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Senate blocks action on disclosure of hidden donors

In a mostly symbolic vote that split along party lines, the Senate on Monday night blocked consideration of a Democratic-sponsored bill to force disclosure of contributions to tax-exempt groups, corporations and unions which engage in political spending.

The bill fell nine votes short of the 60 it needed to move ahead to debate and final passage.

Donors to tax-exempt 501c4 and 501c6 groups aren’t required to be identified publicly; this cloak of secrecy has encouraged some contributors who might fear publicity to invest heavily in trying to influence voters through TV ads.

The bill, sponsored by Sen. Sheldon Whitehouse, D- R.I., would require any donor who gave $10,000 or more to a 501c4 group that spent money on political advertising to be identified and disclosed.

It would not have taken effect until after the 2012 election. Sen. Jeff Merkley, D - Ore., a co-sponsor of the bill said in an interview right before the vote, “We did that deliberately to take this campaign season out of it. We tried to take every objection we heard and strip this down to pure disclosure: any donation over $10,000, you disclose, straight and simple, no matter where it comes from.”

He said, “If it passed, even though it wouldn’t take effect until January, people would say, ‘well at least the principle is broadly supported.' If it doesn’t pass, it may mobilize folks on the issue and say, ‘well let’s make it a campaign issue, let's see where people stand.’”

But Sen. John McCain, R- Ariz., once the leading Republican on campaign disclosure and donor limits, said in a statement he opposed the bill because it was designed to give an advantage to the Democrats and their labor union allies.

“By conveniently setting high thresholds for reporting requirements, the DISCLOSE Act forces some entities to inform the public about the origins of their financial support, while allowing others – most notably those affiliated with organized labor – to fly below the Federal Election Commission’s regulatory radar,” he said in a statement.

According to an analysis by the Center for Responsive Politics and the Center for Public Integrity, 501c4s spent nearly $95 million in the 2010 campaign.

Monday night’s vote was formal confirmation that Congress won’t rein in donors to such tax-exempt groups, at least until 2013 and perhaps not even then. Democratic leaders must now hope that Democratic donors step up and try to match Republicans in their giving to Democratic tax-exempt groups.

The 501c4 and 501c6 groups were given new freedom to run ads by the Supreme Court’s Citizens United decision in 2010 and by FEC rulings.

Lisa Rosenberg, a government affairs consultant with the Sunlight Foundation, a group that supports fuller disclosure of campaign spending, said, “It may take until after the election to see the real damage that was done and to see the corrupting influence of this money on the political process -- and perhaps that will reinvigorate the debate for the next time.”