Monday, December 09, 2013

Money in Politics This Week

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Katherine Munyan and Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.


Moreland Commission Endorses Public Financing of Elections
On Monday, the Moreland Commission to Investigate Public Corruption released a preliminary report on its findings and recommendations regarding the state’s election, campaign finance, corruption, and transparency laws. Governor Andrew Cuomo appointed the commission in July following corruption scandals involving several legislators in Albany and the failure of the legislature to pass comprehensive reform. The preliminary report includes strong recommendations for lowering sky-high campaign contribution limits, closing loopholes, restricting the personal use of campaign funds, disclosing independent expenditures, and creating an independent enforcement agency. The commission also singled out matching small private donations with public funds for election campaigns as an effective strategy to generate greater citizen participation. “Small donor matching also allows those without access to well-heeled interests and without the support of large independent expenditures to nevertheless compete in elections,” the report stated.

Editorials Praise Moreland Recommendations
The New York Times praised the Moreland Commission’s recent report on Wednesday. Criticizing the “engrained corruption” in Albany, the editorial urged Governor Cuomo to “push for a new system of campaign financing that provides public matching grants for small campaign donations.” The editorial pointed out that the cost of $41 million per year for public financing could easily be covered by one fewer tax break for a big developer.  

The Buffalo News wrote, “the effort to establish a voluntary system of public financing of elections in New York is a critical component to change in Albany’s pay-to-play culture.”

The Rochester Democrat and Chronicle demanded legislative action on public financing and the rest of the campaign finance reforms in the Moreland report.

The Albany Times Union called public financing as recommended by the commission “a bargain for cleaner elections and government.”


IRS Proposes New Guidelines on Social Welfare Groups’ Political Activity
Last week, the Internal Revenue Service (IRS) proposed new regulations that would aid enforcement of the limitations on political activity by tax-exempt social welfare organizations set up under section 501(c)(4) of the tax code.  The section was originally intended for civic groups and homeowners associations, but, in recent years, politically-active nonprofits have used the social welfare designation to spend on election-related activities while evading the disclosure requirements imposed on political committees.   The 501(c)(4) political groups, which include Crossroads GPS and the League of Conservation Voters, spent hundreds of millions of dollars in 2012. Current rules say that 501(c)(4) organizations cannot exist “primarily” to influence elections, but offer little guidance on what this means. The proposed IRS guidelines define what activities are considered political, including voter registration drives and voter guides.  The IRS is also considering clearly defining the proportion of money that 501(c)(4) organizations can spend on political activities.

SEC Removes Corporate Political Spending Disclosure from Its Regulatory Agenda
The Securities and Exchange Commission (SEC) has released its list of regulatory priorities for 2014, and a rule strongly supported by investors is missing. Last year’s priority list included a proposed rule requiring public companies to disclose political spending, but disclosure is conspicuously absent from the new agenda. The public push for corporate disclosure began in 2011, when a group of law professors filed a petition with the SEC to establish mandatory disclosure. Their arguments resonated with the broader public; more than 600,000 comments, virtually all of them favorable, have been filed in response to the petition.  The SEC did not offer an explanation for not listing corporate disclosure on its agenda. In response to widespread outcry over the move, SEC Chair Mary Jo White downplayed its significance, saying the agenda is merely an estimate of what the agency can get done in the next year. Robert Jackson, a professor involved in the original petition, suggested that the agenda focuses on Congressional mandates, but does not limit the agency’s actions. Advocates have pledged to continue pushing the SEC for transparency around political spending, and Jackson states he “remain[s] hopeful that the SEC will eventually take up the rule.”

DC Council Approves Campaign Finance Reform Bill
The DC Council unanimously passed a campaign finance reform bill introduced by Councilman Kenyan McDuffie (D-Ward 5). The bill closes loopholes and increases transparency, including by requiring all campaigns to report fundraising data online to the Office of Campaign Finance for publication. Online publication must occur within 24 hours. The bill mandates additional training for candidates on campaign finance rules and increases penalties for violations.  Lobbyists would be required to disclose any contributions bundled for a campaign. If Mayor Vincent Gray signs the bill, it will go into effect in 2015.

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