Tuesday, May 18, 2010

The 'Disclose' Act would make election law even more incomprehensible and subject to selective enforcement for political gain

Chuck Schumer vs. Free Speech. By Joan Aikens, Lee Ann Elliott, Thomas Josefiak, David Mason, Bradley Smith, Hans A. von Spakovsky, Michael Toner and Darryl R. Wold
The 'Disclose' Act would make election law even more incomprehensible and subject to selective enforcement for political gain.
WSJ, May 19, 2010

Editor's note: The following article is co-authored by former Federal Election Commissioners Joan Aikens, Lee Ann Elliott, Thomas Josefiak, David Mason, Bradley Smith, Hans A. von Spakovsky, Michael Toner and Darryl R. Wold:

As former commissioners on the Federal Election Commission with almost 75 years of combined experience, we believe that the bill proposed on April 30 by Sen. Chuck Schumer and Rep. Chris Van Hollen to "blunt" the Supreme Court's decision in Citizens United v. FEC is unnecessary, partially duplicative of existing law, and severely burdensome to the right to engage in political speech and advocacy.

Moreover, the Democracy Is Strengthened by Casting Light On Spending in Elections Act, or Disclose Act, abandons the longstanding policy of treating unions and businesses equally, suggesting partisan motives that undermine respect for campaign finance laws.

At least one of us served on the FEC at all times from its inception in 1975 through August 2008. We are well aware of the practical difficulties involved in enforcing the overly complex Federal Election Campaign Act and the problems posed by additional laws that curtail the ability of Americans to participate in the political process.

As we noted in our amicus brief supporting Citizens United, the FEC now has regulations for 33 types of contributions and speech and 71 different types of speakers. Regardless of the abstract merit of the various arguments for and against limits on political contributions and spending, this very complexity raises serious concerns about whether the law can be enforced consistent with the First Amendment.

Those regulatory burdens often fall hardest not on large-scale players in the political world but on spontaneous grass-roots movements, upstart, low-budget campaigns, and unwitting volunteers. Violating the law by engaging in forbidden political speech can land you in a federal prison, a very un-American notion. The Disclose Act exacerbates many of these problems and is a blatant attempt by its sponsors to do indirectly, through excessively onerous regulatory requirements, what the Supreme Court told Congress it cannot do directly—restrict political speech.

Perhaps the most striking thing about the Disclose Act is that, while the Supreme Court overturned limits on spending by both corporations and unions, Disclose seeks to reimpose them only on corporations. The FEC must constantly fight to overcome the perception that the law is merely a partisan tool of dominant political interests. Failure to maintain an evenhanded approach towards unions and corporations threatens public confidence in the integrity of the electoral system.

For example, while the Disclose Act prohibits any corporation with a federal contact of $50,000 or more from making independent expenditures or electioneering communications, no such prohibition applies to unions. This $50,000 trigger is so low it would exclude thousands of corporations from engaging in constitutionally protected political speech, the very core of the First Amendment. Yet public employee unions negotiate directly with the government for benefits many times the value of contracts that would trigger the corporate ban.

This prohibition is supposedly needed to address concerns that government contractors might use the political process to steer contracts their way; but unions have exactly the same conflict of interest. So do other recipients of federal funds, such as nonprofit organizations that receive federal grants and earmarks. Yet there is no ban on their independent political expenditures.

Disclose also bans expenditures on political advocacy by American corporations with 20% or more foreign ownership, but there is no such ban on unions—such as the Service Employees International Union, or the International Brotherhood of Electrical Workers—that have large numbers of foreign members and foreign nationals as directors.

Existing law already prohibits foreign nationals, including corporations headquartered or incorporated outside of the U.S., from participating in any U.S. election. Thus Disclose does not ban foreign speech but speech by American citizen shareholders of U.S. companies that have some element of foreign ownership, even when those foreigners have no control over the decisions made by the Americans who run the company.

For example, companies such as Verizon Wireless, a Delaware corporation headquartered in New Jersey with 83,000 U.S. employees and 91 million U.S. customers, would be silenced because of the British Vodafone's minority ownership in the corporation. But competing telecommunications companies could spend money to influence elections or issues being debated in Congress.

The new disclosure requirements are unnecessary, duplicating information already available to the public or providing information of low value at a significant cost in reduced clarity for grass-roots political speech. In many 30-second ads, Disclose would require no fewer than six statements as to who is paying for the ad (the current law already requires one such statement). These disclaimers would take up as much as half of every ad.

The Disclose Act also creates new disclosure requirements for nonprofit advocacy groups that speak out. These groups already have to disclose their sponsorship, but Disclose requires them to go further and provide the government with a membership list. This infringes on the First Amendment rights of private associations recognized by the Supreme Court in NAACP v. Alabama. Groups can avoid this only by creating a new type of political action committee called a "campaign related activities account."

The result of these overly complex and unnecessary provisions is to force nonprofits to choose between two options that have each been found unconstitutional by the Supreme Court: Either disclose their members to the government or restrict their political spending to the campaign related activities account. This runs contrary to the explicit holding in Citizens United that corporations (and unions) may engage in political speech using their general treasuries.

These requirements will be especially burdensome to small businesses and grass-roots organizations, which typically lack the resources for compliance. So the end effect of all of this "enhanced disclosure" will be to ensure that only large corporations, unions and advocacy groups can make political expenditures—the exact opposite of what the sponsors claim to desire.

While the Disclose Act does include an exemption for major media corporations, it does not include websites or the Internet, which means the government can regulate (and potentially censor) political dialogue on the Web. Additionally, the law would require any business or organization making political expenditures to create and maintain an extensive, highly sophisticated website with advanced search features to track its political activities.

As a result, small businesses, grass-roots organizations, and union locals that maintain only basic websites would be discouraged from making any expenditures for political advocacy, because doing so would require them to spend thousands of dollars to upgrade their websites and purchase software to report information that is already readily available to the public from the FEC. Large companies and unions could probably meet this requirement, so once again the bill benefits large, institutional players over small businesses and grass-roots organizations.

The Disclose Act's abandonment of the historical matching treatment of unions and corporations will cause a substantial portion of the public to doubt the law's fairness and impartiality. It makes election law even more complex, more incomprehensible to ordinary voters, and more open to subjective enforcement by those seeking partisan gain.

Press Briefing

May 19, 2010

The White House Blog: "The Right Thing to Do"

Vanguard's Bailout Warning - The Senate lets regulators pick creditor favorites

India's Fake Drugs Are a Real Problem - Global trade in counterfeits is huge and penalties are minimal

A message from the Vice President on Elena Kagan's nomination

BPA's Missing Link

Background on the President's Events Today in Youngstown, Ohio

Hillary at the Buzzer: She avoids a debacle on Iran—for now.

The Clearinghouse Rescue Plan
Taxpayers will still be on the hook for risks in derivatives trading

FDA's Bad Blood

Chuck Schumer vs. Free Speech
The 'Disclose' Act would make election law even more incomprehensible and subject to selective enforcement for political gain.

Small Businesses Still Left Empty-Handed

Dealing with Iran, by Ted Galen Carpenter

Akbar Ganji is someone U.S. officials should heed when it comes to policy toward his native Iran. Ganji, a writer and journalist who became the fifth biennial recipient of the Milton Friedman Award for Advancing Liberty on May 13, hasn't just talked the talk when it comes to working to establish a democratic Iran, he has walked the walk far beyond what most people could endure. During the late 1990s, he presented evidence that the mullahs were behind the assassinations of exiled Iranian dissidents and had committed various other outrages. For his efforts, he served six years in prison, much of it in solitary confinement, and suffered tortures that Persians had perfected over the centuries. If there was ever a person who had every right to endorse a U.S.-led campaign to oust the current Iranian regime, Akbar Ganji is that person. And yet he cautions American officials to adopt a very different course.

Climate Change and the Courts. WSJ Editorial
A curious case of judicial recusal on the Fifth Circuit.

One of the most destructive mass litigation theories ever devised—the climate tort—is working its way through the courts, and now with a troubling twist. To wit, green plaintiffs may have found a way to handpick sympathetic judges.

In the class-action Comer v. Murphy Oil, a dozen Gulf Coast property owners whose homes were damaged by Hurricane Katrina are suing 33 energy companies for the "nuisance" of the carbon emitted when people use their products. The claim is that these emissions allegedly contributed to climate change that allegedly increased global surface air and water temperatures that allegedly caused sea levels to rise and thus allegedly compounded the storm's damage.

Last year, Comer was dismissed by a district judge, who sensibly ruled that the Mississippi residents couldn't trace the harm they suffered to any specific company because global warming is, well, global. But the case was resurrected by a three-judge panel of the Fifth Circuit Court of Appeals—prompting the entire court to rehear the appeal en banc. The full court was expected to affirm the original district court decision, though seven of the 16 judges recused themselves because they held stock in one or more of the companies being sued.

The en banc arguments were scheduled for this month, until the Fifth Circuit announced in April that "new circumstances have arisen that make it necessary for another judge to recuse." That move deprived the panel of a quorum and thus its ability to rehear Comer. No further explanation was offered, but it's likely another judge acquired a financial interest in one of the defendants. Judges have the discretion to disclose in a situation like this but aren't required to do so, and a court spokesman didn't return our call.

The climate tort is gaining a legal toehold in part because any judge with reasonably diversified investments will have some kind of conflict of interest and will therefore be disqualified. Since any energy company—or any business or exhaling person—contributes in some way to carbon emissions, anyone could be sued if the courts allow this theory to move forward. More ominously, plaintiffs can add defendants to the suit for the purposes of targeting judicial recusals and a more favorable hearing, given that federal financial disclosure forms are public information.

In Comer, did one of the more liberal Fifth Circuit judges buy stock specifically to blow up the quorum? That isn't as far-fetched as it sounds. One of the appellate judges who waved a similar suit through the Second Circuit last year, Peter Hall, admitted at a February conference that he doubted these nuisance cases stood much chance of success.

"Expert evidence, which is the kind of thing that will be needed in this case, ultimately, to prove causative action and whether that can be done beyond preponderance of the evidence, certainly remains an open question," Judge Hall said. But he added that the "nuisance action by nuisance action" approach was so burdensome and costly that it was like "a sword of Damocles" hanging over companies that would eventually force the political branches to adopt climate policies.

In other words, these suits are naked political intimidation meant to coerce cap and tax or some other expensive carbon crackdown regardless of what Congress wants. The same judge-shopping strategy could also apply to the Supreme Court, where Samuel Alito and Stephen Breyer hold stock in Comer defendants and Sonia Sotomayor heard the Second Circuit case. If the Comer plaintiffs succeeded in forcing one more Justice to recuse, the High Court would lack a quorum and be left unable to rule on the merits even if it wanted to.

The Fifth Circuit will decide what to do this week, and we hope the judges will find a way to reconstitute their quorum before this damaging legal theory gains any more traction.

United States and Brazil Collaborate on Racial Equality

The No-Cost Stimulus: A little Sarbox relief, thank you. WSJ Editorial

Senate Majority Leader Harry Reid wants a floor vote this week on financial regulatory reform, and he should first add at least one provision worthy of the name. Senators Kay Bailey Hutchison (R., Texas) and Mary Landrieu (D., La.) have offered an amendment to spare the smallest public companies from the worst bureaucratic horrors of the 2002 Sarbanes-Oxley law.

Sarbox, the Beltway's previous attempt at financial-regulatory reform, was intended to improve the information investors receive about public companies. The law did nothing to prevent poor disclosure at companies like Lehman Brothers but it did saddle the U.S. economy with billions in unexpected costs. Even the Securities and Exchange Commission, a Sarbox cheerleader, found in a 2009 survey that the average public company pays more than $2 million per year complying with the law's Section 404. The indirect costs may be much greater, as initial public offerings of U.S. companies have never returned to pre-Sarbox levels.

The SEC admits that compliance burdens fall disproportionately on smaller companies. This is one reason the two Senators aim to exempt companies with less than $150 million of shares held by the public from "internal-controls" audits.

These audits are piled on top of the traditional financial audit, and on top of a company's own internal-controls review. The result is that going public in the U.S., once the dream of entrepreneurs world-wide, has for too many company founders become something to avoid. If President Obama is hoping for an unemployment rate below 9%, encouraging these job creators is an obvious step.

Thanks to New Jersey's Republican Scott Garrett and Democrat John Adler, the House has already passed a similar reform. Now the Senate should allow America's most innovative companies to create jobs at no cost to taxpayers.

The White House Blog: Yes, You Can Keep Your Health Plan

No, You Can't Keep Your Health Plan - Insurers and doctors are already consolidating their businesses in the wake of ObamaCare's passage.

Statement by President Obama on Oil Liability

Iran's Nuclear Coup - Ahmadinejad and Lula expose Obama's hapless diplomacy.

Iran's Nuclear Coup. WSJ Editorial
Ahmadinejad and Lula expose Obama's hapless diplomacy.
WSJ, May 18, 2010

What a fiasco. That's the first word that comes to mind watching Mahmoud Ahmadinejad raise his arms yesterday with the leaders of Turkey and Brazil to celebrate a new atomic pact that instantly made irrelevant 16 months of President Obama's "diplomacy." The deal is a political coup for Tehran and possibly delivers the coup de grace to the West's half-hearted efforts to stop Iran from acquiring a nuclear bomb.

Full credit for this debacle goes to the Obama Administration and its hapless diplomatic strategy. Last October, nine months into its engagement with Tehran, the White House concocted a plan to transfer some of Iran's uranium stock abroad for enrichment. If the West couldn't stop Iran's program, the thinking was that maybe this scheme would delay it. The Iranians played coy, then refused to accept the offer.

But Mr. Obama doesn't take no for an answer from rogue regimes, and so he kept the offer on the table. As the U.S. finally seemed ready to go to the U.N. Security Council for more sanctions, the Iranians chose yesterday to accept the deal on their own limited terms while enlisting the Brazilians and Turks as enablers and political shields. "Diplomacy emerged victorious today," declared Brazil's President Luiz InĂ¡cio Lula da Silva, turning Mr. Obama's own most important foreign-policy principle against him.

The double embarrassment is that the U.S. had encouraged Lula's diplomacy as a step toward winning his support for U.N. sanctions. Brazil is currently one of the nonpermanent, rotating members of the Security Council, and the U.S. has wanted a unanimous U.N. vote. Instead, Lula used the opening to triangulate his own diplomatic solution. In her first game of high-stakes diplomatic poker, Secretary of State Hillary Clinton is leaving the table dressed only in a barrel.

So instead of the U.S. and Europe backing Iran into a corner this spring, Mr. Ahmadinejad has backed Mr. Obama into one. America's discomfort is obvious. In its statement yesterday, the White House strained to "acknowledge the efforts" by Turkey and Brazil while noting "Iran's repeated failure to live up to its own commitments." The White House also sought to point out differences between yesterday's pact and the original October agreements on uranium transfers.

Good luck drawing those distinctions with the Chinese or Russians, who will now be less likely to agree even to weak sanctions. Having played so prominent a role in last October's talks with Iran, the U.S. can't easily disassociate itself from something broadly in line with that framework.

Under the terms unveiled yesterday, Iran said it would send 1,200 kilograms (2,646 lbs.) of low-enriched uranium to Turkey within a month, and no more than a year later get back 120 kilograms enriched from somewhere else abroad. This makes even less sense than the flawed October deal. In the intervening seven months, Iran has kicked its enrichment activities into higher gear. Its estimated total stock has gone to 2,300 kilograms from 1,500 kilograms last autumn, and its stated enrichment goal has gone to 20% from 3.5%.

If the West accepts this deal, Iran would be allowed to keep enriching uranium in contravention of previous U.N. resolutions. Removing 1,200 kilograms will leave Iran with still enough low-enriched stock to make a bomb, and once uranium is enriched up to 20% it is technically easier to get to bomb-capable enrichment levels.

Only last week, diplomats at the U.N.'s International Atomic Energy Agency reported that Iran has increased the number of centrifuges it is using to enrich uranium. According to Western intelligence estimates, Iran continues to acquire key nuclear components, such as trigger mechanisms for bombs. Tehran says it wants to build additional uranium enrichment plants. The CIA recently reported that Iran tripled its stockpile of uranium last year and moved "toward self-sufficiency in the production of nuclear missiles." Yesterday's deal will have no impact on these illicit activities.

The deal will, however, make it nearly impossible to disrupt Iran's nuclear program short of military action. The U.N. is certainly a dead end. After 16 months of his extended hand and after downplaying support for Iran's democratic opposition, Mr. Obama now faces an Iran much closer to a bomb and less diplomatically isolated than when President Bush left office.

Israel will have to seriously consider its military options. Such a confrontation is far more likely thanks to the diplomatic double-cross of Turkey's Recep Tayyip Erdogan and Brazil's Lula, and especially to a U.S. President whose diplomacy has succeeded mainly in persuading the world's rogues that he lacks the determination to stop their destructive ambitions.

Press Briefing

May 18, 2010

Remarks by the President at the Signing of the Freedom of the Press Act

TThe New START Treaty. By Hillary Rodham Clinton, Secretary of State, Opening Remarks Before the Senate Committee on Foreign Relations
Washington, DC, May 18, 2010

The New START Threat to Missile Defense

Cell Phones Safe, Rumors Persist
The WHO's International Agency for Research on Cancer completed a decade-long analysis of over 10,000 cell phone users and could not find a clear link between cell phone use and brain cancer risk.

NYT Blogs: The Twilight of the Welfare State?

Readout of the President's Call with President Lee of the Republic of Korea

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Attributing systemic risk to individual institutions - BIS Working Papers No 308
by Nikola Tarashev, Claudio Borio and Kostas Tsatsaronis

Remarks by the First Lady at Healthy Weight Announcement Press Conference

Politically Correct = Scientifically Valid?
High-fat meals may increase inflammation in asthmatics and suppress their response to albuterol, a bronchodilator that increases air to the lungs, according to a weak study presented by Australian researchers at last week's American Thoracic Society's international conference in New Orleans. We are skeptic of it.

Statement by White House Press Secretary Robert Gibbs on Iran

Iran's Nuclear Coup. WSJ Editorial
Ahmadinejad and Lula expose Obama's hapless diplomacy

Public Enemies - Obama ratchets up his attacks even as Republicans begin to cooperate.
Obama's Attacks on Republicans Are Getting Feisty

Did the Federal Government Enable the Gulf Oil Spill?

Restoring Global Financial Stability: Part 1

US Department of State's Partnership with the National Italian American Foundation Assists the University of L'Aquila in its Earthquake Recovery

Failure to Communicate, by Edward H. Crane

Kagan, Harvard, the US Military, and the Saudis

Multipolarism sans the EU Pole? The Geopolitics of Europe's Economic Mess. By Leon T. Hadar

Fast Forward - Ethics and Politics in the Age of Global Warming. By William Antholis and Strobe Talbott, Brookings Institution Press 2010 c. 144pp.

The American Power Act: Climatologically Meaningless - Kerry-Liebermann