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The Truth About President Obama and Citizens United

Posted By Hans von Spakovsky On January 28, 2010 @ 6:24 pm In Legal | Comments Disabled

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I have to admit that if I had been sitting in the House chamber during President Obama’s State of the Union address, I would have had to fight the urge to have a Joe Wilson moment when the President unjustly criticized the Supreme Court, six of whose members were there. Why? Because the two claims President Obama made about the Court’s decision last week in the Citizens United case are categorically and undeniably false.

President Obama claimed that the Supreme Court had “reversed a century of law to open the floodgates – including foreign corporations – to spend without limit in our elections.” Justice Alito seemed to shake his head and mouth the words “not true.” And well he should. The fact is that the Court overturned a federal ban on independent political expenditures by corporations and unions, and in so doing, it rejected the proposition that the government can decide who gets to speak and can ban some from speaking at all.

First of all, the 100-year claim is completely wrong. In 1907, Congress passed the Tillman Act that banned direct contributions by corporations to federal candidates – there was no ban on independent political expenditures in the law. “Contributions” are funds given directly to candidates for their election campaigns; independent expenditures are funds spent by third parties on things like political advertisements without any coordination with the candidate.

The Tillman Act was sponsored by South Carolina Senator Ben “Pitchfork” Tillman, probably the most vicious racist to ever serve in Congress. Tillman was a Democratic segregationist who was chiefly responsible for the imposition of Jim Crow in South Carolina after the end of Reconstruction when he was governor. This federal law, that so-called “progressives” like the President are constantly praising, was intended by Tillman to hurt the Republican Party – the party of abolition and Abraham Lincoln – because many corporations contributed to the Republican Party, not the Democratic Party. These corporations did not like segregation in the South – it cost them money and made it more expensive to sell their goods and services.

Congress did not ban independent political expenditures by corporations and labor unions until 1947. For three decades after the passage of that law, the Supreme Court went out of its way to avoid upholding its constitutionality, and the Court actually struck down a separate ban on independent expenditures as well as a state law prohibiting corporate expenditures on referenda. It was not until 1990 in the Austin case that the Court, in a 5-4 decision, upheld a state ban on independent political expenditures by a nonprofit corporation (a trade association) in a case completely at odds with prior precedent. The actual electioneering communications provision at issue in the Citizens United case was part of the McCain-Feingold amendments to federal campaign finance law in 2002.

So the point is that the law the President claims has been in place for 100 years has been on the books since 1947, and the Supreme Court only issued a very odd decision twenty years ago upholding such a corporate ban in conflict with stare decisis (Quite tellingly, the government refused to defend the 1990 decision on the basis of its actual reasoning when it argued the Citizens United case). As Justice Kennedy said, “[n]o case before Austin had held that Congress could prohibit independent expenditures for political speech based on the speaker’s corporate identity.” While the Supreme Court in Citizens United found that the corporate ban on independent political expenditures is unconstitutional, it did not touch the ban on direct contributions to federal candidates. That is the ban that represents “a century of law” and it remains in force today contrary to the President’s assertion.

The President’s second point about those evil foreign corporations is also totally wrong. 2 U.S.C. § 441e bans all foreign nationals from directly or indirectly contributing to a federal candidate or a political party. It also bans all foreign nationals from making any independent political expenditures – and this ban was not overturned by the Supreme Court. The term “foreign nationals” is defined to include individuals, foreign governments, foreign political parties, and corporations “organized under the laws or having its principal place of business in a foreign country.” It is simply not true that Citizens United freed foreign corporations to make independent expenditures in American elections.

Congress itself put an exemption into the law. If you are not a U.S. citizen but are lawfully admitted for permanent residence in the U.S., this ban does not apply to you. The Federal Election Commission has interpreted this provision with regard to corporations to mean that only U.S. domestic subsidiaries of foreign corporations can establish political action committees, and only if those PAC’s donations and disbursements derive entirely from funds generated by the U.S. operations of the subsidiary and all decisions concerning the donations and disbursements are made by U.S. citizens or permanent residents. I was actually on the FEC as a commissioner when we considered an advisory opinion request from a Canadian company over its U.S. domestic subsidiary, and this was the rule followed by the FEC to implement federal law. Under current law, there are multiple layers of protection to prevent foreign influence on our elections.

This makes perfect sense. Foreign corporations are prohibited from participating in American elections. But their domestic subsidiaries that are American companies, employ American workers, have American officers, and pay American taxes, are able to participate in the American election process to the same extent as other U.S. companies as long as all of the money and all of the decisions are American.

The Citizens United decision did not even consider this ban on foreign nationals. So the President was completely out-of-line when he made the claim that foreign corporations would be able to spend without limit in our elections, a claim that seems to have become a talking point for critics of the Supreme Court’s decision.

The President should know better than to make these false claims. After all, he taught a voting rights class at the University of Chicago that loosely covered campaign finance law, and his new White House counsel is Bob Bauer, probably the leading Democratic campaign finance lawyer in Washington. Bauer even wrote one of the only books that exists explaining the nuts and bolts of federal campaign finance law.

The President owes Justice Alito and the other justices of the Supreme Court an apology for completely mischaracterizing their opinion, an opinion that helped restore the full protections of the First Amendment. It was a decision that upheld some of our most basic principles, principles about the freedom to engage in political speech that are incorporated into the Constitution, a document that the critics of this decision seem all to willing to ignore when its requirements don’t fit their political objectives.


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