Getting Foreign Funds Out of America’s Elections

Russia-linked political ads on every major internet platform. The alleged flow of Russian money to the NRA. The Trump campaign’s solicitation of donations from foreign sources. Reports that Robert Mueller is investigating whether Russian oligarchs funneled money into the 2016 campaign. Each of these has broken as a separate news story, but in one important sense, they all belong to one same thread: Our country’s longstanding ban on political spending by foreign actors is in tatters.

This report is the first comprehensive package of campaign finance reforms to address the threat of foreign spending in American elections. It shows that platforms like Facebook, Twitter, and Google are just a few of the many conduits hostile states can use to circumvent the ban on foreign political spending. And it lays out a roadmap that Congress, states and the social media companies can follow to proactively protect the integrity of our democracy from political spending.

INTRODUCTION

In the months leading up to Election Day in 2016, a hostile foreign power attacked the United States with a multifaceted campaign designed to influence the election. Among other things, this election interference included covert Russian spending on online political ads designed to sway public opinion. In February, a grand jury indicted 13 Russian nationals and three business entities with ties to the Kremlin for their part in this effort. Their scheme relied on internet ads to fuel divisive con­troversies, drive attendance at rallies held in the U.S., and attempt to influence the outcome of the presidential election. Yet even after the indictment, we still do not know the full extent of Russia’s online influence effort.

The menace is only likely to intensify in upcoming election cycles. The 2018 Worldwide Threat Assessment of the US Intelligence Community, presented to Congress in February, predicted that Russia will “continue using propaganda, social media, false-flag personas, sympathetic spokespeople, and other means of influence to try to exacerbate social and political fissures in the United States.” We must also be ready for potential copycat interference from other states like China, Iran, or North Korea, or even non-state terrorist groups like ISIS.

Regardless of whether it affected the outcome of the election, the Kremlin’s activity represents a threat to national security and popular sovereignty — the exercise of the American people’s power to decide the course their government takes. Yet despite the decades-old federal ban on foreign spending on elections, 21st century upheavals — namely the rapid development of the internet and the drastic deregulation of campaign finance — have created huge weaknesses in the legal protections against foreign meddling. These loopholes must be closed to make the ban work as intended.

There are three key areas where American elections are most vulnerable to political spending directed by foreign powers: the internet, dark money groups that do not disclose their donors, and corpora­tions and other business entities with substantial foreign ownership.

The first vulnerability stems from the quick rise of the internet as a mass medium and the failure of regulation to keep up. As the amount of time Americans spend online has jumped, so has the impor­tance of the internet as a medium for political advocacy. Campaign spending online has increased dramatically; the $1.4 billion spent online in the 2016 election was almost eight times higher than in 2012. It’s not surprising that foreign powers would look to the internet to meddle.

Russia’s interference in the 2016 election provides a stark illustration. The Kremlin’s operatives bought online ads through fake accounts whose owners pretended to be Americans, and messages from the fake accounts were seen by hundreds of millions of people in the United States. The ads appeared on all the major internet platforms, including Facebook, Gmail, Google’s search engine, Twitter, and YouTube. There is reason to believe that what has been revealed to date is just the tip of the iceberg.

The second key weakness comes from the ability of some political spending groups to hide their donors’ identities. These dark money organizations have flourished since a series of Supreme Court rulings invalidated many campaign finance regulations and the Federal Election Commission (FEC) has become dysfunctional due to partisan stalemate.

While there is currently no public evidence that Russia violated the ban on foreign national spending by illegally directing funds to dark money groups, the FBI is reportedly investigating whether a Rus­sian banker with ties to President Vladimir Putin used the National Rifle Association’s dark money arm to secretly spend on the 2016 election. It remains to be seen whether the scheme existed. But as a general matter it would be naïve to think that the power behind a large online influence campaign like Russia’s wouldn’t be willing to use other spending avenues like dark money to spend on elections — in the near future, if not already.

Third, corporations and other business entities are currently allowed to spend on American elections even when their owners would be prevented from doing so by the foreign spending ban. There are various examples of foreign nationals using domestic companies to engage in secret election spend­ing. In fact, the St. Petersburg “troll farm” indicted for its online election interference was organized as a business corporation. And recent revelations about Cambridge Analytica, a company that alleg­edly made improper use of user data from Facebook in its political consulting work, raise the question of whether its election activity was directed by its corporate parent, the British firm SCL Group, or foreign employees.

This report offers practical solutions to make it far more difficult for any foreign power to engage in political spending in American elections in each of these three areas. All these reforms are permissible under current Supreme Court doctrine. Most importantly, the Brennan Center recommends lawmak­ers take the following steps:

• Update political spending laws for the internet with the framework used for television and radio ads requiring disclosure of funding sources and explicitly banning foreign spending for ads that mention candidates before an election.
• Eliminate dark money by requiring any organization that spends a significant amount on elections to disclose its donors.
• Extend the ban on foreign spending to domestic corporations and other business entities that are owned or controlled by foreign interests.
• Invigorate enforcement in all these areas by reforming the Federal Election Commission.        

Members of Congress have introduced bills that incorporate some of these policies. In this paper, we make recommendations that can bolster their proposals, offering the first comprehensive framework to defend against the threat of political spending by foreign powers in American elections.

To be sure, the 2016 election showed that American elections are vulnerable to foreign manipula­tion in other ways, beyond expenditures on political ads. The Brennan Center has already detailed the reforms needed to protect against hacking and other attacks on election infrastructure in a prior report. The Russian propaganda campaign also made extensive use of free posts on social media as well as paid ads. But, as the February indictment shows, paid ads were a lynchpin for the scheme, driving new audiences to unpaid content.

Although the danger of interference by foreign governments is our primary motivation, the reforms we propose address expenditures by all foreign nationals, meaning all foreign citizens (including corpora­tions they control) other than lawful permanent residents living in the United States. This is the line American law has drawn to protect U.S. sovereignty for 50 years.

This report focuses on federal policy, but state governments should also act. State elections warrant similar protections to those we recommend at the federal level. And large states have the potential to set de facto nationwide standards for internet companies, analogous to the way California’s environ­mental regulations have induced companies to change their behavior nationwide.

The private sector also has a role to play through voluntary action. Even if Congress and the states fail to act, internet companies can and should voluntarily adopt the policies we recommend for legisla­tion, such as maintaining a public database of all online political ads. Private action would be most effective if the platforms come together to agree on industry-wide standards. In April, Facebook announced it would take steps to verify advertisers’ identities, among other changes, but such reforms are piecemeal at best, revocable at worst.

Nevertheless, if the ban on foreign election spending is to continue to have meaning, reforms by the government are necessary. The attacks by the Kremlin make that clear. As Sen. John McCain has noted, it is “more important than ever to strengthen our defenses against foreign interference in our elections.” Former CIA Deputy Director Michael Morell and former House Intelligence Commit­tee Chairman Mike Rogers (R-Mich.) have advocated for deterring election meddling, including social media spending, with “policies that prevent adversaries from achieving their objectives.” Most recently, Republican members of the House Intelligence Committee issued a summary conclusion of their Russia investigation that recommended improvements in “campaign finance transparency.”

In this report, we offer a comprehensive set of reforms that answers these calls to strengthen America’s defenses against foreign powers spending on political messages.