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Democrats suggest ways to curb companies' campaign spending

By Dan Eggen
Washington Post Staff Writer
Thursday, February 11, 2010; 3:38 PM

Democratic leaders in Congress unveiled proposals Thursday that would limit the impact of a Supreme Court decision allowing unfettered corporate spending on political campaigns.

Sen. Charles E. Schumer (N.Y.) and Rep. Chris Van Hollen (Md.) called for a ban on companies with more than 20 percent foreign ownership, government contractors and bank bailout recipients from participating in U.S. elections. They also want to require companies to inform shareholders about political spending, and to mandate that corporate chief executives to appear in any political advertising funded by their companies.

Schumer told reporters that the proposals will be introduced later this month.

"If we don't act quickly, the court's ruling will have an immediate and disastrous impact on the 2010 elections," said Schumer, the third-ranking Democrat in the Senate.

Other measures in the package outlined by Schumer and Van Hollen:

-- Corporations would be banned from spending money on U.S. elections if a majority of their board of directors are foreign nationals, or if their U.S. operations fall under the direction of a foreign entity or country. Such measures would mark a significant strengthening of current limits on foreign influence in U.S. elections. "I think every American would agree that we do not want foreign interest spending money to try to affect those outcomes," said Van Hollen, who chairs the Democratic Congressional Campaign Committee.

-- Additional disclosures would be required for companies that help sponsor political advertising. The Democratic lawmakers said they are still considering whether to demand shareholder approval for campaign spending.

-- Unions, advocacy groups and all corporations, including nonprofits, would be required to set up special accounts for spending on "political activities" and would be required to report contributions and spending details to the Federal Election Commission.

Several of the proposals are aimed at preventing corporations from hiding behind trade groups or other organizations in order to fund attack ads on political candidates, backers said. During the health-care debate, for example, several major insurers that publicly expressed support for reform gave up to $20 million to the U.S. Chamber of Commerce to pay for anti-reform advertising.

"Any funneling of resources by a particular company to the Chamber of Commerce or a professional association will not avoid detection," Schumer said.

The ideas drew immediate praise from many campaign-finance activists, who argue that the high court's ruling last month will launch a tidal wave of corporate and union money into U.S. elections, including from companies with primary ownership overseas.

"The reforms outlined today . . . are needed to blunt the worst impacts of this heinous judicial overreach by the court," said Lisa Gilbert, democracy advocate for the U.S. Public Interest Research Group.

But the proposals are certain to be strongly opposed by major business groups and many Republicans, who have praised the court's decision as a victory for the First Amendment.

Steven J. Law, chief counsel for the U.S. Chamber of Commerce, said the package "completely ignores union political spending" and is being pushed by Democrats who stand to gain from labor backing.

Nancy McLernon, president of the Organization for International Investment, which represents the U.S. subsidiaries of foreign firms, also said the proposal unfairly targets major U.S. employers with overseas parent companies. "We are making these companies wear the dunce hats in the classroom because their parent company happens to be headquartered in Germany or France or Sweden," she said.

In a 5 to 4 decision Jan. 21, the high court found that corporations have the same rights as individuals when it comes to political speech and can therefore use their profits to support or oppose individual candidates.

The decision opens the door to unlimited spending by corporations, trade groups and unions in the weeks leading up to an election. Corporations had been banned since 1947 from using company money in this way.

But they remain barred from using corporate treasuries to make direct donations to candidates. Those contributions must still be made through political action committees, which raise money independently.

The court's decision has come under sharp criticism from Democrats, who historically have attracted less campaign money from corporations than Republicans. During his State of the Union address, President Obama said the ruling would "open the floodgates for special interests, including foreign corporations, to spend without limit in our elections."

Many Republicans and conservative campaign experts, by contrast, argue that Democrats are overstating the ruling's potential impact and are attempting to demonize corporations in the process. Justice Samuel A. Alito, who sided with the court's majority, mouthed the words "not true" in response to Obama.

Two reform groups, Public Campaign and Common Cause, said that Schumer and Van Hollen's proposals were "a great start" but urged passage of broader legislation that would encourage small-money donors through public matching funds.

"At the end of the day, these proposals still leave members of Congress dependent on money from Wall Street interests, insurance companies and the other deep-pocket interests who control Washington," said Public Campaign President Nick Nyhart.

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