Archive for the ‘Campaign Finance’ Category

Despite an unusual presidential race, the 2016 election proved to continue the trend since the Supreme Court’s 2010 Citizens United decision of dramatically increased campaign spending. Particularly, spending from outside organizations like super PACs and “dark money” nonprofit organizations like 501(c)(4) social welfare organizations and trade associations hit an all- time high. Citizens United and subsequent decisions ended the long-standing $5,000 limit on donations to PACs that make independent expenditures, thus earning them the new name of “super PACs.” These court decisions also allow electioneering nonprofit organizations to receive unlimited donations, and since nonprofits need not disclose their donors, they provide new avenues for corporations to funnel secret money into our elections and skirt the responsibility to their investors and the public for how they choose to spend in politics.

Even though president-elect Trump disdained normal fundraising strategies and received unprecedented free media coverage, it would be incorrect to say that corporate influence and outside spending did not have a big presence in the 2016 cycle. Each of the major presidential candidates established their own super PACs so that once donors maxed out to the candidate campaigns, they could continue making unlimited donations in support of the campaigns to their super PACs. Spending by these outside groups reached record levels and heavily contributed to the most expensive election in American history. What is even more worrisome is the fact that almost half of this unprecedented spending by super PACs came from just 50 families – the very wealthiest of America’s elite class.

Key points about outside spending in 2016

This was the most expensive election in history.  Early estimates identify that a whopping $6.9 billion was spent in the 2016 federal election cycle, making it the most expensive in history. Despite Donald Trump’s erratic fundraising strategy, big donors didn’t shy away from this election.

Outside spending hit a new record. Super PACs and 501(c) organizations not formally affiliated with any candidates hit new records of spending with a total of $1.4 billion in the 2016 cycle– up from $1 billion in 2012 and $338 million in 2008. “Dark money” groups, which are a subset of outside spenders comprised of political nonprofits that do not disclose their donors, spent just over $204 million in 2016. While “dark money” is a problem that should alarm every citizen, just as problematic is the level of coordination between candidates and super PACs. This coordination allows candidates to sidestep the $2,700 per election contribution limit. As soon as a wealthy donor maxes out to the campaign, he or she can simply turn to the candidate’s super PAC where no limits apply. Nearly half of all super PACs spend all their resources in support of one single candidate – the candidate responsible for setting up the super PAC.

Conservative groups continued to dominate outside spending. Conservative groups comprised 55% of the total outside spending in the 2016 election cycle compared to liberal groups’ 39%.

Outside spending groups spent heavily down ballot– with a lot of success. Outside spenders focused $595 million on Senate and House races. Three- fourths of this spending was targeted at races where Republicans were trying to hang onto their majority. The Pennsylvania Senate race was the most expensive race coming in at a total cost of more than $170 million, over $124 million of which came from outside spending. Outside groups outspent the candidates in many of these races, and in the end Republicans succeeded in maintaining their majority in both chambers.

Corporate influence flooded ballot initiative fights. Corporations spent over $335 million to protect their interests in ballot initiative campaigns in the states. Corporate interests won 62% of the fights where they focused their resources and outspent their opposition by an average of 33-to-1.

Corporations funneled untraceable funds through the Chamber of Commerce. In the 2016 election, the Chamber of Commerce spent the second-largest amount among groups not required to disclose their donors, second only to the NRA Institute for Legislative Action. Despite the Chamber’s claims to represent all businesses, in actuality the source of the majority its political spending comes from Big Business and very deep-pocketed corporate interests. This suggests that the over $29 million the Chamber spent on elections in 2016 was not focused on looking out for the average American business.

The 2016 election continued the trend of secret corporate influence taking advantage of lose regulations and unlimited spending capabilities to protect Big Business interests. It is more important than ever that Congress and the incoming administration not hamper the SEC from requiring publicly-traded companies to disclose their political spending. The inappropriate budget rider forbidding the SEC from finalizing this rulemaking should be removed in order to hold companies accountable to their shareholders and to the American people. Additionally, before leaving, the Obama administration should issue an executive order requiring all government contractors to disclose their political spending.

By: Grace Aylmer, Campaign Coordinator, U.S. Chamber Watch project

The U.S. Chamber of Commerce has a decades-long history of spending copious amount of money to elect pro-corporate judges to state courts. Back in 2000, the U.S. Chamber began a 10 million dollar effort to elect judges in five states- Alabama, Illinois, Michigan, Mississippi, and Ohio.

The Chamber and its big business allies have spent millions to elect judges who will represent the corporate perspective in the court, limiting consumers’ rights to sue corporations, siding with corporate defendants over injured workers or consumers, blocking efforts to reduce pollution, and stymieing laws and regulations meant to protect public health and safety.

Outside spending groups like the Chamber of Commerce have the ability to make unlimited donations to other outside spending groups, in addition to not having limits on what they receive from their own donors. In some states, these groups don’t even have to disclose the monies they spend on electioneering activity. The Chamber and its big business allies have already surpassed prior records for TV spending in state Supreme Court elections. Total outside group spending for the current state supreme court election cycle is an estimated $15.6 million, exceeding the previous record set in 2011-12 by over $2 million.

The Chamber has gotten involved in several state judicial elections, pouring in millions to try and elect pro-corporate, anti-consumer judges.  In North Carolina, this year’s state Supreme Court election has the potential to flip the state Supreme Court’s majority from Republican-affiliated judges to Democratic-affiliated judges. The race, between incumbent Justice Robert Edmunds and his challenger, State Superior Court Judge Michael Morgan, has garnered national attention from social and racial justice groups because of the court’s role in congressional redistricting. Edmunds, who is being supported by the Chamber, previously ruled in favor of the state’s congressional map, despite it being ruled unconstitutional in August after 28 of 170 legislative districts were found to be racially gerrymandered. The North Carolina Chamber of Commerce recently received $1 million from the U.S. Chamber of Commerce’s Institute for Legal Reform that has been spent on TV ads supporting Edmunds.

Another “dark” money outside spender in North Carolina is Fair Judges, a group that received $300,000 from the Republican State Leadership Committee (RSLC), which is the biggest spender in state Supreme Court elections. The Chamber, which contributed over $2 million in 2016 and over $3 million in 2014 to nationwide efforts, is the largest donor to the RSLC, contributing more than twice as much as the next biggest donor.

What’s even scarier than the amount of outside dark money spending flooding into state judicial races is the negative nature of the ads that are being paid for with this money.

In Montana, a state Supreme Court race between pro-corporate law professor Kristen Juras and district court judge Dirk Sandefur provides a startling example. “Child Porn,” “Satanic Ritual,” and “Raping 10 year old” jump out in glaring block letters set against an ominous background on an attack site against Judge Sandefur. The site, StopSetEmFreeSandefur.com, is run by a group that has received more than $200,000  from the Chamber-funded RSLC. It houses a 30 second ad, stating “for some, it’s Judge Dirk Sandefur’s refusal to give prison time to two child pornographers, for others, the last straw is Judge Sandefur’s mere seven year sentence for a man guilty of repeatedly raping a 10-year old girl, but for all, Dirk Sandefur’s decision to give no prison time to a man convicted of sexually assaulting a toddler and holding a gun to the child’s head…is the last straw.”

While much of nation’s attention has been focused on an unconventional presidential race, the problem of unlimited, undisclosed “dark” money and nasty attack ads has been largely overlooked in the nation’s equally important judicial elections, and North Carolina and Montana provide only a snapshot of the Chamber’s influence over our courts. When excessive money is spent on judicial elections by the Chamber  it raises the question of who the courts really serve.

Outside spending may leave judges feeling beholden to the corporate special interests that put them into office, threatening the integrity of our judicial system and reinforcing the concern that citizen voices are being drowned out.

 

This week, the Corporate Reform Coalition released a video interview with Vanguard Group’s founder, John C. “Jack” Bogle, about his vision in 1975 to set up a different kind of mutual fund company and how he thinks companies should best serve their shareholders.

Watch Vanguard’s founder Jack Bogle talk about a shareholders right to information like a company’s political spending.

Bogle, who founded Vanguard over 40 years ago based on a novel principle at the time- that a mutual fund company should be owned by the shareholders of its funds and not just by management- remains committed to that vision today. He fosters that commitment by speaking out on broader investor issues, for example, corporate political spending disclosure.

Bogle has submitted public comment to the U.S. Securities and Exchange Commission (SEC) on the securities law professor’s petition calling for the SEC to put forth a rulemaking that would require publicly- held companies to disclose how they spend money in politics. When asked why he commented on the petition Bogle replied, “It’s the shareholder’s right to know what we are all doing,” referring to corporate activities.

bogle-shareholder-right2-twitterBogle’s remarks come at a significant time. Investor advocates are reaching a tipping point in their push for the SEC to issue a rule requiring companies to disclose how they spend money in politics.

As of October 21, outside spending in the 2016 election alone has totaled over $1 billion, much of which is coming from dark money groups that do not have to disclose their donors. This makes it impossible to track secret corporate influence. American know that more dark money in our politics is not good for the health of our democracy, but when faced with adversaries such as giant corporations it’s hard to see an easy way to make change.

One way to combat secret corporate influence is to bring it into the light, which this disclosure rulemaking would do. Unfortunately, the SEC has been dragging its feet on the rulemaking and Congressional Republicans have helped the stagnation by inserting an inappropriate policy rider into the federal budget forbidding the SEC from finalizing (though not from working on) the rule.

For the last decade, investors have been filing shareholder resolutions at individual companies and seeing promising responses from many who are interested in increasing their transparency. Without a uniform rulemaking, though, others are allowed to continue to keep shareholders and the public in the dark about how they spend in politics. Even those who do disclose may not do it the same way as other corporations, making it hard for investors to actually use the information to make corporate comparisons.

How do mutual funds fit into this picture? The major ones, like Vanguard and BlackRock, have incredible power in corporate elections; power accumulated from the millions of retirement savings accounts they manage. With the volume of shares they control, the major mutual funds can and should support shareholder resolutions calling for political spending disclosure. Instead, Vanguard, specifically, either votes against or abstains from voting for these resolutions at the companies where its clients’ savings are invested. The weight of the major mutual fund vote means that many times resolutions fail to get majority support without it.

All shareholders, whether the traditional kind or those who own shares through their mutual fund investments, “are entitled to the information they want, they’re owners,” says Bogle in the interview. Therefore, if shareholders are calling for information about how companies spend money in politics so that they can weigh the reputational risk of this activity, companies should listen and increase their transparency.

The gravity Jack Bogle continues to hold within the investment community is immense, and we should heed his words about shareholder rights. The SEC should make strides on the political spending disclosure rule and Congress should not stand in its way. Until the rule is finalized, though, mutual funds should not hamper the efforts of shareholders calling for disclosure at individual companies.

Bogle seems optimistic that the tide is turning in shareholders’ favor. “When shareholders aren’t served first the world will change,” he says. “And it is changing.”

Originally published on the Corporate Reform Coalition’s website.

It’s clear that Americans want transparency when it comes to how companies spend in politics.

Courtesy Flickr/Almond Butterscotch.

Courtesy Flickr/Almond Butterscotch.

The next administration and the U.S. Securities and Exchange Commission (SEC) must address secret corporate political spending because it poses a great threat to democracy and investor confidence, says a new report by Public Citizen. The report, highlighting the historic campaign for an SEC rule requiring publicly held corporations to disclose their political spending, comes in advance of a Sept. 20 event on the state of corporate disclosure and as Public Citizen and its partners in the Corporate Reform Coalition (CRC) review and plan ahead for a new administration and new SEC priorities.

The Sept. 20 event is organized by Public Citizen, the AFL-CIO, Americans for Financial Reform, Ceres the Financial Accountability & Corporate Transparency (FACT) Coalition, the International Corporate Accountability Roundtable (ICAR), Patriotic Millionaires and SIF: The Forum for Sustainable and Responsible Investment, and hosted by the Center for American Progress. It will explore the SEC’s recent “Disclosure Effectiveness” review, which is evaluating corporate disclosure requirements, and the role of environmental, social and governance disclosures in promoting a sustainable economy.

The report details how a five-year campaign has driven 1.2 million comments to the SEC in support of a disclosure rule – the most in the agency’s history. The campaign also has garnered more than 500 stories in local and national press, and brought together powerful champions on Capitol Hill who are working to ensure that an SEC rulemaking on disclosure is not obstructed by congressional Republicans’ insertion of a harmful policy rider into the appropriations process that would stop the SEC from finalizing the rule. In addition, another 20,000 comments supporting political spending disclosure have come into the agency as comments to its “Disclosure Effectiveness” review process and to the agency’s Regulation S-K concept release, which solicited comments on proposed changes to corporate financial statement requirements.

The campaign began in response to the disastrous 2010 U.S. Supreme Court decision in Citizens United v. FEC, which opened the floodgates for corporations to spend unlimited and undisclosed amounts to influence American politics. In 2011, a bipartisan committee of leading corporate and securities law professors filed the first petition requesting a rulemaking at the SEC requiring all public companies to disclose their political expenditures. In response, the agency began a rulemaking, then halted it.

In this election cycle, secret outside spending is the highest it has ever been, clocking in at a whopping $660 million. Americans know that corporate influences lurk behind most campaign ads. Polls show they remain frustrated by the lack of transparency around corporate political spending.

Disclosure is material to investors as they consider the risk of their investment and important to the American voters who want to know who is bankrolling their elections. The SEC needs to take a stand and move forward with this rulemaking.

Transparency controversies have dominated this year’s presidential campaign, but observers might be missing one of the most important transparency-related topics of all: What insight will the public have into the candidates’ transition planning?

This and other related questions were covered during a National Press Club event sponsored by Public Citizen on Wednesday that featured the deputy general counsel for President-elect Obama’s 2008 transition team, an expert helping the two major party nominees conduct their transition planning right now, a leading academic expert and advocates with varying perspectives.

Norman L. Eisen, the deputy general counsel to Obama’s transition team, said the 2008 work was the last “pre-historic” transition effort because laws passed by Congress since then have formalized processes for the transfer of power from outgoing to incoming administrations.

Eisen, who subsequently became the “ethics czar” of the Obama administration, also promoted Obama’s decision to adopt an ethics policy for transition team members and to implement various sunshine-oriented policies, such as making the White House visitors’ log public.

But Taylor Lincoln, research director of Public Citizen’s Congress Watch division, noted that various measures Congress has passed to make the transitions more efficient have done little to ensure that transitions are conducted in accordance with small-d democratic principles. Despite the fact that transition work is largely publicly funded, the open records and ethics rules that apply to normal government activities do not apply to it.

These shortcomings are significant because the work of transition teams might be among the most important in a presidential administration, Lincoln said, noting that these teams choose the personnel to fill key positions and formulate policy positions.

Sean Moulton, open government project manager at the Project on Government Oversight, advocated applying the Freedom of Information Act to certain transition period records.

Heath Brown, assistant professor of Public Policy at the City University of New York, pointed out that much of the record from past transitions has been lost to history because records were not retained.

Kevin R. Kosar, senior fellow and governance project director at R Street Institute, indicated general agreement with the principle of transparency but noted a tension between transparency and privacy concerns. He noted that transition teams vary for ordinary government work because of hazy lines that separate official participants with informal advisors on the periphery.

Also on the panel was David Eagles, director of the Center for Presidential Transition at the Partnership for Public Service, which is advising the current nominees on their ongoing work. An alum of Mitt Romney’s transition planning team, Eagles noted a significant increase in the comprehensiveness of transition processes in recent years.

Public Citizen will be revisiting this issue next week with the release of a report on the policy advisors closest to Hillary Clinton and Donald Trump.

Here are some photos from the event:
Presidential Transition Event

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