Tycoon dough: The ultimate electoral martial art

January 16, 2015
supreme-court-perspective

U.S. Supreme Court building in Washington, May 20, 2009. REUTERS/Molly Riley

This is first article in the Reuters series on the Supreme Court’s Citizens United decision, handed down Jan. 21, 2010. After five years, is anything the same in U.S. elections? You can read other pieces in the series here.

 

logo election-money--mahurin

Credit: MATT MAHURIN

Jan. 21 marks the fifth anniversary of Citizens United v. Federal Election Commission, the Supreme Court ruling that corporations (and, by extension, unions) have a First Amendment right to spend unlimited money on elections.

Few recent U.S. Supreme Court decisions have received as much attention — or generated as much public backlash — as Citizens United v. Federal Election Commission. The court and its defenders promised that the ruling — which gave corporations (and, by extension, unions) a First Amendment right to spend unlimited money on elections — would free up more voices to enrich U.S. political debates. Critics predicted a deluge of corporate cash into U.S. elections.

Yet neither has been the most striking result of Citizens United. The most stunning consequence is the influence that a few tycoons and other wealthy donors now wield in U.S. elections. Running a close second is the tidal wave of “dark money” from unknown sources making it impossible for citizens to know who is supporting candidates in pivotal races. Both these unexpected and troubling developments undermine American democracy.

Understanding Citizens United

For all the controversy it generated, Citizens United was a fairly straightforward case. The corporation Citizens United produced a documentary film attacking then-New York Senator Hillary Rodham Clinton, which it wanted to air on cable TV weeks before a 2008 Democratic presidential primary. This appeared to violate federal campaign-finance law. But five Supreme Court justices ruled that Citizens United had a First Amendment right to produce and air the film. With their decision, the justices invalidated prohibitions on corporate and union election spending that had existed for more than a century.

This was unprecedented. But it did not appear out of thin air. The court’s skepticism of spending limits dates back to another seminal case, Buckley v. Valeo, in 1976. The court there equated spending money with “speech” and ruled that the only permissible goal for campaign-finance limits is to combat “the reality or appearance of corruption.”

The most crucial new part of Citizens United was the court’s radical narrowing of the kind of “corruption” that campaign-finance regulations were permitted to combat. The term “corruption” had been interpreted broadly to mean something like influence peddling. Citizens United, however, imposed a far narrower definition — more akin to American Hustle-style bribery.

In the court’s ruling, so-called “independent expenditures” — expenditures theoretically outside the control of candidates and parties (though often not really) — could not corrupt in this way. That decision set off a cascade of lower-court rulings that struck down most outside spending limits — not just for corporations and unions, but for everyone.

So Super PACs came on to the scene, along with a variety of more shadowy organizations that can raise unlimited money to spend on elections.

outside spending on prez -- top

An Explosion of Outside Spending

In the wake of Citizens United, there has been an explosion in spending by outside interests the likes of which we have never seen before. They have spent almost $2 billion in total since the ruling five years ago. It almost tripled  between the 2008 and 2012 presidential elections; more than quadrupled  between the 2006 and 2010 midterm elections, and then almost doubled again between the 2010 and 2014 midterm elections.

Below the presidential level, this spending was largely concentrated in a handful of close races in key battleground states. Outside groups now routinely outspend both candidates and parties in pivotal races. They spent more than the candidates themselves in 10 of the most hotly contested Senate races in 2014, for example.

spendbystate

Although there is less comprehensive data on state elections, it appears that outside spending is skyrocketing there as well. Outside spending in several key governors’ races was between four times and 20 times higher than at the same point in 2010, according to Brennan Center calculations in October 2014. Local races have also been affected. Recently, for example, Chevron poured roughly $3 million into municipal elections in the city of Richmond, California (population: 104,000), where it owns a major refinery.

Individual Mega-Donors Rise, As Smaller Givers Disengage

Citizens United’s most striking consequence has been the rise of uber-rich mega-donors — including casino magnate Sheldon Adelson and his wife Miriam, libertarian plutocrats Charles and David Koch and liberal investor Tom Steyer. Since 2010, the top 195 individual donors to Super PACs and their spouses gave nearly 60 percent of the total that Super PACs spent — many times the amount contributed by business corporations.

These mega-donors wield more influence than either the justices or their critics seem to have expected. Adelson, for example, seems in many respects more important than most official party leaders. In 2012, he and his wife gave about $93 million. Their backing literally kept Newt Gingrich’s presidential campaign afloat. That fact was not lost on top Republican hopefuls for 2016, who gathered last March in Las Vegas for a series of closed-door events dubbed “the Sheldon Primary.”

outsidemidterm -- bottom

All this is happening as ordinary Americans are giving less to political campaigns. In 2014, the number of reported federal contributors (those giving $200 or more) dropped for the first time in decades. Small donations are also down. In fact, the top 100 Super PAC donors of 2014 gave almost as much as all 4.75 million small donors combined.

During this time of historic wealth inequality, individual mega-donors have more clout than at any point since Watergate. While these few voices are now much louder, many others are increasingly muffled.

The Rising Dark Money Tide

Citizens United’s second unexpected legacy has been a sharp drop in electoral transparency as dark money flooded in.

Justice Anthony Kennedy, who wrote the majority ruling, seemed to expect “effective disclosure” so the public would know where the money came from. This system would also help corporate shareholders hold business executives accountable for corporate political spending.

“A campaign-finance system that pairs corporate independent expenditures with effective disclosure has not existed before today,” Kennedy wrote — apparently assuming that his decision was creating such a system.

It did not. While federal candidates and political parties are required to disclose all their donors above $200, outside groups need only do so if they qualify as political action committees (PACs). Since the Citizens United ruling, 501(c)(4) “social welfare” organizations and other groups have emerged to spend money in elections. They do not register as PACs, and they can keep all their donors secret. This is the dark money that has influenced many races. Donors who want to spend six or seven figures in elections without being identified funnel their money through these groups.

Many of those in power, notably Senate Majority Leader Mitch McConnell (R-Ky.), are implacably opposed to closing these dark-money loopholes. He successfully filibustered federal legislation that would have done so, dubbing it “an all-out attack on the First Amendment.”

Groups that depend on corporate contributions like the U.S. Chamber of Commerce, meanwhile, have fought hard against even voluntary disclosure of corporate political spending.

nonpartyoutside

Thanks in part to such efforts, more than $618 million in dark money has been spent on federal elections since 2010. That is more than a third of all outside spending at the federal level, mostly targeting a handful of pivotal contests. In the 11 most competitive Senate elections of 2014, for example, almost 60 percent of all outside spending was dark.

It played a critical role in Republicans winning the Senate in November. Consider, dark money accounted for fully 89 percent of all outside spending to support Cory Gardner, the winner in Colorado, 86 percent to support David Perdue, the winner in Georgia, and 81 percent for Thom Tillis, the winner in North Carolina.

The Next Five Years?

So where are we headed? Clearly, predicting how changes to campaign-finance law will have an impact on the actual political landscape is a tricky business.

A remarkable feature of the debate over campaign-finance laws is how much the public actually agrees. After Citizens United was decided, 80 percent of respondents in a Washington Post poll said they disapproved of the decision. An astonishing 88 percent, according to another recent survey, said they favored reasonable limits on money in politics.

The real challenge has never been changing the public’s mind. It has been getting elected leaders to believe the public cares. Too often politicians assume that campaign finance is not enough of a priority, that they can ignore or pay lip service to the issue, leaving needed reforms in limbo.

After Citizens United, however, politicians may no longer have that option. Judges helped reshape our political landscape, but they alone do not get to determine the future of American democracy. That power lies with the American people.

They only need to use it. The burning question for the next five years is whether they will.

4 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

my..my..how democratic….!

Posted by rikfre | Report as abusive

I do not believe that the “justices” were surprised or not expecting the very wealthy to give the most and influence politic more. Simply because they state such sentiments in the opinions is not the same as them really believing the words. The practiced guile of lawyers is legendary and their ability to lie without legally lying is the key to their abilities and their pay grade. They do not seek justice. I think that their intent was to give more influence to the wealthy and they did that.

Posted by brotherkenny4 | Report as abusive

Why do some folks want to perpetuate the Gruber theory that voters are idiots such that the purchase of media marketing equates to effectiveness of such marketing? It makes them sound like elitists and what is sillier than a crop of elitists decrying what they perceive as an unfair advantage of an elite; one has to wonder what changes they desire in the system to enable their ascendancy.

Posted by WorkerBee | Report as abusive

I guess this is how a great country slowly dies.

Mistaking crony capitalism for free enterprise.

Allowing the rich to control public discourse.

Allowing tremendous consolidation of media in just 6 corporations.

I just hope it’s not too late.

Posted by SkipK | Report as abusive