Never Let a Crisis Go to Waste: Progressive Reform of “Dark Money” in the Wake of the U.S. Capitol Insurrection
National Democrats have been “devastated” since Citizens United v. Federal Election Commission in 2010. At every turn, they have pointed to nefarious “dark money” being used to fund political groups or causes they find repugnant. Senators Sheldon Whitehouse and Elizabeth Warren recently called out social welfare organizations organized under section 501(c)(4) of the Tax Code. In a letter to the new Secretary of the Treasury, Janet Yellen, the senators urge Secretary Yellen to “rein in abuse by ‘dark money’ organizations.”
The two senators call out the “tsunami of slime” resulting from the Supreme Court’s decision in Citizens United. As they write, “our most powerful political forces now hide from open debate and public accountability by virtue of having interposed a one-way mirror between themselves and the public sphere.” Senators Whitehouse and Warren have once again brought this debate to the forefront in the aftermath of the January 6th riot in the U.S. Capitol. Their letter cites reporting from CNBC that associates the events in the U.S. Capitol with “dark money.”
On January 9th, CNBC reported that numerous 501(c)(4) organizations helped organize the “March to Save America.” The “dark money” organization Women for America First largely helped organize the event. Importantly, nowhere in CNBC’s reporting did it mention that any of the social welfare organizations or major political groups involved in the planning of President Trump’s January 6th rally called for violence. Instead, these groups were advocating for mass mobilization on the Capitol to protest what they perceived as “a stolen election.”
Senators Whitehouse and Warren are displeased with the IRS granting such politically involved organizations tax-exempt status. For example, they write, “Treasury and the IRS should provide any assistance necessary to help law enforcement in its investigations into the groups behind this tragic assault on our democracy, and should review whether organizers of the assault should keep their tax-exempt status.” While one can debate the merits of public policy, here the senators argue in favor of a review to strip organizers of President Trump’s rally of their tax-exempt status. This effort is reminiscent of the IRS scandal during the Obama Administration, whereby the IRS appeared to target conservative-leaning non-profit organizations.
In completing their pitch to the Treasury Secretary, the senators state that they do not “seek infringement on First Amendment speech rights” and “disclosure is what permits citizens to do the work of citizenship in a republic, knowing the identity of political actors contesting for power.” In light of the January 6th riot in the Capitol and the summer 2020 riots, it is possible that a bipartisan consensus is reached on limiting the ability of major donors to hide behind “dark money” organizations that mobilize political interest groups.