Miami Herald: Supreme Court to examine corporate spending in elections

By DAVID G. SAVAGE
Tribune Washington Bureau

Aug. 20, 2009 — President Teddy Roosevelt campaigned as a trust-busting reformer, but was embarrassed by revelations that his 1904 campaign had received secret contributions from New York insurance companies.

Shamed into action, he soon exhorted Congress: “All contributions by corporations to any political committee or for any political purpose should be forbidden by law.” Ever since, U.S. law has restricted corporate money in politics.

Now, however, this century-old legal rule stands in danger of being overturned by the Supreme Court’s conservative majority, which has embraced an equally venerable principle: free speech in politics.

The justices signaled the prospect of a profound shift in election law by scheduling an unusual special argument for Sept. 9. At issue will be whether to overturn two prior rulings that limit corporate spending in elections.

In the first, the court in 1990 had upheld a state law barring corporations from using their “immense aggregations of wealth” to buy ads to oppose or endorse a candidate. Justices Anthony M. Kennedy and Antonin Scalia dissented.

The second was the 2003 ruling upholding the McCain-Feingold Act by a 5-4 vote, including its ban on corporate or union-funded broadcast ads that target a candidate in the month prior to an election. Justices Scalia, Kennedy and Clarence Thomas dissented, along with the late Chief Justice William H. Rehnquist.

The two precedents are endangered by a new case growing out of last year’s presidential election and involving the video “Hillary: The Movie.” Between the earlier rulings and the latest case, however, the makeup of the court has changed. Three years ago, the majority flipped when Justice Sandra Day O’Connor retired and Justice Samuel A. Alito Jr. replaced her. With O’Connor, a narrow majority supported the campaign-finance laws. Now, five of the nine justices are skeptics and have said government restrictions on political spending violate the First Amendment.

With the corporate spending limits suddenly at risk of reversal, advocates of campaign funding laws are sounding the alarm. Striking down corporate spending limits would be “a radical step” that would change the character of elections, said Fred Wertheimer, president of Democracy 21.

“Banks like Citicorp, investment firms like Merrill Lynch and insurance companies like AIG would be free to spend hundreds of millions of dollars of their corporate wealth to directly support the election of federal officeholders who do their legislative bidding and to directly oppose (those) who refused to carry out their wishes,” Wertheimer said.

“This could take us back to the era when people referred to the senator from Standard Oil,” agreed Washington lawyer Trevor Potter, who last year advised GOP Sen. John McCain’s presidential campaign. “If you have hundreds of millions of corporate dollars flowing into these races, it could drown out the speech of ordinary voters.”

Skeptics of the campaign-finance laws are not convinced.

“This would not be the end of democracy,” said Bradley Smith, a law professor at Capital University in Ohio and a former chairman of Federal Election Commission. About half the states permit corporations to spend freely in state races, he said, and few corporations have chosen to invest large sums in those election contests.

Others note that wealthy individuals, such as financier George Soros or New York Mayor Michael Bloomberg, already spend vast sums of money to sway elections or to support their own candidacy. At issue now before the court is whether to erase the legal distinction between corporations and individuals.

“If dancing nude and burning the flag are protected by the First Amendment, why would it not protect robust speech about the people who are running for office?” asks Washington lawyer Theodore B. Olson, who is leading the attack on the federal campaign law.

Olson, the former U.S. solicitor general, represents Citizens United, the small, nonprofit company that produced “Hillary: The Movie,” which derided the former first lady as ruthless and untrustworthy.

Conservative activist David Bossie, who heads Citizens United, compared his anti-Clinton video to “Fahrenheit 9/11,” the commercially successful documentary by left-leaning film director Michael Moore that mocked President George W. Bush as he ran for re-election in 2004.

Bossie intended his film for viewing last year – and possibly for broadcast on TV – in anticipation that Clinton would be running for president as the Democratic nominee. But the film got tied up in a legal battle over whether the federal laws regulating corporate-funded “electioneering communications” applied to new types of campaign videos produced by nonprofit corporations.

The Federal Election Commission decided “Hillary: The Movie” was covered by the law. This limited how it could be shown, and it meant Citizens United must disclose its donors. A lower court upheld that determination, but the Supreme Court agreed to hear an appeal from Citizens United.

In March, when the case was argued, the justices did not focus on the details involving the video, but on whether the law itself was suspect. At one point, the lawyer defending the FEC was asked whether Congress could ban a corporate-funded book during an election year that attacked a candidate.

Yes, although no such law exists, the FEC lawyer replied.

“That’s pretty incredible,” Alito replied.

In June, rather than deciding whether the election laws applied to the anti-Hillary movie, the justices announced instead they would hear a special argument on whether to overturn its precedents that limit election spending by corporations.

That announcement kept election lawyers busy through the summer.

The outcome – whether a broad ruling on the law or a narrow one pertaining to the video – may well depend on Chief Justice John G. Roberts Jr. So far, he has taken the free-speech side, but only narrow questions of law. Now, he faces the question of whether to broadly overrule longstanding laws.

The case will be first for new Justice Sonia Sotomayor. She replaces Justice David H. Souter, who steadily supported the campaign-finance laws, and she is expected to do the same.

It will also be the first argument for Obama administration Solicitor General Elena Kagan.

“Corporations are artificial persons endowed by the government with significant special advantages that no natural person possesses,” she wrote in her brief to the court. They “do not age, retire or die,” but they “can amass great wealth.”

Because they are state-created entities, the court should stick with its precedents and limit their role in American politics, she said.

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