Budget Rider Alert

March 2, 2022

During the Obama administration, the Internal Revenue Service targeted many nonprofits for more than two years leading up to the 2012 presidential election. Upon being caught red-handed, the IRS proposed a rulemaking that would have codified many of these improper targeting practices and severely chilled issue speech by nonprofits. Not to be outdone, the Securities and Exchange Commission and the White House also seriously considered issuing regulations that would have exposed supporters of nonprofit groups.

In response, Congress adopted several budget riders to restrict the federal government’s ability to adopt regulations that police and chill speech and violate citizen privacy. These policies enjoy bipartisan support and must be included in future federal omnibus spending bills. They include the following:

Internal Revenue Service

The IRS is a tax collection agency, not the speech police. When the IRS went rogue and became the speech police under Lois Lerner’s watch, a damaging scandal occurred that the agency is still recovering from. This budget rider prevents the IRS from writing new regulations to limit political speech by nonprofit groups.

  • The IRS has a dark history of politically motived targeting and harassment of nonprofit groups.
  • In the months following the Lois Lerner scandal, the IRS attempted to issue regulations governing the permissible activities of 501(c)(4) organizations.
  • The proposal further contemplated expanding the regulations to other types of nonprofits, such as labor unions and trade associations.
  • As a result of the proposal’s harmful impact on nonprofit advocacy, it received widespread bipartisan opposition from groups such as the AFL-CIO, American Civil Liberties Union, American Conservative Union, and National Right to Work Committee.

Most recent budget rider language:

“…none of the funds made available in this or any other Act may be used by the Department of the Treasury, including the Internal Revenue Service, to issue, revise, or finalize any regulation, revenue ruling, or other guidance not limited to a particular taxpayer relating to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of section 501(c)(4) of the Internal Revenue Code of 1986 (including the proposed regulations published at 78 Fed. Reg. 71535 (November 29, 2013)); and

(2) the standard and definitions as in effect on January 1, 2010, which are used to make such determinations shall apply after the date of the enactment of this Act for purposes of determining status under section 501(c)(4) of such Code of organizations created on, before, or after such date.”

Securities and Exchange Commission

The SEC’s mission is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation” – not monitor American businesses’ giving. This budget rider prohibits the SEC from using funding to require businesses to disclose contributions to political causes, tax-exempt organizations, and trade associations.

  • Federal law already requires businesses to publicly report detailed information about their political expenditures and corporate PAC activities.
  • Privacy opponents seek to expand such reporting to compel businesses to report their membership in trade associations and giving to nonprofit causes.
  • Such reporting is designed to further cancel culture and expose businesses to targeted harassment campaigns for giving to causes and organizations that some dislike.
  • The federal government should not discourage businesses from joining trade associations and supporting nonprofits that further civic discourse in America.

Most recent budget rider language:

“LIMITATION ON SEC FUNDS. None of the funds made available in this Act shall be used by the Securities and Exchange Commission to finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions, contributions to tax exempt organizations, or dues paid to trade associations.”

White House

In 2011 and 2016, the Obama White House seriously considered issuing an executive order expanding reporting requirements for prospective government contractors in the bidding process. That effort was abandoned twice due to bipartisan opposition in Congress, including from then-House Minority Leader Steny Hoyer (D-MD), then-Senators Joe Lieberman (D-CT) and Claire McCaskill (D-MO), and current Senator Rob Portman (R-OH), over fears of politicizing the government-contracting process. This budget rider blocks the president from issuing an executive order to require government contractors to detail their political and issue advocacy as a condition of bidding on a contract.

  • Federal contracting awards should be based on the merit of the bid rather than the bidder’s views on politics and policy.
  • This type of reporting incentivizes the awarding of contracts based on political giving to the administration in power – and the causes supported by that administration – and would facilitate, not deter, corruption.
  • Current campaign finance laws already mandate reporting of direct political spending and giving.

Most recent budget rider language:

“(a) None of the funds made available in this or any other Act may be used to recommend or require any entity submitting an offer for a Federal contract to disclose any of the following information as a condition of submitting the offer:

(1) Any payment consisting of a contribution, expenditure, independent expenditure, or disbursement for an electioneering communication that is made by the entity, its officers or directors, or any of its affiliates or subsidiaries to a candidate for election for Federal office or to a political committee, or that is otherwise made with respect to any election for Federal office.

(2) Any disbursement of funds (other than a payment described in paragraph (1)) made by the entity, its officers or directors, or any of its affiliates or subsidiaries to any person with the intent or the reasonable expectation that the person will use the funds to make a payment described in paragraph (1).

(b) In this section, each of the terms ‘‘contribution’’, ‘‘expenditure’’, ‘‘independent expenditure’’, ‘‘electioneering communication’’, ‘‘candidate’’, ‘‘election’’, and ‘‘Federal office’’ has the meaning given such term in the Federal Election Campaign Act of 1971 (52 U.S.C. 30101 et seq.).”

Additional Resources:

Internal Revenue Service

Securities and Exchange Commission

White House

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