[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[Senate]
[Pages 6962-6965]
[From the U.S. 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

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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.
  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

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     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 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

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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 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.

                          ____________________