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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 corpora

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.