Campaign Finance And Corporations

National Journal

In an unusual, relatively unpublicized June 29 order, the Supreme Court scheduled a special oral argument for September 9 to consider using a pending case to sweep away the 62-year-old ban on independent corporate spending to influence elections.

That would be the Court’s biggest attack ever on campaign finance laws. It would also be a big mistake. There is no good reason to empower Big Business CEOs to influence elections by spending other people’s money — by which I mean money belonging to ideologically eclectic shareholders, most of whom do not want it invested in election campaigns.

But for all the alarums among liberal election-law experts, I doubt that the Court’s majority is planning to open the floodgates to unlimited campaign spending by Big Business.

I am guessing, and hoping, that the justices will instead use the pending case, Citizens United v. Federal Election Commission, to draw a principled, pragmatic, nonideological line between business corporations and nonprofit advocacy corporations.

Such a decision would uphold the First Amendment rights of citizen groups to spend their individual members’ dues and contributions to support or oppose federal candidates, as long as they don’t serve as conduits for money amassed in the economic marketplace by business corporations.

While many conservatives are all too eager to unleash Big Business to spend on campaigns, most liberals have been all too content to censor nonprofit advocacy corporations. They have also ignored the blatantly self-interested and illegitimate nature of Congress’s decision to draft the campaign finance restrictions so broadly as to hog-tie such advocacy groups, as described below.

The result has been to make it a crime for incorporated citizens groups such as the Sierra Club, the National Rifle Association, organizations supporting and opposing abortion rights, and many more large and small nonprofits to pool the contributions and dues of like-minded members and spend them to support or oppose federal candidates.

Almost all such groups find it necessary to incorporate, for liability limitation and other reasons. But that’s no reason to deny them their First Amendment rights to free speech or "to petition the government for a redress of grievances," which were clearly intended to protect collective as well as individual political activities.

The unfairness of barring campaign spending by these nonprofits is underscored by the fact that some big corporations — such as General Electric (which owns NBC), other broadcast and cable networks, Rupert Murdoch’s News Corp., and The New York Times — are exempted from campaign finance laws because they are, or own, media corporations. George Soros and other wealthy individuals also have First Amendment rights to spend unlimited sums of their own money in campaigns.

The reason that most business corporations (and unions) have properly been barred from making independent expenditures to influence elections is that it would distort the democratic process to open the door for CEOs (or union bosses) to spend vast amounts of shareholders’ (or union members’) money supporting or opposing candidates whom the shareholders (or members) have not meaningfully chosen to support or oppose.

But the same logic simply does not apply to nonprofits that want to spend the money of members who pay dues precisely for the purpose of promoting political causes and in some cases candidates.

"Nonprofit advocacy groups funded by individuals are readily distinguishable from for-profit corporations funded by general treasuries," Stanford University law professor Kathleen Sullivan explained in a friend-of-the-court brief in a somewhat analogous 2007 case. "Speech by nonprofit advocacy groups on behalf of their members does not ‘corrupt’ candidates or ‘distort’ the political marketplace. Instead, it is [campaign finance law] that distorts, leaving wealthy individuals and corporate media conglomerates unfettered in their pre-election broadcast advocacy, and inducing sophisticated corporations to turn to alternatives such as PACs, while thwarting speech by individuals of moderate means who have banded together in grassroots groups to express their views."

Sullivan was arguing for exempting nonprofit advocacy corporations from the 2002 McCain-Feingold campaign finance law’s new restrictions on corporate funding of broadcast, cable, and satellite ads that purport to be "issue ads" but in fact include "electioneering." The justices ignored the business-nonprofit distinction in that case, choosing instead (by 5-4) to adopt an extremely narrow definition of electioneering.

But Sullivan’s logic also argues for exempting nonprofits from the 62-year-old congressional ban on any and all corporate or union campaign spending, even if the sole purpose is to support or oppose federal candidates.

There are two exceptions to this ban — one for specially created political action committees and another for so-called MCFL corporations, named after the Court’s 1986 decision in FEC v. Massachusetts Citizens for Life. But the cost and complexity of setting up a PAC and current law’s exceedingly narrow definition of MCFL corporations make those options impractical for the vast majority of nonprofit grassroots advocacy groups.

Citizens United, a conservative incorporated nonprofit group, made a movie lambasting presidential candidate Hillary Rodham Clinton; the group distributed the film online, on DVD, and in theaters. Citizens United also wanted to show the film on a cable video-on-demand service, but the FEC ruled that the law banned corporate funding of such a direct attack ad on any cable program.

In the initial briefs and during the March 24 oral arguments, the lawyer for Citizens United, Theodore Olson, urged various narrow grounds for overturning the FEC’s ruling, such as holding that video-on-demand programming should not be treated as the kind of "broadcast, cable, or satellite communication" covered by McCain-Feingold.

What grabbed the justices’ attention, however, was a series of admissions by the government’s lawyer, Malcolm Stewart. He said that the government construes the First Amendment so narrowly as to allow Congress, if it chooses, to adopt a hypothetical ban on the financing by any corporation — with the possible exception of media corporations — even of books, articles, signs, or Internet postings (as well as broadcast, cable, and satellite ads) supporting or opposing federal candidates.

That seemed to shock some justices. "If we accept your constitutional argument," Chief Justice John Roberts said, "we’re establishing a precedent that you yourself say would extend to banning [a] book" paid for by a corporation.

These concerns may help explain why on June 29 — in a cryptic order overshadowed by publicity about the 5-4 decision upholding a reverse-discrimination lawsuit by white firefighters — the Court set Citizens United for reargument on September 9.

The order requested new briefs on a big, broad question: whether to overrule "either or both" Austin v. Michigan Chamber of Commerce, a 1990 decision upholding the 1947 ban on independent corporate campaign expenditures, and the part of the 2003 decision in McConnell v. FEC that upheld McCain-Feingold’s ban on corporate funding of electioneering ads.

Does this mean that the five more-conservative justices are preparing to give all corporations the same rights as individuals to spend on elections? Possibly. But I’m betting that they — perhaps joined by one or more of the liberal justices — end up liberating nonprofit advocacy corporations alone.

That would make a great deal of sense, both for the reasons explained by Sullivan and for those evident in the unsavory process by which Congress decided not to exempt nonprofit advocacy corporations from McCain-Feingold’s electioneering provision.

I detailed in an April 28, 2007, column how many senators initially recognized that no justification existed for extending the restrictions on electioneering ads to nonprofit citizen advocacy groups — but then adopted the so-called Wellstone amendment to do just that. By railing against the "attack ads" that had been used mainly by advocacy groups, supporters of that amendment showed that their objective was to censor criticism of themselves, not to prevent corruption or limit Big Business influence.

"This bill… is about slowing political advertising and making sure the flow of negative ads by outside interest groups does not continue to permeate the airwaves," Sen. Maria Cantwell, D-Wash., said on the Senate floor, echoing the views of many.

So it was that Congress slipped a provision carefully designed to muffle ordinary citizens’ criticisms of politicians into what was advertised as a restriction on political spending by Big Business and Big Labor, by making it a federal crime for any corporation (except media corporations) to pay for electioneering ads.

This made a mockery of First Amendment rights that were intended, above all else, to guarantee citizens — acting in groups as well as individually — the freedom to criticize officeholders and candidates.

The justices can and should excise the unconstitutional Wellstone amendment while leaving the restrictions on business corporations and unions intact.

This article appeared in the Saturday, July 11, 2009 edition of National Journal.