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Statement for the Record Lisa Rosenberg, Government Affairs Consultant

The Sunlight Foundation

Senate Committee on Rules and Administration Dollars and Sense: How Undisclosed Money and Post-McCutcheon Campaign Finance

Will Affect 2014 and Beyond

April 30, 2014 Mr. Chairman, Senator Schumer, Senator Roberts, members of the Committee, thank you for the opportunity to submit a statement for the record on behalf of the Sunlight Foundation. The Sunlight Foundation is a nonpartisan nonprofit that advocates for open government globally and uses technology to make government more accountable to all. We do so by creating tools, open data, policy recommendations, journalism and grant opportunities to dramatically expand access to vital government information to create accountability of our public officials. Our vision is to use technology to enable more complete, equitable and effective democratic participation. Our overarching goal is to achieve changes in the law to require real-time, online transparency for all government information, with a special focus on the political money flow, those who are trying to influence government and how government responds. Given that mission, we have a strong interest in ensuring that the Supreme Court’s call for robust disclosure of money in politics is satisfied, despite the many ways the Court has undone other pillars of our campaign finance laws. Unfortunately, despite the Court’s reliance on transparency to cleanse massive political contributions from their corruption influence, today’s laws are a far cry from the robust disclosure regime the Court seems to believe is in place. Congress must act to, at a minimum, uphold transparency—the last remaining pillar of our campaign finance system. The Sunlight Foundation endorses three proposals that would increase transparency: the Real Time Transparency Act, S. 2207 and H.R. 4442, would create a robust, real-time disclosure regime for large hard money contributions; the DISCLOSE Act would provide for disclosure of dark money contributions that are laundered through fraudulent social welfare organizations; and lobbying reform would ensure that the lobbying activities of the wealthiest interests making large hard money or dark money contributions are disclosed. While none of these legislative initiatives would undo the damage wrought by the Court, all are important to deter corruption and inform voters.

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Large “Hard Money” Contributions Must be Disclosed within 48 Hours The Supreme Court’s most recent assault to our campaign finance system came earlier this year, when the Court’s decision in McCutcheon v. Federal Election Commission (FEC) opened the door for a handful of wealthy individuals to give millions of dollars directly to the candidates and parties. The Court overturned years of jurisprudence deciding that the only type of corruption that exists is quid pro quo corruption, nothing short of buying votes for bags of cash. This Court naively believes that there is no corruption or appearance of corruption when candidates solicit five- and six-figure contributions and donors receive—at a minimum—the ear of elected officials in exchange for their generosity. With that narrow framework as its starting point, the Court lifted the overall limit (currently $123,200) on the amount individuals may gave to all candidates, PACs and parties. Thanks to the activist Roberts Court, a single individual can now contribute more than $3.5 million to a single party’s candidates and committees in a two-year period. A donor more interested in buying access and influence than partisanship could give $7.25 million to the candidates and committees of both major parties. By lifting the overall limits, the Court hands wealthy donors with a megaphone, simultaneously silencing everyone who doesn’t have the means to buy access and influence with a large check. In other words, this Court disregards the First Amendment rights of every US citizen except the tiniest handful of the super-rich—the 1% of the 1%. There is one way, however, to return a degree of power back to the citizens of the United States: Inform citizens of large contributions to candidates, parties and committees in real time. Knowledge is power, and disclosure is the last remaining constitutional tool that can be employed to empower citizens. The Real Time Transparency Act would mandate disclosure of all contributions of $1,000 or more to parties, candidates and political committees within 48 hours. It merely extends the current 48-hour notice rule in the Federal Election Campaign Act that applies to $1,000 contributions in the last 20 days prior to an election to provide for year-round disclosures. It would also mandate that Senate candidates electronically file their disclosure reports. The importance of immediate disclosure is not limited to the weeks before an election. It is necessary year-round to inform voters and let them determine whether and how they will react to large contributions. As the McCutcheon Court noted, “disclosure of contributions minimizes the potential for abuse of the campaign finance system. Disclosure requirements are in part justified based on a governmental interest in providing the electorate with information about the sources of election-related spending. They may also deter actual corruption and avoid

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the appearance of corruption by exposing large contributions and expenditures to the light of publicity.” (Emphasis added. Internal citations and quotations omitted.) The Roberts’ Court is mistaken—or disingenuous—if it believes that today’s campaign finance disclosure system is up to the task of exposing large contributions to the public in a timely manner. While the Court justifies lifting the caps on contributions in part because “reports and databases are available on the FEC’s Web site almost immediately after they are filed” it conveniently ignores the fact that current reporting schedules delay disclosure by as much as three months—even more for Senate candidates who do not have to file their campaign finance reports electronically with the FEC. The Real Time Transparency Act would be an important step towards providing citizens with information in a timely manner, so that they can decide whether and how to respond to a huge contribution given to their elected representative or candidate for federal office. Dark Money Contributions Must be Disclosed Four years ago, the Supreme Court first showed its willingness to undo laws designed to prevent corruption or the appearance of corruption in our political process, shattering a 100-year old precedent and dismissing the lessons of Watergate. In Citizens United v. FEC, the Court decided that unlimited contributions from corporations and wealthy individuals would not have a corrupting influence on our political system as long as they were independent from the candidates’ campaigns. We now know the results of that disastrous decision: the influx of over a billion dollars of unlimited, often dark money into the 2012 elections; the creation of a cottage industry of money launderers disguised as nonprofits in order to hide the contributions of wealthy individuals; an easy route for foreign money to slip into the U.S. political process; messages shaped by donors instead of candidates; and a disclosure system wholly incapable of making any of the secret money transparent. To inform the public and deter corruption in a manner consistent with the Court’s own findings, Congress must enact the DISCLOSE Act to create a disclosure regime that reflects the new reality of expanded independent spending. Specifically, the bill’s robust reporting requirements for super PACs, corporations, unions and nonprofit organizations that make independent expenditures and electioneering communications will begin to address many of the problems wrought by Citizens United: It will shine a light on dark money; it will provide an enforcement mechanism to ensure that no foreign money is influencing our political process; it will allow citizens to determine the

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credibility of campaign ads based on the messenger as well as the message; and it will arm citizens with information about campaign funding before they go to the polls, in real time and online. Lobbying Activities Must be Disclosed Perhaps the most damaging result of both Citizens United and McCutcheon is that the decision will provide a powerful tool—unlimited sums of money—that increase the ability of stealth lobbyists to purchase access and influence without any disclosure. Under current law, no disclosure is required of influencers if they spend less than 20% of their time lobbying on behalf of any one client. Under the Court’s new campaign finance regime, an elected official may solicit $500,000 or $1,000,000 from a single individual, giving that individual the opportunity to ask for help on his or her pet issue. Or, a stealth lobbyist can hint that a large, negative dark money ad buy may be in a politician’s future if the politician does not do the lobbyists’ bidding. If the individual doing the asking falls under the 20% loophole, there will be no disclosure, and no way for the public to determine whether access and influence is being purchased. Institutionalizing a class of secret wealthy power brokers will never create vigorous debate that is required of a well-functioning democracy. The Lobbying Disclosure Enhancement Act (H.R. 2339, 112th Congress) would enhance lobbying disclosure, but Congress has so far opposed efforts to close the 20% loophole. However, because of the dramatically and lasting influence wealthy donors have on public policy, the public is entitled to have stealth lobbying activities brought to light. Conclusion Because of the Roberts’ Court, average citizens have literally lost their voice in our political system to a handful of super wealthy special interests and individuals. While the Court may not be concerned about silencing the majority of citizens of this country, it has at least upheld citizens’ right to be informed, stating, “the First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Real- time disclosure of hard money, disclosure of dark money and disclosure of lobbying are important and minimally intrusive ways to inform the public ensure accountability where free speech and the functioning of our democracy intersect.