Election Fundraising Poses Free Speech and Corruption Questions

By Kristen Friend, staff writer – February 8, 2012

The last few presidential races have been marked by tremendous increases in fundraising and spending. President Obama raised $745 million in 2008, twice what former president Bush raised in 2004 and more than four times what the Bush campaign raised in 2000. [1] With the primary season just over a month old, 2012 is shaping up to be no different. Both President Obama and his eventual Republican rival are poised to raise more than $1 billion, making 2012 the first multi-billion dollar campaign in history. [2]

After the Supreme Court’s decision in Citizens United, which lifted spending limits on corporations in elections, speculation ran rampant about how the decision would affect elections moving forward. Supporters of the decision argued that allowing corporations to give unlimited amounts to political action committees represented a real victory for free speech, while opponents worried that the unfettered spending would irreparably corrupt politics and elections.

Early indicators show that, for good or for bad, money will play a huge role in the 2012 election. They also show that large amounts of money, easily and quickly raised by a few wealthy donors or corporations, can have an influence on election results. A last minute infusion of money by the pro-Newt Gingrich super-PAC Winning Our Future helped him close the gap in South Carolina and defeat Mitt Romney. [3] Not to be outdone, groups supporting the Romney campaign spent more than $15 million in Florida, airing a deluge of negative ads. [4] The amount spent on behalf of Mitt Romney in the single state of Florida is more than presidential candidate John McCain spent during the entire primary season in 2008.

Political movements like Occupy Wall Street and public officials, including President Obama, are helping to keep the issue of money in politics at the forefront. Comedian Stephen Colbert has used his television show to mock the laws governing super-PACs mercilessly, exposing the ease with which candidates can collaborate with corporate donors. In his recent State of the Union address, President Obama called for an end to the “…corrosive influence of money in politics,” [5] although he stopped far short of asking for action to change the fundamental workings of campaign financing.

Since the State of the Union, Congress has acted on insider trading rules. The Senate has already passed a bill preventing members of the executive branch, Congress and their staff from making trades based on their knowledge of non-public information. The STOCK Act (Stop Trading on Congressional Knowledge) has more than 270 co-sponsors in the House and will likely pass. [6]

While these measures have predictable public support and will likely be good for the democratic process, they miss the mark on big money influence. Other bills receiving far less attention are quixotically attempting to take real action on the issue. In the Senate, S.J. Res.29 is a joint resolution proposing a constitutional amendment that would allow Congress to regulate the raising and spending of money in elections. [7] The bill is sponsored by Senator Tom Udall (D-NM) and 22 co-sponsors. In the House, H.J. Res.78, proposed by Representative Donna Edwards (D-MD4), also proposes a constitutional amendment to address the Citizens United ruling. [8] Given the high hurdle for passage of a constitutional amendment, two-thirds of Congress and three-quarters of the states, and the opposition to such measures by Republicans, neither resolution is likely to even come up for debate.

Attempts at tackling campaign finance reform must do so by addressing one or more underlying constitutional issues. The first is that money spent in political contests to influence elections is tantamount to speech. The second, and the most widely attacked, is that corporations are people, subject to the protections extended to natural citizens under the First and Fourteenth Amendments.

In constitutional terms, the argument that money equals speech is relatively young. After the 1972 presidential election and the ensuing Watergate scandal, Congress amended the Federal Election Campaign Act of 1971 to enact strict campaign finance reform. According to Fred Wertheimer, a former attorney for Common Cause, before the enactment of disclosure requirements, “Contributors were literally flying into Washington with satchels of cash.” [9] President Nixon secretly raised millions of illegal dollars from corporations, the details of which came out during the Watergate hearings. The 1974 amendments limited donations to political candidates, limited personal expenditures by candidates, placed a $1000 cap on independent expenditures, required disclosure of political contributions and established public financing of presidential elections. [10]

The law was overturned in part in the Supreme Court’s 1976 decision in Buckley v. Valeo, a case that set the precedent for treating money as protected speech. The decision contained two important conclusions. First, the Court held that limits on donations made directly to political candidates were constitutional. Such limits protected the “…integrity of our system of representative democracy” by limiting corruptive practices. [11] However, the Court also found that limits on independent expenditures, personal expenditures by candidates and total campaign expenditures violated the First amendment. [12] The reasoning was that money, in the form of political donations, could be seen as a form of expression and that the quantity of an expression cannot be limited. The conclusion that independent expenditures were protected speech also rests on the assumption that donations not made directly to candidates do not have a corruptive influence.

Opponents of the Court’s decision in Buckley believe that the decision displayed a flawed understanding of the First amendment and political corruption. The overall focus of the entire Bill of Rights, they argue, is to provide recourse for the people (the many) against the government (the few). The right of people to speak and assemble particularly implies the right of people to come together in small “d” democracy. The intent is to empower people against the dominance of elites. But a ruling that a single individual or corporation can spend unlimited amounts has the opposite effect, empowering the few over the many. [13]

The reasoning in Buckley has been upheld in subsequent decisions. It is commonly accepted legal theory that money given directly to candidates corrupts, but that money given to groups supporting a candidate does not.

The second and more contentious legal underpinning of Citizens United is that corporations are people. The idea that corporations should have some of the rights granted to natural people is long-standing and relatively non-controversial. Corporations are legal entities and have to be able to perform basic business functions like signing contracts. They should also be able to sue and be sued. But the concept that corporations deserve all the rights of real people has its basis in a questionable clerical decision in the late 1800s.

The case, Santa Clara County v. Southern Pacific Railroad (1886), involved a tax dispute between a railroad company and local municipality. While the actual question was narrow, the ability of the county to tax some railroad assets, Southern Pacific pushed for the Court to consider the idea that corporations are natural humans under the Fourteenth Amendment. But the Supreme Court did not rule on that issue. It agreed with Southern Pacific on the narrow issue, held no discussion and did not issue an opinion on the idea of corporate personhood under the Fourteenth Amendment. [14]

The precedent comes from a headnote, written by court reporter, J.C. Bancroft Davis, a man with ties to the railroad industry as a former president of the Newburgh and New York Railway Company. The headnote states, “…corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.” [15] Regardless of the fact that idea was nowhere in the actual opinion, Santa Clara County has been used for more than a century as precedent for providing rights to corporations as natural people.

Chief Justice William Rehnquist, a notable conservative, pointed to the fact that the Court had entered into no official discussion of corporate personhood in Santa Clara County in his dissent in Bank of Boston v. Bellotti (1978). In Bank of Boston, the Supreme Court ruled directly that corporations had a First Amendment right to spend money in order to influence or affect elections. Rehnquist’s dissent stated, “It cannot be so readily concluded that the right of political expression is equally necessary to carry out the functions of a corporation organized for commercial purposes […] It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere.” [16]

The two proposed amendments currently languishing in Congress confront this precedent in different ways. The Senate resolution contains two articles, one permitting Congress to regulate expenditures at the federal level and one permitting regulation at the state level. It makes no mention of corporate personhood but would overturn both Buckley and Citizens United by giving Congress the authority to regulate financial political expression. The House resolution gives Congress the power to regulate all corporate political activity, including speech, and expressly protects press freedom. It also makes no mention of corporate personhood.

Various amendments being proposed by outside groups propose limiting the concept of corporate personhood to various extents. The group Move to Amend has proposed an amendment that strips corporations of all rights under the Constitution, [17] a legally and logistically questionable idea at best.

American Prospect editor Mark Schmitt argues that a constitutional amendment is the wrong way to tackle Citizens United. The political and legal hurdles that must be cleared, he says, make the push an exercise in futility. [18] But that alone should not stop people to push for amendments. Many changes to the Constitution were exercises in futility at some point, but consistent advocacy can sway public opinion over time. The focus, he argues, should be on redefining the understanding of corruption. Amending the Constitution to take away a right is contrary to the spirit of the Bill of Rights, which grants freedoms to citizens. However, since corruption is a legitimate public concern, it could be used as an argument in favor of curbing unlimited expenditures. [19]

None of the freedoms enumerated in the Bill of Rights, including speech, are absolute. The Supreme Court has consistently shown a willingness to limit certain types of speech if there is a balancing interest. The amount of money that may be contributed directly to individual politicians and political parties has been weighed against the problem of corruption. Limits also exist on certain means of expression, types of inflammatory speech, the number of people who may assemble at one time or in one place and even the ability of groups to hand out literature. The makeup of the Court has and will continue to determine what interests are are given the most weight.

[1] http://www.opensecrets.org/pres08/totals.php?cycle=2008

[2] http://www.npr.org/2011/02/18/133809150/2012-the-year-of-the-billion-dollar-campaigns

[3] http://www.huffingtonpost.com/2012/01/20/newt-gingrich-south-carolina-super-pac-spending_n_1219093.html

[4] http://thecaucus.blogs.nytimes.com/2012/01/31/92-percent-of-ads-in-florida-were-negative/

[5] http://www.whitehouse.gov/the-press-office/2012/01/24/remarks-president-state-union-address

[6] http://www.bloomberg.com/news/2012-02-02/senate-votes-to-tighten-ban-on-insider-trading.html

[7] http://www.opencongress.org/bill/112-sj29/show

[8] http://www.mainstreetinsider.org/90secondsummaries/?p=520

[9] http://www.nytimes.com/2010/10/17/weekinreview/17abramson.html?pagewanted=all

[10] http://en.wikipedia.org/wiki/Federal_Election_Campaign_Act

[11] http://www.oyez.org/cases/1970-1979/1975/1975_75_436

[12] Id.

[13] http://www.acslaw.org/files/Kreml%20Issue%20Brief.pdf

[14] http://www.hightowerlowdown.org/node/664

[15] http://en.wikipedia.org/wiki/Santa_Clara_v._Southern_Pacific

[16] http://scholar.google.com/scholar_case?case=3768819597963662504&hl=en&as_sdt=2&as_vis=1&oi=scholarr

[17] http://movetoamend.org/amendment

[18] http://www.tnr.com/article/politics/99833/constitutional-amendment-citizens-united

[19] Id.

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