Congress should follow Delaware’s lead on disclosure

{mosads}Today, Governor Jack Markell signed the Delaware Elections Disclosure Act, a law which corrects a longstanding loophole—one all too common in state disclosure schemes—that allows third party groups to evade disclosure requirements merely by avoiding use of so-called “magic words” such as “vote for” or “vote against” in their ads. Now any group that mentions a candidate’s name in an ad right before an election must disclose the names of its contributors who donate $100 or more.

According to Governor Markell, until now, Delaware’s laws “have not kept pace” with the realities of campaign spending. Since Delaware adopted its existing disclosure laws in 1990, the state has “seen big increases in third-party spending on elections and major changes in how the Constitution has been interpreted with regards to campaign spending.”

The new law also requires third-party ads to include “Paid For By…” disclaimers with links to Delaware Election Commission campaign finance reports, so that  voters can easily access more information about the sponsors of advertisements. This innovative solution helps expose speakers who prefer to cloak themselves in misleading names and dupe voters. For example, in 2007, a group called Littleton Neighbors Voting No spent $170,000 opposing a local ballot initiative preventing Wal-Mart from doing business in Littleton, Colorado. But no Littleton neighbors in fact contributed to that campaign—Wal-Mart (which is from Arkansas) funded the effort in its entirety. Delaware’s unique disclaimer requirement will allow voters to quickly identify those responsible for political ads.

Delaware is the 22nd state to beef up its disclosure requirements since Citizens United green lighted corporate and union independent spending and gave rise to unlimited spending by Super PACs and nonprofit organizations.

It’s no mystery why states have taken action: Citizens United included an unambiguous endorsement of the constitutionality of and necessity for disclosure. By an 8-1 vote, the Supreme Court embraced the notion that “prompt disclosure can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters” and allow voters to “see whether elected officials are in the pocket of so-called moneyed interests.” Recognizing the new ways for outside groups to spend in the post-Citizens United world, states have protected their elections by mandating transparency.

But where many states have succeeded, the federal government has failed. Though Super PACs get the most attention from the media, the problem with disclosure lies with nonprofit organizations, which were never intended to be political entities at all. Senate Republicans have twice filibustered the DISCLOSE Act, which would correct the problem, citing bogus claims. The always-ineffectual FEC, which is charged with enforcing election law, has made matters worse by ignoring federal law and requiring groups to disclose only those donors who specifically earmark their contributions for political advertisements. Meanwhile, the IRS has shirked its duty to monitor tax-exempt orgs, by failing to set clear rules for how much of their budgets nonprofits can direct towards political activity, allowing groups like the Chamber of Commerce to use the tax code to shield donors.

Inaction by the federal government has taken its toll, as nonprofits have become the preferred vehicle for outside spending. During the 2010 election nonprofit “social welfare” organizations—which do not disclose their donors—outspent Super PACs—which do—by a 3-2 margin. During the current election, two nonprofit organizations—Karl Rove’s Crossroads GPS and the Koch brothers’ Americans for Prosperity—have spent more on television ads than all Super PACs combined.

The worst part about federal inaction on disclosure is that it discourages states from doing more to stop anonymous spending. Though states like Delaware have been proactive in updating their disclosure law after Citizens United, few have been willing to adopt more comprehensive laws than those in effect at the federal level. Even Delaware’s important and necessary improvements largely mirror the disclosure system adopted by Congress when it passed McCain-Feingold in 2002. Though states can and should go further, few will until the federal government leads the way. The time for action is now. 

Backer is research associate at the Brennan Center for Justice at New York University School of Law