30-second ad, and our experiments show that indeed it does.
In the subs ute amendment offered by the majority there is a feeble attempt to mitigate this burden on speech by calling on the FEC to promulgate regulations to determine when the disclaimer cons utes a hardship by consuming a disproportionate amount of the ad's content. This is another example of the bill's politically-motivated sleight-of-hand--the disclaimer rule becomes effective 30 days after enactment, but this hardships exemption is not effective until the FEC issues regulations. Thus the exemption is likely to be nonexistent during the 2010 elections.
In his testimony before this Committee, former United States Solicitor General Theodore B. Olson said, `When we are going to restrict the ability of individuals in this country to speak and make it a crime if they get it wrong, we have a very solemn obligation to make it very, very clear.' This statement emphasizes the critical importance of campaign finance laws that are clear and easily understood--a standard this bill badly fails to meet. The Supreme Court has said `political speech . . . is central to the meaning and purpose of the First Amendment.' 5