United States - Politics - Dark Money - Notable SCOTUS Decisions

Background

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse efficitur pulvinar elementum. Vestibulum a est eu erat rutrum scelerisque non et diam. Nam ut fringilla enim. Pellentesque finibus mauris vel nulla euismod mollis. Nunc sit amet euismod purus, ut viverra neque.

Citizens United v. Federal Election Commission (Citizens United v. FEC)

Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), was a landmark decision of the Supreme Court of the United States concerning the relationship between campaign finance and free speech. It was argued in 2009 and decided in 2010. The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political campaigns by corporations, wealthy billionaires, and committees established for the purpose of fundraising (PACs: Political Action Committees).

The case began after Citizens United, a conservative non-profit organization, sought to air and advertise a film critical of then Democratic Party presidential candidate Hillary Clinton shortly before the 2008 Democratic primary elections. Advertising the film would have been a violation of the 2002 Bipartisan Campaign Reform Act, which prohibited any corporation, non-profit organization or labor union from making an "electioneering communication" within 30 days of a primary or 60 days of an election, or making any expenditure advocating the election or defeat of a candidate at any time. Citizens United challenged the constitutionality of this law, and its case reached the Supreme Court.

In a majority opinion joined by four other justices, Associate Justice Anthony Kennedy held that the Bipartisan Campaign Reform Act's prohibition of all independent expenditures by corporations and unions violated the First Amendment's protection of free speech. The Court overturned Austin v. Michigan Chamber of Commerce (1990), which had allowed different restrictions on speech-related spending based on corporate identity, as well as a portion of McConnell v. Federal Election Commission (2003) that had restricted corporate spending on electioneering communications. The ruling effectively freed labor unions, trust funds, and corporations to spend money on electioneering communications and to directly advocate for the election or defeat of candidates. In his dissenting opinion, Associate Justice John Paul Stevens declared that the Court's ruling represented "a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government."

The decision remains highly controversial, generating much public discussion and receiving strong support and opposition from various groups. Senator Mitch McConnell commended the decision, arguing that it represented "an important step in the direction of restoring the First Amendment rights". By contrast, President Barack Obama stated that the decision "gives the special interests and their lobbyists even more power in Washington." The ruling represented a turning point on campaign finance, allowing unlimited election spending by corporations and labor unions and fueling the rise of Super PACs. These PACs are "super" in that they produce millions of dollars for a party or an individual candidate through undisclosed means. Later rulings by the Roberts Court, including McCutcheon v. FEC (2014), would strike down other campaign finance restrictions. While the long-term legacy of this case remains to be seen, scholars and political scientists have concluded that the Citizens United v. FEC decision overwhelmingly worked in favor for the electoral success of Republican Party candidates.

...

Political Impact

Super PACs

Citizens United v. Federal Election Commission has often been credited for the creation of "super PACs," political action committees which make no financial contributions to candidates or parties, and so can accept unlimited contributions from individuals, corporations and unions. Certainly, the holding in Citizens United helped affirm the legal basis for super PACs by deciding that, for purposes of establishing a "compelling government interest" of corruption sufficient to justify government limitations on political speech, "independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption."

It took another decision, by the U.S. Court of Appeals for the District of Columbia Circuit, SpeechNOW.org v. Federal Election Commission, to actually authorize the creation of super PACs. While Citizens United held that corporations and unions could make independent expenditures, a separate provision of the Federal Election Campaign Act, at least as long interpreted by the Federal Election Commission, held that individuals could not contribute to a common fund without it becoming a PAC. PACs, in turn, were not allowed to accept corporate or union contributions of any size or to accept individual contributions in excess of $5,000. In SpeechNOW.org, the D.C. Circuit, sitting en banc, held 9-0 that in light of Citizens United, such restrictions on the sources and size of contributions could not apply to an organization that made only independent expenditures in support of or opposition to a candidate but not contributions to a candidate's campaign.

Citizens United v. FEC and SpeechNOW left their imprint on the 2012 United States presidential election, in which single individuals contributed large sums to "super PACs" supporting particular candidates. Sheldon Adelson, the gambling entrepreneur, gave approximately fifteen million dollars to support Newt Gingrich. Foster Friess, a Wyoming financier, donated almost two million dollars to Rick Santorum's super PAC. Karl Rove organized super PACs that spent over $300 million in support of Republicans during the 2012 elections.

In addition to indirectly providing support for the creation of super PACs, Citizens United allowed incorporated 501(c)(4) public advocacy groups (such as the National Rifle Association, the Sierra Club, and the group Citizens United itself) and trade associations to make expenditures in political races. Such groups may not, under the tax code, have a primary purpose of engaging in electoral advocacy. These organizations must disclose their expenditures, but unlike super PACs they do not have to include the names of their donors in their FEC filings. A number of partisan organizations such as Karl Rove's influential conservative Crossroads Grassroots Policy Strategies and the liberal 21st Century Colorado have since registered as tax-exempt 501(c)(4) groups (defined as groups promoting "social welfare") and engaged in substantial political spending. This has led to claims of large secret donations, and questions about whether such groups should be required to disclose their donors. Historically, such non-profits have not been required to disclose their donors or names of members. See National Association for the Advancement of Colored People v. Alabama.

In an August 2015 essay in Der Spiegel, Markus Feldkirchen wrote that the Citizens United v. FEC decision was "now becoming visible for the first time" in federal elections as the super-rich have "radically" increased donations to support their candidates and positions via super PACs. Feldkirchen also said in the first six months of 2015 the candidates and their super PACs received close to $400 million: "far more than in the entire previous campaign." He opined that super-rich donating more than ever before to individual campaigns plus the "enormous" chasm in wealth has given the super-rich the power to steer the economic and political direction of the United States and undermine its democracy. In October 2015, The New York Times observed that just 158 super-rich families each contributed $250,000 or more, while an additional 200 families gave more than $100,000 for the 2016 presidential election. Both groups contributed almost half of the "early money" for candidates in the 2016 presidential election as of June 30, 2015 through channels like super PACs legalized by the Supreme Court's Citizens United decision.

Weakening of "Establishment" Forces

At least in the Republican Party, the Citizens United v. FEC ruling has weakened the fund raising power of the Republican "establishment" in the form of the "three major" Republican campaign committees (Republican National Committee, National Republican Congressional Committee, National Republican Senatorial Committee). Columnist Thomas B. Edsall notes that in 2008, "the last election before the Citizens United decision," the three campaign committees "raised six times" the money that "nonparty conservative organizations" did - $657.6 million vs. $111.9 million. By 2016 those party committees raised less than the independent groups - $652.4 million v. $810.4 million. Thus the new funding "freed candidates to defy" the party establishment, although not, it seems, to move policy making away from traditional Republican priorities.

Republican Advantage

Studies have shown that the Citizens United v. FEC ruling gave Republicans an advantage in subsequent elections. One study by political scientists at University of Chicago, Columbia University and the London School of Economics found "that Citizens United increased the GOP's average seat share in the state legislature by five percentage points. That is a large effect - large enough that, were it applied to the past twelve Congresses, partisan control of the House would have switched eight times. In line with a previous study, we also find that the vote share of Republican candidates increased three to four points, on average." A 2016 study in the Journal of Law and Economics found "that Citizens United is associated with an increase in Republicans' election probabilities in state house races of approximately 4 percentage points overall and 10 or more percentage points in several states. We link these estimates to on-the-ground evidence of significant spending by corporations through channels enabled by Citizens United." According to a 2020 study, the ruling boosted the electoral success of Republican candidates.

Bipartisan Campaign Reform Act of 2002

The Bipartisan Campaign Reform Act of 2002 (BCRA, nicknamed the "McCain-Feingold Act," enacted March 27, 2002, H.R. 2356) is a United States federal law that amended the Federal Election Campaign Act of 1971, which regulates the financing of political campaigns. Its chief sponsors were senators Russ Feingold (D-WI) and John McCain (R-AZ). The law became effective on 6 November 2002, and the new legal limits became effective on January 1, 2003.

As noted in McConnell v. Federal Election Commission, a United States Supreme Court ruling on the BCRA, the Act was designed to address two issues:

• The increased role of soft money in campaign financing, by prohibiting national political party committees from raising or spending any funds not subject to federal limits, even for state and local races or issue discussion;

• The proliferation of issue advocacy ads, by defining broadcast ads that name a federal candidate within 30 days of a primary or caucus or 60 days of a general election as "electioneering communications," and prohibiting any such ad paid for by a corporation (including non-profit issue organizations such as Right to Life or the Environmental Defense Fund) or paid for by an unincorporated entity using any corporate or union general treasury funds. The decision in Citizens United v. FEC overturns this provision, but not the ban on foreign corporations or foreign nationals in decisions regarding political spending.

Although the legislation is known as "McCain-Feingold," the Senate version is not the bill that became law. Instead, the companion legislation, H.R. 2356 - introduced by Rep. Chris Shays (R-CT), is the version that became law. Shays-Meehan was originally introduced as H.R. 380.

...

Legal Disputes

Provisions of the legislation were challenged as unconstitutional by a group of plaintiffs led by then-Senate majority whip Mitch McConnell, a long-time opponent of the bill. President Bush signed the law despite "reservations about the constitutionality of the broad ban on issue advertising." He appeared to expect that the Supreme Court would overturn some of its key provisions. But, in December 2003, the Supreme Court upheld most of the legislation in McConnell v. Federal Election Commission.

Subsequently, political parties and "watchdog" organizations have filed complaints with the FEC concerning the raising and spending of soft money by so-called "527 organizations" - organizations claiming tax-exemption as "political organizations" under Section 527 of the Internal Revenue Code (26 U.S.C. § 527), but not registering as "political committees" under the Federal Election Campaign Act, which uses a different legal definition. These organizations have been established on both sides of the political aisle, and have included high-profile organizations such as the Media Fund and the Swift Boat Veterans for Truth. 527s are financed in large part by wealthy individuals, labor unions, and businesses. 527s pre-dated McCain-Feingold but grew in popularity after the law took effect. In May 2004, the FEC voted to not write new rules on the application of federal campaign finance laws to 527 organizations. Although the FEC did promulgate a new rule in the fall of 2004 requiring some 527s participating in federal campaigns to use at least 50% "hard money" (contributions regulated by the Federal Election Campaign Act) to pay their expenses, the FEC did not change its regulations on when a 527 organization must register as a federal "political committee"-prompting Representatives Shays and Meehan to file a federal court lawsuit against the FEC for the Commission's failure to adopt a 527 rule. In September, 2007, a Federal District Court ruled in favor of the FEC, against congressmen Shays and Meehan.

In December 2006 the FEC entered settlements with three 527 groups the commission found to have violated federal law by failing to register as "political committees" and abide by contribution limits, source prohibitions and disclosure requirements during the 2004 election cycle. Swift Boat Veterans for Truth was fined $299,500; the League of Conservation Voters was fined $180,000; MoveOn.org was fined $150,000. In February 2007, the 527 organization Progress for America Voter Fund was likewise fined $750,000 for its failure to abide by federal campaign finance laws during the 2004 election cycle.

In June 2007 the U.S. Supreme Court held, in FEC v. Wisconsin Right to Life, Inc., that BCRA's limitations on corporate and labor union funding of broadcast ads mentioning a candidate within 30 days of a primary or caucus or 60 days of a general election are unconstitutional as applied to ads susceptible of a reasonable interpretation other than as an appeal to vote for or against a specific candidate. Some election law experts believed that the new exception would render BCRA's "electioneering communication" provisions meaningless, while others believed the new exception to be quite narrow.

In June 2008, the section of the act known as the "millionaire's amendment" was overturned by the Supreme Court in Davis v. Federal Election Commission. This provision had attempted to "equalize" campaigns by providing that the legal limit on contributions would increase for a candidate who was substantially outspent by an opposing candidate using personal wealth. In 2008 one of the cosponsors of the legislation, Senator John McCain of Arizona, touted this piece of legislation and others that he sponsored in his bid for the presidency. Senator McCain consistently voiced concern over campaign practices and their funding. "'Questions of honor are raised as much by appearances as by reality in politics, and because they incite public distrust, they need to be addressed no less directly than we would address evidence of expressly illegal corruption,' McCain wrote in his 2002 memoir Worth the Fighting For. 'By the time I became a leading advocate of campaign finance reform, I had come to appreciate that the public's suspicions were not always mistaken. Money does buy access in Washington, and access increases influence that often results in benefiting the few at the expense of the many.'"

In March 2009, the U.S. Supreme Court heard oral arguments in Citizens United v. Federal Election Commission, regarding whether or not a political documentary about Hillary Clinton could be considered a political ad that must be paid for with funds regulated under the Federal Election Campaign Act. In January 2010, the Supreme Court struck sections of McCain-Feingold down which limited activity of corporations, saying, "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." Specifically, Citizens United struck down campaign financing laws related to corporations and unions; law previously banned the broadcast, cable or satellite transmission of "electioneering communications" paid for by corporations in the 30 days before a presidential primary and in the 60 days before the general election. The ruling did not, as commonly thought, change the amount of money corporations and unions can contribute to campaigns. The minority argued that the court erred in allowing unlimited corporate spending, arguing that corporate spending posed a particular threat to democratic self-government.

President Barack Obama expressed his concern over the Supreme Court's decision during his 2010 State of the Union Address, delivered January 27, saying, "With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests - including foreign corporations - to spend without limit in our elections. I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. They should be decided by the American people. And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems." President Obama also called the decision, "a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans."

Impact

The BCRA decreased the role of soft money in political campaigns as the law places limits on the contributions by interest groups and national political parties. The BCRA had a "Stand by Your Ad" Provision, which requires candidates in the United States for federal political office, as well as interest groups and political parties supporting or opposing a candidate, to include in political advertisements on television and radio "a statement by the candidate that identifies the candidate and states that the candidate has approved the communication."

The impact of BCRA first started being felt nationally with the 2004 elections. One immediately recognizable result was that, as a result of the so-called stand by your ad provision, all campaign advertisements included a verbal statement to the effect of "I'm [candidate's name] and I approve this message."

Additional Reading

Return to Persagen.com