By Senator Evan Bayh
Published by Politico on July 27, 2010
Should a foreign company that opposes U.S. policy be permitted to secretly spend millions of dollars to influence an American election?
The question may sound far-fetched, but it is one that senators may have to answer today when the Senate votes to strengthen our campaign finance laws. The bill before the Senate -- the DISCLOSE Act -- is a much-needed response to the Supreme Court's January ruling in the Citizens United case.
That decision overturned 100 years of settled law and removed limits on the amount of corporate money that can be funneled into political campaigns.
I have seen how special interest money fuels the partisan gridlock gripping Congress. The Citizens United decision is sure to increase this problem. My deepest concern, however, is that it is likely to allow foreign special interests to threaten our national sovereignty.
In Citizens United, the 5-4 majority opened a dangerous loophole that invites foreign meddling in our political process. While foreign corporations are still barred from participating directly in U.S. elections, their U.S. subsidiaries can now spend unlimited amounts on campaign ads targeting federal candidates. Regrettably, the majority declined to address whether Congress may act to prevent such undue foreign influence.
Previously, foreign-owned subsidiaries were required to finance these ads through political action committees constrained by $5,000 individual contribution limits and detailed disclosure requirements. Now, they can spend directly from their corporate treasuries with little oversight or disclosure.
This radical change gives foreign-owned corporations far more influence, while giving U.S. voters far less information about who is trying to sway them.
To put this in perspective, consider that the foreign-owned Royal Dutch Shell earned profit of more than $26 billion in 2008, yet, its U.S. subsidiary's PAC spent only $142,000 in the 2008 election cycle. Freed from constraints, Shell could now overwhelm even the most well-funded candidate by spending a trivial percentage of its overall profit.
While current regulations prohibit foreign companies from directly controlling the election spending of their U.S. subsidiaries, foreign owners are free to share their views about a particular candidate or issue with their U.S. employees. In virtually every case, the U.S. subsidiary can be expected to do what is in the best interests of its foreign owners.
Similarly, it is not difficult to envision how foreign corporations, assisted by clever accountants and lawyers, could circumvent current limits by attributing profit generated abroad to their U.S. subsidiaries. Then, foreign corporations could spend massive sums to influence our elections.
Imagine a Venezuelan oil company that wants to channel millions of dollars through its U.S. subsidiary to defeat a congressional candidate running on a platform of American energy independence.
Worse, the company could mask its involvement by secretly donating funds to a trade association with an innocuous name like "Americans for Good Government." The shadow group could then launch brutal attack ads without ever mentioning the foreign oil company or energy policy -- masking the company's involvement and true agenda.
The legislation I proposed with Sen. Chuck Schumer (D-N.Y.) closes the loophole opened by the Citizens United decision. The DISCLOSE Act would prevent domestic corporations under foreign ownership or control from making contributions or expenditures to influence U.S. elections.
Foreign corporations and governments already have ample means to influence U.S. policy. According to the nonpartisan Center for Responsive Politics, foreign governments spent $87 million in 2008 to lobby our government on a range of issues from free trade to arms sales. But allowing other nations to make their case is one thing; allowing them to select our government is a different matter.
In an age of globalization, we must accept the free flow of products, ideas and talent as good for America. But in acknowledging the economic reality of comparative advantage and the need to compete, we must not surrender our sovereignty -- nor endanger our political independence.
In his farewell address, George Washington cautioned the American people to remain vigilant against the "insidious wiles of foreign influence," which he described as "one of the most baneful foes of republican government."
The Citizens United decision has opened our political process to the kind of insidious foreign influence our Framers sought to guard against. The Constitution specifically grants Congress the power to prohibit federal officials from accepting gifts from foreign governments.
Free and fair elections are the foundation of our democracy. If they are replaced by elections where the voices of ordinary citizens are drowned out by the cash of foreign corporations, we all lose.