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Argument preview: Corporations in politics

NOTE: The Supreme Court case set for argument on Wednesday, Sept. 9, Citizens United v. Federal Election Commission(08-205), originated in the past Term.  It is now being reargued.   The schedule for the 80-minute argument Wednesday is here.  ScotusWiki has a full entry, here, on the case as it unfolded up to this point; that page includes all of the briefs.  The following post discusses what is now before the Court.  Portions of this post also will appear as part of the Wiki entry, which will be updated as the case proceeds to a decision.


Looking back on the Gilded Age, historians Samuel Eliot Morison and Henry Steele Commager wrote: “The nation was fabulously rich but its wealth was gravitating rapidly into the hands of a small portion of the population, and the power of wealth threatened to undermine the political integrity of the Republic.”   Justice Felix Frankfurter quoted that remark in a 1957 decision, and recalled that in the late 19thCentury, there had been a “popular feeling that aggregated capital unduly influenced politics, an influence not stopping short of corruption.”

For generations, that image of the Gilded Age has shadowed the American business corporation, with popular rhetoric routinely treating corporate money, when used in politics, as corrupt and corrupting.  Now, more than a century later,  the Supreme Court is confronting the question — as much a cultural as a constitutional inquiry  — of whether that perception is out of date.  It is pondering whether corporations ought to enjoy full constitutional equality in the financing of modern campaigns for the Presidency and for Congress.  It is doing so in a case that started out a lot more modestly than that, the case of Citizens United v. Federal Election Commission.


Historians and legal scholars disagree on what led Congress, in 1907, to pass the Tillman Act, the first federal campaign finance law, banning American corporations from donating money directly to candidates in federal elections.   Some say it was done as a matter of political reform, to curb the growing power of corporations in politics — that is, the capacity of Big Business to “buy” influence, a reality demonstrated back then by what was known as the New York Life Insurance scandals over secret corporate donations to Theodore Roosevelt’s campaign  in 1904.

Others say Congress stepped in to stop corporations from using other people’s money — their owners’  money — to “buy” legislation that would ease the owners’ control of corporations, part of an effort by business managers to separate ownership and control.

No matter what the motivation, enactment of the Tillman Act sent Congress off on a decades-long, seldom-interrupted effort to insulate federal politics from corporate wealth, even when the money was spent on political activity independently of candidates’ organizations.  The states, who started their own such effort in the 1890s, have kept it up, too.

Along the way, of course, there has been fundamental disagreement on whether the various curbs on corporate political activity, often reinforced, have been effective, or whether corporations have easily found ways to evade the restrictions.  That disagreement still looms in the background of the Citizens United case.

There are two other layers of disagreement in that background.  One is over whether it makes constitutional sense to treat the spending of money as “speech,” and the spending of money on election campaigns as “political speech.”  But that is a disagreement outside the Court; it is clear that the Court regards such spending to be speech that has at least some protection under the First Amendment.  The Citizens United case may determine how much.

And the other layer of disagreement is whether corporations are entitled to some of the same protection, under the Constitution, as real people: in other words, should they be treated as “persons” who actually have constitutional rights?  Once again, that appears not to be open to doubt within the Court.  The origins of the notion that corporations are “persons” with constitutional rights are somewhat obscure (often traced, perhaps erroneously, to an 1886 Supreme Court decision, in Santa Clara County v. Union Pacific Railroad), but the Court does not question that they are persons in a legal sense.  The coming decision in Citizens United will accept that as a premise for whatever rights corporations are found to have as political financiers.

The large stakes of this case were not really apparent when the Court first agreed to hear it last Nov. 14 — ten days after Americans had cast their ballots in the most recent federal elections.  At that time, Citizens United, a politically active group with strong conservative views, pressed the case primarily as a test of whether federal campaign finance restrictions applied to what it called “a broadcast feature-length documentary movie.”  There was some constitutional argument involved, but the case was primarily statutory in scope.  At the center of the case was Citizens United’s sharply critical portrayal of the presidential candidacy last year of Hillary Rodham Clinton.  The feature-length film was titled “Hillary: The Movie.”  The contents of that film have been all but obscured by the profound shift in the shape of the case that has since occurred.

After the Court heard oral argument on the case last March 24, and began debating in private how to decide it, some members of the Court — the public does not know who, or exactly why — apparently began viewing the case as a more fundamental inquiry into constitutional questions about corporations’ rights of political speech.   On the final day of the Term, the Court ordered the case reargued, and set the date for Sept. 9.  Lawyers were told to come back to debate whether the Court should overrule two of its most important precedents that had upheld curbs on campaign finance by corporations.

What was behind the move, almost certainly, was a continuing debate within the Court about whether it had been wrong — specifically, in 1990 and 2003 — in upholding tight controls on corporate money in politics. That debate, though directly involving federal legislation in the Citizens United case, has covered similar state restrictions, too.  The outcome of Citizens United, of course, could affect both levels.  (Although this is not at the center of the rehearing, the outcome also could affect similar curbs on campaign spending by labor unions. Since 1947, they, too, have been barred from using their own funds to try to influence federal elections.)

What apparently is not at stake (unless the Court ultimately speaks very broadly in favor of corporate “political speech”) are laws that bar corporations from donating their money directly to candidates — the type of ban in effect for more than a century.  The restriction now in dispute — lesser, but still resented by many corporations and their defenders — forbid them from using corporate money to advocate, independently of any candidate organization, the election or defeat of a candidate.  That is what is called “independent spending” on campaigns.  The Supreme Court has upheld that kind of ban — at least when applied to corporations.  Two of the Court’s most important precedents that did so must now withstand fresh scrutiny.

In 1990, in the case of Austin v. Michigan Chamber of Commerce, the Court upheld a Michigan law that barred corporations from using their internal funds to support or oppose any state candidate, even though the spending was done independently of that candidate’s campaign operation.  Only three Justices then on the Court remain on the bench now — Justices John Paul Stevens, Antonin Scalia and Anthony Kennedy.  Stevens’ concurring opinion took a narrow view of the dispute, but found the Michigan law valid.  Scaliaand Kennedy each wrote energetically in dissent, with Scalia opening his opinion sarcastically: ” ‘ Attention all citizens. To ensure the fairness of elections by preventing disproportionate expression of the views of any single powerful group, your Government has decided that the following associations of persons shall be prohibited from speaking or writing in support of any candidate —-‘ “  Corporations, he said, were the first victims of “this Orwellian announcement.”

In 2003, in the case of McConnell, et al., v. Federal Election Commission, et al., the Court upheld a provision of a 2002 campaign finance law that banned corporations – profit and non-profit — from spending their own treasury funds to pay for radio and TV ads in the weeks before federal elections, if the ads contain the name of an actual candidate for President or Congress.  Six Justices then on the Court remain: Justice Stevens, one of the authors of the majority ruling in McConnell, and Justices Stephen G. Breyer and Ruth Bader Ginsburg, who were part of that majority, and Justices Kennedy, Scalia and Clarence Thomas, dissenting on the radio and TV ads provision (the so-called “electioneering communications” provision).

In ordering a new argument in Citizens United in the 2008-09 Term,  the Court said it wanted new briefs on whether the Court, “for the proper disposition of this case,” should overrule “either or both” Austin and the part of McConnell upholding, as written, the law dealing with electioneering radio and TV ads.

Supplemental briefs on the reargued question

The two sides filed their new briefs simultaneously, on July 24.  Though quite short, as merits briefs go, they go to the heart of why government could or would impose  restrictions on the political activity of corporations, independent of candidates but clearly influencing elections.  On what theory, the two sides debate, can the government impose such limits?  And, how does that theory square with the fact that corporations do have — to some degree, at least — a constitutionally protected voice to speak on political questions?

Citizens United spends little of its challenge on the McConnell decision, focusing primarily upon the Austin ruling, which it clearly regards as the more fundamental precedent. If Austin is overturned, it argued, that may well scuttle McConnell, too. Without Austin, it argued, the McConnell decision would be “supported by nothing.”

Austin was wrong when it was decided, and this Court’s subsequent decisions have further undermined its First Amendment analysis,” Citizens United contended.  It would not be enough now, it went on, to find that the current ban on corporate political spending does not apply to the documentary about Hillary Clinton.  The brief made clear that Citizens United does not merely want victory for itself, and for that film; it wants a new constitutional manifesto.  The existing framework for regulating corporations’ political speech, the brief argued, is simply unworkable, because it is rooted in the reasoning that produced the Austin decision.

The flaw in Austin, the brief asserted, was its rationale that the “immense aggregations of wealth” gathered by business in the corporate form have a “corrosive and distorting” effect on politics.  What that has led to, the brief then said, is that some speakers’ political speech must be suppressed to diminish its impact on campaigns. The government, it argued, has no compelling interest in equalizing voices in political discourse, the Constitution does not give corporations fewer rights than individuals, and shareholders do not need the protection against using corporation funds to pay for political messages because “corporate democracy” affords sufficient protection.

To the suggestion that the Court should respect its Austin precedent under the theory of stare decisis, Citizens United argued that members of the Court have repeatedly engaged in criticism of that precedent and urged its overruling, thus diminishing anyone’s real reliance on that precedent.

The FEC’s new brief is essentially a combination of two main elements: an argument that the Citizens United case is not a proper one for reexamining Austin or McConnell, and a practical political argument that overruling those cases would turn loose “vast sums” of corporate spending on politics with “pernicious consequences,” increasing the risk of outright corruption, or at least its apparent existence, making politicians beholden to corporations (and labor unions).

In outlining what it called “idiosyncratic features” of this particular case that make it “particularly unsuitable” to raise large constitutional questions, the Solicitor General’s brief contended that the real issue involves political action by major for-profit corporations, not non-profit advocacy corporations like Citizens United.  The Court, it argued, should await a constitutional case brought by a for-profit corporation, or at least by a non-profit corporation that depends heavily upon money from for-profit firms.  Essentially, the government appeared to be suggesting a legal pass for the ‘Hillary’ movie, and for Citizens United.

The government also asserted that Citizens United had largely abandoned its constitutional argument in this case, and did not press much of a constitutional argument when it took part in the McConnell case six years ago.

Moving on, though, to the continuing validity of Austin and McConnell, the Solicitor General mounted a strong defense of both, should the Court reach the question.  Cautioning the Court that it was being asked to overturn “decades of federal legislation,” to engage in a “direct affront” to Congress which has focused closely and repeatedly on the woes of corporate political influence, and to open corporate treasuries to engage in “actual corruption” of politicians, the brief argued that the Austin precedent should not be treated as if it were an aberration.

Pervading that part of the Solicitor General’s discussion is a simple distrust of major business corporations, especially those that are profit-oriented, when they enter the political arena.  “The nature of business corporations,” the brief said, “makes corporate political activity inherently more likely than individual advocacy to cause quid pro quo corruption or the appearance of such corruption.”  It warned of “pay to play” schemes in which corporations are “better suited than individuals to afford the ante.”   A single company need not even have allies, it can simply pony up the money it needs to get its way, the brief suggested.  And, it added, the special benefits that come from the corporate form should not be allowed to hold sway in politics, too.

Each side got an opportunity to answer the other’s new brief, with reply briefs filed Aug. 19.

Citizens United argued that the government had abandoned the basic rationale for the Austin decision — that is, the supposed distorting effects of large amounts of money — and was now relying on two rationales that Austin did not even consider (preventing corruption, and protecting stockholders).  Neither of those, the reply contended, could possibly apply to Citizens United: it clearly did not corrupt anyone, and Citizens United has no stockholders to protect.  It suggested that the FEC had given up on any challenge to Citizens United’s campaign film, in order to preserve the two prior precedents so that the FEC can rely upon them “to suppress political speech another day.”

The FEC reply reiterated its earlier themes, insisting anew that Citizens United had forfieted its constitutional challenge and now was trying to bring it up belatedly, and arguing even more forcefully about the potential corruption-inducing effect of political activity by for-profit corporations.  In stronger language, the Solicitor General emphasized the point that corporations’ political activity is with “someone else’s” money — that of their shareholders or of their customers.  The brief also expressed astonishment that Citizens United would make an argument that the Court should go ahead and rule on the constitutional issues, even if Citizens United could win the case on narrower grounds.

The case has produced a heavy outpouring of amicus briefs — 40 in all, with 23 of those supporting Citizens United’s side of the case.

If there is a common theme in the Citizens United side’s amici briefs, aside from direct suggestions that the Austin and McConnell decisions must be cast aside because they set up a framework that is simply unworkable and too complex for even experts to apply, it is a clarion call for a much more expansive arena for corporate free speech.  As the U.S. Chamber of Commerce put it: “The corporate form is not a constitutional basis for banning core speech.”  Sen. Mitch McConnell, Kentucky Republic who leads the GOP in the Senate, who will have a lawyer sharing in Wednesday’s argument, argued that “recent campaign finance legislation and litigation spawned by that legislation have too often turned First Amendment principles inside out.”

The collection on that side of the case is polyglot, ranging from the National Rifle Association to the American Civil Liberties Union.  Some are there to plead their own causes, including several who urge the Court to decide the case more narrowly, by exempting not-for-profit corporations from existing restrictions if they draw only minimally on for-profit firms for their support.  The California First Amendment Coalition, for example, suggests that the Court leave for another day whether government can regulate the political speech of for-profit corporations.  The Reporters Committee for Freedom of the Press is in the case, it noted, to assure that, whatever happens to other corporations, news media corporations must be left out of the regulated community.

The FEC has a little more than half as many supporting amici as Citizens United, but its backers have raised the rhetorical intensity considerably.  The strongest words come from Sens. John McCain (Arizona Republican) and Russell Feingold (Wisconsin Democrat) and former House Reps. Christopher Shays, a Connecticut Republican, and Martin Meehan, a Massachusetts Republican — all architects of current federal campaign finance law.  They bluntly warned the Court that it would be “unwarranted and unseemly” to overrule the Austin and McConnell precedents, and argued that doing so would “severely jolt our political system.”  They, too, will have a lawyer at Wednesday’s hearing.

What is somewhat surprising about many of the filings on that side of the case is how few of them undertake seriously to advocate that the Court decide the case on far narrower grounds.  Most of them appeared to be driven by a felt need to take Citizens United on, directly, in its effort to get a sweeping new opening for corporations in American political finance, rising to Citizens United’s bait. The Democratic National Committee, for example, focused on trying to undermine Citizens United’s claim at that broad level, suggesting that the Court did not have before it, in this case, anything like the information or evidence it would need before it could undertake to make “a convulsive change in campaign finance doctrine.”

There are four amici filings that do not choose up sides.  It is there that more effort is made to urge the Court to rule narrowly, perhaps by widening the exemption from existing finance restrictions on non-profit corporations.  Also in the middle are 26 states, voicing worry about the potential negative impact on their campaign finance laws.


It is not at all clear, despite the Court’s reaching out to address ultimate questions about the nature of corporate involvement in politics and the constitutional implications of that, that the case actually will be decided upon such a broad plateau.  If the Court has trouble assembling a majority for a monumental shift in campaign finance law, it might well fall back on a narrowly focused opinion that insulates the “Hillary” movie, and groups like Citizens United.  There are some institutional concerns that might suggest restraint — the way this particular case developed on the issues, the long sweep of history that, however imperfectly, has supported fears of corporate wealth, the abiding view that the Court does not decide broad constitutional issues if it does not have to do so.

But, assume that it is ready to grasp the task of scuttling Austin, and with it the now-disputed section of McConnell, Citizens United might well start with three votes for overruling.  Justices Kennedy, Scalia and Thomas have left no doubts of their sentiments about the basic flaws they have seen in both precedents.  Citizens Untied also has reason to be optimistic — but perhaps less so — about Chief Justice John G. Roberts, Jr., who has already established a clear record of skepticism about federal campaign finance restrictions.  Justice Samuel A. Alito, Jr., has exhibited more moderate strains of that same skepticism, and has even suggested he would consider overruling campaign finance precedents if a clear test were at hand.

The FEC, on its side, probably can anticipate support from Justices Breyer, Ginsburg and Stevens, but at this stage can have no reliable sense of whether Justice Sonia Sotomayor would be the supporter of campaign finance regulation that her predecessor, retired Justice David H. Souter, so clearly was.  And, for them, the reach for a fifth vote would seem to be a longer one.

Assuming that Sotomayor does side with the Stevens bloc, that group definitely needs to rely heavily upon arguments for judicial modesty or “minimalism,” arguments that might stir some hesitation in Justice Kennedy, or perhaps even in the Chief Justice or Justice Alito.

If the ultimate constitutional issues are not reached in this case, there is at least a chance that they would come up again, perhaps in a case raised by a major business corporation, wealthy and with much at stake in the political realm but feeling frustrated by Austin and McConnell.   Or a trade group representing such giant firms.  Does Big Business care as much about this as, say, a non-profit, advocacy organization like Citizens United does?  The answer is not obvious.