Democrats Take Aim at ‘Dark Money’ With Eye on Midterm Elections

(Bloomberg) -- Congressional Democrats are taking another run at regulating so-called dark money in politics with a bill that would require groups that spend money to influence elections to disclose the source of their funds -- an issue the lawmakers plan to take beyond Capitol Hill and into the fall campaign.

Senator Sheldon Whitehouse of Rhode Island and all 48 of his Democratic colleagues introduced the measure Wednesday. A House version, sponsored by Representative David Cicilline, also of Rhode Island, garnered 147 supporters.

No Republican in either chamber backed the measure, and its chances for passage before the November midterm elections are slim. But the Democrats plan to use the bill as a progressive theme.

Since the 2010 U.S. Supreme Court ruling that allowed corporations to spend unlimited sums to influence elections, nonprofit groups that don’t disclose their donors have spent $746 million on federal races, according to the Center for Responsive Politics, a research organization.

Five Ways the Supreme Court Transformed Campaign Finance

Under the “Citizens United” ruling, known as almost any organization can spend unlimited amounts of money to support or oppose candidates for office, provided they don’t coordinate with a campaign. Federal contractors, national banks and foreign nationals are still barred from spending, though current disclosure rules can make it nearly impossible for regulatory bodies to find out who contributes to outside groups.

Following the Money

Whitehouse said in an interview that the legislation, called the Disclose Act, would end that. “Whether it’s a fossil fuel billionaire or whether it’s a Putin oligarch, American voters will know who’s supporting their candidates,” he added.

The measure would require all groups that spend $10,000 or more on elections to provide the names of their donors to the Federal Election Commission. That would include disclosure of the owners of limited liability corporations that contribute to politically active organizations.

Supporters of the bill say that Russian influence in the 2016 election could galvanize support for the measure, which has been introduced in every Congress since 2010.

“It shouldn’t take secret money from foreign nations to prod transparency,” said Lisa Gilbert, vice president of legislative affairs for Public Citizen, an advocacy organization that opposes corporate influence. “But now that we are in just that crisis, the bill deserves a hearing, attention and passage.”

Under one of the bill’s provisions, American subsidiaries of foreign corporations couldn’t contribute to super PACs and other organizations that spend on elections. The subsidiaries could, however, continue to have political action committees that are financed by donations of employees. As under current law, those PACs would have to be controlled by American citizens, not foreign owners or executives.

SEC Role?

The legislation would also give the Securities and Exchange Commission the authority to require publicly traded companies to tell shareholders about their political spending. The Center for Political Accountability, which advocates for consumer transparency, said there are 109 members of the S&P 500 that voluntarily provide information about their donations to the type of nonprofit organizations, which are the biggest vehicle for spending undisclosed contributions in elections. Another 43 S&P members have barred contributions to such groups.

Politically active nonprofits that maintain separate accounts that aren’t used for politics could still keep donors to them anonymous.

The bill would extend “stand by your ad” provisions that require political candidates to state their names and that they approve their advertisements, to outside spenders as well. Leaders of super PACs and nonprofits, including trade associations like the U.S. Chamber of Commerce and nonprofit groups like the League of Conservation Voters would have to voice their approval the ads they place.

Senator Ron Wyden, an Oregon Democrat, who wrote that provision, said the bill would ”ensure all Americans know the real interests behind them.”

Whitehouse said identifying those interests was important: “People get the joke when they can see the motive of who’s behind the smear ad.”

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