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Obama order could make corporate political spending public

An executive order being considered by President Obama would require companies bidding for federal contracts to disclose political spending they may now keep secret.

May 08, 2011|By Matea Gold and Tom Hamburger, Washington Bureau

Reporting from Washington — A lobbying battle is raging largely behind the scenes over a seemingly obscure executive order that could — if signed by President Obama — make public the political spending that many corporations can now keep secret.

Under the proposed order, all companies bidding for federal contracts would be required to disclose money spent on political campaign efforts, including dollars forwarded through associations like the U.S. Chamber of Commerce and other private groups.

Election spending by such organizations soared to new heights in 2010, thanks in part to the Supreme Court's ruling in the Citizens United case, which allowed corporations and unions to make direct political expenditures. The majority opinion endorsed disclosure of the new political spending, but many groups have formed as nonprofits, which do not have to reveal their funding sources.

Since then, campaign finance reform advocates and their Democratic allies have sought to unmask the secret contributions fueling the groups, arguing that such spending allows wealthy individuals, corporations and other special interests to have an outsized influence on elections without voters knowing who is behind the effort.

At stake are tens of millions of dollars in donations provided by corporations to trade associations and other not-for-profit groups that use the money for independent campaign expenditures. In the last election cycle, most of the money spent by the groups benefited GOP candidates. Democrats, worried about that advantage, sought to restrict this kind of undisclosed independent spending. When that effort failed, some prominent party members began forming their own not-for-profit organizations to compete with the GOP.

If Obama issued the draft executive order, he would effectively discourage previously undisclosed donations to groups like the U.S. Chamber of Commerce, which — with some exceptions — have been generally helping Republican candidates. It would also give the president a chance to quiet critics who want him to be more outspoken in demanding disclosure of large contributors.

But business interests are trying to quash the measure.

The chamber is pressing top White House officials, including Chief of Staff William Daley, who worked closely with the group when he was an executive at JPMorgan Chase, to push Obama to drop the executive order.

The chamber also has corralled its allies on Capitol Hill. More than two dozen Republican senators, House Majority Whip Kevin McCarthy (R-Bakersfield) and chairmen of 19 House committees signed letters to the president arguing that the order would inject political favoritism into the contracting process. Two House committees will hold a joint hearing Thursday to push administration officials on the matter.

"The way the order is drafted, it hijacks the very powerful engine of the federal procurement system and it takes it and tries to achieve political and electoral ends," said Lily Fu Claffee, the chamber's general counsel, who charged that the measure would "chill the free-speech rights of corporations."

Backers of the disclosure measure say that it is intended not to reward political donors with federal contracts but to shed light on corporate influence over elections. They argue the business opposition is driven by self-interest.

"Many of the government contractors that would be captured under the executive order probably are the big contributors to the Chamber of Commerce, so as a result, the chamber is pursuing their battle against this with extreme vigilance," said Craig Holman, lobbyist for the consumer advocacy group Public Citizen, one of 30 organizations that sent Obama a letter last week urging him to sign the order.

Nonprofit 501(c) groups, as the third-party groups are legally known, plowed at least $134 million from secret donors into the last election — $119 million of which was spent by GOP allies, according to an analysis by the nonpartisan Center for Responsive Politics.

The executive order would require any company seeking a federal contract to disclose all of its federal political spending over $5,000 for the previous two years — including contributions to third-party groups.

Some of this information is already available: Government contractors, like all companies, have to disclose contributions to their political action committees, as well as their independent political expenditures. But the proposed order would create one central database — on the website — listing the political activities of government contractors and their affiliates and officers.

More than 138,000 companies are prime federal contractors and could fall under the measure, according to government data. That includes Fortune 500 companies such as Apple, Southwest Airlines, Coca-Cola and FedEx. It would also affect some unions that have federal contracts to provide services, such as worker training.

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