Column: Two steps forward, two steps back

• Due to partisan gridlock commission, campaign money regulators have been engaged in a disclosure dance.
• The result? An unacceptable lack of information about our elections.
• Other agencies, such as the Securities and Exchange Commission, can step in to fill the void

The Federal Election Commission (FEC) has a simple mission: to administer and enforce the Federal Election Campaign Act, the statute that governs the financing of federal elections. As a part of this mission, the FEC must disclose campaign finance information. However, due to an endlessly 3-3 deadlocked commission, the FEC has been engaged in a disclosure dance reminiscent of the Paula Abdul lyrics, "two steps forward, two steps back," as the agency and the courts go back and forth on disclosure.

The result? An unacceptable dark money in our elections, and a need for other agencies, (like the Securities and Exchange Commission), that regulate entities that play in politics to step up.

To highlight a clear example of the FEC's disclosure dance step, under the McCain-Feingold campaign finance law, groups that make electioneering communications – those that refer to a candidate for federal office but do not expressly advocate for their success or defeat – are required to disclose their donors. However, in 2007, the FEC issued a loophole-filled rule stating that groups that engage in electioneering communications must identify donors only if those donors explicitly mark their money as intended for political expenditure.

Post-rule, donors stopped earmarking, and disclosure ceased. Earlier this year, U.S. Rep.Chris Van Hollen (D-Md.) sued the FEC and won renewed disclosure of the identities of those funding electioneering communications. In response, groups immediately switched to making independent expenditures (ads in which they advocate for or against a candidate) to avoid the now-required disclosure.

But that switch proved unnecessary, as in a two-steps backward dance move, a higher court overruled the earlier decision last week and once again allowed groups to participate in electioneering without disclosing who is paying for it. This throws the issue right back to the FEC, and is a move designed to keep voters in the dark.

With a deadlocked commission, it's clear that we can't count on the FEC to enforce our nation's campaign finance laws. So we must turn to other agencies, as the problem of dark money in our elections is the domain of many:

• The Securities and Exchange Commission (SEC), whose job is to protect shareholders, should require publicly held companies to tell investors about corporate political spending;
• The Federal Communications Commissioner (FCC), whose job is to regulate broadcasters, should force disclosure of who's buying airtime; and
• The Internal Revenue Service (IRS) should take more care as it classifies groups to ensure they don't allow sham non-profits to register as 501(c)(4)s to avoid disclosure.

But let's focus on the SEC. Whether you think companies spending endless amounts of money in elections is good or bad for democracy, it is hard to argue with the premise that it is bad for those who buy shares in a company to stay in the dark about company spending as it relates to the corporate bottom line. And this lack of information has the potential to impact millions, as more than 50 million Americans participate in 401(k) retirement plans and depend on publicly traded company success for their pensions.

Both large institutional investors working on behalf of these public pensions and retail investors need to know about corporate political spending to invest wisely. Political spending choices do not always improve corporate profits.

This puts the issue of corporate political spending directly in the SEC's wheelhouse. And it needs to act.

The SEC should protect investors by creating a rule requiring publicly traded companies to disclose their political spending. This would of course fill part of the disclosure void created by the FEC's inability to act, however this public information is a fringe benefit for democracy; the SEC should provide this disclosure because it is the right thing to do for investors.

SEC, it's time to do your part. Let's turn off the music and begin to fix the disclosure two-step.

Lisa Gilbert is the acting director of Public Citizen's Congress Watch Division.

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