By the time new regulations to into effect cunning contributors may have found a new vehicle through which to pour unlimited sums to attempt to sway the voters.
Tuesday, December 10, 2013
Whether Yaki broke the law hinges on the distinction between legal work and lobbying. Yaki, a well-connected former supervisor, has insisted that he worked for the air-system company as an attorney and "within the parameters of the ordinance." Most San Franciscans do not lose sleep at night worrying about whether lawyers are serving as unregistered lobbyists. But the essence of the disclosure law - which Yaki voted for as a supervisor in 2000 - is sound: The public interest is served by knowing who is being paid by whom to advocate on an issue.
The problem for the IRS is how to reach this disputed activity without engaging in political judgments or usurping the role of the FEC or Congress in the regulation of campaign finance. Under the proposed rules, the Service leaves itself the option at any time to find that an organization’s activity, even without express advocacy, is its functional equivalent—meaning that “candidate-related” or political intent is the only “reasonable interpretation” of the activity. Guidance for Tax-Exempt Social Welfare Organizations, 78 Fed. Reg. 71,535, 71,541 (Proposed Nov. 29, 2013) (a communication is candidate-related if it is “susceptible of no reasonable interpretation other than a call for or against” a candidate or candidates of a political party.) But the legal standard is vague, and inevitably so: any legal test that probes for what is, by definition, not “express,” is going to suffer from a lack of clear definition. Is it the test that the Supreme Court adopted in Wisconsin Right to Life for the “functional equivalent” of express advocacy, or the one that the FEC has adopted in its own express advocacy regulations set forth in 11 C.F.R. § 100.22(b)? These are similar but not the same. See Electioneering Communications, 72 Fed. Reg. 72,899, 72,912 (Dec. 26, 2007) (leaving open “the issue of the impact, if any, of [Wisconsin Right to Life] on the [FEC’s own] definition of ‘express advocacy’….”). The standard the FEC has adopted is more open-ended, which is not what the IRS professes to be looking for in setting the goal of clear and definitive rules that limit its involvement in political campaigns.
The 990 forms do not list the names of big donors but have nonetheless triggered several eye-opening investigations that illuminate just how such “dark money” groups operate. ProPublica detailed how Crossroads GPS spent at least $85.7 million on politics, despite having reported a far smaller sum to the IRS — $74 million. The difference is largely explained by an $11.2 million Crossroads grant to Americans for Tax Reform, which spent the money on campaigns, the report found. The Center for Responsive Politics continued its “Shadow Money Trail” series with several updates showing, among other findings, that one in four “dark money” dollars went to groups with links to billionaire conservatives Charles and David Koch. The CRP also examined the Crossroads GPS grant. Citizens for Responsibility and Ethics in Washington recently complained to the IRS and the Department of Justice that ATR spent more than half its money on politics, not social welfare, and that the group provided false information to the tax agency. ATR organizers call the allegations baseless and say they have complied with the law.
Thursday, December 5, 2013
The campaign to have the SEC regulate corporate political activity was a partisan boondoggle from start to finish. Hundreds of thousands of form letters urging the SEC to regulate corporate political spending, most raging about the Supreme Court decision in Citizens United, were ginned up by liberal advocacy groups. Democratic lawmakers pressured the SEC to regulate. The reason was simple – many Democrats believe that such regulation would harm their political opposition. Frustrated by the Federal Election Commission’s bipartisan requirement for adopting regulations and congressional inaction, many partisans thought that they could pressure the SEC, with its 3-2 Democratic majority, to adopt rules on a partisan basis.
This week, the Senate Rules Committee announced that it will be holding a hearing next week to consider the nominations of two potential Democratic commissioners, Myrna Perez and Thomas Hicks. If the nominations go forward and the two are confirmed, it will restore the agency to half-strength at least for the first time in two years. It's not clear what exactly the agency will be able to do, given that three votes are necessary for any formal action and no GOP nominees are yet forthcoming - but at the very least it may allow the advisory committees constituted under HAVA to resume their meetings after a halt in early 2012. Also, as Rick Hasen notes at Election Law Blog: [I]t will be harder to call the EAC a zombie agency if it has two commissioners out there speaking for the agency and doing things. It isn't clear if this hearing signals new interest on Capitol Hill in the EAC or if it's just part the majority's demonstration of its powers during life after cloture. Still, it's an interesting development, especially as the President's commission prepares to release its report after six months of hearings.
oters almost certainly will endure another election in 2014 without meaningful regulation of nonprofit corporations that claim to be social welfare organizations, but engage heavily in campaigns while benefiting from their tax-exempt status. President Barack Obama’s administration, through the Internal Revenue Service, last week issued the beginnings of what might one day become regulations that could curtail some political activity by so-called social welfare organizations. Given the complexity of the undertaking, and high level of interest on the part of lawyers, consultants and politicians, there is virtually no way new rules governing these nonprofit corporations will be in place before the 2016 election.