Our Unwell Campaign Finance System

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November 2, 2010; Source: Lincoln Times |This op-ed by a John Locke Foundation analyst outlines several problems as seen by conservatives regarding the Democrats’ proposal for enhanced disclosure of donations to 501(c)(4) social welfare organizations engaged in electioneering communications.

Citing the arguments of a professor from George Mason University, the writer suggests that the disclosure requirements would lead to harassment of donors, overwhelm the IRS with “a sea of junk,” lead to rules that would require all disclosure of donors to tax exempt organizations, lead to a divergence between IRS and FEC rules and standards, mandate disclosure of 501(c)(4) donors who only contributed to the (c)(4)s’ “social welfare” activities, lead to the IRS regulating political speech, and lead to some (c)(4)s transforming into 527 organizations. Phew! That’s quite a long laundry list of problems that would ensue if Congress passed the DISCLOSE Act.

In one way, it is useful to see an underlying point, that when public policy affects systems, systems react with intended and sometimes unintended consequences (see the op-ed writer’s point about regulated (c)(4)s becoming 527s, etc.). But it also suggests that the system of campaign fundraising is seriously off-kilter, that the legislated fixes in recent years such as the McCain-Feingold law haven’t worked (ask Feingold who saw tons of anonymous money flood into Wisconsin aiming for his defeat), and nothing but a comprehensive overhaul is going to really have a chance of working.

The op-ed writer would probably choose to leave well enough alone and not regulate further. Others might say that well enough isn’t particularly well at all for our country’s political system. Leaving elections to the influence of anonymous, unregulated money flooding 501(c)(4)s takes the nonprofit sector and the nation down a path that won’t make politics “well” at all.—Rick Cohen