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June 01, 2013

Follow the Money Act would close campaign finance loopholes

The ABA is supporting legislation introduced in the Senate that would address loopholes in existing federal election campaign law that often leave independent spending exempt from public disclosure.

S. 791, the Follow the Money Act of 2013, is a bipartisan effort by Sens. Ron Wyden (D-Ore.) and Lisa Murkowski (R-Alaska) and is the first attempt for bipartisan campaign finance reform in more than a decade, according to the sponsors.

Announcing introduction of the bill, Murkowski said, “A majority of Republicans, Democrats, and Independents were concerned over the role of big money and secret donors in the last election, proving this is not a partisan issue.” She added that this is “an issue about having the best-informed voters possible.”

In the Supreme Court’s 2010 decision in Citizens United v Federal Election Commission (FEC), 588 U.S. 310 (2010),  the Supreme Court ruled that corporations, labor unions, and other such organizations are protected from government restrictions on political spending by the First Amendment’s free speech clause. A few months later, the court let stand an appeals court decision in v. FEC, No. 08-5223, D.C. Cir. 2010, which ruled that independent political action committees (PACs) could accept unlimited contributions.

The rulings have reduced campaign finance transparency because certain nonprofit groups, known as 501(c)(4)s, are not required by law to disclose their donors. These 501(c)(4)s can give unlimited amounts to PACs as a result of Citizens United, and these PACs can accept unlimited amounts due to the Speechnow ruling and then in turn spend those funds on elections. The result is that the original donor is not subject to the same disclosure requirements as donors who give directly to a PAC or a candidate.

The Follow the Money Act of 2013 would create a simple and universal system of disclosure for all players in the independent spending arena, according to the sponsors. The bill would expand requirements for regulation and disclosure for independent spending in federal campaign while also increasing the threshold for amounts that must be itemized by candidates and PACs in their FEC reports.

The act also would strengthen disclosure requirements by broadening the definition of independent expenditure from expenditures made on advertising to any expenditure made to influence an election (not in coordination with a candidate). The bill also would increase disclosure by creating an online reporting system and requiring use of this system to report expenditures in real time.

On April 25, ABA Governmental Affairs Director Thomas M. Susman sent a letter to Wyden and Murkowski commending them for sponsoring S. 791.

“The American Bar Association has long been concerned with campaign finance and electoral issues and is a strong supporter of transparency in the political process,” Susman wrote.  “The overriding premise of these efforts has been to support candidate and citizen participation in the electoral process and increase public confidence through accountability and disclosure.”

Susman explained that the bill is supported by recent policy adopted by the association urging Congress to enact “uniform disclosure rules for all entities that spend on elections.”

In related action, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing in April to discuss gaps in enforcement of existing campaign finance laws. The hearing focused on the distribution of authority between the Department of Justice (DOJ) and the Internal Revenue Service (IRS) in handling campaign finance law violations. 

During the hearing, subcommittee Chairman Sheldon Whitehouse (D-R.I.) and Sen. Ted Cruz (R-Texas) disagreed about what needs to be done regarding the enforcement of campaign laws in the future.                  

Whitehouse favored stronger prosecution of existing laws, saying that the Department of Justice was “constrained by the policy of its deference” to the IRS. Cruz, on the other hand, expressed concern that too much government involvement in policing elections would impede on the First Amendment right to free speech, arguing that “citizens are due all the influence they can get.”


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