The Magazine

Campaign Finance Myths

Lots of untruths are being spread by the president.

Nov 29, 2010, Vol. 16, No. 11 • By WILLIAM R. MAURER
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Since the Supreme Court ruled in Citizens United v. FEC last January, politicians have vied to see who could speak of the decision with the most vitriol. President Obama said he could not “think of anything more devastating to the public interest” and criticized the ruling in his State of the Union address with members of the Court present. Senator Al Franken called it “an incredible act of judicial activism,” while Representative Peter DeFazio is “investigating” whether Chief Justice John Roberts should be impeached.

Campaign Finance Myths

Politicians were not the only ones to denounce Citizens United. Numerous commentators likened it to Dred Scott, and a Huffington Post writer even compared the five justices in the majority to concentration camp prisoners who cooperated with the Nazis.

We can expect the rhetoric only to get worse after the recent elections, where Democrats believe they lost a significant number of seats because of “corporate spending” unleashed by Citizens United.

Unhinged rhetoric aside, however, the critics of the decision almost always get their history wrong, have a selective view of Supreme Court precedent, and fundamentally misread the First Amendment. Read correctly, Citizens United represents a necessary correction to a fairly recent anti-free speech trend in the Court’s jurisprudence and is consistent with both the words and intent of the First Amendment.

Notably absent from many criticisms of the decision is any discussion of what the case was actually about. Citizens United concerned a statute that made it a crime for corporations and unions to use general treasury money to make “independent expenditures” (that is, not coordinated with candidates) that expressly advocated the election or defeat of a federal candidate. Prior to Citizens United, corporations and unions could participate in the political process only by creating separate political action committees. PACs operate under complex and expensive administrative requirements, however, and cannot use general treasury funds for political purposes, so few corporations availed themselves of this alternative.

Citizens United is a nonprofit corporation that wished to use its general treasury funds to distribute a film about Hillary Clinton via video-on-demand when she ran for president. Under federal law, however, the film was banned. Citizens United sued the Federal Election Commission to enjoin the law’s application. The group lost at the trial court and then sought review at the U.S. Supreme Court.

In January 2010, a five-justice majority struck down the restriction. The Court stated unequivocally that the First Amendment restricts the ability of the government to abridge the freedom of speech of corporations, especially through an outright ban on speech. The Court overturned two relatively recent decisions, Austin v. Michigan Chamber of Commerce from 1990 and portions of McConnell v. FEC from 2003, which held that the government may ban the independent expenditures of corporate and union entities.

Criticism from proregulation politicians and campaign finance “reformers” was immediate. It typically employs variations on three arguments: (1) Citizens United overturned 100 years of law prohibiting corporations from spending money in elections, (2) the settled view prior to Citizens United was that bans on corporate and union political activity were constitutional, and (3) Citizens United extended free speech protections to corporations, whereas only individuals are entitled to free speech under the First Amendment.

None of these statements is true. They are, instead, myths used to justify a law that made it a crime to publish a book or pamphlet or pay for a yard sign. In other words, they are simply ways to avoid stating plainly that opponents of Citizens United believe the government can constitutionally put people in prison for publishing a book or distributing a movie.

Myth 1: ‘Citizens United’ overturned 100 years of law prohibiting corporations from spending money in elections.

President Obama has been the most notable proponent of this myth. In the State of the Union he said that Citizens United “reversed a century of law that I believe will open the floodgates for special interests .  .  . to spend without limit in our elections.” In response, Justice Alito was seen shaking his head and mouthing the words “not true.” Alito was right. 

While federal law has indeed prohibited corporations from directly contributing to federal candidates since 1907, that portion of the law was not at issue in Citizens United. It remains the law of the land. Direct corporate contributions to candidates are still banned. 

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