How Obama Could Crack Down on Dark Money Without Congress

AP Photo/Evan Vucci

A combination of pressure from progressive organizations, support from congressional Democrats, and legal assurance from the courts could compel President Obama to levy his first blow to the secretive scourge of dark money in American politics. All it would take is an executive order that requires all federal contractors to disclose their dark-money spending—contributions to shadowy 501(c)(4)s and 501(c)(6) nonprofits.

The only question that remains: Will he put his pen to paper? Advocates of the action argue that for Obama, this is a chance to further define his legacy on an issue that he’s notably spoken out against yet has so far refrained from any real action.

At a 2010 DNC rally, Obama declared that special interest groups that pour money into attack ad campaigns without ever having to disclose their spending are “a threat to our democracy.” In his 2015 State of the Union address, the president called for political reform: “A better politics is one where we spend less time drowning in dark money for ads that pull us into the gutter.”

In an attempt to keep corruption out of the government, federal contractors have been banned for more than 70 years from contributing to federal candidates, parties, or political committees. That’s because federal contracting is big business. In 2013 the federal government spent about $460 billion on contracting, with $177 billion of that going to just 25 companies, according to a report from the Brennan Center for Justice. The top ten contractors have raked in $1.5 trillion in federal contracting since 2000.

An outright ban on direct political contributions had kept these companies’ political influence at bay somewhat. But there is no ban on contractors’ executives, shareholders, or corporate PACs from making contributions, just a requirement that these donations be disclosed. And these disclosures have shown just how prolific federal contractors’ political spending is: “As of 2011, federal contractors made up 33 of the 41 largest disclosed corporate campaign contributors over the past two decades,” the Brennan Center reports. In 2014 alone, the 25 biggest federal contractors gave more than $30 million through their respective PACs.

via Common Cause

But when the Citizens United v. FEC decision came down in 2010, contractors were suddenly free to pump unlimited amounts of money into super PACs and other secretive operations, without a trace. This exposes the government contracting process to corruptive pay-to-play practices that are hidden from the public eye, unless companies voluntarily choose to disclose such spending. Currently, almost three-quarters of the top 15 government contractors—including defense contractors Lockheed Martin, Boeing, and Raytheon—don’t fully disclose contributions to 501(c)(4)s or 501(c)(6) nonprofits, according to a Public Citizen report.

Based on how much money federal contractors have spent from their PACs as well as the dark money they’ve chosen to disclose, experts say it’s reasonable to assume that there are heaps more that remain in the shadows. The executive order would work to illuminate that money. In the past three federal elections, more than $600 million in dark money has been spent, according to the Center for Responsive Politics.

Paving the Political Path

The genesis of the executive order sprang from the chaos following the now infamous Citizens United v. FEC decision that unleashed a whirlwind of unfettered spending in the world of campaign finance.

Democracy advocates scrambled to find any regulatory routes that remained open amongst the rubble of the campaign finance system after the Supreme Court ruling—disclosure of dark-money spending for federal contractors was the one remnant. In fact, the whole rationale propping up the majority opinion in Citizens United was that unlimited political money would be fine as long as it could be disclosed.

As Justice Anthony Kennedy wrote, “Shareholder objections raised through the procedures of corporate democracy … can be more effective today because modern technology makes disclosures rapid and informative. A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today.”

Exactly seven months after the Citizens decision, Democrats introduced the DISCLOSE Act—legislation that would ban companies with more than $10 million in government contracts from contributing to electioneering efforts. There was significant political support from Democrats and the bill passed in the House; however, the legislation died in the Senate when it was faced down by a Republican filibuster.  

In 2011, the White House was internally considering an executive order that would require all contractors that were actively bidding for government contracts to disclose their dark-money spending. The political backlash was swift. Republicans (and some Democrats) argued that public disclosure of political spending would turn the federal contracting process into a partisan process by giving incentive for government agencies to accept or reject bids based on a contractor’s history of contributions. The head lobbyist for the U.S. Chamber of Commerce characterized the executive action as an intolerable, back-door attempt by the White House to silence private sector opponents. “We will fight it by all available means,” he said. 

Republicans quickly introduced a range of legislation aimed at limiting Obama’s authority, including a rider to an appropriations bill that ordered that no federal funds could be used for such an executive order. Still, Democrats, who controlled the Senate, were able to keep Republicans at bay and leave intact the president’s ability to enact an executive order that would require disclosure for federal contractors after they are awarded contracts.  

“[Congress] left open this part of the pathway to disclosure,” explains Lisa Gilbert, director of Public Citizen’s Congress Watch division. “It’s the most important part … it’s a great way to get at a huge swath of dark money.” Such an order would reach about 70 percent of Fortune 100 companies.

Experts say that Obama is on solid legal ground in terms of his authority to require federal contractors to disclose political spending and would be able to stave off the likely barrage of lawsuits. His authority was also reaffirmed by the D.C. Circuit Court last week when they unanimously ruled against an attempt to overturn a 70-year ban of political contributions to federal candidates, parties, and political committees for federal contractors. “It’s a very positive decision,” says Scott Nelson, a Public Citizen attorney who helped file an amicus brief in support of the ban. “It’s not a solution to the problem, but it is holding a finger in the dike as to one very important problem.”

Those who are familiar with the effort say that the White House is very closely considering the order and that it’s on a short list of potential executive orders that the president will be making before his second term ends.

Growing Pressure

As the 2016 presidential campaign ramps up, campaign finance reform advocates are stepping up the pressure on the White House to make the disclosure order a priority. They contend that after making public statements about the ill-effects of dark money on democracy there’s no excuse for Obama to not sign the order, and that it’s a matter of shaping the president’s legacy on money in politics issues.

Back in April, a coalition of 55 progressive organizations—including Common Cause, Public Citizen, and Campaign Legal Center—delivered 500,000 signatures to Obama calling for such an executive order.

“We are strongly supportive of the idea,” says Miles Rapoport, president of Common Cause (and a board member for The American Prospect). “On the one hand, disclosure is the one thing that the Supreme Court has said is allowable—and was really their excuse for dismantling the campaign finance system. On the other hand, it’s completely clear that Congress isn’t going to pass disclosure, and this is well within Obama’s executive power.”

This was then accompanied by a letter from prominent progressive senators like Bernie Sanders, Elizabeth Warren, and Al Franken, noting that “An executive order will not solve our campaign finance problems but it will be a step in the right direction, and will show this Administration’s commitment to transparency and fairness.”

New York Attorney General Eric Schneiderman, whose been a vocal opponent of unrestrained political spending, penned an op-ed in Politico urged the president to “turn outrage at the pay-to-play culture of Washington into meaningful reform. The true outrage would be if Washington waits for another scandal before taking action.”

Cristóbal J. Alex, the head of the Latino Victory Project, wrote for The Hill: “When Congress failed to act on immigration, Obama did the right thing and issued executive orders that lifted families out of the shadows. We hope that he will show the same courage to act and use the power to level the playing field for voters” by signing the executive order.

The chorus of progressive voices was joined late last month by 104 House Democrats who sent their own letter urging the president to act. “Taxpayers have a right to know where their money is spent and you have the power to ensure that the American people can obtain this information,” the representatives said. “With public funds come public responsibilities, and any company receiving federal tax dollars should be required by Executive Order to fully disclose their political spending in a timely and accessible manner.”

Observers range from cautiously optimistic to more than a little jaded about the prospects of action on this from the White House.

“Hope springs eternal,” Meredith McGehee, policy director for the Campaign Legal Center, said in an e-mail. “But hope is mitigated by experience with this Administration which since taking office has done almost nothing to address money in politics problems, other than occasional lip service.”

“President Obama has no excuse on this proposed executive order," she continued. "It is hard to say if his inaction in this area is timidity, political prioritization or simply not caring. But the result is the same—and it’s disappointing.”

Part of what’s held Obama back may have been the backlash after the administration’s ruminations on such an order leaked back in 2011. “That may have made them a little gun-shy,” Lawrence Norden, deputy director of the Brennan Center’s Democracy Program, says. “Congressional Democrats have made it clear that they will back him on this. At this point, I don’t see any reason for him not to do it. … He should feel increased pressure to do it.”

Stephen Spaulding, who as policy counsel for Common Cause has been closely involved in the push, theorizes that the president may be more cautious since his executive action on immigration. Spaulding says this took up a significant amount of political bandwidth. “What’s interesting about this [order] is that this wouldn’t be using federal contractors as a hook to tie to some other preferred policy,” he says.

Meanwhile, this is an issue that has a lot of traction among the public. In 2014, 61 percent of people polled were against the Citizens United decision. Across all party lines, three-quarters of Americans are against the impact that special-interest lobbying and election spending have on our political system. Reducing the role of money in politics, too, is highly salient: 78 percent of Americans said it was an important issue.

Still, if past events are any indication, Republican lawmakers are sure to pounce all over such an executive action, which might be to their own peril.

“I just don’t think it’s a winning argument. … It’s not smart politically,” Spaulding offers. “The American people get it. The courts get it—disclosure was upheld 8-1 in Citizens United. If money is speech, don’t the American people have a right to know who’s speaking? Disclosure has been emphatically constitutional.”

It’s a Step, Not a Silver Bullet

Still, knowing who is speaking won’t keep corporations from speaking loudly—unless disclosure translates to significant public consequences.

“This isn’t a panacea in terms of money in politics,” Brennan Center’s Lawrence Norden says. But it could set an important precedent. “It’s been five years since Citizens and this dark money problem, and the president has been very eloquent about complaining about this problem, but nothing has happened. There’s a danger of this becoming normal to the public.”

So advocates and Democrats in Congress are trying to shape this as an issue that will help shape Obama’s legacy in office. But time is a factor as the presidential campaign gears up—apart from the political symbolism, in order for this order to have real teeth it needs to be implemented soon so this pool of dark money is illuminated.

“Time is running out,” Norden says.

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