Weekend Economists Go Eat Worms March 27-29, 2015

[Demeter]

6. Which Companies Are Buying the Election? NYT EDITORIAL

http://www.nytimes.com/2015/03/28/opinion/which-companies-are-buying-the-election-securities-and-exchange-commission.html

Midway into a three-and-a-half hour congressional hearing this week featuring Mary Jo White, the chairwoman of the Securities and Exchange Commission, none of the legislators had bothered to ask if or when her agency would require that corporations disclose their political spending.

The bipartisan silence testified to the growing importance to both parties of anonymous campaign donations. With each passing year since 2010, when the Supreme Court’s decision in Citizens United opened the floodgates to secretive political giving, politicians appear to value so-called “dark money” more and value disclosure of unnamed donors less. The issue was finally broached by Representative Michael Capuano, Democrat of Massachusetts. He observed that shareholders have a right to know how corporate cash is spent, and demanded to know why the S.E.C. has not required disclosure. Ms. White gave the same answer she has given since she became chairwoman in 2013 — essentially, that the agency is too busy with more important issues. Since then, however, the S.E.C. has added new issues to its agenda, while neglecting to put political-spending disclosure on its to-do list. The omission is indefensible, because the investors’ need to know will only grow along with the level of anonymous giving.

In 2012, a record $6.3 billion was spent on presidential and congressional elections; estimates for spending in the 2016 contest run between $7.5 billion and $8 billion. Much of the spending is disclosed, but the portion that is dark is certain to expand. For example, the network run by the Koch brothers — which is constructed chiefly of groups that are not required to reveal their donors — has set a spending goal of nearly $900 million for the 2016 races, compared with $400 million in 2012. Another reason for the S.E.C. to act is that investors are clamoring for disclosure via petitions and letters to the S.E.C. and the filing of shareholder resolutions. Several research papers bolster the case for disclosure.

In the meantime, President Obama has also come under pressure to force disclosure of corporate political spending. Recently, 50 public advocacy groups called on the president to issue an executive order requiring such disclosure by corporations that receive federal contracts. He should issue an order without delay, not only because it is the right thing to do for transparency, but because doing so would set a needed example for Ms. White, corporate leaders and anyone else in a position to provide investors with the disclosure they want and deserve.