海角大神

With special counsel Robert Mueller鈥檚 investigation reportedly wrapping up, the spotlight on Russian election interference is heating up. And one of the most contentious issues, aside from any possible collusion between the Trump campaign and Russia, is how to prevent foreign money from influencing the 2020 election.

Democratic members of Congress, in their opening salvo after winning the majority in the U.S. House of Representatives last fall, spearheaded passage of a major bill late last week that includes provisions to thwart foreign spending in U.S. elections. The sweeping anti-corruption act, known as H.R. 1, covers a wide range of issues from campaign finance to voter rights and government ethics.

Not a single Republican voted in favor of the bill, which passed 234-193, reflecting a deep partisan divide over how best to shore up American democracy after the tumultuous 2016 campaign.聽

Democrats and campaign finance advocates see an urgent need to close loopholes that could allow foreign money to surreptitiously influence American voters, citing in particular a Kremlin-linked company that bought divisive Facebook ads and a Trump administration tax rule change last summer that could allow illegal foreign donors to evade detection.

H.R. 1 would require greater disclosure of donors, increased transparency on digital ad spending, and disclosure of gifts from foreign agents to officeholders. It would also change the structure of the Federal Election Commission (FEC) to break its current partisan deadlock, which has severely hampered the commission鈥檚 ability to enforce existing campaign finance rules.

Republicans, while acknowledging Russia鈥檚 previous attempts to sow dissension, see Democratic legislators鈥� measures as an overreaction to what was likely a minuscule percentage of overall spending in the 2016 election. They describe Democrats as using a foreign boogeyman to push through an agenda that predates Russian trolls聽鈥撀燼n agenda which they say would curtail American rights to privacy and free speech.

鈥淵ou鈥檙e going to let a few hundred thousand dollars of Facebook ads bought by the rump state of the Soviet Union cause us to give up our speech rights?鈥� asks Bradley Smith, the former head of the FEC who is now the chairman of the Institute for Free Speech in Arlington, Virginia. 鈥淵ou鈥檝e got this kind of made-up crisis and these appeals to xenophobia, ... and their solution is to apply restraints that will affect every American and not just these entities they are supposedly worried about.鈥�

But Democratic Rep. David Price, a former Duke University political science professor who represents North Carolina, says it鈥檚 not about the current extent of the practice; it鈥檚 about the possibility of greater abuse. 鈥淲hy would they assume that this 鈥� couldn鈥檛 take on greater proportions in the future?鈥� he asks.

鈥楧ark money鈥櫬�

Technically, it is illegal for foreign donors to give money to nonprofits for political purposes. But there are several channels through which such money could still flow.

One key channel of concern is so-called 鈥渄ark money鈥� groups, particularly 501(c)4s. These are nonprofits which are allowed to accept political donations in unlimited amounts and do not have to disclose their donors to the public. They can spend up to half of their funds advocating for or against political candidates, with the rest available for other activities, including advocating for certain issues in which they can also mention candidates by name who support or oppose those issues.

In the 2018 cycle, such groups spent about $150 million. That accounts for only about 4 percent of total spending on the midterm elections, but in highly competitive races it can play an outsized role.

鈥淚f we know there鈥檚 big secret money, we can鈥檛 possibly know whether it鈥檚 foreign or not,鈥� says Sheila Krumholz, executive director for the Center for Responsive Politics (CRP), the top group tracking money in U.S. politics.

鈥淵ou鈥檙e seeing groups spending tens of millions of dollars or popping up and spending $1 million on an election, and you don鈥檛 know if this was some billionaire donor with a stake in the election 鈥� [or] a foreign power trying to influence the election,鈥� says Anna Massoglia, who researches nonprofits and foreign influence for CRP. 鈥淚t鈥檚 really just hard to tell.鈥�

Especially now.

Up until last summer, these groups were required to disclose their donors to the IRS, which redacted such information in public releases of tax forms. But then in July 2018,聽Treasury Secretary Steve Mnuchin announced聽that given privacy violations and the fact that donor information was not necessary for tax administration (because donations to such groups are not tax-deductible), they would no longer be required to disclose their donors on the Schedule B form filed with their 990s every year.

That was deeply concerning to campaign finance advocates, particularly in light of the Mueller investigation into foreign actors seeking to influence U.S. elections.

鈥淩ather than the IRS more diligently reviewing Schedule Bs to identify any potential foreign money, the Treasury Department is just doing away with the reporting requirements on the Schedule B altogether,鈥� says Brendan Fischer, director of federal reform at the Campaign Legal Center (CLC) in Washington, D.C. 鈥淚t could be viewed as a green light to foreign actors that this is a way to funnel money into U.S. elections with even less threat of being caught.鈥�

The Treasury Department did not answer the Monitor鈥檚 questions regarding the rule change, pointing instead to last summer鈥檚聽听补苍诲听.

Democrats found the timing of Treasury鈥檚 rule change highly suspect, coming just two weeks after聽聽that Mr. Mueller had likely obtained the NRA鈥檚 tax forms revealing its donors in order to investigate whether a Kremlin-linked Russian banker had funneled money through the NRA to help Donald Trump get elected. The NRA, which endorsed Mr. Trump, spent more than $30 million on the 2016 election.

James Bopp Jr., one of the most prominent American lawyers advocating against campaign finance regulation, dismisses that as a conspiracy theory. He cites longstanding concerns over the IRS targeting groups based on partisan affiliation, such as a 2013 scandal in which the agency admitted scrutinizing groups with terms like 鈥淭ea Party鈥� or 鈥減atriot鈥� in their name. A 2017 report from the Treasury Department鈥檚 inspector general found that such groups were聽聽and determined that the IRS had inappropriately targeted liberal-leaning groups as well.

In light of that, Mr. Bopp says, the focus on a supposed link between the IRS rule change and the Mueller investigation is unwarranted.

鈥淭his is like a herd of elephants just went through the property, but there鈥檚 a little mouse over there 鈥� [and saying] it鈥檚 the mouse鈥檚 fault,鈥� he says.

H.R. 1 would effectively reverse the IRS rule change, thanks to a last-minute addition spearheaded by Representative Price. It would also require disclosure of all donors giving $10,000 or more to groups spending money in U.S. elections. Separately, the Spotlight Act 鈥� introduced by Democratic Sens. Jon Tester of Montana and Ron Wyden of Oregon in January 鈥撀爓ould overturn the IRS rule change and also require dark money groups to disclose not only to the IRS but also to the public any donors making contributions of $5,000 or more.

鈥淒ark money is a threat to our democracy,鈥� said Senator Tester, in a statement issued when the bill was introduced.聽His state has taken a harder line than most聽on the issue ever since a copper baron literally bought himself a seat in Congress in 1899. 鈥淚 will do everything I can to defend Montanans from this shadowy behavior because we need more light in our elections, not less.鈥�

Another channel

Another channel through which foreign money could flow is donations by U.S. subsidiaries of foreign-owned companies. Such donations are allowed if they are not made at the direction of foreign executives.聽

In the last presidential election, a U.S. subsidiary transferred $1.3 million at the behest of its Chinese owners into a SuperPAC supporting Jeb Bush. The FEC on Friday handed down a $550,000 fine to American Pacific International Capital, Inc., and a $390,000 fine to Right to Rise, the pro-Bush super PAC involved. The dual fine represents the third-largest financial penalty the FEC has ever handed down.

But even if foreign owners don鈥檛 explicitly direct their American partners to make such a donation, it could be implicitly understood.

鈥淚f foreign nationals own and run the company, the fact that you have a U.S. national directing the contribution doesn鈥檛 mean anything, because they know what their foreign bosses want,鈥� says Mr. Fischer of CLC.

Josh Kirschenbaum, an illicit finance expert at the Alliance for Securing Democracy, says it鈥檚 virtually impossible to keep sophisticated foreign actors from funneling money into U.S. elections. 鈥淭here鈥檚 a million ways you can do it,鈥� he says, such as instructing a U.S.-based fund manager to make a donation and then repaying him or her under the guise of a finder鈥檚 fee 鈥� and not even necessarily into a U.S. account.

But just as people still lock their doors even when it鈥檚 possible to break in through a window, he says that if rules are put in place to prevent foreign actors from donating, it will slow them down and likely cause them to leave more of a trail.

H.R. 1, which would bring more transparency and make it easier to spot illegal foreign donations, is unlikely to become law so long as the GOP maintains control of the Senate and the White House. The bipartisan cooperation on campaign finance seen in the wake of Watergate has eroded to the point where it鈥檚 nearly impossible to get Republicans on board, says North Carolina鈥檚 Mr. Price, who first took office in 1987.

Still, he鈥檚 not giving up.

鈥淚 think we鈥檝e got to, down the road, explore the possibilities of smaller pieces of this that might get some buy-in,鈥� he says, referring to H.R. 1. 鈥淏ut it is much, much harder than it was 10 years ago.鈥�