One virtue of the Supreme Court’s lamentable January 21 decision striking down all restrictions on corporate (and, by implication, union) independent spending in federal election campaigns is that Congress might be able to fix the biggest problem that the five conservative justices created.
Contrary to many a liberal critique, that problem is not that additional corporate and union cash will pour into campaigns and send the political corruption quotient soaring. It is that few stockholders (or union members) have consented to such corporate or union spending of their money.
And the most logical, politically viable, and constitutionally defensible solution would be a law requiring such consent.
The justices would likely — and justifiably — strike down any congressional response designed simply to keep as much corporate cash out of politics as possible, such as banning campaign spending by federal contractors. The Court has held for more than 30 years that independent spending on campaigns is protected speech that cannot be restricted either in the name of minimizing corruption or to limit the political clout of rich people. That’s why Citizens United v. Federal Election Commission was correct as applied to nonprofit ideological corporations whose very purpose is to advance political causes and candidates.
A for-profit corporation is different. Investing in its stock in no way signals consent for the company to spend that money attacking political candidates whom many of its stockholders support, or endorsing candidates whom many oppose.
Assume that an oil company of which I am a stockholder plans to buy TV ads urging the defeat of a senator to whom I have contributed $50. Suppose further that I don’t want to sell the stock because I think it’s a good investment, and I don’t want to pay a capital gains tax. Shouldn’t I have a chance to vote on whether to authorize my company to spend my money attacking a candidate whom I support? And wouldn’t such a vote be a vindication, not a denial, of stockholders’ First Amendment rights?
Justice Anthony Kennedy’s majority opinion fantastically assumes that the existing "procedures of corporate democracy" — a contradiction in terms in the view of many experts — are adequate to protect stockholders in such matters.
The conservative justices might therefore throw out a law requiring special stockholder votes on proposed election spending. One rationalization might be that government cannot restrict some kinds of corporate speech more than others.
Shouldn’t I have a chance to vote on whether to authorize my company to spend my money attacking a candidate whom I support?
Kennedy’s facile assumption rests, however, on an empirical fallacy that careful congressional fact-findings could demolish and that the Court might be shamed into abandoning. Specifically, Congress could amass empirical evidence that the "corporate democracy" that Kennedy touts is manifestly inadequate to protect stockholders who don’t want their money spent on politics, especially the many who invest in mutual funds owning dozens or hundreds of stocks.
Congress could also compile evidence that friendliness to a corporation’s parochial economic interests — which under corporate law is the only justification for spending on campaigns — is not the criterion that most stockholders use to decide which candidates to support.
Requiring a stockholder vote would be consistent with Kennedy’s cryptic suggestion that if Congress thinks stockholders need more protection, "the remedy is not to restrict [corporate] speech but to consider and explore other regulatory mechanisms."
Some supporters of Citizens United argue that all of this is beside the point because a literal interpretation of the First Amendment — "Congress shall make no law… abridging the freedom of speech, or of the press… " — appears to give business and union leaders the same free-speech rights as individuals.
True. But that’s not to vest in CEOs and union bosses a right to spend other people’s money on political campaigns.
In any event, the justices have never adopted a strictly literal interpretation of the First Amendment. That would require striking down the ban on campaign spending by foreigners and foreign governments as well as the ban on direct corporate and union campaign contributions to candidates, caps on individual contributions, and restrictions on campaign speech by federal employees, among other laws.
It might also be argued that a special shareholder-vote requirement for election spending would perpetuate the somewhat arbitrary exemption of media corporations from campaign finance restrictions and treat election spending differently from issue advertising and other forms of speech.
But these distinctions are no more arbitrary, nor less justified, than the distinction between campaign contributions and "independent expenditures" that has been a cornerstone of campaign law since the seminal 1976 decision in Buckley v. Valeo.
Buckley upheld dollar caps on individual contributions as justified by the "compelling governmental interest" in avoiding the reality or appearance of quid pro quo corruption. And Citizens United did not touch the 103-year-old ban on corporate campaign contributions.
On the other hand, Buckley struck down all limits on "independent expenditures" by individuals supporting or opposing federal candidates. Such spending could not be seen as a corrupt exchange of money for influence, the Court ruled, unless coordinated with the candidate’s own campaign. Buckley also held that government may not "restrict the speech of some elements of our society" — the rich — "in order to enhance the relative voice of others."
The justification for this contribution/expenditure distinction gets pretty weak at the extremes. Under current law, for example, George Soros could spend $1 billion independently to re-elect President Obama, offsetting thousands of contributions to his opponent. That’s hard to stomach even if it’s not corrupt. And would a coal baron’s TV ads supporting a senator’s primary campaign verge on quid pro quo corruption if they were seen as an implicit promise of similar support in the general election depending on how the senator votes?
Many liberals have long sought to sharply limit the political clout of the rich by overruling a big chunk of Buckley v. Valeo and imposing unduly tight curbs on independent political expenditures.
For their part, conservatives, including Justices Antonin Scalia and Clarence Thomas, have called for overruling another big chunk of Buckley by striking down all caps on contributions. It’s unclear how far the three other conservative justices would go down that road.
But I can’t find a mandate in the First Amendment for five unelected justices to destroy the entire edifice of campaign finance legislation that Congress has erected over more than a century — and the Court has, to a substantial extent, upheld — based on copious legislative findings that huge campaign contributions create at least an appearance of corruption.
Unlovely and unpopular as the contribution/expenditure distinction is, the alternatives may be worse. At one extreme, limits on independent campaign spending have no principled stopping point, and could be set so low as to discriminate between classes of voters and stifle a great deal of political speech. At the other extreme, striking down all restrictions on contributions might usher in an era of bought-and-paid-for politicians far more corrupt and grotesque than anything we have seen.
Or it might not. Experts "say the evidence is meager, at best, that the post-Watergate campaign finance system has accomplished the broad [anti-corruption] goals its supporters asserted," David Kirkpatrick wrote in The New York Times on January 24.
I suspect that most stockholders would vote against most corporate campaign spending proposals.
To be sure, the burdens imposed by the incomprehensible complexity of the campaign finance laws tempt me to wish that Congress (not the Court) would repeal the whole mess and rely instead on disclosure laws, voters’ ability to smell out bought-and-paid-for candidates, and perhaps some form of public financing.
But that’s no argument for allowing corporations to spend stockholders’ money on elections without meaningful consent.
A consent law would be tricky to draft. Requiring that all stockholders consent would virtually re-enact the ban that Citizens United struck down. But something like the following would be quite reasonable.
• Any proposed spending to support or oppose any federal candidate must be approved by the board of directors, with public disclosure of each director’s vote.
• The proposal must be distributed to all stockholders at least 30 days before the first proposed expenditure and must specify the names, party affiliations, and offices sought by any federal candidates to be mentioned; the maximum amounts to be spent; and how this would benefit stockholders.
• The corporation may proceed with the proposed expenditures supporting or opposing a candidate only if the owners of a majority of all outstanding shares, or two-thirds of all voted shares, consent.
• If mutual funds or other institutions holding baskets of many stocks consider the above requirements impractical, they may instead ask their investors to choose between three options: to vote their shares for all proposed political expenditures; to vote against them all; or to allow expenditures at the institution’s discretion.
I suspect that most stockholders would vote against most corporate campaign spending proposals and that managers and boards would be reluctant to risk such votes and the resulting publicity. If I am right, the much-feared deluge of corporate political spending might never materialize.