Russian dolls are an attractive toy for children — peel back the layers of wooden figurines until the smallest doll is revealed. But imagine a campaign finance system in which the identity of political donors is shielded from public knowledge. Peel back the layers of this doll and rather than learning who is financing a political advertisement, all you get is the name of a benign-sounding group. Such is the state of disclosure laws today, which were made worse after the influx of new money allowed by Citizens United. The DISCLOSE Act of 2012, being considered today by the Senate Committee on Rules and Administration, goes a long way to remedy this problem — as Brennan Center testimony illustrates.
Under the current iteration of the FEC’s disclosure rules, politically active nonprofits (usually organized under section 501(c)(4) or (c)(6) of the tax code) can easily hide the identities of their donors. And, while Super PACs must reveal their contributors, they may receive unlimited donations from these dark groups. Thus, many — if not most — Super PACs now operate with an affiliated nonprofit to give camera-shy donors a means to contribute large sums of money without public scrutiny. Not surprisingly, the Center for Responsive Politicsfound that thus far during the 2012 election cycle, at least five Super PACs received almost allof their funding this way.
The DISCLOSE Act would plug this loophole. Under the bill, major donors — those who have contributed more than $10,000 to a group spending money on campaign ads during an election cycle — must be named in public reports to the FEC. Indirect campaign spending, called “covered transfers,” must also be reported. And what of disclaimers? Federal disclaimers currently identify only the funding organization. Now, picture the Yellow Pages if it permitted fake names and addresses — useless. One New York Times reporter found that the “Coalition to Protect Seniors” identifies itself as an address at a Mail Boxes Etc. store in Wilmington, Delaware. Similarly, the Sunlight Foundation foundthat “Citizens for Strength and Security,” which spent nearly $3 million in 2010 to benefit Democratic candidates, lists only a UPS store on M Street in Washington.