Democracy is Strengthened by Casting Light on Spending in Elections Act
Floor Speech
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Mr. VAN HOLLEN. Mr. Chair, I want to start by thanking Chairman Brady, Ms. Lofgren, and the other members of the committee, as well as Chairman Conyers, Mr. Nadler, and those on the Judiciary Committee, and to Mike Castle and all the other cosponsors of this legislation, which addresses the very serious threats to our democracy created by the Supreme Court's decision in Citizens United, which in a very radical departure from precedent said that major corporations, including foreign-controlled corporations operating in the United States, will be treated like American citizens for the purposes of being able to spend unlimited amounts of money in our elections.
This bill addresses this issue in three ways. First we say, if you're a foreign-controlled corporation--if you are British Petroleum, if you are a Chinese wealth fund that controls a corporation here in the United States, if you are Citgo, controlled by Hugo Chavez, you have no business spending money in U.S. elections overtly or secretly. And if we don't do something about that now, they will be able to do either of those things.
Number two, we say if you are a Federal contractor, if you are getting over $10 million from the American taxpayer or you are AIG, you shouldn't be recycling those moneys into elections to try and influence the body that gave you the contracts because there is a greater danger of corruption in the expenditure of those moneys.
Third, we require disclosure. We believe that the voter has the right to know. You would think from the comments from the other side of the aisle we are restricting what people can say. That is not true. You can say anything you want in any ad you want. What you can't do is hide behind the darkness, not tell people who you are. Voters have a right to know when they see an ad going on with a nice-sounding name, the Fund For a Better America, they have the right to know who is paying for it. They have a right to know if BP is paying for it. They have a right to know if any corporation or big-bucks individual is paying for it because it is a way to give them information to assess the credibility of the ad.
You vote ``no'' on this, you are saying go ahead and spend millions of dollars, corporations or individuals, and say whatever you want, which is fine, but we are not going to let the voters know who you are. That is what a lot of these interests want. And the reason the League of Women Voters--no big special interest group there--League of Women Voters, Common Cause, Public Citizen, Democracy 21, all of the organizations that have devoted themselves to clean and fair elections support this legislation because they understand that the American voter has a right to know who is spending all of these moneys on these ads, and they don't want foreign-controlled corporations dumping millions of dollars into U.S. elections.
So, my colleagues, I hope we will move forward on this to make sure that the voice of citizens is not drowned out by secret spending by the biggest corporations, including foreign-controlled corporations.
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Mr. VAN HOLLEN. Mr. Chair,
INTERNET RULES REMAIN UNCHANGED
H.R. 5175 extends the existing rules on coordination to apply to any ``covered communication,'' and defines the term ``covered communication.'' In so doing, the bill repeats the language of the existing media exemption and incorporates that exemption into the definition of ``covered communication.'' The existing language of the media exemption has been interpreted by FEC regulation to include an exemption for media activities on the Internet. 11 CFR 100.132. By incorporating the existing language of the media exemption into the coordination provisions in the DISCLOSE Act, the sponsors intend to ensure that the media exemption in the DISCLOSE Act will be interpreted by the FEC in the same way that the FEC has interpreted the media exemption in existing law, to include media activities on the Internet within the media exemption.
INDEPENDENT EXPENDITURES INFLUENCE ELECTED OFFICIALS
Independent expenditures and electioneering communications can influence elected officials and produce gratitude, indebtedness, and access. Although such influence is not per se problematic, it may be improper in certain contexts. In particular, such influence is improper if it has the potential to affect the outcome of federal contracting decisions or if it is exercised by a foreign-controlled entity.
According to a recent report by Professor Wilcox of Georgetown University, ``Donors who seek to gain access and influence care primarily that their contribution is noticed and appreciated, not that it is handled directly by the candidate's campaign treasurer.'' The report notes that contributions to groups that make independent expenditures ``can be conceived as indirect contributions--instead of giving the money directly to the candidate's campaign committee, they are given to an independent committee that also helps the candidate win.'' Indeed some experts believe that large independent
expenditures on behalf of candidates can produce greater influence than direct campaign contributions that are subject to legal limits: ``With almost all of the 527s associating themselves with the two major parties and their candidates, and with the great majority of contributions coming from donors giving in the millions, rather than thousands or even tens of thousands of dollars, big 527 donors today are positioned to garner more attention and consideration from parties and candidates than those who give the maximum direct contribution of $2,000-$25,000.''
In California, recent legislation limiting direct contributions has produced an ``explosion'' of independent expenditures. According to Ross Johnson, Chairman of the California Fair Political Practices Commission and a former Republican Party leader in both houses of the California legislature, ``independent expenditures have provided sophisticated wealthy individuals and special interests the means to circumvent [contribution] limits and create the appearance of corruption, or gain undue influence on, candidates and officeholders.''
Recent examples illustrate that independent expenditures are used to try to influence elected officials.
In 1998 a group with an interest in gaming issues attempted to bribe former Republican Kansas Congressman Snowbarger by signaling that they would conduct an independent spending campaign on his behalf. According to Snowbarger's campaign manager, the offer ``was an attempt to get him to change his position by offering to do independent spending that would help him win re-election.'' Congressman Snowbarger rejected the offer. His campaign manager later explained the rationale behind the proposal: ``[T]he people behind th[e] effort offered to do an independent expenditure rather than make contributions because contributions are limited. If only a small number of people are involved, they are unable to promise to give that much. Even a corrupt Congressman would not risk accepting a bribe of only $5,000.00 or $6,000.00. Independent expenditures, on the other hand, can involve sums of money of an entirely different magnitude.''
Former Wisconsin State Senate Majority Leader Chvala was convicted on corruption charges in 2005 for illegally soliciting funds in exchange for political favors. According to Wisconsin lobbyist Michael Bright, who lobbied Chvala on numerous occasions, ``[t]here was essentially a `menu' of different ways that clients could contribute: they could give directly to candidates in contested races, to the parties, or to groups that made independent expenditures or independent candidate-focused `issue' ads ..... These were all acceptable ways to meet Chvala's contribution expectations, to get `credit' in Chvala's world.'' (emphasis added). Chvala would indicate to interested parties that ``whichever bucket [they] put the money into, it would be used effectively to support Democratic senate candidates and would be appreciated by those candidates.'' According to Bright, ``there was not any ambiguity about it: he was suggesting that the candidates benefited would properly credit the client for the contributions no matter which entity they were made to, and the candidate would be just as appreciative as if the money had all been given directly to the candidate's campaign.''
Recent polling reveals that independent expenditures also create an appearance of influence. A 2008 Zogby poll found that 82 percent of respondents believe ``that if an individual contributed $100,000 or more to a group to spend on an advertising campaign supporting a congressional candidate it is likely that the candidate will do a political favor for the contributor once elected to office.''
THE UNIQUE CONTEXTS OF GOVERNMENT CONTRACTING AND FOREIGN INFLUENCE
Although Citizens United prohibits restrictions on independent expenditures that apply to corporations and unions generally, independent expenditures and electioneering communications by government contractors and foreign-controlled entities pose unique concerns. Congress has a substantial interest in protecting a merit-based government contracting process and in protecting U.S. interests from foreign influence, and Congress therefore has the power to regulate independent expenditures and electioneering communications in these particular domains.
Independent expenditures and electioneering communications by government contractors warrant distinct concern. Government contracting decisions should be based on an objective evaluation of how well potential contractors meet the relevant legal criteria. Elaborate federal regulations reflect this commitment to a fairly and
impartially-administered contracting system. However, contractors may seek to improperly influence elected officials in order to maximize their chances of receiving contracts. Contractors may also feel pressure, whether explicitly exerted by government officials or not, to make expenditures in order to obtain contracts. A company seeking to renew an existing contract may be especially vulnerable to such pressure because it is likely to have significant reliance interests in maintaining its business relationship with the government.
The need to protect the integrity of government contracting is evidenced by recent pay-to-play scandals. Former Illinois Gov. George Ryan went to federal prison in 2007 for issuing state contracts in exchange for financial contributions and gifts over a period of 10 years. In Connecticut, a pay-to-play probe brought down former Governor Rowland, who admitted taking gifts from state contractors. In 1998, New Jersey awarded a seven-year, $392 million contract to Parsons Infrastructure & Technology Group Inc. to privatize automobile inspections. A subsequent state investigation found that Parsons had tainted the competitive bidding process by contributing more than a half million dollars to state officials and that the ``mammoth boondoggle'' cost taxpayers an additional $200 million after the contract was awarded. Randy ``Duke'' Cunningham resigned from Congress in 2005 after pleading guilty to using his official position to extract bribes from multiple defense contractors. In March, 2010, the New York state pension fund's former chief investment officer pleaded guilty to directing public dollars to firms that made political contributions to former Democratic state comptroller Alan G. Hevesi. Financial companies have so far paid $120 million in settlements to resolve their roles in the ongoing pay to play scandal. Even when a direct quid-pro-quo cannot be definitively proven, the relationship between political expenditures and contract awards can still give rise to the appearance of improper influence. For instance, a University of Michigan study found that donors to former Wisconsin Governor Tommy Thompson's campaign were awarded an average of $20 million in contracts, while non-contributors were only awarded an average of $870,000.
Independent expenditures and electioneering communications by foreign-controlled domestic corporations also warrant distinct concern. In 2005, the general treasuries of these companies totaled approximately $3.5 trillion. After Citizens United, these companies are now free to spend unlimited sums from their general treasuries to influence federal elections, and undermine U.S. interests. The DISCLOSE Act would prevent this foreign intervention in U.S. elections.
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