Two Supreme Court decisions (Citizens United v. Federal Elections Commission and, later, American Tradition Partnership v. State of Montana) and an appellate court decision (SpeechNow v. Federal Election Commission) are fundamentally transforming our political system and our democracy to a degree we may not grasp until the results of this year’s elections become clear. Never has our electoral process been more captive to vast – and mostly anonymous – sums of money from a handful of large corporations and wealthy individuals.
For all the scorn rightfully heaped on Citizens United, however, it’s actually SpeechNow v. Federal Election Commission that has been most destructive. SpeechNow allows not-for-profit organizations to accept unlimited contributions from individuals for independent expenditures, and this decision birthed both “super PACs,” which can accept unlimited contributions but must disclose donors, and “tax-exempt organizations” which are not subject to the disclosure requirements that apply to candidates, parties, PACs and super PACs.
Under these recent court decisions, a handful of immensely wealthy individuals and CEOs and boards of directors of large corporations now legally direct tens of millions of dollars to funding an overwhelming stream of political ads on behalf of candidates from whom they obviously expect some sort of fealty once the candidates are in office.
Before we as a nation succumb to the complete abandonment of fairness and balance in our election process, we need to stop the bleeding. Institutional investors, policymakers and voters alike should demand administrative policies, legislative action and voluntary steps by corporations to dramatically limit corporate political spending.
To start, the Securities and Exchange Commission (SEC), in conjunction with the FEC, should use its existing powers to force public disclosure of all corporate political contributions and lobbying expenses. The SEC is obligated to compel public companies to disclose whatever expenditures are material to the companies and, under its same public interest doctrine, to similarly compel disclosure of actions which might materially affect shareholders’ decisions to invest. While political contributions might not be material measured against the totality of earnings, their disclosure, I would argue, are material items of disclosure for the investing public. This disclosure requirement should also include contributions made through a “bundler” or intermediary.