Democrats propose bill to put political limits on foreign-owned companies
By Dan Eggen
Democrats stand ready to introduce legislation next week that would sharply limit the ability of foreign-connected companies to participate in U.S. politics and would require corporations, unions and nonprofit groups who pay for political advertising to make sweeping disclosure, according to an official summary of the bill.
The proposal, spearheaded by Rep. Chris Van Hollen (D-Md.) and Sen. Charles Schumer (D-N.Y.), is aimed at blunting the effect of a Supreme Court ruling earlier this year that equated corporations to individuals and permitted companies and unions to spend unlimited amounts of money for or against political candidates.The ruling has been sharply attacked by President Obama and other Democrats, who fear the decision will unleash a flood of corporate spending in the fall midterm elections that is likely to favor Republicans.
According to a summary obtained by The Washington Post, the legislation to be unveiled by Van Hollen and Schumer would require corporate chief executives or group leaders to attach their approval of ads, much like political candidates are required to do. It would also mandate disclosure of major donors whose money is used for "campaign-related activity."
The latter measure could have particularly broad ramifications because it would require powerful trade groups such as the U.S. Chamber of Commerce to identify the companies that fund its political-related spending; such details are not typically disclosed now.
The measure would also tighten political restrictions on foreign-based corporations, which would be defined as any company that has 20 percent foreign voting shares, a majority of foreign directors or a foreign national leading U.S. operations.
If enacted into law, that provision could affect a significant number of familiar companies, including Budweiser, T-Mobile, Jenny Craig and Research in Motion.
Other provisions would mandate public disclosure of political spending to shareholders or members, and would bar federal contractors over $50,000 from participating in federal elections, the summary says.
Even before its formal introduction, the legislation has attracted sharp criticism from many Republicans and corporate groups, who argue that many of the proposals are excessive and are aimed at discouraging organizations from exercising their First Amendment rights.
Nancy McLernon, president of the Organization for International Investment, which represents U.S. subsidiaries of foreign-based firms, said the legislation could have a chilling effect on the U.S. economy and ignores the rights of U.S. citizens who work for companies based overseas.
"These firms are incorporated in the U.S. with the same rights and obligations as any U.S. company," McLernon said. "If other initiatives follow this bill's lead, it would have a detrimental impact on the ability for these companies to do business in the U.S. and support jobs here."
But Democratic leaders are hoping that GOP opposition will soften in light of the public mood against large corporations, and they announced last week that Rep. Mike Castle (R-Del.) had agreed to be a co-sponsor of the legislation in the House. The White House has also signaled its intent to make the Supreme Court case a central part of its legislative agenda this year.
"We hope that people on both sides of the aisle can agree that Americans have a right to know who is spending money on elections," according to Democratic talking points attached to the bill summary."We can't flood our democracy with millions of dollars in political expenditures and then keep people in the dark about who is trying to influence them."
In a 5 to 4 decision in January, the Supreme Court found that corporations have the same rights as individuals when it comes to political speech and can therefore use their profits to support or oppose individual candidates, as long as they do not do so in direct coordination with campaigns. The decision opens the door to unlimited spending by corporations, trade groups and unions in the weeks leading up to elections, a practice that had been expicitly banned for more than 50 years.
The text of the official summary follows:
The DISCLOSE Act:
Democracy is Strengthened by Casting Light on Spending in Elections Act
Updated Response to Citizens United from Congressman Van Hollen:
The Supreme Court, in a 5-4 decision on January 21, 2010, in the Citizens United v. Federal Election Commission case, overturned decades of campaign finance law and policy, thereby permitting the influx of special interest money into our elections. On February 11th, I released a proposed legislative framework in response to this decision. I have been soliciting input from a number of my colleagues, on both sides of the aisle, as I finalize legislation for introduction next week. Here is an updated summary of the bill:
The legislation will address six major points:
1. Enhance Disclaimers: Make CEOs and other leaders take responsibility for their ads.
If a corporation, union, section 501(c)(4), (5), or (6) organization, or section 527 organization spend money on campaign-related activity, its CEO or organization head will have to stand by the ad and say that he or she "approves this message," just like candidates have to do now. In order to seek out the real money behind the ad, this legislation will drill down several layers and require the top contributor directing the funds to also "stand by the ad." Additionally, we require the top five contributors to an organization to be listed on the screen.
2. Enhance Disclosures: It is time to follow the money.
Any covered organization must disclose within 24 hours to the FEC not just its campaign-related activity, but also transfers of money to other groups which then can be used for campaign-related activity. Additionally, a covered organization must disclose its donors and has two options: 1) it can disclose all of its donors $1,000 and above to its general fund ,or 2) it can set up a "Campaign-Related Activity" account and disclose only those political donors to that account $1,000 and above. If, however, the organization transfers $10,000 or more from the general fund into the political account then it must then disclose all its general fund donors in excess of $10,000. In both options, the Act allows for organizations to "wall-off" donations if the donor restricts the donation from use for political purposes.
3. Prevent Foreign Influence: Foreign countries and entities should not be determining the outcome of our elections.
Corporations that have either 1) a foreign entity controlling 20% of its voting shares; 2) foreign nationals comprising a majority of its board of directors; 3) a foreign national who directs, dictates, or controls U.S. operations; or 4) a foreign national who directs, dictates, or controls political decision-making are banned from spending in U.S. elections. If a corporation is under the direction or control of a foreign entity, it should not be able to spend money on our elections.
4. Shareholder/Member Disclosure: We should allow shareholders and members to know where money goes.
This provision would mandate disclosure by corporations, unions, and other groups to their shareholders and members in their annual and periodic reports. This would also require these groups to make their political spending public on their websites within 24 hours after filing with the FEC.
5. Prevent Government Contractors from Spending: Taxpayer money should not be spent on political ads.
Due to the appearance of corruption and possible misuse of taxpayer funds, government contractors with a contract worth more than $50,000 will not be allowed to spend money on elections. Similarly, TARP recipients who have not paid back government funds are also banned from spending.
6. Tighten Coordination Rules: Corporations should not be able to "sponsor" a candidate.
Loopholes in current coordination rules must be filled, thereby banning coordination between a candidate and outside groups on ads that reference a candidate from the time period beginning 90 days before a primary and running through the general election.
April 22, 2010; 7:17 PM ET
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