Dr. Bombay and I talked about the Citizens United decision recently. If your head has been so far in a casebook that you missed it, the bottom line is that the Supreme Court ruled that First Amendment protections apply to corporations as much as to individuals. Corporations as associations of individuals, therefore, may make independent expenditures to engage in “express advocacy,” calling for the election or defeat of specific candidates.
As with many things political right now, my response was rather ambivalent.
Frankly, I’m open to seeing how it works. I’m certainly sympathetic to the idea that the First Amendment provides a blanket protection for political speech, regardless of corporate identity. My gut also tells me that (a) corporations like Apple, Google, Microsoft, and Exxon-Mobil will tread lightly in this arena and (b) allowing such direct expenditures and requiring disclosure of donor identities to groups like Citizens United will increase transparency, a principle that should be central to political spending.
Because of this my negative reaction to the decision was more tempered than Dr. Bombay’s. However, I’m sympathetic to the notion that the use by corporations of economic power can distort the political marketplace. That’s really the heart of the competing strain of decisions. Frankly, I could care less whether corporations have the fundamental “right” to air advertisements in support of one candidate or another and I doubt the Framers felt they were granting such a right. Call me a raging liberal, but the idea of yet more money flooding the process does not sit right with me and the people should be able to control the flood gates.
Overall, I hate how such decisions are made. Call me naive, I guess.
I’m still open to seeing how this all shakes out. However, I know plenty (just about all) of my friends on the right will disagree with me when I say that I tend to agree with then-Justice Rehnquist’s dissent in Bellotti, discussing a Massachusetts law which limited the ability of corporations to air political ads except on issues which materially affected their business (this did not include tax legislation and policy):
The question presented today, whether business corporations have a constitutionally protected liberty to engage in political activities, has never been squarely addressed by any previous decision of this Court. However, the General Court of the Commonwealth of Massachusetts, the Congress of the United States, and the legislatures of 30 other States of this Republic have considered the matter, and have concluded that restrictions upon the political activity of business corporations are both politically desirable and constitutionally permissible. The judgment of such a broad consensus of governmental bodies expressed over a period of many decades is entitled to considerable deference from this Court. I think it quite probable that their judgment may properly be reconciled with our controlling precedents, but I am certain that under my views of the limited application of the First Amendment to the States, which I share with the two immediately preceding occupants of my seat on the Court, but not with my present colleagues, the judgment of the Supreme Judicial Court of Massachusetts should be affirmed. (footnotes omitted)
Of course, the idea that states ought to have a fairly broad leeway in answering this question won’t sit well with friends on the left. The point is that this is a question for the political branches, at least insofar as the scope of First Amendment protections afforded to entities created by law and not to natural persons.
This is the problem with defining so much as a “fundamental right.” Sure, I love my rights as much as the next guy. But when such rights, and so many of them, are “fundamental” they become, by definition, beyond the reach of the political process. And when that fundamental right is incorporated on the states, you preclude just about any regulation of that right. The most famous (infamous?) example of this is abortion and the right to privacy.
Citizens United is a great example of how a fundamental right stands… until it doesn’t. Until another unelected group of justices has a new conception of that fundamental right that they discover and define quite apart from the political discourse. But when you are faced not only with court precedent but also with the measured decisions of dozens of legislatures, it seems the height of judicial arrogance to think you can contravene that authority.
I admit that there are certain principles that exist beyond this back-and-forth of political whimsy. Freedom of speech is certainly one. To me, an unborn baby’s right to life is another. In each case, I think there are areas of grey that you can make a plausible case for both sides. And I can certainly see how a not-for-profit corporation might reasonably fit within the meaning of the First Amendment guarantee of free speech. They were arguably organized for the express purpose of political participation, receiving voluntary donations from citizens to advance a political idea.
A for-profit corporation, on the other hand, is organized to make money. It only incidentally participates in politics as a means of protecting its interests. A corporation that engages in political speech as only incidental to its core purpose, exists only because of state law, and may have access to a quantity of resources ample enough to determine election outcomes seem like reasonable candidates to have their express advocacy restricted by the representatives the people elected to speak for them.
All I’m saying is that on certain questions, the people should decide and courts should stay out of it. What those questions are is a discussion for another post.
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6 Responses to Random Rumination on Citizens United
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For what it’s worth, lobbying expenses, including expenses to influence legislation and political campaigns, are not deductible for federal income tax purposes. 26 U.S.C. 162(e); Treas. Reg. 1.162-20. Exempt membership organizations, e.g. NRA, are required to notify their members regarding what portion of their dues are attributable to nondeductible lobbying or political expenditures. 26 U.S.C. 6033(e).
I’m not quite sure what you’re getting at Jorge, but I suspect this lends credence to my feeling that the impact will probably be minimal given that there are no tax benefits to these expenditures and many corporations will want to avoid any political fallout of directly endorsing and working for one candidate over another.
As the old zen master said… We’ll see.
I agree with your argument that it won’t have much impact, but I have to take issue with your 2nd-to-last paragraph.
Arguing a corporation exists only “because of state law” is axiomatic to the point of being irrelevant — the corporate construct was an invention created for the mutual benefit of *both* the entrepreneur (who exploits it to make $$) and the politician (who exploits it to ensure constituents have jobs). Using that as a premise to then excessively regulate said corporation seems disingenuous on the part of the regulators.
Same with the claim that engaging in political speech is only “incidental” to a corporation’s purpose of making money. When laws enacted by the Legislature — including a variety arguably outside the scope of government purview — have such numerous and far-reaching economic consequences, of course the business is going to engage in political speech to either limit the negative financial impact or try to exploit the system to enrich itself through the political process.
To me the solution in that case is to restrain the reach of the government, not restrain the activities of the people giving the government its authority (or, in the case of corporations, its budget).
I guess my point is that Congress can regulate almost anything with a tax, including corporate speech. As an example, TaxProf recently posted an excerpt from another blog that proposed treating the anticipated barrage of corporate political expenditures as dividends to shareholders. The existing nondeductible nature of corporate political expenses only affects shareholders indirectly by reducing earnings per share. But if those expenses are treated as distributions to shareholders, in effect dividends, then shareholders would not be as excited about their entity’s new found rights to influence politics.
TDot-
“not restrain the activities of the people giving the government its authority”
But that’s exactly what the Citizens United decision does. The court has said that, despite what the representatives of the people giving government its authority say, those representatives cannot limit the ability of a corporation to engage in express advocacy for a candidate for elected office. Whatever axioms are or are not relevant, it can’t be both ways. Unless the case can be made that by dropping this limit you really put the decision in the hands of shareholders who can hold directors and officers responsible for political expenditures. That’s a reasonable case I think, though not necessarily one that needs to be made in a court of law.
Regulating corporations because they’re legal entities is not disingenuous. It makes perfect sense and it happens in the open. Otherwise there is no authority for this regulation and less incentive to incorporate at all. Whatever true motive exists for the regulators or lawmakers, we view for-profit corporations as different by virtue of their core mission of making money (and the power larger companies accrue as a result). All I’m saying is that for the purposes of the First Amendment, the fact that a corporation is a legal fiction designed to recognize a voluntary association of people around a (typically) money-making enterprise suggests to me that it is not the core of what the First Amendment was designed to protect. (Semi-relevant aside on regulators’ motives, Larry Lessig in a recent talk to Cato talked about how a Member of Congress questioned a plan to deregulate telecoms by saying, in essence, “how will we raise money from them then?”)
You’re correct that legislation can impact a corporation’s ability to make money. That’s why companies can give money to PACs, associations, and candidates who support an agenda that will lessen the impact of legislation on regulated industries.
Elected legislators should be given more leeway than Citizens United grants them to draw that line. I’ll make the case for a smaller government along with you, but I think the case should be made through elections and legislatures not through the courts and the often non-sensical fundamental rights jurisprudence.
Jorge –
That’s a really interesting post. (URL)
I think the point of one of the commenters is one I’d be interested in seeing addressed – namely can you distinguish among the types of corporations and their political expenditures in an equitable manner? Can you say that Exxon’s $3.5 million for a statewide ad buy in a Senate race is a better target for a tax than the AFL-CIO’s similar expenditure? Should that distinction even be drawn?