Apocalypse Update

05 May, 2010

By Doug Pinkham
Public Affairs Council President

May 5, 2010

“The world is not going to be saved by legislation.”

– William Howard Taft

When we last left our discussion of the Supreme Court’s January ruling in the Citizens United case, opponents – including President Obama – were promising swift legislative action to undo the damage. Their dilemma was devising a strategy that wouldn’t require amending the U.S. Constitution.

Democrats found an opening in the court’s argument that disclosing independent expenditures is less restrictive than regulating political speech. As Justice Kennedy wrote in the majority opinion:

The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.

Kennedy’s words were simple and elegant, but the title of the bill congressional Democrats introduced last week is more complex. It’s called the “Democracy is Strengthened by Casting Light on Spending in Elections Act” (the “DISCLOSE” Act). Rep. Chris Van Hollen (D-Md.), the chief sponsor of the House version, picked up two Republican co-sponsors.  Sen. Chuck Schumer (D-N.Y.), the chief Senate sponsor, had plenty of Democrats – but no Republicans – standing beside him when he announced the measure on April 29.

The legislation focuses on disclosure, but defines disclosure in new and interesting ways. It also would prevent certain corporations (including government contractors, TARP recipients and foreign-national companies) from paying for ads that encourage the election or defeat of federal candidates. When this type of advertising does appear, broadcasters would have to give candidates and political parties discounted air time to respond.

As soon as the measure was announced, everyone came out swinging. Prominent Democrats, including Obama, loved the legislation. “What we are facing is no less than a potential corporate takeover of our elections,” he said in his weekly address. “And what is at stake is no less than the integrity of our democracy.” Good government groups such as the Sunshine Foundation, the Campaign Legal Center and People for the American Way also loved it – though some felt a constitutional amendment was still a better idea.

U.S. Chamber of Commerce President Tom Donahue hated it, saying that “with unemployment near 10% and millions of Americans out of work, Congress should be more concerned about creating jobs than protecting their own.”  Senate Minority Leader Mitch McConnell (R-Ken.) took a similar approach, arguing that the bill “is about election advantage, plain and simple.” He pointed out that Van Hollen and Schumer are key players in Democratic fundraising and elections.

Because the president has made Citizens United fix-it legislation a priority, the debate will grab headlines even if the measure struggles to grab votes. Proponents hope to whisk the bill through Congress so it reaches the president’s desk by the end of July.

But there are likely to be many speed bumps on the road to new campaign finance reform legislation. The obvious challenge for Democrats is persuading several Republican senators to break ranks and support the bill. But that’s not the only obstacle:

  • Broadcast media are upset at being asked to offer their lowest ad rate to political parties and committees. TV stations currently must offer this rate only to candidates. How big an issue is this? Media consultant Doc Sweitzer told CQ Politics this would “effectively be a government mandate to lose income.”
  • Unions are not in total agreement. The Service Employees International Union likes the bill, but wants protections for employees who feel pressured to support their CEO’s political agenda. The AFL-CIO supports increased disclosure, yet sided with the U.S. Chamber in Citizens United.
  • Foreign-national corporations can’t make contributions or expenditures in connection with any U.S. election. The bill would expand the definition of a foreign-national corporation to include companies with foreign nationals holding 20% or more of their voting shares, holding a majority of board positions, or controlling U.S. corporate political activities. Organizations and companies that couldn’t care less about election advertising will have something to say about this.
  • So many firms would be on the “prohibited list” that the legislation may invite challenges on free-speech grounds. Perhaps that’s why sponsors inserted a severability provision so that a successful challenge to one section won’t throw out the entire act.
  • The disclaimer requirements would identify not only CEOs of companies who place electioneering ads, but also “significant funders” who support advertising by associations or other groups. This part of the bill is so brilliantly intricate – and it would create so much uncertainty – that you wonder if it was really designed to discourage political involvement rather than disclose funding.

The irony is that all this may be a case of trying to solve a problem that isn’t much of a problem. American corporations aren’t exactly beating a path to their ad agencies to develop TV spots that encourage the defeat of their member of Congress. As I wrote back in January, companies are not likely to get involved in controversial campaigns that anger shareholders and employees or tarnish their brands.

BusinessWeek noted recently that the “hoopla” over the Citizens United ruling “may have been hasty.” The real beneficiaries of the decision, it seems, are not big companies usurping our democracy, but Washington lawyers billing hours to those companies. Ken Gross, a partner with the firm Skadden, Arps, Slate, Meagher & Flom (and the Public Affairs Council’s attorney) told the magazine he has counseled many Fortune 500 clients on the pros and cons of political spending in the wake of the court’s opinion:

“They’re interested, curious, and want to know how to take advantage of it,” says Gross, a former top in-house attorney at the FEC. But not a single major company, he continues, “has made a palpable move to take advantage of it. This is complicated for corporations-more complicated than all the hype would lead you to believe.”

If and when the DISCLOSE Act becomes law, it’s going to get even more complicated.

Comments? Email me at http://pac.org/contact/blog.