Risk Management

Congress to Debate Companies’ Speech and Spending Rights

A Supreme Court decision overturning limits on corporate campaign spending sparks a flurry of proposals on Capitol Hill, including a call for a con...
Sarah JohnsonFebruary 2, 2010

Sen. John Kerry wants to restrict companies’ funding of political campaigns — which was loosened by a January Supreme Court decision — through a constitutional amendment.

Such a change would “make it clear once and for all that corporations do not have the same free speech rights as individuals,” said the Massachusetts Democrat on Tuesday before the Senate Committee on Rules and Administration.

Congress is also floating the ideas of giving shareholders the power to approve spending on political campaigns, expanding related disclosures in financial statements, and reinforcing the prohibition of foreign companies’ ability to make campaign contributions in the United States.

Corporations’ right to free speech was the reason given by the high court’s majority opinion in Citizens United v. Federal Election Commission to lift some of companies’ limitations in financing political campaigns. In a 5-4 decision, the justices ruled the federal campaign finance law’s “prohibition on corporate independent expenditures is an outright ban on speech.” Companies have adjusted to the 2002 law, often called McCain-Feingold, by using indirect routes: donating funds to tax-exempt organizations (known as 527s) and trade associations, or pressuring employees to support preferred candidates.

To be sure, companies still are not permitted to give money directly to politicians. Now, however, their funds can be spent on advertisements that run close to Election Day. The Supreme Court decision gives them more freedom to make indirect donations, such as through lobbying groups that run advertisements in support of a favored candidate or against another politician.

The justices’ decision came in a case over freedom of speech involving a documentary film of Hillary Clinton’s run for President. The plaintiffs, a nonprofit called Citizens United, had appealed to the courts that the McCain-Feingold law was unconstitutional and limited its ability to advertise its movie in the months leading up the election.

Opponents of that view, including Kerry, believe the decision will impair democracy. “The increased influence of money — big money — in our politics is robbing the average citizen of his or her voice in the setting of our nation’s agenda,” he said. Kerry also expressed concern that the ruling seems to free foreign subsidiaries incorporated in the United States to influence elections. Foreign companies are still banned from funding federal and state campaigns, but opponents to the judges’ decision believe there’s a loophole.

Dissenters to the Supreme Court’s decision are trying to get new campaign-finance legislation moving before the November elections. The decision “opens the door to the use of immense aggregate wealth of corporations to influence federal elections,” said Fred Wertheimer, president of the nonprofit organization Democracy 21, at the Senate committee hearing.

However, Stephen Hoersting, vice president of the Center for Competitive Politics, sees the issue another way. The Citizens case “reestablishes core rights to political speech by reaffirming the principle that any association of individuals may speak independently about candidates without limitation,” he said.