The Citizens United Case
The Supreme Court of the United States handed down a decision on Jan. 21, 2010 that will enhance the ability of the deepest-pocketed special interests to influence elections and the U.S. Congress. The decision in Citizens United v. the Federal Election Commission overturned the ban on independent expenditures by corporations, paving the way for unlimited corporate and union spending in elections.
When it comes to independent expenditures, the Court held that there is no difference under the law between an individual citizen and a multinational corporation (or any other corporation). Corporations will now be able to pay for a barrage of television advertisements that directly call for the election or defeat of political candidates. The corporations may fund these political advertisements directly out of their treasury funds.
The Court upheld disclosure and disclaimer requirements for independent expenditures.
Citizens United does not address federal or state prohibitions on direct campaign contributions by corporations or unions – rather, the decision’s scope is independent expenditures.
Citizens United does not overturn the soft money ban.
Download the full decision here: http://www.supremecourtus.gov/opinions/09pdf/08-205.pdf.
Roundup of initial news reports: http://voices.washingtonpost.com/44/2010/01/reactions-to-the-supreme-court.html
Common Cause & Public Campaign press release: http://www.commoncause.org/site/apps/nlnet/content2.aspx?c=dkLNK1MQIwG&b=4773613&ct=7867517
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The impending Supreme Court decision in Citizens United v. FEC is expected to significantly expand the role of the most powerful special interests in financing American elections. The Court appears poised to turn its back on more than 100 years of law and pave the way for the deepest-pocket players to spend unlimited amounts of money on direct campaigns to elect or defeat federal candidates, adding to the enormous influence they already have within the political process.
Such a dramatic decision would further reduce trust in government policymaking and fundamentally undermine the strength of our democracy. It is hard to imagine how America faces the difficult challenges of the 21st Century – like health care, climate change and the economy – and achieves real progress when our elected representatives face enormous fundraising challenges and must depend increasingly on financial elites as they navigate complex electoral terrain.
Possible Outcomes in Citizens United
All signs indicate the U.S. Supreme Court has a 5-4 majority in support of rolling back restrictions on corporate and union spending in their upcoming decision in Citizens United. Such a decision would come as no surprise for the Roberts Court, as the conservative majority has moved steadily toward deregulation of campaigns over the past two years. The Court first showed its hand in its Wisconsin Right to Life decision in 2007, which blew a big hole in BCRA’s ability to regulate electioneering. And in Davis v. FEC last year, the Court struck down BCRA’s “Millionaire’s Amendment,” and breathed new life into a 1994 case thought to be dead law that said matching independent spending “chilled” the spender’s speech.
There are at least three possible outcomes in the Citizens United case:
1. The Court could rule on narrow grounds that BCRA’s electioneering communications ban does not apply to on-demand movies. This is unlikely, given the Court’s highly unusual move of carrying the case over to the fall term and inviting argument on broader issues.
2. The Court could strike down BCRA’s electioneering communications ban on the grounds that it unconstitutionally vague or over-burdensome, or some other narrow rationale, thereby reversing its 2003 decision in McConnell v. FEC.
3. The Court could strike down BCRA’s electioneering communications ban on the sweeping grounds that it is unconstitutional to limit political spending by corporations and unions, thereby reversing its 1990 decision in Austin v. Michigan State Chamber of Commerce.
The immediate legal impact of any of these decisions will only affect BCRA, but a broad holding that corporations and unions have a constitutional right to unlimited political speech (i.e., spending) would pave the way for subsequent challenges to the federal ban on corporate and union political spending in effect since 1947, the federal ban on corporate and union campaign contributions in effect since 1907, and similar laws in more than 20 states. A narrower ruling would continue the path toward deregulation, albeit on a slower pace, but still have the effect of allowing more corporate and union money into the system and encouraging more direct challenges to remaining regulations in the near future.
Policy Options for Dealing with Citizens United
While there are a few defensive legislative options for reducing the impact of a negative decision in Citizens United, the bottom line, even if they pass, is that an already untenable situation will be made worse. The only short-term option available to change the game and seize the initiative for reshaping the nature of elections in the 21st Century is to embrace a small donor/public funding model that empowers grassroots campaigns and allows candidates to run highly competitive races without relying on wealthy special interests. The incentives within the model would vastly expand the donor base available to candidates and party committees, raising up their capacity to compete in a post-CU environment. This model is the basis for current legislation to modernize public funding for presidential elections, under the Presidential Funding Act of 2009, and to create a new public funding system for congressional elections, under the Fair Elections Now Act.
The range of defensive legislative options is fairly narrow, as the Roberts Court has increasingly left very little room to maneuver within the post-Watergate regulatory framework. The alternatives along this line would be to:
1. Narrow the Court’s ruling as much as possible by amending language within BCRA and/or the Taft-Hartley and Tillman Acts. We doubt that there will be much leeway in this direction, but it’s worth looking at based on whatever rationale and guidelines the Court puts forward.
2. Increase individual and PAC contribution limits. Some in Congress believe that the way to counteract outside spending is to let candidates raise contributions in larger amounts. This is perhaps the worst of all policy options. Given that corporate executives and PACs dominate election financing today, raising contribution limits as a response to more corporate spending in elections makes little sense whatsoever. It will only worsen the pay-to-play culture and public policy distortions created by Congress’ current dependence on large contributions – and further undermine voters’ confidence that Congress can act in the public’s best interest – without relieving Members of the crushing burden of year-round fundraising.
3. Require affirmative shareholder approval for corporate political expenditures. While this has some initial appeal, it would only affect publicly traded corporations and, even then, we would have to win proxy fights in thousands of corporations. Powerful interests, like privately held hedge funds, would not be constrained by this approach. It also suffers from severe political obstacles; the immediate response of the Republicans will be “paycheck protection” – requiring member approval of union political expenditures – which the unions and progressives would adamantly oppose.
4. Increased disclosure. This approach, which could be pursued under both FEC and SEC rules, exposes corporations and candidates to potential embarrassment when expenditures come under public scrutiny.
None of those defensive options will prevent the current corrosive influence of money in politics from getting worse. While they may constrain spending at the margins, new avenues for greater corporate political spending will remain open – and be given a fresh stamp of legitimacy by the Supreme Court. The Citizens United decision, combined with a string of other bad campaign finance rulings, will most likely signal the end of a purely regulatory regime as a viable approach to meaningful campaign finance reform.
Nor will those measures restore any semblance of balance on the political playing field. The Citizens United decision will, in all likelihood, greatly increase the political spending gap between corporations and labor. Corporations may have outspent unions 4:1 in the arena of regulated PAC spending during the 2008 election cycle, but they outspent unions 61:1 on lobbying during the same period – an activity for which corporations could freely tap their profits.
More significantly, the fear of unlimited corporate political spending will fuel a rapidly escalating fundraising arms race. Elected officials will feel compelled to spend more and more of their time raising money, thereby further distracting Congress from the pressing issues of the day, creating fear of political reprisal for unpopular votes, exacerbating conflicts of interest, and undermining public confidence in their government’s ability to act in the public interest.
Over the long term, undoing the Court’s deregulation of political spending would require passage of a constitutional amendment (or a change in the composition of the Court). Leading options in this direction include authorizing spending limits, or tackling the prevailing doctrine of “corporate personhood.” Both approaches will require a heavy lift and years of organizing.
The only viable policy option on the table that will fundamentally change the playing field is public financing of federal elections. The small donor/public funding model at the core of both the Presidential Funding Act and the Fair Elections Now Act would allow candidates to opt out of the escalating arms race and run vigorous campaigns without relying on large contributions. The Fair Elections Now Act – sponsored by Senators Durbin and Specter in the Senate, and Representatives Larson and Jones in the House – is loaded up and ready to go. We have significant momentum in the House – where we have been moving steadily toward a floor vote – with more than 115 cosponsors, a bipartisan whip team and leadership support already in place. In addition, a broad coalition of powerful issue and constituency groups is poised to assist us in moving the legislation forward.