FEC deadlocked on ‘dark money’

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Donor-advised funds are a growing way for middle-class Americans to give to charity.

A rare open Federal Election Commission meeting on Wednesday attempted to placate the competing concerns of campaign finance activists. 

But at the end of the day-long hearing and comments from 30 witnesses, the commission was likely as deadlocked as ever on how to increase disclosure rules around so-called “dark money” and whether funding behind Internet advertisements should be reported.

{mosads}The FEC, a panel with three Democrats and three Republicans, has long been stuck on party lines on many policy issues. However, the hearing itself was a consequence of both Republican and Democratic members of the panel agreeing to hear from the public about how – or even whether – to change campaign finance regulations.

“This isn’t something that the FEC has done in the past, this is a historic event,” FEC Chairwoman Ann Ravel said in her opening statement. 

Rounds of advocates for reform sat at the same table with proponents of a laissez-faire approach and spoke into the afternoon about the role of money in politics.

Last year’s Supreme Court decision in McCutcheon v. FEC eliminated barriers on the total a political donor could give to federal political action committees during an election cycle while still keeping the donation limits for each committee in place. Previously, a contributor could only give a maximum of $123,000 to political party and candidate committees every two years. 

The plaintiffs of the suit, the Republican National Committee and conservative businessman Shaun McCutcheon, argued that donors’ speech should not be stifled into only giving to a specific number of candidates each cycle.

Federal campaign regulators are now in the midst of deciding if it’s necessary to create rules that thwart money from being used to circumvent the base limit caps.

“It is time for the FEC to step in and recognize that the fact that coordinated spending is occurring and must be regulated,” said Elisabeth MacNamara, the president of the League of Women Voters. 

The group was one of many that pointed to the rise of super-PACs that support a single candidate, which are often formed by former aides, and run alongside official campaigns without being allowed to officially coordinate. 

Candidates, however, routinely meet with the wealthy donors to these groups and solicit contributions to help run ads in their favor. 

As written, coordination rules “are easily exploited in ways that do an end-run around contribution limits and otherwise violate the independence assumed by the Supreme Court,” said Stephen Spaulding, a policy counsel at Common Cause.

“There are limited but important steps that the commission can take and must take… to curb corruption and its appearance and shine a light on the money that influences voters’ choices,” he added.

Aside from philosophical differences, opponents also argue that the FEC does not have permission under current laws passed by Congress to tighten disclosure rules or further regulate the flow of funds that move through political fundraising committees.

“In large part, these proposed rules appear to be predicated on the notion that money is somehow inherently evil,” said Dan Backer, a lawyer who represented McCutcheon and spoke to the commission on behalf of the Conservative Action Fund. 

Reform advocates, he said, believe money “corrupts everything it touches, seducing our elected representatives away from the path of righteousness into a life within dark, dingy crack-den-like call centers at National Party offices.”

However, as Fordham University Law professor Zephyr Teachout pointed out, there is a giant “elephant and donkey in the room” at the FEC, and that gridlock makes it unlikely for the commission to make any large revisions to campaign finance regulations without action by Congress. 

Teachout, while running for governor against incumbent New York Gov. Andrew Cuomo (D) last year, made campaign finance reform a key part of her platform.

Should the FEC decide to break the stalemate and propose rules on super-PACs, coordination and earmarking, former Obama administration counsel Bob Bauer cautioned it ought to tread carefully.

“You’re not going to reach an agreement on these things,” he said. “If you do, you are likely to be sued and if you are sued, there is a good chance you are going to lose.”

At the end of the marathon hearing, commissioners would not commit to asking counsel to draft an official proposal to tackle any of the issues discussed. 

Commissioner Lee Goodman, a Republican, told The Hill on Tuesday he would “keep an open mind” regarding proposals about issues related to the McCutcheon ruling that address joint fundraising committees, the earmarking of funds, affiliation and disclosure.

However, the hearing also veered into other areas, including discussions on requiring disclosure of the funding for some Internet speech and of donors to non-profit organizations that may engage in political activity, but are not required to report contributors. 

The FEC “doesn’t have authority to regulate speech on the Internet simply because it’s a ‘growing force in the political arena,’” said former FEC Commissioner Dave Mason, quoting Chairwoman Ravel’s inquiry about whether more disclosure is needed. “It has no relevance to the kind of corruption which the rule is supposed to stop, which is quid pro quo corruption.”

Some panelists also addressed the rider attached to Congress’s omnibus spending package at the end of 2014 that created new accounts for party committees for recounts, offices and other expenses. 

The changes allow donors to give a total of more than $1 million to national party committees during an election cycle. Some at the hearing, including Craig Holman of Public Citizen, called for regulations to ensure that these accounts are not misused. 

RNC Chief Counsel John Phillippe Jr. refuted the need for any protections, noting that the accounts strengthen the party system.

“If Congress was worried about large checks to party committees, it has a very odd way of showing it,” he said, referring to the increase in amounts that can be given.

Many of the conservative and GOP witnesses pushed back against any attempts to rein in spending in any way.

“We don’t need less money in the political process, we need more money in the political process,” Backer said. 

He mentioned that the $7 billion spent in the last presidential election equated to about the same amount spent by consumer brands, like Oreo, in advertising each year.

“Every one of those dollars spent is an idea that gives information to the voter who makes the decisions,” he added.

Tags Campaign finance dark money FEC Political action committee

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