Citizens United v FEC: Money, Corporations, and Politics

By Douglas O. Linder (2019)

Money has been called the mother’s milk of politics.  Without money, there can be no campaign.  Money is needed to buy advertising, to rent halls for rallies, to pay campaign staff, and to fly or drive candidates from one rally to the next.

Early in our history, campaigns had expenses we might find surprising today. James Madison probably lost his race for a seat in the Virginia legislature in 1777 because he refused to provide liquor at his rallies.  Why go listen to James when his opponent is offering free rum?  George Washington knew better.  He won one election after serving roughly one half gallon of alcohol for every vote he earned.

According to Melvin Urofsky, author of the Money and Free Speech, it was the campaign of Andrew Jackson that ushered in the era of mass politicking.  And it took off from there. By 1840, the presidential campaign of William Henry Harrison included rallies, parades with banners and floats, log-cabin songbooks and log-cabin newspapers, pictures of Harrison, and “Tippecanoe and Tyler Too” handkerchiefs and badges.  All of this, of course, cost money. 

In 1864, Abraham Lincoln worried about the influence of corporate money in politics.  Lincoln said, “As a result of the war, corporations have become enthroned, and an era of corruption in high places will follow.  The money power of the country will endeavor to prolong its rule by preying on the prejudices of the people until all wealth is concentrated in a few hands and the Republic is destroyed.”

But the cost of campaigns continued to shoot up—and wealthy business owners were eager to help foot the bills. It cost $125,000 to get Lincoln re-elected in 1864.  Eight years later, the Republican Party spent twice that much to elect Ulysses Grant.  And it took about four times that much, close to a million dollars, to win the contested election of 1876 for Rutherford Hayes.  By 1892, campaign costs had more than doubled again. Democrat Grover Cleveland spent well over $2 million to win election.

William McKinley’s campaign in 1896 rested on retaining the gold standard, a policy favored by big industries.  McKinley’s chief fundraiser, Marcus Hanna, told industrial leaders how much they were expected to contribute.  Banks were to pay one-quarter of 1% of their capital.  Other industrial leaders were assessed flat fees.  Standard Oil chipped in $250,000.  Chicago’s meat-packing houses sent in $400,000.  Democratic candidate William Jennings Bryan got his own corporate sponsors, mainly the owners of silver mines in the West.  McKinley won.

In response to the massive corporate funding of the McKinley campaign, four states enacted laws in 1897 banning all corporate contributions to political campaigns.  All four states had voted for Bryan the year before. 

McKinley’s successor, Theodore Roosevelt, was the first president to call for an outright ban on corporate contributions.  Roosevelt told Congress in 1905, quote, “All contributions by corporations to any political campaign or for any political purpose should be forbidden by law.” 

A few years later, Congress managed to pass the first federal campaign finance act.  It was a toothless law called the “Publicity Act.”  It required disclosure of major donors and limited the size of contributions.  But the law lacked any enforcement mechanism.  There would not be a single prosecution in the 46 years the Publicity Act remained on the books.

Campaign spending kept shooting skyward.  And, increasingly, most of the money came from a relative handful of very wealthy people.  In the 1928 Hoover-Smith race, for example, just 1% of givers gave fully half of the total raised.  In the 1952 Eisenhower-Stevenson race, over two thirds of campaign funding came from donors giving more than $2500, as measured in current dollars.

In 1971 that Congress passed the first truly significant piece of campaign reform legislation.  By then, television had changed politics.  Among other things, it made races much more expensive.  Senator Edward Kennedy said, “Like a colossus of the ancient world, television stands astride our political system demanding tribute from every candidate for public office.  Its appetite is insatiable, its impact unique.”  Television turned fund-raising into a nearly full-time job.

The Federal Election Campaign Reform Act was signed by President Nixon.  It created a general taxpayer-paid fund for presidential elections, limited expenditures for media advertising, tightened reporting requirements, and imposed a ceiling on what candidates for federal office could spend on their own campaigns.  Two years later, amendments to the law created the Federal Election Commission. Composed of three Republicans and three Democrats, serving 6-year terms.  The amendments also set limits on individual contributions to campaigns.

The Reform Act became law largely for one reason.  It favored incumbents.  With the powers of their offices and their greater name recognition, they had an edge.  With the law in place, they need not worry about millionaire opponents funding their own campaigns.  Nor about opponents with unique fund-raising appeal.

The campaign reform act was challenged in court in January 1975.  The challenge was brought by some odd political bedfellows.  They included the liberal senator from Minnesota Eugene McCarthy and conservative senator James Buckley from New York.  The ACLU and the American Conservative Union.  Litigants from across the political spectrum.

They argued, first off, that money was speech.  At least money donated to a political campaign or spent to further a campaign.  Money spent, to say, buy a ticket to a play or football game would be conduct, not speech.  Money for a campaign, they argued, is a form of political association protected by the First Amendment.  Without money, no modern day campaign would be possible.

The government argued that even if the law restricted speech, it should be upheld.  The law served to “level the playing field” and reduce the likelihood of corruption. 

The Court gave both sides half a loaf.  In Buckley v Valeo, the Court upheld the limit on individual contributions because a contributor’s money does not directly support the contributor’s free expression.  It is the candidate, the recipient of the money, whose speech reaches the public.  On the other hand, the law restricting the amount of money a rich candidate could spend on his or her own behalf was struck down.  The candidate’s own expression was directly restricted.  And besides, the Court said, a rich person can’t be corrupted by money that comes from himself. 

Billionaires were freed to spend their billions. Good news for later self-funded candidates like Ross Perot.

From the 1980s on, donors increasingly exploited a large loophole in the campaign finance laws.  The exclusion on limitations of so-called “soft money.”  That is, not “hard money” given directly to a candidate for her campaign, but rather money given to a private entity—a “political action committee” or “PAC”—to spend in its own ways.  PACs are required, theoretically, to spend their money in ways not coordinated with the candidate’s own campaign. 

Soft money became the new thing.  The new (some believed) corrupting influence in American politics.  By the mid-1990s, the amount of soft money being spent on elections almost matched that of the campaigns themselves.  PACs took many forms.  There were labor union PACs, interest group PACs like the Sierra Club or NRA, and there were corporate PACs.

Scandals, fund-raising abuses, massive campaign expenditures—all of these led to another attempt at campaign finance reform. The result, in 2002, was a law formally known as the Bipartisan Campaign Reform Act.  It is more commonly known by the name of two Senate sponsors, John McCain and Russ Feingold. 

The McCain-Feingold Act did many things.  It banned soft money contributions made directly to political parties.  It imposed new limits on individual contributions of both soft money and hard money.  Most importantly for our purposes, the law prohibited corporations and labor organizations from paying for any “electioneering communications” within 60 days of an election or 30 days of a primary.

President Bush put his signature on the legislation.  But he did so reluctantly.  There was no signing ceremony, no press conference in the Rose Garden.

On the day of the signing, Senator Mitch McConnell filed a suit challenging the new law’s constitutionality. Meanwhile, he worked to undermine the law.  He did so largely by controlling the process of nominations to the Federal Election Commission.  According to former commission Brad Smith, McConnell said, “We need to put Republicans on the FEC who favor our point of view on regulation.'” The new appointees essentially refused to enforce the law.  The result was a number of 3 to 3 deadlocks on enforcement actions.

McConnell’s behind-the-scenes maneuvering paid off.  But his legal challenge to McCain-Feingold didn’t fare so well. By a 5-to-4 vote in 2003, the Court upheld nearly the entire law.  It was the high-water mark for campaign reform efforts.  A day of sunshine for reformers.

But the precedent of McConnell v FEC did not last long.  The Court soon decided to reconsider the Act’s key requirement prohibiting corporate “electioneering communications” around election time.  The case was Citizens United v the Federal Election Commission.  It became one of the most hotly debated cases of our time.

The case was heard by a newly remade Supreme Court. John Roberts and Samuel Alito joined the Court in President George W. Bush’s second term. The loss of Justice Sandra Day O’Connor, and her replacement by Justice Alito, made all the difference. When a case is decided 5 to 4, it only takes one vote to change it.  

And here we make a brief digression.  You might well be asking—and many people still are—how is it possible for a corporation to have First Amendment rights? 

It turns out the Supreme Court decided long ago corporations were “persons” entitled to certain constitutional rights.  In the 1888 case of Pembina Consolidated Silver Mining Co. v. Pennsylvania, the Court said, quote, "Under the designation of 'person' there is no doubt that a private corporation is included. Such corporations are merely associations of individuals united for a special purpose and permitted to do business under a particular name.”  Over the decades that have followed, the Supreme Court has reaffirmed this holding many times.

And free press fans should be happy that corporations do have at least some First Amendment rights.  After all, the New York Times is a corporation.  The Washington Post is a corporation.

Now, that doesn’t mean corporations necessarily have exactly the same First Amendment rights as individuals.  McConnell v FEC proved that.

But to get back to our story.  David Bosse watched Michael Moore’s political documentary “Farenheit 9-11” in 2004.  It seems an unlikely choice for a conservative activist.  But Bosse didn’t watch the movie for entertainment.  He was doing research for Citizens United.  Citizens United proclaims its mission to be to “reassert the traditional American values of limited government, freedom of enterprise, strong families, and national sovereignty and security.”  Citizens United receives some of its donations from corporations.

Although Bosse disagreed with just about everything in Michael Moore’s movie, he came away impressed.  He said, “I saw its ability to drive discussion.”  He began to think about making movies for Citizens United that pushed a conservative agenda. “I wanted to counterpunch,” he said.

He began by calling, he said, “Every friend in the conservative movement I knew.”  Some were openly skeptical, others encouraging.  Bosse said, “I’m just going to do it.”  Even though, “I didn’t know the front of a camera from the back of a camera.”

Bosse’s first production was a movie called “Celsius 41.11.”  It was a response to Moore’s film, both a tribute to George W. Bush’s war on terrorism and an attack on the 2004 Democratic candidate for president, John Kerry.  The movie questioned Kerry’s anti-war record and attacked his qualifications for president.  Celsius 41.11, by the way, according to film’s tagline, is "The Temperature at Which the Brain Begins to Die."

The movie was put together in record time.  It opened in Washington DC in late December and was shown in 116 theaters across the country for a three-week run. 

Bossie had hoped to take out television ads promoting his movie.  But there was a problem.  The ads would run during the 60-day period before the general election.  The McCain-Feingold law prohibited outside organizations and corporations from purchasing political ads on radio and television in the two months before elections.

Bosse’s film won a lot of praise from movement conservatives.  His political friends called and said, “Wow, you need to do more like that.”  Bosse didn’t need convincing.  He saw the medium of film as a potentially powerful force for political change.  You can put a movie on television and deliver it right into people’s living rooms.  You can have 90 solid minutes or more to persuade and energize voters.

Two years after the success of “Celsius 41.11,” Bosse began thinking about making a movie about Hillary Clinton.  At the time, she was considered the odds-on favorite to win the 2008 Democratic nomination for president.  Bosse had worked in the 1990s for a House Committee that looked into the financial affairs of the Clintions.  Bosse said, “Who knows more about Hillary Clinton than me? Very few people.”

Bossie recruited a “who’s-who” list of conservative commentators to appear as interview subjects in his film called “Hillary: The Movie.”  People like Ann Coulter, Dick Morris, Robert Novak, Larry Kudlow, and Newt Gingrich.  Kathleen Willey appeared to discuss attacks by the Clintons that resulted from her alleging a sexual assault by Bill Clinton.  

None of the commentators had anything good to say about Hillary Clinton.  The Clintons were described as “power hungry.” “They’ll stop at nothing,” one said.  They were accused of covering up evidence of wrong-doing.  One commentator described Clinton’s Presidential Library as “Little Rock’s Fort Knox.”  Dick Morris said, “Hillary Clinton is the closest thing we have in this country to a European socialist.”  The movie ends darkly with Morris saying, “We must never forget the fundamental danger that this woman poses to every value we hold dear.  You see, I know her.”

The movie cost over one million dollars to produce.  But Citizens United was worried.  It suddenly appeared that the wheels were coming off Clinton’s campaign.  She unexpectedly lost the caucuses in Iowa to Barrack Obama.  If the movie didn’t come out soon, and Clinton’s campaign continued to fall apart, who would pay money to see the movie?

Bosse decided to release the movie as soon as possible—well ahead of when he originally intended.  He quickly put together television ads promoting the movie’s release. 

Citizens United knew full well that the ads would run afoul of restrictions in the McCain-Feingold campaign finance law.  In fact, that was probably the point.  Part of a strategy to undo McCain-Feingold.

Bosse and Citizens United argued they had a First Amendment right to advertise their movie anytime they wanted to, even during a campaign. Bosse objected to the FEC’s insistence that ads for the movie contain an explicit disclaimer.  Bosse complained that the disclaimer would turn the spot into a political ad and detract from its effectiveness.  “All I’m trying to do is make people pick up a movie ticket,” he said. 

The FEC also said it would be an illegal campaign contribution for Citizens United to pay a cable company to make the movie available on video and demand.  Moreover, if the combined gifts funding the movie exceeded $3000, all the donors’ names would have to be disclosed.  In the view of the FEC, what Citizens United did was no different than if General Motors or Google made a movie favoring a particular candidate.

Citizens United filed suit against the Federal Election Commission.  Bosse saw the FEC’s restrictions as a blatant First Amendment violation.  “It’s the First Amendment,” he said.  “The first one!”

The case was first heard by a panel of three federal district court judges.  The court sided with the FEC.  In the court’s view the movie was a 90-minute campaign ad arguing that Senator Clinton is unfit for office and that viewers should vote against her.  The court held that the FEC correctly applied the McCain-Feingold law and that the law was constitutional.

Bossie and his legal team appealed directly to the Supreme Court. They hired a Dream Team of lawyers.  Chief among them was Ted Olson, former solicitor general of the United States. He was joined by Citizens United counsel, Michael Boos, and Floyd Abrams, a highly respected First Amendment lawyer who worked on the Pentagon Papers case.

For Olson, the case was special.  Citizens United had dedicated the movie “Hillary” to his wife, Barbara Olson.  Barbara Olson was a conservative commentator who was a passenger on American Airlines Flight 77 when it crashed into the Pentagon on Sept. 11, 2001.  She was also a Clinton critic and author of the book, "Hell to Pay: The Unfolding Story of Hillary Rodham Clinton."

In Bossie’s view, Ted Olson was "singularly responsible for our winning this case." Olson decided to transform the case from a narrow one challenging a few specific provisions of McCain-Feingold into an all-out assault on the law's constitutionality. 

He argued that there McCain-Feingold law created a slippery slope that could lead to an evisceration of protection for crore political speech.  He urged the Court to overturn the 2003 McConnell decision and free corporations to make whatever political pitches they chose to make.

Concern about the slippery slope was evident when the Supreme Court heard oral arguments.  The attorney for the FEC, Deputy Solicitor General Malcolm Stewart, was asked if the government could ban the publication of a book if it mentioned a candidate for office within the election time frame.

Stewart said that it could. "That's pretty incredible," Justice Samuel Alito said.

Then came questions about electronic devices such as the Kindle. "If it has one name, one use of the candidate's name, it would be covered, correct?" Chief Justice John G. Roberts Jr. asked.

"That's correct," Stewart replied.

"It's a 500-page book, and at the end it says, 'And so vote for X,' the government could ban that?" Roberts asked.

This was too much for the Court’s conservatives. The government’s answers to the hypotheticals sent a chill down the Supreme Court," Bossie said.  Bossie said the slippery slope argument turned justices against the FEC and in favor of Citizens United.

Stewart tried to argue for the FEC that the case should be decided on narrow grounds.  There was no need to reconsider the large First Amendment question about the limitations on corporate speech.  But it they did go there, the law should be upheld.  Even direct regulation of political speech is permissible if the government can show a “compelling need” for the regulation.  And preventing corruption and the appearance of corruption was a compelling justification.

But the majority was skeptical.  Why should speech from corporations be more corrupting than speech from individuals?  Can’t we trust citizens to decide the value of speech for themselves?

Citizens United had its five votes. 

The opinion for the majority was written by Justice Anthony Kennedy.  He invalidated McCain-Feingold’s most contested provision.  The provision that barred corporations from using their general treasury funds for express advocacy or electioneering communications.  The law applied to broadcast electioneering communications within 30 days of a primary election and 60 days of a general election.

Kennedy said that under the law, many forms of political speech became felonies.  He gave some examples:  “The Sierra Club runs an ad, within the crucial phase of 60 days before the general election, that exhorts the public to disapprove of a Congressman who favors logging in national forests; the National Rifle Association publishes a book urging the public to vote for the challenger because the incumbent U. S. Senator supports a handgun ban; and the American Civil Liberties Union creates a Web site telling the public to vote for a Presidential candidate in light of that candidate’s defense of free speech.”

Justice Kennedy began his analysis by noting, “The First Amendment has its fullest and most urgent application to speech uttered during a campaign for political office.”

He said it was well established that “political speech of corporations or other associations should not be treated differently simply because such associations are not ‘natural persons.’” Political speech is no less valuable, Kennedy said, when it “comes from a corporation rather than an individual.”

Kennedy described the censorship presented by the case as “vast in its reach.”  He wrote, “The Government has muffled the voices that best represent the most significant segments of the economy.” And “the electorate [has been] deprived of information, knowledge and opinion vital to its function.”

Kennedy said what the government was doing through the McCain-Feingold law amounted to nothing less than “thought control.”  Kennedy wrote, “The First Amendment confirms the freedom to think for ourselves.”

Whether the movie “Hillary” was fair or not was beside the point.  The Court opinion notes, “Some members of the public might consider Hillary to be insightful and instructive; some might find it to be neither high art nor a fair discussion on how to set the Nation’s course; still others simply might suspend judgment on these points but decide to think more about issues and candidates. Those choices and assessments, however, are not for the Government to make.”

Kennedy concluded, “The First Amendment underwrites the freedom to experiment and to create in the realm of thought and speech. Citizens must be free to use new forms, and new forums, for the expression of ideas. The civic discourse belongs to the people, and the Government may not prescribe the means used to conduct it.”   

The decision was ironical in one sense.  Citizen United’s original objections to the law were the only part of the law that survived.  The Court upheld McCain-Feingold’s disclaimer and donor disclosure requirements.

Justice Stevens wrote for the Court’s four dissenters.  He called the decision “profoundly misguided.”  He said he “emphatically dissented” from the Court’ principal holding.  It threatened, he said, to undermine the integrity of elected institutions across the Nation and damage the Supreme Court as an institution. 

Stevens called the decision “backwards in many senses.” He wrote, “It elevates the majority’s agenda over the litigants’ submissions, facial attacks over as-applied claims, broad constitutional theories over narrow statutory grounds, individual dissenting opinions over precedential holdings, assertion over tradition, absolutism over empiricism, rhetoric over reality.” 

In the minds of the four dissenters, the strong “societal interest in avoiding corruption and the appearance of corruption” provided more than enough justification for regulating corporate expenditures on candidate elections.

Stevens concluded by calling the decision “a rejection of the common sense of the American people.”  He noted that the need to prevent corporations from undermining self-government has been recognized since the nation’s founding.  And that the corrupting potential of corporate electioneering has been a major concern “since the days of Theodore Roosevelt.”  Stevens wrote, “While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.”

The conservative activists at Citizens United were thrilled with the ruling.  Citizens United spent about $1.25 million in legal fees on the case -- so much, Bossie said, that it "makes you cry." But, he said, it was worth every dollar.

Just days after the Citizens United decision, a new president gave his first State of the Union speech.  Near the end of the speech, President Barrack Obama had a few things to say about the decision.  He said, “With all due deference to separation of powers, last week the Supreme Court reversed a century of law that, I believe, will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections." Obama added, “I don't think American elections should be bankrolled by America's most powerful interests or, worse, by foreign entities. They should be decided by the American people.”

Democratic lawmakers stood to cheer and applaud.  In the second row of the House chamber, a justice of the Supreme Court had a different reaction. "Not true, not true," Justice Alito appeared to say, as he shook his head and furrowed his brow.

Spending soared in the first election after Citizens United.  Spending in congressional races jumped 46 percent from the election before.

Fred Wertheimer had worked long and hard on the issue of campaign reform.  Wertheimer called Citizens United “a disaster for the American people” and “the most radical and destructive campaign finance decision in Supreme Court history.” The American Enterprise Institute’s Norman Ornstein compared the case to the infamous 1857 Dred Scott decision. Ornstein said, “The Roberts court is going to go down in history in the same way Chief Justice Roger Taney and his court went down in history with Dred Scott.”

Senator John McCain had a warning.  “I promise you, there will be huge scandals,” he said. “There’s too much money washing around, too much of it we don’t know who’s behind it, and too much corruption associated with that kind of money.”

Polls showed that over two-thirds of Americans supported a constitutional amendment overturning Citizens United.  Is that likely to happen?  Constitutional amendments are hard.  They are almost impossible without the broad support of both parties.  Citizens United is likely to remain the law, whatever most of the public might think about it.