Corporate Cash for Campaigns?
"A sharply divided (US) Supreme Court ruled (January 21) that labor unions and corporations can spend unlimited amounts to influence federal elections."
Boston Globe, Jan. 22, 2010
Justice Anthony Kennedy, speaking for the Court, declared that campaign spending by corporations and unions is constitutionally protected free speech. He was joined by Associate Justices Alito, Scalia and Thomas and by Chief Justice Roberts. The other four justices dissented.
The Court had previously ruled that political spending is a form of free speech, but had upheld the ban on corporate contributions to campaigns. Wisconsin (as well as other states) also ban such spending, and apparently this ruling also invalidates such state laws as violative of the First Amendment to the US Constitution.
Although the ruling applies to unions as well as corporations, unions have skirted the ban by establishing independent "political action committees" which are funded by contributions, not union dues. Since membership in a union is a virtual requirement for employment in some industries, the use of dues money to finance campaigns or issue ads would be unfair to workers who oppose the political stance taken by union leadership. I believe that the courts will uphold labor-law restrictions on the use of dues money for politics, despite the cited ruling on campaign-finance law.
Thus the net effect of this ruling would benefit Republican candidates and pro-business causes. Candidates and causes (such as referenda) that primarily favor the rich already have a substantial advantage over those championing the poor and the working class, simply because rich people have more money to spare that they can spend on politics. Now such causes will also benefit from money invested in corporations.
Although corporations have economic interests, such as low corporate taxes, they do not have opinions. It is meaningless to attribute thoughts to a legal entity which has no characteristics of a "natural person." For example, the Marcus Corporation is owned by a huge number of stockholders, both individual and institutional, but is led by members of the family of founder Ben Marcus. Would it be right for the management of the firm to donate Marcus Corporation funds to federal candidates who stand up for Israel, even though the US-Israel relationship has no connection to the profitability of the Corporation? For example, suppose a congressional candidate loves Israel and supports higher taxes on hotels, would it still be OK to use stockholder funds to back the candidate? I say "no", but the Supreme Court has just made this donation perfectly legal.
If corporations begin to play a larger role in politics, look for political fights to play a larger role in disputes over corporate governance. Men like George Soros, Warren Buffet and Bill Gates could pour millions into proxy battles over shareholder resolutions about which candidate or party to back in national elections. Watch for resolutions about abortion, gay-marriage and the Middle East to start turning up on proxy ballots. In a large corporation, a million dollars invested in a proxy battle could leverage ten million in corporate contributions to a party or candidate, and the investor would still own a million dollars worth of stock! Is this a great country, or what?
The decision has come just in time to allow corporate money to play a big role in the 2010 congressional elections, and perhaps an even bigger role in the presidential contest of 2012. Although the ruling can be defended on free-speech grounds, I contend that it is bad for investors, bad for our political system, and therefore bad for America.
Boston Globe, Jan. 22, 2010
Justice Anthony Kennedy, speaking for the Court, declared that campaign spending by corporations and unions is constitutionally protected free speech. He was joined by Associate Justices Alito, Scalia and Thomas and by Chief Justice Roberts. The other four justices dissented.
The Court had previously ruled that political spending is a form of free speech, but had upheld the ban on corporate contributions to campaigns. Wisconsin (as well as other states) also ban such spending, and apparently this ruling also invalidates such state laws as violative of the First Amendment to the US Constitution.
Although the ruling applies to unions as well as corporations, unions have skirted the ban by establishing independent "political action committees" which are funded by contributions, not union dues. Since membership in a union is a virtual requirement for employment in some industries, the use of dues money to finance campaigns or issue ads would be unfair to workers who oppose the political stance taken by union leadership. I believe that the courts will uphold labor-law restrictions on the use of dues money for politics, despite the cited ruling on campaign-finance law.
Thus the net effect of this ruling would benefit Republican candidates and pro-business causes. Candidates and causes (such as referenda) that primarily favor the rich already have a substantial advantage over those championing the poor and the working class, simply because rich people have more money to spare that they can spend on politics. Now such causes will also benefit from money invested in corporations.
Although corporations have economic interests, such as low corporate taxes, they do not have opinions. It is meaningless to attribute thoughts to a legal entity which has no characteristics of a "natural person." For example, the Marcus Corporation is owned by a huge number of stockholders, both individual and institutional, but is led by members of the family of founder Ben Marcus. Would it be right for the management of the firm to donate Marcus Corporation funds to federal candidates who stand up for Israel, even though the US-Israel relationship has no connection to the profitability of the Corporation? For example, suppose a congressional candidate loves Israel and supports higher taxes on hotels, would it still be OK to use stockholder funds to back the candidate? I say "no", but the Supreme Court has just made this donation perfectly legal.
If corporations begin to play a larger role in politics, look for political fights to play a larger role in disputes over corporate governance. Men like George Soros, Warren Buffet and Bill Gates could pour millions into proxy battles over shareholder resolutions about which candidate or party to back in national elections. Watch for resolutions about abortion, gay-marriage and the Middle East to start turning up on proxy ballots. In a large corporation, a million dollars invested in a proxy battle could leverage ten million in corporate contributions to a party or candidate, and the investor would still own a million dollars worth of stock! Is this a great country, or what?
The decision has come just in time to allow corporate money to play a big role in the 2010 congressional elections, and perhaps an even bigger role in the presidential contest of 2012. Although the ruling can be defended on free-speech grounds, I contend that it is bad for investors, bad for our political system, and therefore bad for America.
Labels: corporate campaign-finance
posted by Gerald S Glazer at 2:14 PM
5 comments
