PJ Media

Candidates and Political Parties Are Losers in Campaign Finance Case

A little known nonprofit organization just radically altered the political landscape for the 2010 elections and beyond. Citizens United, a nonprofit organization and the plaintiff in Citizens United v. Federal Election Commission, produced a documentary film critical of then-presidential candidate Hillary Clinton. The group intended to distribute the documentary on cable television and video-on-demand, and also produced television commercials promoting the documentary.

At the time, McCain-Feingold, the campaign finance reform law that bears the names of its chief sponsors, prohibited corporations, including nonprofit corporations, from airing television or radio advertisements referencing a federal candidate within thirty-days of a primary election or sixty-days of a general election in a jurisdiction where the candidate is on the ballot.  Citizens United was concerned about the civil and potential criminal penalties for violating McCain-Feingold and filed a lawsuit in federal court requesting a declaratory judgment that the law runs afoul of the First Amendment’s free speech guarantees.  Yesterday, the United States Supreme Court released its decision ruling in favor of Citizens United.

This landmark Supreme Court removes the barriers to corporate political speech and ensures that independent speech will play a major role in the 2010 elections.  Individuals and corporations are now permitted to sponsor independent expenditures advocating the election or defeat of a federal candidate, or advertisements criticizing or praising incumbents for their policy positions in more pointed terms and in close proximity to elections. While the Court held that the ban on corporate political speech is unconstitutional, it did uphold the disclaimer and disclosure requirements.  Also, corporate contributions to candidates, national party committees, and the hard money accounts of state and local party committee are still prohibited.

Winners and Losers

Listed below are my initial thoughts on who benefits and who is harmed by this decision.

Winners — Trade associations, corporations, unions and individuals with the means to sponsor independent expenditures.  These groups will be able to raise funds in amounts and from sources that will eclipse the hard-money restrictions for candidates and party committees.

Losers — Federal candidates and political party committees. The hard-money limits have the potential to force candidates and political party committees to a lesser role in the election process. The pro-regulation groups’ war on political parties just dealt them another blow.  The Republican National Committee v. Federal Election Commission case seeking to overturn the soft-money ban for national party committees will move to the front of the line in terms of cases to follow. There will also be pressure on Congress to fashion a legislative fix relaxing the funding restrictions for party committees and candidates.

Other factors — The enthusiasm gap will be the single largest factor determining which side benefits from this decision. Simply because the Court opened a new playing field for corporations and unions does not mean one side benefits more than the other.  Political actors must be motivated to speak and willing to engage in the rough-and-tumble political game to take advantage of this decision. Right now the business community and conservatives are motivated to act and fight what they believe are misguided policies pushed by the Democratic Party in Washington. On the other side, unions have not been shy in the past about engaging in political activities. We’ll have to wait and see.

What Happens Next?

Now that we have the decision, the Federal Election Commission (“FEC”) needs to move quickly to provide guidance to the regulated community and identify the regulations that must be repealed or amended to comply with the Court’s holding.

The decision also emphasizes the importance of the coordinated communications rulemaking currently pending before the FEC. Communications that are coordinate with candidates or political parties are considered contributions. The regulatory line between independent and coordinated expenditures is the next fault line in this ongoing battle.

The Republican National Committee v. Federal Election Commission case moves to the front of the line in terms of cases to watch. The RNC is challenging McCain-Feingold’s soft-money ban on constitutional grounds so that it may participate in state elections and engage in issue advocacy on the same terms as other groups. Political parties must be permitted to raise money in the same amounts and from the same sources as outside groups if they are to compete in the political market place.

Initial Thoughts on the Citizens United Opinion

Prior to yesterday’s ruling, corporations and unions were prohibited from sponsoring advertisements advocating the election or defeat of a federal candidate, and were also not permitted to air certain issue advocacy advertisements in close proximity to federal elections.

This decision will result in more robust discussion of the issues, incumbents and candidates. Individuals and groups, including for-profit and nonprofit corporations, can hold incumbents accountable by sponsoring advertisements educating their constituents and voters about votes, policy positions, and qualifications for office.

In basic terms, the Court holding reaffirmed the long standing First Amendment principle that the government cannot restrict political speech based on the identity or characteristics of the speaker (i.e., corporation versus individual), and that our county’s democracy is strengthened when more individuals and groups speak out about candidates, officeholders and important issues of the day. As the majority opinion states:

Prohibited, too, are restrictions distinguishing among different speakers, allowing speech by some but not others.  As instruments to censor, these categories are interrelated: Speech restrictions based on the identity of the speaker are all too often simply a means of content control. … The Government may not by these means deprive the public the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each. Slip op. at 24

When Government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought. This is unlawful. The First Amendment confirms the freedom to think for ourselves. Id. at 40.

The remedies enacted by law, however, must comply with the First Amendment; and, it is our law and our tradition that more speech, not less, is the governing rule. An outright ban on corporate political speech during the critical pre-election period is not a permissible remedy.  Id. at 45.

So long as the advertisements are independent of candidates and political parties, corporations are permitted to offer their own views on candidates and officeholder to the public.

The Court also reasoned that public advertisements criticizing incumbents does not result in corruption or the appearance of corruption — the sole justification for limiting political speech and a major blow to the government’s position in the case. The government argued that a corporation’s aggregation of wealth and the state conferred liability protections provide it with an unfair advantage. This allows a corporation to distort the political marketplace because it has more resources to spend. As the argument goes, the aggregation of wealth bears no relation to support for the corporation’s speech and therefore such funds should not be spent on political advertising. The ability to distort political speech also results in gratitude by officeholders which is another form of corruption. The majority flatly rejected these arguments.

The appearance of influence or access, furthermore, will not cause the electorate to lose faith in our democracy. . . . The fact that a corporation, or any other speaker, is willing to spend money to try to persuade voters presupposes that the people have the ultimate influence over elected officials.  Id. at 44.

Also called in question by the decision is the pro-regulation group argument that preventing circumvention justifies restricting political speech. The decision is a major blow to their campaign finance theories.

In sum, this case will produce a significant impact on the 2010 elections and the legislative debates considered in Washington this year. We will see more groups spending more money to inform voters about their policy positions.