Campaign finance was never exactly intuitive, and post-Citizens United, it gets even less so.
What can churches do? What can corporations do? And what’s up with the alphabet soup of political organizations that have proliferated across the landscape?
This is my best attempt as chairman of the Texas Ethics Commission to make the situation in Texas as simple as possible for lay readers.
There are also local rules that municipalities create for themselves, and there are some slightly different rules for judges.
At the Ethics Commission, we find that almost every question that comes before us is in one of two buckets. Bucket No. 1 is, “Can I do something?” Bucket No.2 is, “Must I disclose it?”
Under Texas law, the answer to No. 1 is almost always yes — unless you are a corporation wishing to donate directly to a candidate.
Under Texas law, the answer to No. 2 is, again, almost always yes.
Public disclosure is the lone sentinel of ethics enforcement in Texas, literally the only real-time tool we have to protect elections from fraud and manipulation.
Q. What in the world are “super PACs”?
A. Super PACs, officially known in Texas as “Direct Campaign Expenditure Only PACs,” are a type of political action committee that can, after the U.S. Supreme Court’s 2010 ruling in Citizens United, raise and spend unlimited sums of money from corporations, labor unions and other persons.
The main restriction on super PACs is that they may not contribute directly to candidates, but they can make unlimited independent expenditures to support candidates.
Super PACs must follow the same transparency requirements as traditional PACs, including filing periodic reports disclosing political expenditures as well as political donors.
Q. Does that get us to “dark money?”
A. Yes. 501(c)(4)s are IRS-recognized “Tax Exempt Social Welfare Organizations” formed for the purpose of improving the social welfare of society. Under IRS standards, these organizations may use their funds for political purposes as long as political activity is not their primary purpose.
The IRS does not specifically require these organizations to publicly disclose their donors, hence the concept “dark money.”
So super PACs are transparent about their political donors, whereas some 501(c)(4)s are not.
The problem is that there is nothing in federal law or Texas law that exempts 501(c)(4)s from Texas disclosure laws. That means that if a 501(c)(4) meets the definition of a Texas PAC, it must comply with Texas transparency disclosure laws by identifying its political contributors.
Q. Do super PACs and “dark money” structures ever intersect?
A. Yes. Super PACs have the ability to shield their donors’ identities by accepting money from organizations that do not report their donors, such as 501(c)(4)s.
At the federal level, the same group of people commonly form both a super PAC and a nonprofit 501(c)(4).
Q. If transparency is all we have in Texas, when you start creating exceptions, isn’t that a dangerous trend?
A. Bingo. Remember that Citizens United had everything to do with what corporations could do (bucket No. 1) and had nothing to do with what must be disclosed (bucket No. 2).
Q. So why is Citizens United blamed for “dark money?”
A. The U.S. Supreme Court equated political spending with free political speech, and that unleashed a whirlwind of liberal and conservative interests who drew the next conclusion on their own.
That is, if political speech can be anonymous (and a long line of jurisprudence supports that idea) political money — as a form of speech — can also be anonymous.
Q. What if that turns out to be true?
A. Then Texas will have to adopt an entirely new approach to ensure integrity in its elections; disclosure will be dead.
Paul Hobby is chairman of the Texas Ethics Commission.