FEC Stalemate on Banning Foreign Money in U.S. Elections Could Be Ending

The six members of the Federal Election Commission found unusual common ground Thursday in a discussion of foreign money in U.S. politics, informally agreeing to move forward after Republican commissioners have had more time to consider the subject.

This is noteworthy because the FEC’s three Republican commissioners have long voted against almost all initiatives to curb the political power of money, causing repeated 3-3 deadlocks.

“I was pretty pleased to see that [the GOP commissioners] received my specifics pretty warmly,” said Ellen Weintraub, one of the FEC’s Democratic members. “Even if you don’t believe the entire system needs reform, it’s hard to argue that, for example, it would be OK for U.S. corporations totally owned by foreign governments to make unlimited expenditures in U.S. elections.”

The FEC did not vote today on Weintraub’s new proposals. Instead, Matthew S. Petersen, one of the Republican members of the FEC, said he would “noodle through some of these a little bit more, see if … there might be areas of agreement, see if there are counter proposals and get a little bit of a better understanding of the nature of some of these proposals.”

Under current law, any company incorporated in the U.S. is considered to be a U.S. national — even if it is 100 percent owned by foreign individuals, corporations or governments. This quirk  unexpectedly gained significance after the Supreme Court’s 2010 Citizens United decision, which allowed corporations and unions to spend unlimited amounts of money on elections (as long as the expenditures are theoretically “independent” from political campaigns).

During President Obama’s 2010 State of the Union address, he predicted Citizens United would therefore “open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.” Recent reporting by The Intercept demonstrated that Obama’s concern was justified: A California corporation owned by Chinese nationals donated $1.3 million to a Jeb Bush Super PAC while following advice from Charlie Spies, a top GOP campaign finance lawyer.

Citing the publication of The Intercept’s series, Ann Ravel, another Democratic member of the FEC, proposed in early August that the FEC rescind a 2006, pre-Citizens United advisory opinion that dealing with two U.S. companies that were wholly-owned subsidiaries of a Canadian corporation. The FEC opinion allowed U.S. companies owned by foreign corporations to set up political action committees that receive legally-limited donations from individual American citizens. Spies’s legal advice extended the logic of the advisory opinion to argue that wholly-owned U.S. subsidiaries could now, thanks to Citizens United, make unlimited donations to Super PACs directly from their corporate treasuries.

Weintraub proposed at a meeting two weeks ago that the FEC vote to begin the process of writing new regulations to deal with the overall issue of foreign money in U.S. elections post-Citizens United.

The FEC deadlocked 3-3 on votes on both proposals.

At Thursday’s meeting Weintraub submitted a revised proposal, asking that the FEC begin the process of writing regulations on more narrow aspects of the issue. In particular, Weintraub asked that the FEC decide whether there is a certain threshold of foreign ownership — 5 percent, 20 percent or something else — at which corporations should be considered to be foreign nationals.

Even if the FEC does move forward on the issue of foreign money, it generally takes at least a year to promulgate new regulations.

Top photo: Protesters hold up signs during a Democracy Spring demonstration in Washington, DC on April 13, 2016, calling for changes in voting laws and campaign finance.