The Corruption-Disclosure Connection

Bruce Cain’s thoughtful recent post in this series on his semi-disclosure idea provides an opportunity for me to explain more fully the connection between disclosure rules and the prevention of corruption.

Let’s start with an easy case, and work our way toward Bruce’s example. In 1995, Jude Wanniski wrote a New York Times op-ed in which he called upon a change in federal law which would have allowed wealthy magazine owner Steve Forbes to fully bankroll a presidential campaign for Jack Kemp. Under then-existing law, Forbes could not give Kemp more than a thousand dollars in the primary and another thousand for the general election. Wanniski said that Kemp’s views were very similar to Forbes’s views, but that Kemp would be a stronger candidate and more likely to be elected. He saw no reason for the federal contribution limitation, although I defended the limitation on anticorruption grounds. (Forbes later ran for president but did not do well in the Republican primaries.)

Suppose Congress followed Wanniski and eliminated individual contribution limits. Or, somewhat more likely (though I think still unlikely), suppose the Supreme Court struck down the individual limitations on contributions to candidates. Would Bruce support full disclosure the next time a Forbes stands ready to contribute millions to elect a Kemp? Or, to get everyone’s partisan juices flowing, the next time a Soros stands ready to contribute millions to a Clinton, or a Murdoch to a Palin? I know that I would be strongly in favor of such disclosure. With this much money being contributed, the candidate would feel a great debt of gratitude, and there would be a temptation to give the bankroller some presidential or legislative favors. This is even more likely to occur on the congressional level, where a small number of large contributors could contribute a large percentage of donated funds to a candidate.

Disclosure is not as good a deterrent to prevent corruption in these circumstances contribution limitations would be, but in the absence of limits, disclosure is a lot better than nothing. Disclosure helps opponents, the press, and public ferret out corrupt actions undertaken by politicians for campaign donors.

Wanniski did not win that battle. Individuals still cannot bankroll presidential or congressional campaigns directly. But thanks to Citizens United, to developments in the lower courts and at the FEC, as well as inadequately drafted disclosure provisions in the Internal Revenue Code, it is now possible for individuals, corporations, labor unions, and other entities to make unlimited and undisclosed contributions to front groups which support or oppose candidates for office. As the law stands now, all that is disclosed is the spending by Americans for American Values, and not the real people with the money behind the ads.

Though the contribution information need not be disclosed to the public, nothing prevents the contributor or the front group from disclosing that information to candidates and party leaders. This independent spending therefore raises a similar potential for corruption as the Wanniski proposal did, and therefore the same argument for disclosure as a second-best anticorruption provision applies.

Bruce points out that in Citizens United the Court majority indeed said—without any evidence supporting the statement in the record or in the Court’s opinion—that independent spending cannot corrupt candidates. I’ve explained my disagreement with this statement at length elsewhere, and don’t view the unsupported statement as either a constitutional barrier or a good policy argument against mandating disclosure of large contributions funding such ads. I also note that the Citizens United majority seemed to recognize that corruption could still be a problem with independent expenditures: “If elected officials succumb to improper influences from independent expenditures; if they surrender their best judgment; and if they put expediency before principle, then surely there is cause for concern. We must give weight to attempts by Congress to seek to dispel either the appearance or the reality of these influences. The remedies enacted by law, however, must comply with the First Amendment; and, it is our law and our tradition that more speech, not less, is the governing rule.”

Bruce sees the Koch brothers as pursuing an electoral strategy rather than a legislative strategy and therefore sees no danger of corruption. Whether or not this is true as to the Koch brothers, there are many contributors to front groups pursuing a legislative strategy. So when an industry secretly backs a candidate through a front group, I expect industry leaders to be calling and to get a welcome reception after the election.

Restoring party soft money, as Bruce suggests, presents something of a mixed bag on the anticorruption front. Assuming that the parties would have to disclose all sizable contributions received, that would be a benefit compared to secret contributions to front groups. Parties also tend to be more responsible than outside groups in terms of their advertising, so the public would be less likely to face as many misleading ads. On the other hand, we should not forget why McCain-Feingold imposed the soft-money ban in the first place: both of the major political parties were selling access (or potentially more) to elected officials to the party’s bankrollers. It is not clear to me that allowing the Democrats and Republicans to take million-dollar donations from those with important legislative business before the Congress and the President would decrease the potential for corruption.

Finally, Bruce did not understand my enforcement argument. Under current federal law, most foreign individuals and entities are precluded from spending or contributing money in connection with U.S. elections. Disclosure ensures that these rules are not being broken, and that foreign entities (including foreign governments) are not buying influence through secret contributions to these new front groups.

I titled my original response to Bruce a “semi-objection” to his semi-disclosure proposal, because I agree that there is little social benefit to disclosure of small contributions and the potential for a chill of small-scale political activity. But when the Chamber of Commerce, one of the most powerful groups in Washington claims it has been chilled, I am not only dubious of the claim’s veracity: I stand with Justice Scalia’s call for groups in the democratic process to have some “political courage” lest our democracy be “doomed.”

Also from This Issue

Lead Essay

  • Shade from the Glare: The Case for Semi-Disclosure by Bruce Cain

    Bruce Cain’s lead essay calls for a compromise on campaign finance disclosure. We want many things from our election law, he notes – the freedom to speak, a process that both is and appears to be just, a well-informed electorate, and protection for the holders of controversial opinions. Cain suggests semi-disclosure as a good way to get most of what we want. He advocates “the full reporting but only partial disclosure of campaign donor information.” Semi-disclosure of the type Cain suggests is already used in the release of census data, where individual privacy is respected even while demographers gain valuable information from the aggregate. Giving voters information about campaign contributions without giving them donors’ names would allow voters to consider the nature of a candidate’s or a measure’s supporters while shielding those supporters from personal attack, Cain argues.

Response Essays

  • The Costs of Mandating Disclosure by John Samples

    In his response essay, John Samples notes that disclosure discourages people from participating in the political process. When someone decides not to do something, that decision is all but invisible to researchers who might wish to study it. Disclosure also shifts attention from the content of speech to the identity of the speaker, which is not necessarily the best basis for decisionmaking. The paternalism of disclosure is also a problem, as he sees it: the government appears to be trying to keep you from hurting yourself, even if you decline to fulfill your responsibilities as a citizen by examining the issues on their merits.

  • DISCLOSE Act Is an Opening, Not a Barrier by Nikki Willoughby

    In her response essay, Nikki Willoughby argues that anyone who opposes full disclosure of donors’ identities probably has something to hide. Spending money isn’t speech; it’s a commercial transaction, and thus regulable under our law. Moreover, even if campaign finance were a matter of speech, some speech always has been subject to regulation, including slander, libel, and speech that incites imminent acts of violence. We should likewise regulate speech that imminently threatens our democracy, by mandating that sources of such speech are disclosed. Secrecy destroys trust in government, driving citizens away from political participation. Openness wouldn’t chill participation – openness would encourage it.

  • A Semi-Objection to Bruce Cain’s Semi-Case for Semi-Disclosure by Richard Hasen

    Richard Hasen offers some objections to Cain’s case for semi-disclosure. Cain’s plan doesn’t seem to appreciate sufficiently the benefits of disclosure; whereas public disclosure and analysis by independent watchdog groups can provide fairly sophisticated monitoring of campaign finance data, we shouldn’t expect the government to provide all the details about patterns of campaign contributions that we might desire. Further, he finds little benefit to demographic data about campaign finance shorn of names and public identities of major contributors.

The Conversation