The Intimidation Game (22 page)

The shaming would be easier, wrote Kaplan, if Wheeler would just understand that “we don't have to wait for the president to send a disclosure bill to Congress that won't go anywhere; we don't have to wait for Congress to bite the hand that feeds it. The FCC can do that rulemaking on its own, and after a 120-day public comment period, if you conceal who's paying for those ads, you'll get nailed.” Kaplan complained that as “important” as Wheeler's other priorities were, only his taking up the disclosure mantle would “rescue” democracy.

If Kaplan had substituted the word “Democrats” for “democracy,” the piece would have had a whiff of honesty. It was nonetheless revealing. The pressure on the FCC to join the targeting brigade will continue.

Government intimidation wasn't confined to the IRS, the FEC, and the White House.

Democrats wanted corporations out of politics. The White House had tried doing it to a discrete group—government contractors. A scant few months after that failed, the left debuted a bigger, better fallback plan. They'd get the whole corporate world in one big swoop. And luckily for them, they had yet another agency, one with control over public companies: the Securities and Exchange Commission.

The SEC on August 3, 2011, received a petition from an odd if purposefully named organization: the Committee on Disclosure of Corporate Political Spending. It was in reality a collection of ten liberal academics, many of them high-profile scholars who frequently parlayed their putative research into calls for more and bigger rules on the financial sector.

They were back, in force. Their petition asked that the SEC “develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities.” This was a reprise of the Larry Tribe idea.

The broader argument for the rule was cast in all sorts of fancy scholar-speak. The petitioners insisted that the law gave the SEC the authority to require such a rule. They cited a new trend in shareholder proposals that demanded that companies divulge their political spending. They referenced the
Citizens United
decision, claiming that the Supreme Court had backed just this type of disclosure.

Their
Citizens United
meditation was actually the most revealing part; it was yet more proof that what drove the petition was the left's new focus on outing companies, teeing them up for reprisal. The scholar-speak was designed to cloak what was a naked partisan play.

Citizens United
focused the left's attention on nonprofits. But it was equally frantic about the new free-speech rights of corporations, which now had greater freedom to run their own issue ads. It was also worried that companies would give more money to nonprofits that would also engage in the political system. The DISCLOSE Act had been its initial attempt to immediately shut down the freedoms
Citizens United
had restored to companies. When that failed, the left crafted a sweeping multipronged campaign to embarrass companies out of civic participation.

Liberal groups had been going from company to company, trying to pressure them into disclosing their political giving, but that plan wasn't yielding quick results. The petition was an attempt to get at the same end by a faster, bigger, all-encompassing means—namely by getting the SEC to impose the same requirement from above.

The idea initially went nowhere. Obama's SEC was busy, now that his Democratic Congress had passed the gigantic Dodd-Frank financial straitjacket. But the left wasn't about to let go; it kept pressing and pressing. In December 2012, the patience paid off. The Office of Management and Budget released its list of potential regulatory actions. It included that the SEC's Division of Corporate Finance was deciding whether to recommend to the SEC a rule requiring companies to disclose political giving.

We don't know precisely what SEC chairwoman Mary Schapiro thought about this plan. The left's problem was her professional staff. Turns out the agency still contained a few serious career lawyers—attorneys who held the quaint view that the Securities and Exchange Commission's job was to regulate trading, not political speech.

According to documents obtained by Congress, one of these was Eric Spitler, counselor to Schapiro and the director of SEC's Office of Legislative and Intergovernmental Affairs. Only a few months after the scholars filed their petition, Spitler used one of their arguments against them, in an e-mail to Schapiro. Plenty of groups were indeed filing shareholder proposals about disclosure with companies, he wrote. And thanks to existing SEC rules and regulations, those proposals were getting a fair hearing and vote. “I think a key point for us to make is that the mechanisms already exist, and as their letter points out, people are using them.”

In January 2012, Spitler sent another e-mail, this one flatly highlighting the left's motivations: “Ironically, it is that fact that Congress cannot act in this area because the votes are not there that is causing them to put more pressure on the agency so they can show something can be done.” Another staffer was far more blunt: “This is an issue for Congress to address.” Staff noted that acting outside of Congress could cause a troubling situation. The SEC can only regulate public companies. An SEC disclosure rule would force public firms to release all sorts of information that their private counterparts didn't have to. Practically speaking, only Congress could require uniform disclosure.

It was more unfair than even that. The SEC could only look at companies. It could not require disclosure from unions, which also spend directly on elections and give money (anonymously) to nonprofits. Which is precisely why the left was asking the SEC, rather than Congress, to regulate.

The staff also had the temerity to point out that even were the SEC to obnoxiously ignore Congress, another agency still had a first and better claim. In December 2012, employees in the office of Meredith Cross, the director of the SEC's Division of Corporation Finance, prepared a memo that made this point: “FEC is the primary federal regulator of political activity disclosure,” it lectured. “Formulating a SEC disclosure rule that is not duplicative of other federal and state law requirements and does not raise First Amendment issues may be challenging.”

In April 2012, Schapiro infuriated Obama's liberal base by voting with Republican commissioners to move ahead with an SEC agenda that did not include a disclosure rule. The timing had the left seeing red. It was an election year, and they'd been counting on getting a corporate-disclosure win. At the very least, they had wanted the promise that the rule was coming. They had hoped the mere possibility of it would cause companies to think twice about spending that election year.

E-mails and letters poured into the SEC. Groups demanded meetings and explanations. One SEC e-mail recounted a May meet-up between Schapiro, members of outside pro-disclosure groups, and a former Democratic congresswoman. When Schapiro asked, “Why not the FEC instead of us?” the congresswoman responded, “Because the FEC is even more broken than you.” A congressional Republican memo on the exchange pointed to this as glaring evidence that even supporters didn't believe this was a legitimate SEC job. They were just looking for any means to an end.

Congressional Democrats—as they had done with the IRS and the FCC—jumped in to push a rule. Barney Frank—the other half of “Dodd-Frank”—was in the summer of 2012 still the ranking member on the House Financial Services Committee. In July, his deputy chief counsel e-mailed the SEC Office of Legislative and Intergovernmental Affairs to make a request. It read, “We have gotten a question from leadership about SEC authority to require disclosure on corporate charitiable [
sic
] contributions. There is particular interest in what the authority is for disclosure of 501(c)(4) contributions (political contributions).”

The request was remarkable. The summer of 2012 was also the height of the IRS targeting of conservative nonprofits. Frank's office was essentially asking if the SEC would zero in on corporate money to those same nonprofits. And it made clear that the demand was coming from the top, from the Democratic “leadership”—likely Nancy Pelosi's office.

The e-mail was forwarded to numerous higher-ups at the SEC, with the following (somewhat snarky) note: “I suspect the answer to the actual question is relatively easy,” it read, “but I'm including all of you on the email so you'll be aware that House Democratic Leadership is interested.” One SEC lawyer almost immediately answered: “There is no specific authority.” The attorney explained that for the SEC to move ahead, it would have to think of some way to argue that the provision fell under some broader existing disclosure rule.

Schapiro and her two fellow Democratic commissioners ultimately sat in at least eleven meetings with liberal groups demanding disclosure. Many of these meetings were with Public Citizen, the same organization that had been busy filing requests with the IRS to target 501(c)(4) groups. And Public Citizen openly explained that it wanted the SEC rule for the same reason—to expose “electioneering front groups.”

Another three meetings were with an organization formed in direct response to
Citizens United
, called the Coalition for Accountability in Public Spending. It was founded in 2010 by then–New York City public advocate Bill de Blasio (who is today New York City's liberal mayor). The organization admitted that its main goal was to force companies to disclose all their political spending. The meetings also featured all the other usual suspects: Common Cause, People for the American Way, etcetera.

The staff remained resolute. When in September 2012 the agency started working on its next-year agenda, Cross's office was asked for its opinion on disclosure. It brusquely stated, “The Division would not recommend adding it to the agenda at this time unless requested by the Commission.”

Which is precisely what the commission, or at least one commissioner—Luis Aguilar—proceeded to do. The Democrat began a campaign to get the disclosure rule included, sending formal requests to both Schapiro and the agency's other liberal, Elisse Walter. By the end of September, Schapiro had been made to see the liberal light. Congress did not obtain any documents explaining why she chose to ignore all the wisdom of her staff, but a little more than a week after Aguilar's demand, the general counsel sent around a draft agenda for the upcoming year that included the disclosure rule.

The staff, at the wish of political masters, now switched gears. It feverishly attempted to cook up some good excuses for why the SEC needed to act as speech police. The Division of Corporation Finance in January 2013 produced a draft argument in favor of the rules. It even creatively came up with a way to make Barney Frank and the Democratic “leadership” happy. It read, “A substantial amount of corporate spending on politics is conducted through intermediaries not required to disclose the sources of their contributions.…There are cases, such as corporate contributions to intermediaries that spend a large fraction of their funds on politics, for which inclusion within the scope of the Commission's rules seems warranted.” The SEC, at Democratic leadership's request, was advocating a backdoor way of blowing up nonprofit anonymity. This is an example of how Congress makes agencies do its bidding.

In the end, the blowing up happened on the other side. The SEC had terrible timing with its proposal. Not long after it indicated that it intended to proceed, the IRS targeting scandal was exposed and put new focus on other agencies that were pursuing nonprofits. The scholarly community also rained down scathing criticism on the disclosure idea, pointing out just how far the SEC had to stretch to find a legal rationale for inserting itself in the debate. The corporate world uncharacteristically pulled together to beat up on the idea. House Republicans called hearings, warning new SEC chairman Mary Jo White that she risked derailing her tenure at the agency with an uproar over a highly partisan rule, an issue that would overshadow and stymie the rest of her agenda.

White, a straitlaced former federal prosecutor, decided that she had no interest in wallowing in a partisan mudhole. In October 2013, she disparaged the whole idea, saying that the disclosure rules pushed by activists “seem more directed at exerting societal pressure on companies to change behavior, rather than to disclose financial information that primarily informs investment decisions.” A little more than a month later, the SEC circulated its list of upcoming priorities. Disclosure was gone.

Democrats haven't given up. In August 2015, forty-four Democratic senators signed a letter to White demanding that she get on their disclosure train. It was threatening. “We ask that you make this a top priority for the SEC in the near term, and inform us of the basis for your decision should you not plan to include it on the commission's agenda for the upcoming year,” it read. The “upcoming year” part is important. It includes a presidential election.

Government intimidation wasn't confined to the IRS. The service was simply the agency that most fully succumbed to a pressure campaign the left waged across the vast sweep of the Obama apparatus. As soon as the DISCLOSE Act failed in Congress, liberal activists and Democratic politicians instituted a broad and coordinated campaign to get the IRS, the SEC, the FEC, and the FCC to hassle conservative nonprofits. Americans were outraged over the IRS, but they didn't know the half of it.

The left got more than it hoped for when the IRS outright muzzled nonprofits. The left's campaigns at the FCC and SEC, and via the White House executive order, had all been aimed at one thing: disclosure. The activists wanted lists of names. Because they were already fine-tuning a new method of cowing conservative players out of politics.

Bruce Josten
has been at home at the U.S. Chamber of Commerce for more than forty years. And for about thirty-five of those years, he had pretty obvious jobs.

Josten is on paper the executive vice president for government affairs, making him the second-ranking officer at the nation's largest and oldest trade association. In reality, he's the chamber's chief strategist, chief lobbyist, chief policy expert, chief go-to guy. For thirty-five years, Josten has done battle with the trial bar. For thirty-five years, Josten has pressured and educated and lectured Congress on trade and health care and immigration and taxes and spending. For thirty-five years, Josten has put together coalitions of businesses to fight for (largely) free-market legislative priorities.

In January 2010, the Supreme Court issued
Citizens United
, and Josten got a new job. Not one he'd asked for. Not one he expected. And not one he likes. In addition to all his other jobs, he has added, in his words, the title “chief defender of the business community's right to open its mouth.”

The trade association became the left's foil for everything supposedly wrong with corporate spending. And Josten's days became all new. He found himself testifying in front of Congress against the DISCLOSE Act and other speech-suppression ideas. He found himself defending against endless attempts by the left to force the chamber and companies to disclose their political funding and political spending. He found himself researching the complex web of liberal groups that then used that disclosure to jointly target and harass companies engaged in politics. He found himself calming nervous CEOs whose companies came under pressure to leave the chamber and withdraw from political speech. He found himself educating entire C-suites on the left's game plan, and the perils of giving in to the intimidation.

“Somebody had to get out in front of this as a spokesman,” says Josten, who credits a whole team of people at the chamber who have for several years now made it their mission to respond to the assaults. “And the mad, mad, mad thing of today is that somebody
had to
. We thought
NAACP v. Alabama
was the definitive answer—that there are rights to freedom of speech and association. The business community, and business owners, they are a foundation of this country. They represent every worker in America. Of course they must be allowed to speak about our country's direction. And of course that voice is healthy for debate.

“But look at these groups. Look at this campaign. Look at the stakes. These folks are very clear: They not only want to silence business during a political campaign season, they want to move the business community entirely out of the legislative process in Congress, in the states. They want us silenced entirely. And they've got a game plan.”

That game plan hinges on disclosure.

One thing that drives the left nuts about the chamber is that it is a trade association. Companies are barred by law from giving directly to parties and candidates. And they must disclose a lot of their political giving. But the chamber as a nonprofit is allowed (just like unions) to keep its donors anonymous, and to directly spend money on political campaigns.

And the chamber has been spending money in campaigns—growing amounts of it. Josten went to Harvard, and he gives off the appearance of a swanky lawyer. In reality, he's a scrapper. It makes him a good fit with chamber CEO Tom Donohue, whose prior job was as the combative head of the powerful American Trucking Associations. When Donohue took the top chamber job in 1997, one of his goals was to ramp the organization into a far more powerful lobbying and political voice in defense of business and free markets. Pre-Donohue days, the chamber spent little if anything on politics. In recent cycles it has spent an average estimate of $35 million, much of it in support or defense of Republicans and free-market ideas. This amount pales compared to the regular union spending blowouts on elections. But the left would rather the chamber spent nothing at all.

Obama shared that dislike, and came to office intending to take out the organization. Not that he showed his cards at first. Obama was still acting as a uniter, and he maintained a wary but cordial relationship with the trade association for about six months. His moment came in the summer of 2009, when the chamber dared to oppose his budding proposal for a single-payer health system, running ads correctly warning that such a policy would lead to higher taxes and “government control over your health.”

The White House reaction was swift, and in keeping with the sort of intimidation the Obama team had practiced in the 2008 campaign—against the Hillary super PAC, and against conservative groups like the American Issues Project. Obama began meeting privately with dozens of CEOs, sidelining the chamber and letting it be known that their association with the group might cause them problems. On October 9 he elevated the campaign, using his podium to slam the chamber in front of the entire press corps, berating it for opposing his agenda. The president had opted out of the presidential financing system so that he could accept unprecedented campaign contributions. Yet here he was griping that the
chamber
spent money on lobbying.

These days, Obama routinely calls out opponents by name. It's commonplace. But early in his tenure it was still a bit shocking to see a president—one who'd taken an oath to represent all Americans—use his power to demonize a specific organization. Activists took the president's cue and mobilized against companies allied with the chamber's campaign against single-payer care. Some staged unpleasant protests outside the homes of insurance CEOs. They showed up at CIGNA CEO Edward Hanway's house outside Philadelphia. They showed up in Indianapolis, outside the home of WellPoint CEO Angela Braly. They showed up in Wayzata, Minnesota, at the home of UnitedHealth CEO Stephen Hemsley. In September, they staged some 150 demonstrations at insurance headquarters nationally. The joint activist-presidential attacks provoked publicity, which was Obama's aim. It sent a powerful message to every CEO that the chamber was a political risk.

It was part of a broader effort by left-wing organizations, which had for more than a month been targeting individual chamber members. This was 2009, and one of the hot topics in Washington was climate change. Democrats had failed miserably in prior efforts to pass climate legislation, but Obama had reelevated the issue and promised to ram through a bill. Corporate America was still highly sensitive to the topic, worried about what would happen if it opposed Obama. As Jim Rogers, the CEO of Duke Energy, said in that era, “If you don't have a seat at the table, you'll wind up on the menu.” Some thirty companies had even formed a new organization, the U.S. Climate Action Partnership (CAP), to try to demonstrate their interest in reducing greenhouse gas emissions.

The left was aware of this sensitivity, and pounced when the chamber came out in late summer against the Obama suggestion that it might use the Clean Air Act to impose climate regulations. The chamber wasn't opposed to steps on global warming. It instead argued that Congress was the only appropriate body to impose such a massive shift in the energy economy, and that the United States should consider it only if the world's biggest polluters—China, India—also took steps.

Liberal groups didn't have a roster of chamber donors, but they did have at the ready a list of company executives who were formal board members of the chamber—including a short list of those they felt most susceptible to pressure. Thus began a campaign against select boards and CEOs, in which they labeled any organization that stayed with the chamber a climate denier. Weak-kneed companies started folding like accordions. Two California utilities, PG&E and PNM Resources, both announced their withdrawal from the chamber. Also nuclear-power generator Exelon. Nike was a particular profile in noncourage, issuing a statement complaining that it “fundamentally disagrees with the U.S. Chamber of Commerce's position on climate change and is concerned and deeply disappointed with the U.S. Chamber's recently filed petition challenging the E.P.A.'s administrative authority and action on this critically important issue.” (Nike skipped over the small detail that EPA had no administrative authority.) The company withdrew from the chamber's board, though kept its (useful) membership. Apple got in on the action, noting that “we strongly object to the chamber's recent comments opposing the E.P.A.'s effort to limit greenhouse gases.” It issued a resignation letter, effective immediately.

Josten points out archly that not one of the corporate members of CAP ever endorsed Waxman-Markey, the Democrats' proposed cap-and-trade bill. They all knew how bad it would be for the economy. Yet several CAP members were happy to make a spectacle out of their resignation from the chamber, in an effort to curry greenie points. “We were brutalized as an organization simply for pointing out a few obvious realities, like that no climate action would make a difference unless all countries participated,” he remarks.

The pressure was so successful, liberals couldn't wait to replicate it. They got their next chance in January 2010, only a few weeks before
Citizens United
. The
National Journal
's Peter Stone broke the news that the chamber ads of 2009—the ones that had slammed Obama's plan for single-payer health—had been funded in part by six large health care insurers. Since this was money to nonprofits, the donations were legally anonymous. But two health care lobbyists had divulged the insurers' names to the reporter.

Liberals were thrilled to have a new list of corporations to attack. Nineteen Senate Democrats almost immediately called for legislative retribution, demanding that the insurers be stripped of their antitrust exemption in the coming health care bill. Obama joined those calls. Another round of protests ensued. In early March, thousands of union and liberal activists bombarded the insurance industry's annual conference, held at the Ritz-Carlton hotel in Washington, issuing “citizen's arrest” warrants for health care CEOs, engaging in civil disobedience, and unrolling an oversized yellow police tape reading “
CORPORATE CRIME SCENE
.” Later that month, nine protestors were arrested in downtown Manhattan on charges of disorderly conduct while protesting at WellPoint's corporate offices—blocking the entrance, chanting “Arrest the Profiteers.” It was part of a dozen similarly riotous sit-ins across the country. They were all designed to target the companies and direct public animosity against any organization that opposed Obama's health care agenda.

Obama signed his health care bill that same month, and conservatives got a powerful issue.
Citizens United
also gave them a voice. As the midterm season rolled along and Democrats faced a tidal-wave defeat, they escalated their campaign against corporations and nonprofits—and made the Chamber of Commerce a unifying target for the whole campaign.

Congressional Democrats pursued their DISCLOSE agenda, and Josten spent days in hearings, attempting to get members of the most democratically elected institution in the world to remember the Constitution. Democratic operatives filed complaints about conservatives with the FEC and the IRS. Activists started petitioning other federal agencies to impose disclosure, and unleashed shareholder proxy wars against companies. Obama began his public campaign against “shadowy” groups, echoed by the liberal establishment and powerful Senate Democrats, spurring the IRS to action.

But the president had a special and ugly attack waiting for the chamber, which the White House still blamed for the agony of, and anger over, its health care law, and Dodd-Frank, and its prospective climate bill. And for the millions of dollars the chamber was spending against Democrats in the midterm. Obama's goal was twofold—to silence the chamber, and to get more names of companies to target.

Obama let loose that attack in early October, about a month before the election. A little-known researcher by the name of Lee Fang at the liberal Center for American Progress crafted a highly irresponsible posting for its
ThinkProgress
site. It pointed out that the chamber accepted foreign “dues money” and on the basis of this argued that the trade group was “likely skirting longstanding campaign finance law” against foreign spending in U.S. elections. It cleverly dropped in the names of some Middle Eastern countries that hosted chamber chapters—Bahrain, Egypt, Abu Dhabi—to make it all sound a little more sinister. Fang's “likely” was proof that he had no idea what he was talking about and was engaged in pure muckraking.

That muckraking was good enough for the president of the United States, though, who two days later in a public rally complained bitterly about a new round of ads that were running against his Democrats. “Just this week, we learned that one of the largest groups paying for these ads regularly takes in money from foreign corporations,” Obama railed.

The rapid response from the rest of the liberal establishment was almost impressive. The Democratic National Committee rushed out ads repeating the libel, claiming that “it appears” the chamber has “even taken secret foreign money to influence our elections.” Liberal activists put out releases and statements claiming that foreign corporations were stealing our democracy by funneling illegal money through the chamber. MoveOn.org made up a dollar amount, claiming, “Foreign corporations are funding some of the $75 million the U.S. Chamber of Commerce is spending to defeat Democrats.” It also imagined up donors, claiming the lobby was getting the money from foreign corporations “in countries like China, Russia and India, the same companies that threaten American jobs.” In Bauer style, it urged its members to call on the Justice Department to investigate.

Josten, who was growing accustomed to this White House's tactics, was nonetheless floored. “I won't even call this guy a reporter, he was a hack, at
ThinkProgress
—which isn't even a news organization—and he tries to convince people we're using foreign money in campaigns. And amazingly, within a week he had the president of the United States citing it. I couldn't believe it.”