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Maryland To Require Companies To Post Election Spending Online

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A bill awaiting the Maryland governor’s signature could serve as a template for national campaign finance reform laws, in light of last year's Supreme Court decision that opened the floodgates to unlimited spending.

Full disclosure of who is paying for what is the main focus these days for reformers who worry that massive, secret spending inevitably leads to corruption and scandal. The Maryland bill is notable because it requires companies to disclose independent campaign expenditures not only to the government, but also to the general public -- and specifically to their shareholders and consumers.

The bill (here’s a plain-English summary) requires any organization that spends money on campaign advertising in a state-level election to post on its website "a hyperlink from its homepage to the Internet site where the entity’s independent expenditure or electioneering communication report information is publicly available.”

Moreover, the information has to appear “in a clear and conspicuous manner” in any “regular, periodic reports to its shareholders, members, or donors.”

The bill has passed the Maryland legislature and Gov. Martin O’Malley (D) is expected to sign it into law shortly. It transforms Maryland’s campaign finance disclosure rules from among the weakest in the nation into, at least in some ways, the vanguard.

One presumed effect of the law is that it will give companies that many view as apolitical pause before getting involved in hotly contested races, for fear of alienating shareholders and maybe even consumers.

Currently, as the Los Angeles Times recently reported, many companies do not report their campaign spending -- including the donations they make to powerful trade associations and other groups that, despite their political activity, are not required to disclose their donors.

“The idea that corporations ought to disclose their campaign activities to their shareholders, and the idea that they ought to make it available on their website, those are valuable provisions,” said Fred Wertheimer, a longtime campaign finance reformer who heads the campaign finance reform advocacy group Democracy 21.

Advocates of campaign finance reform are currently pursuing the battle to increase disclosures on a number of fronts -- one of them being on the state level. "There's plenty of room for improvement there," said Edwin Bender, executive director of the Institute on Money in State Politics. Researchers for his group have found that “reporting, simply put is awful” at the state level, he said, as only 12 states currently have effective disclosure rules.

Jon Cardin, a Maryland state representative from Baltimore County who was the bill’s original author, told HuffPost he hopes it can serve as a model for national legislation. “The reason why I would argue that it’s a good model is that we worked both with the Chamber of Commerce, the business community, the state Bar Association -- as well as the pro-disclosure advocates,” he said. “Neither were 100 percent satisfied, which I always see as a good thing, but both were appreciative.”

Pro-disclosure advocates are, in fact, quite concerned about one aspect of the bill. In its definition of third-party donations that must be reported, it uses the same problematic language that companies and nonprofits have exploited to maintain secrecy on a national level.

The Maryland bill only requires the reporting of donations to groups that are “made for the purpose of furthering” independent political expenditures -- language that may make it possible for groups to continue to keep donor lists secret on the grounds that donations were made to advance the group's agenda generally, rather than for an expressly political purpose.

“No corporation has to make a direct expenditure when they can give the money to the Chamber of Commerce or some other group, [which can then] make the expenditure without their donors being disclosed,” Wertheimer said.

Just last week, Rep. Chris Van Hollen (D-Md.) sued the Federal Election Commission, demanding it abandon its “for the purpose” disclosure standard, and thereby close the loophole.

Another loophole -- Maryland's so-called "LLC loophole" -- may also minimize the effectiveness of the law once it is passed. The provision allows individuals and companies to make unlimited contributions directly to candidates by donating through an unlimited number of limited-liability corporations.

Despite its relative mildness, the bill got almost no GOP support in the Maryland House. The vote was 103 to 38, with only four Republicans voting in favor.

Maryland Chamber of Commerce Vice President Ron Wineholt told HuffPost that the chamber considers the Cardin bill “much more reasonable” than other bills Democrats pursued last session, which he said particularly targeted the business community. “I would give the sponsors of this legislation credit for being even handed,” he said.

But Wineholt said the chamber still has some concerns about the bill -- especially its requirement that companies notify shareholders of donations. “We just thought this provision was unnecessary and onerous and fairly clearly designed to discourage entities from making independent expenditures,” he said.

Jeff Patch, spokesman for the Center for Competitive Politics -- which reliably opposes campaign finance activism -- explained that his group simply doesn’t believe that disclosure of contributions to independent political groups is necessary. “[S]uch policies would capture a lot of donations that don’t have a political purpose,” he wrote in an e-mail to The Huffington Post. “Many people who give to 501(c)s don’t give for political advertising purposes even if the organization runs some political ads.”

Ironically, one reason the Maryland bill was so popular among elected Democrats is that it wasn't just meant to target independent spending by companies. It was also aimed at Progressive Maryland, a group with a habit of mounting primary challenges against incumbent Democrats from the left.

"The law really is kind of targeted at us," said Rion Dennis, the group's executive director. "We’re the only ones that do independent expenditures in the state." Nevertheless, he said, "on a national scale, I think it’s something that’s necessary, and we don’t mind being the scapegoats if we can change things nationally."

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Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail, bookmark his page; subscribe to his RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get e-mail alerts when he writes.

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