The source of millions of undisclosed dollars spent to influence California state ballot initiatives tracked down to billionaire brothers Charles and David Koch

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Stepping Up Transparency in Political Spending | Commentary
By Rep. Anna G. Eshoo and Michael Copps, January 24, 2014

The Supreme Court’s wrongheaded Citizens United ruling in 2010 unleashed billions of dollars of unaccountable, anonymous spending on our campaigns. Each election season since has brought more smears from groups whose vague names tell the electorate little of their agendas or backing. Voters should know if groups with names like Citizens for Clean Waters are real grass-roots activists or disguised fronts for the chemical industry, bent on dumping waste in the Potomac River.

This is not a theoretical problem. In California, it took nearly a year for the state’s Fair Political Practices Commission to investigate a California Common Cause complaint and track down the source of millions of undisclosed dollars spent to influence state ballot initiatives. As it turned out, the Small Business Action Committee and the California Future Fund were funded by secret donors through a web of shadowy nonprofits connected to billionaire brothers Charles and David Koch.

While the investigation and resulting million-dollar fine in the California case should be commended, they came months after Election Day. The whole point of disclosure laws is that voters should know who is trying to influence us before we cast our ballots. It’s time for policymakers to give voters the transparency we deserve.

Donor disclosure requirements for all political ads should be a no-brainer. Although the current Congress is on track to be the most gridlocked in history, our independent regulatory agencies already have all the authority they need to provide more transparency in campaign spending.

In November, the IRS made an important move in that direction, proposing guidelines to clearly define the limits on candidate-related political activity by 501(c)(4) “social welfare” groups. By law, those groups need not disclose their donors and are supposed to stay out of elections. But ambiguity in the IRS’s current regulations has encouraged savvy operators in both parties to skirt the law and use money from anonymous donors to make 501(c)(4) groups a major political force.

The new rules, which still need considerable fine-tuning, would not increase disclosure on their own. But they would push big-dollar donors to give directly to candidates, parties or political action committees that are subject to disclosure requirements.

While the IRS is taking indirect steps toward greater transparency, the Securities and Exchange Commission has quietly yielded to a backlash on Capitol Hill and backed away from considering a measure to require publicly traded companies to disclose more of their political activities to their shareholders. The SEC should reconsider and take up the proposal.

The Federal Communications Commission also has an opportunity to boost reform. Since its inception in 1934, the FCC has had legal authority to compel broadcasters to reveal the “true identity” of the sponsors of advertisements. The regulations enforcing that rule have not been updated in decades, however, creating loopholes that shadowy groups exploit. The good news is that these regulations can be updated by the FCC.

According to both the statute and the nonpartisan Government Accountability Office, the FCC’s mandate applies equally to commercial and political advertisements. Considering that Congress intended that the commission ensure that broadcasters serve the public interest, the FCC has a responsibility to update its rules and enforce the law.
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