Yesterday’s Public Citizen event calling for the Securities and Exchange Commission (SEC) to promulgate a rule forcing corporations to disclose their political spending was a disappointing mixture of blatant partisanship and outright misinformation. Headlined by Senators Elizabeth Warren (D-Mass.) and Bob Menendez (D-N.J.) – for the first twenty minutes or so – Public Citizen’s panel preached doom and gloom if the SEC isn’t, as Senator Warren put it, “harassed” into doing their version of the “right thing.”
Touting the Committee for Economic Development’s (admittedly non-sampled, opt-in, entirely non scientific) survey, the Director of Public Citizen’s Congress Watch Division, Lisa Gilbert, informed us that disclosure such as this has been “loudly demanded by investors.” Of course, this is patently false, as shareholder votes on enacting increased disclosure have never passed. In fact, only two resolutions ever garnered over 40% of the vote, with the vast majority languishing in the 20% or below range.
Unfortunately, this falsehood was repeated as though it was fact throughout the remainder of the event.
Those in attendance were then treated to accusations that political spending “has nothing to do with shareholder interest,” instead acting as a vehicle for high-ranking executives to curry favor with the current political elite. This was, according to members of the panel, so that the executives could eventually run for office or gain access to executive branch jobs.
If there was a logical step between executives making undisclosed corporate donations to trade associations and 501(c)4 groups and thus endearing individual executives to politicians, it was not explained. After all, the point of companies involving themselves with trade associations and 501(c)4 groups is to allow companies to maintain a hands-off approach to representing their interests, not to provide executives with a platform for nefarious, self-serving political intrigue, as was suggested.
Then came the open partisanship.
Members of the panel repeatedly asserted it was best the audience remained utterly ignorant to the ramifications of this measure. We were told by members of the panel that when it came to political spending, “All you need to know from this is that politics are risky” for shareholders, and “If [the SEC] decides not to enact the rule because of effects on politics, that would be an inappropriate political consideration.” Of course, the risk they were referring to is the ginned up smear campaigns by anti-corporate speech activists against companies whose money ultimately wound up being used by independent groups to support candidates these activists don’t like. The panel conveniently forgot to mention that, historically, not only were their peers responsible for these smear campaigns, but that they also didn’t have any sort of significant impact on shareholder value.
The “effect on politics” that we’re all supposed to be blind to is that this proposed regulation, which is designed to discourage businesses from engaging in First Amendment-protected activities, has no effect on unions. It’s a shame to see self-described “good government” advocates sully their name by injecting political favoritism into a debate about protections that should apply to everyone. Truly non-partisan public interest groups should know that politics has no place in debate; this is a discussion about civil rights applying equally to all associations and individuals.
Professor John Coates took partisanship to the next level when he said that the SEC needs to deal with this issue while a Democrat is President because we couldn’t trust a Republican SEC chairman to act outside of partisan interest. You can view a video of his response to a follow-up question on this remark below:
Finally, members of the panel (Professor Robert Jackson of Columbia Law School in particular, an original filer of the SEC rulemaking petition) repeatedly claimed that the public was incapable of discovering the extent of spending by 501(c) groups to influence elections. Other panelists, who correctly pointed out that the Federal Communications Commission (FCC) requires disclosure of groups broadcasting political advertisements, contradicted this assertion at various points. In short, they intentionally conflated their perceived issue of not knowing the extent companies support non-profits and trade groups with their perceived issue of not having instant access to FCC disclosure information, two entirely different topics.
Yesterday’s event was truly disappointing. Misinformation and overt partisanship ruled the day. Apparently the pro-regulation community, including Senators Warren and Menendez didn’t learn their lesson that using unsubstantiated accusations to encourage an executive agency to attack their political opponents is bad for everyone.