A History of Blocking Spending Disclosures

In late April 2010, following the Supreme Court’s Citizens United decision, Senator Chuck Schumer (D-NY) introduced the Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act, which would have required publicly traded companies to disclose independent expenditures and electioneering communications to their shareholders.

While the measure passed the House, it died in the Senate, and subsequent attempts to reintroduce it or pass similar laws, such as the For the People Act, Democrats’ ambitious political reform bill, have also been stymied.

In September 2015, Hillary Clinton made corporate spending disclosure a plank of her failed presidential campaign, promising to compel publicly traded companies to disclose their political giving. Biden’s 2020 campaign went a step further, promising he would “end dark money groups” by barring 501(c)(4) social welfare organizations from spending to influence elections and forcing politically active nonprofits to disclose their donors. Those pledges were echoed in the 2020 Democratic platform.

The 2020 election cycle saw more than $1 billion in dark money spending — much of it going to support Democrats, who once in office, waited months before leading a half-hearted, doomed effort to overhaul election reform.

But even if Democrats were willing to really tackle the issue of corporate dark money, the federal agency in charge of such matters has long been hamstrung in what it can do on the subject.

Every year since December 2015, federal budget legislation has contained a provision prohibiting the US Securities and Exchange Commission (SEC), the federal agency tasked with regulating the securities markets, from developing any new rules pertaining to political spending.

For years, the agency didn’t appear eager to tackle the issue of corporate political spending anyway. President Barack Obama’s SEC chair Mary Jo White, as well as her Trump-appointed successor, Jay Clayton, took minimal action on the matter.

But that seemed to change when Biden nominated Gary Gensler, a Wall Street veteran who served on the Commodity Futures Trading Commission during the Obama years, for SEC chair.

At his confirmation hearing last March, Gensler suggested there was a growing demand among investors for a company’s political spending to be considered “material” to company business, and therefore need-to-know.

At the time, Democrats were trying to repeal the anti-transparency rider legislatively. Representative Andy Levin (D-MI) had introduced the Transparency in Corporate Political Spending Act in January 2021 as a standalone version of part of the For the People Act of 2021, the Democrats’ major election reform bill that also included the repeal. Levin had previously introduced the bill in February 2019.

As Democratic efforts at repeal have failed, Republicans have continually attached the SEC political disclosure ban to must-pass spending legislation, as they did with the recent omnibus bill. Democrats have effectively accepted the rider as the cost of keeping the government open.

Corporate Interests Are Keeping Their Dark Money Dark

Big business interests, meanwhile, have consistently lined up against efforts to compel political spending transparency.

In March 2019, the US Chamber of Commerce, many of its chapters, and other national, state, regional, and local lobbying groups submitted a letter to the US House of Representatives opposing the For the People Act. The letter singled out the DISCLOSE Act. Signatories included the American Forest & Paper Association, the American Petroleum Institute, and the American Bankers Association.

The National Right to Work Committee, a nonprofit that is leading a national fight for anti-union legislation, as well as the United States Telecom Association, which represents the telecommunications industry, also lobbied on the DISCLOSE Act last year.

The big-money network of oil tycoon Charles Koch has been particularly active in trying to keep its political operations completely obscure. At the federal level, the Koch network has been waging calculated warfare against both the DISCLOSE Act and the For the People Act. Lobbying disclosures reveal that Koch Industries’ lobbying arm hired the corporate law firm Akin, Gump, Strauss, Hauer & Feld to lobby on the bill in the second, third, and fourth quarters of 2021.

At the state level, Koch’s organizations have also been working for years to keep their dark-money operations secret. In 2014, Americans for Prosperity Foundation (AFPF) — the Koch political network’s charitable arm — sued the state of California over its requirement that nonprofit groups submit their Internal Revenue Service tax forms to state officials. AFPF argued that such requirements violated the First Amendment’s guarantee of free association. The case worked its way to the United States Supreme Court, which ruled in AFPF’s favor in April 2021, striking down California’s requirement.

In the wake of that ruling, Republican state legislators in a number of states began pushing bills to prevent state officials from compelling donor disclosure from political nonprofits, including in Arkansas, Florida, Iowa, Louisiana, Nebraska, Oklahoma, Tennessee, Utah, and West Virginia.

Several of those bills have similar language to a model from the American Legislative Exchange Council, a Koch-backed pay-to-play operation that serves as a channel for corporations to influence state legislators.

Corporate interests are winning their fight to keep dark money dark. Democrats’ new omnibus spending bill means that the SEC, with Gensler at its head, will once again be unable to do anything to compel disclosure by public companies to their shareholders of political spending for at least another year.