A Contractual Solution to Citizens United

Now that the Supreme Court has freed corporations to expressly advocate for the election or defeat of federal candidates, many pundits feel that is simply beyond the power of Congress to constitutionally curtail the corrosive potential of corporate speech.

But Bruce Ackerman and I just published a piece in the Washington Post arguing that Congress can constitutionally prohibit corporations that are federal contractors from paying for ads “endorsing or opposing a candidate for public office.”

A 2008 Government Accountability Office study found that almost three-quarters of the largest 100 publicly traded firms are federal contractors. If Congress endorsed our proposal, these companies — and tens of thousands of others — would face a stark choice: They could endorse candidates or do business with the government, but they couldn’t do both. When push came to shove, it’s likely that very few would be willing to pay such a high price for their “free speech.”

The Roberts court is skeptical — to put it mildly — of campaign finance restrictions. But it is still highly unlikely that the justices would strike down a law targeting federal contractors. All nine recognize that Congress may restrict free speech when there is a significant risk of corruption. That risk is obvious when corporate speakers are simultaneously doing business with the government.

Hillary: The MovieCitizens United Productions

Many smaller firms would retain their full rights to expressly advocate for the election or defeat of candidates. The very corporation at issue in last week’s Citizens United decision falls squarely in this category. The corporation that produced Hillary: The Movie had no federal contracts and would thus remain as unconstrained as ever.

More importantly, many news organization would remain unregulated (or could easily comply) because the Fourth Estate doesn’t sell goods or services to the government.

Our Solicitor General, and former Harvard Law School Dean, Elena Kagan, had a monumentally difficult task at oral argument before the Supreme Court when she tried to distinguish books from pamphlets in an age of pdf documents:

[At oral argument,] Ms. Kagan disavowed a statement that a government lawyer made when the case was first argued in March. The lawyer said the government could ban the distribution of books paid for by corporations before elections.

“The government’s answer has changed,” Ms. Kagan said, adding that the Federal Election Commission had never tried to regulate distribution of books.

Chief Justice Roberts bristled at that statement. “We don’t put our First Amendment rights in the hands of F.E.C. bureaucrats,” he said.

He then asked about pamphlets. “A pamphlet would be different,” Ms. Kagan said. “A pamphlet is pretty classic electioneering.”

Conditioning campaign finance regulation on federal contracting is a sensible bright line rule that is much easier for bureaucrats to implement, and for the Justice Department to defend.

In a sense, we’re just trying take the “personhood” of corporations seriously. The Supreme Court has granted corporations free speech rights, because the law treats these artificial creations as legal persons. But these powerful and publicly-traded fictional people should at least also be subject to the same anti-corruption restrictions as real people. Current law prohibits federal contractors (and those that are trying to become one) from directly or indirectly making contributions to political parties and candidates. Our proposal to bar contractors from buying endorsement time merely captures one powerful method of making an indirect contribution.

Bruce and I are the authors of Voting With Dollars: A New Paradigm for Campaign Finance Reform.


AaronS

Ian,

THAT is a great idea! I mean, what's the point of a corporation supporting a candidate if the candidate will be unable to send business there way?

I'm serious--this is one of those elegant, silver bullet ideas that puts the Supreme Court in its place, elevates the American people, and stops the Goldman Sachses of this world from having an edge over the common man.

Thank you!

Chris

Who would want to back a bill such as the one you propose? Especially given that it would most likely cost them significant campaign contributions.

The problem with the verdict comes from the fact that it encourages a vicious cycle of congress protecting corporate sponsors of any sort since said corporate sponsors are a significant factor of their being members of congress to begin with.

frankenduf

it's hard to figure out what planet the SC presides on- meanwhile, on planet earth, we have this notion of justice and equality in our civil society- both of which are being severely hampered by unprecendently powerful corporations- it's one thing to be naive in the early 20th century and believe that incorporating a group of people may legally involve granting that group (temporary) rights and priveleges accorded to citizens- it's another thing to negligently ignore the powerful corruption that modern corporations control- have the 'justices' not heard of Enron or Goldman Sachs and the political access their $millions commands in drafting legislation to their benefit?- so now, beyond campaign donation corruption, where corporate $ power dwarfs citizen $, the 'justices' have ratified corporate media control of election propaganda, which also dwarfs citizen media influence- shame on the SC- they need to be schooled in practical justice, rather than a rational idealism that equates $ and speech

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greg

Well, all of the media companies are large corporations. And they certainly advocate for candidates and parties, and even have the power to offer discounted advertising rates to candidates they favor.

And corporations create Pac's that are essentially corporate lobbying.

So this has been going on already in many ways.

Ted

News organizations are corporations. The new ruling will take "Advocacy Journalism" to a new level.

Paul Jackson

The assertion that the 4th estate doesn't do business with governmental entities is false. I would think that every government agency receives newspapers and magazines from the 4th estate. Also, many governmental agencies probably pay for advertising for certain programs (unless all of that is provided gratus, which I doubt).
So, this would do away with endorsements and contributions from a lot of the 4th estate.
I don't think that would be half bad.

Steve K

Great idea. One question though: How much effect would this have on foreign corporations who have an interest in US politics, but don't supply contractors?

As an example, a corporation operating in an oil-exporting country that wants to help elect US politicians who oppose offshore drilling or nuclear energy in order to further their own business needs.

Tim B

Couldn't large corporations get around such a restriction by creating a separate shell corp through which they funnel all politically-related expenditures? Don't get me wrong, I applaud your effort to deal with this problem in a smart manner. It's just that we're up against a phalanx of lawyers who are paid to find loopholes, and they will most certainly direct their full attention to any attempts to curtail their employers' "free speech".

Hydra

"Who would want to back a bill such as the one you propose? "

No bill is necessary. The quoted language is already contained in the Federal Acquisition Regulations.

derf

Would this even require a separate law? Wouldn't it already be a textbook conflict of interest?

Mike

Foreign corporations cannot contribute to the campaigns of Federal candidates. It was against the law before the recent Supreme Court decision, and it remains against the law today.

Mark Wolfinger

Not true.

Congress can mandate that a majority vote of all shareholders is necessary to approve ANY donation to ANY candidate.

Furthermore, a separate vote of shareholders is necessary for each donation. There is no blanket shareholder vote that covers more than one candidate, for more than one primary or election.

That would be expensive for the corporations. And absolutely constitutional.

David S.

Mike, in the hypothetical the foreign corporation isn't contributing to the campaign of a Federal candidates. It is merely buying ads that say "candidate A is bad for America" without giving any money to "candidate B." I.e.,

The question then becomes does free speech protections that have been given to "corporate persons" also apply to "foreign corporate persons". I'm not sure of the law -- do free speech protections apply to non-citizen humans?

Clifton

Can the federal government also contractually prohibit its employees from contributing to candidates? Can it contractually prohibit federal employees from talking about candidates? Obviously, the answer to the second question is no.

I find the idea appealing, but I'm afraid its authors haven't fully grasped the implications of (1) corporations are people, and (2) money is speech.

They argue that by the Hatch Act, the answer to the first question is yes, the federal government can prohibit its employees from making campaign contributions. And they suggest in essence, a Hatch Act for corporations. But the proper conclusion to draw from Citizens United is not that we can go ahead and make a Hatch Act for corporations. It's that the Hatch Act itself just became unconstitutional. After all, money just became speech.

Mike B

Isn't there a way to re-define the legal fiction of a corporation to not include free speech rights and call it like a neo corporation? Congress can simply state that only entities that meet the definition of a Neo Corporation's are able to engage in interstate commerce. Also, couldn't states simply require corporate charters to prohibit any certain forms of political speech?

Pete

An excellent idea. Presumably it would also apply to public sector and police unions?

@Mike B: As I understand it, the "personhood" of corporations is somewhat irrelevant to the First Amendment, because the amendment doesn't address the concept. "Congress shall make no law ... abridging freedom of speech"

David Jones

Regarding Congress doing this or that to force corporations to adopt charters forbidding contributing to political campaigns, Congress can't do anything of the kind. All corporations in this country are chartered in a state. Congress promulgates the Uniform Commercial Code which states adopt to a greater or lesser extent. It can regulate the actions of corporations in interstate commerce but not their charters.

And this, of course, is how it should be. We live in a federal republic. A federal republic is not a democracy in the purest sense, and certainly not in the sense held by those who want the federal govt. to supply whatever they want, especially when they can't get it from their state govt.

Boris

Interestingly enough, my comment pointing out the error in your reasoning about the Fourth Estate was not actually allowed through by this particular member of the Fourth Estate...

Mark S.

Why does congress have to get involved at all ?
If a federal contractor is corrupt and the allegation is that the campaign contribution by the contractor or its employees influenced officials in making a favorable contracting decision, then any competitor, whistleblower or even an employee of said contractor (who will be looking for a new job if revealed) has the right to sue under one of the corrupt influences statutes and have the contract awarded to someone else.
Most large companies have anti corruption codes of conduct as part of their internal procedures. Successful whistleblowers collect a significant share of the damage award.
These laws are already on the books but not widely publicized. If lower level employees realized that their best long term income protection is to save information on corrupt practices "just-in-case", then corporations will realize that the return on corrupt investment could be negative. As the famous quote (attributed to Lenin) goes: "Trust is good, control is better".

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Boris

Let's try this again....

Your claim that the Fourth Estate doesn't sell goods or services to the government is not quite true. While it does not sell to the government per se, it does sell to individual politicians. In particular, it sells votes via voting blocs it controls (its readership), and the government pays for these with money in the guise of access.

If you agree that any newspaper which is allowed into closed briefings or attendance-limited press conferences, as well as any paper that publishes any "off the record" leaks (the vast majority of which are simply press releases only released to one paper) should have constraints on its political speech, I might be more wiling to take your proposal seriously.