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The hidden dangers of the Supreme Court’s decision on corporate political contributions

This year, in an absolutely stunning and bitterly divided 5 to 4 decision, The Supreme Court overruled two important precedents about the First Amendment rights of corporations, and ruled that the government may not ban political spending by corporations in future elections.

The decision, Citizens United v. Federal Election Commission, No. 08-205, overruled two precedents: Austin v. Michigan Chamber of Commerce, a 1990 decision that upheld restrictions on corporate spending to support or oppose political candidates, and McConnell v. Federal Election Commission, a 2003 decision that upheld the part of the Bipartisan Campaign Reform Act of 2002 that restricted campaign spending by corporations and unions. (The ruling keeps intact restrictions on funds to candidates, but allows unlimited expenditures for “independent political organizations”).

Ironically, Minnesota’s own Target Corp. has suddenly become the “poster child” for the ruling in its $150,000 contribution to MN Forward, and consequent support for Tom Emmer’s campaign for governor. The backlash, primarily because of Emmer’s known opposition to gay rights, was swift and severe — but that has been fully reported. What has not been widely discussed are the insidious ramifications and hidden dangers of the SCOTUS ruling, and its disproportionate effects on future elections. Here are some:

Corporate executives are strongly tilted to the right
This may be assumed and self-evident, but still needs added vetting. Gregg Steinhafel, Target’s CEO, is a strong Republican supporter. And it is no wonder he would direct his company’s funds to a hard-right candidate. He is reported to have given Emmer $2,000 individually (the maximum); and over $25,000 mostly to various Republican causes. Historically, individual contributions from Target’s other top executives have gone mainly to Republicans. Moreover, Steinhafel’s total compensation, from all sources, at Target last year was over $13 million — not atypical for top executives at major corporations. There is little question where such contributors will send their company’s money. When we see other corporate contributions, count on them going the same way Steinhafel’s corporate money went.

Interlocking boards
As with most corporations, the Target board is made up of current or former executives with other major American corporations. These include directors associated with such companies as Eli Lilly, General Mills, United States Cellular, Xerox and Wells Fargo. This creates a clique — a “club” — of individuals with a common cause; and that cause is clearly the one espoused by the U.S. Chamber of Commerce and other similar supporters of the right. If Steinhafel made his contribution to MN Forward with the knowledge and acceptance of the board, then this assumption of a collusive effect is correct; if he did it without board approval, it brings up what I consider an abuse of management power.

Not his money
Either with or without board approval, it is essential to note that Steinhafel was contributing a substantial sum of money that was not his, nor the board’s. It belonged to the shareholders — and there is no doubt that a fair percentage of them were not supporters of Emmer, or other right-wing causes. There are other interested parties as well — the employees of Target, many of whom would probably not be pleased to see their company supporting a candidate they did not approve of. Then there are the customers of Target (I include myself), who do not wish to see their purchases contributing to the revenues of the corporation and then delivered to candidates they seriously oppose.

This brings us to the entity to which the contribution was made: MN Forward. The organization if staffed by former insiders from Gov. Tim (“no-tax”) Pawlenty’s administration. It is headed by Brian McClung, of whom Pawlenty said when he left the administration:

“Brian is best known as the public voice of our office, but has been much more. “He’s been one of my closest advisors during both terms and I greatly value his insights, loyalty and expertise. Brian is an integral part of our team, and I know he will continue to have great success.”

MN Forward’s endorsements

MN Forward claims to be bipartisan, and has endorsed three DFL candidates as a show of independence. Two are known conservative, pro-business legislators; the third (Terri Bonoff), accepted the MN Forward endorsement with a kind of “thanks, but no thanks” statement. Bonoff stated: “I am, however, concerned about the effect of the Supreme Court ruling in the Citizens United case, which opened the door to direct corporate spending in political campaigns. This new influx of money, combined with self-financing millionaire candidates, threatens to drown out the voice of the people who are supposed to be deciding our elections.”

It should be noted that unions are also eligible to contribute funding under the new ruling, but with union membership at a historic low, they will be no match for the massive dollars residing in major corporations.

It is clear and obvious that these new, substantial (actually unlimited), corporate contributions will be going to entities that are tilted to the right, have conservative agendas, and may well have candidates (like Emmer) with extreme right views.

In short …
The new Citizens United ruling is going to have far-reaching effects beyond the obvious pouring of unlimited funds into political campaigns.

• Those who decide on the corporate contributions will be high income earners who almost universally will select conservative causes for their funding.

• Implicit in all this is the use of corporate funds to protect high earners’ personal financial self interests — particularly tax issues.

• They interlock with boards of directors that interface with colleagues at other corporations to develop a de fact network of right-wing giving.

• They do so with funds they do not own (it is shareholder money), thus making American corporations virtual private political piggy banks for the conservative executives who make contribution decisions.

• The entities they give the money to appear to be universally tilted to the right, as is MN Forward.

• In today’s world of sound bites, mass media advertising, and costly campaigns, these entities are going to have power and influence beyond anything known in previous elections with huge and new bankrolls

The net effect of all this is that this new SCOTUS ruling is going to have even more insidious ramifications than appear even at this early stage. It is going to build a powerful inter-corporate network of funding and contributions that can profoundly affect our future elections, and ultimately the governance of our nation.

Once this interlocking, synergistic money-giving machine matures, and the entities they fund become even more adept at influencing elections, the hidden dangers of the SCOTUS ruling will become more and more evident, and likely extremely damaging to America’s electoral process.

Sadly, 2010 will be only the first chapter in this dangerous, long-term new dynamic.

Myles Spicer of Minnetonka has spent his business career as a professional writer and owned several successful ad agencies over the past 45 years.

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Comments (8)

  1. Submitted by Michael Rowe on 08/24/2010 - 06:56 am.

    This article misses two things. First, I’m skeptical whether data support the assertion that CEOs/Boards tilt to the right and thus, more corporate donations are given to the GOP. There is no question that CEOs/Boards probably tilt to the right, but I suspect that corporations attempt to predict winners and donate accordingly. For example, President Obama out-raised Senator McCain by $1.6 million among employees from just three Wall Street Banks (Goldman, Citi, and JP Morgan). Second, Target’s MN Forward donation illustrates that Corporations, especially consumer product and retail organizations, will donate to either political party at their own risk. As long as robust disclosure laws are in place, corporations will recall Target’s two-week public relations disaster before contributing.

  2. Submitted by Richard Schulze on 08/24/2010 - 07:22 am.

    The general public also seems woefully misinformed about what the Supreme Court ruling actually says. The case was about corporations funding issue-ads. There are still lawful restrictions on corporations making direct contributions to candidates. Therefore, most of the hand-wringing about corporations “buying” elections is overblown — corporations (both for profit and non-profit) can fund issue ads, but cannot fund candidates except via political-action-committees (which they could always do).

    Obviously corporate spending on an advertisement is going to increase the likelihood of success of that particular candidate or issue. I just wanted to make clear that Citizens United does not change the law with regards to corporate contributions to a candidate’s coffers.

  3. Submitted by myles spicer on 08/24/2010 - 09:10 am.

    Re the Rowe comment, you are correct when you note the following:
    “As long as robust disclosure laws are in place, corporations will recall Target’s two-week public relations disaster before contributing”

    Problem is, the hard right has already instituted a suit to eliminate Minnesota’s disclosure laws (as a side note, the plaintiffs are MCCL and the Taxpayers League) — all giving further support to my contention that the right is active in manipulating future elections through Citizens United.

    Re the Schulze comment, I did note his point about not direct support of candidates in my second paragraph. To me, this is irrelevant — the support of various candidates is de facto through funding of third party organizations who do aggressively support candidates. They can promote like positions, causes, policies, and legislation of their favored candidates. In fact, it is probably worse than directly funding the candidate, in that it makes advertising even more effective through the perception that the candidate has objective support even beyond his own campaign committee.

    In short, the entire issue is just plain terrible for a fair, enlightened electoral process.

  4. Submitted by Greg Kapphahn on 08/24/2010 - 11:44 am.

    Thus will the great experiment known as “America” come to an end…

    The wealthy have been working on this project since FDR’s “New Deal, but Johnson’s “Great Society” programs formed the push (or should I say “putsch”) that, through buying up media, buying off media personalities, funding right-wing “think” tanks and other ways designed, through smoke screen and sleight of hand, to discover and play upon the public’s doubts and fears.

    They have been using those doubts and fears as wedge issues to distract the public while they convinced that same public that the well being of us all depended completely on how rich we allowed the rich to get.

    They made sure that we never noticed that the rest of our nation’s citizens grew poorer in direct proportion to how wealthy the richest of our citizens became (something which, except for the intervention of the right-wing media, would have become clear over the past three decades).

    They have stacked the federal courts (and the state supreme court, in Minnesota’s case) with those whose ideology matches their own and whose judgments will override the constitutions they are sworn to uphold in favor of dancing with the “ones that brought them.”

    Now they will use their ownership of the media together with their newly-enabled ability to drown the public in ads convincing them that those who have been working against the public interest really have the best interests of the general public at heart, thereby, over the next couple of election cycles electing governments bent on destroying the Social Contract that was the real backbone of this nation.

    In the end, those who cried “Patriotism!” and “America!” the most loudly will have sold our nation’s prosperity into bondage to other nation’s central banks (because massive borrowing from Japan and China is “good” whereas paying taxes to support the government we want and demand and need is “evil.”)

    What our conservative friends do not yet realize, what they are unable to realize, I suspect, is that in their rush to convert America into an oligarchy parallel to Nicaragua under the Anastasio Somoza’s (where five wealthy families owned and controlled all property in the nation and everyone else worked for them for poverty wages (or less),…

    What conservatives do not realize is that they will not be among those in the oligarchy. Once they have consolidated their control of the nation, they will be forced to hand over the keys to the nations who already own us due to the massive debt we owe those nations – debt accumulated precisely because those wealthy would-be oligarchs refused to pay taxes to support the country they thought they would soon own as their own little kingdom and support on the backs of the economic serfs: the poor and middle class.

  5. Submitted by myles spicer on 08/24/2010 - 12:07 pm.

    Re the Kapphahn comment below:

    “Now they will use their ownership of the media together with their newly-enabled ability to drown the public in ads convincing them that those who have been working against the public interest really have the best interests of the general public at heart, thereby, over the next couple of election cycles electing governments bent on destroying the Social Contract that was the real backbone of this nation.”

    Rupert Murdoch’s News Corp recently gave a $1 million corporate contribution (under the Citizens United ruling) to Republican candidates. This is not conjecture — Murdoch annonced it openly and proudly!

  6. Submitted by L.A. Krahn on 08/24/2010 - 04:04 pm.

    Nice essay, Mr. Spicer, but where’s the call to action?

    Please tell your readers what movements are afoot to counter this legal ruling. How can we restore personhood to primacy, over corporate personhood?

  7. Submitted by Thomas Swift on 08/24/2010 - 04:13 pm.

    “This is not conjecture — Murdoch anno[u]nced it openly and proudly!”

    As well he should! What a wonderful gift for freedom loving Americans.

  8. Submitted by myles spicer on 08/25/2010 - 08:33 am.

    Mr. Krahn

    I fear I have no “call to action”; the Supreme Courst has spoken, and the ruling to allow corporations unlimited funding is a done deal.

    The issue of disclosure is still open, in Minnesota at least, and that battle is still to be fought (although it seems to be a legal one in the courts rather than one of public pressure).

    I hate to use this phrase (iniated by the Tea Party), but to extend the Kapphahn comments, we must fight harder in coming elections to “take our country back”.

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