Disclosure of Independent Campaign Spending

Yesterday, the Senate passed legislation requiring timely disclosure of “independent” spending in political campaigns. I have long supported this improvement in transparency. It is the most significant practical response that Massachusetts can make to the Citizens United case. I’m very pleased that we got it done yesterday — congratulations to Senator Eldridge, who initially filed the legislation, and to Senator Barry Finegold, the Election Laws Chair who shepherded it through.  At the end of debate, the Senate voted unanimously for the bill.

There was only one heavily contested roll call.   It pertained to a proposed amendment to the rule that allows associations, including unions, to give up to $15,000 to a single candidate in a calendar year. Common Cause supported the  amendment which would subject associations to the same limit on contributions to a single candidate that individuals and PACS are subject to (currently $500 per calendar year, increasing to $1000 under the proposed legislation). I joined 5 other Democrats in the Senate in supporting this amendment which failed 10 to 28.

I think many members were confused about the effect of the amendment, fearing that it would restrict the ability of associations and the people that they represent to participate politically.   The Office of Campaign and Political Finance has determined through an interpretive bulletin that associations, like unions, that raise their funds through not political contributions but instead through membership dues, are not subject to reporting requirements or campaign contribution limits unless their political spending is more than “incidental.” OCPF defined incidental spending as spending amounting in aggregate to less than the lesser of 10% of gross revenues or $15,000.  So, under current law, larger associations can make up to $15,000 in incidental political donations, and, since their incidental donations are not subject to contribution rules, they can even give up to $15,000 to a single candidate.  I don’t have a problem with permitting associations who are not primarily political to make incidental political contributions — as permitted by OCPF’s ruling.  I do, however, feel that that no organization should be able to donate $15,000 to a single candidate.  Large donations do have the potential to corrupt — as recognized in the Supreme Court precedent discussed below. The normal limits on amounts contributed to a single candidate should apply to incidental donations by associations.

To more fully understand the issues raised by the  legislation, it’s helpful to understand the basics of Massachusetts campaign laws. A candidate for office in Massachusetts may form exactly one political committee to support his or her candidacy. The candidate must run all contributions and expenditures for his or her campaign through that committee and must make full disclosure of the committee’s fund-raising and spending.

The spending rules give considerable flexibility to legislators in the objects of spending from their campaign committees. Political committees of statewide candidates (Governor, etc.) may only incur “reasonable and necessary expenses directly related to the campaign”. By contrast, legislative and other candidate committees may spend “for the enhancement of the political future of the candidate . . . so long as such expenditure is not primarily for the candidate’s or any other person’s personal use.” This gray area allows many elected officials to use campaign funds for gifts, dinners or travel with colleagues, etc., expenditures which may advance their political prospects, but which also may enhance their lifestyle.

The Supreme Court has recognized that direct contributions to candidates have the potential to corrupt. In Buckley v. Valeo, 424 U.S. 1, the Supreme Court upheld federal limits on campaign contributions because of their potentially corrupting influence:

Under a system of private financing of elections, a candidate lacking immense personal or family wealth must depend on financial contributions from others to provide the resources necessary to conduct a successful campaign. The increasing importance of the communications media and sophisticated mass-mailing and polling operations to effective campaigning make the raising of large sums of money an ever more essential ingredient of an effective candidacy. To the extent that large contributions are given to secure a political quid pro quo from current and potential office holders, the integrity of our system of representative democracy is undermined. Although the scope of such pernicious practices can never be reliably ascertained, the deeply disturbing examples surfacing after the 1972 election demonstrate that the problem is not an illusory one. [Footnote 28]

Of almost equal concern as the danger of actual quid pro quo arrangements is the impact of the appearance of corruption stemming from public awareness of the opportunities for abuse inherent in a regime of large individual financial contributions.

With the sanction of Buckley, Massachusetts limits individual and political action committee contributions to candidate committees to $500 per calendar year.  I felt that, for the reasons stated in Buckley, that limit should also apply to donations by associations and so supported Common Causes’s amendment.

The larger issue in the legislation was independent spending.  Independent expenditures — expenditures made by an individual or group to influence the outcome of an election but without the sanction of a candidate — are not limited. Similarly, contributions to committees to further or oppose a ballot question are not limited. Of course, independent expenditures may make a big difference in a campaign and concern about them may influence the actions of an elected official, but they have somewhat less potential to corrupt than money placed directly in the control of an official, which he or she may use to improve their lifestyle.  The Citizens United case emphasized this distinction between independent expenditures and campaign contributions and found, in essence, that, while limits on contributions to candidates are defensible to prevent corruption, limits on independent expenditures are unconstitutional restrictions on free speech. Most notably, Citizens United overturned the absolute bar that Massachusetts had on campaign spending by corporations.

Since, before Citizens United, corporate spending was simply prohibited, there are currently no disclosure requirements for independent spending by corporations in Massachusetts. Additionally, although there are provisions for reporting for independent spending by individuals, groups and associations, as noted above, the rules currently don’t apply to associations spending less than $15,000.

The legislation that we approved last night brings spending by unions, corporations and all other entities into the basic reporting framework by altering the definition of independent spending.

“Independent expenditure”, an expenditure made or liability incurred by an individual, group, association, corporation, labor union, political committee or other entity as payment for goods or services to expressly advocate the election or defeat of a clearly identified candidate; provided, however, that the expenditure is made or incurred without cooperation or consultation with any candidate or a nonelected political committee organized on behalf of the candidate or an agent of the candidate and is not made or incurred in concert with or at the request or suggestion of the candidate, a nonelected political committee organized on behalf of the candidate or agent of the candidate.

Additionally, the legislation strengthens the reporting rules for independent spending and mandates OCPF to, by regulation, require disclosure of transfers among entities so as to identify the original sources of spending.  It creates the concept of an “independent expenditure PAC” and requires these PACs to make the same disclosures of contributions and expenditures as other PACs.

Notably, the bill requires that sources of independent spending behind advertisements also be disclosed in the advertisements themselves.

An independent expenditure or electioneering communication which is transmitted through paid television, internet advertising or print advertising appearing larger than 15 square inches shall include a written statement at the bottom of the advertisement that contains the words “Top Contributors” and a written statement that lists the 5 persons or entities or, if fewer than 5 persons or entities, all such persons or entities, that made the largest contributions to that entity; provided, however, that only contributions in excess of $5,000 reportable under this chapter during the 12-month period before the date of the advertisement or communication shall be listed. If no such contribution is received by the entity making an independent expenditure or electioneering communication, the advertisement or communication may exclude the statement. The advertisement or communication shall also contain a written statement with the words “For information on the top contributors to this message, go to http://ocpf.cloud.app.net.” This paragraph shall also apply to such advertisements purchased to influence or affect the vote on any question submitted to the voters.

The bill does some other housekeeping in campaign finance laws, most notably:

• raising the contribution limit for individuals contributing directly to candidate committees from $500 to $1000;
• striking the aggregate cap on contributions by individuals (required by a recent Supreme Court case)
• requiring a fiscal impact summary to be prepared for ballot questions.

For some details on some additional provisions, see the official Senate press release about the bill.