Two Democrats' remedy for the high court's campaign finance ruling

Tuesday, February 16, 2010

THERE IS no simple legislative fix to the Supreme Court's unfortunate recent decision allowing corporations to spend money directly advocating the election or defeat of federal candidates. The court's 5-4 decision was grounded in the First Amendment; consequently, the congressional response is inevitably limited. Sen. Charles E. Schumer (D-N.Y.) and Rep. Chris Van Hollen (D-Md.) unveiled an important proposal last week designed to address the most fixable aspects of the ruling in time for the 2010 election.

The most dangerous aspect of Citizens United v. Federal Election Commission is that it would let corporations spend money anonymously, by funneling donations through trade associations or other groups that do not have to disclose their donors. This gap in reporting requirements existed before the Supreme Court ruling. But the decision made the loophole more problematic by allowing corporations to spend directly on political campaigns, and not only through so-called issue ads that stop short of endorsing or opposing particular candidates.

The Schumer-Van Hollen proposal would address this problem by requiring groups running ads that support or oppose a candidate to report their donors to the Federal Election Commission and list the top five donors in the advertising itself. In addition, the corporation would have to disclose political expenditures to its shareholders, posting the spending within 24 hours on the company Web site. If corporations are going to get directly involved in political campaigns, such transparency about their spending is imperative.

The proposal also attempts to curtail political involvement by particularly troublesome classes of corporations: foreign-owned companies and government contractors. This part gives us more pause. The Supreme Court has spoken, however wrongly; the proper legislative response is to come up with a well-tailored solution, not the one that achieves the biggest end-run around what the court has said is the constitutionally required room for free speech. The prohibition on government contractors is so broadly worded as to sweep in nearly every major corporation that sells goods to the government; at the very least, some significant dollar threshold should be applied here.

On the issue of foreign ownership, the proposal defines a foreign-owned company as one with foreign ownership of 20 percent or more, a majority of foreigners on the board, or whose "U.S. operations, or their decision-making with respect to political activities, falls under the direction or control of a foreign entity, including a foreign government."

Under existing rules -- unaffected by the Supreme Court decision -- foreign individuals, corporations and countries are barred from making political expenditures, and U.S. subsidiaries of foreign companies cannot use foreign funds or let foreigners make decisions on political spending. If those rules need tightening, in particular to keep foreign governments from influencing U.S. elections, that should be done, but in a way that is sensitive to the realities of a globalized economy.

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