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Center for American Progress

RELEASE: New CAP Report Recommends Bold Solution To Limit Political Spending by Foreign-Influenced U.S. Corporations
Press Release

RELEASE: New CAP Report Recommends Bold Solution To Limit Political Spending by Foreign-Influenced U.S. Corporations

Washington, D.C. — Today, the Center for American Progress released a new report that outlines a bold plan to reduce foreign influence in U.S. elections. CAP specifically recommends barring U.S. corporations from political spending if they have certain minimum levels of foreign ownership.

A bedrock principle of U.S. law is that foreigners are prohibited from influencing American elections. The issue of foreign influence remains central to the ongoing presidential impeachment proceedings. But due to a loophole in current law, one avenue for foreign entities to exert influence over U.S. elections is through investment in American-based corporations.

Under CAP’s new recommendation, a U.S. corporation would be deemed “foreign-influenced” and therefore prohibited from election-related spending if: 1) a single foreign shareholder owns or controls at least 1 percent of the corporation’s equity; or 2) multiple foreign shareholders own or control at least 5 percent of the corporation’s equity; or 3) any foreign entity participates in the corporation’s decision-making process about election-related spending in the United States.

“It’s time for lawmakers to close the loophole that allows foreign entities to use U.S. corporations to influence our elections,” said Michael Sozan, a senior fellow at CAP and author of the report. “Imposing strict foreign ownership thresholds will help ensure that our elected representatives are accountable to Americans, not to corporate CEOs who are looking out for their foreign investors.”

The recommended policy solution is critical because about 35 percent of all U.S. corporate stock is now owned by foreigners, up from just 5 percent in 1982. For example, Uber is approximately 10 percent owned by Saudi Arabia, yet the company has spent tens of millions of dollars to influence elections and ballot measures that would help its bottom line.

CAP estimates that these proposed restrictions would bar 98 percent of S&P 500 corporations from political spending in U.S. elections. Only about 28 percent of smaller companies would trigger the threshold, according to CAP’s analysis.

This policy solution has support from many experts and constitutional scholars, including Sen. Elizabeth Warren (D-MA). And a recent survey by Civis Analytics found that 73 percent of Americans support limits on spending for companies that have any foreign ownership.

Read the report: “Ending Foreign-Influenced Corporate Spending in U.S. Elections” by Michael Sozan

Read a fact sheet summarizing the plan.

Additional resources:

For more information on this topic or to talk to an expert, please contact Sam Hananel at [email protected] or 202-478-6327.