Demonstrators gather outside the Supreme Court in Washington on Oct. 8, 2013, as the court heard arguments on campaign finance.
Susan Walsh/AP

‘Citizens United’ fallout ‘more dangerous’ than expected

Updated

Five years ago, during his second State of the Union Address, Barack Obama looked over the podium at the the justices of Supreme Court sitting in front of him on the floor of the House of Representatives to scold them for a decision they made half a decade ago Wednesday.

“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 said, sparking a brief media controversy over alleged breach of protocol.

The president’s fear was widespread after the court’s Citizens United ruling, which allowed corporations and unions to spend money on political campaigns. It was echoed by Democrats, good government groups, and some Republicans, like Sen. John McCain, who worried the floodgates would open on political ads from McDonalds and WalMart and Goldman Sachs. Critics feared ads like, “Don’t vote for Mike Capuano, he’s a horrendous guy, brought to you by the Exxon Corporation,” as the Massachusetts Democrat said during a hearing in 2010 while pushing a bill to roll back the decision.

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But none of that came to pass. Instead, after half a decade, the decision’s actual effect – including its judicial progeny – has been decidedly different, perhaps even more dramatic than expected. 

“The fallout has been somewhat different in that people had predicted that major corporations would be making major independent expenditures directly,” said Larry Noble, the former general counsel to the Federal Election Commission, who is now a campaign finance reform advocate at the Campaign Legal Center. “But what has happened has been much more dangerous.”

Instead of corporations spending directly in the political process, wealthy individuals, including corporate executives, have opened their personal checkbooks, while corporations are more likely to funnel money through so-called dark money groups that allow donors to remain secret.

“The Citizens United decision was wrong, and it has caused real harm to our democracy,” President Obama said in a statement Wednesday. “With each new campaign season, this dark money floods our airwaves with more and more political ads that pull our politics into the gutter. It’s time to reverse this trend. Rather than bolster the power of lobbyists and special interests, Washington should lift up the voices of ordinary Americans and protect their democratic right to determine the direction of the country that we love.”

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Corporations weren’t particularly interested in taking advantage of the new independent expenditure vehicles that became known as super PACs, which allow for unlimited spending in elections as long as it’s not coordinated with candidates. A 2013 poll of corporate PAC and trade association staffers found they preferred traditional PACs, trade associations and other nonprofits.

Just 12% of donations from super PACs came from businesses in the 2012 presidential election, according to a report from the liberal groups Demos and U.S. PIRG Education Fund.

“Corporate political spending changed very little following the Citizens United ruling,” an analysis if 2012 campaign spending from three University of New Mexico political scientists found. And while occasional stories about foreign-owned companies donating to super PACs have cropped up, existing prohibitions on foreign national donations remain in place and there hasn’t appeared to be a massive wave of spending to super PACs.

For conservatives, this is vindication of their support for Citizens United. “Corporate money is not swamping the system, and elections are more competitive,” Brad Smith, the founder of the Center for Competitive Politics, said earlier this month at a conference of the American Association of Law Schools.

But while the spending from corporate treasuries might not have changed much, the conservative response misses (likely intentionally) the larger point, which is that Citizens United has fundamentally changed the political landscape by making elections more expensive and giving donors more ways to influence politics. “It has given far more power to corporations and wealthy individuals to influence our elections and decide who gets to run this election,” said Noble.

Super PACs and other outside groups spent more than $1 billion dollars in 2012 – just shy of triple the amount that was spent in 2008, before the court’s decision. Even the cost of midterm elections have become astronomical. Outside groups poured more than $560 million into 2014 elections, close to double the $309 million spent in 2010, which was itself a giant leap from the $69.5 million spent in 2006. The vast majority of that money has come from wealthy individuals, who could always spend money in elections, but saw the limits on the largess blown away from Citizens United and subsequent rulings. Campaign finance reformers argue there’s no difference between Exxon supporting a candidate directly from its general treasury and its CEO donating to a super PAC.

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And the actual total is probably much much higher, since hundreds of millions have likely been spent through nonprofit groups empowered by follow-on rulings to Citizens United that don’t have to disclose donors or political activity, as long as their activities meet certain basic requirements. And these groups, which include trade associations and 501(c)4 social welfare organizations, could be a backdoor for foreign corporations to influence American politics, reformers say.

The problem has been compounded by the lack of enforcement from the FEC and IRS, which could impose new regulations, but have been hamstrung by political pressure and barely enforce current rules.

Attempts at reform have so far gone nowhere, but advocates see some hope in conservatives of the libertarian persuasion getting increasingly upset with big-money influence in elections. Since it’s impossible to overturn a high court ruling without a constitutional amendment, lawmakers have focused on expanding disclosure laws.

Americans will probably have to wait for the time-tested practice of waiting for scandal to prod legislation. It’s a practice older than America. George Washington allegedly sparked one of the country’s earliest campaign finance scandals when he gave voters rum and hard cider on Election Day. Later, Virginia’s colonial House of Burgesses passed a law in 1757 prohibiting candidates or their agents from providing “money, meat, drink, entertainment or provision” in exchange for votes.

“There’s always that scandal that’s just around the corner, which I’m sure is going to come,” Nobel said. 

Midterm Elections 2014 and Campaign Finance

'Citizens United' fallout 'more dangerous' than expected

Updated