2014 Midterms: Transparency of Money in Politics Means Trust in Government, Trust in Citizens

Editor’s Note: As part of the 2014 Midterm Elections Series, Brookings scholars and outside experts will weigh in on issues that are central to this year’s campaigns, how the candidates are engaging those topics, and what will shape policy for the next two years.

Since the Citizens United decision, political spending by outside groups has been shaping voters’ opinions before Election Day and public policy afterwards.  Spending patterns that began after the 2010 decision will continue during the upcoming midterms: nonparty, outside spending will flow through two distinct pipelines—super PACs and politically active nonprofits. This time around there seems to be a partisan split to the spending, with Democrats leaning towards super PACs and Republicans relying more on dark money nonprofits. But whichever tool is used to funnel money into competitive races, imperfect or non-existent disclosure rules leave voters unable to determine whether access and influence is being sold to highest bidder.

Shining a brighter light on super PAC and nonprofit campaign spending would not cleanse the system of all of its corrupting influences, but it would help to restore citizens’ trust in government by eliminating the secrecy that makes voters believe their elected officials have something to hide. More disclosure would also result in the equally important outcome of demonstrating that government trusts us, its citizens, with information about how the influence industry works.   

When Thomas Jefferson wrote, “Whenever the people are well-informed, they can be trusted with their own government…whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights,” he certainly could not have conceived of secret money’s impact on elections and policy-making. But every year that goes by with Congress failing to address secret campaign spending challenges the founding father’s time-tested wisdom.

When the Supreme Court decided Citizens United, it was either willfully blind or sorely naïve about the state of political finance disclosure. Justice Kennedy swept aside concerns about the corrupting influence of unlimited political spending by claiming that, “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions. . . This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Unfortunately, no such prompt disclosure existed at the time, nor has Congress been able to pass any improvements to the transparency regime since then. In the case of super PACs, while information about donors must eventually be disclosed to the Federal Election Commission (FEC), disclosures can be delayed by up to three months.  This is not an inconsequential delay, especially when contributions come are in the multi-million dollar range.

There is even less disclosure by politically active nonprofits.  Their overall expenditures are only disclosed after the election in annual reports filed with the Internal Revenue Service (IRS). The donors to dark money groups may never be known, as the law does not require the names of donors to such groups to be disclosed. Yet more than 55 percent of advertising has been paid for by dark money groups, and 80 percent advertising benefitting Republican candidates has been paid for with undisclosed funds according to the New York Times. 

Congress and the executive branch have no shortage of methods to make money in politics more transparent, but have so far failed to demonstrate they respect voters enough to entrust us with that information.  The Real Time Transparency Act (S. 2207, H.R. 4442) would ensure that contributions of $1000 or more to candidates, parties and PACs, including super PACs, are disclosed within 48 hours. It would also require electronic filing of campaign finance reports.  The DISCLOSE Act, S. 2516, would disclose contributors to political nonprofits entrusting voters with information that currently is only known to the candidates who may benefit from dark money contributions. 

Affirmative congressional action would be the strongest signal that government trusts its citizens, but executive branch agencies can also take important steps to make political finance information more transparent. The IRS is in the process of reforming rules to better clarify when a nonprofit is a political organization and thus must disclose its donors.  The Securities and Exchange Commission can likewise modify its rules to require publicly traded companies to disclose their political activities.

Many large donors have gone to great lengths to take their political activities underground, claiming they fear attacks in the form of criticism or boycotts of their companies.  But just as participating in the political process through contributing to election efforts is an expression of free speech, so is criticizing such efforts.  Yet until campaign finance information is fully and quickly made public, the first amendment rights of voters and their ability to participate fully in our democracy are drastically shortchanged.