Campaign Money And The Chief Justice

National Journal

The Supreme Court, especially Chief Justice John Roberts, is at a crossroads.

The immediate issue is whether to demolish Congress’s overly broad, 62-year-old ban on corporate spending in federal elections or, instead, carve out a sensible exception.

The broader question is whether Roberts and Justice Samuel Alito will aggravate the Court’s polarization and give plausibility to charges of conservative judicial activism by providing the fourth and fifth votes for demolition of the ban, and of two important precedents as well.

I fear that the two Bush appointees may be poised to do just that. In their comments during the September 9 oral argument in the big campaign finance case, Citizens United v. Federal Election Commission, they seemed to be pushing for an unnecessarily sweeping decision that would enhance the political power of big business corporations (and would almost certainly be extended to unions as well).

Roberts and Alito would thereby be passing up a golden opportunity for principled compromise held out by liberal Justice John Paul Stevens. He credited a National Rifle Association amicus brief, by conservative lawyer Charles Cooper, with suggesting (as its second-favorite outcome) what Stevens called "the wisest narrow solution of the problem before us." That would be excising with a scalpel, not a meat ax, the one serious First Amendment defect in the campaign finance rules now before the Court.

The defect is Congress’s decision in adopting the 2002 McCain-Feingold law to add to its justifiable ban on "electioneering" broadcast ads by business corporations an utterly unjustified amendment by the late Sen. Paul Wellstone, D-Minn., extending the ban to nonprofit ideological corporations. These include the NRA, the Sierra Club, the ACLU, Citizens United, and other large and small groups of like-minded individuals who want to pool their funds to promote their political views. A 1947 law imposed a narrower ban on corporate "express advocacy" for or against candidates.

The Wellstone amendment’s transparent purpose was, as supporters made clear in floor debate, to muffle criticism ("negative attack ads") of themselves and other incumbents. The justices should strike down the Wellstone amendment, as Stevens suggested, while leaving intact the McCain-Feingold ban on "electioneering" and the 1947 law’s ban on "express advocacy" as applied to business corporations.

Solicitor General Elena Kagan urged the justices to uphold the ban on corporate election spending across the board. But she also stressed that a narrow decision striking down the Wellstone amendment would be far better than a broad one unleashing big business corporations.


The justices should strike down the Wellstone amendment, while leaving intact the ban on "electioneering" by business corporations.


Kagan’s main argument was that business spending on campaigns, even when done independently of the candidates, creates the same appearance of indebtedness and quid pro quo corruption that the Court has long held to justify banning direct contributions to candidates from corporations and large (above $2,400) contributions from individuals.

This particular argument has some force but is not entirely persuasive. The reason is that independent election spending by business corporations is not dramatically more corrupting than the independent spending of vast sums by super-rich individuals such as George Soros, which — the Court has properly held — the First Amendment protects.

A better argument against unleashing business corporations is that executives motivated solely by their companies’ economic interests would be pouring into campaign ads money belonging to individual stockholders who had not consented to the executives’ candidate choices and would in many cases disagree with them.

Oil executives, for example, might buy ads praising champions of more offshore drilling. But many of their stockholders no doubt have other political priorities — such as legislation on health care, abortion, civil rights, drug laws, or education — that might well lead them to oppose some of the same candidates.

"When corporations use other people’s money to electioneer," as Kagan explained, "that is a harm not just to the shareholders themselves but a sort of a broader harm to the public," because it distorts the political process to inject large sums of individuals’ money in support of candidates whom they may well oppose.

Roberts sharply challenged this line of argument. "Isn’t it extraordinarily paternalistic," he asked, "for the government to take the position that shareholders are too stupid to keep track of what their corporations are doing and can’t sell their shares or object in the corporate context if they don’t like it? … ‘We the government have to protect you naive shareholders.’ "

Kagan responded that "in a world in which most people own stock through mutual funds [and] through retirement plans … , they have no choice. I think it’s very difficult for individual shareholders to be able to monitor what each company they own assets in is doing."


It would look a lot like judicial activism for the more conservative justices to ram through a 5-4 decision smashing a cornerstone of campaign finance law.


Kagan was right, and Roberts was wrong. Many people own stock through pension funds and index funds as well as other mutual funds that buy dozens or hundreds of stocks. And even people who invest in individual companies rarely have the time or interest to keep track of their political spending, let alone the motivation to sell stock that they bought for economic reasons — and perhaps incur a capital-gains tax — just to express disagreement with the companies’ political ads.

It’s true, as Justice Anthony Kennedy emphasized — and as do many conservatives and some liberal First Amendment mavens — that big companies have expertise on complex policy issues that can add value to the marketplace of ideas. But companies can set up political action committees to support or oppose candidates with money contributed by consenting stockholders. They are also free to spend stockholder funds without limit on "issue ads" and on lobbying.

None of the reasons for banning business-corporation spending on elections apply to nonprofit ideological groups that would spend only individual contributions. (Almost all but the tiniest of such groups find it necessary to incorporate.)

Unlike stockholders, members of nonprofit ideological groups fully expect and desire that their money will go to support political causes and candidates.

And unlike big companies, such groups are often so small that requiring them to set up PACs would impose prohibitively burdensome paperwork and legal costs. Many potential donors to such groups don’t like the idea of being listed in public campaign finance reports.

During the argument, liberal Justice Stephen Breyer argued against unleashing nonprofit ideological groups and corporations, while conservative Antonin Scalia argued in favor of unleashing all corporations by pointing to supposed flaws in the compromise suggested by Stevens. Neither was persuasive.

Breyer warned that nonprofit ideological corporations — many of which accept business contributions — would be used as conduits for business spending on elections. But the law requires groups to put business contributions into segregated accounts in the event that the Wellstone amendment is struck down, so any "conduit" problem would be easy to police.

Scalia stressed that even if nonprofits were exempted, the ban on election spending by business corporations would be "vastly overbroad" because the great majority of them have only one or a few stockholders who would have to consent to any election spending. But, as Kagan pointed out, such stockholders can spend what they wish individually and have no need to do so through their corporations.

In arguing against a broad decision unleashing business corporations, I don’t mean to endorse the alarmist rhetoric of the many liberals who warn that such a decision would swamp our elections under a deluge of corrupting corporate dollars.

After all, no such deluge appears to have materialized in at least 26 states, including California, that already allow businesses to spend money supporting and opposing candidates for state offices — a strategy that many businesses are wary of, lest they make enemies as well as friends.

Advocates of unleashing all corporations also point out that the current ban sits somewhat awkwardly alongside the congressionally conferred (and, I think, constitutionally mandated) license enjoyed by media corporations — including General Electric’s NBC and Disney’s ABC — to spend whatever they please on election advocacy.

Still, unleashing all business corporations might enhance their political power in unhealthy ways. And it would look a lot like judicial activism for the more conservative justices to ram through, for no good reason, a 5-4 decision smashing a cornerstone of campaign finance law; overruling precedents that date to 2003 and 1990; and brushing aside congressional concerns about corruption and its appearance — all in a case that does not even involve a business corporation.

"If Chief Justice Roberts takes that road, his paeans to judicial modesty and unanimity would appear hollow," Jeffrey Rosen, a leading legal journalist who is also a George Washington University law professor, wrote in a September 12 op-ed in The New York Times.

The 54-year-old Roberts seemed to show judicial statesmanship (or so my June 27 column argued) in leading his colleagues to a narrow but near-unanimous decision in June sidestepping an apocalyptic conservative-liberal clash over the constitutionality of a major provision of the Voting Rights Act. He could show statesmanship here, too. Justice Stevens, whose 89-year-old mind seems as nimble as ever, has pointed the way.

This article appeared in the Saturday, September 19, 2009 edition of National Journal.