21 September 2010

501(c): Money's Secret Ballot

If donating money to a political candidate or an advocacy group for the purpose of paying for advertising is a Constitutionally protected equivalent of political speech, I suppose it would follow that the donors of money should be entitled to the same protections as the people who vote. Since the 19th century, the secret ballot has existed ostensibly to allow individuals to vote according to their consciences without fear of reprisal from employers, landlords or anyone else who might otherwise exploit economic dependence by dictating how workers or tenants voted. For those who donate money, apparently, the moral equivalent of the secret ballot is the 501(c), a category of public-interest organization under current tax law that allows donors to remain anonymous. For that reason above all, the New York Times suggests, 501(c)s have supplanted the once-famous "527s" as the vehicle of choice for political donations. Small-business donors give to 501(c)(4) non-profits, which are obliged to devote no more than 50% of their resources to political activity, albeit under a very tight definition of "political" that actually allows a lot of political-seeming activity to go on. Trade groups like the Chamber of Commerce count as 501(c)(6) groups, while labor unions are 501(c)(5) groups. All 501(c)s allow both anonymity and unlimited donations, and both Republican and Democratic sympathizers take advantage of the opportunity.

Apparently, donors are entitled to anonymity because 501(c)s are "social welfare" rather than "political" groups. Why "social welfare" donors should enjoy anonymity is a mystery to me, but in practice political donors are relying on a loose interpretation of 501(c) law to make sure their donations aren't on public record. For more than a century, advocates of greater democracy and responsible government have demanded that candidates reveal who specifically gives them money, and candidates and donors alike have been looking for ways to dodge the demand. Why? From the candidate's point of view, anonymity is preferable because he doesn't want to look like the hireling of corporations or the stooge of unions, depending on the presumed point of view of his constituents. From the donor's point of view, I have to assume that the logic behind the secret ballot applies. That is, the business owner who donates to a Republican candidate, for instance, may fear that his business will face harassment from a Democratic administration in the form of IRS audits or other burdensome investigations. In a global context, it's not an irrational fear; many governments abroad are only too happy to make life miserable for rich people who supported a failed opposition. A corporate donor might also worry that his business might be subject to boycott by angry voters.

Whatever my opinion about the propriety of campaign donations or their alleged equivalence to discourse, no one should fear reprisals from partisan government for supporting another party through words or donations. How do we weigh that principle against the public's presumed right to know where a politician gets his campaign money? It could be argued that the need to know presumes an unreasonable ad hominem argument against both the candidate and the donor. If you don't presume that the donor has a corrupting influence on the candidate, the argument might go, then you don't need to know who's donating. The fiercest defenders of the right to donate without limit are quick to dismiss the notion that campaign donations influence politicians' votes. The rest of us are under no obligation to agree. So long as a corrupting influence remains a possibility (and the Founders certainly thought it did) the public does have an interest in knowing who gives money to candidates. The only people who should suffer from such disclosures, if anyone suffers at all, are the candidates who may well be discredited by their dependence on unpopular donors. As long as the donor has the right to donate, he shouldn't be punished for doing so. The idea of forcing someone to stop donating by threatening his trade doesn't appeal to me. The idea of a government singling out opposition donors for harassment appeals even less.

If these seem like unsatisfactory recommendations, I'll revert to my preferred position, which is to eliminate as completely as possible the role of money in elections. Here my recommendations would be more drastic; I'd do away with paid political advertising on TV, for instance. If money is necessary to carry on national campaigns, then we might be better off decentralizing electoral politics as much as possible. If you want to support a candidate, go make a speech or join like-minded people and go marching like they did in the 19th century. Worry about influencing your neighbors rather than people in distant states. For now, however, we ought to know where candidates get their money and their advertising. No entity that participates in politics in any way should allow people to contribute anonymously. The public has a right to know how money votes -- and they may even have a right to know how people vote, but that's an issue for another time.


Anonymous said...

In my opinion, there ought to be no donor anonymity for one simple reason: No one who is not an American citizen should be allowed political donations. As it has become too obvious that at least some politicians feel obliged to "return the favor" to campaign contributors, our elected representatives should NEVER allow themselves to be put in that position by a foreign agent. This includes foreign corporations.

Anonymous said...

As I understand it, the courts have said that legal entities (corporations, labor unions, non-profits) have protected political speech rights. I check the Constitution and it does not say that. And, as far as I can recall, Congress passed no law that said that.

The Supreme Court decision (Citizens United v. FEC; http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission) is pure politics. It was decided on a party line vote (5 Republicans for and 4 Democrats against).

As far as I am concerned, legal entities do not have first amendment protected political speech rights. They are not citizens. Legal entities do have commercial speech rights and that's it.

This political error by the courts should be challenged just like conservatives have been challenging Roe v. Wade ever since it was decided in 1973.

d.eris said...

"Worry about influencing your neighbors rather than people in distant states."

That would be a radical, and welcome, reform. I think something like 90% of funding for congressional Democrats and Republicans comes from outside their district/state.

Samuel Wilson said...

Cryhmethinc: Good catch on a strong argument that didn't occur to me.

pragmatist: I agree with you on the injustice of the Citizens United case but while it remains law corporate donors should be publicized but not subjected to reprisals designed to punish them for their political views.

d.:The disproportion you describe follows from the ideologization of politics. If every local election is a fundamental battle of "right" against "wrong" with the fate of the entire nation at stake, Americans will understandably want a voice in every local election. I wonder whether toning down ideology would stop the flow of money from outside, or whether stopping the flow first would tone down the ideology more effectively.