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Bill Would Pave Way for Corporate Political Spending Transparency

Should the SEC have the legal option to require publicly traded companies to disclose their political spending?

by Countable | 1.16.19

  • One of the first bills out of the new Congress would – among other things – lift a ban currently preventing the Securities and Exchange Commission (SEC) from requiring publicly traded companies to disclose their political donations.
  • The broader intent of the For the People Act is to reduce money’s influence in politics, and increased campaign finance transparency is one of the bill’s three pillars.

Why it matters

Critics of the current system say political contributions from corporations corrode democracy when companies disproportionately influence elected officials to further their interests. Those who favor more minimal limits on political spending counter that restrictions on contributions – even by corporations – are unconstitutional limits on free speech.

The latter camp achieved a major victory with the January 2010 Citizens United v. Federal Election Commission (FEC) decision, in which the U.S. Supreme Court threw out spending limits that had been in place for decades.

The structure of campaign finance law and the many ways in which companies can spend to influence political outcomes make it impossible to determine independently what groups a company contributes to that are active in the political arena. Those seeking more clarity focus on spending from intermediary groups that receive corporate money and disburse it on both political campaigns and lobbying after elections are over.

Intermediary groups in general, the source for much of the additional cash in current elections, spend increasingly vigorously: more than $1.6 billion in 2016, 30 percent more than in 2012 and more than triple the amount spent by such groups in the 2008 presidential election.

Voluntary disclosure

While many business groups oppose expanded disclosure efforts, including the U.S. Chamber of Commerce and the National Association of Manufacturers, a growing number of large companies are providing more detail about how they oversee spending and what they spend.

Much remains opaque, however, particularly at the state level. According to recent research by the Sustainable Investments Institute:

“Even if there is voluntary reporting by companies, the state level disclosures required by law do not allow for an easy understanding of what companies spend on lobbying. Instead, they often provide an illusory sense of transparency that in practice explains little.”

Legal constraints on the SEC

Congressional opponents of disclosure were able to insert a section into the Omnibus Appropriations Act in the fall of 2015 that limited the SEC from using any funds from the bill to “finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions, contributions to tax-exempt organizations, or dues paid to trade associations.” The section has appeared in the continuing budget resolutions passed in both 2017 and early 2018.

Prospects

The current bill doesn’t seem likely to pass the Republican-controlled Congress, particularly given that Senate Majority Leader Mitch McConnell (R-KY) has consistently opposed any sort of political disclosure rulemaking.

Even if the legislation doesn’t pass, it could still set the stage for eliminating the specific prohibition on SEC political disclosure rulemaking.

What do you think?

Should the SEC have the legal option to require publicly traded companies to disclose their political spending? Why or why not? Tell your reps what you think, then share your thoughts below.

—Sara E. Murphy

(Image Credit: iStock.com / mj0007

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