The White House is circulating a draft Executive Order requiring disclosure of contributions to "third party" or "independent" expenditure groups by corporations receiving government contracts. During the 2010 elections, much of the unlimited election spending made possible by the U.S. Supreme Court's Citizens United decision was kept secret by groups taking advantage of the 501(c) section of the tax code. The President's proposed order would lift the veil on secret spending in time for the 2012 elections.

Americans Want Less Secret Spending

The draft Executive Order is not an attack on the U.S. Supreme Court's Citizens United decision -- the Court's majority actually favored disclosure as a condition of unlimited corporate spending -- but on the way groups have stretched the opinion and abused their nonprofit status to hide their funding sources. Karl Rove's Crossroads GPS [3], for example, spent almost $17 million [4] in the 2010 election cycle attacking Democratic candidates and did not disclose its donors. Over 46% of election spending in 2010 [5] ($135.6 million) was entirely secret. Polls in October of 2010 also showed [6] that 92% of Americans wanted greater disclosure of political spending.

Obama's Proposed Order

The proposed Executive Order [7] would require disclosure of "any contributions made to third party entities with the intention or reasonable expectation that parties would use those contributions to make independent expenditures or electioneering communications" whenever contributions by "the bidding entity, its officers and directors, and its affiliates and subsidiaries exceeds $5,000 to a given recipient during a given year." The disclosed expenditures would then be entered into a searchable online database. The purported purpose is to "ensure that [the Federal Government's] contracting decisions are merit-based in order to deliver the best value for the taxpayer" and that such "measures are appropriate and effective in addressing the perception that political campaign spending provides enhanced access to or favoritism in the contracting process."

2 U.S.C. § 441c [8] already prohibits contractor spending during the period between negotiations and performance of the government contract, and last year's failed DISCLOSE Act would have prohibited all expenditures by government contractors, at any time. That law fell one vote short of a filibuster-proof supermajority in the Senate.

The proposed order is not a prohibition on contractor political spending, but a requirement that expenditures made at any time be disclosed to taxpayers. "It was a ban and they are turning it into disclosure," Fred Wertheimer, election transparency advocate and president of Democracy 21, told the Huffington Post [9]. "It is becoming a condition of doing business with the government."

Wider Corporate Transparency

If signed, the Executive Order would have a sweeping reach. The Sunlight Foundation reports [10] that thirty-three of the forty-one companies listed in the top 100 campaign contributors over the past two decades are recipients of federal contracts. Koch Industries [11], for example, has received $85 million in government contracts over the past eleven years [12].

JPMorgan Chase, Exxon Mobil, General Electric, and Bank of America would all be affected. Even FOX News' parent corporation News Corp is a government contractor [13]. The disclosure requirement would not apply to past government contracts, but every new contract signed would require disclosure of all contributions over the past two years.

Take Action!

Corporate lobbyists are certainly working hard to keep this transparency proposal from becoming a reality.

Please call the White House and tell President Obama at 202-456-1111 to follow through on his proposal. Then, visit Russ Feingold's Progressives United website [14] and let them know you called.