Omnibus Bill Contains Dark Money Riders

Congress put provisions in the 2,741-page omnibus funding bill that are designed to stop the government from improving transparency of money in politics.

Omnibus Bill Contains Dark Money Riders
Senate Minority Leader Mitch McConnell and House Speaker Nancy Pelosi

Tucked into the text of the $1.5 trillion, 2,741-page omnibus funding bill that was released in the middle of the night on March 9 are at least three provisions designed to protect corporations and dark money groups from money-in-politics transparency initiatives. The bill is considered “must-pass” legislation because it appropriates the money that the government needs to continue operating beyond Friday night, as well as billions in Ukraine aid. 

One provision in the bill would protect a loophole in IRS practices that allows political groups to register themselves under a section of law that exempts them from disclosing their donors under campaign finance laws. 

Nonprofit organizations under 501(c)(4) rules are considered “social welfare” organizations and are not supposed to spend more than half of their resources on political campaign interventions. However, that restriction is barely ever enforced, so groups that focus on political activities can call themselves social welfare nonprofits and exempt themselves from disclosing their donors. These (c)(4) groups contribute the bulk of dark money spending in elections, and both parties benefit from the spending. 

The omnibus rider says that the IRS cannot take action to improve how it determines what groups can qualify as disclosure-exempt social welfare organizations. 

Another rider in the omnibus would prevent the Securities and Exchange Commission from finalizing a rule requiring corporations to publicly disclose more of their political and lobbying spending. 

Companies route much of their lobbying through trade associations and are believed to funnel political spending through social welfare groups. However, because trade associations and social welfare groups are nonprofits, they are not required to disclose their donors and thus large swaths of corporate influence spending around politics and public policy remains hidden. The omnibus language would prevent the SEC from addressing this gap in public information by requiring corporations to be more transparent. 

A third rider would prevent any department or agency from taking action toward requiring that government contractors disclose information about their political activities. 

Since 1940, companies that have contracts with the government or are in negotiations to secure contracts have been banned from making “any contribution of money or other things of value, or to promise expressly or impliedly to make any such contribution to any political party, committee, or candidate for public office or to any person for any political purpose or use.” The prohibition is meant to protect against pay-to-play in federal contracting, but it is not actively enforced by the FEC. 

The omnibus rider would prevent anyone in the government from even recommending that contractors disclose their political spending. 

These riders have been included in past appropriations bills and have been signed into law despite opposition from good government groups.

Congressional leaders are hoping to have final votes on passage of the omnibus by Friday at 11:59 pm in order to prevent a government shutdown. The House of Representatives approved the measure on Wednesday, just hours after the text was released to members, in two parts: a defense portion that passed by a vote of 361-69, and a nondefense portion that passed in a 260-171 vote. The bill then headed to the Senate.

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