Removing Corporate Money from Politics
| Publication year | 2017 |
Removing Corporate Money from Politics
Kyle Landrigan
More than one hundred years ago President Theodore Roosevelt started the nation down a difficult path of campaign finance regulations when he sought a legislative ban on corporate contributions made in relation to elections.1 What followed President Roosevelt's plea were several regulations purposed toward refining a campaign finance system to prevent disproportionate influence of the wealthy, to regulate campaign spending, and to minimize abuses of the system through public disclosures.2 Over the next century, Congress would pass multiple statutes in furtherance of these goals, and the Court would subsequently restrict the congressional power to regulate these areas on First Amendment grounds. This back and forth has created an intricate system of campaign finance that is in dire need of restructuring. By passing the Tillman Act, Congress made the first move banning direct corporate involvement in federal elections.3 This ban caused a century of litigation and regulation, eventually ending in 2010 when the Supreme Court held such bans on corporations were unconstitutional.4 Regardless of whether the Constitution protects the political speech of a corporation, it is obvious, due to the number of regulations and amount of litigation, that corporate spending on elections is highly controversial. The fear of corporate influence over elections, through deep pockets holding large sums of money, may be well grounded; but, because the Supreme Court has held the First Amendment protects a corporation's political speech there is no regulation Congress may pass restricting this right. A possible solution to this problem would be to pass legislation which proposes a trade to corporations; corporations agree not to spend any money on elections in return for the ability to vote in elections.
Background of Campaign Finance Law Regulations on Corporations
The history of campaign finance is best described by Justice Brennan in his opinion from Cort v. Ash that the purpose of the regulations was "to assure that
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federal elections are free from the power of money, to eliminate the apparent hold on political parties which business interests. . . seek and sometimes obtain by reason of liberal campaign contributions."5 The passage of the Tillman Act of 1907 was first believed to be a strict ban on corporate involvement in federal elections but due to loopholes6 Congress passed the Federal Corrupt Practices Act of 1910 (FCPA) to require disclosures on all campaign contribution sources as well as limited Party spending.7 Because the FCPA regulated spending by political parties, it was struck down by the Supreme Court in Newberry v. United States on the grounds that the Congress was not given the power to regulate parties this way by the Constitution.8 The fear of corporate involvement remained after this ruling and the Congress was forced to amend the FCPA in 1925 to comply with the Court's holding by continuing the ban on corporate political contributions and disclosure but adding in a system of campaign spending for Senate and House Candidates.9 The provisions of the amended FCPA were not stringent enough and loopholes were exposed,10 leading to more regulations on who could contribute to political campaigns;11 but, these regulations also fell short as the response to direct bans was to create political action committees (PACs) to contribute on the true donor's behalf.12
The next regulation on corporate spending on elections came with the Taft-Hartley Act of 1947 which made stricter regulations for corporations contributing to candidates.13 Campaign finance law remained almost unchanged until the passage of the Federal Election Campaign Act of 1971 (FECA), replacing the FCPA, which sought further disclosure requirements on
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campaign funding to bring the money into the light and restrict spending14 while maintaining a ban on corporate contributions to candidates. This created a strict law of campaign finance with maximum contribution and spending limits15 until the Supreme Court again addressed these regulations in 1976, under First Amendment precedent, holding that spending limits were unconstitutional when the money is spent to expressly advocate or oppose a candidate.16 It became apparent that FECA was falling short of its original purpose when it was again amended in 1979 to allow corporations to contribute unlimited amounts of "soft-money."17 Even with FECA in place, the Buckley holding made clear that the Congress could only regulate the money that was being directly given to candidates or was used to expressly advocate for, or oppose, a federal candidate, leaving open the door for spending on advertisements that fell short of express advocacy—using key terms like elect or defeat—notably termed issue ads.18 FECA amendments were also passed to limit soft money spending by corporations through limiting PACs to one per organization.19
Following many years of litigation over loopholes in FECA, the Congress attempted to preempt all unwanted involvement by passing the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold Act, banning unlimited soft money contributions and restricting corporate funding of issue ads within certain time periods of elections.20 The Court upheld the challenged portions of BCRA restrictions in McConnell v. FEC the next year21 which, on its face, seemed to imply the law would stand as is; but, in 2007 the Court was again asked to review BCRA and this time it struck down BCRA provisions restricting advertisements focusing on issues aired shortly before elections paid for by corporations because "where the First Amendment is implicated, the tie goes to the speaker, not the censor."22 Still at this point, campaign finance jurisprudence banned corporate spending on independent expenditures, but this was changed in 2010 when the Supreme
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Court again ruled on BCRA provisions, striking down, on First Amendment grounds, the ban on corporate expenditures in federal elections.23 The Court held that "independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption,"24 which in turn brought about the death of campaign finance law.25
Government Justification of Campaign Finance Law
When FECA was challenged in Buckley, the government justified the regulation as an interest in preventing corruption as well as the appearance thereof.26 FECA was again challenged in Austin v. Michigan Chamber of Commerce; the valid government interest was extended to include a prevention of distortion of the political speech marketplace by corporations with mass wealth, thus validating an equality rationale.27 After FECA was replaced by BCRA, the valid government interest justifying regulations against soft money was further expanded to include preventing the opportunity to influence government actions under the prevention of corruption umbrella in McConell v. FEC.28 These many justifications were all upheld as valid government interests for infringing on freedom of speech until the Court ruled in Citizens United that the only valid government interest in regulating campaign finance spending was to prevent corruption or the appearance thereof.29 Because the Court has held that the only interest the government may use when regulating campaign finance is to prevent corruption,30 and corporations cannot be banned from making independent expenditures,31 halting corporate involvement in political spending must rely on another basis if there is a continued fear surrounding the involvement of corporations in federal elections.
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Fear of Corporate Participation in Federal Elections
The fear of corporate spending on federal elections stems from the idea that allowing a corporation to use its deep pockets to influence elections would cause a disproportionate influence,32 but after Citizens United this interest is no longer valid for governmental reliance when regulating campaign finance.33 Because of lacking disclosure regulations for contributions, corporate spending goes vastly unknown.34 The fear that arises is that shareholders do not know whether their money is being spent on elections, and if it is being spent, how much of their money is used for political spending.35 The Citizens United holding, although allowing corporations to expend on speech, noted the importance of transparent disclosures on this spending,36 and because the corporations who participate in political spending are not disclosing contributions to organizations on the dark side of campaign finance, the fear of corporate influence over federal elections has grown.37 There are many who believe transparency of disclosure in corporate political spending will bring about greater trust in the system;38 but, even when a corporation voluntarily discloses political spending there may still be deception. One of the companies that voluntarily agreed to be more transparent with its political spending, Boeing, failed to report $200,000 in political contributions.39 This shows that even when a corporation vows to remain transparent, there is nothing looming over its head as a punishment should it break its vow. Even the SEC has acknowledged the fact that voluntary disclosures fall far short of giving enough information relevant to ascertaining the amount of money a corporation has truly spent on politics.40 Today, corporations spend the most money of all participants in the financing of campaigns and elections.41 Because Citizens
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United ended most of the campaign finance jurisprudence, there is no clear way to track the political spending of corporations on federal elections.42 The rise of 501(c)(4) corporations43 and the emergence of super PACs44 has increased valid fears because of the increased anonymous spending and the rate at how quickly these types...
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