October 14, 2010

Schotland on the DISCLOSE Acts Shortcomings

Below is a guest post from Roy Schotland, based upon a comment that will appear in volume 20, issue 3 of the Cornell Journal of Law and Public Policy, in a symposium on Citizens United (footnotes omitted, and reprinted with permission):

    The DISCLOSE Act's flaws are so significant that they must be noted, even if briefly. (Only major flaws in the bill's 112 pages are noted here, and they are not listed in order of importance.)

    1. The bill is remarkably loophole-laden. It naively (astonishingly so) includes among "covered organizations" only three kinds of 501(c) organizations, ignoring obviously available alternative routes for funds, e.g., 501(c)(19):

      "A post or organization of past or present members of the Armed Forces of the United States, or an auxiliary unit or society of, or a trust or foundation for, any such post or organization..."

    Imagine how many veterans' organizations will form and at once become conduits for campaign funds. Also, what of readily available non-501(c) entities like partnerships and trusts, and even for-profit corporations to which contributions could be tax-deductible? See Donald B. Tobin, Political Advocacy and Taxable Entities--are they the next loophole?, 6 First Amendment Law Review 41 (2007) and 26 C.F.R. 1.501(c)(19)-1.

    2. The bill flatly bars corporations from any independent campaign spending if they have federal government contracts worth $10,000,000 or more. By itself, that would bar all sizable corporations but leave unions free to exploit the deregulation brought by Citizens United--reversing more than 60 years of treating corporations and unions together for campaign finance purposes. Perhaps such a reversal should occur, but that provision is utterly beyond disclosure. How ironic that a bill aimed at transparency hides behind a false facade, which happened because the bill deviated to pursue partisan goals. I'm a Democrat too, but...

    That the non-disclosure provisions were completely separable was made explicit when the sponsors admitted, after the bill had been blocked in the Senate on September 23, that they (the sponsors) had told "Senators Snowe and Collins that they were prepared to change the bill to strip it down to the disclosure provisions..." (emphasis added)

    3. The sponsors evidently seeking to get a bill whatever the cost, infamously exempted the NRA from being covered by the new requirements. That move drew such hostile reactions that the exemption was broadened to include any organization of "at least 500,000 individuals who paid membership dues during the previous calendar year." (Sec. 211(c)(27)(B) of H.R. 5175, at 59). But: Don't we want voters to know when the NRA or Sierra Club or XYZ funds a campaign ad? On the other hand, if we don't need disclosure from the major players, do we need --can we even justify-- imposing on smaller organizations the burdens of reporting? The smaller the organization and the larger the burden, the greater the chill on their participation, i.e., on their speech.

    4. Where disclosure is required, the requirements are unworkable: e.g., requiring reports not merely by spenders but also by the bill's "deemed" spenders, entities that are actually donors which will not have the information they are supposed to report.

    5. Desirable as disclosure is and even if reporting involved no burden at all, there is such a thing as too much disclosure. The bill's threshold for which donors would be required to report started at $600 "in an aggregate amount ... in a calendar year" (Sec. 211(a)(5)(A)(ii)(I)--and as that citation surely indicates, this bill is complex!). Professor Briffault (Forthcoming in the Election Law Journal) describes perfectly why too much disclosure is counter-productive:

      [M]assive disclosure ... threatens to inundate us in a sea of useless data, while potentially distracting attention from the big donors whose funds play a more meaningful role in understanding a candidate ... The educational value of knowing about [the amount of the support] is tied, albeit loosely, to the fraction of a campaign's war chest attributable to that donor... [T]argeted disclosure aimed at the largest [supporters] would sharpen the public's focus ... [And] the reports come fast and furious as Election Day approaches...

Posted by Rick Hasen at October 14, 2010 08:31 AM