In an era of skyrocketing election spending, corporations have the ability to secretly spend millions of dollars on politics. Demand for information about corporate political spending has increased among investors and the general public in the years since Citizens United was decided. A new Brennan Center for Justice report details the extent of the problem of anonymous political expenditures and advocates for a viable solution. The Securities and Exchange Commission should issue regulations requiring publicly traded companies to include information about their political spending in their mandatory disclosures.
Introduction
American elections are awash in cash as never before. Spending in the 2012 presidential election will shatter all historic records, as will spending in Congressional races. But the most significant money won’t be in the candidates’ campaign coffers. The money transforming contemporary elections is that flowing into — and being spent by — outside groups that are legally independent of the candidates. Many of these outside groups are able to raise funds in unlimited amounts from wealthy individuals, unions, and corporations.
As the law stands today, corporations and unions can spend unlimited amounts of money in order to influence the outcome of elections. If individuals, unions, or corporations choose to spend political money directly — by producing television advertising and buying air time, for example — they must publicly disclose the expenditures and their contributors. But it is easy to evade such disclosure by simply routing political contributions through intermediary groups that purchase the ad time. The end result is that wealthy individuals, corporations, and unions can spend millions on political advertising to influence voters’ choices at the ballot box, without disclosing this spending to the public.
After the Supreme Court decided Citizens United v. FEC, Americans were outraged at the invitation extended to corporations to spend unlimited sums to influence elections. But in addition to expanding corporations’ ability to make political expenditures, Citizens United strongly approved of disclosure requirements. The court emphasized the importance of such disclosure, explaining that through it “[s]hareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
Unfortunately, a disclosure regime that would accomplish these goals did not exist at the time Citizens United was decided. Nor does it exist now: more than two years after Citizens United, Congress has done nothing to improve our nation’s disclosure laws. The DISCLOSE Act of 2012, which would have required groups spending more than $10,000 during an election cycle to identify donors of more than $10,000, was filibustered in the Senate.
But the failure of Congress to act does not necessarily mean that Americans’ calls for accountability in political spending must go unanswered. Instead, the Securities and Exchange Commission (“SEC”) can take action, having both the authority and the responsibility to protect shareholders and the public by mandating the disclosure of political expenditures by publicly-traded corporations. Indeed, one of the SEC commissioners, Luis Aguilar, recently came forward in support of disclosure rules and urged the full Commission to act. The rest of the Commission should follow his lead.
In an era of skyrocketing election spending, corporations have the ability to secretly spend millions of dollars on politics. Demand for information about corporate political spending has increased among investors and the general public in the years since Citizens United was decided. A new Brennan Center for Justice report details the extent of the problem of anonymous political expenditures and advocates for a viable solution. The Securities and Exchange Commission should issue regulations requiring publicly traded companies to include information about their political spending in their mandatory disclosures.