“This is the worse Supreme Court decision since the Dred Scott case.” –Rep. Alan Grayson (D-FL)BACKGROUND
In 2008, Citizens United, a nonprofit corporation, produced a documentary film critical of then-Senator Hillary Clinton. Senator Clinton was, at the time, a candidate for the Democrat party's nomination for president. Citizens United wanted to make the film available to cable subscribers through video on-demand within 30 days of the primary elections. The organization produced television ads, but due to its concern about McCain-Feingold's civil and criminal penalties, Citizens United sought declaratory and injunctive relief, arguing that civil and criminal penalties were unconstitutional as applied to the ads for their documentary.
On January 21, 2010, the U.S. Supreme Court held that independent political advocacy (expressly advocating for the defeat or support of a political candidate on the federal level) by corporations and labor unions could not be limited under the First Amendment. The court also overturned the ban on corporations' and labor unions' use of their general treasury funds to make independent expenditures for "electioneering communication." An electioneering communication is any broadcast, cable or satellite communication that fulfills each of the following conditions: (1) the communication refers to a clearly identified candidate for federal office; (2) the communication is publicly distributed shortly before an election for the office that candidate is seeking; and (3) the communication is targeted to the relevant electorate (U.S. House and Senate candidates only). While the court's decision did not overturn the general ban on direct corporate and labor union contributions to political parties or candidates, the Democrats, attempting to suppress one of the nation's foundational rights-the right to free speech, especially political speech, guaranteed by the Constitution-are drafting legislation to restrict political speech and defy the ruling of the court.
Members may feel that the motive for any Democrat legislation would not be to ensure free, fair, and transparent elections, but rather to create a punitive measure for associations of persons who choose to exercise their right to free political speech as guaranteed by the Constitution, and affirmed by the Supreme Court in the Citizens United v. FEC case.
Democrats have not disclosed any legislative language. However, according to press reports and a summary provided by Sen. Charles Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) in February, the legislation would aim to restrict political expenditures by "foreign-influenced" corporations, government contractors and TARP recipients.
The Democrat bill would also include a definition for "foreign influence" as (1) foreign ownership 20% or greater, (2) a majority of the board of directors comprised of foreign principals, or (3) the U.S. operations fall under the direction or control of a foreign entity. The current definition of "foreign national" in 2 USC 441e is limited to those who are "organized under the laws of or having its principal place of business in a foreign country."
Additionally, the package would likely require more disclosure for the sponsor of political speech supporting, promoting, or opposing a candidate. For corporations, such a proposal would require the ad include an endorsement of the message by the CEO, much as candidates are required to do. Advocacy groups will be required to include a statement of endorsement by their top funder, as well as list the top five contributors at the end of the advertisement.
Corporations, labor unions and organizations constructed under 501(c)4, 5 or 6 laws, as well as 527 organizations, would be compelled to disclose, to the Federal Elections Commission, contributions received in excess of $10,000 and expenditures exceeding $200. These funds would have to be maintained in separate "political broadcast spending" accounts by the advocacy group.
Further disclosure measures call for shareholder notification of a corporation's political expenditures via website posting, quarterly reports directly to shareholders and comprehensive disclosure in the annual report.
The proposal would ensure the lowest unit rate in a media market is available to a candidate or political party when a corporation purchases airtime on broadcast, cable or satellite television referencing a candidate. Candidates would be guaranteed "reasonable access" to airtime.
Finally, the proposal would seek to expand current law barring corporate and union expenditures in coordination with campaigns, banning them 90 days before a House or Senate primary through the general election.
ISSUES OF CONCERN
Suppression of Free Speech: Legislative proposals to reduce or limit the political speech of corporations can only result in the suppression of speech by those who choose to advocate through associations, a fundamental right guaranteed by the Constitution. Any proposed "remedy" is certain to infringe upon that right. Writing for the majority, Justice Anthony Kennedy stated, "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."
Possible Union Loophole: Democrats have previously pledged to apply the same restrictions and requirements on unions as they do business corporations. Republicans understand that anything short of equal treatment of unions is an attempt to provide Democrat allies with an unfair advantage.
Violates Principle of Federalism: State corporate law traditionally governs corporate governance issues, producing a diverse set of corporate governance structures that has allowed the U.S. economy to be the most prosperous in the world. Yet, Democrats are determined to essentially federalize corporate governance despite proven success on the state level.
False Claims Regarding Foreign Influence: In his State of the Union address, President Obama stated that the court's decision would "open the floodgates for special interest, including foreign corporations, to spend without limit in our elections." However, current federal law and Federal Election Commission regulations already ban foreign corporations from participating directly or indirectly in American elections (see, 2 U.S.C. § 441e and 2 U.S.C. 437g).