Democracy 21 President Fred Wertheimer Submits Written Testimony to House Hearing Strongly Supporting Government Contractor Executive Order after Chairman Issa Refuses to Allow Democratic Members of His Committee to Call any Witness
In written testimony submitted today to a joint hearing held by the House Committee on Oversight and Government Reform and the House Committee on Small Business, Democracy 21 President Fred Wertheimer strongly supported “the draft proposed Executive Order of the Obama Administration to require government contractors to disclose all of the campaign contributions and expenditures they make to influence federal elections.”
According to Wertheimer’s testimony:
These disclosure provisions are an appropriate way for the Executive Branch to help protect the public against pay-to-play efforts by persons seeking to influence Executive Branch contracting decisions or seeking to obtain earmarks by Members of Congress for government contracts.
Wertheimer’s testimony was submitted in writing to the joint hearing after the Democratic members on Chairman Darrell Issa’s Committee on Oversight and Government Reform made a request to Chairman Issa that Wertheimer be called as a witness to testify for the Democratic members of his Committee.
Chairman Issa, however, refused to allow the Democratic members of his Committee to call any witness. Instead Chairman Issa told the Democratic Committee members that they and the Democratic members of the House Committee on Small Business jointly could have a total of one witness to represent the Democratic members of both Committees.
Meanwhile, Chairman Issa and Chairman Sam Graves of the House Committee on Small Business have called five witnesses to attack the draft Executive Order, as opposed to the one witness being allowed for the Democrats on both of these Committees.
“I find this to be an unusual, strange and unfair way to run a congressional hearing,” Wertheimer said.
Wertheimer’s testimony includes a request to include in the committee hearing record a letter sent to President Obama from 34 organizations expressing strong support for the draft Executive Order and asking the President to "move ahead promptly with the Executive Order."
According to Wertheimer’s testimony, the draft Executive Order would close for government contractors a gaping loophole in the campaign finance disclosure laws opened up by the Supreme Court decision in the Citizens United case.
The testimony states:
The draft Executive Order would require public disclosure of donations made by government contractors to third party groups where the donor knows or has reason to know that the money will be used by the third party group for expenditures to influence federal elections.
This would ensure that the public is fully informed about the campaign finance activities undertaken by government contractors and would help protect against government contractors using campaign funds to obtain influence with Executive Branch officials and members of Congress over government contractors.
The Executive Order is simply an effort by the Administration to do what the President appropriately can do under his own authority to obtain campaign finance information from government contractors that is being hidden from the American people.
The testimony further states:
The Executive Order would facilitate disclosure and make it easier for citizens to know what government contractors are doing to influence federal elections by providing all of the relevant campaign finance information for a contractor in one centralized location.
This campaign finance information is necessary for public accountability and to guard against pay-to-play efforts involving decisions by the Executive Branch and actions by Members of Congress.
The idea that disclosure would facilitate the misuse of campaign finance support or opposition to make decisions is backwards. Disclosure to the public will protect against decisions being made on the basis of campaign finances and that is one of the cardinal principles used by the Supreme Court to uphold campaign finance disclosure laws.
Absent disclosure, public officials and elected officeholders are always able to know who provided them campaign finance support and who did not. The only people who will not know are the American people and the public absence of this information will make it easier, not harder, to make improper decisions based on campaign finance support or opposition.
Werteimer’s testimony rejected attacks being made by opponents on the constitutionality of the disclosure requirements of the Executive Order as completely ignoring Supreme Court decisions.
The testimony noted that the Supreme Court for more than three decades has consistently upheld disclosure laws as constitutional and necessary to inform citizens and protect against government corruption. According to the testimony:
In January 2010, the Supreme Court in the Citizens United case struck down the ban on corporate expenditures in federal elections. In doing so, the Court made clear that disclosure laws to cover the new campaign finance activities permitted by the decision were constitutional and necessary.
The Supreme Court by an 8 to 1 majority held that disclosure is “needed to hold corporations and elected officials accountable for their positions and supporters.” The Court said that disclosure allows citizens to “make informed choices in the political marketplace,” and “permits citizens and shareholders to react to the speech of corporate entities in a proper way.”
The testimony noted that the Supreme Court in Citizens United stated:
"A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today.”
According to the testimony:
Unfortunately, however, as evidenced by the 2010 congressional races, such a system of “effective disclosure” did not exist on the day Justice Anthony Kennedy wrote the decision and still does not exist.
The new opportunities for independent spending in federal elections permitted by the Citizens United decision resulted in more than $135 million in secret contributions being spent by outside groups to influence the 2010 congressional races. This represented an unprecedented return to secret money in federal elections that has not been seen since before the Watergate scandals of the 1970s.
The testimony points out:
The American people overwhelmingly support disclosure of the campaign finance activities being conducted by outside groups. According to a New York Times/CBS Poll last year (October 28, 2010):
92 percent of Americans said that it is important for the law to require campaigns and outside spending groups to disclose how much money they have raised, where the money came from and how it was used.
Wertheimer’s testimony notes:
Democracy 21 supports congressional enactment of new disclosure laws to cover the new campaign finance activities permitted by the Citizens United decision. The disclosure should be comprehensive and encompass campaign finance activities by corporations, tax-exempt advocacy groups, business associations and labor unions.
In the last Congress, we supported the DISCLOSE Act, which passed the House and received 59 votes in the Senate, one vote short of the 60 votes needed to break a filibuster and pass the legislation.
Short of new legislation, we support alternative ways to provide to the American people the campaign finance disclosure information that the Supreme Court has made clear citizens have a basic right to know. This includes the draft Executive Order of the Obama Administration.
The testimony states that contrary to claims made by opponents of the Executive Order that government contractors should not be required to disclose their campaign finance activities, “there is nothing new about government contractors making campaign finance disclosures.”
According to the testimony:
Under existing campaign finance disclosure laws, government contractors are already required to make a number of campaign finance disclosures. They are required to disclose the campaign contributions and expenditures made by their PACs, as well as the individuals contributing to their PACs. They also are required to disclose the campaign expenditures they directly make on “independent expenditures” and “electioneering communications.” The contributions made by officers and directors of government contractors also have to be disclosed by the recipients of the contributions.
What is missing today, however, and what the draft Executive Order would provide, is disclosure of contributions made by government contractors to third parties “with the intention or reasonable expectation” that the third party groups will spend the contributions on independent expenditures or electioneering communications to influence federal elections.
This information would have been disclosed under existing campaign finance disclosure laws but for Federal Election Commission regulations that have eviscerated the disclosure requirements covering these contributions.
The testimony points out:
In considering a disclosure Executive Order applicable to government contractors, it is important to understand that government contractors are in a special category and have long had to abide by a special provision in the campaign finance law designed to protect the integrity of the government contracting process.
Section 441c of the Federal Election Campaign Act explicitly prohibits government contractors from making any contribution, directly or indirectly, to “any political party, committee, or candidate for public office or to any other person for any political purpose or use.” An exemption is provided in the section that allows the PACs of government contractors to make contributions, with such contributions subject to disclosure under existing disclosure laws.
Special rules for government contractors were considered necessary in order to help protect the integrity of the government contracting process and protect against pay-to-play efforts. This has been true both nationally and in a number of states which have enacted strong campaign finance restrictions and/or disclosure requirements on state and local government.
The testimony points out that the claims by opponents that the Executive Order would “chill” and stifle” free speech fly in the face of Supreme Court decisions.
According to the testimony:
In Citizens United, the Supreme Court held that that disclosure requirements regarding campaign expenditures by outside groups “do not prevent anyone from speaking” and serve governmental interests in “providing the electorate with information” about the sources of money spent to influence elections so that voters can “make informed choices in the political marketplace.”
The Supreme Court noted the importance of disclosure for the new corporate campaign finance activities being permitted, stating:
With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are “‘in the pocket’ of so-called moneyed interests.”
The Supreme Court further stated:
The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.
The testimony also notes the strong support of Justice Scalia for disclosure requirements:
Justice Antonin Scalia rejected the “chilling” effect argument in a forceful defense of disclosure in a concurring opinion in Doe v. Reed (2010). In this case, which upheld disclosure requirements for petition signers for ballot measures, Justice Scalia wrote:
Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.
The testimony also flatly rejects as without merit the argument made by opponents that the Executive Order is an attempt to end-run the Congress. The testimony states:
The Executive Order is just one of various ways to provide citizens with important campaign finance information they have a fundamental right to know. Democracy 21 supports and is pursuing legislative, litigation and administrative avenues to ensure that citizens are provided with this campaign finance information.
The United States Congress can and should enact comprehensive legislation to require disclosure for all groups of the new campaign finance activities permitted by the Citizens United decision. But Congress has no monopoly on whether voters are informed about the campaign money being used to influence their votes and government decisions.
The President also has a right to act within the appropriate sphere of his powers, which include protecting the integrity of the Executive Branch contracting process.
The courts have a right to determine whether existing campaign finance disclosure laws are being properly interpreted and enforced by the Federal Election Commission. The Democracy 21 legal team joined by the Campaign Legal Center has filed a lawsuit on behalf of Representative Chris Van Hollen on this question that challenges FEC contribution disclosure regulations as contrary to law and as having eviscerated contribution disclosure requirements.
The testimony also notes as puzzling the widespread opposition by congressional Republicans to disclosure:
The widespread opposition to new campaign finance disclosure requirements voiced by Republican Members of Congress last year and this year is puzzling, particularly in light of the past history of consensus support for disclosure laws and the overwhelming public support for disclosure.
In the past, there has always been strong and broad bipartisan support on Capitol Hill for full and timely disclosure of campaign finance activities. Even the most vocal congressional opponents of various other campaign finance reforms have argued that full and timely disclosure of campaign finance activities is the one reform that makes sense.
Ten years ago, for example, Congress enacted new disclosure legislation to apply to 527 political organizations that were at the time raising and spending undisclosed money to influence federal elections.
The House passed the disclosure legislation for 527 groups by a vote of 385 to 39. Of the 217 House Republicans who voted, 178 Republican Members voted for the disclosure legislation. The Senate passed the disclosure legislation 92 to 6. Of the 54 Republican Senators who voted, 48 Republican Senators voted for the legislation.
In contrast, last year, two House Republicans and no Republican Senator voted for the DISCLOSE Act.
The testimony notes the comments by House Republican leaders on disclosure last year:
An article in TalkingPointsMemo (May 6, 2011) included comments made last year in support of disclosure by House Majority Leader Eric Cantor and House Majority Whip Kevin McCarthy:
"Anything that moves us back towards that notion of transparency and real-time reporting of donations and contributions I think would be a helpful move towards restoring confidence of voters," Cantor told Newsweek right after the Citizens United ruling.
McCarthy is quoted in the same article as sharing a similar philosophy.
“I watched in California campaign-finance reform and what’s happened is…people now move money through central committees at the last minute so you don’t get the transparency," he said. "It doesn’t get [at] what the public thought was going to happen. The best way, the fairest way, is greater transparency. Let people understand where it is going and what’s happening.”
The testimony concludes:
The Supreme Court clearly and unequivocally found in Citizens United that campaign finance disclosure laws were constitutional and necessary for the new campaign finance activities permitted by the Court’s decision. The draft Executive Order would provide such information to citizens and taxpayers whose funds are being spent on government contracts and who have a basic right to know this information.
President Obama should move promptly to sign the Executive Order.
Congress should enact comprehensive disclosure legislation to require corporations, tax-exempt advocacy groups, business associations and labor unions to disclose the campaign finance activities that were permitted by the Citizens United decision.
