Obama vs. the 'Undisclosed Donors'

Obama vs. the 'Undisclosed Donors'
By Jed Babbin on 5.2.11 @ 6:08AM

On matters of war and peace, President Obama likes to lead from behind. On matters domestic, he's content to subcontract grand ideas to congressional Democrats in order that they wreak havoc on our economy. But there's one topic on which Obama stands second to none: campaign fundraising.

First, he condemned those who gave undisclosed political contributions. Next, he is taking steps to corrupt the federal contracting process and then he turned a blind eye to his former staffers' creating the means to gather and flow those same undisclosed contributions to his campaign.

The drama began with the January 2009 Supreme Court decision in Citizens United v. Federal Election Commission. The high court held a substantial portion of the McCain-Feingold campaign finance law unconstitutional. That decision said that barring independent political expenditures by corporations conflicted with the First Amendment.

About a week later, in his State of the Union address, Obama castigated the Supreme Court with the justices sitting, as is the custom, close to the presidential podium. Obama said, "With all due deference to separation of powers, last week the Supreme Court reversed a century of law that, I believe, will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections," Obama said. "I don't think American elections should be bankrolled by America's most powerful interests or, worse, by foreign entities. They should be decided by the American people. And I urge Democrats and Republicans to pass a bill that helps correct some of these problems."

It was an unprecedented slap in the faces of the justices who sat only a few feet from the president. Justice Alito was apparently so insulted by it that he couldn't refrain from mouthing the words, "Not true," in a memorably-filmed incident.

Only a few weeks before last November's election, Obama -- campaigning in Delaware -- said of the undisclosed donors, "They don't have the courage to stand up and disclose their identities. They could be insurance companies or Wall Street banks or even foreign-owned corporations. We will not know because there's no disclosure." He added, "But this isn't just a threat to the Democrats: It's a threat to our democracy."

Congressional Dems responded with an effort to overturn the Citizens United decision legislatively with the so-far un-passed "DISCLOSE" Act, which would have restricted undisclosed donors who aren't unions and other reliable sources of liberal funding. The fact that you cannot amend the Constitution by legislation apparently isn't known to our professor of Constitutional law and is of no concern to Congressional Dems.

Now, Obama is considering an Executive Order the effect of which would reverse Citizens United in part, and, entirely, corrupt the federal contracting process.

The April 13 draft Executive Order is entitled "Disclosure of Political Spending by Government Contractors." Section 2 of the draft says, in part, that "…every contracting department and agency shall require all entities submitting offers for federal contracts to disclose certain political contributions and expenditures they have made within two years prior to the submission of their offer."

The required disclosure would be any contributions or expenditures -- by the company, its officers and directors and subsidiaries under its control -- to or on behalf of federal candidates, parties, or party committees or to third party entities with the expectation that the contributions would be used for campaign purposes.

And, of course, the disclosure would not affect any of the unions so favored by the White House. They don't bid on government contracts for ships, aircraft, computers and the other assets the government spends billions to buy every year.

But for what purpose would the companies disclose to the contracting departments and agencies and not the FEC? The only reason to require the contracting agencies to have this data is for them to consider it when awarding the contracts.

Federal contracts are among the most-regulated of the government's actions. They are not patronage: contracts are legally required to be awarded on the basis of price, technical superiority and the past performance of the company in question. By injecting the political contributions, Obama is trying to restrict the ability to get contracts to those who are politically loyal to him.

Aside from being entirely corrupt, that conflicts directly not only with Citizens United but also with a 1996 Supreme Court decision that arose -- perhaps inevitably -- from Illinois politics.

In O'Hare Truck Service v. City of Northlake, the high court ruled in favor of a tow truck company that had been removed from a list of approved providers because its owner refused financial support for the city's mayor's re-election campaign and had the audacity to support his opponent.

Writing that had the mayor's campaign demanded the donation directly it might have violated a criminal anti-bribery law, Justice Kennedy said that it was clear that a government entity could not fire an employee for legitimate political activity and that First Amendment rights had to extend to independent contractors: "We cannot accept the proposition, however, that those who perform the government's work outside the formal employment relationship are subject to what we conclude is the direct and specific abridgement of First Amendment rights described in this complaint."

Obama's draft Executive Order doesn't bar companies donating to Republican candidates from obtaining contracts: but it implicitly requires government contracting officials to consider the disclosures in choosing contractors. Thus, it also places an unconstitutional pressure on the companies to either contribute to candidates the president likes or not contribute at all.

This is one of the principal points raised in an April 26 letter to the president signed by twenty-seven Republican senators led by Minority Leader Mitch McConnell. The letter says, in part:

We are concerned that the requirement to provide such information to every contracting agency as part of every contract proposal could have a chilling effect on the First Amendment rights of individuals to contribute to the political causes or candidates of their choice. Political activity would obviously be chilled if the prospective contractors have to fear that their livelihood could be threatened if the causes they support are disfavored by the Administration. No White House should be able to review your party affiliation or the causes you support before deciding if you are worthy of a government contract.

McConnell & Co. have it precisely right. The White House is trying to use the leverage that the government has as a monopsonist customer: those companies in the defense market have only one domestic customer, and if they sell to foreign governments they do so only with U.S. government supervision and control. Companies dependent on the shrinking defense market, and others in the rest of the government contracts market, will have to bow to this pressure.

Obama's hypocrisy on "undisclosed donors" goes back to the 2008 campaign in which he gathered untold millions of dollars in Internet contributions the sources of which may never be discovered. And it is highlighted by the recent announcement by two former Obama staffers of new organizations that will accept undisclosed donations for Obama's 2012 campaign.

"Priorities USA" and its political action committee, "Priorities USA Action," have just been formed by former White House spokesman Bill Burton and Sean Sweeney, a former Rahm Emanuel staffer. Though the PAC will have to follow FEC regulations on disclosure, the main group can spend up to half of the money it receives on political action without disclosing where the money came from.

Obama's hypocrisy isn't the only problem. The biggest problem is the ruthlessness with which he, his union supporters, and others will exhibit in raising money for his re-election campaign and in interdicting any money flowing to his opponents directly or indirectly, in 2012.

The proposed executive order is only the beginning. Those who wish to raise money to oppose Obama will need to resort to the courts -- frequently and quickly -- to protect the First Amendment rights Obama wants to deny them.