In post-election statements, both Sen. Amy Klobuchar and Rep.-elect Rick Nolan called for campaign finance reform. They singled out the role of big money and negative ads in campaigns, demanding among other things, an overturning of the Supreme Court’s 2010 Citizens United v. Federal Election Commission. Campaign-finance reform is needed, but the American election system is broken, demanding even broader changes beyond reversing Citizens United. These changes extend to the role of money in politics, voting, and the quality of political debate and information.
Money and politics
Citizens United is one of many Supreme Court decisions that try to define the role of money and speech in American elections. Concern that money corrupts the political process goes back to the 19th century. Beginning in 1907 with the Tillman Act, federal law made it illegal for corporations to make direct political contributions to candidates for federal office. In 1947 the Taft-Hartley Act did the same for labor unions.
Many states have similar laws. The concern, especially with corporations, as Chief Justice Rehnquist once stated in First National Bank of Boston v. Bellotti (1978) is that the government might reasonably fear that a “corporation would use its economic power to obtain further benefits beyond those already bestowed.” The task is now to prevent the conversion of resources amassed in the economic marketplace from corrupting the political marketplace.
What Citizens United actually did was to say that corporations (and unions) have a First Amendment right to make direct expenditures from their treasuries to make independent expenditures to advocate for the election or defeat of a candidate for office. The decision did not overturn the ban on direct contributions to candidates, but it overturned laws that made it illegal for corporations to spend money independently to support a candidate for office.
Is Citizens United responsible for the $6-8 billion election cycle spending that just concluded? Yes and no. Prior to Citizens United, corporations already had lots of ways of getting around the law. They could do issue ads that attacked candidates but did not expressly urge their election or defeat. They could set up political action committees. They could fund get-out-the-vote, voter-registration, and voter-education programs. Individual corporate officers could give money. There were many ways around the law.
Citizens United did not necessarily mean that more money would go into elections; instead it meant that money would enter in different ways and with less transparency. Given that it was illegal for corporations to make express advocacy independent expenditures before Citizens United, when the Supreme Court declared that ban unconstitutional there were no laws in place to force corporate disclosure. The intensity and closeness of the 2012 elections probably explains how much money was spent; Citizens United tells us about why, in part, we do not know who spent it.
In addition the Citizens United decision was built upon in a 2010 Court of Appeals decision, SpeechNow.org v. Federal Election Commission, that allowed for the creation of Super PACS that could accept unlimited political donations from corporations, unions and individuals to engage in independent expenditure express advocacy. With limited disclosure and often innocuous sounding names, these groups provided another outlet for money.
Finally, the transparency problem with money was exacerbated in 2012 by the misuse and hijacking of nonprofits. Basically, there are two types of nonprofits under the federal tax code. Entities classified as 501(c)(3)s are prohibited from engaging in partisan politics as a condition of donations to them being tax deductible. But contributions to nonprofits classified as 501(c)(4)s are not tax deductible, and they may engage in partisan politics and endorse candidates for office so long as that political activity is not a major purpose of their activity.
There is extremely limited disclosure required on nonprofits in terms of donors, and there are no contribution limits to them. Corporations and wealthy donors used them as laundering mechanisms to escape disclosure requirements.
So what could be done on campaign finance? More disclosure is needed and efforts to pass the Disclose Act to force that is a first step. But partisan opposition to it in Congress has prevented that. Overturn Citizens United? That requires a constitutional amendment and that means two-thirds vote of both the House and Senate and ratification of three-fourths of the states. Little chance there. The Supreme Court could reverse itself, but unless President Obama can replace a conservative Supreme Court Justice, that option, too, looks unlikely.
Yet President Obama could act on his own to mitigate some of the problem. He could issue a procurement rule barring corporations from making express advocacy independent expenditures above a certain dollar amount as a condition of bidding on federal contracts. Here the issue is about conflict of interest.
Additionally, he could direct the Securities and Exchange Commission to engage in rule-making to require shareholder assent before expending money for political purposes. The issue here is protecting the First Amendment rights of shareholders not to have their money spent for political causes they do not support. This rule would parallel those already found with unions and their members.
Third, Congress could change the tax code to require more disclosure for nonprofits that use money for political purposes. The president alone might also be able to direct the IRS to do that.
The defeat of the voter ID amendment is a rare victory in the battle to fight the second great wave of disenfranchisement in American history. The first wave was after the Civil War and when Reconstruction ended. It ushered in the Jim Crow era and a 100-year effort to prevent African-Americans from voting.
Voter ID, based on the erroneous claim of widespread voter fraud, is one part of this disenfranchisement. Across the United States in the last few years many states have enacted voter ID and other laws such as cutting back on early voting and restricting voter registration drives. Pre-election voting-rights litigation was significant in 2012. The United States effectively has 50 different state laws regarding voting. Were it not that Obama won the 2012 presidential race so decisively, problems this year in Florida would be holding up the election results yet again.
One solution is to use federal voting rules and procedures. The Constitution gives Congress the authority to regulate federal elections. Congress could construct rules regarding voter eligibility, ban voter ID, allow for early voting, or whatever else it wants to do. Uniformity and fairness across states in elections too.
Political speech and rhetoric
The final critique is that political campaigns have become too negative and nasty. Maybe. They are tame by comparison to the 19th century. But there are limits regarding what can be done to regulate political speech. The Supreme Court correctly in its 1964 New York Times v. Sullivan gave broad First Amendment protection to speech that criticizes public officials and candidates. A free society should encourage robust political debate, and it should be the people and not judges or government officials who decide what is true. Moreover, attack ads will continue to be used so long as they are effective and voters respond to them.
The bigger problem now is that voters have developed partisan choices when it comes to the consumption of news. The world is increasingly divided between FOX and MSNBC. It seems all of us want our own truth now. The rise of the new and social media has done little to encourage voters to seek out alternative information.
One solution to this would be to reinstate the fairness doctrine and vigorously enforce the equal time doctrine, requiring television and radio to offer opposing viewpoints. The public has a First Amendment right to a diversity of viewpoints and broadcasters, as a condition of holding a license, should be required to honor this.
Overall, Klobuchar and Nolan are correct that the American elections system is a mess. But the causes are varied and the fixes more complex than they realize.
David Schultz is a professor at Hamline University School of Business, where he teaches classes on privatization and public, private and nonprofit partnerships. He is the editor of the Journal of Public Affairs Education (JPAE). Schultz blogs at Schultz’s Take, where this article first appeared.
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