Prior to the Supreme Court’s decision last week in Citizens United v. FEC, Jefferson Smith, Jimmy Stewart’s archetypal hero who arrived in our nation’s capital to take on the special interests, may never have made it to Washington. The film Mr. Smith Goes to Washington, after all, was speech funded by a corporation. As pointed out by Justice Anthony Kennedy, writing for the court’s majority in Citizens United, some officials at the time discouraged the film’s distribution because they did not like its criticism of Congress. Under prior precedent governing our campaign finance laws, such officials could have gone even farther and banned the film outright.
Our courts have long recognized that the First Amendment applies to corporations even in the context of political speech. However, federal law on the books prior to Citizens United prohibited corporations and unions from using general treasury funds to make direct contributions to candidates or independent expenditures that expressly advocate the election or defeat of a candidate through any form of media.
Recognizing that political speech is indispensible to decision making in a democracy—and that this is true when the speech comes from a corporation, a union or an individual—the court struck down the independent expenditure prohibition as unconstitutional (direct contributions remain illegal). As a result, corporations and unions may use general treasury funds to pay for such messages, but still must adhere to existing disclaimer and disclosure requirements.
Nonprofit corporations too may also do so, but still must avoid political activity from becoming their primary activity under the tax code. We should expect more scrutiny by the IRS and the FEC on the activities of nonprofits in the wake of Citizens United. In addition, the ability of corporations and unions to speak more freely during the political season will bring more attention towards potential coordination between these outside organizations and political parties. In a prior case, the Supreme Court upheld contribution limits as a sufficiently important governmental interest in the prevention and appearance of corruption. The court held that large donations could be given to secure a political quid pro quo. It determined that an independent expenditure ceiling fails to serve any such interest because the absence of prearrangement and coordination alleviates the danger that expenditures will be given as a quid pro quo. The FEC, already engaged in its third round of rulemaking since 2002, will be forced to reassess the issue as it finds itself flooded with complaints during the upcoming political campaign.
Of potentially the greatest alarm on the enforcement front—and one that should attract immediate and universal concern—the Citizens United ruling failed to address how the flow of foreign money, otherwise illegal under federal law, could enter into our political debate in the form of foreign corporate contributions to U.S. subsidiaries. This issue came up during oral arguments in the case, but was left unaddressed by the court.
Notwithstanding these enforcement issues, Citizens United marks a revolution in the jurisprudence surrounding campaign finance laws and political speech protected by the First Amendment. But what is clear is that this is a revolution far from reaching its Yorktown. To paraphrase Winston Churchill, this ruling marks only the end of the beginning of this debate.
In a D.C. federal court, the RNC is waiting for a decision on its constitutional challenge of the prohibition on national parties from soliciting, receiving or spending any funds that were not subject to federal contribution limits, commonly referred to as soft money. The RNC has argued that it should be allowed to raise soft money for purposes not related to advocating for candidates, such as party-building and redistricting efforts.
The RNC litigation may be helped by the practical impact of this decision. Political Parties and federal candidates are bound by contribution limits both on amounts they may receive and the sources from which the may receive it. Now that outside organizations are more freely able to speak, parties and candidates will have to fight that much harder to compete. As Justice Stevens pointed out in his dissent, corporations and unions are now free to spend as much money as they wish on ads that support or attack specific candidates; national parties, however, will not be able to spend a dime of soft money on ads of any kind. There is a clear need for greater parity in this area, but where and how to draw such lines may prove difficult if not impossible. And the courts may be forced to reassess political party speech in light of the analysis of the rights of association and speech raised in Citizens United.
It is also clear from a close reading of Citizens United that contribution disclosures, while predicated on sound public policy, will run into future First Amendment challenges. The majority in Citizens United recognized that the First Amendment protects political speech and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. Disclosures may burden the ability to speak but they do not prevent anyone from speaking. The majority raised concerns when presented with examples in other instances in which donors to certain causes were blacklisted, threatened or otherwise targeted for retaliation. But because it found no actual evidence that such things happened in Citizens United, it upheld the disclaimers.
As Justice Thomas warned in his dissent on this point, however, Congress may not abridge the right to anonymous speech based on the simple interest in providing votes with additional relevant information. Thomas noted how supporters of a California state ballot proposition suffered property damage or threats of physical violence and even death as a result of contribution disclosures. He further pointed out at least one example of fear of retaliation from elected officials: give to a challenger and suffer the wrath of the incumbent. Both scenarios create a chilling effect on speech that could amount to prior restraint and thus violate the First Amendment.
Citizens United will inevitably go down as a seminal victory for political speech. It also makes clear that both Congress and the Supreme Court will continue to tinker with both the policy and the law involving political speech. In so doing, both bodies need to continue to respect the breadth of the First Amendment. Remedies must comply with the Constitution, including any renewed push for public funding. As the Court said here, it is our law and tradition that more speech, not less, is the governing rule.
Elliot S. Berke is a Washington, DC attorney focusing on political law and can be reached at email@example.com. He served as Counsel to the Speaker and to the Majority Leader of the U.S. House of Representatives from 2004 until 2006.