By Krist Novoselić (May 26, 2016)
The most notorious Supreme Court ruling of recent times is 2010’s Citizens United v. F.E.C. This ruling has captured many an imagination with the idea that the Court somehow turned “corporations into people” or that money was created into speech. This article is not about propagating these useless catchphrases, rather, it is about how independent campaign expenditure prohibitions bump into 1st Amendment protections. I look at the history of attempts to regulate independent campaign expenditures and how, in the process, a state censorship board was created.
On February 5, 1972 President Nixon signed the Federal Election Campaign Act of 1971 (FECA) into law. The New York Times reported that some considered the Act “a revolution in American political finance”[i]. While it may not have materialized any revolution, this legislation, and its progeny certainly have caused much judicial and legislative controversy—casting a shadow that affects us to this day.
FECA arose from the demand for reform after campaign finance abuses of the time. The legislation required detailed disclosure of campaign contributions; set campaign contribution limits to candidates, parties and committees; set expenditure limits on campaigns, independent groups and individuals and created the first public financing of presidential campaigns and national conventions. Under the Act, the Comptroller General of the United States General Accounting Office monitored compliance with FECA. 1972 was an election year, therefore it did not take long for the new law to become embroiled in campaign politics.
A group called "The National Committee for Impeachment," purchased a full two-page advertisement in the May 31, 1972, issue of The New York Times (Times). Under the title of "A Resolution to Impeach Richard M. Nixon as President of the United States" the advertisement was critical of the sitting president’s Vietnam war policies. The group also stated it would, “devote its resources in funds and publicity in aid of any new candidate for election to the House of Representatives” who supported impeachment of Nixon.
The Nixon administration soon after filed a complaint under FECA’s § 301(f), claiming that this two-page advertisement was effectively a campaign expenditure. Nixon alleged the group “attempted to influence the outcome of various Congressional primary and general elections” [ii], along with, "the outcome of the 1972 Presidential and Vice Presidential elections." The United States Department of Justice issued an injunction against the impeachment group, and also let it be known it was considering prosecuting the Times for running the advertisement.
The United States Court of Appeals, Second Circuit decided on October 30, 1972 that “The dampening effect on first amendment rights and the potential for arbitrary administrative action that would result from such a situation would be intolerable.”[iii] In a narrow ruling, the Second Circuit found this single newspaper advertisement failed to establish a close nexus between the impeachment group and a specific candidate. While FECA’s expenditure limits may have survived this challenge, there was still unease over the government’s potential to stifle political speech.
On October 27, 1972 a full page ad ran in the Times with the title “It Took A Court Order To Get This Advertisement Printed”. In fact, the action of obtaining an order is exactly what the ACLU did before it purchased the advertisement. On December 9, 1972, the Times published a letter to the editor from Aryeh Neier, Executive Director of the American Civil Liberties Union (ACLU)[iv]. Mr. Neier was defending the advertisement and was in response to another letter published in the Times a day after the advertisement ran by Phillip S. Hughes, Director of the Office of Federal Elections. Mr. Hughes asserted that such an order was not needed to run the advertisement. Mr. Neier stated that the order was obtained to “vindicate our right not to submit materials we wish to publish for prior review by any government agency.” Mr. Hughes may be correct that such an order was unnecessary, nevertheless, the ACLU obtained the order to make the point that expenditure limitations could potentially stifle free speech.
While the 1972 ruling regarding the impeachment advertisement expressed concerns over “arbitrary administrative action” by the government, nonetheless, FECA became a political weapon used by warring campaigns during elections. Accusations of breaking the rules were flying, however, according the the Federal Election Commission, following the 1972 elections, few of the nearly 7,000 cases referred to the Justice Department and the Comptroller General by congressional officials were litigated[v].
In 1974, after campaign finance abuses in the 1972 presidential election came to light, Congress amended FECA. The result was tighter contribution and spending limits[vi]. In addition, the Federal Election Commission, now an independent body appointed jointly by Congress and the President, was established. Another amendment exempted media companies from falling under independent expenditure prohibitions to “ensure the unfettered right of the newspapers, TV networks, and other media to cover and comment on political-campaigns.”[vii] Other than the media exemption, FECA’s amendments were immediately challenged by presidential candidate Eugene McCarthy, New York US Senator James Buckley, the Libertarian Party, the ACLU and other groups.
On January 30, 1976 the Supreme Court of the United States (SCOTUS) ruled unanimously in Buckley v. Valeo[viii] that, among other issues, the expenditure limits were unconstitutional restraints on speech. The Court rejected arguments defending the law that expenditures were conduct and not speech. Unlike the burning of a draft card—which is determined to be conduct and not speech—the Court said, “some forms of communication made possible by the giving and spending of money involve speech alone, some involve conduct primarily, and some involve a combination of the two.” Even though prior rulings such as the impeachment newspaper advertisement were narrowly construed as outside of the scope of FECA, the law’s expenditure limits were found generally to be "suppressing communication." The Court said,
A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money. The distribution of the humblest handbill or leaflet entails printing, paper, and circulation costs. Speeches and rallies generally necessitate hiring a hall and publicizing the event. The electorate's increasing dependence on television, radio, and other mass media for news and information has made these expensive modes of communication indispensable instruments of effective political speech.
Buckley provides the template for today’s campaign finance regime; where contribution limits are acceptable, while independent expenditure proscriptions, imposed on certain groups and individuals, are not. The ruling also protects other aspects of our current campaign financing law. Buckley upheld FECA’s provisions such as the public financing of campaigns, direct campaign contribution limits and campaign financial disclosure. Buckley invalidated how FEC members were appointed, however, the legislative fix that preserves the separation of power stands to this day in the form of the Federal Election Commission (FEC). The decision also invoked First Amendment free speech rights by establishing that there should be no constraints on self-financing candidates—for, how can a candidate corrupt themselves?
The Court addressed independent expenditures with issue advertisements “that in express terms advocate the election or defeat of a clearly identified candidate for federal office”. FECA’s $1000 expenditure limit on communications not containing “express words of advocacy (so-called "magic words") of election or defeat, such as ‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote against,’ ‘defeat,’ ‘reject’” was declared a violation of free speech rights. Independent expenditures are just that, uncoordinated and not connected to a campaign. Therefore, the Court said corruption is seemingly impossible, “The absence of prearrangement and coordination of an expenditure with the candidate or his agent . . . alleviates the danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.” The lack of the magic words of express advocacy can move a political message—along with the groups who espouse them—through the walls of direct contribution limits. The resulting ghost-like creature is the Political Action Committee (PAC) resulting in the soft money / hard money dynamic; which defines how and where finances are allocated in today’s elections.
Hard money is a campaign contribution given directly to a candidate’s campaign. Contributions must be made with funds that are subject to the FECA’s disclosure requirements and amount limitations. The current contribution limitation to a candidate is $2,700. Soft money is the funding of an issue advertisement that does not contain express words of advocacy of election or defeat. There are no contribution limits to this kind of communication. The effect of this is hard money limits are avoided with communications that resemble advocacy, however, lacking the express or “magic words”, technically are not coordinated with a campaign. The soft money dynamic is a giant loophole that FECA and its amendments has tried to contain. Despite Buckley’s position on allowing independent campaign expenditures, a state took aim at this loophole. Once again, newspaper advertisements were caught in the First Amendment issues arising from expenditure prohibitions.
Austin v. Michigan Chamber of Commerce (1990) was a challenge to the Michigan Campaign Finance Act. The Court ruled, six to three, that Michigan could prohibit corporations—other than media companies—from using treasury funds with independent expenditures in campaigns[ix]. The Act, however, did still allow corporations to use segregated funds for the purpose of electioneering. The Chamber, from within its treasury funds, wanted to run a political advertisement in a newspaper in favor of a candidate for state office. The group wanted to enjoin the statute as unconstitutional, but SCOTUS overturned an Appeals Court decision and let the Michigan law stand. The majority in SCOTUS said the expenditure limit did not violate the Fourteenth Amendment by singling out certain corporations because, “the State's decision to regulate only corporations is precisely tailored to serve the compelling state interest of eliminating from the political process the corrosive effect of political ‘war chests’ amassed with the aid of the legal advantages given to corporations[x].”
The Chamber cited Massachusetts Citizens for Life (1986), a SCOTUS ruling regarding corporate expenditures[xi]. In this case, a group / corporation opposed to abortion was allowed to electioneer because of its “narrow focus”. Citizens for Life were not a business group, rather, they held the sole purpose of expressing a single political opinion. The Chamber, on the other hand, was made up of businesses, who had an economic incentive to be part of this economic advocacy group. The crucial point with upholding the Michigan expenditure limit is the economic advocacy group could be a way for these business interests to circumvent the individual contribution limits of Buckley. The Court frowned on how the Chamber could be a convenient soft-money conduit.
Despite FECA and its amendments, along with various court rulings—campaign finance laws could still not contain spending. For example, during the 1996 presidential election, the Democratic administration of Bill Clinton became embroiled in controversy regarding foreign contributions. As a result, in 2002 the FEC imposed a record-setting $719,000 in fines against the Democratic National Committee, the Clinton-Gore campaign, a group known as The Buddhist Temple and nearly two dozen people and corporations acting as conduits for illegal contributions[xii]. Amidst this scandal, and the fact that the Republican and Democratic parties had each raised and spent $500 million between 1998 and 2000[xiii], Congress was ready to act on campaign finance reform again.
The Bipartisan Campaign Reform Act of 2002 (BCRA), offered a series of amendments to FECA and has been referred to as “the most significant change in federal campaign finance law since the early 1970s[xiv]” As a result of Austin, which upheld expenditure prohibitions—even after Buckley—the BCRA contained limits on campaign spending by corporations and unions. §441b. said, in part, it was, “unlawful for any national bank, or any corporation organized by authority of any law of Congress, to make a contribution or expenditure in connection with any election to any political office”. These limits were within a certain timeframe preceding federal primary and general elections. This means electioneering communications, including newspaper ads, were off limits for certain groups during the election season. The BCRA was sued immediately, with Senator Mitch McConnell leading the plaintiffs; which included the ACLU who called the new law, “a double-barreled attack on political freedom in America[xv].”
With this challenge, SCOTUS once again ruled on campaign finance reform laws in 2003. McConnell v. F.E.C[xvi] was a long opinion written by Justice Sandra Day O’Connor and Justice Paul Stevens for the majority. This opinion gives a comprehensive history of campaign finance legislation. They recall the T. Roosevelt administration and the Tillman Act of 1907. They mention other campaign finance legislation such as the Hatch Act passed shortly after World War II. Of course, FECA looms large in McConnell, with the reform spirit of that 1972 legislation setting the tone of this jurisprudence.
The McConnell majority were uneasy about the rigid quid pro quo standard of corruption with campaign financing established in Buckley. This legal term means that there is an exchange for money between the contributor and the office seeker only for the purpose of buying a favor. In essence, the contribution is a bribe. The McConnell majority provide a nuanced view, citing undue influence with campaign contributions[xvii]. They said the quid pro quo standard is too narrow, reasoning that substantial donations gain access or ingratiate high-level government officials; hence the influence. The majority then lament how soft-money loopholes in the system funnel ever increasing amounts of money, “Of the two major parties total spending, soft money accounted for 5% ($21.6 million) in 1984, 11% ($45 million) in 1988, 16% ($80 million) in 1992, 30% ($272 million) in 1996, and 42% ($498 million) in 2000” [xviii]. Their frustration is that money in elections was ballooning regardless of 30 years of FECA. Considering the incessant growth of money in politics, and concerns over influence it tends to garner in elections, an alarmed SCOTUS majority did not have the heart to overturn the 2002 BCRA expenditure prohibitions.
The McConnell majority said that express advocacy and the loopholes of, “the presence or absence of magic words cannot meaningfully distinguish electioneering speech from a true issue ad”[xix]. This is the key to their ruling upholding expenditure prohibitions. Advertisers could easily evade express advocacy restrictions. This evasion made attempts at reform “a pile of legal rubble”[xx]. They add the soft-money loophole has “destroyed our campaign finance laws.” Therefore, the BCRA independent expenditure prohibitions close off these soft-money conduits.
The McConnell majority opinion is essentially a lecture on how campaign finance regulation is in the public interest. The opinion reads like the Court throwing up their arms frustrated, urging that something needed to be done! It is like they were saying that if the cost of trying to contain growing campaign spending—and the undue influence it can buy—is at the expense of some First Amendment free speech protections; then so be it. The cost of this decision would soon appear.
The 2004 election was a year into the United States’ Operation Enduring Freedom. This invasion and occupation of Iraq was a reaction to the devastating September 11, 2001 attacks on Washington DC, New York City and in the air in Pennsylvania. Filmmaker Michael Moore released a film critical of the George W. Bush administration’s Iraq war policies. Fahrenheit 911 was reviewed by the Times who said, “it is not a fair and nuanced picture of the president and his policies”[xxi]. The reviewer also called the film “partisan”. George H.W. Bush, the ex-president and father of the subject of the film called Fahrenheit a “vicious attack” on his son[xxii]. Released in June, the documentary was caught in the middle of presidential election year politics—and BCRA expenditure prohibition periods. The nature of the film was not lost on other partisans and a formal complaint was made to the FEC.
Dale A. Clausnitzer alleged Fahrenheit 9/11 constituted an independent expenditure by Mr. Moore’s corporation Dog Eat Dog Films because the film expressly advocated the defeat of President Bush[xxiii]. The FEC disagreed and determined, “the film, associated trailers and website represented bona fide commercial activity, not ‘contributions’ or ‘expenditures’ as defined by the Federal Election Campaign Act”. Mr. Moore’s film was essentially ruled as entertainment by the FEC—even though it was a partisan attack in the middle of an election year. It is very plain Mr. Moore’s production company had a similar partisan intention as the The National Committee for Impeachment did in 1972, however, what was different is how communication technology had progressed significantly in the 40 years since that election season.
Mr. Clausnitzer’s complaint noted that a partisan site, ReDefeatBush.com, provided a link to Michaelmoore.com; a corporate asset of Moore’s production company, which also provides political advocacy[xxiv]. The complaint mentioned a link to MoveOn.com and MoveOn PAC, another Democratic / left-wing advocacy group. In other words, there appeared to be coordination, through new technologies, to target the incumbent president. Like the group seeking Nixon’s impeachment, Moore’s political statement survived electioneering complaints rooted in expenditure prohibitions. This is a victory for free speech, however, the tensions with these expenditure bans and the First Amendment would hardly go away.
In 2008, there was an open seat for the office of president. Former First Lady and United States Senator Hillary Rodham Clinton (NY) was caught in a tough fight for the Democratic party nomination. Long a foe of right-wing partisans, this prominent political figure was a major target. In 2007, a right-wing advocacy group called Citizens United made their own documentary with Sen. Clinton as the subject. Like Moore’s film, Hillary: The Movie (Hillary) is an attack on a candidate for president. Citizens United was prepared to give a pay-per-view cable company $1.2 million to make Hillary available on a channel called “Elections ‘08”[xxv]. This way, the film was available to cable viewers free of charge. The proposal also included airing 30 second advertisements promoting the work. SCOTUS, in their Citizens United v. FEC ruling, called these advertisements “pejorative” towards Sen. Clinton[xxvi].
Citizens United filed a complaint in District Court in December of 2007 requesting that the Court prevent the FEC from enforcing electioneering communications provisions. The group also asked that the disclosure at the end of the advertisements for the film be declared unconstitutional[xxvii]. The District Court denied both of these requests and the case was appealed.
On January 21, 2010, SCOTUS issued its ruling with Citizens United v. FEC, on the grounds expenditure prohibitions violated First Amendment protections, “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech”[xxviii] The notion of “corporate personhood”—a term not used in the opinion—was referenced. The majority said even though, “state law grants corporations special advantages—such as limited liability, perpetual life, and favorable treatment of the accumulation and distribution of assets. This does not suffice to allow laws prohibiting speech.”[xxix] The Court rejected the undue influence standard found in McConnell as being “unbounded”[xxx] reasoning, “The fact that speakers may have influence over or access to elected officials does not mean that these officials are corrupt”[xxxi]. The quid pro quo standard was therefore restored.
There were conflicting legal precedents regarding expenditures, so the court could choose which course of law to follow. The narrowly tailored public interest cited in Austin was overruled. Citizens United instead cited Buckley; rejecting any government interest “in equalizing the relative ability of individuals and groups to influence the outcome of elections.”[xxxii]
Citizens United did not repeal direct hard-money contribution prohibitions to campaigns from corporations or unions; “For example, the owner of an incorporated Mom and Pop grocery store is not permitted to use a business account to make [direct] contributions.”[xxxiii] Like Buckley, Citizens United did not touch the laws on direct contribution limits to campaigns.
The Citizens United majority also identified another way the expenditure prohibition was producing lopsided results. “In the 2004 election cycle, a mere 24 individuals contributed an astounding total of $142 million to [soft-money advocacy groups], yet certain disfavored associations of citizens—those that have taken on the corporate form—are penalized for engaging in the same political speech.”[xxxiv]
The Court did reject Citizens United’s plea to strike down disclosure laws by adhering to “public interest” reasoning. As in Buckley, the ruling said disclosure of campaign finances pass Constitutional muster to, “insure that the voters are fully informed about the person or group who is speaking”.[xxxv] On the heels of this notorious case, in another opinion, more campaign finance regulations were struck down.
On April 2, 2014, SCOTUS decided McCutcheon v. FEC. With this case, the same Citizens United majority overturned aggregate contribution limits to campaigns. While the individual limit on hard-money to a candidate still stands at $2,700, the limit of $48,600 in total individual contributions, every two years, among all federal candidates was struck down as an infringement of First Amendment rights. The Court argued that once the aggregate limit was reached, how does that extra contribution above it constitute quid pro quo corruption? Again, the Court stressed, “The hallmark of corruption is the financial quid pro quo: dollars for political favors.”[xxxvi]
Conclusion
The catchphrases of Citizens United “turning corporations into people” or making “money speech” loom large in the minds of many. Their grip on the reactionary psyche is a powerful rhetorical opportunity for politicians, non-profits and others dependent on political fundraising. The BCRA effectively turned the FEC into a state censorship board. As described above, filmmaker Michael Moore’s production company Dog Eat Dog Films had to stand in front of a state agency to get permission to show his documentary during an election season. Same with the group Citizens United.
The best one can do to serve democracy is to understand and study issues. Don’t believe the hype about Citizens United. It was a good ruling that protected the right of people to hear information without the government picking and choosing who could speak.
NOTES:
[i] Nixon Expected to Sign '71 Campaign Funding Act Tomorrow Ben A. Franklin; ProQuest Historical Newspapers: The New York Times pg. 20, Feb 6, 1972
[ii] Federal Election Campaign Act 'Censorship' Aryeh Neier, New York Times Dec 9, 1972; ProQuest Historical Newspapers: pg. 34
[iii] United States v. National Committee for Impeachment, 469 F.2d 1135 (2d Cir. 1972).
[iv] New York Times Dec 9, 1972; ProQuest Historical Newspapers: pg. 34 United States v. National Committee for Impeachment, 469 F.2d 1135 (2d Cir. 1972).
[v] http://www.fec.gov/info/appfour.htm
[vi]PUBLIC LAW 93-443-OCT. 15, 1974 https://www.govtrack.us/congress/bills/93/s3044/text
[vii] https://bulk.resource.org/gao.gov/93-443/00007D7A.pdf
[viii] Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976).
[ix] Nowak, J.E., Rotunda, R.D., (1991) Constitutional Law Fourth Edition, West Publishing Company p. 1121
[x] Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 110 S. Ct. 1391, 108 L. Ed. 2d 652 (1990) at 1401
[xi] Federal Election Comm'n v. Massachusetts Citizens for Life, Inc., 479 U.S. 238, 107 S. Ct. 616, 93 L. Ed. 2d 539 (1986)
[xii] 1996 Fund-Raising Scandals Bring Stiff Penalty, Sep 21, 2002, The Washington Post
[xiii] Baran, J. W. (2001). Regulating Money in Politics: We've Got It All under Control. Cumb. L. Rev., 32, 591.
[xiv] Briffault, R, (2002) The Future of Reform: Campaign Finance After the Bipartisan Campaign Reform Act of 2002 Arizona State Law Journal 34 Ariz. St. L.J. 1179
[xv] https://www.aclu.org/news/aclu-statement-campaign-finance-reform
[xvi] McConnell v. Federal Election Comm'n, 540 U.S. 93, 124 S. Ct. 619, 157 L. Ed. 2d 491 (2003).
[xvii] Ibid p. 41
[xviii] Ibid p. 13
[xix] Ibid p. 86
[xx] Ibid p. 19
[xxi] Scott, A.O., New York Times , June 23, 2004 http://movies2.nytimes.com/2004/06/23/movies/23FAHR.html
[xxii] Susman G. (2004) Former President Blasts Michael Moore Entertainment Weekly June, 1 http://www.ew.com/article/2004/06/01/former-president-bush-blasts-michael-moore
[xxiii] Federal Election Commission August 9, 2005, http://www.fec.gov/press/press2005/20050809mur.htm
[xxiv] http://eqs.fec.gov/eqsdocsMUR/000045DF.pdf
[xxv] Citizens United v. Federal Election Com'n, 130 S. Ct. 876, 558 U.S. 310, 175 L. Ed. 2d 753 (2010)
[xxvi] Ibid at xxiv p. 3
[xxvii] http://www.fec.gov/law/litigation_CCA_C.shtml
[xxviii] Ibid at xxiv p. 33
[xxix] Ibid p. 35
[xxx] Ibid p. 44
[xxxi] Ibid p. 43
[xxxii] Ibid p. 34
[xxxiii] http://www.fec.gov/pages/brochures/citizens.shtml#prohibited
[xxxiv] Ibid at xxiv p. 40
[xxxv] Ibid p. 53
[xxxvi] McCutcheon v. Federal Election Com'n, 134 S. Ct. 1434, 572 U.S., 188 L. Ed. 2d 468 (2014). P. 3
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