The Easiest Fix for Dark Money: Disclose Less Often

Forcing candidates to file frequent reports has actually made the problem worse.

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"Politics has got so expensive that it takes lots of money to even get beat with nowadays." —Will Rogers

Super PACs are unquestionably a scandal: The lightly regulated committees mean wealthy donors can funnel unlimited amounts of money into elections anonymously. But one of the remedies being proposed—early and frequent disclosure of super-PAC donors and expenses—would very likely make things worse.

Senate Democrats have proposed a bill, the DISCLOSE Act, that would require super PACs to publicly file lists of their donors and spending every 90 days during an election cycle. This sounds good—who is against transparency?—but it ignores the real-word dynamics of fundraising. In fact, ill-conceived disclosure requirements have already stimulated a campaign-spending arms race and made U.S. elections more expensive.

Let’s be clear: Transparency is vital to our democracy. Americans are rightly concerned about the cascade of "dark money" into U.S. elections. The question is not whether to disclose, but when and how. What the last decade shows is that early and frequent reporting of donations creates a perverse incentive to start the money chase earlier—and to raise more cash to pay for perpetual fundraising.

The most productive reform that could pass the House and Senate right now would be to mandate less frequent disclosure. Counterintuitively, it would greatly reduce the influence of money in the political system. It would condense the campaign season and allow members, candidates, and donors the freedom not to raise money and not to give money.

In Citizens United and more recently in April’s McCutcheon v. FEC decision, the Supreme Court has affirmed its belief that political money is free speech and the influence of money in politics does not cross the threshold of bribery. The Court’s view is a reaction to the flawed 2002 Bipartisan Campaign Reform Act, otherwise known as McCain-Feingold. The well-intentioned but poorly written campaign-reform law suffocated the party committees and created new, less-regulated vehicles for money like super PACs.

In their rhetoric and with bills like the DISCLOSE Act, Democrats in Congress have tried to curtail the influence that super-PAC donors could have, yet their party has at the same time fully embraced super PACs and perfected the ability to funnel money to these outside groups. Call it hypocrisy, or call it rational: They’ve accepted that the current Congress won’t end the era of super PACs, but perhaps there are ways to better regulate them.

"Americans deserve a campaign-finance system that is transparent and just, and information on who is funding political advocacy should be readily available to the public so voters can make fully informed decisions when they head to the ballot box,” said Senator Kay Hagan, a North Carolina Democrat. “The DISCLOSE Act would take a step in the right direction by ensuring accountability and transparency in our electoral system.”

Hagan is right that voters have a right to know who is funding candidates and about the need for a transparent system. But instead of limiting or reducing money in politics, early financial disclosure has had the opposite effect.

Here’s how. As disclosure has become more frequent and more detailed, it is nearly impossible to run for Congress without focusing on early money. FEC compliance is not cheap, and the bigger the campaign, the more you spend. The norm for compliance cost is upwards of $200,000 a year for a big Senate race. That’s an additional $200,000 cost for the campaign that has to be raised. The same applies to House candidates and political action committees, which will spend as much as $5,000 a month on compliance issues and more than $100,000 per election. In the past, with less frequent filings, candidates could fill out the form themselves or use campaign staff that were hired closer to the election. Now this is no longer possible, because the flow of money begins so early in the election cycle.

Frequent disclosure also makes early impressions matter more. If you’re elected to Congress in November, you can’t spend time learning the job or getting to know colleagues. By March, you have to report how much you have raised. Ninety days after being sworn in, political reporters, the opposing party, and political hacks will pore over your report to determine the strength of your reelection campaign based on money. If you haven’t raised enough, you end up on the list of candidates who might be in trouble. Money in the war chest will scare away opponents and calm simplistic political reporters—at first. But a member or candidate can’t rest after that first report, because the next report is due again in 90 short days.

This cycle shrinks the pool of potential candidates for office. Challengers need either personal wealth or a wealthy donor network to be considered a strong candidate. Removing the burden of proving viability might open the door to a new era of political candidates.

On the other side of the equation, people with money to spend—either their own or a PAC’s—used to wait until close to the election to contribute money. That way they could be sure cash went where it mattered most: Donors could contribute only to candidates in close elections. Candidates without serious opponents would raise less and spend less.

Now the money game is less about competitive races than it is about the next disclosure period. Members of Congress call wealthy donors or PACs 18 months before the next election and explain that if they don’t have a “healthy” report to the FEC they might lose the election. It has nothing to do with having an opponent and everything to do with appearances.

At one time, donors could escape getting hit up because their name would only appear at the end of a year or after the election. Now, once a donor or PAC’s name shows up in a disclosure report, the sharks circle. Other members see that a colleague has received a gift and come asking for their own “fair share.”

Expanding the early-disclosure rules to super PACs would just reproduce all of the same problems in a new space. If George Soros contributes $1 million to one super PAC 18 months before the election, all the other super PACs on the left will seek the same. Soros would have to change his phone number before 200 members of Congress called to inform him that they might lose 18 months from now if they don’t have a super PAC that is well funded.

But the scale will be much worse. Large donors to Congressional campaigns and now the large donors to super PACs have influence because all 535 members of the House and Senate know their names from early disclosures and press stories. Disclosing $1 million donors 18 months before the election would mean almost $535 million worth of influence: Members of Congress will see their names and ask why they can’t get a slice of that pie.

If Democrats want to stop the follies, they should instead seek to change the rules so that candidates, PACs, and super PACs have to disclose contributions and expenditures 60 days before Election Day and then again 10 days after the election. That’s it.

Ending the foolish early disclosure of money would reduce the amount of money in politics, reduce the influence of donors, and create a real election season, rather than the never-ending election cycle we suffer through now.