Foreign Contributions Risk Unites Liberals, Conservatives

Foreign Contributions Risk Unites Liberals, Conservatives

Campaign-finance deregulation has elevated the risk that foreign money will make its way into American elections, and this danger is emerging as a rare point of bipartisan agreement between liberals and conservatives.

The threat of foreign campaign contributions and how to stop it was the topic of a bipartisan forum at the Federal Election Commission to address how to ensure that foreign donors do not use corporations, “dark” money nonprofits, and shadowy limited liability corporations (LLCs) to funnel foreign money into American elections. The panel was convened by Democratic FEC commissioner Ellen Weintraub, and featured lawyers, campaign-finance experts, and watchdogs from both sides of the aisle.

Foreign money has long been banned in American elections on the grounds that this protects the country from political subversion of the national interest. But the growing deregulation of campaign-finance laws, combined with dwindling enforcement, has diminished accountability, watchdogs warn. Reform advocates voiced concern Thursday that this has made it all too easy for foreign money to find its way in.

The specter of that growing foreign influence is emerging as an area of common ground among liberals and conservatives, who are usually sharply divided on the issue of campaign financing. Panelists on both sides of the aisle at Thursday’s event brought up a slew of concerns, starting with the growing role of outside money in elections.

Outside money accounts for about 20 percent of all political money so far in the 2016 election, said Sheila Krumholz, executive director of the Center for Responsive Politics. And undisclosed, “dark” political spending could reach as much as $600 million this election cycle, she predicted. Moreover, weak disclosure laws have made it increasingly difficult to uncover the existence of foreign money in elections, Krumholz said.

But the risk that such money will run through corporate coffers is high, panelists said. For one, as companies have become increasingly globalized, they may no longer have singular domestic interests—something the Supreme Court did not address when it ruled in Citizens United that corporations are essentially people.

“Corporations are different than they used to be,” Norm Ornstein, a political scholar at the American Enterprise Institute, said at the forum. “Now we have corporate inversions; we have a vast expansion of foreign countries and entities buying U.S. companies and starting U.S. subsidiaries.”

While an individual American may have many different interests, Ornstein said, it’s broadly assumed that such a citizen will be loyal to the national interest. The same is not true for many corporations, he argued. “We’re going to have very serious scandals and questions over what is or isn’t in the national interest,” Ornstein said.

It’s no secret that companies see political contributions to U.S. elections as an investment—and foreign entities are no different. “People everywhere know that political investment is a tremendous investment,” said John Pudner, executive director of the conservative campaign-finance reform group Take Back Our Republic and a former political consultant.

The fact that foreign donations are illegal can have little impact in the highly lucrative political consulting industry, Pudner said. “There’s the temptation here, and there are the people willing to carry it out,” he said. The temptation of big commissions from large ad buys might make unscrupulous political consultants willing to turn a blind eye, said Pudner.

So how can foreign money be kept out?

Weintraub has proposed an FEC rulemaking that would require corporations making political contributions to verify that they are not using foreign money. The FCC already has a similar requirement in place for companies that want to obtain a federal broadcast license.

“Regardless of whether the perpetually deadlocked FEC takes action, lawyers may wish to think twice before signing off on corporate political giving or spending that they cannot guarantee comes entirely from legal sources,” Weintraub wrote in The New York Times back in March.

Pudner has also successfully lobbied more than 40 House conservatives to back a bill that would require federal candidates’ online contribution forms to disclose a three-digit credit card security code as well as a valid U.S. billing address, which he argues would close an easy loophole that allows foreign nationals to contribute to campaigns.

Panelists also cited robust disclosure of all political expenditures as a critical measure to ensure that foreign money stays out of American elections. However, disclosure legislation has in recent years fallen prey to partisan gridlock in Congress, amid Republican concern that disclosure mandates will lead to political targeting.

Meanwhile, it remains to be seen whether substantive action on foreign money can transcend partisan gridlock at the FEC.

“You don't lose money betting against action” at the FEC, Weintraub told Bloomberg BNA in an interview