Friday, January 22, 2010

How Will Yesterday’s Supreme Court Decision Affect 2010 Elections?

Summary: Show me the money! 2010 and the Supreme Court.

As you probably know by now, the Supreme Court yesterday overturned decades of precedent by ruling that a century-old law forbidding corporate (and possibly labor union) funding of political campaigns was unconstitutional. The issue, they claimed, was that the law infringed on free speech as protected by the First Amendment.

We first explained the case, Citizens United v. FEC, in a post last year.

The concept that campaign finance is an issue of free speech dates back to the case Buckley v. Valeo of the mid-1970s, and the concept that corporations are similar to individuals dates back to the mid-to-late 1800s.

Yet, in a 1990 case - Austin v. Michigan Chamber of Commerce - the Court found there was a “compelling government interest in preventing corporations, in particular, from having an inordinate influence in the political process.”

And even if you don’t believe the ruling itself was a sign of judicial activism, the way the Court went about the ruling was totally out of character. The justices actually called for a second round of oral arguments so the two sides could debate the broader constitutional issues surrounding their particular case. In other words, the justices needed more to be said in order to make a more sweeping change to precedent.

Anyone who has studied constitutional law or the Supreme Court knows that such a move would generally be considered within the Court’s limitations, but highly irregular and a sign of improper conduct.

Constitutional issues aside, the practical implications of the decision are not yet certain.

First: do corporations actually want to risk alienating customers by running political ads close to an election? My guess is “no” for the most part. Yet there are definitely exceptions to that, especially with financial regulatory reform now on President Obama’s legislative agenda.

Now firms like JP Morgan, Chase, and other lenders - who are at risk of being broken up under the president’s plan - can target at-risk members of Congress who support Obama’s reform agenda.

Second: do campaigns really want corporations to help them? The SCOTUS decision didn’t say that a corporation could contribute an unlimited amount of money to a campaign - it would be limited, like an individual, to $4,600 per candidate this cycle - but only that corporations could make unlimited independent expenditures running ads supporting or attacking a candidate.

In other words, the 527 ads that liberals came to fear so much would be child’s play compared to the ads that corporations can spend money on.

But that could come with its own set of problems. It is unclear at this point how much coordination a campaign could have with a corporation producing and supporting a political ad. If their coordination is limited - like it is between a campaign, a party, and PACs at the moment - then campaigns would actually fear the ads throwing them off-message.

Explaining why the Obama for America campaign did not take federal funding - largely ceding advertisement expenditures to the DNC - campaign manager David Plouffe writes about this issue in his new book, The Audacity to Win:

“All the decisions would be made without our input. They would invariably be running a negative health care ad in a market where we would have preferred a tax cut comparative. And since tone was so important to our campaign - we did not want traditional low-blow negative ads run on our behalf - this factor took on added weight.”

So it is possible that corporate spending on behalf of a candidate could hurt a campaign more than help it.

Third: will Congress take action to limit the impact of the ruling? Within hours of the decision being released, liberal activists and grassroots organizations started a firestorm of angry criticism. When I emailed the story to co-workers yesterday, the subject line I gave it was “holy sh**, the levees just broke…”. And online petitions have already popped up from Organizing for America - who blasted an email about it - Public Citizen, and others.

What kind of action could they take? One of the comments I read on the post from the blog Campaign Diaries included a good idea.

“…perhaps Congress could address this without violating the Court’s new ruling on censorship. Could Congress require stock holders and union member to explicitly approve of political expenditures before they are made by those individual entities? I know that in a few states, union members must given written permission for their union dues to go political activity. Similar approval rights could be given to stock holders regarding corporate profits, or something even more specific for both groups, such as written permission for political spending per issue or per candidate. That would likely reduce the spending from those entities without the need for government censorship. The people that make up those entities would in effect be censoring themselves.”

In fact, one of my arguments against opening campaign finance to corporations was that executives wouldn’t just be making political speech decisions with their own personal money, but their investors’ money as well. This would be a good way to counter corporate spending that investors might not agree with.

At the end of the day, laws must be passed to counter the implications of more than just Citizens United v. FEC. In an op-ed yesterday, Michael Waldman - executive director of the Brennan Center for Justice at NYU School of Law - noted more campaign finance cases to come.

Another big campaign finance case soon likely to reach the high court would test the ban on large "soft money" contributions to political parties, last upheld by the court in 2003. Just days after John McCain's presidential campaign ended, the Republican National Committee sued to overturn the provision that was his proudest legislative accomplishment. That would mark a true plunge into partisan wars. Explaining the case, the RNC's political director was blunt: To have a chance of matching Obama's small donations, "we need to be on an equal footing, and we think that law [McCain-Feingold] keeps us from doing that."

While it is reasonable to fear that the floodgates have been opened, it is still not entirely clear what impact the Court’s decision will have on this year’s elections - especially given the fact that no one has ever seen a corporate-funded political ad. The only way to know the implications for sure will be to live through it in 2010.

In the meantime, however, you can petition Congress through OFA to take action to counter the decision by clicking here.

1 comment:

Ben Masel said...

requiring shareholder approval of ads is the promising avenue. I tossed the idea at PA State rep Marc Cohen via his Facebook last night, he's drafting a bill to apply to Corps chartered in the State.