Americans are their most charitable at year’s end. But even on Giving Tuesday, billionaire donors crowd out the impact of small-dollar gifts.
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More than $2 billion dollars. That’s how much dark money eclipsed the 2020 elections, OpenSecrets estimates– an increase of over $1.8 billion from just ten years prior.
The 2010 Citizens United v. FEC Supreme Court decision devastatingly altered U.S. campaigns and elections. By likening political spending groups to individual Americans entitled to First Amendment rights, Super PAC groups have flourished, offering a quick and easy way for donors to pour money into political advocacy while shielding their identities.
Senate Majority Leader Chuck Schumer (D-NY) first introduced the Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act twelve years ago – hoping to at least cast light on the people behind booming political spending. (Even Justice Antonin Scalia went on record stressing the value of transparency and disclosure: “For my part, I do not look forward to a society which, thanks to the Supreme Court, campaigns anonymously . . . hidden from public scrutiny and protected from the accountability of criticism. This does not resemble the Home of the Brave.”)
The bill would require advocacy groups to publicly disclose the contributions they receive worth ten thousand dollars or more – and ban foreign participation in domestic political advocacy.
The phenomenon of dark money is one of inequality, both in terms of its cause and its effects. Allowing moneyed individuals – who, under current law, don’t even have to be American citizens – to purchase outsize influence in the political system guarantees a government beholden to special interests that “suffocat[e] the will of the people,” as former Ohio state Sen. Nina Turner (D) says. A political system captured by a select few is far less likely to legislate for economic equality, revealed social scientist and Professor Larry Bartels in his book Unequal Democracy. As the rich get richer, elections get less fair and more expensive.
Economic benefits to the wealthy further accrue from the financial structure of advocacy organizations.
While 501(c)(3) charities are expressly prevented from political activity, the 501(c)(4) Internal Revenue Code designation for “social welfare organizations” allows for lobbying and political spending. As Chuck Collins and Helen Flannery note, 501(c)(4) groups cannot receive tax deductible donations like their (c)(3) counterparts, but elaborate tax dodging mechanisms allow for the donation of appreciated assets to (c)(4) funds, which assists with dodging capital gains taxes that can often be more valuable than income tax.
Another key difference? 501(c)(4) groups are under no payout or transparency requirements, meaning they don’t have to disclose the names of their donors. By consequence, the groups can easily become slush funds for dubious interests – from foreign governments with interest in American destabilization to mega-corporations intent on poisoning the environment for a quick buck.
Take Barre Seid, who gave his entire company, valued at $1.6 billion, to Leonard Leo’s Marble Freedom Trust (c)(4). Intent on ossifying far-right majorities on America’s highest courts, Seid dodged $400 million in capital gains taxes by transferring his company Tripp Lite to Leo’s shadowy network.
In a speech from the White House on September 20, Biden highlighted that $1.6 billion dollar donation, conceding that it was Seid’s legal right – and flagged the enormous problem in our citizenry only finding out about it due to a tip-off to ProPublica and Lever News.
“Dark money has become so common in our politics, I believe sunlight is the best disinfectant,” he said. “And I acknowledge it’s an issue for both parties.”
Democrats have rallied behind the DISCLOSE Act, though foiled by filibusters and inopportune electoral minorities. The bill has been introduced every session since 2010, currently helmed by Sen. Sheldon Whitehouse (D-RI). All 50 Democratic Senators co-sponsored the bill in this Congress, yet as Andrew Perez highlighted in Jacobin, a select few refused to abolish the filibuster in order to ensure passage of the legislation to which they affixed their names.
Indeed, OpenSecrets and the New York Times conclude that in the 2020 election cycle, Democrats benefited more from dark money expenditure than Republicans – receiving aligned support worth hundreds of millions of dollars.
“But here’s the key difference,” continued President Biden. “Democrats in the Congress support more openness and accountability. Republicans in Congress so far don’t. I hope they’ll come around.” Biden praised the Republican-led efforts in state legislatures to increase dark money disclosure in Tennessee and Wyoming, and named his “friend John McCain” as a key champion of campaign finance reform.
In spite of Biden’s bipartisan plea, Republican Senators uniformly opposed the bill that Minority Leader Mitch McConnell (R-KY) once compared to a “modern day Nixonian enemies list.” As Business Insider reported, Senators Josh Hawley (R-MO) and Ted Cruz (R-TX) cynically defended their votes by citing the 1958 NAACP vs. Alabama case, which allowed for the civil rights nonprofit to shield its registry lists from the racist state.
Without intervention, the 2022 elections are slated to be the most expensive on record. But while federal solutions languish, states can create their own transparency standards – and more just electoral outcomes.
This November, Arizona voters could institute mandatory donor disclosure through a statewide proposition: Voters’ Right to Know.
It would codify “the prompt, accessible, comprehensible and public disclosure of the identity of all donors who give more than $5,000 to fund campaign media spending in an election cycle and the source of those monies, regardless of whether the monies passed through one or more intermediaries.” Highground polling shows that Arizonans across the political spectrum overwhelmingly approve of these disclosures.
The measure has faced considerable scrutiny and court challenges, and several democracy-limiting initiatives join the Voters’ Right to Know on the ballot. But it remains – and voters have a chance to do what Congress can’t.
Dark money disclosure is a crucial first step in reining in the influence of big money in politics. Policies like public financing and democracy vouchers and rank-choice voting help level the playing field for individual voters. These measures are becoming law of the land, from Florida to Alaska and Hawaii, making it clear as day: the American people want to do away with dark money.