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Shadow Elite: The DISCLOSE Act -- Who's Blindfolding the American Electorate?

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If you think that an "information era" has ushered in a golden age of transparency, read on. This is the first in an occasional Shadow Elite series examining how private actors seize and hoard vital information to serve their own interests, not the public interest.

Is there anything more toxic to a healthy democracy than special interests buying elections? Sadly, yes. It's when citizens have no idea who those special interests even are, and no way to find out. That's where the U.S. stands in the wake of decisions over the past several years vastly enabling campaign finance secrecy, the focus of the current congressional fight over a so-called DISCLOSE Act.

The blindfolding of the American electorate is a sign of the new era of power and influence -- the shadow elite age, as identified in Janine's book, Shadow Elite. It's an era in which basic questions like "who funds it?" and "who is responsible?" often lack straight answers. It's an era of deniability. Far from transparent, the source of more and more campaign financing is ambiguous or even secret, enabling the funders (and their comrades in the know) to deny responsibility.

There was enormous consternation among public watchdogs after January's Supreme Court ruling in the Citizens United case fully legalizing corporate campaign donations. And so we were intrigued by what the New York Times reported last week: "Corporations have so far mostly chosen not to take advantage of the Citizens United ruling to directly sponsor campaign ads themselves."

The operative word there is "directly." Rather than exert influence openly, even when it is completely legal to do so, (mostly Republican-leaning) donors with deep pockets are apparently choosing to channel influence anonymously through so-called 501(c)(4) groups. These groups declare that their primary purpose is the "promotion of social welfare," not partisan politics, and therefore don't need to disclose their funding sources. The groups themselves, in true shadow elite fashion, add another layer of obfuscation with vague names that give no hint of politics or provenance, like "Americans for Prosperity" and the Karl Rove-backed "Crossroads GPS."

How much influence, in the form of campaign cash, is funneling through these groups from wealthy donors? We'd like to know. Salon reports that "in August, [the non-profit 527] American Crossroads raised $2,639,052. Fully $2.4 million of that -- or 91 percent -- came in the form of gifts from just three billionaires [or companies they control.]"

At least those billionaires are named: American Crossroads' sister group, Crossroads GPS, which is organized as a 501(c)(4), doesn't have to disclose where its many more millions have come from.

Further complicating matters: These organizations "fall into something of a regulatory netherworld," as the Times puts it, with neither the IRS nor the Federal Election Commission seemingly inclined or empowered to push for more disclosure, even when 501(c)(4) activities look far more political than philanthropic. The Times, in an editorial called "The Secret Election," shows the extent and the deliberate nature of this muddle:

In 2004 and 2006, virtually all independent groups receiving electioneering donations revealed their donors. In 2008, less than half of the groups reported their donors, according to a study issued last week by the watchdog group Public Citizen. So far this year, only 32 percent of the groups have done so.

The secrecy and ambiguity is just as the shadow elite wants it. They don't want just influence but rather influence with impunity. A controversial policy decision might be made, and the public would have no idea what questions to ask or even whether to ask the questions in the first place. Both the donor and the politician enjoy the benefits of deniability that come with anonymity. The information that not long ago was public information is now firmly in a few, private hands.

There's an inescapable irony to this: We are told that the digital era has unleashed a wealth of information, and the flood of data has had an inevitably democratizing effect. Amplifying the irony is the cultural atmosphere of self-disclosure and false intimacy fostered by social networking. (Even the wife of the man named to head Britain's Secret Intelligence Service (MI6), in charge of Britain's spying operations abroad, famously (or infamously) put the family's photos on Facebook.)

But confounding this narrative of openness is what has actually happened to vital, should-be public information over the past several decades. In Shadow Elite, Janine identifies a new system of power and influence that debuted with the diffusion of global authority, the growth of privatization, new information technologies, and "truthiness" in the late twentieth and early twenty-first centuries. In this rearrangement of power, responsibility has become more difficult to pin down. The contracting-out of government functions (delivering vast amounts of should-be official information into private hands), the intertwining of business in the regulatory process, and the gutting of government oversight capacity and investigative reporting (enfeebling institutions of check and balance) are some of the key components of this new system.

The result is that the public is more reliant on the accounts and ethics of the players themselves. With major sources of power and influence more difficult to track, the private interests who've stepped into the breach are often the only ones with the needed information to connect the dots. This could be seen in the 2008 bailout process, with private bankers suddenly deputized as crisis contractors for the Treasury Department, without the disclosure requirements of a civil servant. It can be seen in the recent story of Blackwater creating dozens of shell companies, allowing the government to still hire the notorious security contractor, but with a built-in deniability feature of having a different, unrecognizable name on the dotted line.

Meanwhile, the narrative of "transparency" not only masks who is calling the shots, but also makes it more difficult to see the consequences of this chimera for democracy.

Deniability is clearly a huge part of the appeal of these 501(c)(4)'s. A politician can plausibly deny any connection to a wealthy donor. The donor doesn't have to answer to reporters or regulators if his name isn't reported.

Right now, the 501(c)(4)'s are dominated by Republican interests, and indeed the fight over passage of the DISCLOSE Act has split along party lines. But at this point, the act, which would force more disclosure, wouldn't necessarily affect the upcoming elections. And as for the argument that disclosure would "chill political speech," we would say that peddling influence anonymously is an insidious backroom whisper, not the full-throated speech that should be protected. When President Obama last week warned Senate Republicans that "it's our democracy itself" at risk, he was, of course, advocating for his party's interests. But he also happened to be right.