Keeping Dark Money in the Shadows

Congress recently passed a new bill that will ensure that “dark money” in elections will remain shrouded in secrecy.

With the Supreme Court knocking down regulations with a wrecking ball, the FEC out of commission, and an election heating up that will likely redefine the term “big money,” there are few avenues left for regulation of American elections. And now, Congress is set to close one off.

On June 17, the House Appropriations Committee passed 2016 Financial Services and General Government Appropriations bill including a collection of provisions that ensure that the so-called “dark money” of elections—money that passes through supposedly non-political social welfare nonprofits, such as the Koch Brothers’ Crossroads GPS or the League of Conservation Voters, and is therefore free from disclosure—remains very much dark.

Section 129 of the bill prevents the IRS from taking any action to investigate whether these social welfare groups are acting exclusively for social welfare; Section 625 prevents the SEC from requiring disclosure of political donations for publicly traded companies; Section 735 prevents a rule requiring that government contractors disclose their contributions to political groups, nonprofits, and trade unions.

Rules like these are aimed at preventing what some campaign watchdog groups refer to as the dark money system. Though Federal Election Commission regulations require disclosure of all donations to political candidates, 501(c)(4) groups—groups determined by the IRS to be for social welfare, not political campaigning, and exempt from taxes and donor disclosure—can be used as a workaround. Corporations and individuals do not have to disclose their donations to these groups, meaning that these groups can make donations to political campaigns using money donated by others without those original donors revealing it.

An executive order requiring disclosure rules of this sort had been one of the last hopes for election watchdogs looking for a way to keep campaign finance under control in the coming election. This action by the House Appropriations—part of a large government funding bill for which passage will likely not hinge on such small sections—has left them even more enraged at the state of current campaign finance regulations.

“I think it’s pretty outrageous that they try to kill these ideas,” Lawrence Noble, Senior Counsel for the Campaign Legal Center, told WhoWhatWhy. “They’re trying to short-circuit any attempt of disclosure of dark money.”

Jon Bonifaz, President of the Free Speech for People campaign watchdog group, agrees. “It’s another effort to essentially keep from the public the information of who is influencing our elections,” he said to WhoWhatWhy. “I don’t think this belongs in any open society in any country that believes in the fairness of its elections.”

The Appropriations Committee, for its part, celebrated these provisions in a press release, pointing to their efforts “to protect the right to free speech and political involvement.”

David Keating, President of the Center For Competitive Politics, applauds the Committee’s bill, saying that it is a victory for freedom of speech.

“It’s very dangerous for any government agency to be policing speech, especially when it’s an agency like the SEC that knows nothing about First Amendment speech,” Keating told WhoWhatWhy. He points to the way that these disclosure rules would go beyond political contributions and affect all non-profits—a problem for worthy causes that may be unpopular.

He furthermore feels that forcing rules like these for government contractors would make assigning of government contracts far more difficult. “It’s bad from a First Amendment perspective and it’s bad from a fiscal policy perspective.”

Noble disagrees with this claim.

“It is a pay-to-play situation,” he said, comparing campaign contributions by government contractors to out-and-out bribery corruption. “You can’t even get any reform to the system because the people who would be affected by reform are giving enough money to stop it.”

Polls have shown public opinion clearly supports limits on money in politics, but Congress is now making it clear that things will get worse before they get better.

“Because Congress knows that there’s public support for all this, they don’t want it to gain too much steam,” says Noble.

Bonifaz sees this action, seemingly going against the wishes of the people as another contributing factor to a public that may write off the whole political system. “It’s very difficult to maintain public confidence when you have tens of millions or hundreds of millions of dollars dark money coming in,” he says.

“It’s supposed to be we the people, not we the corporate interests.”

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