Navigation

Update: Options for Reining in Corporate Election Cash in Wake of Citizens United Supreme Court Decision

The Supreme Court’s Citizens United v. Federal Elections Commission (FEC) decision earlier this year gave corporations the same First Amendment rights as citizens with regard to advocating for or against political candidates, unleashing a flood of new corporate cash into state races and a range of new state policy initiatives that aim to protect the integrity of their elections.  In response, states are pursuing other reforms, such as requiring shareholder approval for corporations spending election cash, tighter public disclosure and attribution in ads, public financing of elections, and calling for a federal constitutional amendment to reverse the Citizens United decision.

Laws in twenty four states have been directly affected by the Supreme Court’s ruling and many states have already taken action in response to the decision.  Alaska’s Department of Law issued a memo this February stating that the state's laws prohibiting independent expenditures by corporations and labor unions in political campaigns were likely unconstitutional, but that laws related to contributions to candidates, coordinated expenditures, disclaimers, and disclosures were not directly affected.  In Michigan, the Department of State provided clarification on which portions of the Michigan Campaign Finance Act dealing with the prohibition of independent expenditures by corporations, labor organizations, or Indian tribes were unconstitutional.  In Wyoming, the House debated HB 68, which would have expressly referenced the Supreme Court’s decision by saying, “The prohibitions”¦ shall not be construed to prohibit any organization”¦ from exercising its first amendment rights," although the bill ultimately failed to pass.

Other states have denounced the decision as harmful to the process of promoting clean and fair elections.  Speaking at a US Congressional hearing on the Supreme Court decision, Montana Attorney General Steve Bullock championed Montana’s laws banning corporate campaign spending in candidate elections that have been in place for about 100 years and warned that corporate money can have extreme effects on local campaigns in states like Montana, where in 2008 the average State Senator won with a total of $17,000 in spending.  Read more about Attorney General Bullock’s comments here

In California, Asm. Pedro Nava introduced Assembly Joint Resolution 3 which calls on Congress to “pass and send to the states for ratification a constitutional amendment to restore the power of Congress and state legislatures to safeguard democracy by placing appropriate limits on the ability of corporations to influence the outcome of elections through political campaign contributions and other expenditures." Hawaii's HR 204, Idaho's HJM 12,
New Jersey's AR 64, Pennsylvania HR 653, South Dakota HCR 1018, and Washington SJM 8027 similarly call on Congress to change the federal constitution to reverse the Citizens United decision.

Still, the main avenue for reform will be alternative approaches to regulating campaign donations. See this page at People For the American Way (PFAW) for an extensive list of individual state bills, but the following are a few examples of state approaches.

Requiring Shareholder Approval:  A national poll commissioned by PFAW reveals that following Citizens United, 75 % of respondents believed that a publicly traded company should get shareholder approval before being able to spend money in an election.  Bills introduced in Maryland (HB 616, HB 986, and SB 570), New York (A 9948), Iowa (SF 2354), and Wisconsin (SB 540 and AB 812) reflect these findings.  If passed, these bills would require companies to get approval from their Boards of Directors and/or stockholders before making independent expenditures.  South Dakota (SB 165) and West Virginia (HB 4646 and SB 692) also attempted to pass such provisions, but failed.  If passed, these shareholder approval laws could have a great impact on independent expenditures as many companies will not want to attempt the arduous approval process.  The Center for Competitive Politics provided a brief overview of some of the potential legal challenges for states in requiring such shareholder approval.

Disclosure and Attribution:  States including Alaska, Arizona, Connecticut, Minnesota, New Hampshire, Ohio, South Dakota, Tennessee, and West Virginia are seeking to apply either old or newly-written laws surrounding campaign finance disclosure and political advertisement disclaimers.  Language in Connecticut’s HB 5471 would require the maker of an independent expenditure to identify itself.  In television or Internet video advertising, this means that an image of the entity’s Chief Executive Officer must accompany the advertisement, with a personal audio statement saying, “I am”¦(name of entity’s  Chief Executive Officer or equivalent), ”¦(title), of”¦(entity).  This message was made independent of any candidate or political party, and I approved its content.”  In Tennessee, Rep. G.A. Hardaway and Sens. Reginald Tate and Beverly Marrero are seeking to pass bills (HB 3713/SB 3798) that would make it a class B misdemeanor if corporate funds are used to help or hinder a candidate’s election campaign.

Public Financing of Elections:  Ultimately, any restriction on corporate money may be doomed to fail given the ability of companies to launder political support through multiple channels.  Instead of restricting "bad" money, many analysts see public financing of elections as the best chance to ensure that alternative voices to corporate speech get heard by the public. 

Current public financing systems mostly provide small grants to state parties (10 states), give money to candidates in some selected races (16 states), and offer tax breaks to citizens who contribute to political campaigns (9 states).  The National Conference of State Legislatures (NCSL) and Common Cause provide a breakdown of public financing provisions in the states.

A few states, including Arizona, Connecticut and Maine, have more comprehensive “Clean Elections” statutes by which state legislative candidates can receive almost all of their campaign money from public funds, and in exchange, candidates are prohibited from raising private money.  While voluntary, this version of public financing can have a huge impact on the way money and politics work together.  Maine’s program under the state's Clean Election Act has been hailed as particularly useful in that candidates running for Governor or for the State Legislature raise seed money contributions in order to qualify for full financing from the state.  In 2008, 81 percent of Maine’s legislative candidates participated because public opinion favors candidates who run clean.  See Public Campaign's website for more on clean election approaches.

With corporate political advertisements already hitting newspapers and the 2010 elections just around the corner, states are beginning to discuss action but most states have a long way to go in finding alternatives to stop corporations from taking over elections in the wake of Citizens United.

Resources:
Progressive States Network -States Act to Limit Judicial Ruling Allowing Corporations to Spend Directly to Elect or Defeat Candidates
People for the American Way - Legislation to Fix Citizens United
Brennan Center for Justice - Shareholder Consent is Key in Political Spending
National Conference of State Legislatures- Life after Citizens United
Public Campaign - In-Depth Resources on Public Financing of State Elections

Theresa Chalhoub is a Progressive States Network Legal Intern.  She is a second year student at the New York University School of Law.