[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
H.R. 5175, THE DISCLOSE ACT, DEMOCRACY IS STRENGTHENED BY CASTING LIGHT
ON SPENDING IN ELECTIONS
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HEARING
before the
COMMITTEE ON HOUSE
ADMINISTRATION
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
Held in Washington, DC, May 6, 2010
__________
Printed for the use of the Committee on House Administration
Available on the Internet:
http://www.gpoaccess.gov/congress/house/administration/index.html
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COMMITTEE ON HOUSE ADMINISTRATION
ROBERT A. BRADY, Pennsylvania, Chairman
ZOE LOFGREN, California, DANIEL E. LUNGREN, California,
Vice-Chairwoman Ranking Minority Member
MICHAEL E. CAPUANO, Massachusetts KEVIN McCARTHY, California
CHARLES A. GONZALEZ, Texas GREGG HARPER, Mississippi
SUSAN A. DAVIS, California
ARTUR DAVIS, Alabama
Jamie Fleet, Staff Director
Victor Arnold-Bik, Minority Staff Director
H.R. 5175, THE DISCLOSE ACT, DEMOCRACY IS STRENGTHENED BY CASTING LIGHT
ON SPENDING IN ELECTIONS
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THURSDAY, MAY 6, 2010
House of Representatives,
Committee on House Administration,
Washington, DC.
The committee met, pursuant to call, at 11:03 a.m., in room
1310, Longworth House Office Building, Hon. Robert A. Brady
(chairman of the committee) presiding.
Present: Representatives Brady, Lofgren, Capuano, Gonzalez,
Davis of California, Lungren, McCarthy, and Harper.
Staff Present: Khalil Abboud, Professional Staff; Darrell
O'Connor, Professional Staff; Victor Arnold-Bik, Minority Staff
Director; and Katie Ryan, Minority Professional Staff.
The Chairman. The hearing of the Committee on House
Administration will come to order. Today we will hear testimony
on H.R. 5175, Democracy Is Strengthened By Casting Light on
Spending in Elections Act. This bipartisan legislation was
introduced on April 29th and a nearly identical version was
introduced in the Senate by Rules and Administration Committee
chairman, Chuck Schumer, of New York.
This is the second time that the committee has held
hearings to address the Supreme Court decision in Citizens
United. During the first hearing, we heard from campaign
finance experts on how the decision will open the flood gates
of unregulated money into the political system. While there may
be many disagreements on the Court's decision, I am confident
that we all agree that the American people deserve to know who
is attempting to influence American elections.
That is why I am pleased that H.R. 5175 focuses on
increasing transparency and strengthening our disclosure of
political spending by all groups. The Watergate scandal of 1970
taught us a lot about secret campaign cash. Anonymous donations
permitted corporations to funnel large sums in cash to
candidates despite an existing ban on corporate contributions.
Instead, our Federal disclosure laws have been strengthened
to prevent Federal election officials from taking advantage of
unreported donations and political spending. Campaign
disclosure laws are effective, have bipartisan appeal, and by
an 8 to 1 vote were upheld by the Supreme Court in Citizens
United as constitutional.
The DISCLOSE Act recognized that the American voters are at
a minimum entitled to full and accurate reporting of campaign
spending so that voters may know who is attempting to influence
their vote. Disclosure laws expose corruption, alert voters to
who is behind the candidate on valid measures, and help to
ensure that other campaign finance laws are being followed.
In addition, H.R. 5175 will improve transparency by
requiring the CEOs, union presidents, and top donors to stand
by their ad instead of funneling money through sham
organizations.
Americans deserve honesty from those seeking to influence
elections and legislation. They deserve to know that the drill
here, drill now ad is funded by BP, not citizens concerned
about Gulf Coast wetlands.
I am also pleased that the DISCLOSE Act will close some
glaring loopholes left open by the Citizens United decision,
loopholes that threaten to corrupt our democracy. These
loopholes must be closed so that well-funded special interests
are not elevated over the American people.
H.R. 5175 will prevent government contracts and entities
receiving TARP funds from spending money on elections.
Corporations should not be using taxpayers' money dollars to
influence the election of those in a position to distribute
those resources. And a ban on election spending will protect
those government contractors who simply do not want to get
involved in the pay-to-play politics.
H.R. 5175 will also close the loophole that would allow
foreign corporations from influencing American elections
through foreign controlled U.S. subsidies. Foreign countries
should not be able to elect our leaders or decide our policy.
Our national security depends upon it.
I am also pleased that this bill has bipartisan and popular
support. Since I have been chairman on this committee, the
committee has never heard from so many concerned citizens since
the Citizens United decision came down. According to numerous
polls, 8 out of 10 Americans are concerned about the decision's
impact on our democracy. The American people expect us to act
and act we will. Our democracy should be and by for the people,
not special interests.
And I thank our panel for being here today. I look forward
to your testimony.
I would now like to recognize the ranking member, Mr.
Lungren, for any statement that he may have.
Mr. Lungren. Thank you very much, Mr. Chairman. I thank you
for this and I know we are going to have another hearing on
this matter. I might say, Mr. Chairman, I have appreciated the
bipartisan spirit with which you have conducted this committee
and the work that has been done with both of our staffs on most
issues. Unfortunately, this is not one of them.
It is more than irony that the title of the bill before us
is Democracy is Strengthened By Casting Light on Spending in
Elections, because I believe democracy is strengthened by
casting light on the legislative process. Despite my request to
have a cooperative spirit on this and despite my earnest desire
to work on a bipartisan basis on this, our two letters to the
leadership on the Democratic side asking for cooperation on
this and asking if we could work on a bill to respond to any
legitimate concerns was met by silence for more than a month.
I love the word ``bipartisan'' in reference to this bill
when in fact a couple of members on my side of the aisle, not
on this committee, were contacted by the authors of this bill
and were instructed not to give copies of the bill to anybody
on the Republican side on this committee. And being men of
their word, they did not. And so the idea that we are here in a
real effort to shine the light on the political process is
overwhelmed by the fact that there was a refusal to shine light
on the legislative process. Why did we have months of work
behind closed doors with the refusal to even acknowledge
letters that we had sent out and in fact instructions that
anybody on our side of the aisle who might have seen it were
not to show any part of the suggested legislation to members of
this committee on the Republican side. This is, however, the
authorizing committee or the committee of jurisdiction in this
matter. So it is disappointing.
I didn't also realize I was going to hear an opening
statement that was going to refer to things as wide ranging as
offshore oil drilling and Watergate. I guess we ought to be
ready for everything here today.
Mr. Chairman, this legislation is troubling. It is
troubling because we are dealing with a crucial part of the
Constitution, the First Amendment and the essence of the First
Amendment free speech protection, which is political speech.
Mr. Chairman, I have not had as much experience as Mr.
Olson has presenting cases before the U.S. Supreme Court. But
for 8 years of my life, I spent a good deal of time preparing
briefs, editing briefs, overseeing presentations to the U.S.
Supreme Court. The California Department of Justice appears
before the U.S. Supreme Court perhaps more than any other
entity other than the Solicitor General's Office. I had the
opportunity to argue a case before the Supreme Court. I
understand how important words are, phrases are in context,
particularly when you are dealing with an essential part of our
Constitution. And I would argue, Mr. Chairman, that the First
Amendment dealing with free speech, particularly as it affects
political speech, is as important as any other part of our
Constitution. And it seems to me it ought to have the highest
degree of discernment, the highest degree of light, and the
highest degree of consideration by this panel and the Congress
at large.
So I do thank you for having the hearings, but I must
register my disappointment in the manner in which this has been
presented. Senator Schumer and Mr. Van Hollen are outstanding
representatives of your side of the aisle. They have led your
political operation on your side of the aisle, one of whom
continues to do that, and it is more than ironic that they
would be the ones to take the lead on this bill.
In an April 29th political article, Senator Schumer stated
that unions should be treated the same as corporations, no
more, no less. If you are going to do these ads, you shouldn't
be exempt no matter who you are. Well, if we are going to try
and find some substantial way of restricting political speech--
and I say if we are going to--I would agree with that
statement. But this legislation does not follow that standard
whatsoever. It does not even come close.
The sections of the bill dealing with government
contractors and TARP recipients exclude unions. I believe also
media corporations. So they are making a distinction in the
bill before us between media corporations and other
corporations, which the Supreme Court directly dealt with in
their opinion. They said you can't do that. And yet we are
bringing a bill here before us that does exactly what the
Supreme Court told us we could not do.
This legislation punishes businesses with more onerous
mandates at a time when we need a thriving marketplace and
business environment to help people find meaningful work. If
you happen to have a government contract for a good or service,
you will now need to make sure it is not over an arbitrarily
set limit. This legislation would punish American subsidiaries
of companies that may have a percentage of foreign ownership.
The voices of American citizens working for those U.S.
subsidiaries would now be eliminated.
As Nancy McLernon, President of the Organization for
International Investment, an organization which represents U.S.
Subsidiaries, stated, the legislation chips away at the
political rights of 5 million American workers who collect over
$400 billion in paychecks from the U.S. subsidiaries of
companies based abroad or in-sourcing companies.
I have got to ask this question. If we do this, what
precedent does this set for foreign governments? We do have
American companies working in foreign countries. Are those
governments now going to have the opportunity to bring criminal
sanctions against American companies who complain about laws
that are directed against them by these foreign countries?
I mean, we ought to understand what we are doing and how we
may be advancing along a road which is going to harm American
businesses doing international work, and that directly affects
American jobs at a time when small businesses across this
country are being forced to lay off employees. I have an
employer in my district that laid off 75 employees immediately
after the health care bill was passed as a direct result of the
health care bill. They have hundreds of employees that are now
at risk. But yet we go blithely on our way passing legislation
and not being concerned on the impact of employees. And now we
are going to have our employees worried about the threat of
perjury and litigious requirements.
As one former FEC Chairman has stated, the First Amendment
says Congress shall make no law abridging the freedom of
speech. Not Congress should protect some speech, but feel free
to hyperregulate the political speech of businesses and
nonprofits.
Mr. Chairman, in all my years in Congress, I have yet to
ascertain what the full definition of campaign finance reform
really means. The goalposts frequently change. We are now
frequently here for voting about the corporate takeover of our
elections. I would like the help of this committee to be able
to identify the people who ran suppression--voter suppression
ads against my district in the last election. But we don't do
that sort of thing here.
I find these ominous warnings intriguing. Are corporations
the real enemy? Which ones, the big corporation, the small
corporation, the medium corporation, the one you agree with or
I agree with or I disagree with? The ones that happen to be in
disfavor with the government today but may be in favor of the
government tomorrow? Is money the real enemy since many
reformers support taxpayer funded campaigns?
Mr. Chairman, our Republic has always had free, open, and
robust debate. We have had a robust political culture. We all
have had our complaints about the media, I guess, but the media
and mediums change, the right of political speech does not and
should not.
As Justice Kennedy wrote in his majority opinion, rapid
changes in technology and the creative dynamic inherent in the
concept of free expression counsel against upholding a law that
restricts political speech in certain media or by certain
speakers.
Today, 30-second television ads may be the most effective
way to convey a political message. Soon, however, it may be
that Internet sources such as blogs and social networking
websites will provide citizens with significant information
about political candidates and issues.
The First Amendment does not permit Congress to make these
categorical distinctions based on the corporate identity of the
speaker and the content of the political speech.
Mr. Chairman, the bill before us is 84 pages long. That is
27 pages longer than the decision it seeks to change. It adds
to the lengthy restrictions already in place. There are now
apparently 33 specific types of political speech needing
regulation, 71 different types of speakers and statutory and
regulatory edicts totaling more than 800 pages. The FEC has
issued more than 1,700 advisory opinions since its creation in
1976. I don't believe campaigns and elections should be this
complicated.
Mr. Chairman, with all due respect, this bill should really
be called the Distract Act. It is a distraction. It is a
distraction from what we should be doing. What we should not be
doing is regulating what can be spent on disseminating
political speech. We should not be trying to control the
quantity, the content, or the timing of political speech. The
government has no right deciding what the proper quantity of
political speech is meant to be.
This bill requires by its new disclosure in some cases for
a 30-second ad where 14 seconds will have to be the disclosure.
Is that chilling speech? I think it is. You take up over half,
over half of the time of the commercial with a disclosure.
As one Justice wrote, the amendment--speaking of the First
Amendment--is written in terms of speech, not speakers. Its
text offers no foothold for excluding any category of speaker,
from single individuals to partnerships of individuals to
unincorporated associations of individuals to incorporated
associations of individuals.
Mr. Chairman, I would just say we need a vibrant and
healthy campaign in our political process. We need civility in
the way we conduct ourselves. We need transparency in the way
we conduct our campaigns. We do not, however, need to stifle
speech, and we surely don't need any more indecipherable
regulations attempting to do so.
The last thing I would say is this, as someone who has
practiced law for nearly 40 years, this system is set up such
that people who otherwise would be positively affected by the
decision of the Supreme Court will have their free speech
rights chilled. Why? Because we have let in this bill as it
stands, a litigation process which is going to be more extended
than that which is allowed under current law for campaign
rules, And it will mean that, much like Mr. Bossie's
organization, who presented to the FEC in 2008 a request and
got their decision by the Supreme Court nearly 2 years later,
it will basically mean that people will be put under the threat
of civil and criminal penalty if they make the wrong decision
with respect to a subsequent judgment by the Court.
That is not the essence of the First Amendment. The essence
of the First Amendment is to allow as much speech as possible.
Some I don't like. I don't like some Supreme Court decisions
that have allowed what I consider to be pornography out in the
public square, yet that is what they have decided with respect
to the First Amendment.
Political speech ought not have less protection than
obscenity, and I am afraid that what we have done in this bill
in an effort to try and alter a Supreme Court decision without
the cooperation of our side of the aisle, without looking at
the constitutional questions inherent here, without being
concerned about the underlying protection of free and fair and
open speech, that we have gone down the wrong path.
Thank God the writers of the Federalist papers didn't have
to worry about this kind of legislation or the great
pamphleteers during the period of time of our Revolution. They
would have found themselves subject to King George.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. Anybody else care to
make an opening statement?
Ms. Lofgren.
Ms. Lofgren. Mr. Chairman, thank you all. I will be brief
because I want to hear our witnesses. I do want to thank you
for holding this hearing today.
When I read Justice Kennedy's opinion, I will be honest, I
didn't agree with it. But so what? It is the Supreme Court. It
is the decision. We have got to deal with it and I very much
accept that, the rule of law. So as I read through the
decision, I was actually heartened to see the reliance on the
opportunity for disclosure to remedy some of the concerns I had
in reading the decision, and I think the bill before us goes a
long way in that regard. Obviously we are having a hearing to
see if improvements can be made. But I think disclosure was
really what the Court looked at, and it is really what this
bill does.
I would like to just note--I mean, you can never legislate
on the basis obviously of a poll, but I will say that the
public is with us on this one. Recently there was a poll on
what people thought about Citizens United and the ability of
corporations to have unlimited expenditures in the political
arena. 85 percent of Democrats oppose the ruling, 76 percent of
Republicans oppose the ruling, 81 percent of Independents
oppose the ruling. And I think the reason is this: We have a
history that goes back--I am from California. I remember one
time as an undergraduate there was a move that the trustees
vetoed to make our school mascot at Stanford the Robber Barons.
Certainly we are familiar 100 years ago with the kind of role
that money played in politics, and it is not something that
people want to go back to.
I have a number of questions. I had some other ideas on how
to approach some of these issues. I have not yet introduced a
bill, but I am looking forward to getting some thoughts really
of a very distinguished panel on some other possibilities. And,
Mr. Chairman, I believe you think that this hearing is very
important. And I thank you and I yield back.
The Chairman. I thank the lady. Mr. McCarthy.
Mr. McCarthy. Thank you, Mr. Chairman, and thank you for
calling this important hearing. This bill's supporters have
been using the phrase ``sunlight is the best disinfectant.'' I
think this bill can benefit from a little sunlight itself, and
this hearing is a first step.
While both Senator Schumer and Representative Van Hollen
commented that this bill will cover unions as well as
corporations and trade associations, it seems they were
conveniently left out of a key portion of the legislation.
For example, union members' annual dues don't generally
meet the $600 threshold required for reporting. Unions
representing government employees have the same conflict
concerns as government contractors, but those unions are left
out of the bill. There are many international unions who raise
the same concerns over foreign influence that the bill claims
to address, but those unions are not affected by the bill. The
author of this legislation would want to say that this bill
treats everyone equally, but they have cherry-picked what
provisions they want to apply to their supporters and which
provisions it would just be more convenient for their campaigns
if they ignore it.
Plain and simple, this legislation is an incumbent
protection bill that is intended to stop speech. Why else would
independent expenditures and electioneering communications be
held to higher standards than even candidate ads are for the
disclaimer and stand-by-your-ad portion of the bill?
The Democrats who introduced this legislation do not want
individuals or groups to have the same opportunity to speak
that Members of Congress do or, for that matter, unions do. For
all practical purposes, unions have been carved out of this
legislation.
Mr. Chairman, we had an opportunity to work bipartisanly
here in a way that brought about meaningful reform that still
protects the First Amendment rights of the American people.
Instead, we reached out repeatedly to our colleagues on the
other side of the aisle in hopes of crafting a solution that
would be able to garner wide bipartisan support but shut out
the process of drafting this bill, and looking at this
legislation, it shows.
I look forward to hearing the testimony of our witnesses
today and hope that they can shed some more light on the
legislation we have before us. Again, I thank the chairman. And
as my colleague from California said, maybe she was drafting a
bill of her own. Once again, the minority on this side of the
aisle will reach out and look to draft legislation not based
upon campaign committees but based upon real policy that
protects the American people. And I yield back.
Ms. Lofgren. Would the gentleman yield? I would look
forward to working with you. I have not yet decided whether to
introduce a bill, but I would look forward to working with you.
Mr. McCarthy. Well, I appreciate that and I would gladly
introduce a bill.
The Chairman. I thank the gentleman. Any other opening
statements?
Mr. Harper. Mr. Chairman.
The Chairman. Mr. Harper.
Mr. Harper. Thank you, Mr. Chairman. As Mr. Lungren pointed
out earlier, I have to begin by noting that the bill at 84
pages is actually longer than the 57-page court opinion it
seeks to overturn, but this bill is about much more than
disclosure. And I certainly think well enough of my colleagues
on the Democratic side to believe that this bill cannot really
be what they intended. And I would like to offer a few examples
if I may.
As a result of section 102, American-based companies
apparently now are going to be prevented from creating PACs,
limiting the voices of their American employees and
shareholders. And any time any corporation makes a donation,
the CEO of that company is going to have to file certification
with the FEC, even if it appears that that donation is to a
charity and has nothing to do with an election.
Under the coordination rules proposed by the majority in
sections 103 and 104, a candidate could be found to have
coordinated and campaign-related spending based solely on the
content of the communication without ever having had any
interaction or knowledge or contact with the group making the
expenditure.
Now, if union dues are going to be treated under this bill
as donations and payments subject to the reporting and
disclosure requirements in sections 211 and 212, union members
who don't agree with their leadership may have to affirmatively
refuse to allow their union dues to be used for campaign
purposes every time they get a paycheck. That would also mean
that union leaders would have to send certification letters
every paycheck to those members assuring them that their dues
will not be used for political activity.
Furthermore, the required disclaimer language for
television commercials in section 214 is so long that it could
easily take up a group's entire ad time. It even appears that
some ads will require two separate stand-by-your-ad disclaimers
from different people. This confusion and ambiguity would be
bad enough in any bill, but it is especially bad here.
This bill has implementing language that makes it take
effect 30 days after enactment, regardless of whether the FEC
has published its regulations. That means there will be no
guidance to clear up this ambiguity, no instructions for how to
comply and no way to participate in the political process with
confidence that your speech will not land you in jail.
Those who seek to challenge this bill's ambiguity and
potentially unconstitutional provisions in court are going to
be faced with a judicial review process that will be designed
for delay and frustration. The procedure in this bill conflicts
with the processes created in both the Federal Election
Campaign Act and the Bipartisan Campaign Reform Act, opening
the door to collateral litigation to decide what court to be in
before this case is even heard.
It appears that section 401 is congressional forum
shopping. The only conclusion one can draw from the immediate
implementation without regulatory guidance and the protracted
court process is that this bill was designed to affect the
outcome of the 2010 elections and protect the majority's
incumbencies.
Mr. Chairman, I echo the sentiments of my colleagues, Mr.
Lungren and Mr. McCarthy, when I say that I had hoped that we
could work together on this bill. There is common ground on a
number of these issues, but this bill does not even attempt to
reach it.
I hope that our panel here today will be able to speak to
some of these concerns that I have raised, and I look forward
to their testimony. Thank you, Mr. Chairman. I yield back.
The Chairman. I thank the gentleman. We have to take a walk
for about an hour. We have got three votes on the floor. Rather
than introduce the panel and make you stop, I would rather
introduce you and let you continue to speak. You look pretty
comfortable. I hope that you are. We should be back in about 45
minutes.
We have three votes on the floor. Again, we have to recess
this hearing until approximately 45 minutes. My colleague
reminds me to remind you there is a cafeteria in the basement.
We wouldn't mind your patronage, And you can bring me back a
decaf if anyone chooses to.
Thank you.
[Recess.]
The Chairman. I would like to call our hearing back to
order. And again, thank you for your patience. And I would like
to introduce our panel.
First we have Donald Simon. Mr. Simon represents a number
of campaign finance reform organizations and is an expert on
campaign finance and election law issues. Prior to his work on
his current firm, he spent 5 years as Executive Vice President
and General Counsel of Common Cause, directing the
organization's legislative and legal programs.
Nick Nyhart is Co-Founder and President of Public Citizen,
a nonprofit organization dedicated to campaign finance reform.
Prior to serving as President of Public Citizen, Mr. Nyhart was
national field director and deputy director for the
organization.
Theodore B. Olson. Mr. Olson is a partner at Gibson, Dunn &
Crutcher. Mr. Olson was also lead counsel for Citizens United
during the Citizens United v. FEC case before the Supreme
Court. Prior to his work with the firm, he was Solicitor
General of the United States, as well as Assistant Attorney
General in charge of the Office of Legal Counsel in the United
States Department of Justice.
Ms. Lofgren. Mr. Chairman, would you yield for just one
moment for Mr. Olson?
The Chairman. Yes, I will.
Ms. Lofgren. I have a meeting with the Speaker at 12:30. I
may not get the chance to thank him for his pro bono effort on
gay marriage in California. It really is something I
appreciate, and I wanted to take this opportunity to thank him
for that.
Mr. Olson. Thank you very much.
Ms. Lofgren. I thank you, Mr. Chairman.
The Chairman. You are welcome.
David Bossie. David Bossie is the President of Citizens
United. Prior to working at Citizens United, Mr. Bossie served
as chief investigator for the United States House of
Representatives Committee on Government Reform and Oversight,
as well as investigator for Senator Faircloth's special Senate
campaign to investigate Whitewater Development Corporation.
Lisa Gilbert, the rose amongst the thorns. Lisa Gilbert is
a Democracy Advocate with U.S. PIRG, the federation of State
public interest research groups. Ms. Gilbert works on measures
to make government more transparent and elections more fair, as
well as accessible. Prior to joining U.S. PIRG, Ms. Gilbert
worked with the Fund for the Public Interest, where she ran
large citizen outreach campaigns.
Dr. Craig Holman. Mr. Holman is a Legislative
Representative for Public Citizen. Mr. Holman assists in
drafting campaign finance reform legislation and conducts
numerous research projects on the impact of money in politics.
In addition, he has been called upon to assist as a researcher
and/or expert witness defending in court the bipartisan
Campaign Reform Act of 2002 as well as the campaign finance
reform laws of various States. Previous, Mr. Holman was Senior
Policy Analyst at the Brennan Center for Justice.
I thank you all for being here and I would ask you if you
would just push your button and pull that mic a little closer
to you, and we would hope that you would have your statements
reach 5 minutes because I am sure we have questions, you may
have to elaborate something you may have missed, and we will
also accept any statements for the record.
Mr. Simon.
STATEMENTS OF DONALD J. SIMON, GENERAL COUNSEL, DEMOCRACY 21;
NICK NYHART, PRESIDENT AND CEO, PUBLIC CAMPAIGN; THEODORE B.
OLSON, PARTNER, GIBSON, DUNN & CRUTCHER, LLP; DAVID N. BOSSIE,
PRESIDENT, CITIZENS UNITED; LISA GILBERT, DEMOCRACY ADVOCATE;
AND CRAIG HOLMAN, GOVERNMENT AFFAIRS LOBBYIST, PUBLIC CITIZEN
STATEMENT OF DONALD J. SIMON
Mr. Simon. Thank you, Mr. Chairman. I appreciate the
opportunity to testify this morning on behalf of Democracy 21
on the DISCLOSE Act that was introduced last week in response
to the Citizens United decision. The legislation provides
Congress with the opportunity to mitigate some of the
destructive impact of Citizens United, which has opened the
door for corporations, labor unions and other organizations to
flood Federal elections with special interest money and thereby
to buy influence over government decisions with potentially
massive campaign expenditures.
The DISCLOSE legislation is fair and equitable and not
partisan in its impact. The bill applies alike to corporations,
labor unions, trade associations, and nonprofit advocacy
organizations across the political spectrum. At the heart of
the legislation are comprehensive new disclosure requirements
that will provide for prompt public disclosure of campaign-
related spending by corporations and other covered
organizations.
Importantly, these reporting organizations are required to
identify the sources of the funds they use for campaign
spending. This essential provision is necessary in order to
ensure that public disclosure of campaign-related spending is
effective, that the money used to influence Federal campaigns
cannot be hidden behind conduits, intermediaries or front
groups used to mask the true source of funds.
But the legislation is also fair to donors. Under the
legislation, any donor to any organization can restrict the
donated funds from being used for campaign spending. And if so,
the donor will not be subject to any disclosure requirement.
Thus, whether the donor's identity is disclosed or not is fully
within the donor's control.
Now, there was discussion earlier from Mr. Lungren and
others about the constitutionality of these provisions, and I
want to address that.
Dating back to the Buckley decision more than 30 years ago,
the Supreme Court has consistently endorsed the principle that
the public has an important interest of constitutional
significance in knowing about expenditures being made to
influence election campaigns and about the sources that are
providing the funds used for such expenditures. In upholding
similar disclosure laws in the McConnell case, the Supreme
Court by an 8 to 1 majority took note of spending done by
generically named front groups such as Americans Working for
Real Change or Citizens for Better Medicare. And with reference
to those challenging the constitutionality of new disclosure
rules that would unmask the sources behind what the Court
called these dubious and misleading names, the Court said,
``plaintiffs never satisfactorily answer the question of how
uninhibited, robust and wide open speech can occur when
organizations hide themselves from scrutiny of the voting
public.''
Indeed, the Citizens United decision itself, after it first
opened the door to corporate spending, then strongly reaffirmed
the constitutionality of laws which require the disclosure of
money spent by corporations to influence Federal elections.
The Court in Citizens United, again by an 8 to 1 majority
that included 4 of the 5 conservative justices, the Court
rejected the argument that disclosure requirements chill the
exercise of First Amendment rights. Disclosure requirements,
the Court said, ``impose no ceiling on campaign-related
activities'' and ``do not prevent anyone from speaking.'' The
Court held that disclosure of campaign-related spending serves
an important governmental interest ``in providing the
electorate with information about the sources of election-
related spending.''
The Court recognized that 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.''
The Court also squarely rejected the argument that only
expenditures containing the expressed advocacy or its
functional equivalent can be subject to disclosure
requirements.
Finally, I want to note that there has always been strong
and broad bipartisan support on Capitol Hill for full and
timely disclosure of campaign spending. Even the most vocal
congressional opponents of other campaign finance measures have
argued that disclosure is the one reform that makes sense.
For instance, as we quote in our written testimony, Senator
McConnell, who was second to none in his opposition to campaign
finance reform, said on national TV a few years ago that
Republicans are in favor of disclosure and disclosure, he said,
needs to be ``meaningful'' and ``real.'' With regard to a bill
that at the time addressed spending by 527 groups, Senator
McConnell said, ``and so what we ought to do is broaden the
disclosure to include at least labor unions and tax-exempt
business associations and trial lawyers so that you include the
major political players in America. Why would a little
disclosure be better than a lot of disclosure?''
On that at least Senator McConnell was right, a little
disclosure is not better than a lot of disclosure. And what
this legislation provides is comprehensive disclosure,
disclosure that includes corporations and labor unions and
trade associations and other groups now empowered by the
Citizens United decision to spend their Treasury funds on
Federal campaigns. And disclosure by them that--to use Senator
McConnell's terms--would be meaningful and real. Republicans
who have supported disclosure in the past should support the
disclosure rules in this legislation.
In his radio address last Saturday, President Obama
strongly endorsed this legislation. The President said that in
the wake of Citizens United, ``what we are facing is no less
than a potential corporate takeover of our elections and what
is at stake is no less than the integrity of our democracy.
This shouldn't be a Democratic or Republican issue. This is an
issue that goes to whether or not we will have a government
that works for ordinary Americans, a government of, by, and for
the people. That is why these reforms are so important.''
We agree. The public is entitled to know whose money is
behind campaign-related spending and, ensuring there will be an
effective answer to this question, this legislation serves as
an important protection to safeguard the integrity of the
democratic process.
We urge you to act quickly to enact the DISCLOSE Act so it
can be effective in time for this year's elections. Thank you
very much.
[The statement of Mr. Simon follows:]
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The Chairman. I thank the gentleman.
Mr. Nyhart.
STATEMENT OF NICK NYHART
Mr. Nyhart. Thank you very much, Chairman Brady. Ranking
Member Lungren and distinguished members of the committee, I am
appreciative of the opportunity to give testimony today.
I am Nick Nyhart, the President and CEO of Public Campaign
actually, not Public Citizen, although my colleague, Craig, may
invite me over to his side. We are a nonpartisan organization
dedicated to changing the role of money in elections in a way
that expands democracy in a public campaign. Our major Federal
policy focus has been on the Fair Elections Now Act, which is
Representative Larson's bipartisan legislation that offers
candidates an alternative way to fund their campaigns, relying
on small donations and limited public funds.
But I am here today to support a different piece of
important legislation, the DISCLOSE Act. The DISCLOSE Act is a
critical response to the Supreme Court's recent decision in
Citizens United that throughout decades of common sense
practice limiting the influence of corporate and using Treasury
funds in our elections. That decision, coupled with the
skyrocketing cost of running for office, has made a bad
situation worse.
In my written testimony, I have provided my reasons for
supporting the bill and suggestions that I believe will
strengthen it.
As I sit here today in front of you, I cannot help but use
another example that is unfolding on our TV screens nightly,
mentioned by Chairman Brady, that illustrates why this bill is
so important. Over the last few weeks, Americans have watched a
human ecological and economic tragedy unfold in the Gulf with
tens of thousands of gallons of oil pouring into the ocean off
our Gulf Coast. We have all come to understand that the cleanup
of this disaster will take years. As children, we are all
taught that we are responsible to clean up our own messes.
Right now, oil companies like BP have their liability on a
mess like this one capped at $75 million. Experts say this is a
drop in the ocean, so to speak, compared to the actual cost of
lost jobs, damage to the environment, increases in energy
prices, and changes in the way of life throughout the Gulf
Coast.
Legislation called the Big Oil Bailout Prevention Act has
been introduced in both Chambers to increase oil company
liability from $75 million to $10 billion, and I know Mr. Davis
on the committee is a leading cosponsor of the House measure.
Our political system, given the Supreme Court's recent
decision, allows companies like BP to spend their Treasury
money to influence elections. What would stop BP, a foreign-
owned corporation, facing the projected penalty of a $10
billion cleanup bill from spending $10 million or $50 million
or even $100 million or more to elect candidates who--it is
simple math to see that their financial interest is in spending
maybe $100 million to save as much as $10 billion. The DISCLOSE
Act prevents foreign-owned corporations from doing that, and
that is one reason it should pass.
But the oil industry as a whole would certainly think that
there for the grace of God go I. Executives at Exxon Mobil and
others like Citizens United will have the chance to spend
political money from their treasuries also and do it in secret
unless this passes. DISCLOSE will make the identities of those
behind the acts public, in some cases requiring that companies'
executives take personal responsibility for the ad.
Public disclosure is an important principle here that will
give voters more information as they make decisions knowing
that an attack ad is paid for by a big oil company with a
vested interest in who wins an election and certainly provides
an essential perspective on the, quote-unquote, facts by a
group that might officially be called something like Americans
for Jobs, Health, and Security.
Transparency will help stop further erosion of our public
trust in corporations and in our government. And even when
DISCLOSE passes, oil companies will remain political actors,
funding campaigns of Members of Congress. The oil and gas
industry as a whole has given nearly a quarter of a billion
dollars, and that is why we also need a fair election system,
so candidates don't need to chase oil industry checks to pay
for their campaigns.
In this past month, we have seen plenty of stories about
campaign fund-raising alongside the Senate debate on financial
regulation. Wall Street is spending money to shape policy. The
full list of other big money issues on the table is a long one.
In conclusion, neither DISCLOSE with its many provisions
nor the Fair Elections Now Act alone address the entirety of
these problems. But together they can make a big difference.
That is why today I urge your support of DISCLOSE that will
improve our political system for American voters.
Thank you.
[The statement of Mr. Nyhart follows:]
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The Chairman. Thank you.
Mr. Olson.
STATEMENT OF THEODORE B. OLSON
Mr. Olson. Mr. Chairman, Ranking Member Lungren, and
members of this committee, I appreciate also the opportunity to
speak today in connection with H.R. 5175, the DISCLOSE Act. I
should say and I think your introduction--thank you, Mr.
Chairman--suggested this. I have studied and litigated
constitutional issues throughout my 45-year legal career both
in private practice and in government. This has included nearly
8 years of service in the Office of Legal Counsel and the
Solicitor General's Office in the Department of Justice, the
two divisions of the Department of Justice most responsible for
constitutional questions, and I have argued 56 cases in the
United States Supreme Court, many of which had to do with
constitutional questions, including seven cases involving the
First Amendment, the right to free speech. I now represent and
advise the United States Chamber of Commerce with respect to
constitutional questions, including this act.
The First Amendment declares that Congress shall make no
law abridging the freedom of speech. Justice Thurgood Marshall
explained for a unanimous Supreme Court that this
constitutional protection has its fullest and most urgent
application to speech uttered during a campaign for political
office. The reason is simple, the right to self-government is
unattainable without vigorous and uninhibited public debate
about the qualifications and positions of persons seeking
elective office.
An essential component of the right to free speech is that
government may not discriminate against speakers on the basis
of their identity, their ideas, or their ability to speak.
Political speech may not be stripped of its First Amendment
protection on the basis of a speaker's wealth, point of view or
special interest or because the Speaker's interests are
represented by a trade association, an affinity group, a union
or a corporation.
The Supreme Court's decision in Citizens United did not
effect a revolution in First Amendment jurisprudence. In fact,
it reaffirmed the central principle of the First Amendment,
that free and unfettered political speech, whether we like it
or not, whether it is popular or not, and whether it is
supported by polls or not, is at the very core of our system of
government.
I respectfully submit that the DISCLOSE Act shares many of
the same unconstitutional characteristics as the legislation
invalidated in Citizens United.
I will focus today during these oral remarks on only three:
One, its far-reaching restrictions on the speech of companies
offering services to our government; that is to say, government
contractors; two, its discriminatory prohibitions on the speech
of persons based upon their national origin or citizenship;
and, number three, its onerous and discriminatory disclosure
requirements for corporations or unions that wish to speak out
on behalf of the interests of their members, their shareholders
or their employees.
First, the bill would prohibit speech on matters of vital
interest to those who invest in or work for tens of thousands
of government contract corporations. This type of wholesale
criminalization of speech can only be tolerable in the
narrowest possible context if there were documented evidence
that speaking out about candidates for high public office was a
serious source of quid pro quo corruption of Federal office
holders.
There is no evidence before this body that this is or would
be the case with government contractors' independent,
uncoordinated commentary on office holders or candidates for
election. Indeed, more than half of the States, including
California, Florida, Maryland, Oregon, Virginia and Washington
and many more impose no restrictions at all on corporations'
independent expenditures. Yet there has been no showing that
these States' political systems are awash in corporate
corruption.
The constitutional flaws in making it a felony for
government contractors to express opinions on who shall run our
government are compounded by the provision's discriminatory
application. The application operation of this prohibition
exempts labor unions and media corporations. The First
Amendment will not tolerate selective bans on public speech
based upon the identity of the speaker. That is a certain path
to tyranny. There is no limiting principle to such
discrimination. Who are we to pick out to say who can speak and
who cannot speak? Would we prohibit speech by those who accept
Federal housing assistance or public benefits or other benefits
that the Federal Government offers?
Second, this bill's restrictions on persons on the basis of
their nationality or citizenship are prohibited by the
Constitution and intention with scores of Federal statutes that
explicitly prohibit such national origin discrimination.
It seems to me ironic that at the very time that so many
political commentators are denouncing as discriminatory the
effort by Arizona to enforce Federal prohibitions on illegal
immigration, Congress might simultaneously adopt a measure that
would abridge the freedom of speech of selected persons to
express views on elections based solely on their national
origin.
Third, the disclaimer and disclosure provisions of this
proposed legislation have serious constitutional flaws. It is
important to recall that speakers who are concerned about
disclosure wrote many of the pamphlets and books such as the
Federalist Papers that played an important role in our Nation's
founding.
This is not to say, Mr. Chairman, that disclosure
requirements are invariably impermissible, merely that they
must be rigorously scrutinized to ensure that they are not
being used to place onerous, disproportionate, or burdensome
restrictions on speech or impose discriminatorily to chill
disfavored speech or speech by disfavored speakers.
These concerns are undeniably present here. Statements by
supporters of this legislation have already led many to infer
that they will suffer adverse consequences for speaking out for
or against office holders or office seekers. Indeed, some very
public statements have openly acknowledged that this measure is
targeted at specific corporate speakers. It has even been
mentioned that it is targeted at the United States Chamber of
Commerce.
These disclosure requirements are onerous, confusing,
burdensome, costly, and discriminatorily written. They quite
obviously have less to do with informing the electorate and
more to do with silencing speech that might be critical of
office seekers or, most of all, incumbents. It is indisputable
that the more we restrict speech, the more we help out those
already in office and handicap those who wish to throw the
rascals out. If we make it illegal, complicated, expensive or
burdensome to speak, we favor entrenched positions and stifle
unpopular views.
That is precisely why we have a First Amendment, and that
is why all measures that make it a crime to speak or that
impose a bureaucratic regulatory regime on public debate must
be resisted and rejected.
Thank you, Mr. Chairman.
[The statement of Mr. Olson follows:]
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The Chairman. I thank the gentleman.
Mr. Bossie.
STATEMENT OF DAVID BOSSIE
Mr. Bossie. Mr. Chairman, Ranking Member Lungren, members
of the committee, I also appreciate the opportunity to be here.
I am honored to be on the panel today.
My name is David Bossie, and I am President of Citizens
United, a 501(c)(4) membership organization that among other
things makes movies. We produced and marketed 14 popular and
timely documentaries over the past several years with three
more scheduled to be released in 2010.
Our 2008 film, Hillary The Movie, led to the recent Supreme
Court decision in Citizens United v. Federal Elections
Commission. The decision, the reason for this hearing and
proposed legislation today, specifically recognized the
importance of our First Amendment freedom of speech and, more
importantly, political speech as a means to hold elected
officials accountable to the people. Citizens should be free to
question their government and its leaders. And indeed, that
right is explicit in the words of the First Amendment.
Measures like McCain-Feingold and the proposed DISCLOSE Act
restrict that freedom either by design or unintended
consequence. Restrictions on that exercise of the First
Amendment right to political speech by design or oversight set
very dangerous precedents.
McCain-Feingold criminalized political speech. The Supreme
Court justices correctly recognized that if Congress could
criminalize political speech in film and advertising, they were
heading down a dangerous path.
As I sat in the Supreme Court watching the oral arguments
in our case, I was appalled to hear the government lawyer argue
that the government had the ability to ban books. I would ask
the members of this committee on both sides of the aisle to
stop for a moment and consider that statement. The government
of the United States admitted that the logical conclusion of
the Federal election law was that government had the
constitutional authority to ban books.
The First Amendment should be thoughtfully considered
before rushing to enact this legislation. Despite the rhetoric
from many on the left about corporations, this debate is about
one thing and one thing only: The right of all Americans to
speak out for or against their elected officials.
Senator Schumer at a press conference just last week stated
he hoped this legislation would result in fewer people
participating in the political process. Again, I would ask
members of the committee to take another moment to think about
that more a moment. One of the authors of this bill explicitly
stated that the purpose of the legislation was to discourage
Americans from becoming involved in the political process. If
that is not the definition of chilling free speech, I don't
know what is.
In the 3 months since our victory corporations have paid
for exactly one ad that was run in a small town Texas
newspaper. Moreover, at least 26 States have longstanding laws
that permit the same corporate activity in State elections as
are now permitted in Federal elections after our decision.
My point is that this legislation is a solution in search
of a problem. Unfortunately the solution burdens small
businesses and nonprofit organizations, silencing the voices of
average Americans rather than the big businesses it says it is
targeting. While the proponents of this bill claim that they
are acting so the people will not be drowned out, this bill
would have precisely the opposite effect.
The bill would require groups like Citizens United to file
an extensive report within 24 hours of making a regulated
expenditure, including not only an itemized list of the amounts
paid to produce and air an ad, but also an itemized list of
each person who has donated only $600 or more to Citizens
United from the beginning of the calendar year up to the day in
which the ad runs. As anyone who has filed reports with the FEC
or the IRS can verify, this is an extremely burdensome task to
accomplish within 24 hours.
Already almost a quarter of my staff are comprised of
attorneys and accountants. This legislation would force my
group and others like it to spend a small fortune in order to
exercise our constitutionally guaranteed right to speak. Of
course, considering the rhetoric, the irony is that for-profit
corporations, which is what everybody is talking about, would
not be affected by this provision at all because it applies
only to donors of which, so far as I am aware, Goldman Sachs
has none.
In today's media environment, it is easy to demonize
corporations to score cheap political victories. I would
encourage the members of the committee to look beyond the
rhetoric and think about the essential First Amendment rights
that are implicated by this bill. Thank you.
The Chairman. Thank you.
[The statement of Mr. Bossie follows:]
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The Chairman. Ms. Gilbert.
STATEMENT OF LISA GILBERT
Ms. Gilbert. Chairman Brady, Ranking Member Lungren,
committee members and distinguished panelists, good afternoon.
My name is Lisa Gilbert, and I am the Democracy Advocate for
the U.S. Public Interest Research Group.
U.S. PIRG is a federation of State PIRGs which are
nonprofit, nonpartisan, public interest advocacy organizations.
And we are pleased to be part of this critical conversation
today.
I would like to take this time to make three points: first
on the necessity for a legislative response to address the
Supreme Court's dangerous Citizens United decision; second, on
several important components in the DISCLOSE Act newly
introduced by Representatives Brady, Jones, Castle and Van
Hollen; and then, third, to briefly discuss why Representative
Capuano's Shareholder Protection Act should move in tandem with
the DISCLOSE Act.
The decision in the Citizens United case raises concerns
that the newly enabled flood of corporate spending could skew
participation and drown out the voices of independent voters.
This decision has elevated the role of corporations in politics
at the very moment when regular Americans already have a marked
distrust for corporations and especially for Wall Street. This
one-two punch has increased the unpopularity of this decision,
and, as Ms. Lofgren stated earlier, there was a poll conducted
recently by ABC and the Washington Post in which 8 of 10
Americans outright disagreed with this opinion.
In addition to being unpopular, it is also destructive. No
matter what the final tally of election spending is in the 2010
elections, it will only take one or two races where industry
giants like Exxon Mobil or Goldman Sachs bring their now
unlimited dollars to bear and successfully influence an outcome
to forever change the dynamic of American elections.
Every officeholder in the land will be keenly aware that
their race could, in fact, be next.
There are several components which I would like to
highlight in the DISCLOSE Act that we think are vital to
mitigate the worst impacts of this decision: those that are
designed specifically to increase transparency disclosure and
disclaimer; those that are in place to limit the influence of
foreign entities in American elections; and those that are in
place to ensure that corporations with substantial government
moneys are not intervening in politics.
After Citizens United, the voting public urgently needs
enhanced disclosure. This is an incredibly basic step. Where
the money comes from is one of the most important ways that
voters can test the accuracy of campaign statements and is
essential if the free and open marketplace of ideas is to
function properly.
The DISCLOSE Act would begin to get behind the money shell
games and would help voters find the sources of election
funding by requiring corporations to disclose in numerous
places, both when moving and spending their money for political
purposes, as well as inform the public through disclaimers by
their CEOs.
This bill has begun to receive the bipartisan support that
it deserves, and the transparency and disclosure provisions
specifically should strike a cord with anyone who cares about
open and accountable government.
The Court's decision in Citizens United also likely opens
the door for independent expenditures by foreign corporations
in American elections. Under existing law, foreign nationals
cannot spend money in elections. However, the definition of
foreign nationals does not currently include domestic U.S.
corporations that are owned or controlled by foreign interests,
and the Citizens United case has opened a sizable loophole for
those corporations to participate.
The DISCLOSE Act expands the definition of a foreign
national to include these types of foreign companies and
appropriately ensure that they cannot make independent
expenditures.
Corporations that receive substantial government funds
should be barred from making independent election expenditures.
Under current law, government contractors cannot make direct
contributions to candidates, and the DISCLOSE Act simply
applies similar pay-to-play restrictions to independent
expenditures for companies who have over $50,000 in government
contracts or have received TARP funds and not yet repaid the
money. This lessens the potential for direct corruption.
Finally, I will speak quickly on the importance of
Representative Mike Capuano's bill, the Shareholder Protection
Act. The bill requires an affirmative majority of shareholders
to authorize future corporate political expenditures and
requires disclosure of that spending. Currently, nearly one in
two American households owns stocks. However, American
shareholders lack both the ability to object or consent to
political spending and the right to be told about it. It is
particularly antithetical to the ideals of a participatory
democracy to envision a company using shareholder profits to
support a candidate that the shareholders might actually choose
to oppose.
We urge Congress to move the Shareholder Protection Act in
tandem with the DISCLOSE Act. To conclude, for those who
cherish an active democracy, the Court's decision in the
Citizens United case was fundamentally wrong and also just a
tragic mistake. Congress needs to act now within the boundaries
left by the Court and move and strengthen the DISCLOSE Act and
the Shareholder Protection Act to protect the integrity of
upcoming American elections. Only by first passing these types
of responses can we hope to pass further legislation designed
to tackle the underlying problem which is corrosive special
interest money in American politics.
Thank you and I look forward to your questions.
The Chairman. I thank the lady.
[The statement of Ms. Gilbert follows:]
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The Chairman. Mr. Holman.
STATEMENT OF CRAIG HOLMAN
Mr. Holman. Chairman Brady, Ranking Member Lungren,
committee, thank you for letting me testify on this issue.
The DISCLOSE Act has been criticized here for criminalizing
speech or in some some way chilling free speech. This act does
nothing of the sort. This act is largely a disclosure measure
which has gained--the type of concepts that have gained support
across both parties in previous years, with some important
measures to help preserve the integrity of the legislative
process.
What is often overlooked in this whole debate is the impact
of the Citizens United decision on the legislative process. The
ranking member, in his introductory remarks, emphasized that we
should be talking about the legislative process, so let's do
that.
What we find that the DISCLOSE Act can do is, it is not
just an impact on the campaign finance arena, it will have a
dramatic impact on you and on this committee. The House
Administration Committee helped lead the way a couple years ago
in drafting and promoting the Honest Leadership and Open
Government Act that tried reining in some of the worst abuses
we have seen of lobbying here on Capitol Hill, and it was a
sweeping, sweeping improvement in the whole legislative
process.
Citizens United has the danger of reversing much of those
achievements in allowing corporate lobbyists to walk into
meetings with you and your staff, carrying this big club of a
potential campaign expenditure for Members who are friendly and
punishing those Members who may not be as friendly to the
corporate interests that are being pursued.
This is something that should be discussed more. When we
are talking about Citizens United, we are not just talking
about money and politics. We are talking about the lobbyists
who are going to represent these corporations.
What we need and what is achieved--what could be achieved
in the DISCLOSE Act is critical disclosure provisions that
allow you and other Members of Congress and the public realize
that if any of these corporate lobbyists or corporations decide
that they are going to use that big club, that the public is
going to be aware of who is financing various campaign ads, who
is behind the campaign ads, and what interest it is that they
are attempting to achieve behind those campaign ads. That is an
important means to fill in a huge loophole that currently
exists in our regulatory regime.
Under the current transparency regime, contributions from
major corporations to such groups as Americans for Job Security
or the Chamber of Commerce do not get disclosed. As a result,
we don't really know what corporations or what labor unions or
what other entities are really seeking to do behind financing
certain campaign ads.
The Bipartisan Campaign Reform Act tried to regulate that.
It required disclosure of electioneering communications. In
2004 all electioneering communications revealed most of their
donors, but quickly in 2008, many of these third-party groups,
especially, realized that they did not have to disclose
individual corporate donors as long as those moneys were not
specifically earmarked for that advertising campaign. That has
become the norm at this point.
We just saw in the 2008 Massachusetts Senate election,
Americans for Job Security reported spending about $1 million
in the campaign, but did not disclose any donors. Same with the
Chamber of Commerce. This measure is primarily and importantly
a disclosure measure that is going to close those loopholes so
the public and lawmakers can know who is financing these types
of campaign ads.
I also want to emphasize one important regulatory measure
that is included in this, and that is the pay-to-play provision
to government contractors. This is not a revolutionary idea,
nor is this a campaign finance reform measure. When it comes to
regulating campaign contributions or expenditures by government
contractors, that legislation is not designed to curtail money
flowing into politics; it is designed to enhance the integrity
of the government contracting process, to make sure that
government contracts are awarded to companies based upon merit
and not based upon campaign contributions or company
expenditures.
This measure helps extend the current pay-to-play law to
include independent expenditures and electioneering
communications that are financed by these government
contractors, a narrow class of corporations.
It should be improved to make sure it captures also any
corporate contributions to groups like Americans for Job
Security that are used for political expenditures, and then we
would have a full, strong disclosure regime, along with some
important improvements in making sure that the integrity of
government is preserved. Thank you.
The Chairman. I thank the gentleman.
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The Chairman. And I thank the panel. We will open it up
with questions. I have just a couple.
I guess, Mr. Holman, because you touched on this, if
Congress does not pass this act, where can shareholders and
where can investors of a corporation find that information of
the corporate spending with their--how would they find out--I
am a shareholder, how do I find out where my corporation--I am
a shareholder, how do I find out where they are spending their
money on political ads?
Mr. Holman. There is no built-in system in the United
States for that type of information to be given to
shareholders. There is a system in the United Kingdom in which
corporations are, in fact, required to inform shareholders of
any political expenditures, but we don't have that system here
in the U.S.
Now, corporations will include general categories in their
annual reports to shareholders, but not to the public. And even
in those types of annual reports, it is not detailed to the
point in which a specific political expenditure would be
identified. There is no such disclosure here in the U.S.
The Chairman. So if I am not an investor or shareholder, I
am just a citizen, and I like Deer Park, and I buy Deer Park
water, and if this bill doesn't pass and if Deer Park puts out
a whole lot of commercials against me, I won't know that, and I
will continue to buy Deer Park and I will continue to
contribute financially to an organization or corporation that
is putting commercials or putting--spending money against me.
Mr. Holman. That is correct. You won't know that, the
shareholders won't know that, and the public won't know how
these political spending decisions are being made, how much is
being spent, or who is being promoted or attacked.
The Chairman. One other thing, and this is a comment. I am
a member of two unions, still carry a card for both unions. And
my unions and other unions that I know of, before they make a
political expenditure, it has to be ratified, it has to be
agreed by the executive board and then ratified by its full
membership. So that is pretty much the disclosure that they do,
existing right now, that corporations don't do. I want to be
clear in the difference between unions and corporations.
Now I will turn to my ranking member, Mr. Lungren.
Mr. Lungren. Thank you very much, Mr. Chairman.
Mr. Holman, can you tell me the five largest donors to your
organization?
Mr. Holman. We don't have any government sponsors to Public
Citizen.
Mr. Lungren. No, no, no, no, no. The five largest donors.
Mr. Holman. Oh, the five largest donors. I don't deal with
the financial arrangements.
Mr. Lungren. Are you required to do that by law?
Mr. Holman. We report on our IRS Form 990s the amounts of
money that we get. All our money comes from individuals and
foundations. But I am not involved in the fundraising activity.
Mr. Lungren. Ms. Gilbert.
Ms. Gilbert. I don't know the top five donors off the top
of my head. But, similarly, all our funding comes in small
amounts from individual citizens.
Mr. Lungren. So it is reported publicly?
Ms. Gilbert. But it could be publicly accessed.
Mr. Nyhart. We comply with all the reporting requirements.
We report to the IRS our 990s.
Mr. Lungren. I don't know what the reporting requirements
are.
Mr. Nyhart. We have to report to the IRS. Our largest
contributor is a nonprofit.
Mr. Lungren. Let me ask you this. Mr. Nyhart, you mentioned
BP, and you talked about the Big Oil and so forth, and you
talked about the corrosive influence. According to Politico's
article, during the time in the Senate while running for
President, President Obama received a total of over $77,000
from BP and is the top recipient of their PAC and individual
money over the past 20 years, according to financial disclosure
records.
Are you suggesting that the reason why his administration
didn't support legislation to extend the liability for BP and
other people similarly situated was because he got those
moneys?
Mr. Nyhart. I am suggesting it raises the questions of
conflict of interest when large amounts of money are given to
politicians. And I think it raises that even more----
Mr. Lungren. So my question is, are you--I just want to
know--you brought up BP and you brought up this oil spill.
Mr. Nyhart. That is right, and I think their contributions
raised that question every time.
Mr. Lungren. With the President?
Mr. Nyhart. I would include the President and Members of
Congress, yes.
Mr. Lungren. The major question I have got here is the
difference, Mr. Olson, between direct political contributions
to a candidate and the use of funds to express a political
point of view. Here it almost sounds like we are confusing the
two or we are overlapping the two as if there is no
distinction.
Let me try and put it this way. There seems to be some
confusion as to whether the Citizens United decision allows
foreigners to be directly involved in our campaigns.
And so I would posit this question, as I understand Random
House now, one of the most important publishers of books in
this country, is no longer owned by a U.S. entity. I think it
is German or something. I am not sure what it is.
Under this bill, if a professor at Harvard or Stanford or
some university were to publish a book, were to write a book,
it was published by Random House, in this fall or during this
fall, before the election, and let's say it is 950 pages, but
three of those pages in there specifically were critical of a
Senator up for election--specifically, it made very clear that
anybody reading it would say this is critical of this Senator
who is up for election--if I had this information before me, I
would be less likely to vote for that person. Would Random
House, because it is owned more than 20 percent by foreign
interest, run afoul of this law?
Mr. Olson. I think it would, Congressman Lungren. That very
question was asked during the arguments in the Supreme Court
under the previous law in the Citizens United case, and the
government said this--Mr. Bossie mentioned this--that the
theory that the government was advancing to support the
constitutionality of what that law did would support the
suppression of books.
Now, you raise a separate question because that was
addressed to the question about corporations.
Mr. Lungren. Right.
Mr. Olson. And the Supreme Court, contrary to what the
President said in the State of the Union address, did not in
any way address the foreign corporation or foreign citizen
involvement in elections issue. In fact, the Supreme Court said
we are not addressing that question.
Mr. Lungren. That is a distinction between a direct
contribution of a candidate versus political speech.
Mr. Olson. That is an additional distinction the Court made
for the first time in Buckley v. Valeo in 1976. The Supreme
Court said that contributions raised potentially a concern
about corruption, actual corruption. The Supreme Court said
that actual corruption, quid pro quo corruption, is the only
justification for inhibiting political speech.
The Supreme Court said that limits on contribution might be
acceptable because the money is going right from the donor to a
Member of Congress or a candidate; whereas independent,
uncoordinated expenditures, where the entity spending the money
to express a point of view, does not raise the concern of
corruption that a contribution would. So there is a distinction
there.
And then the final point is that this legislation, in a
very ambiguous way, selects out people who are foreign
nationals or foreign corporations. And corporate structure
these days is a very, very complicated situation for particular
discrimination, and to impose particular burdens and I think
that that--oh, one more point. Random House is a so-called
media corporation. And the proposed legislation would make a
distinction for a media corporation. And the Supreme Court said
there isn't any justification in the Constitution for selecting
out someone because they are in the business of a media, or as
opposed to a different type of business, or if they own a
television station or a book publisher. So that also raises
constitutional questions because it discriminates on the basis
of the identity of the speaker.
Mr. Lungren. Thank you.
The Chairman. Mr. Capuano.
Mr. Capuano. Thank you, Mr. Chairman.
Ladies and gentlemen, I want to be very clear. I am for
public financing of campaigns, because I just went through a
campaign that raised $3 million in 2 months, and I hated every
minute of that. I don't like the perception it leaves with
people. I don't like it, period. Can't get it, so we are stuck
with the situation we have.
I am for shareholder empowerment and shareholder
protection. My guess is if I want to donate to somebody, I
should be the one who makes that decision. If it is my money,
you shouldn't make that decision for me. I feel that
shareholders own corporations. They should be the ones making
that decision.
At the same time, I really don't have too much of a problem
with this general decision. And some of the detailed aspects of
this proposal concern me as well. And I think those are fair
questions. Is 20 percent a right number? I don't know. Those
are fair questions.
The concept, however, of simply letting voters know who is
saying what is unassailable to me. And the concept of a
chilling effect? Well, one of the people I just ran against was
the attorney general of the Commonwealth of Massachusetts, a
fine person. You don't think the people who donated to me might
have been a little concerned that the attorney general might
abuse that power?
Now, in Massachusetts, and this particular candidate, there
is no concern with that. But others may not feel that way; or
district attorneys or judges that are not elected. They are not
elected in Massachusetts, but they are elected other places. So
the chilling effect is there. Yet no one, to my knowledge, has
yet publicly suggested that we should have secret donations to
candidates for office.
Does anybody here think we should have secret donations for
campaigns, candidates?
Mr. Olson. That goes back to the distinction that
Congressman Lungren made: contributions versus expenditure.
Mr. Capuano. I understand that. But does anybody here think
that we should have secret donations to candidates?
Mr. Olson. Well, we haven't; and the Supreme Court has
upheld the constitutionality.
Mr. Capuano. I understand that. I am asking does anyone
here think so? I didn't think so, but I wanted to hear it.
Mrs. Davis of California. I was curious to hear are you
against that or for it?
Mr. Olson. I am neither against it or for it, but the
legislation that was upheld in Buckley v. Valeo, and
legislation for a long time has prohibited anonymous
contributions or contributions----
Mr. Capuano. Excuse me, this is my time. And I will tell
you that this is not the Supreme Court of the United States.
And I am a lawyer, too, and I understand that is why we have
courts, so lawyers can go make arguments and judges make their
decisions. And to my knowledge, there is no lawyer that I have
ever met that has not lost a case in a court. Now maybe there
is one, but I haven't met that person yet. That is what we do.
That being the case, a chilling effect in and of itself is
a concern, and a legitimate one, and the Court will make that
decision whether a specific law does that.
At the same time, the whole concept of making something
public can't, in and of itself, be a chilling effect. The very
fact that Mr. Lungren knew that President Obama took X amount
of dollars from BP is a good thing. I am glad you know that. I
am glad anybody here can go find out who my top five donors are
and draw any conclusions you want from it.
All I want is when people go on TV or take out an ad and
say Mike Capuano is a good guy or a bad guy, people know who is
saying it. That is all, in the final analysis.
Now the details. There are questions, some points, I am
happy to work with people on some of these details. But the
concept of it--and by the way, when it comes to foreign
corporations, I understand the definition of one is a fair
question.
Does anybody here think that ADIA Corporation should be
able to donate and be involved in American politics?
ADIA Corporation is the largest sovereign wealth fund in
the world, worth almost $1 trillion, run by the United Arab
Emirates. Does anybody here think that they should participate
in our election process?
Mr. Olson. I think that a point was made at the beginning
by Congressman Lungren, is are we going to say that it is
against the law----
Mr. Capuano. I am asking a very simple question.
Do you think that ADIA Corporation should be able to
participate in our election process? And it is okay if you do.
Mr. Olson. I think what you are saying is that we should
make it a felony----
Mr. Capuano. I am not saying that. I am asking a question.
Mr. Olson. I am trying to answer your question.
Mr. Capuano. The answer is yes or no.
Mr. Olson. The answer is no if it means you are going to
make it a crime by Congress to pass a law that says someone
can't speak.
Mr. Capuano. I agree with you. They should not be allowed.
Now, the question of what is a foreign corporation is a
fair question. This is a wholly owned subsidiary of a foreign
government. It is a corporation. And I happen to agree with
you. Now we are in the definition of what is a foreign-owned
corporation. Fair question, always gray areas no matter where
we come up, and I am happy to work with trying to redistinguish
the lines.
I have concerns about 20 percent. I am not so sure I have
any concerns whatsoever about 100 percent. And by the way,
foreign individuals are already prohibited from participating
in our elections. So we have a history of doing that.
Some of the issues that have been raised, the broad issues,
are all specious. The specific comments, fair point. But first
of all, we are happy, I am happy to work with making this law
better. There are some things here I don't like. And when we
are finally done, I have no doubt, no matter what we come up
with, Mr. Bossie, you will be in court. God bless you. And I
also suspect you will win some points. God bless you. That is
what we are here for.
But the prospect of one or two or ten or 100 people telling
me this is what I feel is constitutional and unconstitutional
should not stop us if we feel that it is constitutional. That
is what the Court is for. And they will decide and whatever
they decide--depends who is on the Court when you get there--
you will probably win a few, and when you do, we will come back
and we will try to amend it then.
But the concept of simply publicizing who is participating
in our electoral process cannot be assailed in any rational,
reasonable way, in my district, or, I think, in this country.
The lines--we will have debate, and we will have, hopefully,
some agreements. But not the concept.
Thank you. Mr. Chairman, I think I yield back the time I
have already gone over.
The Chairman. Mr. Harper.
Mr. Harper. Thank you Mr. Chairman. I think that a lot of
things are circling here as we discuss this. And of course I am
one of those who is strongly opposed to the Fair Elections Now
Act and having taxpayer-funded elections. I was certainly one
who doesn't like to raise money. It is no fun for any of us,
but I think it is part of the process.
And you know, it is interesting that there was a study done
in the last--the 2008 elections; 41 out of 50 self-funders
lost. So I think that it is important for people to be involved
in the process, and if that means, like in my election, having
a police officer who gave me $25 a month for 4 months as a
contribution, more power to him and God bless him for being
involved as a citizen. And those things matter, and I think we
need to maintain that.
And one of the great things about being a freshman, besides
the fact that we don't get blamed for a lot yet----
Mr. Capuano. Yet.
Mr. Harper. Yet. The emphasis on the word ``yet,''--is that
you are kind of a--it is humorous the way we name things here,
a bill. We can call it the Disclosure Act. I think I see this
more as a restrict act. And certainly we have heard--I think
three people so far have referred to polling. And of course, as
you know, 67 percent of all statistics are made up on the spot,
or is that--maybe it is 58 percent. It is all how you ask the
question and what you do.
But, look, here is another poll that was done on this very
issue. And it is how you phrase the question that will
determine what your results are. Victory Enterprises polled on
March 1 and 2 of 2010. The question was: Do you believe that
the government should have been able to prevent Citizens
United, an incorporated nonprofit advocacy group, from airing
ads promoting its movie? Only 18 percent said yes; 51 said no;
and 27 percent said not sure.
The next question was: Do you think the government should
have the power to limit how much some people speak about
politics in order to enhance the voices of others? Only 18
percent said yes; 63 percent said no.
Another question in that poll: And do you support or oppose
allowing the Federal Government to impose criminal or civil
penalties against individual citizens or corporations for
spending money to engage in political speech? Only 28 percent
supported that; 50 percent were opposed to the government
imposing criminal or civil penalties in that situation.
And so you can find a lot of different approaches to these.
But since we are here about disclosure, I would be
interested to know if any of the witnesses here today, if you
played any role in drafting or providing any input in the
writing of this bill.
Mr. Simon. Congressman, I did work with the staffs of
Representative Van Hollen and Senator Schumer.
Mr. Harper. Thank you, sir. Anybody else?
Mr. Holman. I kept trying to influence it to include
Capuano's Shareholder Protection Act in it, but I was not
successful.
Mr. Harper. Well then I would ask--if I could ask any of
the other witnesses if you saw the bill before it was filed?
Mr. Bossie. No, sir.
Mr. Harper. And if I could ask you, since you did have some
input in it--did you get to see the final version before it was
filed?
Mr. Simon. I don't believe so, no.
Mr. Harper. Were you instructed by anybody to not discuss
what you were talking to them about?
Mr. Simon. No.
Mr. Harper. One of the questions I have for you, Mr. Olson,
if I could, and if I am wrong on my understanding here, please
correct me. But it appears that our Democratic leadership has
said that it has to act quickly on this legislation so it can
influence the fall elections.
And the way it wants to influence those elections seems to
be by silencing certain speakers. So they are saying we have to
silence this political speech so that we are not criticized too
much and can hold on to our seats perhaps in Congress this
fall.
Based upon your expertise and experience with
constitutional issues, how does this bill square with your
understanding of the First Amendment? And then, do you recall
legislation ever being proposed for this reason in the past?
Mr. Olson. Well, I mentioned in my statement that I think
that there are several deficiencies in this legislation under
the Constitution. One, it assumes that all corporations--that
speech by all corporations is suspect, not just big
corporations, but little corporations, the owner of the
neighborhood hardware store. Incidentally, I checked; every
single spokesperson here today represents a corporation.
But this legislation assumes that all speech by
corporations is suspect, all speech by government contractors
is suspect, all speech by someone who might be of a different
nationality than us is suspect; whereas the First Amendment
says Congress may make no lawabridging the freedom of speech.
There is an inconsistency there. There is an inconsistency
because the legislation discriminates on the basis of types of
speakers--contractors, corporations, labor unions, media
corporations. And one might be very much in favor of the
concept generally of disclosure, but if the disclosure is so
burdensome, so oppressive, that it discourages speech, as some
of the sponsors of this legislation say we want the Chamber of
Commerce to butt out of having a point of view on behalf of its
members with respect to who will get elected and who will run
this country, that is a violation of the Constitution. And I am
not aware of other laws that have selected types of speakers
based upon this basis.
We come from a culture in our constitutional culture that
more speech is better. And I hear testimony here today that
certain speech is dangerous. Lobbyists are dangerous. By the
way, the First Amendment protects what? The right to petition
one's government. That is what a lobbyist helps one to do. The
concept here is that the people get to decide. And they get to
decide based upon as much information as possible.
And for those various reasons, and several more, I think
that this is a very dangerous piece of legislation.
Mr. Harper. I would like to thank each of the witnesses Mr.
Chair.
The Chairman. Mrs. Davis. Thank you.
Mrs. Davis of California. Thank you Mr. Chairman. I want to
apologize to my colleague. I just got a little excited because
I thought I was hearing something different and I just wanted
to be certain that the witnesses were being upfront about that
if they had some concerns.
I wanted to ask you, Mr. Bossie, could you please describe
the context in which the quote that you gave of Senator Schumer
occurred?
Mr. Bossie. He was standing on the steps of the Supreme
Court announcing this legislation.
Mrs. Davis of California. What was the context? What was he
saying? What led you to--you quoted him. And you quoted him,
and I am just wondering if you could describe the context----
Mr. Bossie. Somebody asked him what the purpose of the
legislation was, and he gave a very candid and frank answer.
Mrs. Davis of California. Do you know anything more about
that?
Mr. Bossie. Congresswoman, I am happy to get that
transcript from the steps of the Supreme Court that he gave,
and I will be happy to send it to you.
Mrs. Davis of California. It is my understanding and just
in the quick time that we have had here, that part of what he
was saying is that he thought that CEOs now having to--if they
had to disclose any information about the ads in which they
were participating, that they would actually choose to
participate less, because they didn't want to disclose.
So when he was saying that he thought there might be less
involvement, he was actually saying a supposition of what he
thought, how companies might respond. Which is a little
different I think, if you know that context, to what you said.
I think it occurred to me as you were speaking that perhaps
it was that citizens would want to be less involved, and that
that was the role of the Senator.
Mr. Bossie. But I think that the onerous and burdensome
regulations that are included in this legislation could have
that same effect on people as well.
Mrs. Davis of California. That may be a supposition, but I
think that is not the supposition that was being referred to
directly. And I just wanted to see if you had any idea about
that.
Could we talk just a little bit about coordination? And if
you could just share with me, and perhaps Mr. Simon, what do
you think is likely to happen? If you are looking out a few
years from now, and others might want to respond, what do you
think the impact is going to be really on voters, number one?
And secondly, when we talk about coordination with
campaigns, the fact that an actual discussion occurs is one
thing, but there is also something if it doesn't occur. And
what does that mean in the political context of the feeling
that somebody might have about something that was going to
happen?
Mr. Simon. Well, there is a lot of debate and speculation
about what the impact of the Citizens United decision is going
to be. And the speculation ranges from it will have minimal
effect to, on the other side of the spectrum, that it will have
quite significant effect; that there will be major infusion of
corporate wealth brought directly to bear on Federal campaigns.
In terms of coordination, that is a very important point
because coordination is the line between the spending, which,
under the Citizens United case, is permitted and the spending
which is not permitted. Corporations, unions, other spenders,
although they can make expenditures out of the treasury funds
now, those expenditures have to be independent of a candidate
or a party. There cannot be coordination. If there is
coordination, then those coordinated expenditures are treated
like contributions and remain prohibited.
So the definition of coordination is the line between
permissible and impermissible corporate and union spending. And
it is in the reasoning of the Court, it is also the key hedge
against corrupt quid pro quo arrangements. Where there is
coordination on an expenditure, that raises the threat and the
danger of corrupt arrangements.
So that definition, what constitutes coordination, is a
very, very important issue. The Federal Election Commission has
been struggling for years with that issue. We have been in
court with the Commission on that issue, and it is still
unresolved.
The legislation addresses that question in a relatively
modest way by codifying some existing FEC regulations and in a
modest way extending existing FEC rules. But it still remains
an important issue, and it really is fundamental to how
damaging Citizens United is; because if, in fact, although
technically and as a legal matter, expenditures by corporations
are considered independent and therefore permissible, but as a
practical matter they are coordinated, the impact of Citizens
United on the legislative process will even be more damaging.
Mrs. Davis of California. Does anybody disagree with that
statement? I just want to give you an opportunity to respond.
Sure.
Mr. Olson. I would like to make just one point.
Mr. Simon said that the Federal Election Commission has
been struggling for years with respect to where the line is
drawn. If you miss it, and you don't know, and the Federal
agency that regulates elections doesn't know what the line is,
if you miss it, it is a felony. So we are saying that you have
to guess what the law is because the government can't even tell
you what the law is. And if you guess wrong, you may be sent to
jail or you may be prosecuted.
When someone is told that, they will say, I am not going to
speak. So if we don't make laws that are clear, we discourage
people from speaking. And the Supreme Court said in the
Citizens United case, if we burden speech with the threat of
litigation or the threat of prosecution, or you make it too
hard to find out what the law is, people won't speak. That is
not what the First Amendment was intended to accomplish.
Mr. Holman. Could I briefly add to this? With the Citizens
United decision, we now have this huge, huge new source of
revenues for lawmakers, for campaigns, for politicians. And
that huge new source of money is going to be very tempting both
ways. If corporations can work closely and intimately with a
campaign, what better way to endear themselves with the
lawmakers in a close, coordinated fashion?
Also, conversely, there are many lawmakers who can be so
powerful as committee chairmen, or even heads of political
parties, that they can basically shake down some of these
corporations that have this huge new source of wealth to work
in coordinated campaigns. That is why it is so important that
this legislation clearly define what is coordinated activity
versus independent activity.
Mrs. Davis of California. Thank you.
And, Mr. Chairman, I am certainly concerned about the
absence of not running an ad as much as running an ad in terms
of that coordination. Thank you.
The Chairman. Thank you.
First, I would like to ask unanimous consent that the
following materials be made a part of the official hearing
record: Letter of support from Common Cause; three articles
related to members of corporations objecting to trade
associations of political spending.
Without objection, so ordered.
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The Chairman. We are going to go another round, I
understand. We are going to go another round.
I just have one thing. I am not an attorney, thank God. But
I keep hearing Congress shall make no law limiting free speech.
I don't think we are doing that with this bill. All we want to
know is who is saying it and who is paying for it. In my mind,
that is what I think we are doing here.
And again, Mr. Lungren.
Mr. Lungren. Thank you very much, Mr. Chairman. I don't
have the transcript of what Senator Schumer said on the steps
of the United States Supreme Court. I, do however, have a
reference to a statement he made in February of this year, as
reported by the Wall Street Journal, where he said he hoped the
proposed legislation will discourage companies and unions from
spending freely on political advertisements. The disclosure
requirements ``will make them think twice'' before attempting
to influence election outcomes.
He then added this: The deterrent effect should not be
underestimated.
Mr. Olson, if you were arguing this case before the Supreme
Court, would that be relevant?
Mr. Olson. Yes. The Court would be very much concerned with
what motivated this legislation, and particularly because the
legislation focuses on the identity of the speaker and allows
some speakers to disclose--requires some speakers to disclose,
at great expense and with great burdens, if one-fourth of the
staff of Citizens United is focused on compliance with
regulations having to do with the things that they do, which
are First Amendment things; and certain other speakers,
individuals, certain media corporations, whatever those are,
labor unions, so forth, don't have to do that. That is
consistent with selecting speakers and discriminating and
wishing to discourage some kind of speech.
Mr. Lungren. And if I were laying a premise for an argument
before the Supreme Court, I would love to have my opponent on
the other side, referencing free speech, to say the deterrent
effect should not be underestimated.
It appears to me it is a very direct statement of the wish
of legislation to abridge free speech. At least that is the way
I would look at it.
Let me ask you this. Does anybody here, has anybody tested
the amount of time that it would take to comply with the new
stand by your ad requirements in section 214?
Mr. Simon. I think it was accepted by the Court in the
McConnell case that the prior stand by your ad requirement took
4 seconds. That is what the Court said in the McConnell
opinion, so this adds an additional disclaimer. It adds an
additional disclaimer
Mr. Lungren. Would it surprise you to know that my staff
tried it with the names of those of you here and your
organizations, just with the numbers that would be required,
and realized it took about an average of 13 seconds? Would that
be troubling if, in fact, that were true; that in a 30-second
ad it would require, under the law, that 13 seconds be
disclosure? Would that be troubling?
Mr. Simon. Well, I guess I am very surprised by the number.
I also note that----
Mr. Lungren. I am saying if you accept that. You may
disagree with it. I am just saying my staff made a good-faith
effort using your names and your organizations; with two, as
required, that is what it took. If in fact that were the case,
would that be troubling or would that not be troubling?
Mr. Simon. I don't know. I guess it would be troubling. But
the legislation does provide the Commission with the ability to
create regulations that provide a hardship exemption if it is a
burden on the speech.
Mr. Lungren. That would be a hardship exemption, I would
think.
Mr. Simon, let me ask you this, because you talked
specifically about a very important thing, and I do think it is
important, the coordinated communications language, because
that essentially is the demarcation between directly involving
yourself with a campaign and this other area or category of
political speech that I think the Supreme Court was talking
about.
As I understand it, however, current FEC regulations really
use a two-pronged test. One is content and then you go to
conduct. That is, is there evidence of coordination, in essence
some conduct that would give rise to that suggestion? This
bill, section 103, removes the conduct side and only confines
it to content.
Mr. Simon. That is absolutely a misreading of the bill.
Mr. Lungren. Well, it is section 103. It seems to me pretty
clear. It makes no reference to conduct that I can find. If I
am wrong, I would appreciate it because that bothers me a great
deal.
Mr. Simon. Let me if see if I can find the language
quickly. Okay, if you start on page 17 of the bill, let's--I
will walk through this. It says what it is doing----
Mr. Lungren. I would just ask you, because of the limited
amount of time, if you could just point out the conduct
section.
Mr. Simon. It is on page 18, lines 1 through 5. The covered
communication which is made in cooperation, consultation, or
concert with or at the request and suggestion of a candidate.
That is the existing statutory conduct test which is unchanged.
Mr. Lungren. But the next word says ``or.''
Mr. Simon. ``Or'' a communication that republishes. If
somebody goes out and takes the candidate's campaign literature
and republishes, that under current law----
Mr. Lungren. It says publishes, disseminates or distributes
in whole or in part any broadcast or any written graphic or any
form----
Mr. Simon [continued]. Performed by the candidate.
Mr. Lungren. Okay, I am the candidate, and I make a
statement which I--I make a statement on the floor of the
House. All right? But I repeat that statement in my campaign
material. That is all I do. Can someone then not, in talking
either for me or against me, repeat the statement?
Mr. Simon. No. No. This is a restatement of existing law.
This does not change existing law at all. If somebody takes
your campaign brochures----
Mr. Lungren. I understand that.
Mr. Simon. This is not intended and does not currently do
what you said.
Mr. Lungren. But today, is the ``or'' in that regulation? I
thought it required both conduct and content, an examination of
both under current regulation.
Mr. Simon. It does. But this provision here says a covered
communication which is made in cooperation with a candidate.
And covered communication is then defined to be the content
test. So lines 1 through 5 include both the conduct and the
content standards.
And, again, this mirrors existing law.
Mr. Lungren. That is confusing to me because you have the
``or'' there. At least statutory language would suggest ``or''
means either or; that is, one or the other. You don't have to
have both.
Mr. Simon. Well, the second part after the ``or'' again
restates existing law, which is that if an outside spender
takes a candidate's campaign literature and just----
Mr. Lungren. I just want to make sure your understanding
would not be if you repeated a phrase that is in there but,
rather, you actually would adopt the form of the public----
Mr. Simon. If you went and paid for a candidate's
brochures, you just took the candidate's brochure, walked to a
publishing house, said, ``Here, make 10,000 copies of this
brochure.''
Mr. Lungren. It says in part or in whole. I just want to
make sure if--and, again, look, I would rather have us approach
this by allowing greater coordination between parties and
candidates. It seems to me that is one of the solutions.
Mr. Simon. Which the bill does.
Mr. Lungren. It is very obtuse in the way it does that. I
will be happy to work with you on that, because I don't think
it helps us on that. But if we could agree on that, that would
be very helpful.
My concern here is this, and I am really trying to get to a
point. If, in fact, a candidate were to say, I support the
health-care bill because it is the best approach to solving our
problem and that is why I am a leader on that, could someone
use that statement, republish that statement in the context of
explaining why they would either be for me or against me, or
would that run afoul of this law as you see it written?
Mr. Simon. I believe that this law, what is in this bill,
is not in any way intended to change existing and longstanding
law with regard to the republication standard. And my reading--
my reading, if you go to the existing statute, you will find
the republication standard and I think this just----
Mr. Lungren. So your position is that we ought to support
that; it merely restates what the current regulations are.
Mr. Simon. Yes. Exactly.
Mr. Lungren. Mr. Olson.
Mr. Olson. When I read it, I read it the way your initial
questions suggested that you read it; that if you rearticulated
or restated what a candidate had said, that was going to be
presumed under this statute, as it was being proposed here, as
coordination. That is the way I read it. Something like
conscious parallelism or something, to adapt a concept from the
antitrust laws, that that would be a violation if there is
confusion about it, unless it is fixed. And if I were asked by
a client what to do, I would say, Don't do it, or get an
advisory opinion.
If you seek an advisory opinion, you better hire some
lawyers to get you an advisory opinion and expect to wait 6, 8,
10 months or a couple of years before you get a response from
the Federal Election Commission, which means don't do it.
Mr. Lungren. It takes that long?
Mr. Olson. Well, it takes various different periods of
time. We talked before about the fact--you mentioned that it
took--well, there was a period of time, by the way, that the
Federal Election Commission couldn't do anything because it
didn't have a majority. So you had the regulatory agency not
existing and people not knowing whether they could speak or
not.
As you pointed out, Citizens United, from the time they
wanted to find out whether they could do their movie until they
found out that the Supreme Court said that they could, it was
virtually 2 years. That started in the 2008 election. We got an
answer in 2010.
Mr. Lungren. Don't you have an expedited procedure to go to
the courts?
Mr. Bossie. That is the expedited procedure.
Mr. Simon. Congressman, again, we need to----
The Chairman. We need to impose a couple of our expedited
procedures. Again, as I said, lawyers will be here forever.
Mr. Bossie. Mr. Chairman, could I just make one point?
The Chairman. After Mr. Simon. Then you can make one point,
and then we will move on.
Mr. Simon. Again, I just want to focus on this is talking
about the republication of campaign material, not just a
statement made by a candidate.
Mr. Lungren. But it says in whole or in part. That is what
bothers me.
Mr. Simon. Well, but again, it is campaign material.
Mr. Lungren. Again, could you put something in there--I
mean, we can put something in defining it, not merely--well,
something that would suggest if you merely repeat what someone
says or something like that. Do you know what I am trying to
say?
Mr. Simon. I do.
Mr. Simon. And let me just refer you or your staff to
existing 441a(a)(7)(b)(iii), which is where this republication
language is derived from. And I think you will see it is the
same as existing law.
The Chairman. Mr. Bossie.
Mr. Bossie. Mr. Chairman, thank you very much. I just want
to point out two things.
One is, to Congressman Lungren's point about the disclaimer
provision, we were messing with the timing, as well, and it is
about 13 or 14 seconds. Two of the ads that we submitted to the
Supreme Court that we produced--because it used to be 60-second
ads, as everybody remembers, and now it is that 30-second ads
is kind of the standard. But, for us, the 10-second ad is a
standard. And so, if you have a 13-second disclaimer, you
literally can't send your message.
And that is an important element, because you may--
obviously, if the assumption is it is a 30-second ad, some
could argue 13 seconds is overly burdensome. I would. But if it
is a 10-second ad, even if you cut that back, even if the FEC
said, ``Oh, you can have a 6- or 7-second,'' that still doesn't
allow you--you are still having to pay for the 10 seconds and
you are not able to send your message.
Mr. Simon. Could I just interject one point quickly on
that? Because I don't know the----
The Chairman. One more point quickly.
Mr. Simon [continuing]. Experiment you ran, but I just want
to point out, the top-five-funder disclaimer is not an audio
disclaimer. It is just a scroll, a list. So it doesn't take any
time.
Mr. Lungren. So that doubles, at least, what we have to do
now. Thank you.
The Chairman. That is right. And that is what that word
``or'' did, right?
Mr. Capuano.
Mr. Capuano. Thank you, Mr. Chairman.
First of all, I am not Senator Schumer. So whatever he may
have said, so be it.
Mr. Lungren. You are much better looking.
Mr. Capuano. That is a low standard, but thank you.
Don't worry. Chuck would give it to me too.
Mr. Lungren. We will vote on that.
Mr. Capuano. Chuck is going to have the last word on that
one, I know.
At the same time, though that may be interesting, that is
not what the Court is going to look to, one or two quotes of
somebody in public life. They are going to look to the intent
of the legislation.
I, for one, have no intention, that is not my intention in
this law, is to give anybody a chilling effect or to stop
anybody's free-speech rights, no matter whether I agree or
disagree with the Court's decision. I agree with Ms. Lofgren,
it is. I am over it. Well, not quite, but I am pretty much over
it.
At the same time, what I am trying to do is carve some
legislation that does disclosure. And I think that some of
these questions--if it is a 13-second thing, first of all,
maybe if you came from Boston, you might speak faster, but, you
know, you don't know that.
Mr. Lungren. Thirty seconds in Mississippi.
Mr. Capuano. If there are certain specific issues, I am
happy to talk about them. I am not looking to take a 30-second
ad and turn it into a 10-second ad. I agree, that wouldn't be a
fair result. There are ways around that. I am happy to talk
about those things.
If it is a 30-second ad, I do think that there are ways to
do it. And we can come up with exceptions and specifics. And 30
seconds is usually the standard. If you come up with a 10-
second ad, you can't really say too much bad about me in 10
seconds. So I am not too worried about that.
But, for instance, one of the new ads that is out there
right now, it is a bank in Boston. They do, like, a 10-second
clip, then they go to another commercial, and they come right
back with another 10. I think it is kind of neat, but, you
know, it works.
So there is all kinds of ways to do this, and I am happy to
try to parse it out.
If, in the final analysis, the average voter is allowed to
know who is saying what--if Exxon Corporation wants to come up
and say, ``Mike Capuano is a terrible guy,'' fine. My voters
know who Exxon Corporation is, and they can make that decision
on the basis of it. What I don't think is fair is for the
Citizens for Good Government to come up and say, ``Mike Capuano
is a bad guy,'' or a good guy, if it is fully funded by Exxon.
I don't mean to pick on Exxon, but what the heck, it is oil
company week.
So all I am asking is, as opposed to simply saying,
``Nothing is good,'' help us--I am happy to work with anybody
to try to make this better and to try to make it as
constitutional as possible, number one. And that means
clarification. If the idea is to clarify it to the point of
killing it, fine, I have it. I am a politician, too. You know,
you can try, and I will be nice to you, but I won't say yes.
I am also personally very interested in keeping foreign
corporations out of the American political system. Yes, I am.
Whether it is constitutional or not, Mr. Olson, you may well be
right, and you may win, but that doesn't mean I am not going to
try. And I think there is very good reason that. And I have no
idea about poll numbers. I guess I could make them up, but, you
know, my expectation is the average American would not want a
foreign corporation to participate in the American system. But
that is beside the point. Whether they do or they don't, it is
still wrong, in my estimation.
So all I am trying to do is--I am not trying to stifle
anybody, I am not trying to limit anybody. I am simply trying
to provide reasonable, thoughtful ways of disclosure. And I do
think that it is fair to say that if disclosure requirements
are so burdensome as to make them--I understand that standard.
Again, where you draw the line is a matter of judgment. If you
think there is something specifically overly burdensome, fine.
No burden--I am sorry, you know, everybody pays taxes; it is a
pain in the neck to fill out the forms. I would love to see a
tax system where we all put it on index cards. Now, don't get
me wrong, it would still be a progressive tax. But it could be
done.
And all I am saying is, so far we are focused on the
details of this bill that some people don't like, and I respect
that. Reasonable people would disagree. What I don't think is
right is to say, because of our detailed differences, we should
kill the bill, or at least the whole concept of the bill.
And just as a final point, just as a point of information,
because it is surprising to me that somehow the length of the
bill is now an issue all the time, or whether you read the
bill. I have told everybody at home, I read the House health
bill, I read the Senate health bill, I read the conference
committee health bill. I have also read the Bible and ``Moby
Dick'' and, you know, ``War and Peace'' and on and on and on,
and I don't understand all of those books. I am not going to
necessarily understand--and, therefore, the length of a bill,
interesting, but who cares. Except, of course, if anybody wants
to make a motion that the United States Congress actually uses
smaller print and single spacing, I am happy to go for it,
because the decision, though shorter, has more words in it, a
lot more words.
Now, I only say that because it was raised twice in the
opening statement, and I actually did some math here. And,
like, first of all, who cares? And, second of all, if you care
about it, you better know what you are talking about. The
decision, especially adding the two concurring, is actually
7,400 words longer, which is almost 60 percent. Now, I didn't
make that up, but you can figure it out.
I ask and invite anybody who wants to to work to try to
address the most serious concerns you might have. We may not be
able to find common ground, but I am happy to do so, and
hopefully do it quickly.
Mr. Lungren. Would the gentleman yield?
Mr. Capuano. Sure.
Mr. Lungren. I would just say in response to something you
said earlier, is there any attorney in this room who has never
lost a case, I will tell you what I told my children: I never
lost a case I shouldn't have.
Mr. Capuano. Good answer.
The Chairman. Mr. Harper.
Mr. Harper. I guess I am going to have to give some speech
lessons here, Mr. Chairman. Just remember when you come to
Mississippi, it is ``Miss-sippi.'' It will make it easier for
you when you come. And you are welcome to come.
I really have to say, one of the greatest concerns I have--
and we sit here and we say this doesn't have a chilling effect
or it is maybe not intended to impact the November elections.
If you look on page 21 on the bill, you know, it is clear what
this section says, that this goes into effect 30 days after the
enactment of the bill. And they add the language, ``without
regard to whether or not the Federal Election Commission has
promulgated regulations to carry out such amendments.''
Why would you put that language in there unless you know
that there is no way on Earth that the Federal Election
Commission can complete the regulations during that time? And
if you are making the decision on whether or not you want to
participate in any type of political advertising on your
interpretation of those rules, you are probably going to opt
not do it.
So what would be the problem--and anybody who wants to
respond--what would be the problem with saying, we are going to
make this effective 30 days after the regulations have been
done, promulgated? What is the problem?
Mr. Simon. Well, if I could respond to that, I think the
intent of the sponsors is that this legislation be effective in
time for this year's election. It is not to chill speech, it is
not to deter spending. It is to provide disclosure of the
spending in time for this year's election campaign.
I think the FEC--the reason the language is the way it is
is that they don't want the FEC to, as an effective matter,
mean the legislation won't go into effect because the FEC
delays regulations. But I think the FEC can issue regulations
in 30 days. They did under McCain-Feingold.
Mr. Harper. How long would you say that it would take--and
I will let you come back and answer. How long do you think it
would take to write the regs?
Mr. Simon. I think it can be done within 30 days. And, as I
said, there is a track record of the FEC acting that
expeditiously after McCain-Feingold was passed.
Mr. Harper. I mean, the Supreme Court decision was in
January.
Mr. Bossie. We still have no rulemaking, 3\1/2\ months.
Mr. Harper. And here we are. So, as far as I know, the FEC
has not done anything in regard to the Supreme Court decision.
If they have, I apologize. I haven't seen any publication of
that.
So, Mr. Bossie, I think you had a response.
Mr. Bossie. That was exactly what I was going to say. We
have been waiting since January 21st for the Federal Election
Commission to come down with their rulemaking. And I believe
now we are being told it is going to be sometime in June or
July. But it can take a very, very long time. And it is not
like this was--they have been working on our case for a year
before that. So I think that there is a lot of validity to what
you are saying.
Mr. Harper. What would be the problem to say that we are
going to wait until the regulations are done or we are going to
say this won't be effective in this election cycle? What harm
would there be in that, until that point was made?
Mr. Olson, any comment that you have on it?
Mr. Olson. When we are going to restrict the ability of
individuals in this country to speak and make it a crime if
they get it wrong, we have a very solemn obligation to make it
very, very clear.
And to answer your question, if there is to be a regulatory
process to explain some of these things, it is fundamental to
its constitutionality that everyone, you and me and everyone
else, be--and not including lawyers, because people need to run
for office without having to hire a lawyer and an accountant
and a bookkeeper. We need to know in this country what the law
prohibits us from saying.
I heard Mr. Simon refer to subsection--he said a(a)(7)(b),
subsection X, of something. And I was thinking, what a
nightmare that is if you are trying to speak about someone
running for office. You have to figure out what that means.
And I, in preparation for my argument in the Supreme Court
on the Citizens United case and the other cases I have argued
having to do with election law, I spend hours trying to figure
out what the definitions are and how they relate. And it is a
very, very big thicket. We have regulatory free speech--
regulated free speech, which is an oxymoron if there ever was
one. It is almost as complicated to run for office in this
country as it is to go through the Internal Revenue Code and
all those regulations.
So it is important, if nothing else--and I agree with the
sentiment that there should be working together, and the
concept of disclosure is good if it is not discriminatory and
it is not burdensome and it doesn't pick out certain people.
And people should work together for this.
But one thing that I think we should all agree upon is that
those of us who are running for office or supporting people
running for office or want to speak about people running for
office, we should know what the law permits and what it doesn't
permit.
Mr. Harper. Thank you, Mr. Chairman.
Mr. Holman. Could I briefly add to this, very briefly?
The Chairman. Why not?
Mr. Holman. If this law is not passed--or this bill is not
passed and signed into law by this summer, we are not going to
know what is happening in the 2010 elections. That is why it is
so critical. This is the very first election cycle following
the Citizens United decision.
Right now we are already monitoring a fourfold increase in
outside group spending, and we have no idea where that money is
coming from. If this law is not passed quickly, we are going to
go through our first election cycle and not have a clue what
hit us.
Mr. Harper. Why hasn't the FEC already done their updated
regs based upon the Citizens United decision back in January?
Then we would know what was in effect for the November
elections.
Mr. Holman. The Federal Election Commission has a serious
problem right now, and that is it is sharply divided along
partisan lines. Their partisan deadlock votes have increased
from 2 percent to 14 percent--2 percent all through its
history, by the way--and then last year alone has jumped a 600
percent increase, which is why I would not expect the FEC to
come out promptly with regulations.
Mr. Harper. On this bill also?
Mr. Holman. On this bill, yes.
Mr. Harper. Okay. So we can't really depend on the FEC to
come up with regs based on Citizens United or this before the
November elections to where we can make these decisions that
have to be made. Would that be a fair assessment?
Mr. Holman. I would expect the FEC would not develop
regulations by the 2010 election.
Mr. Harper. Well, then, all the more reason that we don't
need to have this bill take effect until the regs have been
written.
With that, I will yield back.
The Chairman. I thank the gentleman.
Ms. Davis.
Mrs. Davis of California. Thank you, Mr. Chairman.
Perhaps I can try and ask a simple question. What do you
think people should know when they are watching TV about the ad
that they are watching? What should they know about who has
contributed to that ad? Today, perhaps, I guess, and under the
DISCLOSE Act, what should they know? How far down should it go,
in terms of what is behind it?
Mr. Simon. Well, I think they should know who is sponsoring
the ad, and they should know the real funder behind the ad,
which is what the legislation proposes, precisely because of
the problem of the innocuously named, the generically named
front group, which provides the voter and the viewer with
virtually no useful information about the interest behind the
ad.
Mr. Nyhart. I would just ad, if a Goldman Sachs or a BP or
any deep-pocket interest wants to have a major impact, having
voters know that when the ad comes out is a right of the
voters.
Mr. Olson. With respect to that statement that was just
made, that presupposes that certain people who participate in
the political process should have disclosure obligation, if it
is BP or Goldman Sachs. But what about a person putting up a
yard sign, what do they have to disclose? What if a person
writes a pamphlet, what do they have to disclose?
My point was that it should be equal. If everybody
participating in the political process is subjected to the same
obligations and the same disclosure requirements, then
government is not selecting who can speak based upon who the
speaker is. And those requirements should not be burdensome or
oppressive such that they inhibit people, and they should be
understandable.
Mr. Bossie. Congresswoman, speaking for Citizens United,
from our standpoint, we make and we submitted, as I said, to
the Supreme Court, as well as other movies we make, TV
commercials for them. We don't feel there should be any
disclosure because we are saying, go to a local movie theater
or buy a DVD. So we have a completely different type of problem
when it comes to the disclosure issue, because right now the
Federal Election Commission is saying that we need to have a
disclaimer on there. And, as you know, we are all trying to
answer the questions the best we can, but the problem is we
have a different type of problem here.
Mrs. Davis of California. A yard sign shouldn't say that
they are paid for by the----
Mr. Bossie. No, I was speaking from what we are trying to
do and what our case was about. And so I agree with Mr. Olson.
Mrs. Davis of California. Okay.
Ms. Gilbert. From our perspective as a public interest
organization, it is all about where the money comes from and
making sure that citizens know that and can make educated
decisions based upon that. So, certainly regardless of who the
speaker is, people should know.
Mrs. Davis of California. And if there is a company or a
subsidiary of that company, it should be the subsidiary rather
than the company?
Ms. Gilbert. I mean, it should drill down. And that is
exactly----
Mrs. Davis of California. Drill down all the way.
Ms. Gilbert [continuing]. What the legislation does.
Mrs. Davis of California. Okay.
Mr. Holman. And getting back to the integrity of the
legislative process, voters need to know if there is a link
between who is funding a particular campaign ad for or against
a lawmaker and whether or not that funder has business pending
before this chamber.
Mrs. Davis of California. Okay. I appreciate that. I think
that we probably, in some ways, have more possibly that we
agree with. I am certainly with my colleague, I think there is
enough interest here to try and have something that we can look
to.
But what worries, I think, all of us is that it will be
very difficult for a voter to discern fairly quickly where
those dollars are coming from. And some people may say that
that is not that important to the voter, that they should be
able to find that information and take the time to get it. But
I think that that is really going to be a difficult thing to
do.
But I think we can get around it, frankly. I mean, I think
there is a way, even in a short snippet, to let people know
that so-and-so brought you this ad. And I hope that we can do
that.
Thank you.
The Chairman. I thank the lady.
Without objection, the record will remain open for 5 days
for Members to submit and witnesses to respond to any
additional questions submitted for the record.
I thank the panel for your participation. And I am sure we
will be hearing a whole lot more of you, you will be hearing a
whole lot more of us. Thank you.
And this committee will convene Tuesday, May 11th, at 5:00
p.m. For an additional hearing on the DISCLOSE Act.
The hearing now stands adjourned.
[The statement of Mr. Edgar follows:]
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[Whereupon, at 1:58 p.m., the committee was adjourned.]