Rep. Alan Grayson says that legislation to deal with the Supreme Court’s Citizens United ruling, which he believes will pass the House shortly, will include a ban on direct campaign spending by any corporation who has a contract with the federal government.

The Citizens United response bill is being written by Chris Van Hollen and Chuck Schumer, and they expect to release it shortly. It’s being pitched as a non-partisan way to increase transparency and reduce corporate control of elections. But clearly the effort is meant to channel public anger at the corporate effort to buy elections and government, and put the GOP on the spot about that.

We knew about some of the pieces of the proposed legislation. At the root, the bill would increase transparency by forcing disclosure of corporate money and requiring corporate honchos to “stand by their ad” with an on-air approval of the message, even if they’re standing behind a shell organization. But Grayson, speaking in Los Angeles after a debate with George W. Bush (OK, a fake debate), said that some of his contributions were included in the bill. Chief among them was a measure to limit foreign companies, or companies controlled by foreign entities, from spending on political campaigns. But in addition, Grayson said that another measure of his would be adopted: barring companies which receive taxpayer money from government contracts to use that money in federal elections.

That’s actually a huge restriction. Many, many companies hold government contracts in one form or another; they would have to make a choice to spend in elections or to stay on the government dole. “Corporations want three things from government: they want tax breaks, they want deregulation, and they want contracts,” Grayson said. “Now maybe they’ll only want two.” The measure would also ban TARP recipients from campaign expenditures.

In essence, such spending would violate the Hatch Act, which prevents government officials from engaging in political activity. This fix would just extend that ban to corporate contractors.

Unions, some of whom supported the Citizens United ruling because it would free up their political spending, have yet to take a position on the fix legislation. But they may be attracted to a ban on contractor spending. Unions would be just as culpable on disclosure and transparency as corporations, under the proposed law (and editorially speaking, they should be).