Opinion: Transparency critical to a healthy democracy

Lori A. Ringhand

We are living through a crisis of public faith in our political institutions. Large majorities of Americans, in both political parties, are unhappy with the role money plays in politics today. An astonishing 74 percent of us feel like our elected officials do not care about the concerns of ordinary people, and even more believe that big money has too much influence in our political process.

Yet in the face of this crisis, Michigan legislators are taking steps to make things worse rather than better. Supporters of Michigan Senate Bill 1167, being pushed during a lame-duck session, are relying on generic appeals to “privacy” to generate support for the bill. But its likely effect, like others enacted across the country in the past few weeks, is to undercut the results of a recent election by preventing the incoming Secretary of State from fulfilling a campaign promise to make the role of money in Michigan politics more transparent.

Regulating money in politics requires encouraging robust public debate while also ensuring that people have the information they need to make informed political decisions. The way our laws strike this balance is through the public disclosure of election-related spending. The idea behind disclosure laws is simple: we need to know where political information is coming from and who our public officials are indebted to in order to evaluate their actions and hold them accountable for their choices.

The people of Michigan elected a Secretary of State who promised to bring more openness to Michigan politics. SB 1176 would stymie that, and should be rejected.

Senate Bill 1167 stops that type of disclosure in its tracks by entrenching a rule prohibiting any state entity from requiring “501(c)” entities to provide information about who is funding them. The “501(c)” reference is to a category of organizations defined by the Internal Revenue Service. There are different types of 501(c) organizations. Some, like churches and charities, don’t engage in campaign activities and aren’t affected by campaign disclosure laws.

But others, like 501(c)(4) “social welfare” organizations, are very politically active and have become the source of the huge amounts of anonymous spending – “dark money” – engulfing our political system today. These social welfare organizations didn’t always engage in political activity, which is why they haven’t been required to disclose their donors. But a series of internal decisions by the IRS and the Federal Election Commission changed that, and these groups can now keep their 501(c)(4) status even while they engage in extensive electioneering.

The effect of this has been devastating to political transparency. In the 2016 presidential election, more than $180 million in undisclosed money washed through our political system.

Dark money spending by social welfare organizations was four times higher in the 2018 midterm elections than it was in the 2014 midterms. Shockingly, spending by groups subject to no or only partial disclosure rules could soon match or exceed spending by groups subject to full disclosure. And these aren’t small, grassroots organizations: most dark money in federal elections is spent by just 15 large, well-connected organizations. Yet we have little or no idea where their money is coming from.

Fortunately, after years of inundation by this dark money, we are finally starting to see some movement toward a more sane system. A recent federal court decision invalidated the rule that had allowed social welfare groups engaged in political advocacy to keep their funding sources for those activities secret. And the U.S. Senate just voted to overturn another agency rule that allowed certain politically active groups to keep their donors secret from the IRS, even though this type of confidential disclosure is essential to ensuring that these groups aren’t accepting illegal or foreign contributions.

That is good news for transparency and accountability, but these decisions only apply to federal elections. Senate Bill 1176 is an effort to make sure no similar disclosure is ever required at the state level.

This is a mistake. Public officials should welcome transparency, not fear it. Transparency and accountability are critical in a healthy democracy. Campaign finance law has long recognized the important role disclosure plays in helping citizens evaluate political advertising, reach informed decisions, and ultimately hold elected officials accountable at election time. And as the Supreme Court has made clear, the Constitution supports robust disclosure rules designed to ensure citizens have accurate and complete information about who is funding political advocacy.

There also is no conflict between effective disclosure rules and the privacy interests of ordinary citizens. Small donors can easily be protected by collecting but not publicly disclosing information about those who have made individual donations of $250 or less.

Exemptions already are available for larger donors who can prove that disclosure would subject them to a real threat of serious harm. And if they choose to, Michigan legislators also could specifically protect churches and charities rather than all 501(c) groups, even though by definition churches and charities cannot engage in explicitly political activity and therefore would be unlikely targets of disclosure laws.

An informed electorate is an empowered electorate. If Michigan’s elected officials have nothing to hide, they should follow the trend toward greater openness rather than swim against the tide and entrench dark money in state politics. The people of Michigan elected a Secretary of State who promised to bring more openness to Michigan politics. SB 1176 would stymie that, and should be rejected.

Lori A. Ringhand is a J. Alton Hosch professor of law at the University of Georgia School of Law. She is the co-author of two books, Supreme Court Confirmation Hearings and Constitutional Change, and Constitutional Law: A Context and Practice Casebook.