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Disclose Act

Disclose Act



What is the Disclose Act?

The Disclose Act is a piece of legislation that was introduced in the United States House of Representatives by Democrat Chis Van Hollen (Maryland) on April 29th of 2010 and in the U.S. Senate on July 21, 2010 by Democrat Charles Schumer of New York. 

The Disclose Act aimed at amending the Federal Election Campaign Act of 1971 in the hopes of prohibiting foreign influence in the U.S’s federal elections. The Disclose Act also wanted to impede government contractors from engaging in expenditures with respect to these elections. Lastly, the Disclose Act wanted to establish further disclosure requirements regarding spending in these elections and for other purposes.

When the Disclose Act was introduced it banned American corporations that were controlled by foreign governments from influencing federal elections through the use of campaign contributions. The Disclose Act also prevented Troubled Asset Relief Program (TARP) beneficiaries from making political contributions. In general, the Disclose Act gave organization members, shareholders and the public, access to information concerning corporate and interest group campaign expenses and donations. Through these provisions, the Disclose Act bolstered transparency’ the legislation forced corporations (any business entity with over 500,000 members) to stand by their political advertisements and contributions.  

Why was the Disclose Act Passed?

Before the Disclose Act was introduced to the House of Representatives, the United States Supreme Court, in a 5-4 ruling, argued in favor of Citizens United and stated that it was unconstitutional to ban free speech by limiting campaign contributions made for independent communications by associations, unions or corporations. 

Following the Supreme Court’s decision, President Barack Obama expressed displeasure, by stating that U.S. elections should not be dictated by America’s most prevailing interests. The President stated, in his 2010 State of the Union Address, that American elections should only be decided by the people. In turn, the President urged Republicans and Democrats to unite behind a legislation to remedy this problem. 

To thwart the Supreme Court’s ruling, Senator Charles Schumer and Representative Chris Van Hollen introduced versions of the Disclose Act to their respective houses. 

In the House of Representatives, Van Hollen stated that Congress must enforce disclosure and improve transparency on special interest groups who attempt to undermine or influence the election process.   

The Disclose Act in the House of Representatives:

The House Sponsors of the Disclose Act believe that Americans deserve the right to information concerning special interests. This transfer of information will further protect democracy by ensuring the legitimacy of federal elections. Further, supporters of the Disclose Act argued that opponents in the House cannot stand against the merits of bi-partisanship. 

Those in the House who opposed the act (most notably Republican Minority Leader, John Boehner) argued that the legislation is a direct violation of the First Amendment. Opposition to the act believed that the bill was a scheme to silence the majority’s opponents. Those in the House who disagreed with the bill, claimed that it actually promoted special interest exemptions and backroom deals.

The Disclose Act in the Senate:

Charles Schumer (Democrat Senator from New York), the lead sponsor of the Senate’s version of the Disclose Act, claims that Americans need control over their own elections, especially in a time when people speculate and fear the influence of special interest groups. Schumer and his supports argued that unless Congress acts quickly, the United States Supreme Court, through their ruling, could ultimately predetermine the outcome of Federal elections. 

Opponents to the bill in the Senate (led by Republican leader Mitch McConnell) stated that the majority drafted the bill in a clandestine manner, without Congressional markups or hearings. McConnell argued that the politics surrounding the bill was the ultimate vehicle to introduce and subsequently pass the law. 

Who Supported/Opposed the Bill?

Supporters of the Disclose Act:

The United States Public Interest Research Group: This group supports the introduction of the Disclose Act, but actively withholds its support when a special interest exemption is provided. The United States 

Public Interest Research Group started the “Stop the Corporate Takeover of Democracy” campaign, which is an effort to educate American voters on the negative effects and contributions that businesses and labor unions impose on the Democratic process, through a lack of transparency and disclosure. 

AFL-CIO: The AFL-CIO supported Congress for introducing the Disclose Act and creating transparency requirements for the delivery of political contributions. AFL-CIO stated that the United States needs to implement stronger regulations to promote equal participation on the part of individual voters and corporations to protect the democratic process and political speeches. The AFL-CIO promotes full disclosure regarding advertisement contributions. 

The Disclose Act was also fully-supported by the Democratic Party.

Opposition to the Disclose Act:

United States Chamber of Commerce: In a press statement, the United States Chamber of Commerce outwardly criticized the House majority for passing the Disclose Act, because the legislation violates the principles of equality, as prescribed by the Constitution. Further, the United States Chamber of Commerce argued that the passing of the legislation was a result of backroom deals with unions and special interest groups. In general, the Chamber of Commerce believes that Congress should shift their attention to fixing the economy versus protecting their own interests and jobs. 

National Federation of Independent Businesses: This organization—which sent a letter to the House of Representatives opposing the passing of the Disclose Act—believes that passage of the Disclose Act would threaten American small businesses and create an uneven playing field by providing exemptions for special interest group.

Brief Summary of the Disclose Act:

Section 101—regulates certain political spending: The first section of the Disclose Act prevents Government contractors from making campaign-related expenditures. This regulation effectively extends existing bans on contributions offered by government contractors. A threshold of $50,000 is included to exempt small government contractors. This section of the Disclose Act also prevents Corporate Beneficiaries of TARP from making contributions or spending money on federal elections. Corporations that received bailout funds are not permitted to use taxpayer money to influence an election. This section of the Disclose Act prohibits bailout beneficiaries from making federal campaign-related contributions. Once the bailout money is repaid, however, the impediments are removed. 

Section 102—prevents foreign influence in federal elections: This section of the Disclose Act bans foreign corporations (incorporated overseas and foreign nationals from making political contributions to help influence a U.S. election. This act; however, created a significant loophole—domestic corporations that are controlled by foreign nationals can provide funding to candidates or political parties. To eliminate this loophole, the Disclose Act extends the exiting ban to include domestic corporations under the following series of circumstances:

• The Foreign National owns at least 20% of voting shares in the said corporation

• The majority of the board of directors are foreign nationals

• If multiple foreign nationals possess the authority to direct or control the decision-making process of the corporation or a U.S. subsidiary to the corporation

Section 103 of the Disclose Act: prevents corporations and organizations from coordinating their activities with parties and candidates 

Section 104: implements provisions on political party communications

• The Disclose Act states that any payment by a political party board or committee for the direct costs of an advertisement or any other communication made on behalf of the said candidate affiliated with the party is treated as a contribution the said candidate if the communication is directed or controlled by the individual. 

• The Disclose Act ensures that the American public will have full disclosure of campaign related expenditures made by organizations and unions.