Saturday, May 28, 2011

Can corporate campaign contributions be banned?

One of the planks in the Ogden Ethics Project platform is to ban direct campaign contributions to candidates from corporations (including other business entities and unions). Utahns for Ethical Government advocates a similar restriction for state legislative candidates. But is such a restriction constitutional?

Last year the U.S. Supreme Court struck down a ban on independent political expenditures by corporate entities, ruling in the Citizens United case that such a ban violates the First Amendment protection of free speech. At the same time, however, the Court explicitly recognized earlier precedent upholding the existing ban on direct corporate contributions to federal candidates.

Yesterday, however, a federal district judge issued a ruling that extended the Citizens United conclusion to direct corporate contributions. If such a ruling is upheld at higher levels, it could spell trouble for all attempts to ban these contributions.

There are two problems with allowing corporations, other business entities, and unions to contribute to political candidates:
  1. These entities don’t contribute out of mere generosity or public spirit. As organizations they expect something tangible in return for their contributions, and that makes their contributions hard to distinguish from bribes.
  2. Contributors can use business entities to avoid disclosing their names or to evade contribution limits, either contributing through entities that they already control or setting up sham entities that merely launder contributions for this purpose.
These problems have already occurred in Ogden, and they are sure to recur if Ogden doesn’t put tighter restrictions in place.

As for yesterday’s court decision, it fortunately won’t have any effect over the short term. If this or a similar ruling is eventually upheld by the Supreme Court, it will overturn a century of precedent on campaign finance reform in the United States. That seems unlikely but if it does happen, we’ll let national-level organizations take the lead in sorting out the new law and devising strategies to deal with it.

1 comment:

  1. In a story dealing at least tangentially with the status of corporations as "persons" [in this case, as "persons" capable of committing criminal conduct rather than exercising first amendment rights], the SL Trib is reporting this:

    In a shift still evolving, federal enforcers are targeting individual executives in health care fraud cases that used to be aimed at impersonal corporations....

    Previously, if a company got caught, its lawyers in many cases would be able to negotiate a financial settlement. The company would write the government a check for a number followed by lots of zeroes and promise not to break the rules again. Often, the cost would just get passed on to customers.

    Now, on top of fines paid by a company, senior executives can face criminal charges....

    The full Trib story is here:

    Corporations can still be fined for criminal conduct, but I wonder if this might perhaps be the entering wedge for the notion that a corporations [when it comes to criminal conduct at least] do not exist, really, apart from the individuals who run them.

    Probably not, but I thought the story interesting nonetheless in terms of thinking about the status of corporations in law.