[Congressional Record Volume 156, Number 64 (Monday, May 3, 2010)]
[Senate]
[Pages S3029-S3032]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DISCLOSE ACT
Mr. SCHUMER. Madam President, last Friday, I introduced S. 3295, the
DISCLOSE Act, because Democracy Is Strengthened by Casting Light on
Spending in Elections. I am joined by 40 of my Senate colleagues as
cosponsors.
Decades ago, Justice Louis Brandeis boldly said, ``Sunlight is said
to be the best of disinfectants.'' That is exactly what this bill will
do--shine a light on the flood of spending unleashed by the Citizens
United decision.
The DISCLOSE Act will drill down and give the public the information
they have a right to know. No longer will groups be able to live and
spend in the shadows.
The Court spoke in the Citizens United decision. And while there is
disagreement with its ruling, there is room to maneuver. This
legislation does not circumvent the Court by reimposing a backdoor ban
on corporate spending. Instead, the DISCLOSE Act closes certain
loopholes and relies on enhanced disclosure, an idea endorsed by the
Court. This legislation meets the test of constitutionality.
The aim of the DISCLOSE Act is simply to level the political playing
field so that special interests do not drown out the voice of the
average voter. It applies to corporations and advocacy organizations
the same rules that candidates already have to abide by. And it applies
these rules equally across the board. It covers corporations and labor
unions alike, as well as 527s, social welfare organizations, and trade
associations.
The DISCLOSE Act will do the following:
First, new disclaimers on all television advertisements funded by
special interests will be required in order to uncover who is really
behind the ad. If a corporation is running the ad, the CEO will have to
appear to at the end to say that he or she approved the message, just
like a candidate must do today. If an advocacy organization is running
the ad, both the head of the organization running the ad, and the top
outside funder of the ad, will have to appear on camera. Additionally,
a list of the top five funders to that organization will be displayed
on the screen. This will stop the funneling of big money through shadow
groups in order to fund ads that are virtually anonymous. For the first
time, the money can be followed back to its origin and the source of
the money will be public.
Second, an unprecedented level of disclosure is mandated, not only of
an organization's spending, but also of its donors. In disclosing their
donors, organizations will have a choice--they can either disclose all
of their donors that have given in excess $1,000, or they can disclose
only those donors who contribute to the group's campaign-related
activity account, if they solely use that account for their spending.
All spending intended to influence an election--be it on television,
radio, print, mailers, robocalls, and billboards--would flow through
this account. And every donor who contributes more than $1,000 would
have to be disclosed. Organizations must not only disclose these donors
to the FEC, but also to the public on their Web sites and to their
shareholders and members through their annual and quarterly reports.
Third, loopholes created by the Court's decision are closed. The
first loophole is closed by preventing foreign-controlled entities from
spending unlimited sums in our elections through their U.S.-based
subsidiaries. This was a loophole specifically mentioned by Justice
Stevens in his dissent. Foreign leaders who don't have American
interests in mind shouldn't have the ability to influence our
elections. The second loophole is closed by banning companies with
government contracts in excess of $50,000 from making unlimited
expenditures. The third loophole is closed by banning expenditures by
companies that receive government assistance such as TARP. Taxpayer
money should not be used to help corporations influence elections.
Finally, in an attempt to allow all candidates and parties to respond
to ads funded by special interests, the current law granting lowest
unit rate to candidates is expanded by giving those same rights to the
parties on a limited geographic basis.
[[Page S3030]]
I ask my colleagues to join me in sponsoring and passing the DISCLOSE
Act.
I ask unanimous consent that a section by section analysis of the
DISCLOSE Act be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
TITLE I--REGULATION OF CERTAIN POLITICAL SPENDING
Sec. 101. BAN PAY-TO-PLAY
Prevent Government Contractors from Spending Money on
Elections. Government contractors would be barred from making
campaign-related expenditures, defined to include independent
expenditures and electioneering communications. This is an
extension of an existing ban on contributions made by
government contractors. Before Citizens United, corporations
could not make such campaign-related expenditures. A $50,000
contract threshold will be included to exempt small
government contractors.
Prevent Corporate Beneficiaries of TARP from Spending Money
on Elections. Corporations that received bailout funding from
the federal government should not be permitted to use
taxpayer money to influence elections. This section would
prohibit bailout beneficiaries from making campaign-related
expenditures. Once that money is repaid, however, the
restrictions would be lifted.
Sec. 102. PREVENT FOREIGN INFLUENCE IN U.S. ELECTIONS
While foreign nationals, including foreign corporations
(those incorporated overseas), are banned from making
contributions or expenditures to influence U.S. elections,
the opinion in Citizens United created a loophole for
spending by domestic corporations controlled by foreign
nationals. To close the loophole, the legislation extends the
existing prohibition on contributions and expenditures by
foreign nationals to include domestic corporations under the
following circumstances:
1. If a foreign national owns 20% or more of voting shares
in the corporation, which is modeled after the control test
in many states, including Delaware;
2. If a majority of the board of directors are foreign
nationals;
3. If one or more foreign nationals have the power to
direct, dictate, or control the decision-making of the U.S.
subsidiary; or
4. If one or more foreign nationals have the power to
direct, dictate, or control the activities with respect to
federal, state or local elections.
Sec. 103. PREVENT ORGANIZATIONS FROM COORDINATING THEIR ACTIVITIES WITH
CANDIDATES AND PARTIES
The legislation ensures that corporations and unions are
not allowed to coordinate campaign-related expenditures with
candidates and parties in violation of rules that require
these expenditures to be independent.
Current FEC rules bar corporations and unions from
coordinating with congressional candidates and parties about
ads that refer to the candidate and are distributed within 90
days of a primary election or within 90 days of the general
election. For Presidential contests, current FEC rules
prohibit coordination on ads that reference a presidential
candidate in the period beginning 120 days before a state's
Presidential primary election and continuing in that state
through the general election.
This legislation would do the following:
For House and Senate races, the legislation would ban
coordination between a corporation or union and the candidate
on ads referencing a Congressional candidate in the time
period starting 90 days before the primary and continuing
through the general election. For presidential campaigns, the
legislation would ban coordination between a corporation or
union and the candidate on ads referencing a Presidential or
Vice Presidential candidate in the time period starting 120
days before the first presidential primary and continuing
through the general election.
Sec. 104. POLITICAL PARTY COMMUNICATIONS
The legislation provides that any payment by a political
party committee for the direct costs of an ad or other
communication made on behalf of a candidate affiliated with
the party is treated as a contribution to the candidate only
if the communication is directed or controlled by the
candidate.
Party-paid communications that are not directed or
controlled by the candidate are not subject to limits on the
party's contributions or expenditures.
TITLE II--PROMOTING EFFECTIVE DISCLOSURE OF CAMPAIGN-RELATED ACTIVITY
The legislation ensures that the public will have full and
timely disclosure of campaign-related expenditures (both
electioneering communications and public independent
expenditures) made by covered organizations (corporations,
unions, section 501(c)(4), (5), and (6) organizations and
section 527 organizations).
The legislation imposes disclosure requirements that will
mitigate the ability of spenders to mask their campaign-
related activities through the use of intermediaries.
It also requires disclosure of both disbursements made by
the covered organization and also the source of funds used
for those disbursements.
Subtitle A--Reporting Improvements to the FEC
Sec. 201. INDEPENDENT EXPENDITURES
The definition of an ``independent expenditure'' is
expanded to include both express advocacy and the functional
equivalent of express advocacy, consistent with Supreme Court
precedent. Additionally, the section imposes a 24-hour
reporting requirement for expenditures of $10,000 or more
made more than 20 days before an election, and expenditures
of $1,000 or more made within 20 days before an election.
Sec. 202. ELECTIONEERING COMMUNICATIONS
This section expands the definition of ``electioneering
communications'' to include all broadcast ads that refer to a
candidate within the period beginning 90 days before a
primary election, until the date of the general election. Any
such ``electioneering communication'' is subject to the
disclosure requirements in the bill. The section also expands
the reporting requirements for electioneering communications
to include a statement as to whether the communication is
intended to support or oppose a candidate, and if so, which
candidate.
Subtitle B--Expanded Requirements for Disclosure
Sec. 211. IMPROVED DISBURSEMENT REPORTING REQUIREMENTS
The legislation would require corporations, labor unions,
and section 501(c)(4), (5), or (6) organizations--as well as
section 527 organizations--to report all donors who have
given $1,000 or more to the organization during a 12-month
period if the organization makes independent expenditures or
electioneering communications in excess of $10,000.
If an organization makes a transfer of funds to another
person for the purpose of making an independent expenditure
or electioneering communication, the organization shall be
treated as making an independent expenditure or
electioneering communication. A person shall be deemed to
have transferred funds for the purpose of making campaign-
related expenditures if there have been substantial
discussions about such expenditures between the person making
the transfer and the person receiving the funds, if the
person making the transfer or the person receiving the
transfer knows (or should have known) of the intent to make
campaign-related expenditures by the person making the
transfer or if making the transfer or the person receiving
the funds made a campaign-related expenditure in the last
election cycle or the current cycle.
Sec. 212. DISCLOSURE OF GENERAL TREASURY FUNDS
If a donor to a covered organization specifies that his
donation may not be used for campaign-related activity, the
organization is restricted from using the donation for that
purpose, and may not then disclose the identity of the donor.
The organization's CEO must certify to the donor within 7
days that such funds will not be used for campaign-related
activity.
If a covered organization makes a disbursement for
campaign-related activity, the CEO must file a statement with
the FEC certifying that the expenditure was not made in
coordination with a candidate, that funds designated by the
donor not to be used for campaign-related activity have not
been used for any campaign-related activity, and that the
spending has been fully disclosed and made in compliance with
law.
Sec. 213. CREATION OF SEPARATE CAMPAIGN-RELATED ACTIVITY ACCOUNT
An organization can establish a separate ``Campaign-Related
Activity'' account to receive and disburse political
expenditures. If an organization makes campaign-related
expenditures exclusively from its separate account, then it
is only required to disclose only donors who have contributed
$10,000 or more for unrestricted use or donors who have
contributed $1,000 or more specifically for campaign-related
activity.
Sec. 214. ENHANCE DISCLAIMERS TO IDENTIFY SPONSORS OF ADS
Require Leaders of Corporations, Unions, and Organizations
to Identify that they are Behind Political Ads. If any
covered organization (corporation, union, section 501(c)(4),
(5), or (6) organization, or section 527 organization) spends
on a political ad, the CEO or highest ranking official of
that organization will be required to appear on camera to say
that he or she ``approves this message,'' just like
candidates have to do now.
In order to prevent ``Shadow Groups'', Require Top Donors
To Appear in Political Ads They Funded. In order to prevent
individuals and entities from funneling money through shell
groups in order to mask their activities, the legislation
will include the following requirements:
The top funder of the advertisement must also record a
stand-by-your-ad disclaimer.
The top five donors of non-restricted funds to an
organization that purchases campaign-related TV advertising
will be listed on the screen at the end of the advertisement.
This has been used very successfully in Washington State and
is the model for this section in the legislation.
Subtitle C--Reporting Requirements for Registered Lobbyists
Sec. 221. REQUIRING REGISTRANTS TO REPORT INFORMATION ON INDEPENDENT
EXPENDITURES AND ELECTIONEERING COMMUNICATIONS
In an effort to add to the transparency of lobbying
activities, all registrants under the Lobbying Disclosure Act
must disclose the
[[Page S3031]]
following information on their semiannual reports: the date
and amount of each independent expenditure or electioneering
communication of $1,000 or more, and the name of each
candidate referred to or supported or opposed.
Subtitle D--Filing by Senate Candidates with the Federal Election
Commission
Sec. 231. FILING BY SENATE CANDIDATES WITH THE COMMISSION
In addition to the increased disclosure and transparency
placed on outside organizations, the legislation will
incorporate language from the bipartisan S. 1858, which
requires Senators to electronically file their campaign
finance reports directly to the FEC.
TITLE III--DISCLOSURE OF CAMPAIGN-RELATED ACTIVITY TO MEMBERS &
SHAREHOLDERS
Sec. 301. ENHANCE REQUIREMENTS FOR DISCLOSURE OF POLITICAL EXPENDITURES
TO SHAREHOLDERS AND MEMBERS OF COVERED ORGANIZATIONS
All campaign-related expenditures made by a corporation,
union, section 501(c)(4), (5), or (6) organization, or
section 527 organization must be disclosed on the
organization's website with a clear link on the homepage
within 24 hours of reporting such expenditures to the FEC.
Additionally, all campaign-related expenditures made by a
corporation, union, section 501(c)(4), (5), or (6)
organization, or section 527 organization must be disclosed
to shareholders and members of the organization in any
financial reports provided on a periodic and/or annual basis
to its shareholders or members.
TITLE IV--TELEVISION MEDIA RATES
Sec. 401. PROVIDE LOWEST UNIT RATE FOR CANDIDATES AND PARTIES
Current law allows for candidates to receive the lowest
unit rate for airtime in order to get their message out over
the airwaves.
If a covered organization (which includes corporations,
unions, section 501(c)(4), (5), and (6) organizations, and
section 527 organizations) spends $50,000 on airtime to run
ads on broadcast, cable, or satellite television that support
or oppose a candidate, then that candidate or political party
committee is allowed to receive the lowest unit rate for that
media market.
The broadcaster must also ensure that the candidate or
political entity has ``reasonable access'' during
nonpreemptible airtime.
TITLE V--OTHER PROVISIONS
This Title contains the judicial review, severability, and
effective date sections.
Mrs. FEINSTEIN. Madam President, I rise to express my strong support
for the Democracy Is Strengthened by Casting Light on Spending in
Elections Act, also called the DISCLOSE Act.
I want to thank Senator Schumer for his work on this important bill
and say that I plan to support it every step of the way.
Before I discuss the merits of this legislation, I think it is
important to provide some context.
This bill is a legislative response to a Supreme Court decision. In
2002 we passed the Bipartisan Campaign Reform Act. The law was
bipartisan, widely supported, and we firmly believed it to be
constitutional based on prior decisions of the Court.
In 2003, the Supreme Court upheld portions of the law in the case of
McConnell v. Federal Election Commission.
But on January 21 of this year, the Roberts Court handed down a 5-4
decision striking down parts of the Bipartisan Campaign Reform Act.
That decision--Citizens United v. Federal Election Commission--flew
in the face of nearly a century of congressional law. It also
overturned two prior rulings of the U.S. Supreme Court. The overturned
cases were McConnell v. Federal Election Commission, 2003, and Austin
v. Michigan Chamber of Commerce, 1990.
The case is not alone. It is part of a trend of decision after
decision from the Roberts Court overturning prior precedents. I have
real concern that this Court is going out of its way to rewrite and
reinterpret prior law. Its decisions seem to favor corporate interests
over the interests of the American people. We have heard talk of
``activist'' courts before and I fear that is exactly what we have
today.
The Citizens United decision may be the most troubling one yet. This
decision does not only impact one group of people or one area of the
law--it affects the very way our elections and our democratic system
are run.
The Court's decision in this case opened the door to unlimited
corporate spending in federal elections. It held that the first
amendment of the Constitution protects the rights of corporations, and
protects their right to spend freely--in the millions or even the
billions of dollars--on election ads to support or defeat their favored
candidates.
This means that an oil company like ExxonMobil could spend any
portion of its billions in profits to elect a candidate who will let
them drill more, or to defeat a candidate who opposes their drilling
plans.
It means that Xe Services, formerly known as Blackwater, and other
defense contractors could spend unlimited sums toward the election of
candidates who view their defense positions favorably.
And large banks like JPMorgan Chase would be free to use their
corporate treasury funds to attack candidates who favor financial
regulation.
This last example, of course, is a very real and present situation.
The questions on the floor right now are of great importance--should
the credit default swaps and derivative contracts that have wreaked
havoc on our economy be regulated, and how? These are questions we need
to answer with the interest of the American public and our economy in
mind, not the possibility that JP Morgan could launch a multimillion
dollar attack against us if we don't bow to their demands.
As Fred Wertheimer of Democracy 21 testified at a Rules Committee
hearing, ``It would not take many examples of elections where
multimillion corporate expenditures defeat a member of Congress before
all members quickly learn the lesson, vote against the corporate
interest at stake in a piece of legislation and you run the risk of
being hit with a multimillion-dollar corporate ad campaign to defeat
you.''
The Supreme Court's decision is based on constitutional law. They get
the final word on the Constitution, and they have spoken. So our
response unfortunately has to be made with one hand tied behind our
back. The DISCLOSE Act is a powerful attempt to show the public the
effect of this decision and to ensure that our election process will
remain transparent.
Here is what the bill would do:
First, it would require new disclaimers so that the American public
knows who is behind an ad they see on TV.
If a corporation runs an ad, the CEO must stand up and say that they
approved the message. If an advocacy organization runs the ad, the head
of the organization and the top outside funder must appear. The point
is simple--if you are behind an ad, say so, and let the public know.
Second, the bill would impose new disclosure requirements.
Organizations will have to disclose all of their donors who have
given over $1000 or who have contributed to their election spending
accounts.
Let me give you an example from the National Law Journal of why these
disclosure and disclaimer rules are important.
Last summer, an organization called America's Health Insurance Plans,
or AHIP, collected between $10 and $20 million from major health
insurance companies such as Aetna, Cigna, Kaiser Foundation,
UnitedHealth Group, and Wellpoint. AHIP funneled these funds to the
U.S. Chamber of Commerce, which set up two separate entities called the
``Campaign for Responsible Health Reform'' and ``Employers for a
Healthy Economy.'' These two shell organizations then engaged in
widespread advertising to oppose health reform. Although the health
insurance companies were the primary funders of the ads, the American
public had no way of knowing that by the time the ads appeared on TV.
The DISCLOSE Act will require disclaimers that name an ad's top
funders and disclose where the money came from. I think this is
important, and I believe it will be an important step forward in true
voter education and transparency.
Third, the bill will prevent foreign-controlled entities from
spending unlimited sums in American elections through their
subsidiaries.
Under current law, foreign companies cannot directly contribute to
candidates or air election ads, but their U.S.-based subsidiaries can
and often do. According to the Washington Post, since 2007, U.S.-based
subsidiaries of foreign corporations have contributed more than $20
million to Federal campaigns through political action committees.
The rules will prevent a corporation from making contributions or
spending on election ads if a foreign national
[[Page S3032]]
owns 20 percent or more of its voting shares; a majority of the board
of directors are foreign nationals; foreign nationals have the power to
control the decision making of the subsidiary; or foreign nationals
control election-related expenditures.
Fourth, the bill will prohibit any company with government contracts
in excess of $50,000 and any company that receives TARP or similar
government assistance funds, from making unlimited election
expenditures.
The point here is simple--if your business relies on government
contracts or government assistance for its revenues, you should not be
in the business of trying to buy seats for your friends or take them
away from your enemies.
Finally, the bill will expand current law to allow political parties
the same ability as candidates to get television ad time at the
``lowest unit rate'' in certain situations and in certain geographical
areas.
The Roberts Court's decision in Citizens United was, I believe, the
wrong one. It protected corporations at the expense of drowning out
individuals' free speech. It threatened to put democratic elections in
the United States up for sale. And it will, I believe, lead to voters
having less reliable information about candidates--not more.
The DISCLOSE Act cannot solve all of the problems created by the
decision, but it is a critical step forward. The bill will ensure that
the American public knows who is funding an ad when they see it on
television, and it will close loopholes that could have otherwise
allowed unlimited spending in our elections by foreign nationals and
corporations receiving government assistance.
I believe it is essential that we pass this bill quickly, and I look
forward to working with Senator Schumer and others to do so.
____________________