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States Act to Limit Judicial Ruling Allowing Corporations to Spend Directly to Elect or Defeat Candidates

Portending a sharp increase in corporate political spending, the Supreme Court has ruled (Citizens United v. FEC) that corporations enjoy the same speech rights of citizens when it comes to advocating the election or defeating political candidates.  Elected officials, including U.S. President Barack Obama, have denounced the ruling as striking at the heart of our democracy by putting corporations on an equal footing with real people when it comes to basic constitutional rights.  Progressives who are trying to counter the oversized influence of giant corporations on our democracy have long viewed the granting of full first amendment rights to corporations as the moment when these creations of the state would end up rampaging on the political scene like Frankenstein's monster.  That day has now arrived and a forceful response is being pursued by policymakers at all levels of government.

Most States Don't Even Have Basic Disclosure Requirements:  As expected, much of the early debate has focused on the ability of the federal government to write new rules which will stem the tide of corporate cash likely to flood the political landscape in the mid-term congressional elections and beyond.  Yet, only 24 states currently prohibit corporations from spending their treasury funds to promote or attack a candidate for state or local office, and many lack the disclosure and disclaimer requirements that serve as a last line of defense for citizen control over our elections.  And even if the federal government does respond forcefully, state and local elections will not be covered in federal statute, meaning that states must act independently to protect their own democratic processes.  Given this, there clearly is an imperative for states to strengthen their campaign finance laws, placing limits on corporate spending where possible and allowing access to information on corporate spending to support or oppose which candidates. 

Using Corporate Accountability to Rein in Spending:  Lawmakers at both the federal and state levels are developing and moving forward with a series of proposals that will seek to directly counter the impact of the ruling by protecting the interests of shareholders, remove tax benefits for political spending, prevent foreign-owned corporations from electioneering, and ban political spending by government contractors, among other things.  These are in addition to measures to strengthen current disclosure and disclaimer requirements.  The first state to act has been Maryland, where Senators Jamie Raskin and David Harrington, and Delegate Brian Frosh have introduced a package with the following measures:

  • Require any corporate executives to obtain a two-thirds vote of the shareholders ratifying the specific expenditure. (This is the same percentage of the shareholders required for mergers and acquisitions.)
  • Prevent "pay to play" corruption (and its appearance) by forbidding state contractors to make campaign expenditures on behalf of political candidates and their campaigns.
  • Mandate that corporations disclose their expenditures to the Board of Elections just as any other campaign expenditure would be reported.

Speaking to the critical need for these reforms Sen. Raskin commented that:

"[a] strong democracy requires a wall of separation between corporate money and public elections, but five justices on the Supreme Court last week took a sledgehammer to that wall.  In Maryland, we are beginning to explore ways to contain the damage of this devastating opinion.  By assuring that corporate political expenditures only occur when two-thirds of the shareholders agree, that all such expenditures are disclosed, that state contractors not participate in partisan campaigns at all and that corporate political expenditures not be tax-deductible, we have started to spell out a program that can be used nationally to make sure that 'we the people' doesn't turn into ”˜we the corporations."

Corporate Transparency in State Budgets as a Tool:  Another key part of campaign spending accountability is making clear how different companies are benefiting from government spending, whether from direct subsidies, government contracts or various corporate loopholes.  State lawmakers working with Progressive States Network on our Corporate Transparency in State Budgets campaign are seeking to make sure that key information on all of that corporate largesse from government is publicly available.  Any time corporations are seen spending money on elections, information on the spending and tax deals they receive from state governments should be instantly available to voters to put any election claims in perspective.

See here for model corporate transparency legislation and a resource page for the campaign.

Challenging Judicial Bias Towards Corporate Power:  In addition to his legislative response, Sen. Raskin and others are also working to generate pressure for a federal constitutional amendment through the website FreeSpeechForPeople.org.  Several other groups are moving in the same direction as well (see here, here and here).  And moving on another track are advocates from the Fair Elections Now Coalition who have brought together over 40 business leaders to denounce the corporate takeover of campaigns and pledge to not engage in political speech with corporate treasury funds.  Members of this coalition are also emphasizing that while these are some basic rules we can lay down to reduce the flood of corporate cash, it is clear that without alternative, clean, funding mechanisms there is no way to free our democracy from the grip of corporate power.

What does the future hold for campaign laws?  Likely more change is coming.  The current court has taken every opportunity (and even created the most recent opportunity) to strike down restrictions on independent expenditures.  In a case argued just yesterday, the DC Court of Appeals made clear that they will strike down the $5000 cap on contributions to political non-profits.  This trend makes it even more important that states develop robust disclosure and disclaimer requirements, restrictions on government contractors, requirements for corporate accountability, and clean elections campaign finance reform.

Resources:
Citizens United v. FCC
The New York Times - Justices, 5-4, Reject Corporate Spending Limit
Maryland Corporate Campaign Package Press Release
Fair Elections Now
Free Speech For People
Public Campaign - Clean Elections Overview
Progressive States Network - Corporate Transparency in State Budgets