Dark money reform demands voter attention | Arizona Daily Sun

September 28, 2014 5:30 am

There are dark money campaigns.

And then there are campaigns about dark money campaigns.

In Arizona this fall, voters will be exposed to both -- the two candidates for Secretary of State are each proposing dark money reforms.

The dark money - spending by groups mainly from outside Arizona that are not required to identify their contributors - is already pouring in. Estimates in Arizona's 1st Congressional District alone have the money topping $6 million by the time Nov. 4 arrives. Nationally, the Center for Responsive Politics reports that $228 million has already been spent by outside interest groups, the most ever in a midterm election.

The influx of money is due to the Supreme Court's 5-4 Citizens United decision in 2010 that allowed unlimited campaign spending by corporations and unions. In the 2008 presidential year before Citizens, outside groups spent $144 million; in 2012, they spent more than $1 billion.

Good government types objected at the time to the Supreme Court lifting spending limits that they said would skew influence toward entities like corporations that have far more financial resources than individuals contributing to political action committees. And when the corporate campaign managers took advantage of nonprofit laws and Federal Election Commission rules that allowed the names of contributors to be kept secret, suddenly dark money became a bipartisan issue that united politicians as different as John McCain and Harry Reid in calling for reform.


In Arizona, big injections of dark money occurred in 2012 in the campaign for attorney general and on two ballot measures: extending the state sales tax for education and the open primary. The last two were leading in voter surveys before the dark money but were defeated in November. The sources of the spending were ultimately revealed, but only after the election, and in the case of the ballot measures, only because the state of California has tougher disclosure laws that allowed the Arizona money to be traced ultimately to committees controlled by the Koch Brothers.

So now both candidates for Secretary of State - Democrat Terry Goddard and Republican Michele Reagan - are proposing to rein in dark money. Because the Koch Brothers are aligned with conservative causes, some national Republicans contend the attempt to shine light on dark money is partisan. But with Reagan carrying the torch for dark money reform and winning Republican endorsements, that argument is falling flat in Arizona.

Neither candidate is looking to overturn the Citizens decision and limit corporate and union spending. They are focusing on disclosure requirements, which the Supreme Court did not directly address and Congress has not acted on. As a result, corporations and wealthy individuals can form "educational" 501(c)(4) nonprofits that are exempt from disclosure as long as their campaign ads do not expressly endorse or oppose a candidate or ballot measure (so-called "electioneering").

Some have said that remaining anonymous allows these groups to stand up to powerful, entrenched interests without fear of reprisal. But the majority behind some kind of 501(c)(4) reform contend that industrialists like the Koch Brothers are in fact the very entrenched interests trying to frustrate an open democratic process that should hold them accountable to their positions on environmental laws and tax policies even as they seek to influence voters and politicians on those very issues..


The two candidates for Secretary of State have different approaches to the issue. Reagan introduced a bill earlier this year in the Legislature that would make it a crime for corporations, limited liability companies and labor unions to hide the identities of contributors by transferring the money through other entities.

Other provisions would tighten the rules on which independent expenditure committees have to register with election officials and file campaign finance reports, force independent committees to disclose their largest contributors in their campaign ads, and give the Secretary of State's Office broad leeway to investigate alleged violations in city and county elections.

The bill didn't pass, in part because some doubted it would be enforceable - transferring money by itself is not a criminal act, and intent would be difficult to prove.

Goddard proposes, among other things, to require any group mentioning the name of a candidate or ballot measure within 60 days of an election to register as a political organization with the Secretary of State, thus requiring disclosure before the election.

The challenge would be to trace the contributions to their original source. If a corporation is bankrolling a 501(c)(4) from its treasury, that would not name individual names, but at least it would identify the corporation.


Goddard's plan appears to be similar to dark money rules in place in California, Maryland and several other states. The key is to enforce them in a timely manner -- if an outside group found to be electioneering refuses to disclose donors before the election, Goddard's plan says they must stop the electioneering.

That will no doubt trigger a lawsuit accusing Goddard of pre-emptively chilling free speech. But if the courts have said that disclosure rules are constitutional, then presumably they can be enforced, too. The question is whether the court will limit the penalty to a meaningless fine that corporations will gladly pay to remain anonymous until after the election instead of attempting to shut down an ad campaign.

At some point, given the groundswell of bipartisan discontent with dark money, Congress will likely act to at least close the 501(c)(4) loophole - the educational component should not be allowed to include any kind of election-related activity and remain an anonymous nonprofit corporation. But until then, it is up to the states, and in this year's secretary of state race, at least Arizona voters have two candidates who are very much dialed into the problem. We'll be interested to learn how they fine-tune their proposals in the final weeks of the campaign - and whether dark money itself rises up to oppose them.

Originally posted by Arizona Daily Sun on September 28, 2014

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