Roberts Court Overturns Yet Another Precedent in Favor of Corporate Campaign Cash

http://www.politifact.com/truth-o-m...gn-finance-ruling-united-citizens-historical/


[rquoter]Campaign finance ruling on United Citizens is historical, but 100 years is a stretch

It's clear that the U.S. Supreme Court's ruling on campaign finance reform, allowing corporations to spend as much as they like on their own political ads, marked a major reversal of current campaign law.

But according to leading Democrats, the ruling went much farther than overturning recent law.

"With a stroke of a pen, the court decided to overrule the 100-year-old ban on corporate expenditures and override the will of millions of Americans who want their voices heard in our democracy," said Sen. Charles Schumer, D-N.Y. Other Democrats echoed similar sentiments, that the Supreme Court has overruled more than a century of established law.

This more-than-100-years talk confused us. We thought the Supreme Court ruling hinged on a recent campaign finance law, sponsored by Sen. John McCain, R-Ariz., and Sen. Russ Feingold, D-Wisc., more formally referred to as the Bipartisan Campaign Finance Reform Act of 2002 -- and clearly less than 100 years old. So we decided to look into Schumer's statement.

But first, a little bit more about the case, which was kicked off by Hillary: The Movie, a documentary film that portrays Clinton as deceitful, ideological, and power-hungry. During the 2008 presidential campaign, a group called Citizens United wanted to promote the movie in the days leading up the election. But the Federal Election Commission said they couldn't do that; the 2002 campaign finance law banned corporations from "electioneering" -- running ads or messages that mentioned a specific candiate -- during the 30 days before a primary and 60 days before an election. The FEC said Citizens United could not promote the movie without violating the law.

The Supreme Court, in a 5-4 decision, not only threw out the time limits for electioneering, but added that the federal government could not set limits on corporations spending whatever they wanted to promote their own political messages during campaigns. The ban violated free speech protections, the court said.

So the ruling does go farther than just ending the ban on electioneering. But how far back does it go?

We asked Schumer's staff about the 100-year-old comment, and they pointed us toward a 1907 law called the Tillman Act. They cited the dissenting opinion issued this week, written by Justice John Paul Stephens, that said, "The majority’s approach to corporate electioneering marks a dramatic break from our past. Congress has placed special limitations on campaign spending by corporations ever since the passage of the Tillman Act in 1907."

But as we dug deeper into the history of the Tillman Act, the picture got murky because of the difference between independent expenditures and direct contributions.

An independent expenditure means money that corporations go out and spend on their own to portray a particular candidate as unfit for office, or on an issue. A direct contribution means a donation to a candidate's campaign, for the campaign to spend any way it likes. Corporations may not make direct contributions to federal campaigns from their own treasury; they have to create a separate political action committee, or PAC, for that. The recent ruling did nothing to change that ban.

The Tillman Act said corporations could not "make a money contribution in connection with any election to any political office." Now, does this mean that independent expenditures are outlawed, or just direct contributions? We looked at several court opinions and legal articles, and everything we looked at suggested that back then, people weren't thinking of campaign contributions in those terms. And in 1947, Congress came back and passed another law, the Taft-Hartley Labor Act, banning corporations and unions from making independent expenditures.

In fact, much of modern campaign finance laws dates to the post-Watergate period in the 1970s, when Congress passed the Federal Election Campaign Act and a series of amendments. That's when modern reporting requirements for campaigns were put into place, and the Federal Election Commission was established. A history on the Web site of the Federal Election Commission notes that before this the laws were largely ignored, "because none provided an institutional framework to administer their provisions effectively."

So what about Schumer's comments that the Supreme Court "decided to overrule the 100-year-old ban on corporate expenditures." This glosses over a lot of detail. Yes, it was more than 100 years ago that the first law limiting corporate spending was passed. But we don't see evidence that the Tillman Act even envisioned a distinction between direct contributions and independent expenditures. And the ban on direct contributions still stands.

Perhaps some of you are probably thinking, what's the difference? So what if a company can't contribute directly to a candidate if it can run ads about what a great person Joe is. Well, in practice, it's an important distinction. Corporations aren't allowed to coordinate their ads with the campaigns, and campaigns have their own ideas of messaging and strategy. In his campaign memoir, The Audacity to Win, Obama campaign manager David Plouffe discussed in detail why spending by groups outside the campaign is less effective than commonly thought.

We also don't want to downplay the historical importance of the Citizens United ruling. The Citizens United case does overturn some notable precedents and laws. The majority opinion specifically said it was overturning a 1990 precedent, Austin vs. Michigan Chamber of Commerce, which said that the federal government could regulate corporate spending as laid out in the reforms of the 1970s. You could also argue that the Citizens United case overturns the campaign finance portion of the 1947 Taft-Hartley Act.

Schumer said the Supreme Court "decided to overrule the 100-year-old ban on corporate expenditures." But he ignores the fact that the ban on direct donations from corporations to campaigns still exists. And the oldest law that specifically banned independent expenditures dated to 1947. You could also argue that we should be dating this from the 1970s campaign finance laws, or even the 1990 Austin case. So he's exaggerating the scope of the ruling and how long the laws have been on the books. We rate Schumer's statement Barely True. [/rquoter]

I thought this would be useful in understanding what precisely happened here. It was to me.

 

Shocking, but I agree with this to an extent (though I think the Supreme Court acknowledging such a position will lead to very dangerous outcomes).

And again, the corporatization of the media is at fault here - the gradual discovery that partisan confrontation segments and editorializing makes for a larger viewing audience, and hence larger advertising revenues, has put the last nail in the coffin of the genuine journalists of the 20th century.

So much of the real reportage that goes on in this country now seems limited to overseas incidents and minor tribbles. Genuine journalism has been marginalized by being placed in the same category as editorializing ( it's all "news") because it doesn't generate the same amount of revenue.

The shame is that the real news we get now is largely limited to comedy shows, old-school print resources, and the recesses of the internet. Because reportage and fact-checking have become so integrated and interweaved with editorial commentary, many people dismiss genuine news, if it appears to support one side or the other, as simply "liberal" or "conservative" propaganda.

I believe the majority of the viewing public at this point (and, in lesser numbers, reading public) often fails to make a distinction between fact-checking reportage and vastly more entertaining partisan hacks expressing their opinion with a few shoddily-researched "facts" for support.

I've seen it in this forum. The site I quoted from above checks facts rigorously with no bias that I've been able to detect - but if it criticized the wrong person, then a couple posters here have immediately dismissed it as partisan propaganda. It's also evident in many of the articles posted in support of one side or the other - articles that are clearly editorial, often poorly researched, but presented as if they actually create or contribute to a meaningful debate.

This, in my opinion, is a result of the massive influence of capitalist corporations in every sphere of American culture. It hasn't been simply an economic system for over a century now, and functions in the strongest sense as a cultural determinant. While good reporters still exist, they don't control the airwaves or run in the big-money circles that would allow them to present their reporting unobstructed by the demands for profit.

This ruling by the SC, while legally sound (at least in my current opinion), only provides the grounds on which profit-driven behemoths will exercise their power to continue shaping the political/cultural landscape of the United States to further their own interests - and, as should be obvious to most, their own interests are supported by our money - money which we have less of now than in generations, all the while our bills are increasing and the purchasing power of our dollars is tanking.

The greater power these bloated financial juggernauts have to pursue their profit, the more we're going to suffer for it.

 

How about a 500% excise tax on corporate political "free speech"? That would help even the field, at least a little bit.

[rquoter]
<b>Business Should Mind Its Own Business Act (Introduced in House)</b><br/>

<p>HR 4431 IH
<p><center>111th CONGRESS</center>
<p><center>2d Session</center>

<p><b><center> H. R. 4431</center></b>
<p><ttitle>To amend the Internal Revenue Code of 1986 to impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns.</ttitle>
<p><b><center>IN THE HOUSE OF REPRESENTATIVES</center></b>
<p><h3><center>January 13, 2010</center></h3>
<p>Mr. GRAYSON introduced the following bill; which was referred to the Committee on Ways and Means
<hr>
<p><b><center>A BILL</center></b>
<p><btitle>To amend the Internal Revenue Code of 1986 to impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns.</btitle>
<p><ul><em> Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,</em></ul>

<p><h3>SECTION 1. SHORT TITLE.</h3>
<p><ul> This Act may be cited as the `Business Should Mind Its Own Business Act'.</ul>
<p><h3>SEC. 2. EXCISE TAX ON CORPORATE CONTRIBUTIONS TO POLITICAL COMMITTEES AND ON CORPORATE EXPENDITURES ON POLITICAL ADVOCACY CAMPAIGNS.</h3>
<p><ul> (a) In General- Chapter 36 of the Internal Revenue Code of 1986 (relating to certain other excise taxes) is amended by adding at the end the following new subchapter:</ul>
<p><h3><b>`Subchapter E--Certain Corporate Political Activities</b></h3>
<p><ul><ul>`Sec. 4491. Corporate contributions to political committees and corporate expenditures on political advocacy campaigns.</ul></ul>
<p><h3>`SEC. 4491. CORPORATE CONTRIBUTIONS TO POLITICAL COMMITTEES AND CORPORATE EXPENDITURES ON POLITICAL ADVOCACY CAMPAIGNS.</h3>
<p><ul> `(a) In General- In the case of a corporation, there is hereby imposed a tax equal to 500 percent of the aggregate of the following amounts:</ul>

<p><ul><ul> `(1) The amount of contributions (as defined in section 301 of the Federal Election Campaign Act of 1971) made during the taxable year.</ul></ul>
<p><ul><ul> `(2) The amount paid for an electioneering communication described in section 304(f)(3) of such Act.</ul></ul>
<p><ul> `(b) Certain Determinations Disregarded- For purposes of this section, any court determination that such Act does not apply to one or more corporations shall be disregarded.'.</ul>
<p><ul> (b) Denial of Income Tax Deduction- Subsection (a) of section 275 of such Code is amended by inserting after paragraph (6) the following new paragraph:</ul>
<p><ul><ul> `(7) Taxes imposed by section 4491 (relating to corporate contributions to political committees and corporate expenditures on political advocacy campaigns).'.</ul></ul>
<p><ul> (c) Clerical Amendment- The table of subchapters for chapter 36 of such Code is amended by adding at the end the following new item:</ul>

<p><h3>`subchapter e. certain corporate political activities.'.</h3>
<p><ul> (d) Effective Date- The amendments made by this section shall apply to amounts paid after the date of the enactment of this Act in taxable years ending after such date.</ul>

[/rquoter]

 

As you wish...

I have not read the Court's opinion in this case, nor have I reviewed the applicable precedent, etc.

That being said, at first blush, this is a deeply disappointing decision. McCain and Feingold were on the right track with their jointly sponsored bill. The ability of corporations to purchase law because they have the deeper pockets simply cannot make for a good result for our nation. When the fox is guarding the henhouse, you generally end up with a lot of dead chickens. Logical, outcome determinative rhetoric aside...I am not sure where I come out on this from a legal perspective.

Some have said that the Court ignored previous cases of precedential value. If this is true, in my view, the Court acted inappropriately.

I will certainly weigh in on this again once I have read the opinion and the dissent.

I am not happy...and am very concerned with the practical effect of this ruling.

 

What you are neglecting to mention is that the Times is covered under the first amendment.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Freedom of the press. And clearly, in my opinion, the amendment refers to people, not to corporations. The shareholders in those corporations have no realistic say in how that corporation takes advantage of this radical shift by the Supreme Court. I would argue that, in fact, the shareholders are having their own rights trampled in the process. This was a radical shift from established law of long precedence, one of far reaching impact on the body politic and our political system's foundations. In my opinion.

 

This attempt at humanizing corporations is amusing, but it makes sense considering the boogeyman caricature view people have of corporations.

Corporations don't have free speech rights because a corporation doesn't produce speech. People do, who may or may not be part of a corporation.

A corporation is an artificial legal construct. It is not capable of speech.

"The shareholders are powerless to stop the corporation from funding candidates! It's alive!"

This isn't Judgement Day.

The corporation is the shareholders, or whomever the owners are. Ultimately it's people producing and funding speech. And speech shall not be abridged by an act of congress, period.

The owners of a corporation have just as much a right to produce speech as any other person, or groups of persons.

 

At least now the Chinese can just bribe every American elected official for favorable acts to China.

The Chinese can use all those billions of dollars on campaign funding. Amazing.

WE should all just take down our American flags and put up the new flags of our new masters. America can turn red.

 

unless such corporation is a newspaper or a television network/station, or, a satellite broadcast company. under the previous precedent, Sirius XM and Clear Channel were protected, Pandora, Spotify, et al, were not.

 

Thanks the thadeus, refman, and Otto -- very interesting all around. Sounds like most of us think the impact of this decision will be negative for most american citizens. I'd love to hear (in public press) some CEO reactions.

 

Why do you think shaerholders don't have a realistic say? Of course they do. The last thing a corp wants to do is piss off shareholders.

Also, groups like Sierra Club and the NRA are corporations. I think lots of the stuff in McCain Feingold limiting these groups activities in elections was really unconstitutional. The government restrictions were going too far.

That said, I wish there was more of a middle road. I'm not sure corporations will immediately jump into spending tons on campaigns, but perhaps eventually.

 

Yeah, I'm not sure. If you think it's going to change, why not go for it, to put some people in, say, the Senate, that will vote your way for 6 years? I think a big company with deep pockets would be completely stupid to not try to influence the process, while it's legal.

 

My last year in school I wrote a thesis on a lot of the problems created by McCain-Feingold.

Yes it cut down on a lot of corporate donations but a lot of stuff like Swift Boat ads etc.. are a product of McCain-Feingold. Before the bill, people donated directly to parties and consequently parties couldnt get away with blatantly slandering people in advertisements since they could be held directly accountable.

But once donations to 3rd parties increased 1000% post McCain-Feingold, a lot of very questionable advertising (from both sides) really started to grow and both parties just claimed ignorance whenever anything was questioned. Obviously some of that existed before but the amount of such advertising and the blatant nature of it took a new course.

I'm not against a lot of McCain-Feingold as limits on the amount one could donate was important but some of the restrictions were incredibly counterproductive. Soft Money may have allowed large donors and corporations to influence parties directly but i still think that was better than the alternative of unregulated 3rd party groups posting whatever garbage they wanted with their new found money.

 

A corporation doesn't want to piss off shareholders or politicians. That's why they usually donate to both parties. So I'm questioning how much their behavior will change here.

 

The shareholders that they don't want to piss off are the institutional ones who are corporations just like them or nonprofits who are politically agnostic. If you think XOM of PFE even spares enough time to wonder about me and my measly 2,000 shares in passing one way or the other, there is a bridge in Brooklyn I would like to sell you.

Five minutes trying to find unambiguous information in a 10-K should tell you exactly how much they care. Its funny, when I owned shares of several Chinese companies circa 2004-2005 their 10-K's were remarkable in their amazing clarity. Within a year or two, however, you could see the willful progression to the same artistic level of obfuscation that American 10-K's epitomize.

Small investors for any corporation are just the rubes you lead by the ends of their noses exactly to where you want them to go. They respect your opinions and concerns about as much as I respect my cat's, or about as much as Las Vegas casinos care about Granny dropping quarters in the slots.

 

Well, if you only have a couple shares of course they aren't going to try to please you over the masses of other shareholders.

However, they don't want to piss of a large shareholder who has different political views either.

I corps like the Sierra Club and NRA spending a lot, but other non- political corporations? I'm not so sure.

 

Mr. Clutch, you could own a thousand shares and you're still small potatoes. The people who would weld great influence are people like Warren Buffett, or Rupert Murdoch. Do you want someone like him basically telling a company who to spend money on in a political campaign? Not trying to pick on Buffett at all, but a man like him could really have a huge influence on an election after this ruling... far more than he could before, IMO. You and I aren't even a nat on the same screen.

 

a guy like buffet already has the opportunity to wield such influence, simply by running and spending his own money, which is what happened w/ bloomberg here in NYC last fall. blooie spent over $100m of his own cash, and thompson simply could not compete.

 

Heaven forbid a group produce speech with money. We can't have that, it's "garbage", they must be "regulated" (rather than refuted).