Secret campaign ad financing in offing as FEC is deadlocked

If an impasse at the Federal Election Commission remains, corporations, unions and wealthy individuals will be able to fund hundreds of millions of dollars in campaign advertisements for next year’s presidential and congressional elections while keeping their names and roles secret.

The agency’s three Democratic commissioners want full disclosure -- saying current law and the Supreme Court’s most recent decision on campaign spending require it. The three Republican commissioners challenge that interpretation and favor a largely hands-off approach.

Last year, in a landmark ruling, the Supreme Court said for the first time that corporations and unions had a constitutional right to spend unlimited sums on campaign advertising so long as it was independent of candidates or parties. At the same time, the court reaffirmed an existing federal law, which says that “all contributors” of $1,000 or more to an “electioneering communications” fund must disclose their identities to the FEC.

The justices said they foresaw a new era of corporate-funded ads combined with “effective disclosure” so citizens and shareholders would know who was paying for the messages. “This transparency enables the electorate to make informed decisions,” Justice Anthony M. Kennedy said.

But many independent political groups, especially those dedicated to electing conservative candidates, have taken the position that the disclosure law does not apply to them because their donors are unaware of exactly how their money will be spent. Last year, outside groups that were separate from candidates and political parties spent $294 million on campaign ads, four times more than in 2006.

Their interpretation has been challenged before the FEC. By law, the agency is governed by a six-member board with three Republicans and three Democrats. The commission is deadlocked, casting the disclosure provision into limbo as it applies to independent political groups.

Last month, Democrats on the commission proposed stricter disclosure rules, but the commission split 3 to 3.

Defenders of tight campaign finance laws are sounding an alarm.

“Last year was a practice run. Enforcement of the disclosure rules has collapsed. And unless the FEC is fixed, the American public will be in the dark as to who is buying the White House and Congress,” said Craig Holman, a lobbyist for Public Citizen.

Several liberal advocacy groups sent a letter to Congress recently saying the FEC should be investigated as a “broken agency.” They also sent a letter to President Obama calling on him to fire the FEC commissioners and appoint new ones who will “break the deadlock” and enforce the law.

Obama’s options, however, may be limited. Senate Minority Leader Mitch McConnell (R-Ky.), a fierce critic of campaign finance laws, has insisted on GOP commissioners who share his views. Theoretically, critics could take the FEC to court, but such a case would be difficult and probably drag on for years.

The three Republicans on the commission dispute the need for new disclosure rules. They argue that Democrats in Congress failed to win passage last year of the so-called Disclose Act, which would have forced groups such as the U.S. Chamber of Commerce to name top donors behind political ads.

“It’s not the job of an unelected bureaucracy to write a new law,” said Commissioner Donald McGahn, formerly a lawyer for the National Republican Congressional Committee.

On the other side of the issue, Commissioner Ellen Weintraub, a Democrat, said the FEC had a duty to enforce the disclosure law already on the books. “People have the right to know who is paying for these messages,” she said. “Eight justices of the Supreme Court upheld that part of the law.”

The deadlock over disclosure marks an ironic twist for the agency, considering its history. The downfall of President Nixon revealed not just political dirty tricks but also how the flow of secret cash had bought favors in Washington. In 1974, a reform-minded Congress adopted strict limits on the funding of campaigns, along with disclosure requirements. Congress created the FEC to enforce the new law.

Fred Wertheimer, an advocate of tight election laws who played a role in creating the FEC, said he despaired of what it had become. “This is the worst I’ve ever seen it. It is by far the most dysfunctional and inoperative agency in Washington,” he said.

As if to underscore his point, the commission met recently to consider several questions from members of Congress. Last year’s Supreme Court ruling dealt only with independent election spending. It did not affect the bulk of the campaign funding laws, which restrict contributions to candidates.

Sen. Scott Brown (R-Mass.) was embarking on a national book tour to promote his autobiography, “Against All Odds.” His campaign committee asked whether he could legally hold fundraisers and collect the e-mail addresses of the attendees during the ostensibly non-political tour. His publisher, a corporation, was paying for the trip.

The FEC split 3 to 3, saying it “was unable to approve a response to this question.”

david.savage@latimes.com

kim.geiger@latimes.com