Campaign Finance Ruling Looms

By Wall Street Journal, Wall Street Journal - December 8, 2009

Montana voters, fed up with the grip of out-of-state mining interests on local politicians, passed an initiative in 1912 banning corporate spending on candidates for state office. As soon as Tuesday, that law -- and similar ones in nearly half the states -- could be struck down by the U.S. Supreme Court for infringing corporations' free-speech rights.

None of those state laws specifically were at issue when the court agreed to hear Citizens United v. Federal Election Commission, which challenged provisions of the federal McCain-Feingold Act. The 2002 law built on a longstanding ban on direct corporate giving to House, Senate and presidential candidates by reining in so-called issue advertisements, such as television spots a corporation takes out on its own to help a particular politician's election or defeat.

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David Bossie, leader of Citizens United and producer of 'Hillary: The Movie.'

Under the law, corporations and unions may not use general funds for such advertisements within 30 days of a primary or 60 days of a general election. Instead, they must channel their electioneering through political action committees that solicit contributions from executives, employees, shareholders and other affiliates of the corporation.

The case initially involved a feature-length movie attacking then-presidential candidate Hillary Rodham Clinton, produced by a conservative advocacy group chartered as a nonprofit corporation. But instead of delivering an opinion after March arguments, the Supreme Court in June ordered re-argument on a much broader question: Should prior cases that upheld restrictions on corporate independent expenditures be overruled?

In 1990, the court voted 6-3 to uphold the Michigan Campaign Finance Act, which, like the McCain-Feingold provision, required corporations to raise funds through political action committees for their electioneering efforts, rather than draw from profits or general treasuries.

The majority opinion by Justice Thurgood Marshall observed that states confer on corporations various tax and legal advantages that make it easier to do business and accumulate money. The act "reduces the threat that huge corporate treasures amassed with the aid of favorable state laws will be used to influence unfairly the outcome of elections...while also allowing corporations to express their political views" through political action committees, Justice Marshall wrote in Austin v. Michigan Chamber of Commerce.

States initially took little interest in the Citizens United case. When the Supreme Court said it might overrule Austin, however, Anthony Johnstone, the Montana state solicitor, saw a threat to his state's nearly century-old campaign finance laws. He and the Arizona solicitor general circulated a friend-of-the-court brief to other states, and 24 added their names.

The 1912 voter initiative "has allowed Montana to have a political sphere that isn't dominated by the one or two companies that dominated it in its early, post-territorial days," said Mr. Johnstone. Back then, the Anaconda company, a mining trust whose founders included William Randolph Hearst's father, George Hearst, exerted outsize influence on the state.

Montana remains sparsely populated, and holding down corporate spending prevents outside commercial interests from overly influencing the elections in a state where a small amount of money can go a long way, Mr. Johnstone said. "Each state really needs to have the flexibility to adapt to its own circumstances," he said.

David Primo, a political scientist at the University of Rochester, agreed that overturning Austin would "reshape the political landscape" in more than 20 states. But he said that doing so would be "very healthy for democracy."

Prof. Primo, who signed a friend-of-the-court brief urging that the restrictions be lifted, said he has seen "no evidence that corruption or the appearance of corruption has been reduced or the democratic process improved" by such regulations. He said some states with reputations for clean government, such as Oregon and Vermont, don't restrict independent corporate expenditures.

If Austin is overturned, the impact probably will be felt strongest in states with "very aggressive politics," said Raymond La Raja, a political-science professor at the University of Massachusetts, Amherst.

The Michigan law that prompted the 1990 Supreme Court ruling was enacted in the 1970s after the Watergate scandal. Because corporations didn't like to associate their own names with political causes, they gave money to the Michigan Chamber of Commerce, which then spent it to back pro-business candidates.

As a test case, the chamber took out a newspaper advertisement backing a Republican candidate for the state House in 1985. The candidate was successful, but the advertisement became the center of the high court's case.

The Democrat who lost the race, Robert Kolt, was a television reporter making his one and only run for office. Now a public-relations and political consultant in Lansing, Mr. Kolt said loopholes -- such as a narrow definition of what counts as an electioneering ad -- helped companies continue to spend heavily to influence elections in Michigan.

"Large organizations find a way to do what they want to do," Mr. Kolt said, calling his case "for the most part a bump in the road."

Write to Jess Bravin at

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