Democrats Want Contribution Disclosure Measure Passed by July, Backers Say

Congressional Democrats trying to rein in corporate political spending will seek to pass their legislation by early July, before the 2010 election campaign heats up, supporters of the effort say.

Senator Charles Schumer of New York and Representative Chris Van Hollen of Maryland plan a bill that responds to a Supreme Court decision that allows corporations and unions to spend their own treasuries on federal elections. The legislation would require nonprofit groups such as the U.S. Chamber of Commerce to disclose their donors.

The provision is designed to prevent companies from anonymously pouring millions of dollars into ads funded by nonprofit groups.

“Corporations are going to make sure there’s an ad, but they’re going to make sure it’s not the corporation’s name on the ad,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a watchdog group.

The Schumer-Van Hollen legislation, which may be introduced later this week, is designed to mitigate the U.S. Supreme Court’s Citizens United ruling in January that reversed decades of earlier decisions and campaign finance laws aimed at reducing corporate money in campaigns. The court said corporations and unions could use their own treasuries for ads through Election Day supporting or opposing federal candidates, as long as their efforts were independent of the office seekers.

Regulated Committees

Previously, corporations and unions seeking to support candidates had to rely on regulated political action committees.

The Schumer-Van Hollen bill is “going to be voted on and signed into law” by Congress’s weeklong recess for the July 4th holiday “or else it’s not going to have” sufficient impact on the 2010 elections, said Craig Holman of Washington-based Public Citizen, which supports stronger campaign finance laws. Holman has met with congressional staff members drafting the legislation.

Approval of the legislation by early July would allow the new rules to go into effect before outside groups schedule their television advertising buys for primaries in August and September and the general election in November, Holman said.

Brian Fallon, a spokesman for Schumer, said the legislation didn’t have to pass by July 4 in order to affect the November elections. He said the measure would take effect 30 days after it was signed into law. Bridgett Frey, a spokeswoman for Van Hollen, had no immediate comment.

Lobbyists’ Advice

So far, companies have been holding back on substantial contributions as they take the advice of their lobbyists and wait to see what Congress does.

“This is all unchartered territory,” said Tim Peckinpaugh, a partner at K&L Gates LLP in Washington. “I’ve been counseling them to be careful.”

Discussing reasons for prudence, Peckinpaugh said, “I can see a situation where if a fairly visible company goes after a member and it’s all disclosed, that might backfire,”.

Schumer and Van Hollen first outlined their legislation Feb. 11. They have delayed introducing it in an attempt to get Republican backing, supporters said.

The only Republican willing to co-sponsor the legislation so far has been Representative Mike Castle of Delaware, running for the Senate seat formerly held by Vice President Joe Biden.

Holman and Lisa Gilbert, a lobbyist for the Boston-based U.S. Public Interest Research Group, which also supports stronger campaign finance laws and has met with Democrats drafting the legislation, said they expected other Republicans to support the bill, including some in the Senate to reach the 60 votes needed to overcome delaying tactics.

Disclosure Bill

“There are quite a few” Republicans likely to vote for the bill, Gilbert said. “It’s mainly a disclosure bill. For years, Republicans have said, ‘What we want is disclosure.’”

To make the bill easier to pass, it won’t include provisions requiring corporations to get the approval of shareholders before spending money on campaigns, Holman said.

The House Financial Services Committee is scheduled to vote today on a separate bill requiring shareholders to approve corporate political spending.

The legislation sponsored by Schumer and Van Hollen would require the heads of corporations, unions or nonprofit groups to say in a political ad that they approved of the message. Also, the names of the top five contributors to an organization sponsoring the ad would have to be listed as part of the spot, according to a bill summary.

Government Contracts

Banned from funding political ads would be companies with more than $50,000 in government contracts, institutions who have yet to pay back Troubled Asset Relief Program funds, and corporations which have least 20 percent of their stock controlled by a foreign entity or a board majority comprised of foreign nationals.

Chamber President Thomas Donohue has criticized the legislation, calling it “a thinly veiled attempt to hijack the political playing field.” The chamber, the largest U.S. business lobby, has said it plans to spend $50 million in support of favored candidates this fall.

Obama used his Jan. 27 State of the Union address to criticize the court ruling, saying it would “open the floodgates for special interests.” Justice Samuel Alito, part of the 5-4 majority and a member of the audience in the House chamber listening to Obama’s speech, mouthed “that’s not true” in response to the president’s comment.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

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