Citizens United Decision Sparks Controversy

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It all started with a little documentary about Hillary Clinton. "Hillary: The Movie," critical of the then-presidential candidate, was a 90-minute film starring Ann Coulter, Newt Gingrich and other popular conservative commentators. But the movie, which backers intended to offer direct to interested cable TV viewers via "on demand," turned out to be much more than a little documentary for a niche audience. It became the driving impetus behind the Supreme Court's decision in Citizens United v. Federal Election Commission to rethink campaign finance rules.

The Bipartisan Campaign Finance Reform Act of 2002 (also known as McCain-Feingold) banned corporations from paying for "electioneering communications" that expressly advocate the election or defeat of a candidate for federal office within 30 days of primary elections and 60 days of general elections. The law also barred non-profits--including those whose only purpose is political advocacy--from paying for such campaign ads.

That's where the makers of the Hillary flick came in. Citizens United is a registered non-profit devoted to promoting small government, free enterprise and other conservative political positions. It planned to launch and promote "Hillary" in the weeks leading up to the 2008 presidential primary, but those plans were dashed when the Federal Election Commission found that the Hillary movie, and the short ad spots that promoted it, were "electioneering communications" subject to McCain-Feingold's prohibitions.

After a long legal battle that lingered in the Supreme Court for two rounds of hard-fought briefing and oral argument, the court made a drastic move. It decided not only that McCain-Feingold was unconstitutional as applied to "Hillary," but it also did away with the law's prohibition on corporate electioneering, not to mention two previous decisions upholding it.

Free speech backers and business advocates heralded the decision as a long-overdue vindication of First Amendment rights.

"Corporations and their shareholders pay much of the freight for our government, yet McCain-Feingold said they could have no meaningful voice in our electoral affairs," says Matthew McGill, a Gibson Dunn partner who represented Citizens United before the Supreme Court. "The most tangible benefit of this decision will be that when a candidate scapegoats a corporation to voters, as for example when then-Sen. Obama repeatedly vilified insurance companies on the campaign trail, the corporation will have a chance to respond if it wishes."

Speaking Out

At the core of the court's decision was the longstanding concept that corporations are "people" under the law, entitled to many of the same constitutional rights granted to natural persons. Many speech advocates believe eliminating McCain-Feingold's limitation on campaign speech was the only logical application of that principle.

"We're talking about the freedom to speak out about a presidential candidate's qualifications," McGill says. "There is nothing more central to the First Amendment."

The court's 5-4 majority was particularly troubled by some of the arguments government lawyers made in support of McCain-Feingold; for instance that the statute would give the government authority to regulate the publication of books critical of a specific candidate.

"The broader questions [of the act's constitutionality] were put into play by the very broad arguments the government made to support the right to control the speech of any corporation," says Joel Gora, an election law professor at Brooklyn Law School who represented the ACLU as amicus in Citizens United. "The court felt a duty to protect First Amendment rights against such official overreaching by striking down the whole statute."

Justice Clarence Thomas, who concurred in the court's result, would have taken the further step of striking down the part of McCain-Feingold that requires candidates to disclose the contributions they receive from corporations as an impermissible burden on the right to anonymous speech. The majority decision elected to look at that question on a case-by-case basis.

Meanwhile, Justice John Paul Stevens was sharply critical of the decision in a dissent laced with numerous barbs for the majority opinion. "Under the majority's view," he wrote, "I suppose it may be a First Amendment problem that corporations are not permitted to vote, given that voting is, among other things, a form of speech."

Corporate Dollars

The immediate impact of Citizens United will be that corporations will not run afoul of the law if they pay for ads, books, movies or other media that could be interpreted as advocating for a specific candidate. The decision also eliminates the distinction between media companies and other corporations that have an interest in supporting or opposing candidates. (McCain-Feingold has always permitted newspapers, for instance, to endorse candidates.) This is particularly crucial for advocacy groups such as Citizens United whose sole mission is to influence politics, as well as non-profit, nonshareholder corporations such as the Chamber of Commerce and the Business Roundtable.

But not everyone is convinced that the decision is a good thing for corporations. Paul Smith, a partner at Jenner & Block who represented the Committee for Economic Development as amicus curiae in support of upholding McCain-Feingold, fears lifting the regulations will lead to corporate "shakedowns" by politicians.

"Many corporations participate in electioneering only because they feel pressure from politicians," Smith says. "Indeed, they often spend money supporting both sides. Many appreciate the value of corporate expenditure limitations for that reason. A world of greatly heightened corporate spending on elections will also undermine public confidence in the business community."

Smith also pointed out that there is a strong anti-corruption rationale for limits on corporate campaign spending given the huge amounts of money companies could potentially inject into a given candidate's campaign.

Others think that the impact of the decision is somewhat overstated, and doubt that it will substantially increase corporate spending. After all, corporations are already free to engage in lobbying the government and to spend money to influence state elections.

Legislative Mulligans

Regardless of its ultimate impact, Citizens United has received widespread attention, much of it negative. A February Washington Post/ABC News poll found that about 80 percent of Americans opposed the decision. This has sparked congressmen to propose new laws that would reverse or limit the impact of the decision. Even President Obama chimed in, promising a "forceful response."

Sen. Chuck Schumer, D-N.Y., and Rep. Chris Van Hollen, D-Md., introduced a bill in both houses of Congress in late February that would make several significant changes--preventing any company owned by more than 20 percent foreign shareholders from spending money in U.S. elections, banning Troubled Asset Relief Program (TARP) recipients and government contractors from spending money in campaigns, and requiring CEOs to appear in their ads to disclose the source of any political message they sponsor. Even if the bill passes, it may be a short-lived victory for advocates of corporate spending limits.

"The proposals range from the questionable to the impermissible," Gora says. "Requiring corporate officials to appear in ads would seem excessive and nothing more than a harassment of that speech."

Of course, any new campaign finance restrictions will face court challenges, and the current Supreme Court has expressed unwillingness to uphold limitations that burden free speech for corporations. Ultimately, many believe that to have staying power, change would have to come in the form of a constitutional amendment. And that is unlikely to get widespread support.

"I doubt the legislation will pass," McGill says. "This is a constitutional decision. Until Sen. Schumer and
Rep. Van Hollen are granted the authority to amend the First Amendment, there can be no 'legislative fix.' Their efforts are just posturing--lame efforts to placate those who, quite unlike our framers, find campaign speech dangerous. They'll be challenged and struck down."

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