WAVES OF dark money are washing through the country’s political system as big donors exploit a trick to get around disclosure laws — creating sham corporations to do the donating for them.
Corporations have already channeled some $68 million into this political cycle, according to a Post analysis last month, which means they are on track to break their 2012 record. Many of these corporations are recognizable — but many others are fake entities created to hide the identities of political donors. Corporations do not have to disclose the sources of their funds to federal elections officials, so donors who do not want their political activities to attract attention can hand money over to a “pop-up LLC,” which can then donate to super PACs on their behalf. Super PAC donor lists end up filled with the generic-sounding names of shadowy corporate entities rather than the real donors behind them.
If you are wondering how this could possibly be legal, even in the Citizens United era, you are not alone. The Federal Election Commission is supposed to enforce rules that prevent wealthy people from masking their political spending by routing it through straw donors. But the commission has been hopelessly deadlocked, its three Republican commissioners at odds with its three Democratic-voting members, for years. Republicans even blocked investigating three instances of blatant rule-skirting from the 2012 presidential election, including one in which a Mitt Romney associate admitted he donated $1 million to a shadow corporation in order to avoid publicity.
This month, the commission’s three Republicans defended their foot-dragging, arguing that it would be unfair to go after donors in the 2012 cycle, because they did not have enough notice about how the FEC would enforce federal rules after the Citizens United ruling. Though this was a poor reason for ignoring the law, the implication was that the typically toothless panel might more seriously scrutinize dark money sloshing through the system going forward. Lee Goodman, a Republican commissioner, confirmed that “everyone should be on notice” to The Post’s Matea Gold.
Problem solved? Maybe not. The Republican commissioners also argued that only those who “intentionally” skirt the law by funneling money through a corporation “for the purpose of” evading reporting requirements should be punished. This leaves the commissioners massive leeway to decline to investigate all sorts of shady activity.
The real solution is for Congress to give the country’s snoozing watchdogs no opportunity to refuse to enforce common-sense rules. Several years ago, Republican lawmakers argued that limiting campaign donations was unwise, but that requiring full disclosure of campaign donations, so the public could see who was giving what to whom, would allay concerns about the influence of political money on politics. No matter how you feel about other campaign finance rules, there is no convincing argument against transparency. Now that the channels for political money are wider and the opportunity for significant reform is dimmer, GOP politicians have changed their tune on disclosure. Instead, Congress should demand an end to dark money.
The Post’s View: A rising tide of dark money
The Post’s View: The IRS gives up on fighting dark money
Ruth Marcus: Shedding light on dark money
Greg Sargent: Get ready for a lot more dark money in politics
Heather K. Gerken, Wade Gibson and Webb Lyons: Rerouting the flow of dark money into political campaigns