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Washington Examiner: Democrats’ ‘foreign influence’ elections bill is subterfuge for silencing companies

Sunday, January 2, 2022

January 02, 2022 By Eric Wang

House Democrats recently reintroduced the Get Foreign Money Out of U.S. Elections Act, which purports to ban political spending by “foreign-influenced” corporations. The bill’s “America First” pretense is as disingenuous as it is ironic, considering Democrats’ furious opposition to former President Donald Trump’s “America First” agenda. The legislation is not targeted at foreign influence. Rather, its real intent is to steamroll American businesses by preventing them from defending themselves against Democrats’ anti-business agenda.

As the bill’s lead sponsor, Maryland Democrat Rep. Jamie Raskin, notes , the measure is similar to a law that Seattle adopted at the beginning of 2020. Seattle’s experience is quite instructive.

In 2018, the city enacted a controversial “head tax” on certain large employers in the city. The measure essentially punished job creation by forcing the companies to pay a surtax on each and every person they employed in the city. In response, the targeted companies moved to put the measure to a vote by referendum. Realizing that the city’s voters cared about keeping their jobs, the Seattle City Council members begrudgingly repealed the tax themselves before voters could repeal it for them. For good measure, Seattle’s business community also spent millions in the 2019 city elections to put the City Council members who had supported the tax out of their jobs, although that effort was less successful.

The 2020 ordinance that Seattle enacted can be seen as payback by the left-wing City Council members whose agenda the business community thwarted. Under the ordinance, as well as the Raskin bill pending in Congress, a “foreign-influenced” corporation is defined broadly and vaguely to include, among other standards, any U.S. corporation in which any foreign national has “direct or indirect beneficial ownership” of even 1%, or two or more foreign nationals have “direct or indirect beneficial ownership” of even 5%.

American corporations deemed to be “foreign-influenced” generally are prohibited from making any political contributions and expenditures under the Seattle ordinance and the Raskin bill. (Employee-funded corporate PACs also are covered under the latter.) In order for companies to engage in political spending under both measures, CEOs must sign certifications under penalty of perjury that their companies are not “foreign-influenced.”

As a practical matter, no publicly traded American corporation can determine with certainty whether it has any foreign owners that meet the extremely low percentage thresholds under these measures. This is especially so given the measures’ broad and vague regulation of “indirect” ownership, which could include foreign nationals indirectly owning shares of companies through mutual funds and other investment vehicles.

The measures also do not align with federal securities law, which requires certain owners of publicly traded companies to disclose their ownership interests, and which could otherwise assist companies in determining whether they meet the “foreign-influenced” ownership thresholds. With all of this in mind, CEOs simply are not going to risk personal criminal liability to allow their companies to engage in political spending.

The effect of measures such as the Seattle ordinance and the Raskin bill is that Democrats can ram through whatever anti-business legislation they like, and the business community is forced to sit on its hands and remain silent. Level-headed members of the Democratic House leadership recognize this radical result: When a version of the Raskin bill was tucked into Democrats’ leviathan H.R. 1 elections bill in 2019, a “manager’s amendment” summarily stripped out the provision before the bill could reach a vote. Democratic leaders also omitted the provision in the 2021 version of H.R. 1.

Two other important factors give the lie to the pretense that Raskin’s bill is actually intended to address foreign influence in American elections. First, federal law already prohibits genuinely foreign corporations from spending on American elections, and many states have their own parallel laws. Second, when Democratic-controlled jurisdictions such as New York City change their laws to allow noncitizen foreigners to vote in local elections, there is nary a peep of concern from congressional Democrats.

Lawmakers should not be fooled by Raskin’s patriotic-sounding Get Foreign Money Out of U.S. Elections Act. The bill is not targeted at foreign money in U.S. elections. It is an un-American subterfuge for silencing the private sector from opposing Democrats’ agenda to expand the public sector.

Eric Wang is a political law attorney and partner at the Gober Group. He advised clients on responding to the 2018 Seattle “head tax” and lobbying to remove the foreign-influenced corporations provision from the 2019 DISCLOSE Act.