December 17, 2012; Source: New York Times
Two law professors, Lucian A. Bebchuk and Robert Jackson Jr., have submitted a rule-making petition on corporate political spending to the Securities and Exchange Commission (SEC). Although 60 percent of the corporations in the Standard & Poor’s 100-stock index have accepted the idea of voluntary disclosure of the moneys they spend in political campaigns, there are still plenty of opponents to voluntary disclosure, and even more opposed to mandatory disclosure.
Bebchuk and Jackson contend that “the quality of information provided under voluntary disclosure policies is generally low” and that companies don’t follow uniform reporting practices, making data comparisons difficult. The authors argue, “Mandatory rules would address gaps and loopholes in voluntary disclosure practices.”
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From our vantage point, two things stand in the way. First, the SEC is one of those regulatory agencies, like many others, that is relatively captured by the entities it is supposed to oversee and regulate. President Barack Obama has been pushing the SEC to be tougher than it typically has been over the years, especially during the George W. Bush administration, but it will take some doing to get the SEC into gear, no matter how cogent the analysis of Bebchuk, Jackson, and others.
Second, over the years, this issue has been caught, legislatively speaking, in a weird deadlock between Democrats and Republicans that involves, oddly enough, corporate philanthropic grantmaking. As readers know, corporate grantmaking through 501(c)(3) corporate foundations that file 990s gets disclosed, but direct grants from companies’ executive offices, marketing and PR arms, community relations divisions, etc. can be, and frequently are, done without disclosure. For some years, a Republican member of Congress would introduce a bill calling on disclosure of corporate charitable giving. Democrats (and leading nonprofit associations) have consistently opposed corporate charitable disclosure, saying that disclosure would make corporations apprehensive about supporting some causes and charities. Democrats would instead counter that if Republicans wanted disclosure of corporate philanthropic spending, they should be willing to require the disclosure of corporate political spending. And that’s where the debate would always grind to a halt.
Even when uncomfortable, disclosure is a generally preferable alternative to secrecy. That certainly goes here. Bebchuk and Jackson’s call for mandatory disclosure of political spending by publicly traded corporations makes a great deal of sense. It wouldn’t hurt to see disclosure of corporate charitable giving as well. This nation could stand a great deal more knowledge as to how corporations deploy their resources in the political and charitable arenas if we want to rein in the excesses and disproportionate influence of major corporations.—Rick Cohen