Is Campaign Disclosure Heading Back to the Supreme Court?

Don’t expect to see Karl Rove’s Rolodex just yet.

Karl Rove
Karl Rove

Photograph by Tom Pennington.

The news this week that a federal appeals court has refused to block a lower court ruling requiring the disclosure of more funders of campaign ads has campaign finance reformers tasting their first victory in a long time. “It’s the first major breakthrough in overcoming the massive amounts of secret contributions that are flowing into federal elections,” Fred Wertheimer of Democracy 21 told the Los Angeles Times. But don’t expect to see Karl Rove’s Rolodex just yet. Crossroads GPS and other groups have found that raising money from donors who don’t want to be disclosed is good for business, and they’ve got a few ways to keep the unlimited money poured into campaigns secret yet. And before you get too excited it’s worth considering that the Supreme Court could well help them keep their secrets in 2012, even though the court has so far been a big supporter of disclosure laws.

Since 1974, federal campaign finance law has required the disclosure of campaign donors and spenders. Opponents of disclosure have long argued that at least some disclosure is unconstitutional under the First Amendment’s guarantee of free speech and association, because compelling someone to reveal the names of those funding political speech will chill vigorous participation in politics. As I’ve explained, the Supreme Court rejected that constitutional challenge in the 1976 campaign finance case, Buckley v. Valeo. Confronted in that instance with a law that required disclosure of even very small contributions, the court held that the disclosure laws were justified by three important government interests: First, disclosure laws can prevent corruption and the appearance of corruption. Second, disclosure laws provide valuable information to voters. (A busy public relies on disclosure information more than ever.) Third, disclosure laws help enforce other campaign finance laws, like the ban on foreign money in elections. But the court has repeatedly said that if someone could demonstrate a real threat of harassment, they could be exempt from the disclosure laws.

Despite the court blessing of disclosure, donors have found more and more workarounds. A Center for Responsive Politics study found that in 2010 the percentage of “spending coming from groups that did not disclose their donors rose from 1 percent to 47 percent since the 2006 midterm elections,” and that “501(c) non-profit spending increased from 0 percent of total spending by outside groups in 2006 to 42 percent in 2010.” It’s only getting worse in 2012. Karl Rove’s secret donor group, Crossroads GPS, has been raising more money than his donor-disclosed Super-PAC, American Crossroads.

The problem with our disclosure laws is political, not constitutional. Congress has not seen fit to fix the holes in the campaign finance laws, and the Federal Election Commission’s rules allowed for much money to be left undisclosed. It got even worse recently when three Republican commissioners on the FEC, who have been blocking whatever campaign finance laws they could, interpreted the rules to require even less disclosure.

In the current lawsuit, brought by Rep. Chris van Hollen, D-Md., and good government groups, a federal district court threw out the new FEC’s rules, with the upshot being that any individual, group, or association that runs “electioneering communications” must disclose their donors. Electioneering communications are TV or radio ads mentioning the name of a candidate for federal office and broadcast within 30 days of a primary or 60 days of the general election. So any group running these ads would have to disclose the donors who gave money to the group for any purpose. If the groups prefer not to disclose all of their donors, they could set up a separate fund just to pay for these communications. The appeals court dismissed concerns about the burdens of disclosure, and refused to stay the lower court’s ruling.

So does any of this put Karl Rove’s Crossroads GPS in a box? Not just yet. First, there’s a similar loophole for disclosure when it comes to groups running “independent expenditure” ads. These are ads that expressly advocate the election or defeat of a candidate like “Elect Obama” or “Defeat Obama.” Wertheimer has threatened to bring a suit to go after these too, but so far there’s no such suit. No one really expected these outside groups to run independent expenditure ads, because doing so could raise questions about whether the groups are violating IRS and FEC rules requiring such groups to register as a political committee. But sure enough, electioneering communications from these groups have dried up, replaced by independent expenditures.

Second, it is likely that the request to stay the district court order in the van Hollen case will go to the Supreme Court, where the court might well agree to stay the ruling through the November elections. Why might the court do so, given that it has consistently supported disclosure laws? Three reasons.

First, the court has said that courts should not change the rules for running elections in the middle of any one election season. People rely on the rules in place when they give money or take other steps, and changing the rules upsets settled expectations. Here, the benefits of disclosure are so strong—and the election far enough away—that this is not a persuasive argument in this context. The rule can be applied going forward, not backward.

Second, the ruling in van Hollen will require disclosure not just from the Crossroad GPSes of the world, but also from any 501c(3) group, like the NRA or the Sierra Club, which might run a TV or radio ad close to the election that tells a federal candidate to support or oppose a piece of legislation. So the disclosure rules capture a wide swath of political speech that some justices may think is too wide. The solution here: 501c(3) can set up separate funds to run these ads in the period before the election.

Third, at least some of the conservatives on the court have come to believe that the problem of harassment of donors, especially donors to conservative causes, is a serious one. The problem is way overblown. Two federal courts recently have examined this issue closely in the context of gay rights measures, and it turns out that there is virtually no harassment of campaign donors these days. The worst that anti-gay rights activists faced was being mooned or flipped the bird. No real harassment.

But, as Dave Wiegel explains, the harassment drumbeat has only picked up in recent days, with Kimberly Strassel and FOX News sounding an alarm about an Obama administration that is now going after its political enemies (i.e., donors to the Romney campaign) for political reasons. It appears there’s nothing to this either, but if enough conservative justices are watching FOX News they just might start to believe it—and thus decide we can do without more disclosure in the 2012 elections.

In Citizens United, Justice Kennedy spoke of a fantasy world of unlimited campaign funding with instant disclosure via the Internet. It’s starting to look as though he got just half of what he imagined.