DISCLOSE Act – Not What You Think

Senate Democrats presenting on the DISCLOSE Act (TRNS)

The new current issue that has completely taken over the media is the DISCLOSE Act. At its most basic level, this act would require all corporations, labor unions, political groups, etc. to disclose anyone who donates over $10,000 during an election year. No Republicans in the Senate voted for it, and now there are cries everywhere that “angry old white men” are buying the country (Harry Reid, Senate Majority Leader), or that “Republicans stood with big banks and oil companies” (President Barack Obama).

Numerous petitions have started to lament the resistance against the DISCLOSE Act. This media hype, this political hatred against all rich Republican people is completely misguided. Let’s consider again the myths and take a look of some of the actual facts.

1) “Secret money” is a one-sided problem. False.
In past elections, Democrats have outspent Republicans with “soft money” (organizations that can accept unrestricted donations.) In 2006, the ratio was almost 2 to 1. The point is, sometimes the Democrat spends more, sometimes the Republican spends more.

2) Corporate money caused the Republicans to win big in 2010. Again, false.
Although the President and media outlets everywhere predicted a “flood of corporate money” after Citizens United, this never came. Instead, there was a flood of union money – almost 3 times the amount spent by corporations. Corporations are actually reluctant to engage in special-interest political activism because they face a risk of alienating customers and investors.

3) Big Banks control the Republican Party. Also false.
If this is true, why did Goldman Sachs donate $1,013,091 to Barack Obama’s campaign in 2008, while donating only $240,295 to McCain? Obama’s top contributors in ’08 include JP Morgan, Citigroup…not exactly small banks. In fact, each of Obama’s top 20 supporters in 2008 donated more money than McCain’s highest.

Here’s the bottom line. The DISCLOSE Act requires even more companies and organizations to reveal all of their donors’ names and addresses publicly. So let’s say you’re a wealthy person, and you donated $10,000 to Google because you like their products. It is your money, and you are completely in your rights to do this. Let us also say it just happens to be an election year. If they decide to run an ad about a certain political issue at any time in that election year, your name, home address, and donation amount will be publicly displayed to the world as an assumed “contributor” to Google’s political cause. Does this law force transparency? Yes. But at the price of privacy? I would argue yes as well. I don’t want the government to always know when and where I made a donation, let alone any person who has access to the Internet.

What do I mean? You can already find the names and home addresses of all donors to all SuperPACs (political action committees that can accept unlimited donations) on the Federal Election Committee website. Personally, I think that’s kind of scary. Now I’m not sure what the reporting requirements for SuperPACS are, but there are some individuals who are listed on that website for giving as low as $50.

The ACLU has written a letter opposing this new law, and John McCain, one of the biggest proponents of campaign finance reform in the past, said this:

Corporations and their employees also tend to spread their donations fairly evenly between the two major parties, unlike unions, which overwhelmingly assist Democrats. In 2008, Democrats received 55% of the $2 billion contributed by corporate PACs and company employees, while labor unions were responsible for $75 million in political donations, with 92% of it going to Democrats.”… The bill before us today is clearly designed to offer disclosure in some instances, while allowing some, primarily labor unions, to speak and spend under convenient spending disclosure thresholds.

The bill’s requirements would allow unions to ignore reporting union members’ dues payments as well as many smaller local union payments to the national union headquarters, thanks to the “affiliate payment” clause.

The bottom line? This is just a political tool that makes it more difficult for all organizations to get donations because of the privacy risk. Unions obviously will have no problem, because their “donations” are mandatory dues. Bringing up this law at a time when Romney is relentlessly criticized for his wealth is a political strategy move. In fact, the law was secretly put on the floor calendar, skipping over the standard committee and mark-up times that Senate bills usually have to go through.

Even if Romney ends up spending more than Obama, what does it matter? When’s the last time you saw a political commercial and decided, “You’re right, I’m changing all my positions.” This article on Freakonomics by Jeff Milyo, an economics professor at University of Missouri at Columbia, has done much research on the matter. He says,

I have examined several other natural experiments and found similar results. For example, large shocks to campaign spending from changes in campaign finance regulations do not produce concomitant impacts on electoral success, nor do candidates with vast personal wealth to spend on their campaigns fare better than other candidates… People just aren’t that malleable; and for that reason, campaign spending is far less important in determining election outcomes than many people believe (or fear).

The next time someone tries to tell you the Republicans shot down the DISCLOSE Act so that Romney could win, bring up a few of these facts. You may also want to mention that none of the provisions in the act would have taken effect until 2013 anyway.

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8 responses to “DISCLOSE Act – Not What You Think

  1. “What do I mean? You can already find the names and home addresses of all donors to all SuperPACs (political action committees that can accept unlimited donations) on the Federal Election Committee website. Personally, I think that’s kind of scary. Now I’m not sure what the reporting requirements for SuperPACS are, but there are some individuals who are listed on that website for giving as low as $50.’
    I didn’t know this was true. Thank you.
    I’m very concerned about invasion of privacy too. However, when it comes to speech, I believe I ought to easily know who spoke it. I have little respect for anonymous speech unless the writer has reason to fear repercussions or some such. In classes where we are asked to evaluate a prof, for example, I always sign my name. If its worth saying, I’m willing to own it. As a teacher I respected most those evaluations that were not anonymous.
    So, I’m glad I can discover who donates to what superpac. However, being as lazy as I am, I am not likely to look up that website to find out. If Google wants to back human rights for gays, be up front about it. I like that. If the United Auto Workers want to back Obama, great; I’m glad their name is out front, letting me know. (I do believe that individual union workers ought not be forced to donate to that fund so that they end up funding political speech with which they disagree.) However, if Google puts millions behind ads for human rights along with some much more minor donors and does so under some name as ‘citizens for human rights,’ I feel cheated. If your speech is worthy,
    put your name behind it or shut up is the way I feel.
    By the way, I’m happen to be more concerned about invasions of privacy under the rubric of national security than I am about wanting to keep my speech anonymous.
    More by the ways, if political speech is so powerless why spend so much money on it?
    Also, I’m confused. Why the Disclosure Act if disclosure is already occurring?
    If all your myth busting is true, and this act would not take effect until 2013, why were the Republicans unanimously opposed? Did they feel it was a pure political act of jealousy? Again, I’m confused. The same limits would be placed on all parties…. Were Democrats convinced that this act would hurt Republicans more than Democrats? If so, would you agree with that assumption? And if so, how would it hurt Republicans more?
    Still considering…..

    • Hi Don, I have enjoyed reading your responses on this site.
      You’ve said “If your speech is worthy,put your name behind it or shut up is the way I feel.” This caused me to think of the parallels between political speech and voting. I hear the other day that guarantees of a secret ballot were only imported from Australia about 100 years ago. Yet today, this is something we all value: anonymity at the ballot box protects us from reprisal so we can do the right thing and vote our conscience, without fear of what a thug looking over our shoulder might do. So why not extend this to political donations?
      My quick research on opensecrets.org has indicated that currently, individuals’ political donations are reported by the Federal Election Commission if they’re above $200.
      When it comes to speech, there are those of us who want to put out challenging ideas that will catch the ire of unscrupulous actors. Political donations also raise the same eyebrows. That’s why it was such a big deal when President Obama named and “shamed” major Romney SuperPAC donors. I’m in general agreement with consideragain that donor’s privacy, while not ironclad, ought to be respected if it can be helped.

      • I agree. We ought to protect privacy at the ballot box. (Interesting history. Thanks.) I also believe we ought to protect privacy of charitable donations. I also recognize that sometimes the difference between a charitable donation and a political donation is gray. However, in most cases I think one can tell the difference, and where that is difficult a court of law could help.
        I must admit that I’m confused. It’s my understanding donations directly to political campaigns must be disclosed; however, donations to issue oriented super-pacs need not be disclosed and have no limits to the amount donated. Is that true? If so, I consider super-pac speech to be the kind of political speech where one’s names ought to be out front unless one fears political reprisals. How much was donated could remain secret, I suppose. However, there must be enough folks on both sides of the political aisle who believe political speech is powerful enough in its persuasive effects, especially when money can make such speech that much more ubiquitous, to feel the need for the kind of disclosure laws we already have. Again, “If your speech is worthy, put your name behind it or shut up should be the normal practice.” The source of the speech can be an important factor in a listener’s evaluation of that speech.

        • Donations to direct campaigns as well as to issue-oriented SuperPACs are all on the FEC website. (Most people don’t) You can look some of the more well-known ones up and see. The DISCLOSE Act attempts to include non-political sources that engage in some political activity – i.e. businesses.

          Your quote, “If your speech is worthy, put your name behind it or shut up should be the normal practice.” is a good one. I do agree with it. However, the question is, should it be law? If someone wants to donate their own money to a cause, do we have the right to force them to reveal themselves? Sure, I may want to know who’s behind the speech, but I do believe I can evaluate it pretty well regardless of who paid for it. And I think publicizing all donations to businesses is extravagant. It leads to too much information about our financials being publicly spread around the Internet. Imagine if someone were to send a false letter to one of the names and addresses on the FEC website: “Concerning your $200 donation on 7/23 to ______, we want to verify your bank account.” or something similar. It’s a very easy path to identity theft.

          I think, again, it really does sound like a political move considering that it wasn’t even discussed in committee. Honestly, I don’t think the Democrats even expected it to pass. I believe they just want to hit the “Romney has lots of money” point over and over.

        • Also, I don’t think he was arguing that political speech is “powerless” – but that more money does NOT guarantee a win by any means. Obviously having some money is important to spread awareness.

          From the Freakonomics link..
          “So gold doesn’t always glitter in politics — but you better have some of it, and sometimes, sometimes, having the most can matter the most. ”

          This is also one of the most interesting quotes:
          “It is true that winning candidates typically spend more on their campaigns than do their opponents, but it is also true that successful candidates possess attributes that are useful for both raising money and winning votes (e.g., charisma, popular policy positions, etc.). This “reverse causality” means that campaign spending is potentially as much a symptom of electoral success as its cause.”

  2. Why should people care if others are wealthy enough to give money to causes? If they’ve got a business, they didn’t build that. (Said President Barack Obama). And this website, run by a University Student – if he does well in school, he didn’t earn that. (All the above was said with tongue planted firmly in cheek…) This ties in well with the point of this blog on the Disclose Act, because we as Americans really should make politicians as accountable as we are. If they do not earn our vote, we should not give it to them in November, or contribute funds to them. And using jealousy as a political tool and motivator, is extremely destructive. That was part of the political motivation of putting this bill on the Senate floor – the false meme that wealthy people are bad, and that wealth is bad. The good news is that after a certain point, spending money on campaigns has greatly diminishing returns, as Freakonomics explains well. And thus, wealth cannot buy elections.

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