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.


R Zonis

I agree with comment #1, and completely disagree with #17. The required Congressional action would be to modify the rules governing federal contractors. Simply put, the new rules would say that any corporation which makes a contribution to a political candidate and/or cause out of it's general funds becomes ineligible to participate in the federal contract bidding process for a period of time. No changes to the laws governing corporations would be required,

Having said that, I'd say that the odds of getting this legislation passed are about 90:10 against.

M.M.

How would the law address the seemingly easy workaround to this ban: Dummy Corporations?

"No, Megacorp didn't pay for any political ads this year. Of course, our wholly-owned subsidiary, Reactionary Films, did produce a political documentary or two, but we SWEAR we own that company purely for investment purposes. Now, about my missile contract...."

Daniel

Banning government contractors from electioneering as a condition of their contract is only a partial solution. While government contractors may be the grossest abusers at the moment, they are not the only ones.

What we really need to do is to explicitly legislate that civil rights are reserved for flesh and blood human beings. Corporations can't be arrested, jailed, deported, or otherwise mistreated. They have no need for constitutional rights.

I realize that theoretically, an irresponsible future government would then be able so censor the New York Times because the 1st amendment would no longer apply to it as a corporation. That only means that essential functions like the press would have to be sold from corporations to actual people. In the case of the media, that's already happening anyways as blogs take over the role of traditional reporters.

Andy

Sounds like a good idea in general.

How would it apply in specific cases, such as NBC, which is owned by GE? I suspect GE has government contracts even though we'd really want NBC to be free in this regard.

But overall it seems to get the best parts of free speech while potentially avoiding corruption.

Anon

How about public interest and advocacy organizations which do receive some federal funding?

I think you would have a problem with allowing SELECTIVE contractual arrangements with Congress and corporations.

Rich

We could require all political ads to declare their funders with the now familiar "I'm ____ and I [paid for and] approved this ad." For corporations, the CEO could be the mandated spokesman. Businesses might think long and hard about who they could alienate with a political ad if they were so blatantly linked to it.

Dave M.

Ian and Bruce need to bone up on the Unconstitutional Conditions Doctrine.

http://classes.lls.edu/fall2006/conlaw2-manheim/abc/Uncondition.pdf

It's well-established that government can't condition a benefit (such as a eligibility for a government contract) on the relinquishment of a constitutionally protected right.

Richard M

Would this contractual provision also extent to government employee unions - these are not only contractors but contractors holding a monopoly both to the government and their employees.

While most of the largest corporations get only a small fraction of their business from the government, government employee unions get 100% from government.

M

Has anyone actually read the Citizens United opinion?

The opinion is not premised on the idea that corporations are people. The First Amendment says: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." The upshot with respect to speech? Congress cannot make a law abridging the freedom of speech. It does not address who or what the speaker is -- it can be an individual, an association of individuals, or a corporation. Compare this to other amendments or text in Constitution that specifically reference the rights of people, persons, or citizens. Even the next clause of the First Amendment references people: "the right of the people peaceably to assemble"; the part on speech does not. But even if it did reference "people," why doesn't the freedom of association provide for people to exercise their right of free speech through their associations (e.g., corporations, where they associated as co-owners of property)?

It's disconcerting that Mr. Ayres, a law professor, seemingly has not read the Court's opinion. In any event, his idea has merit, but it seems too imperfect to matter - even of the 100 largest corporations, a quarter would not be covered by the measure. And what about the myriad other corporations in the U.S.? Does the measure address subsidiaries and affiliates? What about indirect or partially owned subsidiaries? Subsidiaries in which the federal contractor only holds a minority interest?

But at a basic level, why are we so determined to "get around" the language of the First Amendment? Seems to me if there really is tremendous popular support for the idea of keeping corporations out of politics, we should amend the Constitution to be clear on this point. I suspect, though, that you would never find the popular support for such a measure. Most polling I have seen indicates that a majority of Americans actually support the result reached in Citizens United.

Could it be that the Court got it right on this one?

Read more...

anon

Are you only talking about big corporations? How about the one or two person incorporation? Their company income is counted as personal income, will you bar them from having a political opinion?

The corporations in the crosshairs of Eliot Spitzer might disagree that they didn't need Constitutional protection. If it is clear that foreign corporations and persons can't contribute to the political debate and that the FEC has enough leeway to watch that they don't use American branches or buy American companies to hide behind then that is a start.
Besides, if every political ad, film, satire, contribution was identified, listed on the internet on a well publicized webpage, all voters could decide for themselves if a politician was working for voters or corporations.
Say, what nationality is George Soros?

CrisisMaven

Isn't that adding insult to injury, first make corporations dependent on tax dollars, later regulating how they spend them? Whether corporations donate is neither here nor there... they only do it because the state appropriates more than half the money in the economy and then favoritism is the inevitable outcome. To put it succinctly: even the greater part of the money donated to whatever candidate has first been percolated through states' coffers. And few find that an abnormal state of affairs ... By the way, I have just added a Reference List to my economics blog with economic data series, history, bibliographies etc. for students & researchers.

James Smith

Congress shall make no law . . . abridging the freedom of speech.

That seems clear enough. And so said Hugo Black, who held that speech could not be regulated, ever, and that running around on other people's lawns was not free speech.

How can Congress ever say that some speech may be abridged?

anon

Don't forget that many nonprofits (such as ACORN and all universities) receive federal contracts. Under this logic, they also would be banned from making contributions. What about in-kind contributions? Could ACORN use it's employees to campaign for senators that support it's contracts? Finally, what about firms that receive subsidies or favored regulation, but not contracts (e.g. Archer Daniels Midland)?

matunos

Sounds like an interesting idea, but I do have one nitpick:

"The Supreme Court has granted corporations free speech rights, because the law treats these artificial creations as legal persons."

As I understand it, the Citizens United case didn't rest on corporate personhood, but on the fact that the First Amendment doesn't qualify protected "speech" as only belonging to persons (real or imaginary). It just says "speech".

myron

The whole premise that corporations are "persons" or "collections of persons" is fundamentally flawed. Just check the first paragraph of any corporate charter and you will find that the government "grants" articles of incorporation. Corporations are government created entities.

BUSINESSES are created by people. But corporations are created by governments. One doesn't need to be a corporation to conduct business.

It's really simple. Just make grants of articles of incorporation contingent on those articles including a section stating that the corporation will not engage in political spending of any kind.

This passes constitutional muster because there is no requirement to incorporate to engage in business activities.

juanita

No, the Court did not get it right, as we will start to see in the very next election.

Andrew McKenzie

The federal government does ban a lot of executive branch employees from a wide variety political activities via the Hatch Act. This includes some activities that are purely speech based (like giving speeches at a campaign). Giving money to a campaign is allowed, but actually working with the campaign is not, etc.

And if I'm not mistaken, Foreign Service Officers are even more restricted than that.

Henry Bowman

It would be at least as important for Congress to prohibit GSEs (e.g., Fannie Mae & Freddie Mac) from making political contributions. These entities contribute lots of monies to campaign coffers, but operate on the charade that they are "private" corporations.

tommystinson

So you advocate allowing corporations to buy votes in congress(as quid pro quo for political campaign ads) as long as they do not have direct contractual agreements with the government.

So corporations could have laws passed in congress with favorable subsidies, targeted lax breaks, free access to public land, low interest loans, cheap labor, lax environmental regulation, etc.

As one company can easily split into two it seems that a bill like this would prompt large companies to divest themselves of divisions that deal with the government because the benefits of buying votes in congress are plain to see even if our "supreme" court "justices" failed to notice.

Brett Bellmore

Could you clarify this for me? Is the idea that, every time the NRA wanted to run an advertisement with some political salience, it would have to organize a vote of it's entire 3-4 million members? Or would the "shareholders" be limited to life members such as myself? Either way, it seems excessively complex in the case of corporations which exist for the sole purpose of advancing a particular viewpoint.