Supreme Court Shreds Campaign-Finance Laws, Lifts Corporate Spending Restrictions

In a sweeping 5-4 ruling, the US Supreme Court on Thursday struck down several longstanding prohibitions on corporate political contributions, saying legislative measures to control such spending infringed upon corporate First Amendment free speech rights.

The majority framed the decision, which will now allow corporations and unions to spend unlimited treasury funds on independent campaign expenditures, as essential to American democracy.

“Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people,” wrote Justice Kennedy, who authored the majority opinion joined by Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia and Clarence Thomas. “Political speech must prevail against laws that would suppress it, whether by design or inadvertently.”

Justice John Paul Stevens, who wrote the 90-page dissenting opinion, called the decision “profoundly misguided.”

The 57-page majority opinion held that provisions of the 2002 Bipartisan Campaign Reform Act (BCRA), otherwise known as the McCain-Feingold Act, prohibiting corporations from spending general treasury funds on “electioneering communications” and independent campaign advertisements, are unconstitutional. In reaching the decision, the Court overturned the 20-year-old Austin v. Michigan Chamber of Commerce decision, which held that corporations could be banned from using general treasury funds for political purposes.

“The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether,” wrote Justice Kennedy.

“Hillary: The Movie”

In the run-up to the 2008 presidential election, Citizens United, a conservative nonprofit corporation, wished to broadcast “Hillary: The Movie,” a documentary that profiled various scandals that unfolded during President Bill Clinton’s tenure in office and challenged Hillary Clinton’s record in the Senate. Citizens United had previously released the movie in theaters and on DVD, but wanted to broadcast the movie for on-demand viewers. Fearing that the broadcast would run afoul of the BCRA’s prohibitions on corporate electioneering communications prior to elections, they brought suit in federal district court for an injunction against the law.

Because the movie was partially produced using corporate funds, a lower court ruled that it fell under the restrictions of the McCain-Feingold Act. Citizens United appealed that decision, and eventually wound up in the Supreme Court. After a first round of arguments, the justices made the unusual move of calling for a pre-term September re-argument this year, asking the parties to brief the court on whether the 1990 Austin decision, which justified the prohibition on corporate expenditures, should be overturned. On Thursday, five justices answered that question in the affirmative.

“Some members of the public might consider Hillary to be insightful and instructive; some might find it to be neither high art nor a fair discussion on how to set the Nation’s course; still others simply might suspend judgment on these points but decide to think more about issues and candidates,” Kennedy wrote for the majority. “Those choices and assessments, however, are not for the Government to make.”

In a statement posted on Citizens United’s website, David Bossie, president of the organization, hailed the ruling as a victory not only for his group, but for the First Amendment rights of all Americans.

“The fault line on this issue does not split liberals and conservatives or Republicans and Democrats,” Bossie wrote. “Instead, it pits entrenched establishment politicians against the very people whom they are elected to serve.”

Not true, said President Barack Obama, who harshly criticized the decision and said he has instructed his administration “to get to work immediately with Congress on this issue.”

“The Supreme Court has given a green light to a new stampede of special interest money in our politics,” Obama said. “It is 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.”

A “Massive Tilt in Our Democracy”

Michael Waldman, the executive director of the Brennan Center of Justice at New York University School of Law, which filed amicus briefs in the case, said the ruling means that “Exxon could spend Bloomberg-level money in every Congressional campaign around the country.” Waldman was referring to New York Mayor Michael Bloomberg, who tapped into his vast wealth and spent more than $70 million of his own money on his first mayoral campaign.

Waldman added that the Supreme Court justices “chose to intervene in the political process in a way they didn’t have to,” which will now result in a “massive tilt in our democracy.” He warned that the “impact of this case could dwarf the impact of this election.”

Burt Neuborne, a law professor at NYU and a Supreme Court litigator, agreed.

“[The decision] gives a green light for a massive flow of corporate treasury money into our democracy,” he said, adding that the decision “changes the ground rules [of] our democracy.”

Lawmakers Vow to Restore Spending Limits

Democratic lawmakers also reacted swiftly, calling the decision an historic mistake and a striking display of judicial activism, and vowing to pass legislation to restore the controls on corporate spending lifted by the Supreme Court.

Rep. Jerrold Nadler (D-New York), chairman of the Judiciary Subcommittee on the Constitution, Civil Rights and Civil Liberties, said he intends to hold a hearing in February to “examine the ways in which Congress might respond to ensure that our elections are not further corrupted by the influence of corporate money.”

Sen. Chuck Schumer (D-New York) was pointed in his remarks, saying the Supreme Court “has just determined the winners of next term’s elections. It won’t be Republicans. It won’t be Democrats. It will be corporate America.

“I have not seen a decision that more undermines campaign finance, and it is probably one of the three or four decisions in the history of the Supreme Court that most undermines democracy,” Schumer said. “We will regret the day that this decision was issued.”

Sen. Sheldon Whitehouse (D-Rhode Island) said he could not fathom how the Supreme Court has, in the past, “repeatedly upheld reasonable limits on corporate campaign spending” yet “today” ignored “settled precedent.”

“Five conservative justices have now rewritten the Constitution to permit corporate election spending to drown out the voices of individual Americans,” Whitehouse said. “Today’s disastrous decision is a long step towards government of the CEOs, by the CEOs and for the CEOs. We need to carefully review the consequences of this decision, which threaten to further strengthen corporate interests at the expense of ordinary Americans and, at worst, turn the keys of American democracy over to CEOs.”

Sen. Russ Feingold (D-Wisconsin), who, along with Republican Sen. John McCain, co-sponsored the legislation that bears their name, said the ruling “was a terrible mistake.”

“Presented with a relatively narrow legal issue, the Supreme Court chose to roll back laws that have limited the role of corporate money in federal elections since Teddy Roosevelt was president,” Feingold said. “Ignoring important principles of judicial restraint and respect for precedent, the Court has given corporate money a breathtaking new role in federal campaigns.

“Just six years ago, the Court said that the prohibition on corporations and unions dipping into their treasuries to influence campaigns was ‘firmly embedded in our law.’ Yet this Court has just upended that prohibition, and a century’s worth of campaign finance law designed to stem corruption in government. In the coming weeks, I will work with my colleagues to pass legislation restoring as many of the critical restraints on corporate control of our elections as possible.”

McCain said he too was disappointed by the Supreme Court’s “lifting of the limits on corporate and union contributions.”

But many Republicans, including Senate Minority Leader Mitch McConnell of Kentucky, who challenged provisions of the McCain-Feingold Act in 2003, praised the court’s decision.

“For too long, some in this country have been deprived of full participation in the political process,” McConnell said. “With today’s monumental decision, the Supreme Court took an important step in the direction of restoring the First Amendment rights of these groups by ruling that the Constitution protects their right to express themselves about political candidates and issues up until Election Day.”

Public Interest Groups Urge Swift Passage of Legislation

Good government groups also came out forcefully against the decision. Fred Wertheimer, president of Democracy 21, said the ruling is a “disaster for the American people and a very dark day for the Supreme Court.”

“This is the most radical and destructive campaign-finance decision in the history of the Supreme Court,” Wertheimer said. “With a stroke of the pen, five justices wiped out a century of American history devoted to preventing corporate corruption of our democracy. It’s wrong for the country, wrong for the Constitution and wrong for our democracy.”

Bob Edgar, president of Common Cause, said the ruling is the “Super Bowl of really bad decisions” and “returns us to the days of the robber barons.

“This decision allows Wall Street to tap its vast corporate profits to drown out the voice of the public in our democracy,” Edgar said. “The path from here is clear: Congress must free itself from Wall Street’s grip so Main Street can finally get a fair shake. We need to change the way America pays for elections. Passing the Fair Elections Now Act would give us the best Congress money can’t buy.”

Nick Nyhart, president and chief executive of Public Campaign, said the ruling means that lawmakers, “fearing that they will be targeted by corporate money, will look to raise even more special interest cash than they do now.”

Nyhart also called on Congress to pass the Fair Elections Now Act, a bill introduced by Assistant Senate Majority Leader Dick Durbin (D-Illinois) and House Democratic Caucus Chairman John Larson (D-Connecticut), which aims to blend small-donor fundraising with public funding as a means of reducing the pressure of fundraising from large contributors.

Bitterly Divided

When it looked likely during oral arguments in September that the court was going to rule in favor of Citizens United, the government urged the court to adopt a narrower decision, finding a statutory exception which would not prohibit Citizens United from airing “Hilary: The Movie” on demand.

The court, however, refused to take that more-cautious step, arguing that “any effort by the judiciary to decide which means of communications are to be preferred for the particular type of message and speaker would raise questions as to the courts’ own lawful authority. Substantial questions would arise if courts were to begin saying what means of speech should be preferred or disfavored.”

Justice Kennedy continued that the wide-reaching decision was required because “a speaker’s ability to engage in political speech that could have a chance of persuading others is stifled if the speaker must first commence a protracted lawsuit. By the time the lawsuit concludes, the election will be over and the litigants in most cases will have neither the incentive, nor, perhaps, the resources to carry on.”

Proponents argued that corporations should not enjoy the same First Amendment protections as humans, but the court disagreed.

Using high-flying language accusing the government of acting like Big Brother, Kennedy wrote, “When Government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought. This is unlawful. The First Amendment confirms the freedom to think for ourselves.”

The Austin decision, written by late Justice Thurgood Marshall, held that the government had an interest in preventing “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.”

The majority decision on Thursday, however, rejected this “antidistortion” rationale, saying that “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.” The court further held, citing a string of other campaign-finance cases, that the government cannot equalize the relative voice of citizens and associations during political campaigns by prohibiting speech. “All speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech. The First Amendment protects the resulting speech.”

Justice Stevens criticized the decision for “rewrit[ing] the law relating to campaign expenditures by for profit corporations and unions” when it could have more narrowly dealt with the campaign-finance law and First Amendment doctrine related to nonprofit corporations.

“Although they make enormous contributions to our society, corporations are not actually members of it,” Justice Stevens wrote. “They cannot vote or run for office. Because they may be managed and controlled by nonresidents, their interests may conflict in fundamental respects with the interests of eligible voters.

“The financial resources, legal structure and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process. Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races.”

Chief Justice Roberts, who during his confirmation hearings promised to bring “no agenda” and to remain faithful to the law, wrote specifically about the conflict between the weight of precedent and overturning Austin, arguing that the broad decision addressing the constitutional questions in the case was necessary, as a more limited statutory decision was impossible. “There is a difference between judicial restraint and judicial abdication,” he wrote.

Justice Sonia Sotomayor, in the court’s first major decision of the 2009-2010 term, sided with the dissenting liberal wing of the court, but did not write on her own.

There were two small victories for campaign-finance reform advocates, who saw the decision as a terrible defeat. Citizens United had urged the court to hold the disclosure and disclaimer provisions of the BCRA unconstitutional, but eight members of the court refused to do so. Furthermore, the court repeated its commitment to allowing Congress to prohibit direct corporate contributions to candidates.

Attacking the majority for overruling Austin and damaging the policy of stare decisis, Justice Stevens said, “The only relevant thing that has changed since Austin and McConnell,” when the Court first considered the constitutionality of the BCRA, “is the composition of this court.”