Democrats Attempt at Full Disclosure for Donors

Democrats and their allies are broadening their attacks on campaign spending by pro-Republican groups, hoping to force the disclosure of donors' identities and curtail a lucrative source of financing for their rivals.

Liberal activist group MoveOn.org and nonprofit groups Public Citizen and Public Campaign plan to press media outlets that run campaign advertising to question whether the cash used for the ad buys is legal for that purpose.

The groups are also asking the U.S. Department of Justice and Internal Revenue Service to investigate the pro-Republican groups and the sources of their ad spending.

"We're going to keep hounding every group we can, filing complaints with the IRS, using every avenue we can to keep the spotlight on them, and hopefully someone's going to come forward" and name donors, says Public Citizen chief lobbyist Craig Holman.

Honing a campaign message, President Barack Obama and Democratic Party officials have in recent days strongly suggested the U.S. Chamber of Commerce and other groups, including two run by Republican strategist Karl Rove, are illegally using money from foreign nationals or companies to fund U.S. political advertising.

The groups have repeatedly denied the charges.

The line of attack is prompting some Washington strategists to tell foreign-owned corporations to stay clear of the Nov. 2 midterm elections. It is legal for U.S. units of an overseas corporations to make independent campaign expenditures, as long as all decisions on its spending is made by U.S. citizens.

"It's a difficult enough economic environment without being targeted as a bad guy," said Joshua Zive, campaign finance attorney at Bracewell & Giuliani LLP in Washington, adding he has passed that advice on to a dozen foreign-owned companies. "There is a broad concern that the domestic subsidiaries of foreign parent companies are a convenient target to demagogue."

The White House has said its goal is to pressure the groups into naming their backers. The Chamber's chief lobbyist Bruce Josten said, "We are seeing an attempt to demonize specific groups and distract Americans from a failed economic agenda."

The political clash centers on a Supreme Court ruling in January that allows companies and unions to make unlimited independent campaign spending on behalf of a candidate.

In an election year that favors the GOP, much of this corporate spending has gone to GOP-leaning non-profit groups, including the Chamber, which aren't required to disclose the source of their donations. For the first time in years, cash from the right is close to drawing even with cash raised by unions.

The reluctance to spend appears more widespread among big corporations, which tend to be relatively conservative, supporting incumbents and dividing political spending between both parties.

"We are responsible to our shareholders, and there are a number of us who are just going to avoid this election and focus instead on lobbying spending when the composition of Congress is clear," said a chief executive who is a member of the Business Roundtable, which is made up of the nation's biggest listed corporations. Unlike the chamber, the roundtable does not spend money on elections.

Some companies are confining themselves to spending by less-controversial political action committees-corporate bodies funded by employee contributions-which are limited to $5,000 per candidate per election.

A political action committee "is not an instrument to execute a political strategy as much as it is to develop relationships and goodwill," said Erick Gustafson, director of government relations at consultants Marsh & McLennan Companies Inc. which has decided not to make any independent expenditures.

Mr. Gustafson runs the firm's political action committee, which will contribute about $200,000 this election year, to Democrats and Republicans.