CAP Calls for Administration to Take Action through IRS, SEC, Federal Contractors

Center for American Progress: “”Specifically, CAP is calling on the executive branch to act in the following three areas:

  • IRS rulemaking on political activity by nonprofit organizations: Current regulations enable so-called dark-money groups to masquerade as 501(c)(4) “social welfare” organizations, thereby avoiding campaign finance disclosure laws. The IRS should clarify the rules for 501(c) organizations and should also tackle the problem of undisclosed political spending more directly by amending the regulations for Section 527 of the tax code. Rather than simply regulating dark money groups out of Section 501(c), the IRS should regulate those groups into Section 527 and thereby mandate public disclosure of donors.
  • Political activity by federal contractors: The executive branch should mandate further disclosure of political spending by federal contractors and should furthermore require those contractors take steps to ensure that they are not making impermissible federal political contributions.
  • SEC rulemaking: Currently, there is no rule requiring corporations to disclose political activity expenditures to their shareholders. The SEC should prioritize the development and implementation of a political activity disclosure rule. This corporate transparency would not only help to ensure that corporate spending is in line with shareholder interest, but it would also combat the problem of dark money.”

More information here.

FEC to Consider Loosening Rules on PACs to Draft Candidates

National Journal: “The current interpretation of the rules allows draft groups to raise funds for a specific prospective candidate, which would then be given to that candidate if he or she decides to run before the filing deadline for the race the draft group identified.

“Under the guidelines expected to be approved Thursday, the groups will have more options on what to do if their candidate doesn’t run. The rules would allow a draft group to promise would-be donors that if their preferred candidate doesn’t enter the race, the money would then go to a second candidate. For example, they could say that if Warren doesn’t run, the money would instead go to Sen. Bernie Sanders. The new rules would also give the groups more leeway to set deadlines for their candidates to enter the race.

“The new rules would also allow groups to raise money for a candidate who fits certain criteria. Specifically, a group could raise funds for ‘the first female president,’ which would go to the eventual party nominee should the nomination go to a woman.”

Groups Push to Tighten, Loosen SEC Limits on State Contributions

Wall Street Journal (12/28): “The rule effectively prohibits certain employees of financial-services companies that do—or might do—business with state agencies from contributing to the officials who oversee those agencies. The rule, adopted in 2010, was intended to prevent political contributions from influencing state contracting decisions.

“Critics say the SEC rule’s effectiveness could be blunted in 2016 by the rise of super PACs, which can raise money without contribution caps but can’t coordinate with or give to candidates’ campaigns, as well as politically active nonprofit groups. In particular, they point to the increasing number of super PACs that form to support only a single candidate. Critics argue that a contribution to a group that spends money on behalf of a single candidate is akin to giving to the candidate.

“Others say the SEC rule should be eliminated, not expanded, with some noting that it creates an advantage for members of Congress, who aren’t subject to the rule, over governors in campaign fundraising. Some states have rules that are even more restrictive than the SEC’s.”

CA City Council to Vote on Expanding Ethics Commission’s Power

East Bay Express: “The second prong of a plan by city Councilmember Dan Kalb to increase transparency and accountability in City Hall calls for the council to approve the Oakland Government Ethics Act. The act would give the ethics commission the power to enforce a new, sweeping set of ethics rules in the city. The council is scheduled to hold a final vote on the act on December 9.

“As strange as it sounds, the Oakland Public Ethics Commission (PEC), created by city voters in 1996, has never had the authority to actually enforce ethics rules, in part because Oakland didn’t have a comprehensive set of regulations like other cities do. Instead, the PEC has focused mostly on political campaign reporting violations, local open-meeting violations, and other issues. However, the PEC lacked the staff and authority to actually do anything about those violations when it found evidence of them.

“Measure CC, a city charter amendment, changed that aspect of the PEC. It mandated that the city council, beginning on July 1 of next year, increase the PEC’s budget from about $300,000 a year to about $750,000 a year so that the commission can hire four additional full-time staffers. Currently, the PEC only has a budget for two full-time staffers — not enough to effectively investigate campaign finance and open-meeting laws.”

“But not included in Measure CC was a comprehensive set of ethics rules. And that’s where the Oakland Government Ethics Act comes in. Drafted by Kalb and a working group of good-government advocates and co-sponsored by City Attorney Barbara Parker, the act would give the PEC the power to enforce new rules that ban so-called revolving-door and pay-to-play politics and limit the value of gifts that politicians can receive from lobbyists and other special interests.”

Three Steps the FCC Could Take to Improve Disclosure of Ads, Funding Sources

The Hill: “Yet, currently, the FCC is allowing TV station owners to ignore their statutory obligations to reveal the “true identity” of the sponsor of an ad.

“The Campaign Legal Center, Common Cause and the Sunlight Foundation, represented by the Institute for Public Representation at Georgetown Law, filed complaints against stations that during the 2014 campaigns failed to include the true identity of ad sponsor even though that information was readily available to the station. These complaints are pending. In the aftermath of the Citizens United decision, dark-money spending on ads is expected to explode in the next presidential election, so it is even more important for the FCC to update sponsorship identification rules.

“Another area ripe for action is for the FCC to finish its proceeding on getting the political files online. TV stations have been required to maintain these files, which include information about ad costs and buys, and to make them publicly available as a means of ensuring compliance with rules governing ad rates for candidates and access to the airwaves. Responding to petitions filed by the Campaign Legal Center and other members of the Public Interest Public Airwaves Coalition, the agency now requires all television broadcasters to upload their political files information to a FCC database.

“But broadcasters are continuing to drag their heels about providing the information in the online political files in a database format with standardized fields. Instead, they insist on filing “pdf’s.” Thus, the information in the political file is not sortable or searchable; instead, analyzing and understanding the data involves an enormous undertaking, going through each pdf and “scraping” the information to try and make sense of it. So the FCC’s job on this issue is not done.

“Lastly, the FCC should require cable, satellite and radio to also place their political files online. While most political ads air on broadcast TV, the number of ads on these other outlets is growing significantly as campaign consultants attempt to reach specific segments of voters that can be targeted more easily through these media. The Commission is currently considering a proposed rule but has yet to send it out for public comment.”

The IRS or SEC Could Help Reduce Dark Money

This piece ties the two trends of relaxing campaign finance limits and disclosure laws and tightening voter id laws and explores potential solutions from the IRS and SEC

Salon: “What if Washington, D.C., adopted a comprehensive disclosure law? In 2010, Congress came within one vote of overcoming a party-line filibuster to pass the DISCLOSE Act. Since then, the need for improved transparency has only grown more urgent and it’d be nice if the Republican Congress would adopt a donor ID law. (Don’t hold your breath, said Demos’Liz Kennedy.)

“Better to lay your bet on the Securities and Exchange Commission, which is supposed to protect shareholders and the “integrity of the markets.” It could issue a rule requiring publicly traded corporations to disclose political spending to shareholders.”

“Or maybe the taxman could help. The Internal Revenue Code does not require nonprofits organized under section 501(c)4 or 501(c)(6) to disclose their donors to the public. Yet, the Bipartisan Campaign Reform Act calls for exactly those groups to disclose their donors when they run “issue ads” that mention a candidate. Confusing? You bet! The law and the code don’t match up and things get even muddier when you factor in other federal agencies. As this chart demonstrates, the tangled web of campaign finance is enough to give even an offshore banker a migraine.

Bloomberg View Calls for Obama, IRS to Change Rules to Distinguish Political Activities

Bloomberg View: “President Barack Obama, who’s pretty good with words himself, could easily order the IRS to change its language. That would help curb the influence of dark money, political contributions that are shielded from public view, which amounted to some $200 million in 2014 – most of it spent on negative advertisements.”

“The IRS has been studying how to tighten its rules for nearly a year and is expected to release a proposal early in 2015. Returning to the statute’s “exclusively” standard is not a feasible solution: That would eliminate tax exemptions for nearly all large nonprofit organizations, from hospitals to universities. So the goal must be a rule that prohibits such organizations from engaging in campaign-related activity.”

“That’s no easy task, but it can be done. Obama should direct the IRS commissioner, John Koskinen, to draw bright lines between social-welfare organizations and political committees, so that the latter cannot dress up as the former. This also would allow the IRS to spend less time policing political spending, work for which it is spectacularly ill-suited.”