Justices shift campaign-finance rules

A divided Supreme Court yesterday wiped out decades of laws designed to curb corporate influence on elections, ruling that a government ban on political spending by corporations and unions violates the First Amendment.

The sweeping shift in the rules will reshape the way campaigns are conducted in the 2010 midterm races already under way and beyond. Experts in campaign-finance law predicted a flood of unrestricted special-interest spending.

In a 5-4 decision that overturned two court precedents, a conservative majority freed corporations to spend from their general treasuries to directly advocate the election or defeat of candidates for president and Congress.

"When government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought," Justice Anthony M. Kennedy wrote for the majority. "This is unlawful. The First Amendment confirms the freedom to think for ourselves."

The decision, in Citizens United v. Federal Election Commission, keeps in place the ban on direct corporate contributions to candidates, enshrined in federal law since 1907. In addition, public disclosure of expenditures and contributors will still be required.

Most Democrats condemned the decision, with President Obama urging Congress to pursue an aggressive response. Republicans praised the court's action as a victory for freedom, though it was far from clear who might benefit more. Together, the parties benefited from a record $2.6 billion in political spending from all sources in the 2008 election cycle.

"Our democracy depends upon free speech, not just for some but for all," said Senate Minority Leader Mitch McConnell (R., Ky.), who had pressed an earlier lawsuit that reached the Supreme Court over campaign-finance restrictions.

Before yesterday's ruling, independent groups and political action committees were barred from advertising within 60 days of a general election or 30 days of a primary. Now, they can run ads right up through Election Day, or buy up blocks of network time to use at strategic moments in the days and weeks before voting.

Political analysts also predicted a surge in Internet and direct-mail advertising.

"The court's ruling threatens to undermine the integrity of elected institutions around the nation," Justice John Paul Stevens said in a vigorous dissent, reading his 90-page opinion - the longest of five opinions issued in the case - from the bench.

State regulations are likely to be affected, because the court overturned its precedent in a 1990 case, Austin v. Michigan Chamber of Commerce, that had restricted independent expenditures by corporations.

"There definitely will be a ripple effect in terms of state and local laws," said Michael Toner, former chairman of the Federal Election Commission and a partner at the Bryan Cave law firm in Washington. "I think they are no longer valid after this ruling."

Toner, a Republican, said he supported campaign-finance restrictions. He said he was struck by the breadth of the "very libertarian" decision. "They're really deregulating the system, saying, 'Have at it,' " Toner said.

The court also held that independent corporate expenditures have no corrupting influence, because no money is given to the candidates. Legislatures have long used the appearance of corruption as a justification for restrictions on campaign cash.

"It's the Super Bowl of bad decisions," said Common Cause president Bob Edgar, a former Democratic congressman from Delaware County.

Obama sharply criticized the decision as giving "a green light to a new stampede of special-interest money in our politics." He said it was "a major victory for big oil, Wall Street banks, health-insurance companies, and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans."

Rep. Bob Brady (D., Pa.), chairman of the Committee on House Administration, said he would convene hearings in the next few weeks to consider new legislation. His committee has jurisdiction over campaign-finance laws and the FEC.

"We've got to figure out what we can do to keep big money from running all over us," said Brady, of Philadelphia. He said the effort could draw some Republican support because increased spending by corporations and unions would "cut both ways."

The Senate also was moving forward. Sen. Charles E. Schumer (D., N.Y.) said: "The Supreme Court just predetermined the winners of next November's elections.. . . It will be corporate America."

Congressional aides said provisions that could be pursued include tighter monitoring on rules that prohibit coordination between outside groups and campaigns, or increased disclosure requirements for companies to be more transparent about their electoral activities to shareholders and others.

Christopher DeLacy, who heads the Washington law firm Holland & Knight's campaign-finance and election-law practice, said there were powerful "disincentives" for corporations to take advantage of their new rights.

"Just because you can do it doesn't mean it makes sense," DeLacy said.

He noted that Wal-Mart took a "P.R. hit" in 2008 when it gave fliers to employees about proposed union-organizing legislation that noted that Democrat Obama supported the measure and that Republican John McCain opposed it.

Even though companies are now free to spend and say what they wish in political campaigns, they still have to consider the possibility of alienating customers or damaging their images.

"In the end, I think we'll see nonprofit entities like trade associations act as fronts for this type of speech, rather than corporations themselves," DeLacy said. "That gives them cover."

Larry Ceisler, a Philadelphia public relations and political consultant, said he agreed that corporations might hesitate, but he predicted that unions would embrace the ruling to spend more.

There is a risk that unfettered corporate speech might drown out candidates' own ads, costing them control of their own messages, Ceisler said.

"For instance, if an entity is supporting a candidate and doesn't think the message is tough or sharp enough, they can go in and do it themselves," he said. "That could be good for a campaign - or disastrous."

Nearly everyone seemed to agree that voters would have information overload.

"It's going to add a lot of clutter to the television environment, and it's going to be hard for candidates to truly define themselves and their opponents," said Tim Kay, director of political strategy for National Cable Communications, which sells advertising time for cable systems.

Yesterday's decision, besides reversing the 1990 Austin ruling, strikes down part of the Bipartisan Campaign Reform Act of 2002, commonly known as the McCain-Feingold law after its chief Senate proponents, McCain and Russ Feingold (D., Wis.). The law had banned direct corporate spending on "electioneering communications" within 60 days of a general election and 30 days of a primary.

The case decided yesterday originated with a scathing 90-minute documentary called Hillary: The Movie, produced by Citizens United, a conservative nonprofit, and released in time for the 2008 Democratic primaries. It argued that Hillary Rodham Clinton was unfit to be president and that viewers should oppose her candidacy.

Citizens United had planned to show the movie on cable news video-on-demand channels and broadcast TV networks. The FEC, citing McCain-Feingold, said the group could not do so, and lower courts upheld that denial.

The case worked its way up to the Supreme Court and was first argued before the justices last March, seeming to center on narrow questions of whether the statute applied to movies. Instead of ruling in June, the court took the rare step of ordering a reargument in September, and broadened the scope of the case to consider reversing its Austin ruling.

Kennedy was joined in the majority by Chief Justice John G. Roberts Jr. and Justices Samuel A. Alito Jr., Antonin Scalia, and Clarence Thomas.

Justices Ruth Bader Ginsburg, Stephen G. Breyer, and Sonia Sotomayor joined Stevens in dissent.

The justices yesterday:

Overturned a 1947 law, and two earlier high court rulings, that barred corporations and unions from spending money directly from their treasuries on ads that advocate electing or defeating candidates for president or Congress, but that are produced independently and not coordinated with a candidate's campaign.

Overturned a provision in the McCain-Feingold Act that since 2002 had barred issue-oriented ads paid for by unions or corporations 30 days before a primary and

60 days before a general election.

Left intact a 103-year-

old ban on donations

by corporations from their treasuries directly to candidates.

Left intact the ability of corporations, unions, or individuals to set up political action committees that can contribute directly to candidates, but that can accept only voluntary donations and can't use money directly from corporate or union treasuries.

Left intact a McCain-

Feingold provision that anyone spending money on political ads must disclose the names of contributors.

SOURCE: Associated Press

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Justice Anthony M. Kennedy, writing for the majority:

Chief Justice John G. Roberts Jr., in concurrence:

or union."

Justice Antonin Scalia,

in concurrence:

Justice John Paul Stevens,

in dissent:

the integrity of elected institutions across the nation. The path it has taken to reach its outcome will, I fear, do damage to this institution.. . .

"Corporations help structure and facilitate the activities of human beings, to be sure, and their 'personhood' often serves as a useful legal fiction. But they are not themselves members of the 'We the People' by whom and for whom our Constitution was established."

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Read the justices' opinions in the Citizens United case via http://go.philly.com/campfinEndText