Big Business Thinks Small on DISCLOSE Act

No wonder confidence in corporate America is plunging.

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The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter.
"Forget the number: It says nothing about the state of the economy," says one economist.

Corporations must be people after all, because they have the right to speak freely, in secret.

If you're perplexed by that logic, so am I. But let's indulge, for a moment, the case that corporate America is making in favor of keeping its donations to political campaigns secret, as a way of protecting its First Amendment rights.

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About 85 business groups have lobbied aggressively against the DISCLOSE Act, which once had bipartisan support but was defeated in a July 16 Senate vote. The DISCLOSE Act is meant to strengthen and speed up the disclosure requirements for big donors to political campaigns. It would require anybody who gives $10,000 or more to a political organization to report the donation to the Federal Election Commission within 24 hours, with the information published on the Internet within another 24 hours. The idea is to prevent the stalling and evasion that happen now, and make sure voters know who's funding political campaigns before the election is actually over.

A lot of people who think the American political system is broken and corrupt support the DISCLOSE Act. In their recent book It's Even Worse Than It Looks, political scientists Thomas Mann (left of center) and Norman Ornstein (right of center) wrote that such a bill "would be a useful antidote to the poisonous interaction between huge money spent on campaign ads and subterfuges to ensure the contributors can remain anonymous."

In the 2010 Citizens United Supreme Court decision--which allowed unlimited donations to third-party political groups such as super PACs—Justice Anthony Kennedy even wrote that "prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters."

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But congressional Republicans, backed by the big-business lobby, have now formed solid opposition to the DISCLOSE Act, effectively killing it. The U.S. Chamber of Commerce calls such rules "an unconstitutional attempt to silence free speech." The National Association of Manufacturers says the DISCLOSE Act would "have a chilling effect on political speech." Key opponents in Congress, such as Senate Minority Leader Mitch McConnell, typically cite the threat to free speech to explain why they oppose the bill.

So if you secretly donate $10,000 or $100,000 or $1 million to a political advocacy group, you're exercising your right to free speech. But if you have to acknowledge you gave the money, which might reveal your political leanings, suddenly your speech isn't so free anymore. Got that?

This is a problem for big companies and their executives because political activism can harm the bottom line if your customers don't support the same causes you do. Target had that sort of problem in 2010 when it donated money to a group that supported a conservative candidate for governor in Minnesota who opposed gay rights. Target customers who felt offended by the donations organized a boycott. So for Target executives, the "chilling" effect of expressing their political views was embarrassing news coverage that could have harmed sales.

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But the First Amendment says nothing about secrecy being a required element of free speech. In fact, it contemplates public assembly and public expression as basic forms of speech. If you think about it, the concepts of free speech and secrecy are actually contradictory. Can it even be "speech" if it's secret?

Nor does the First Amendment suggest that anybody should be protected from the lawful consequences of saying something that's unpopular. And there's no provision against boycotting companies that support political policies their customers disagree with. Once upon a time, in fact, it was considered courageous to take a stand even if you knew a lot of people might disagree with you.

But America's big companies want to take a stand without anybody knowing what it is. The U.S. Chamber and its allies argue that labor unions and other political donors who tend to favor Democrats would be exempt from some of the requirements corporate donors would have to satisfy, if the DISCLOSE Act were to become law. But if that's true, then businesses should lobby for stronger disclosure rules and even more transparency, which would build confidence in the politcal system, rather than suspicion. Sunlight is a much better disinfecant than secrecy.

We live in a time of rampant cynicism and growing distrust of big institutions. Confidence in big business is well below historical averages, according to polls by Gallup. Corporate America seems determined to prolong that trend.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.