by Gary L. Beaver
Democrats in Congress, led by Senator Chuck Schumer and Representative Chris Van Hollen, are pushing for rapid action to pass legislation intended to create new requirements for corporations spending money on political speech in light of the Citizens United v. FEC decision by the U.S. Supreme Court on January 21, 2010. The Citizens United Court held that there was no distinction between corporations and individuals with respect to political speech and struck down certain statutory limitations placed on corporate political speech. These Congressman believe that the Citizens United decision will open the floodgates to organizations spending money on political speech to influence election outcomes.
If publicized descriptions of the proposed new requirements are accurate, most appear to be reasonable. They would apply to corporations (including S-corporations) and labor unions and would require detailed disclosures to the FEC of who is funding the political speech, including requiring almost contemporaneous posting of information about the spending on the company's website. In addition, companies that are more than 20% owned by foreign interests or whose board of directors is more than half foreigners and companies receiving TARP money would be banned from spending on political speech (reportedly the ban on the TARP recipients would be lifted if the TARP money was already repaid). There is reportedly some language similarly banning political speech by companies receiving money through federal contracts. The scope of that provision will have to be closely examined. There is already a statute barring federal contractors from engaging in political activities (2 U.S.C. Section 441c) so adding this provision must be for some other purpose such as expanding the scope of the prohibitions in the existing statute. Perhaps it is intended to expand the ban from what is currently defined as the federal contractor to other companies that may be parents, subsidiaries, or affiliates of the contractor in order to add restrict additional corporations from political speech as many large corporations have subsidiaries receiving at least a small amount of revenue from federal contracts. In addition, there is one restriction being floated that is plainly biased against corporations. Some representatives, including Barney Frank, are pushing for language requiring publicly traded companies to receive shareholder approval before spending on political speech. That restriction, which apparently does not require unions to obtain member approval, appears to be unduly restrictive as it would be difficult to impossible to timely obtain such approval for political speech that may have to be shaped and aired quickly in the last days of a campaign. Another interesting requirement is for the CEOs of the companies paying for the ads to appear on camera to say that they stand by the ad similar to the "stand by your ad" requirements for politicians in the ads they run. Finally, a controversial provision would require candidates and political parties to be given the lowest unit rate for advertising to counter corporate and union advertising. Giving one speaker a leg up on another does not appear to be required by the First Amendment so the viability of that provision is questionable.
The pols are on the right track with the disclosure requirements and foreign investment restrictions which appear to be reasonable and appropriate. There are rational bases for restricting foreign interests in the amount of influence they can have on American elections and one would hope that the Supreme Court will agree. Likewise, there are good reasons for requiring timely and complete disclosures so that voters know exactly who or what is backing a candidate and those requirements would not restrict political speech but rather would enhance it by providing information about who is making the speech. Such requirements should easily withstand judicial scrutiny. However, I predict political fights over some of the other provisions which appear to place barriers designed to stifle corporate political speech and, if they are enacted, their ultimate demise in the courts for unduly restricting political speech.
Showing posts with label Citizens United. Show all posts
Showing posts with label Citizens United. Show all posts
Friday, February 12, 2010
Thursday, January 28, 2010
U.S. Supreme Court Erases Bar to Funding Political Attack Ads
by Gary Beaver
If you think you have seen dirty political campaigns in the past, I opine that “you ain’t seen nothing yet.” On January 21, 2010, in the case of Citizens United v. Federal Election Commission (FEC), the U.S. Supreme Court changed the rules that restricted corporations (profit and non-profit) and unions from funding political ads. The change is likely to result in more money being spent on political advertising, which, in turn, is likely to result in more negative advertising.
Under § 203 of the Bipartisan Campaign Reform Act of 2002 (2 U.S.C. § 441b), corporations and unions were barred from using their general treasury funds to pay for an “electioneering communication” or speech that expressly advocates the election or defeat of a candidate, through any form of media. “Electioneering communications” included any broadcast that referred to a clearly identified candidate for federal office and was made within 30 days of a primary or 60 days of a general election. They could provide funds indirectly through political action groups (“PACs”) but funds into PACs had to come from donations from stockholders or employees of the corporation or members of the union.
The case involved efforts in the 2008 presidential campaign by Citizens United (a conservative non-profit) to distribute a movie entitled “Hillary: The Movie” more widely by offering it through a free video-on-demand channel called “Elections “08.” The 90-minute movie painted an unflattering picture of Hillary Clinton. Citizens United feared running afoul of 2 U.S.C. § 441b and sought declaratory and injunctive relief arguing that the law was unconstitutional as applied to the movie and ads promoting the movie. The District Court denied Citizens United relief and, instead, granted summary judgment to the FEC. The Supreme Court agreed that the movie and ads were “electioneering communications” but applied the First Amendment to invalidate 2 U.S.C. § 441b and hold that corporations and unions are free to spend as much as they want on such speech. Importantly, corporations and unions remain required to identify themselves as the sources of funding the advertisements and to include disclaimers in the ad, and remain barred from making direct contributions to the candidates. In making its holding, the Court overruled Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), that political speech may be banned based on the speaker’s corporate identity.
The internet was immediately filled with the howls of many, mostly from the left and the public interest advocates, who fear that corporations will greatly outspend the unions and, thereby, influence voters to choose candidates who are business-friendly and not necessarily worker- and consumer-friendly. For example: Ralph Nader called for a constitutional amendment to prevent corporate campaign contributions (note: he also called for a similar restriction on union funds); Senator Leahy (D-Vt. and chair of the Senate Judiciary Committee) blasted the decision in a press release calling the decision a victory for Wall Street at the expense of Main Street; and, President Obama criticized the decision and announced that his administration would work with Congress to pass legislation to vitiate the holding. In contrast, conservative groups praised the decision (e.g., U.S. Chamber of Commerce, Cato Institute). Not surprisingly, the U.S. Supreme Court followed that same pattern in its 5-4 vote in the case with the more conservative judges in the majority. Justice Stevens was especially incensed by the decision and wrote a 90-page dissent.
Another criticism of the decision seen frequently on the internet is that foreign corporations, individuals, and governments can own corporations in the U.S. and use them as vehicles to influence American politics and government.
Obviously, many observers believe (or at least say) that this decision will profoundly affect future political races. We shall see. I am reminded of what happened in the 2008 senatorial campaign in North Carolina when Ms. Dole used an unseemly ad attacking the religious beliefs of Ms. Hagan. The backfire was heard round the country. Perhaps liberal and public interest observers are not giving the voters enough credit for being able to evaluate political speech and determine what constitutes valid positions and arguments and what is unfair or inaccurate criticism. If voters are inundated with heavy-handed advertising campaigns funded by corporations for one candidate or by unions for another, such advertising may have the opposite of its intended effect. American voters do not like to be told what to think, do not like bullying, and may react negatively to a candidate receiving too much support from a particular group, whether corporation or union. American voters are likely to find particularly repugnant political ads from corporations owned by non-Americans. The voters’ political sophistication and ability to look behind canned messages grows with each day the Internet exists. The difficulty remains in gleaning the truth from the many assertions on the Web.
If you think you have seen dirty political campaigns in the past, I opine that “you ain’t seen nothing yet.” On January 21, 2010, in the case of Citizens United v. Federal Election Commission (FEC), the U.S. Supreme Court changed the rules that restricted corporations (profit and non-profit) and unions from funding political ads. The change is likely to result in more money being spent on political advertising, which, in turn, is likely to result in more negative advertising.
Under § 203 of the Bipartisan Campaign Reform Act of 2002 (2 U.S.C. § 441b), corporations and unions were barred from using their general treasury funds to pay for an “electioneering communication” or speech that expressly advocates the election or defeat of a candidate, through any form of media. “Electioneering communications” included any broadcast that referred to a clearly identified candidate for federal office and was made within 30 days of a primary or 60 days of a general election. They could provide funds indirectly through political action groups (“PACs”) but funds into PACs had to come from donations from stockholders or employees of the corporation or members of the union.
The case involved efforts in the 2008 presidential campaign by Citizens United (a conservative non-profit) to distribute a movie entitled “Hillary: The Movie” more widely by offering it through a free video-on-demand channel called “Elections “08.” The 90-minute movie painted an unflattering picture of Hillary Clinton. Citizens United feared running afoul of 2 U.S.C. § 441b and sought declaratory and injunctive relief arguing that the law was unconstitutional as applied to the movie and ads promoting the movie. The District Court denied Citizens United relief and, instead, granted summary judgment to the FEC. The Supreme Court agreed that the movie and ads were “electioneering communications” but applied the First Amendment to invalidate 2 U.S.C. § 441b and hold that corporations and unions are free to spend as much as they want on such speech. Importantly, corporations and unions remain required to identify themselves as the sources of funding the advertisements and to include disclaimers in the ad, and remain barred from making direct contributions to the candidates. In making its holding, the Court overruled Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), that political speech may be banned based on the speaker’s corporate identity.
The internet was immediately filled with the howls of many, mostly from the left and the public interest advocates, who fear that corporations will greatly outspend the unions and, thereby, influence voters to choose candidates who are business-friendly and not necessarily worker- and consumer-friendly. For example: Ralph Nader called for a constitutional amendment to prevent corporate campaign contributions (note: he also called for a similar restriction on union funds); Senator Leahy (D-Vt. and chair of the Senate Judiciary Committee) blasted the decision in a press release calling the decision a victory for Wall Street at the expense of Main Street; and, President Obama criticized the decision and announced that his administration would work with Congress to pass legislation to vitiate the holding. In contrast, conservative groups praised the decision (e.g., U.S. Chamber of Commerce, Cato Institute). Not surprisingly, the U.S. Supreme Court followed that same pattern in its 5-4 vote in the case with the more conservative judges in the majority. Justice Stevens was especially incensed by the decision and wrote a 90-page dissent.
Another criticism of the decision seen frequently on the internet is that foreign corporations, individuals, and governments can own corporations in the U.S. and use them as vehicles to influence American politics and government.
Obviously, many observers believe (or at least say) that this decision will profoundly affect future political races. We shall see. I am reminded of what happened in the 2008 senatorial campaign in North Carolina when Ms. Dole used an unseemly ad attacking the religious beliefs of Ms. Hagan. The backfire was heard round the country. Perhaps liberal and public interest observers are not giving the voters enough credit for being able to evaluate political speech and determine what constitutes valid positions and arguments and what is unfair or inaccurate criticism. If voters are inundated with heavy-handed advertising campaigns funded by corporations for one candidate or by unions for another, such advertising may have the opposite of its intended effect. American voters do not like to be told what to think, do not like bullying, and may react negatively to a candidate receiving too much support from a particular group, whether corporation or union. American voters are likely to find particularly repugnant political ads from corporations owned by non-Americans. The voters’ political sophistication and ability to look behind canned messages grows with each day the Internet exists. The difficulty remains in gleaning the truth from the many assertions on the Web.
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