Back to the Nineties? Or the Coming (C) 4 Shakedown?

With the announcement of Jeb Bush’s 501 (c) 4 organization, Right to Rise Policy Solutions, we are seeing a new assault on the most fundamental principles of the campaign finance system. Jennifer Nicoll Victor provides an excellent backgrounder on this threat. 501 (c) 4 nonprofit organizations are intended to engage in “social welfare” functions; they get their name from the section of the U.S. Code that creates them. Like Super PACs, 501 (c) 4 social welfare organizations can raise unlimited sums from corporations, labor unions, and individuals. Unlike Super PACs, 501 (c) 4’s do not have to disclose their donors. (There are perfectly sound arguments for allowing most nonprofits to keep their donors secret; they do not apply to groups engaging in electioneering).

At least we know who is funding Super PACs – except when they are themselves funded by 501 (c) 4’s. Since under Citizens United, 501 (c) 4’s can make independent expenditures under Citizens United, we now have a large flow of “dark money” in our politics. $170 million was spent in the 2014 elections by groups that do not disclose their donors. This is the most serious amount of undisclosed funds since “issue advocacy” era pre-BCRA.

By and large, for-profit, publicly traded corporations have not given to Super PACs. As a Chamber of Commerce official once told me, “Business traditionally doesn’t like politics.” Generally, corporations give as little as they need to in order to secure access and build relationships. PAC giving and some individual donations by lobbyists and top executives do the job. Rarely do corporations have strongly partisan or ideological views. Few want controversy. Few want shareholders raising awkward questions. Few want to risk angering powerful incumbents.

Giving to Super PACs has been dominated by extremely wealthy individuals, often motivated by strongly partisan or ideological incentives. Many may have pet issues, while others have interests before government. (Sheldon Adelson is a stalwart Republican who loves Israel, hates labor unions, and has numerous gaming interests affected by public policy). Disclosure usually doesn’t bother egomaniac billionaire ideologues, while those who don’t want the publicity can always give to a (c) 4 instead. Super PACs have also attracted donations from privately held corporations (under the control of their wealthy owners, and without any troublesome shareholders), and from labor unions.

Who gives to 501 (c) 4’s? We don’t know, although there are some signs that for-profit, publicly traded corporations play more of a role than they do in supporting Super PACs. We face two major threats. Since giving to 501 (c) 4’s is completely anonymous, corporations can give without fear of consumer boycotts or shareholder backlash. In turn, politicians (and their allies) are in a better position to push corporations to give as the price of access. Is this going on? There are whispers, but we do not know for sure.

We are facing the return of two of the worst elements of the 1990s: the unlimited anonymous giving that supported issue advocacy groups like Americans for Job Security, coupled with the “soft money shakedown” in which politicians pressured corporations to contribute unlimited sums to party committees. All in all, I’d rather have a Spice Girls reunion.

Is there anything we can do? Yes. Congress could pass the SUN Act. The Internal Revenue Service can devise more appropriate rules for political activity by 501 (c) 4 organizations. (There are real issues about dividing electioneering – not part of the “social welfare” mission – from speaking out on issues – which is – so makes the work of the Bright Lines Project so important). The Securities and Exchange Commission could require publicly traded corporations to disclose their political spending. The White House could do the same for federal contractors (and what corporation doesn’t want to be a federal contractor?). Disclosure traditionally has been a cornerstone of our campaign finance system, supported by both liberals and conservatives. Nineties nostalgia has its place, but not at the heart of our political system.

[Cross-posted at Mischiefs of Faction]

Richard Skinner

Richard Skinner teaches at the School of Professional and Extended Studies at American University and is the author of More Than Money: Interest Group Action in Congressional Elections. He tweets at @richardmskinner.