In February, Special Counsel Robert Mueller indicted 13 Russian nationals for conspiring to undermine US democracy, and many believe such meddling paved the way for the Trump administration – with its deregulatory agenda. Global Insight assesses whether it was electoral deregulation that cleared the way for Russian intervention.

As Donald Trump took his first steps towards the White House in the primary debates, few noticed or cared that the Federal Election Commission (FEC) let a German pornographer spend $300,000 to defeat a Los Angeles ballot measure for ‘Safer Sex in the Adult Film Industry’. But the FEC’s then-Chair, Ann Ravel, saw the implications. Deadlock at the agency had the effect of hanging ‘a giant neon sign announcing to hostile actors worldwide that there would be no consequences for illegally meddling’ in United States politics. ‘I mean, think of it,’ she warned presciently at a hearing in October 2015, ‘do we want Vladimir Putin… to be influencing American elections?’

Most in the media either ignored her or called her concerns over Putin ‘bizarre’. But, perhaps surprisingly, Breitbart News ran its own warning about the case. ‘What about the impact of foreign dollars on national security issues?’ asked Republican campaign consultant from Alabama John Pudner, Executive Director of the organisation Take Back Our Republic. ‘As conservatives, we cannot continue to dismiss any attempt to change or enforce campaign finance laws as a “liberal” cause.’

Deadlock has been the norm at the FEC since Donald McGahn – now White House Counsel to President Trump – became an influential figure at the agency in 2008. ‘When McGahn arrived,’ says ex-FEC litigation head David Kolker, ‘we shifted from not only having a conservative interpretation of the law, but an utter lack of interest in enforcing the law.’ Pudner says McGahn came in ‘with the stated cause of making sure this thing would never work again. He stands for the concept that basically no rules are best.’

In the run-up to the last presidential vote, Ravel believes that the FEC’s deadlocks followed a specific and disturbing pattern: ‘They had to do with foreign money, they had to do with the internet, and they had to do with disclosure. Those were the three things. And it turns out those are the things that were significant in the 2016 election.’

McGahn declined repeated invitations from Global Insight to respond to these critiques, as did the two Republican commissioners he served with, Matthew Petersen and Caroline Hunter, and his successor, Lee Goodman. All have publicly stressed that their narrow approach is faithful to the law. At the FEC, McGahn proudly pled ‘guilty’ to enforcing campaign statutes as strictly interpreted in court.

Whatever US election law may mandate, the undoubted effect of the FEC’s paralysis during the Obama era was to open up America to undisclosed foreign internet advertising. And undisclosed foreign internet advertising is what America got. Dan Coats, Director of National Intelligence since March 2017, grimly predicts that America will get more of the same in this year’s election season. As Russian troll farms gleefully reap what the FEC has sown, bipartisan advocates of campaign reform are calling on the US to regulate Facebook political advertising.

An agency set up for deadlock

When the FEC was created after Watergate, Washington, DC was collegial enough that Congress thought it a good idea to split a commission evenly between three Democrats and three Republicans. But the FEC wasn’t ‘set up to deadlock,’ argues longtime Democratic Commissioner Ellen Weintraub. ‘It’s set up to compromise’. Trevor Potter – a Republican elder statesman who served as Commissioner from 1991 to 1996 – emphatically agrees. The FEC deadlocked only once during Potter’s tenure, and that was by accident. ‘We saw avoiding deadlock as our job,’ he says. As late as George W Bush’s time, the Commissioners cooperated against groups like the Swift Boat Veterans for Truth.

The era of functionality ended at midnight on 31 December 2007, when Congress let three FEC seats go empty. As Potter tells the tale, while the FEC operated without a quorum, any regulation of money in politics was impossible. But, when Republican presidential candidate John McCain opted for public funding, this required an FEC vote. So Senate Minority Leader Mitch McConnell chose to fill the three empty seats with three Republican commissioners.

Weintraub, who’s been on the Commission for 15 years, says the change was instant. ‘We always used to talk to each other. We didn’t retreat to our corners. That all changed in 2008. I recall distinctly an email from one of them early in their tenure saying, “The three commissioners believe X on this issue.” I was really taken aback by that. I said, “What are you, the class secretary?” I was perplexed.’

The rate of deadlock soared from three per cent to 30 per cent between 2006 and 2016, but that understates the degree of paralysis. Potter says virtually any vote of consequence fails. ‘The matters we can still handle,’ Weintraub says, are the ‘equivalent of traffic tickets.’

The political strategist Steve Bannon has openly proclaimed that President Trump’s agenda is to ‘deconstruct’ the vast edifice of regulation that has been painstakingly built over the past century. Those who accept the need to regulate see what they view as the stymying of the FEC as the trial run. A month after her Putin prophecy, Ravel appeared on The Daily Show with Jon Stewart. Asked to rate the uselessness of the agency she then chaired, Ravel memorably joked: ‘I would say that the FEC and men’s nipples are probably comparable.’

By all accounts, McGahn was the man who made this analogy possible. The son of an Atlantic City lawyer who helped open Donald Trump’s first casino, McGahn made his name as Ethics Counsel to the House Republicans’ campaign arm at a time when campaign irregularities led to the indictment of House Majority Leader Tom DeLay. The long-locked McGahn moonlighted as lead guitarist for a weekend rock band covering 1980s hits by Metallica and Loverboy, and occasionally jammed while reading FEC campaign filings. ‘I call him a libertarian bad boy,’ says Kolker, ‘and I suspect he wouldn’t disagree.’

McGahn had a histrionic side at work, too. Weintraub recalls one Commissioners’ meeting where he slammed his law books on the table and stormed out of the room. Kolker remembers a case where McGahn was so annoyed at a position taken by the in-house counsel that he posted a statement online to undermine it while the in-house counsel was on his way to court. Weintraub calls him a disrupter. ‘He came in with the notion of throwing all the cards up in the air and breaking all the china,’ she says. ‘If we didn’t get the work at the agency done that was even better from their perspective, because they didn’t like the laws, and they didn’t want to see them vigorously enforced.’ McGahn and his allies cast themselves as faithful agents of Congress and the courts. ‘We’re not willing to take the law beyond where it’s written,’ Commissioner Hunter said. ‘I don’t view my role as [to] step into the void when Congress doesn’t act,’ Commissioner Petersen added. ‘This agency is functioning as Congress intended,’ concluded Commissioner Goodman, and ‘democracy isn’t collapsing around us.’

The consequences of deadlock

But democratic collapse is exactly what the FEC’s critics see. Before 2008, the FEC ‘viewed their job as making sure that both parties received equal justice,’ says Potter, who advocates bipartisan reform as Chair of the Campaign Legal Center. ‘Since then, the view of three commissioners is that their party should be protected. And that’s very different.’

Exhibit A is Commissioner Goodman’s open admission at a 2015 hearing that he delays complaints by election law reformers because they mostly target Republicans. The Campaign Legal Center is chaired by a Republican and has sued the Clinton campaign for hiding its payments for the infamous dossier on Trump in Russia. One of its lawyers compared the Commissioner’s statement to a judge confessing: ‘I don’t like people who bring… lawsuits against my party, so I’m just not going to hear those cases.’

When cases are heard, says Kolker, the Republican commissioners ‘consistently come up with pretty shameless extreme interpretations of why the law hadn’t been violated’. For sheer shamelessness, Ravel says the Bob Murray and Thom Tillis cases are hard to top. With respect to Murray, the FEC ignored repeated allegations that the nation’s top coal baron makes his managers support Republicans – despite punishing unions that force members to support Democrats. In the Tillis case, the FEC wouldn’t admit that a group donating 97 per cent of its budget to a Republican senator was engaged in ‘political action’ – despite the group’s founder being caught on video at the Tillis victory party wearing a Tillis hat, saying ‘We did it.’

But, what most troubles Ravel are the three inactions she believes paved the way for Russia’s electoral intervention. Mindgeek was the case where a German pornographer blocked a ballot measure to protect actors in adult films. This would seem an obvious violation of the ban on foreign money in US elections. But FEC Republicans reasoned that a ballot measure isn’t an ‘election’. Ravel regards this logic as shameless, and believes it invited foreign mischief. Nevertheless, it is true that Mindgeek had no direct implications for federal elections proper, as it concerned only local ballot measures. But, foreign money in US elections remains clearly forbidden if it can be detected. So, the biggest help the FEC could provide would be to make foreign influence undetectable. The FEC did this in two ways: by leaving social media unregulated, and by creating a vast new category of unidentified political donations known as ‘dark money’.

Casual observers blame the Supreme Court in Citizens United (2010) for turbocharging the US political money culture, by opening the spigot for corporate donations. But, Justice Anthony Kennedy clearly envisioned that corporate spending would be disclosed to the public. Election reformers say it’s what the FEC didn’t do after Citizens United that made the case so harmful.

After Citizens United, the FEC Republicans stymied the FEC Democrats’ push for a rule that would clarify the disclosure duties for new forms of independent political expenditures. Adav Noti, who then served as the FEC’s Associate General Counsel for Policy, says it was this inaction that created the explosion of untraceable ‘dark money’ in US campaign finance. A cautious estimate of dark money in the last voting cycle is $800m. But, dark money’s scale, like its origin, is unknowable. Among other things, dark money is a ready vehicle for foreign currency – including rubles. ‘We simply don’t know the full extent of the Russian involvement,’ says Noti. ‘It wouldn’t at all surprise me if we find out [that] Russian money flowed through dark money groups into political ads.’ What needs no speculation is that Russia exploited the FEC’s failure to regulate social media.

In 2006, the FEC expressly left free internet communications unregulated, as no one anticipated the spread of political advocacy on social media. Then, in 2011, Facebook asked the FEC to clarify that even paid online advertisements are exempt from the disclosure rules for television or other media. The internet giant reasoned that online adverts are too small to make disclosure of the advert’s source practical. Never mind that television can now be streamed on the internet. And never mind the ease of linking to a landing page large enough for the full works of Tolstoy. Predictably, the FEC deadlocked on Facebook’s advisory opinion. Weintraub tried to convene a hearing about social media, but couldn’t get a rulemaking off the ground. As Commissioner Petersen put it, the FEC provided ‘regulatory space’ for the development of online political activity.

This is a point on which FEC Republicans and Democrats agree. ‘There’s no doubt at all that the FEC’s inaction on requiring disclosure for internet-related election advocacy helped facilitate some of the Russian activity in the 2016 election,’ says Noti, the former Associate General Counsel for Policy. ‘There was just no cop on the beat ensuring that the people who were actually subjected to this advertising had any way of figuring out who was paying for it.’

The issue of internet disclosure was revived in a 2014 FEC test case brought by Citizens for Responsibility and Ethics in Washington, DC. A dark money group called Checks and Balances had spent close to $1m, undisclosed, on a pair of YouTube videos accusing President Obama of ‘ABSOLUTE LIES’. A deadlocked ruling ensued. Ravel lamented that the FEC was turning ‘a blind eye to the internet’s growing force in the political arena,’ and called a ‘re-examination of [its] approach… long overdue’.

Ravel naively vowed to ‘bring together technologists, social entrepreneurs, policy wonks, politicos, and activists – from across the spectrum – to discuss new and emerging technologies’. The Republican commissioners warned against ‘a shift in course that could threaten the continued development of the internet’s virtual free marketplace of political ideas’. Commissioner Goodman told Fox News that Ravel raised the ‘specter of a government review board culling the internet daily’ and ‘a regulatory regime reaching deep into the internet’. The Drudge Report ran a banner headline: ‘DEMS ON FEC MOVE TO REGULATE DRUDGE’.

Social media accounts tweeted death threats and bombarded Ravel with hatemail. They called her a ‘disgusting fascist Nazi’ and likened her to Joseph Goebbels. ‘Die, fascist, die!’ they told her. ‘Go fall down ten flights of stairs.’ And, in a zealous invocation of the Bill of Rights: ‘You’re the kind of person the Second Amendment was made for.’ Two years later, Donald Trump was elected President. Ann Ravel resigned from the FEC with a report entitled Dysfunction and Deadlock.

An end to deadlock?

Facebook subsequently admitted that Russian posts for Trump had secretly reached 126 million Americans. ‘All the Russia stuff came out and suddenly everybody was interested in foreign money,’ says Weintraub. So the Commissioner dusted off her six-year-old proposal to regulate online advertising. On 14 September – eight days after Facebook’s confession -- the FEC voted unanimously to reopen the rulemaking for public comment.

In the past, the plan had drawn only a handful or two of comments. But ‘who wants to get their information from a Russian troll farm?’ asks Weintraub. ‘We got 150,000 comments -- 98.5 per cent of them saying, “yes, you should do something”.’

Suddenly, Facebook said it favours disclosure rules for online political advertising, but asked for flexibility in how the identifying information must be displayed. Google said that it ‘strongly supports’ an FEC rule that would put the onus on political advertisers. Twitter voiced a willingness to work with regulators. The three companies have likewise expressed a guarded openness to the bipartisan legislation in both houses of Congress, known as the Honest Ads Act, which would broadly require the same disclosure online as for television.

A December filing from an unexpected source kept the FEC’s feet to the fire.

Pudner is the Republican reformer who echoed Ravel’s concerns about foreign influence. After growing up in the same Virginia community as Steve Bannon, Pudner spent four decades advising Republican campaigns, culminating in the race that ‘primaried’ the House Majority Leader Eric Cantor for being insufficiently right-wing. But Pudner grew up dirt poor, and he’s troubled by big donors dominating US politics. His Alabama-based nonprofit, Take Back Our Republic, is devoted to ‘conservative solutions for campaign finance’.

The Take Back Action Fund said it planned to run online attack ads against Democrats on Facebook, and asked for an advisory opinion clarifying its duties. ‘I am filing this request with the FEC because I am dead set against the ridiculous lack of transparency in politics that invites countries like Russia to secretly run political ads,’ Pudner stated.

Once again, the Russia scandal shamed the FEC into avoiding deadlock. In late December, the Commission ruled that the Take Back Action Fund must include disclaimers on its proposed Facebook adverts. However, it confined the precedent to express political advocacy ‘indistinguishable’ from Pudner’s. ‘I don’t think this is an earth-shattering answer that will affect lots of people going forward,’ cautioned Commissioner Hunter. The Campaign Legal Center’s Potter says a rule is needed to sweep broadly, and to mandate a registry for privately targeted Facebook adverts.

Weintraub called the Take Back opinion ‘a small step forward’ and the Commission’s agreement to consider a draft rule ‘a baby step in the right direction’. She expresses ever-so-cautious hope that the FEC can push a meaningful rulemaking to completion. But hardened campaign finance reformers will believe the progress when they see it. Says Noti: ‘The will to do something may be fleeting.’

Michael Goldhaber is the IBA’s US Correspondent. He can be contacted at michael.goldhaber@int-bar.org