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Will Obama Shine Light on Dark Money?

Jeanne Cummings writes on money, lobbying and politics. As political editor for Bloomberg News, she directed coverage of the 2012 and 2014 elections. The 2016 race marks her seventh presidential campaign.
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A coalition of liberal groups is pressing President Barack Obama to sign another controversial executive order. With no chance that Republicans in Congress will pass campaign finance disclosure laws, the groups want Obama to strike a blow for transparency on his own, requiring companies with government contracts to disclose all of their political activity, including contributions to political groups that don't disclose the names of donors.

Since 2010, when the Supreme Court's Citizens United decision dramatically advanced an already aggressive trend toward deregulation in campaign finance, at least $600 million has flowed from wealthy donors to secretive nonprofit groups. Most of the money financed political ads attacking Democrats.

Obama, who has long supported curbs on the influence of mega-donors in politics, has made little effort to change the system. Liberal activists now hope to prod the president into forcing corporations to disclose donors after they win a federal contract.

Many large U.S. corporations are both government contractors and political donors. In the 2014 election cycle, the top 25 federal contractors collectively contributed more than $30 million to candidates and political committees through their own political action committees, according to a March study by the Brennan Center for Justice at New York University's School of Law. While corporate PACs must file disclosure reports, it's unknown how much those same corporations may contribute in undisclosed donations.

Undisclosed "dark money" is generally funneled by big donors to politically active nonprofits that claim they operate for social welfare. Many such groups sprang up after a series of court rulings essentially blessed unlimited spending by corporations, unions and individuals. Spending on Senate races by groups that don't disclose donors doubled between 2010 and 2014, from $105 million to $226 million. In the 10 most competitive Senate races last year, almost 60 percent of independent expenditures were made by non-disclosing groups, according to the Brennan Center. 

One of the top donors, Koch Industries Inc., doesn't have federal contracts. But a Koch subsidiary, Oplink Communications Inc., has a Navy contract to provide a $10,412 laser transmitter. Owners David and Charles Koch indicated that they intend to spend almost $900 million on conservative candidates and causes in the 2016 election. Under current rules, little of that spending seems likely to be disclosed.

The White House considered issuing an executive order requiring contractor disclosure once before. A draft order was leaked to the news media in 2011, prompting Congressional Republicans to attach riders to legislation to block it. Since then, Obama has basically been a spectator at the disclosure fight. The liberal coalition hopes an executive order covering government contractors would increase pressure on other corporations to adopt similar disclosure policies. But should Obama re-engage the issue, it will elicit howls of protest from executives claiming that disclosure infringes on corporate First Amendment rights.

Lisa Gilbert, director of the Congress Watch Division at Public Citizen, and other coalition members began organizing their eight-week lobbying campaign after Obama's January State of the Union address, in which the president lamented the prevalence of "dark money" in campaigns. The coalition has held more than 60 rallies in 30 states, with more planned.

Next week, Gilbert intends to deliver a petition to the White House signed by more than 650,000 people. Citing Obama's lame duck status, Dan Smith, an organizer with the U.S. Public Interest Research Group, asked: "What's he waiting for?"

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Francis Wilkinson at fwilkinson1@bloomberg.net