The Misguided Case Against 'Dark Money' In Politics

Disclosing donors could impair democracy.

One of the most heinous crimes in recent memory took place in Jasper, Texas, in 1998, when three white savages chained James Byrd Jr., a black man, to the back of a truck and dragged him for three miles until Byrd collided with a culvert, which severed his head and right arm. The killers dumped his body in front of a black church and then went to a barbecue.

The murder prompted the introduction of hate-crime legislation, which Texas Gov. George W. Bush opposed. In late October of the 2000 presidential race, the NAACP Voter Action Fund ran a 30-second TV ad featuring Byrd's daughter. When Bush refused to support the hate-crime law, she said, "it was like my father was killed all over again. Call Gov. George W. Bush and tell him to support hate-crime legislation. We won't be dragged away from our future."

The ad infuriated conservatives. They called it "atrocious," "despicable," "truly over-the-top," a "smear," and more. Fortunately, all they could do was fume. They could not do as some critics of a California initiative forbidding gay marriage did when they used donor information to create online maps showing where the measure's supporters lived and worked, in order to exact revenge.

Yet in today's language, the NAACP ad exemplified the most dangerous threat to democracy since the poll tax: dark money.

What is dark money? The very term reeks with the stench of corruption; the notion that dark money should be allowed to pollute American elections is intuitively alarming. And that is why critics use the term. They wish to make something that is perfectly legitimate—free speech by nonprofit groups—sound menacing, even unpatriotic. Outfits such as the Brennan Center for Justice issue reports on "Outside Spending and Dark Money in Toss-Up Senate Races." Liberal organs such as The American Prospect publish articles purporting to show the profound extent to which dark money sways elections. Ann Ravel, the new chairman of the Federal Election Commission—which is considering new restrictions on dark money—terms it a "problem" of "grave concern." The Center for Public Integrity frets that a "Hobbled IRS Can't Stem 'Dark Money' Flow." And so on.

Left unanswered is the question as to why the IRS, or the FEC, should try to.

After all, what is the point of campaign-finance regulation? To prevent moneyed interests from corrupting politicians. We don't want a Congress filled with lawmakers on the take. To that end, a host of federal laws already forbid bribery; prohibit campaign contributions by corporations and unions; cap how much individuals can give directly to candidates and to political parties; and so on.

All of that regulation still leaves political groups free to spend money to influence elections in other ways, of course. And every dime they spend is reported—along with every dime they collect, and from whom they collect it. If you want to know who gave to the Committee to Elect Dirty Rotten Scuzbags, you can find out with a few clicks of the mouse.

So again: What is dark money? Is it given to politicians? No. Is it given to political parties? No again. Is it the expenditure of funds by outside political groups coordinating with the candidates, campaigns, or parties? No—coordination is verboten. Is it the expenditure of funds by outside groups without disclosing how the money was spent? No again. When a group spends "dark money" on a TV ad, it has to report how much it spent, who received the money, and so on.

The only thing that makes "dark money" dark is that the group spending it does not have to disclose who it got the money from.

Do we need those details? In 2014 the biggest dark-money spenders were groups such as the Chamber of Commerce, the NRA, the League of Conservation Voters, the Environmental Defense Action Fund, Planned Parenthood, and NARAL Pro-Choice America. Does anyone think their agendas are a mystery?

Say the NRA buys an ad urging Senator Smith to oppose gun confiscation. Everyone knows who the NRA is and what it wants. Is the cause of democracy advanced by knowing also that David Jones of 123 Sycamore Street, Kennesaw, Ga., gave $150 to the NRA? Of course not. What matters is that the NRA spent money that helped Smith's opponent—not that David Jones of Kennesaw, Ga., supports the NRA.

On the other hand, it is easy to see how disclosing so-called dark-money donors could impair democracy. First, as former FEC Chairman Bradley Smith testified to Congress earlier this year, "studies have confirmed that the costs of mandated disclosure disproportionately harm grass-roots organizations and campaigns run by volunteers. Complying with disclosure laws often requires expensive legal counsel, an accountant, and other record-keeping staff." What's more, citizen activists might refrain from activism out of fear that they might unintentionally break some obscure reporting rule.

The threat to citizen activism goes even further than that. Many people contribute to groups such as Planned Parenthood because they support its general mission, not because they expect to participate in elections by doing so. In 2012, Planned Parenthood spent roughly $7 million on so-called dark-money expenditures—a tiny fraction of its billion-dollar budget. Ask yourself whether more of the group's supporters or fewer of them would write checks knowing their names, addresses and occupations would be put online for all the world to see. (Indeed, Alabama tried to use just such disclosure requirements to keep the NAACP from operating there in the 1950s—and the Supreme Court ruled unanimously that it had no right to. "Compelled disclosure of affiliation," the court wrote, "may constitute as effective a restraint on the freedom of association" as other kinds of governmental interference.)

Much of the hostility to dark money comes from the press, which has an ideological ax to grind against money and an institutional bias against secrecy of any sort. But the media had better be careful what they wish for. There is zero functional difference between a dark-money issue ad and, say, an NPR or Pro Publica story critical of a Republican candidate's position on climate change. When dark money gets spent, it gets spent to disseminate opinions—precisely what the First Amendment was written to protect.

In 2012 dark money amounted to roughly $311 million. But total election-related spending that year was $7.3 billion—which means dark money accounted for only 4 percent of the total. That's a pretty thin reed on which to justify curtailing core constitutional liberties.