U.S. Chamber fights donation disclosure rules

  • Article by: JIM SPENCER , Star Tribune
  • Updated: May 7, 2011 - 5:21 PM

New disclosure rules would require government contractors to reveal political donations.

WASHINGTON - The U.S. Chamber of Commerce has made a controversial campaign contribution in last year's Minnesota governor's race a centerpiece in a fight against tougher federal disclosure rules for government contractors.

Target Corp.'s donation of $150,000 to a group backing Republican candidate Tom Emmer led to a store boycott organized by people opposed to Emmer's stand against gay rights. The Chamber cited the Target case as a prime example of how government contractors could have their right to free speech stifled if President Obama issues an executive order forcing them to reveal their political donations.

"Mandatory disclosure laws, like breaches in privacy laws, can squelch speech," Chamber spokeswoman Blair Latoff said. "The only reason proponents of these so-called disclosure provisions want to pursue this is because they want to single out organizations like Target, as they did. So what we're seeing here is the left spending potentially millions of dollars a year harassing the business community."

A draft of the executive order, leaked to a conservative website, requires companies seeking federal contracts to disclose political contributions for the prior two years, if those donations collectively total more than $5,000 in a year.

Any order would affect dozens of Minnesota companies that receive federal contracts and actively donate to political campaigns. That includes most of the state's biggest businesses and virtually every economic sector -- from banking to retail to medical technology to manufacturing to farming.

The January 2010 Supreme Court decision that spawned the proposed order did not find that forced disclosure of campaign contributions violates the First Amendment rights of businesses, said Heidi Kitrosser, a University of Minnesota law professor who specializes in free speech and separation of powers. The case -- called Citizens United -- allows businesses to spend unlimited amounts to finance political campaigns.

"There was an underlying theory to the campaign financing opinion," Kitrosser said. "Under the First Amendment, the remedy for harmful speech is more speech. Disclosure is a form of speech."

Obama's draft order would compel companies to report the donations of officers, directors, affiliates and subsidiaries not only to candidates and committees, but to "third-party entities" that the company reasonably expects to make independent political expenditures, something that doesn't happen now.

A White House spokesman called the potential executive order part of a "process" and declined to add details.

Earlier, the Chamber and other opponents succeeded in stopping a political contribution disclosure bill in the Senate, leaving supporters looking for an administrative remedy.

"Corporations had a loud voice in the political process before Citizens United, and the argument that companies should be able to anonymously donate unlimited amounts of money because they otherwise might shy away from the political process is absurd," said Sen. Al Franken, a Minnesota Democrat.

Tim Pawlenty, Minnesota's ex-Republican governor and potential presidential candidate, sees it differently. He recently called the possible executive order "political arrogance" and "hypocrisy."

The executive order applies only to businesses and not to unions, Pawlenty noted. As a result, it "singles out people who support Republicans, and entities that support Republicans, and doesn't touch the Democratic supporters."

Companies changed policies

The Citizens United decision struck down a Minnesota ban on corporate donations to political campaigns, prompting the state to enact a new disclosure law. It requires businesses to make public any political donation of more than $100, including contributions to third parties.

In July 2010, six-figure donations by major corporations were revealed, including those made by Target, Best Buy, 3M, Regis, Polaris, Securian and Hubbard Broadcasting to MN Forward, a political action committee supporting Emmer.

Emmer opposed gay rights, but the companies said they supported the Republican's stand on economic issues, not social issues. Gay activists, including OutFront Minnesota, responded that Emmer's social agenda was anathema to gay customers.

Target took the brunt of the anger. A Facebook page called "Boycott Target until they cease funding anti-gay politics" is still active and has 83,572 members. Videos popped up on YouTube of people cutting up their Target credit cards.

The donation issue continues to linger over the company. In March, pop music diva Lady Gaga, who counts gays among her audience, canceled a deal with Target to distribute a new album.

Earlier this year, Target changed its process regarding political donations, naming a group of senior executives responsible for insuring "a variety of perspectives." Best Buy also tweaked its policy on political donations as well.

"If they believe in the free market of ideas, that's how the process should work," said state Rep. Ryan Winkler, DFL-Golden Valley, who guided the new legislation through with unanimous support.

Target and Best Buy declined to comment last week on what role negative publicity and the boycott played in the changed policy. Nor would either company talk about the Chamber's position.

"Forcing disclosure to exercise First Amendment rights means some people and corporations alike will stay silent with little or no benefit to the public," Latoff said. "Corporations have employees, vendors, suppliers and shareholders of all political stripes. They do not want to alienate anybody."

But customers have the right to react to a business' political spending as much as the business has the right to spend as much as it wants on any candidate it chooses, said Democratic Rep. Tim Walz of Minnesota's First Congressional District.

"Nowhere in the Constitution does it say that free speech is anonymous," Walz said. "We require that individual donors be disclosed, and if corporate America plans to act like individuals and participate in the political process, it is reasonable to expect that their donations be disclosed as well."

Retaliation concerns raised

An executive order forcing tougher disclosure on government contractors would have a significant impact on Minnesota's largest company, Minnetonka-based UnitedHealth Group. UnitedHealth gets billions of dollars from the federal government to help with health care services such as Medicare and Tricare.

UnitedHealth's political action committee gave nearly $400,000 to congressional candidates and political committees in 2010, according to the Federal Election Commission. It also spent $2.45 million lobbying in 2010.

A company spokesman declined comment on the proposed executive order.

Current rules do not require disclosure of money given by government contractors to third-party groups making independent expenditures in behalf of candidates. During recent political campaigns, some of those groups have raised millions of dollars and become financiers of attack ads and dirty tricks. On Thursday, the Center for Responsive Politics reported a 338 percent increase in independent expenditures on political campaigns since 2006. The center, which compiles financial disclosures, also showed that two-thirds of independent expenditures in the 2010 elections came from groups "freed" by the Citizens United decision.

The Chamber fears that a company's disclosure of donations could affect their ability to get federal contracts.

"It's undeniable that political opponents and, worse, government officials, could use the disclosure of their political opponents for retaliation," Latoff said.

Most of Minnesota's congressional delegation did not respond to requests for comment on that point of view. Fourth Congressional District Democratic Rep. Betty McCollum said she couldn't disagree more.

"Disclosure, transparency, and accountability in election financing are essential to keep any election fair and our democracy strong," she said. "The right to free speech granted to Americans was never intended to give corporations the right to buy elections and politicians in order to help them make more money."

Jim Spencer • 202-408-2752

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