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Welcome back to Swamp Notes! Ed Luce is back in the saddle after a few weeks of leave to research a book and Rana Foroohar will return from her own book leave in April. In the meantime, I’m Brooke Masters, the FT’s chief business commentator, and I will be serving as Robin to Ed’s Batman.

Back in January, dozens of large companies piously announced that they were suspending political donations entirely or rethinking their ties to Republicans who questioned the 2020 election results. Refusing to certify Joe Biden’s victory even after the violence at the US Capitol on January 6 had put those 147 members of Congress beyond the pale. 

I wondered then how long the outrage would last. Less than two months, it turns out. The US Chamber of Commerce has told members in a memo that it won’t blackball members of Congress for simply voting against certification. “Casting a vote is different than organising the rally of January 6 or continuing to push debunked conspiracy theories,” the chamber’s Ashlee Rich Stephenson told members.

Instead, the group will evaluate candidates “based on their position on issues important to the chamber, as well as their demonstrated commitment to governing and rebuilding our democratic institutions”.

This matters not just because the chamber is a powerful lobbying and donation machine in its own right. The decision also gives cover to companies that want to prioritise their own views on regulation, taxes and the minimum wage over punishing GOP members who played along with Donald Trump’s false claims of a stolen election.

The intervention will be most welcome at a time when Trump is making a concerted effort to divert his supporters’ cash from Republican party organisations to his own. “No more money for RINOs,” Trump said in a fundraising email last week, referring to “Republicans in name only” after the GOP rejected his demand that they stop using his name and likeness in fundraising appeals. 

While small donors played an unusually large role in 2020, Republican candidates in the House of Representatives have historically relied on political action committee money, according to data from OpenSecrets.org and the GOP is struggling to refill its coffers at a time when the Democratic National Committee entered the midterm election cycle with more money in the bank than ever before

But a changing political climate may make it uncomfortable for companies to open up the taps. Donations to controversial candidates can cause a storm on social media, as the supermarket group Publix discovered in 2018. Just months after the deadly Parkland high school shooting in Florida, Publix was revealed as a big donor to a Republican gubernatorial candidate who described himself as a “proud NRA sellout” in reference to his National Rifle Association ties. Gun control activists organised boycotts and “die-ins” in supermarket parking lots and Publix suspended contributions

And increased scrutiny may be coming. Right now, corporate PAC and executive donations to specific candidates are public, but many companies influence elections indirectly by giving money to trade and “social welfare” organisations that do not have to disclose their donors.

However, some investors are trying to address that problem with shareholder proposals demanding more transparency. Between 2010 and 2019, some 2,410 shareholder proposals were filed at S&P 500 companies on what Harvard Law School research fellow Roberto Tallarita calls “public interest” issues. Political spending initiatives made up the single largest group at 16 per cent, followed by those about lobbying with 13.3 per cent. (Climate change came third at 10.5 per cent.) The political spending proposals also drew more support, on average about 28 per cent, than resolutions on any other topic. 

I expect to see even more disclosure proposals on this year’s annual meeting ballots, given the Capitol riots. Investors also look to be gaining at least one powerful ally on this issue. During his confirmation hearings to serve as chairman of the Securities and Exchange Commission, Gary Gensler told the Senate Banking Committee that mandatory disclosure of political contributions “is something I think the commission should consider in light of the strong investor interest”.

Gensler’s appointment cleared the committee last week by a 14-10 vote, which bodes well for final approval by the Senate. Bruce Freed, president of the Center for Political Accountability, says his arrival would create a three-person majority for increased disclosure of political activity. Given that the SEC is already updating its approach to climate change disclosure, this might well be the next move.

Ed, do you think more transparency is coming and will it change the dynamics of campaign finance?

Rana Foroohar is on book leave and will be back in mid-April. 

Recommended reading

  • Caitlin Flanagan’s hard-hitting piece in The Atlantic on US private schools really resonated. I attended one of the schools she talks about, but the sheer privilege and wealth involved now is, as she writes, “obscene”.

  • The FT’s Martin Wolf caught my attention with this frightening statistic: “Today, human beings and the livestock we rear for food make up 96 per cent of the mass of all the mammals on the planet.” Technology can do a lot to put people back in balance with nature, but not everything. Sacrifices will be needed.

  • In a week when Joe Manchin, the Democratic senator from West Virginia, hinted he might be open to reforming the filibuster rules, Ezra Klein of The New York Times has some practical suggestions on how to do it.

  • Looking for some perspective? Bloomberg’s John Authers put me on to this fabulous YouTube video titled History of the Entire World, I Guess. Everything that’s ever happened in 20 amusing minutes.

Edward Luce responds

Many thanks Brooke — and welcome to Swamp Notes. For the last six weeks I’ve been buried in the early stages of research for my biography of Zbigniew Brzezinski, which is a far cry from campaign finance transparency. So you’ll forgive me if I’m a little blasé on this important topic. I’ve no doubt that Gary Gensler will push for more corporate transparency and probably get his way. As chair of the Commodity Futures Trading Commission under Obama, Gensler was very effective at pushing through reforms on derivatives regulation. But I doubt any SEC rule changes on political spending will revolutionise American campaign finance. 

When the Supreme Court made its infamous Citizens United ruling in 2010, the body was divided 4-4 with Justice Anthony Kennedy holding the swing vote. That 5-4 decision swept away a century’s worth of restrictions on outside spending on US politics. In his opinion, Kennedy said that independent expenditures were not corrupt, would be transparent, and that any restrictions on them violated their First Amendment rights. It came as quite a surprise to many Americans that “corporations are people, my friend” in the words of Mitt Romney. As you imply, Brooke, no such transparency has been forthcoming since 2010.

Gensler will no doubt bring in rule changes that force companies to disclose such spending. That would be a good thing. Shareholders have a right to know what is being done with their money. It may even dampen political spending. But the real money nowadays comes from two sources — billionaires operating through often shadowy super-PACs, and small donors. Short of a revolution on the Supreme Court, I can see no path to curbing the former. Chief Justice John Roberts commands a rock solid six votes on this interpretation of the First Amendment. In the US system, water will always find a channel. In my view, the best reform therefore would be to institute public financing of candidates who agree to abide by certain rules. Since money is apparently speech (an absurd proposition but it is what it is) let’s spread the speech around. 

Your feedback

We’d love to hear from you. You can email the team on swampnotes@ft.com, contact Ed on edward.luce@ft.com and Brooke on brooke.masters@ft.com, and follow them on Twitter at @brookeamasters and @EdwardGLuce. We may feature an excerpt of your response in the next newsletter.





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