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Awful Eight #2: Government by Organized Money

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Corporate-voteBackground

The co-existence of elected representatives and the private money to elect them has always been an uneasy one. With contributions come expectations, and the larger the contribution the larger the expectation. And, with a surfeit of money sloshing around, what’s to prevent a dishonest official from using that money for unsavory purposes?

Recognizing the public’s discomfort with big politics and big money in close proximity, Congress has passed numerous campaign finance laws over the decades: the Tillman Act (1907) prohibited corporate contributions. The Federal Corrupt Practices Act (1925) set limits on general contributions. The Hatch Act (1939) limited party campaign expenses to $3 million. Taft-Hartley (1947) extended the ban on corporate contributions to unions.

All of these met with limited success because they contained no provision for enforcement and lacked a mechanism of reporting contributions. Then came Watergate. A shocked nation learned their President re-directed their campaign contributions to create a slush fund, and his minions used that money to finance illegal activities.

Reacting to public outcry, in 1974 Congress passed amendments strengthening the Federal Election Campaign Act (1971). Most important of these was the creation of the Federal Election Commission, charged with monitoring and enforcing campaign finance law, the public financing of presidential campaigns, and limits on contributions and expenditures.

After Buckley v Valeo (1976) struck down limits on campaign expenditures the FEC ruled that “hard money” (contributions regulated by the FEC) could be used for election-related activities like increasing voter turnout. Unlimited amounts of “soft money” (unregulated contributions) could be used for issue-related messaging. The steady increase in soft money- and once again public outcry- led to the passage of the Bipartisan Campaign Reform Act, or BCRA, in 2002.

Which leads us to the 2004 presidential election and a film by documentarian Michael Moore. Fahrenheit 9/11, Moore’s highly critical documentary of the Bush Administration’s response to September 11th, was released in June of 2004 just as the presidential campaigns were kicking into high gear.

Citizens United, a conservative political group, filed a complaint with the FEC that advertising for Fahrenheit 9/11 constituted “electioneering communications” by a corporation, an activity BCRA prohibited within 30 days of a primary of 60 days of a general election.  During that time the film was promoted on the web and through in-theatre trailers. The notoriously slow FEC got around to rendering a decision in August 2005, ten months after the election.

The FEC dismissed the complaint because the film was not promoted through broadcast means (i.e. television, cable or satellite) and the film “did not refer to a clearly identified candidate.”  Thus, the web promotion and theatrical trailers were a “bona fide commercial activity”, not “contributions” or “expenditures” as defined by BCRA.

Well, reasoned Citizens United, if Michael Moore can get away with propaganda bashing conservative candidates by calling it a documentary and promoting it on the web, why can’t we do the same against liberal candidates? So in 2007 they produced their own caustic documentary- Hillary: The Movie.

Citizens United planned to distribute the film in theaters, on pay-per-view cable and in DVD sales. Promotional activities included television ads, to be run during the presidential campaign. They figured the FEC might prohibit this and sought a pre-emptive ruling from the FEC. As expected, the FEC (moving a little quicker this time) classified The Movie as an “electioneering communication” and banned its promotion during the proscribed election periods. Citizens United then went to the DC District Court for an injunction.

But the DC District Court denied their injunction and granted summary judgment in favor of the FEC. The Movie was the functional equivalent of “express advocacy” against a particular candidate, ruled the District Court, and therefore the Commission correctly applied BCRA. The case found its way to the Supreme Court and was argued in March 2009.

The Case- Citizens United v FEC, 2010

Citizens United is unusual in that it gives us a rare glimpse into the inner machinations of the Court in a landmark case. The Court initially sought to rule on a very narrow basis: quite simply, could Citizens United advertise and show their film? Since BCRA forbade corporations from promoting electioneering communications by broadcast means, the case was about movies, television commercials and cable television.  The question before the Court was an “as applied” challenge- did the FEC properly apply the law in this specific case?

Initial arguments reflected this, and the case was likely destined for obscurity alongside thousands of other Court opinions. But during oral arguments, the case- and American electoral history- turned on a single question:

Could the law “limit a corporation from providing the same (information) in a book?” asked Justice Samuel Alito.

Reluctantly, the Deputy Solicitor General answered: Yes. An avalanche of questions from other Justices followed: could the Constitution ban “the advertising… or the sale for the book itself…within the sixty- and thirty-day periods?” Yes. “If it’s a five-hundred-page book, and at the end it says, ‘And so vote for X,’ the government could ban that?” Yes.

After oral arguments Chief Justice John Roberts assigned the task of writing the majority opinion to himself, and he penned a narrow “as-applied” opinion holding that BCRA was improperly applied against Citizens United.  But Justice Anthony Kennedy wrote a more expansive concurring opinion, arguing that the offending sections of BCRA were not only applied incorrectly, but unconstitutional in the first place; the law was wrong “on its face.”  Kennedy’s opinion argued for overturning two earlier cases upholding restrictions on independent expenditures by corporations (Austin v Michigan Chamber of Commerce, (1990) and McConnell v FEC (2003)).  According to one account, the conservative Justices warmed to Kennedy’s version, and Roberts eventually re-assigned him to turn his opinion into a Finding of the Court.

Then personalities got involved. Justice David Souter was assigned to write the dissent. This was after he had announced he would retire in the summer, and his dissent reportedly turned into an airing of the Court’s dirty laundry. Fearing Souter’s parting shots would damage the Court’s credibility, Roberts withdrew Kennedy’s draft majority opinion and put the case up for re-argument in the fall. With Souter retired his nasty valedictory would never surface in the Court.

For the second hearing the Court re-wrote the Questions Presented (the outline of the questions that frame a case). These were more expansive, reflecting the Court’s readiness to overturn Austin and McConnell.

But the Court ruled against the first four of Citizens United’s contentions: The Movie was, in fact, an “electioneering communication”; it was an express advocacy against a particular candidate; and the means of communication (cable, pay-per-view, DVD) were not grounds for exemption from BCRA, nor was CU’s non-profit status. Except none of that mattered, as we shall see.

CU dropped their fifth claim that the law was wrong as it was written (facially invalid), but the Court insisted on taking up that challenge. Kennedy wrote:

“If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” (emphasis added)

What followed was a lengthy attack on Austin and its finding that the state has “a compelling interest in preventing corruption or the appearance of corruption in the political arena.” Kennedy argued this interest applies to direct contributions to candidates, not independent contributions; that just because officials are influenced does not mean they are corrupt; and that even the public’s awareness of officials being influenced “will not cause the electorate to lose faith in our democracy.”

He then went further: “Austin was not well reasoned. It is also undermined by experience since its announcement.”

Of course, experience in a post-Citizens United world proves the opposite. For example, the 2014 mid-term elections were the most expensive in U.S. history yet the number of donors actually declined. The Congressional House candidate who spent the most won a staggering 94 percent of the time! For the Senate, 82 percent. Big money equals big victory. Though this puts us on a slope back to Robber Baron influence, in the Court’s mind it did not connote undue influence or the potential for corruption.

In fact, Kennedy ignored that concern, noting “all speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech….” Since one could not have speech without money, he concluded “Austin interferes with the “open marketplace” of ideas protected by the First Amendment.”

He warned “the censorship we now confront is vast in its reach. The Government has “muffle[d] the voices that best represent the most significant segments of the economy.” (Apparently in addition to government by the people we must ensure government by economic segment.)

Kennedy concluded “no sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations,” and overruled Austin completely.   Since these limits were eliminated, McConnell’s limits on soft money therefore were struck down as well.

In his dissent Justice John Paul Stevens pointed out the difference between corporate and individual speech in the context of public office: corporations could be managed or owned by non-residents, and “though they make a tremendous contribution to society, they are not actually members of it.” Corporations cannot vote or hold office. In light of this, lawmakers therefore have a “compelling constitutional basis, if not also a democratic duty” to safeguard against the potentially deleterious effects of corporate spending in local and national races.

Citizens United made one additional claim: donor disclosure requirements could “chill donations by exposing donors to retaliation.” The Court was unconvinced, and kept in place the campaign finance disclosure requirements of BCRA. However, disclosure requirements only applied to direct contributions- i.e. a candidate’s official campaign fund.  Per their earlier finding, there are no disclosure requirements for independent donations.

The case was decided 5-4 with the liberal Justices dissenting.

Implications

Contrary to popular belief, Citizens United did not contain the phrase “corporations are people.” The Court has long recognized certain individual rights apply to corporations as associations of people. Dartmouth College v Woodward (1819) granted corporations (actually, in this a case a college) protection under the Contracts Clause. Santa Clara County v Southern Pacific Railway recognized corporations enjoyed equal protection under the Fourteenth Amendment… way back in 1886.

Rather, in Citizens United we see a Court spoiling for a fight. Where once Chief Justice Roberts berated a lawyer for daring to address an issue outside the original petition (Cone v Bell, 2009), he maneuvered to do exactly that. Where Citizens United was set to be ruled on narrow grounds- “as applied”- the Court took up a constitutional issue. Where the plaintiffs themselves dropped a claim, the Court insisted on adjudicating it.

We are thus left with the bizarre campaign “system” of today. And it is indeed troubling. In competitive 2014 Senate races, spending exploded. The five most expensive races spent $440 million. More ominously, independent expenditures accounted for nearly two thirds of all spending, and this only accounts for registered Political Action Committees, not “dark money” groups. (Does not the very term “dark money” imply corruption?) Before Citizens United, the most expensive races were always where the candidates themselves spent the most. Now outside money drives campaign expenditures.

Some argue the amount is unimportant. I disagree. With large donations come large expectations. A citizen’s influence therefore becomes proportional to his pocketbook. Worse, we now have an environment where large, anonymous donors give a majority of donations. Large, anonymous donations. How can this not be a recipe for corruption, or at the very least the appearance of corruption?

Additionally, this “system” is self-perpetuating. Candidates receiving large donations are most likely to win. Since these candidates benefited from this system, they are unlikely to demand any reform to it.

So I put Citizens United high on this list because of the corrosive effect the Court’s decision has on representative government. Despite what Kennedy wrote, corporations are not “associations of citizens.” As Stevens pointed out, many corporate employees and shareholders may not be citizens at all. Why must these be given a voice in the electoral process?

To my uneducated legal mind the only legitimate corporate speech is advertising- i.e. promoting a corporation’s products, services or image in the marketplace- because the success of the corporation is the only point on which all of its members unanimously agree.  Most corporations, especially large ones, favor free-market conservative ideals- but surely liberals work there as well. Similarly, unions overwhelmingly support liberal candidates and principals- but they count conservatives in their ranks. Therefore a corporation or union campaigning for a specific candidate inevitably violates the convictions of at least some its members.

This is different from individual speech, where a person’s speech necessarily reflects their own convictions, or from advocacy groups formed for an express political purpose (like, for instance, fighting toll lanes), whose membership by definition unanimously supports their purpose. In matters of political candidates or issues, a corporation or union does not speak with one voice. (The Court brushed aside this argument as “underinclusive.”)

Also, if corporate speech is protected, is it unreasonable to know the identity of the speaker? Instead the Court has created the equivalent of an internet comments section where faceless avatars can blast away, except the price for access has spiraled out of reach of the common citizen.

Given the strong correlation between campaign spending and victory, a cynic might say we should drop the pretense of counting votes and instead just compare bank accounts.

Finally, this case turned on Alito’s pivotal question, but his hypothetical was fundamentally flawed. Books and broadcast communications are not equivalent; a person must make an affirmative choice to select and purchase and read a book. Viewing a television ad requires little volitional activity on the part of the viewer. So the initial concern that brought us to this point- that the government could ban books and therefore all manner of materials- is unfounded.

We live in a Brave New World of limitless contributions by faceless donors.

Aftermath

Unlike other cases we’ve examined, there is no individual claim at stake. What is in peril is representative government. Those chapters have yet to be written, but by every indication the ending will not be a happy one.  If money equates to free speech, then some are freer than others.  Instead of Government By the People, we have Government By Organized Money.  And we have Citizens United to thank for that.

Up next: Honorable Mentions

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