Power to the Corporations, Baby!

AT&T's "personal" rights, campaign donations from China, and other absurdities one year after Citizens United.

| Fri Jan. 21, 2011 7:00 AM EST

A year ago today, the Supreme Court handed down its game-changing decision in the case of Citizens United v. Federal Election Commission. The 5-4 ruling threw out decades of limitations on the amount of cash corporations and unions could spend to influence elections. Arguing that those limitations curtailed the First Amendment rights of corporations and unions, the majority of the high court effectively opened the campaign-cash spigot to its maximum setting, enabling a spending free-for-all.

Outside donors, most of them anonymous, dumped almost $300 million into last year's midterms. Among them were rich individuals, such as housing titan and GOP benefactor Bob Perry, and corporations and unions, like Dow Chemical and the AFL-CIO.

So where do we stand 365 days later? How dramatically has Citizens United altered the way our leaders get elected? And can we expect more changes to campaign finance law in its wake?

It was the post-Citizens United political playing field that defined the 2010 midterm elections. Shadowy groups like Karl Rove's American Crossroads, Crossroads GPS, American Action Network, and Commonsense Ten sprung up to capitalize on the new ground rules. The rush of outside spending came mostly from the right, which outspent the left by more than a two-to-one average, $191 million to $94 million.

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Only after they'd conceded 63 House seats and six Senate seats did Democrats and liberal organizations grasp how much power these independent spending groups had been handed. "Post-2008 election, there was a certain amount of complacency," says Joan Fitz-Gerald, president of America Votes, which oversees a coalition of progressive groups active in elections. "We always need to understand that the electorate is always going to see some kind of campaigning going on."

Fitz-Gerald went on, "This is the way it's going to be, unless we have radical changes on the Supreme Court."

The Obama administration knows this. Although the campaign of then-Sen. Barack Obama told high-profile Democratic donors in 2008 to shut down outside spending operations, Obama and his team now know they can't compete without them. Not with heavyweight donors like the US Chamber of Commerce and much of corporate America poised to spend a half-billion dollars or more to reclaim the White House and Senate.

Obama lieutenant David Axelrod told Politico in November that while the administration favors disclosure and transparency in campaign spending, "I am sure the physics of this is that there will be people offended by this, and they will be inspired to get involved." Read: Let the left-vs.-right spending wars begin.

With fundraising strategies just now coalescing for the 2012 election, $500 million is probably a lowball estimate for how much conservative groups will spend to defeat Obama, retake the Senate, and beef up their House majority. Meanwhile, left-leaning strategists and fundraisers will be hitting the road in upcoming months, pitching their campaign strategies to wealthy donors and drumming up money for their 2012 campaign war chests. Liberal groups have to make up plenty of ground if they want to avoid being outspent as badly as they were in 2010.

"We're certainly going to need to fight back with any and all resources at our disposal," says Steve Phillips, president of the progressive group PowerPAC in San Francisco. "I don't think we can leave any weapons unutilized. And we're gonna need the major donors on the progressive side to be competitive as possible."

In the meantime, don't be surprised to see plenty more ads by outside groups like American Crossroads. They won't, however, focus on a particular candidate or race, but instead on a hot-button issue. The Sunlight Foundation explains:

Under IRS rules, a corporation that wants to hide the donors to its election activities and still maintain its tax-exempt status cannot have the election of candidates as its "primary purpose." So it must spend more on "education" or issue ads than it spends on electioneering communications. That means, for example, that in order to keep its tax-exempt status, Karl Rove brainchild Crossroads GPS, which spent $17 million on campaign ads on the November elections, must now spend at least twice that on issue ads.

Whether Rove's outfit and others like it can prove they're not entirely political creatures will be one of the most closely watched issues in Citizens United's aftermath.

Not to be overlooked are the legal aftershocks of the case. The Supreme Court is now contemplating the corporation-as-person issue, raised so famously in Citizens United, in a case where telecommunications giant AT&T aims to prevent the federal government from obtaining company information under the Freedom of Information Act.

The act exempts the release of information that would violate "personal privacy," and AT&T claims the government's request would do just that, though most people would hardly call AT&T a "person." As US Solicitor General Neil Katyal put it, "A corporation itself can no more be embarrassed, harassed, or stigmatized than a stone." But in the wake of Citizens United, outsiders wait nervously to see how the Supreme Court takes on "corporate personhood" this time.

Post-Citizens United legal battles could also chip away at the campaign-finance laws left standing. In one ongoing suit, two foreign nationals—in this case, Canadian citizens living in the US—are challenging the so-called Alien Gag law, a part of the McCain-Feingold Act of 2002 that prevents foreign nationals or sovereign-wealth funds from donating to American political campaigns. In short, it's what prevents China from directly influencing American elections. On January 13, a federal judge ruled that two plaintiffs had the right to challenge the act. And while Fred Wertheimer, who runs the reform group Democracy 21, says the challenge isn't much cause for concern, he adds, "I'm not predicting anything."

Also on the Supreme Court's to-do list is McComish v. Bennet, a case involving Arizona's public-trigger mechanism—the point at which a publicly financed candidate receives additional funds. Conservatives argue that these mechanisms, which kick in when the war chest of the candidate's privately financed opponent surpasses certain thresholds, stifle free speech.

What worries reform advocates is that the Davis case could be used to scrap public campaign financing altogether. Wertheimer, an avowed supporter of publically financed elections, says he doubts the high court would overturn Buckley v. Valeo, its 1976 decision allowing public financing, but "always, given Citizens United, we live to wait and see what this [Supreme Court] is going to do."

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