Citizens United’s Biggest Surprise: The Collapse of Disclosure

January 25, 2011
Guest Post

This post is part of an ACSblog symposium marking the one-year anniversary of the landmark decision in Citizens United v. FEC. The author, Joseph Sandler, is a member of the firm Sandler, Reiff & Young P.C. and an election law expert. Sandler participated in an ACS panel discussion and ACSblog video interview about the decision last February.
From the vantage point of its one-year anniversary, the biggest surprise about the Citizens United decision was not the decision itself nor its consequences for the 2010 campaign. Rather, it was the successful effort by Republican and conservative forces to keep secret the sources of much of the independent expenditures made possible by that decision.

The collapse of disclosure - that the new wave of independent spending was marked by secret funding - was stunning for two reasons. First, of course, in CU the Supreme Court fully upheld the provisions of the Bipartisan Campaign Reform Act of 2002 requiring the disclosure of contributors funding independent broadcast ads referencing federal candidates and run close in time to an election ("electioneering communications"). Indeed, as the Campaign Legal Center's Paul Ryan points out in his own post on this blog, the CU majority clearly expected that the new freedom to use corporate and union funds to pay for independent expenditures would be accompanied by full disclosure. Justice Kennedy referred to a system "that pairs corporate independent expenditures with effective disclosure" and upheld "disclosure which 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. ..."

Second, that disclosure was vigorously opposed by Republican and conservative leaders and groups was an even bigger surprise. Keeping the identity of donors secret would seem to run counter to the fundamental tenets of conservative and free-market philosophy.

The successful functioning of free markets requires transparency. One of the fundamental strengths of the U.S. financial system has been the transparency of securities and some derivatives markets. The evasion of transparency - the off-market trading of derivatives with opaque terms - was of course closely associated with the recent financial collapse.

Free markets in ideas - a cherished ideal of conservative thinkers generally opposed to regulation of campaign finance - similarly require transparency. One of the most powerful rationales for not restricting sources and amounts of independent campaign spending is that if the voters know who is doing the spending, they can weigh the value of the message for themselves. Without disclosure, that rationale basically disappears. Thus, in his book Unfree Speech: The Folly of Campaign Finance Reform (2001), Professor Bradley Smith, a former Republican FEC Commissioner and leading opponent of campaign reform, wrote: "[W]e, as voters, are lazy. .... Knowing the sources of a candidate's campaign funds provides us with a shorthand method for estimating a candidate's probable stand on a variety of issues. ... Contributions, in short, are a bit like endorsements. We rely on our knowledge about the endorser to make quick relatively effortless judgments on the candidate. Thus there may be modest benefits to be had from a system that provides voters with information on the sources of campaign funds, through mandatory disclosure." (p. 224)

Some conservatives have argued that donors to independent expenditure groups have a legitimate First Amendment interest in keeping their identities secret because of fear of harassment. But the Supreme Court majority rejected that very rationale in the CU decision itself, in upholding the disclosure provisions of BCRA. Further, that notion commands little sympathy from the Court's own conservatives. In Doe v. Reed, conservative groups argued that the state should be barred from disclosing the names of persons signing a petition to put a state gay rights measure on the ballot in Washington State, because of the theoretical threat of harassment or intimidation. The Supreme Court ruled 8-1 that the First Amendment did not bar disclosure. Justice Scalia, in his opinion concurring in the judgment, wrote, "There are laws against threats and intimidation; and harsh criticism, short of unlawful action, is a price our people have traditionally been willing to pay for self-governance. Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed. For my part, I do not look forward to a society which...campaigns anonymously..."

The collapse of disclosure resulted from the ambiguity of the language of federal campaign finance law relating to the reporting of donors to groups paying for electioneering communications and paying for independent expenditures expressly advocating the election or defeat of federal candidates. In part, the problem stemmed from the fact that the disclosure provisions of BCRA were designed for a regime in which use of corporate and union funds for these expenditures and communications were not permitted or contemplated.

The disclosure problem could be solved, of course, through new congressional action. Unfortunately, the recent "DISCLOSE" Act was larded with foolish efforts to discourage independent expenditures (such as requiring corporate executives to appear in ads their companies help fund) and provisions aimed at thwarting "evasion" that became so twisted and obsessive that labor unions would have been unfairly burdened. By the time a "clean" disclosure bill was introduced, it was too late.

The question of how to change the result of Citizens United has been extensively debated and will not be revisited here. In the short term, at least, it appears that we will be living with corporate and union independent expenditures. As citizens we should know who is paying for them. And conservatives should be the first to say so. Conservative Republicans should show fidelity to their own principles and, in the new spirit of bipartisanship, join Democrats and progressives in supporting simple and sensible legislation that would mandate full disclosure of the sources of funding of independent expenditures.