ASKED & ANSWERED: Matthew Menendez on dark money

By Steve Thorpe

Legal News

Michigan was recently called "the dark money capital of America" by Rich Robinson, chief watchdog of the nonpartisan Michigan Campaign Finance Network (MCFN). Secretary of State Ruth Johnson has said voters should know who pays for "some of the most negative advertising in political campaigning." Dark money funding was a point of contention in recent Michigan Supreme Court races and has been mentioned unfavorably in the national media. The State Bar of Michigan has asked Johnson to require disclosure of names of donors who sponsor what Robinson describes as "millions of dollars-worth of candidate focused advertisements in state judicial campaigns." Matthew Menendez serves as counsel for the Brennan Center's Democracy Program, where his work focuses on fair and impartial courts. Menendez attended New York University School of Law as a Dean's Scholar and graduated in 2007, having served as notes editor of the NYU Environmental Law Journal.

Thorpe: Give us a quick and dirty definition of "dark money" in political terms.

Menendez: "Dark money" refers to campaign spending that is not disclosed to voters until long after an election, if at all, leaving voters unable to determine who is paying for political ads. In the 2012 elections in Michigan, massive amounts of dark money was spent by so-called "social welfare" organizations organized under section 501(c)(4) of the tax code. Groups with 501(c)(4) status do not have to disclose the identity of their donors, so frequently the only information voters have about these groups is an innocuous name such as "Americans for America," when in fact these groups are often funded by wealthy special interests groups.

Thorpe: Former Republican-Secretary of State Terri Lynn Land has said that "only communications with magic words of express advocacy, such as 'vote for,' 'vote against,' 'support,' 'defeat,' and the like, are subject to mandatory disclosure" under the act. Agree?

Menendez: This interpretation is based on outdated Supreme Court cases, and is not in keeping with more recent precedent. Not only has the Supreme Court explained that the distinction between "express advocacy" and "issue ads" is "functionally meaningless," the court has repeatedly emphasized that political disclosure furthers important First Amendment interests. Disclosure of political spending enables voters to make more informed choices in evaluating the weight to afford speakers and their messages supporting and opposing candidates, and disclosure helps to prevent corruption and the appearance thereof by making clear who is spending in support of and in opposition to candidates.

Thorpe: MCFN Executive Director Rich Robinson has called Michigan "the dark money capital of America." Agree?

Menendez: It is extremely difficult to compare dark money across states, as the defining feature of this spending is the lack of disclosure and transparency. The National Institute of Money in State Politics gives Michigan an "F" grade for its independent spending disclosure requirements.

We do know that Michigan's 2012 judicial elections were by far the most expensive in the country, and the vast majority of this spending was not disclosed to voters, due to Michigan's unnecessarily narrow definition of what constitutes an election expenditure. The current interpretation of Michigan's campaign finance law requires disclosure only for "express advocacy," that is, for ads that explicitly advocate voting for or against a candidate using certain "magic words" such as "vote for," "elect," or "defeat." This interpretation does not require disclosure for the many ads that are clearly aimed at influencing voters but abstain from using the magic words, even though the U.S. Supreme Court has characterized the distinction between express advocacy and issue ads as "functionally meaningless." By adhering to an outdated and useless distinction between these ads, Michigan's campaign finance law offers a gaping loophole allowing massive amounts of campaign spending to evade disclosure requirements merely by avoiding a few specific words, leaving voters unable to determine who is spending staggering sums to sway elections.

Thorpe: Secretary of State Ruth Johnson recently said voters should know who pays for negative campaigning. But then the state Senate voted 20-18 to reject an expansion of campaign disclosure rules that would mandate public disclosure of those who finance political "issue ads" that do not specifically advocate votes for a candidate. What's next?

Menendez: If Michigan passes proposed legislation that would double campaign spending limits and allow ad sponsors to remain anonymous, it would codify the existing underinclusive definition of campaign expenditures, prop open the gaping loophole undermining disclosure, and ensure that Michigan voters are kept in the dark about who is paying for the deluge of negative campaign ads flooding the airwaves. If the bill is not passed into law, the Secretary of State will have the opportunity to take action to close the loophole by broadening the disclosure requirement beyond express advocacy and bringing Michigan law in line with U.S. Supreme Court precedent.

Thorpe: Ad sponsors are required to include a simple "paid for by" disclaimer, but that is often an obscure group name. Would proposed legislation change that?

Menendez: The key to effective disclosure is to require that these obscurely-named groups identify their donors. The legislation passed by the state Senate would continue to shield these donors from disclosure, allowing them to spend massively on negative ads while hiding behind anonymity. The public should be worried that lawmakers are pushing legislation placing the desire of wealthy special interests to hide their donors over the interests of all Michigan voters in knowing who is financing election spending. If the legislation is blocked and Secretary Johnson broadens the disclosure requirements, voters could get information about the donors behind those shadowy groups.

Thorpe: The State Bar of Michigan has asked Johnson to require disclosure of names of donors who sponsored millions of dollars-worth of candidate-focused advertisements in state judicial campaigns, including the Supreme Court race. Johnson has said she can't "move forward under current law, the Michigan Campaign Finance Act, (to grant) a special carve-out in exception for judicial candidates alone ... our department cannot impose different disclosure rules based upon the office sought." What role might the bar play in this process?

Menendez: The State Bar should consider advocating for more robust disclosure requirements for elections, as the bar can play an important role in educating the public and elected leaders. The bar is right to be concerned about campaign spending disclosure, particularly in the context of judicial elections, as all litigants have a fundamental due process right to a fair trial in a fair tribunal. This fundamental right guarantees a trial that is not only fair in fact, but also in appearance, as public confidence in judicial independence and impartiality is critical. Our polling shows that an overwhelming number of voters believe that campaign donations and other special interest spending on judicial elections influence judges' decisions on the bench. And anonymous negative ads not only damage the public's confidence in the integrity of the judiciary, they also threaten the integrity of the recusal process. If a party in a particular lawsuit has expended substantial amounts of money in support of the election campaign of a certain judge, that judge must determine whether to step aside from that particular case in order to maintain an impartial bench. But if the public does not know who contributes to a campaign, they can't ask judges to step down when they feel the fairness of the court is at risk.

Published: Fri, Dec 27, 2013

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