Transparency is the cornerstone of electoral regulation in the United States. Because the Supreme Court limited the government’s ability to regulate election spending (in cases like United citizens), we citizens rely heavily on warnings and disclosures to monitor how politicians spend their money.
But due to a loophole in campaign finance law, disclosure of election expenses falls short of providing the transparency that democracy needs.
As we discuss in a brief published last week by the Center on Science & Technology Policy at Duke University, while campaign committees and political organizations are required to report their expenses to the federal government, advertising agencies and consultants who disburse money on their behalf are not. We can see money going into consultants, but we can’t see money going out.
This loophole creates a black box around political advertising spending, which today goes mainly through consultants, especially during elections. Analyzing data from the Federal Election Commission (FEC) 2020, we estimate that in the last month of the 2020 general election, advertising agencies distributed 94% of the coordinated ad spend. The black box not only severely limits our ability to track and hold political organizations and campaigns, but it complicates our ability to study how political interventions, such as recent political advertising bans by platforms like Twitter, Facebook, and Google , have an impact on paid policies. speech.
For example, in a single transaction on October 9, the Biden campaign paid Media Buying & Analytics over $ 28 million. The FEC data reports this purchase simply as a “media purchase”. We don’t know if this money was used for TV, radio, print or digital ads, and we don’t know if the money was spent on Google, Facebook or News Corp.
Indeed, this gap in disclosures makes it easier for campaigns to hide illegal election expenses. According to a complaint lodged with the FEC by the legal center of the campaign, the Trump campaign appears to have distributed illegally hidden campaign money to members of the Trump family and associates using companies like American Made Media Consultants. And while FEC data shows the AMMC received over $ 806 million from the Trump campaign in the year leading up to the election, it shows nothing else about how the AMMC spent. This money. (A Trump campaign spokesperson told CNBC that “the campaign complies with all campaign finance laws and FEC regulations.”)
This flaw has been around for almost 40 years, but it only recently became a giant problem. Although FEC regulations require that all expenses incurred “by or on behalf” of campaigns be reported, in 1983 they issued a advisory opinion this allowed consultants to avoid these types of reports if they are left out of a campaign and take other clients.
In recent election cycles, campaigns have increasingly relied on consultants to guide advertising spending. In the year leading up to the 2020 general election, the AMMC received payments for coordinated spending from just two organizations: Donald J. Trump for President ($ 575 million) and Trump Make American Great Again Committee ($ 231 million). During the same period, Media Buying & Analytics received money from a single organization for coordinated spending: Biden for President ($ 445 million). This makes it difficult to justify that either of the companies was kept “at bay” and not working “on behalf” of the Trump or Biden campaigns.
To break this black box, we recommend that the FEC issue a new advisory opinion requiring campaigns and committees to report on the advertising spending of advice offices and to demand standardized and detailed descriptions of how that money is spent. This would allow us to see, for example, specific TV channels, digital platforms or news outlets that received money as part of the $ 28 million the Biden campaign paid to Media Buying & Analytics October 9.
Otherwise, the legislation could provide a more permanent solution. If Congress wanted to demand this transparency, it could follow the model set by California and Washington state, which recently revised their campaign finance regulations to require agencies to disclose expenses on behalf of campaigns. Or he might consider changing the Honest Ads Act, which was recently incorporated into the electoral reform law that the House recently passed. We also recommend that ad platforms help fill these gaps by revising their political ad archive to include separate variables for the ad funder (campaigns) and buyer (consultants) of ad.