Citizens United v. FEC stands in the public eye as the U.S. Supreme Court case that flooded U.S. elections with “dark money” and SuperPACs. Professor Matilde Bombardini argues that this contemporary reality of campaign finance deviates drastically from the principles underlying the Supreme Court’s now-infamous opinion and that, as such, it is time to reconsider the case’s merits.
On Nov. 8, U.S. voters will again cast ballots for their members of Congress. In this election cycle, we are again observing record amounts of outside spending, approaching $1.5 billion compared to $1.07 billion in the 2018 midterms. This form of “independent” political spending is now three times as large as traditional candidate-controlled PAC money. Outside spending, once almost nonexistent, has come to dominate the discourse on money in politics. Surveys reveal that increasing outside spending is an important cause of rising voters’ distrust of government, and the public seems to overwhelmingly support limits on money in politics.
Most Americans know that outside spending took off after the U.S. Supreme Court ruled in favor of Citizens United in 2010. The principles behind that decision, however, are less familiar. Even less well understood is how far contemporary campaign finance has deviated from those principles in the 12 years since the ruling. If reality has departed so conspicuously from the principles that undergirded the Supreme Court’s decision, it is perhaps time to reflect on and reconsider that decision.
Citizens United v. FEC was the culmination of a long legislative journey that started in 1867 but saw its modern milestone in the 1971 Federal Election Campaign Act. Throughout this journey, the discussions surrounding campaign finance have debated the merits of “money in politics” based on the First Amendment’s principle that “Congress shall make no law…abridging the freedom of speech, or of the press…the right of the people peaceably to assemble.” The germane Supreme Court cases over the years have shared the view that any means of advocating in favor or against political candidates are a form of freedom of speech and association and those means cannot be limited except in very restricted circumstances. These restricted circumstances encompass situations in which such political spending gives the “appearance of corruption,” hence harming the public’s confidence in free and fair elections.
The Federal Election Campaign Act of 1971 established strict regulations on political candidates’ fundraising, spending, and reporting of funds. Those early walls immediately confronted two lines of attack: expanding the room for independent expenditures–i.e., money that the candidates themselves do not spend–and enlarging the rights of corporations, as opposed to individuals. In fact, it took only a few years for Buckley v. Valeo in 1976 to start eroding the limits on independent expenditures. If money did not directly go to a candidate, the Supreme Court argued, it could not “appear” as a corrupt exchange and should not be limited at all. The second line of attack aimed at expanding the set of entities that could contribute took longer to make significant inroads. While in 1978 First National Bank of Boston v. Bellotti allowed corporations to participate in ballot initiatives and thus recognized for the first time their right to free speech as associations of individuals, the 1990 Austin v. Michigan State Chamber of Commerce decision confirmed a ban on corporate independent expenditures. Attempts to overturn this ban failed until 2010, when the two watershed Supreme Court decisions, Citizens United v. FEC and SpeechNow.org v. FEC, finally allowed corporations to engage in independent expenditures to express advocacy in favor or against a candidate, something they could not do overtly prior to this ruling.
In the Supreme Court’s majority opinion for Citizens United, Justice Anthony Kennedy argued that allowing corporations to “expressly advocate” would redress the Austin decision that allowed only “wealthy individuals” to “spend unlimited amounts on independent expenditures” while banning from such activities incorporated associations of individuals like the Sierra Club. That Kennedy chose the Sierra Club as his example underlined the Court’s emphasis on corporations as associations of individuals, “including nonprofit advocacy corporations.” Public discussion before and since the case has too often conflated “corporate” with for-profit business.
Indeed, the role of nonprofits in campaign finance has provided the most controversy since Citizens United. The newly acquired rights of previously obscure types of incorporated nonprofits, like 501(c)4 social-welfare organizations, to engage in independent expenditures and expressly advocate in favor or against candidates combined with the removal of contribution limits to independent-expenditure-only committees to create the perfect storm of “dark money” and SuperPACs. Since 2010, “dark money” and SuperPACs have come to dominate money in politics.
“Dark money” refers to funds from corporate entities like 501(c)4’s that are allowed to withhold the identity of their donors and can spend just shy of 50% of their funds for political activity. It is hard to tell whether the U.S. has realized Kennedy’s original hope that allowing corporations as associations of individuals to express their political position would rebalance the excessive voice given to “wealthy individuals.” By construction, we know almost nothing about who contributes to 501(c)4’s, although some of these organizations’ links to specific individuals are well known, such as Americans for Prosperity and the Koch brothers. Charles Koch (his brother, David, died in 2019) ranks among the wealthiest individuals in the U.S., exemplifying the question if allowing nonprofits to advocate politically has truly extended the right to free speech to previously constrained sections of society, a tenet of the Court’s opinion, or simply provided anonymity to wealthy political financiers.
The second part of this “perfect storm,” SuperPACs, comes from the SpeechNow decision to allow unlimited contributions to independent-expenditure-only committees. The practical complementarity between “dark money” and SuperPACs cannot be overstated. Money flows from undisclosed sources through incorporated 501(c)4’s like Ed Gillespie and Karl Rove’s Crossroads GPS, which can contribute unlimited amounts to SuperPACs like Gillespie and Rove’s American Crossroads, which in turn expressly supports Republican candidates in various races.
This partnership between “dark money” and SuperPACs is exacerbated by another phenomenon I would like to call “daisy chains.” Daisy chains are a pattern of contributions through which even the limits on 501(c)4’s to contribute less than 50% for political causes are avoided. For example, Crossroads GPS may contribute 50% to SuperPACs, thus maxing out its ability to engage in political activity. However, it may then use the rest of its funds to provide grants to other 501(c)4’s who can channel 50% of that into a SuperPAC and pass on the rest to another 501(c)4 and so on and so forth. If the transaction costs of such transfers are low enough, one can see how Crossroads GPS may donate practically all its funds to political causes.
Daisy chains are a common practice and not illegal, as Denes, Scanlon, and Schulz explain in a comprehensive paper measuring “dark money” in U.S. politics, an effort only the Center for Responsive Politics had previously endeavored to complete. Importantly, 501(c)4’s donations to SuperPACs are not the only form of “dark money” in politics; it is just the one that is easier to measure as political activity. Crossroads GPS can and does spend money directly on political ads and it must report those expenditures to the FEC. Interestingly, the portion of some of these groups’ funds reported to the FEC as political spending has declined over the years.
It is often forgotten that Kennedy envisioned two guardrails in the original Citizens United opinion that would prevent corporations’ independent expenditures from causing the electorate to “lose faith in our democracy”: prohibiting coordination with candidates and disclosure. “Dark money” clearly warps the second guardrail and makes the first harder to see in the fog. It is impossible to read Kennedy’s words and see the Court’s principles of disclosure fulfilled in the current system. Solutions to the current American campaign finance system vary from partial reform to complete overhaul. Americans support publicly funded federal campaigns, and it is not too late for a reform like the 1970’s Federal Election Campaign Act.
The First Amendment’s right to free speech is a justly treasured pillar of the U.S. Constitution, but the current system where moneyed interests seem entitled to “speak” more should make us reflect on another important right sanctioned by the U.S. Constitution. The principle that each citizen’s voice deserves to be heard, and one may extrapolate, receive equal consideration, is enshrined in the 24th Amendment: “The right of citizens of the United States to vote…shall not be denied or abridged …by reason of failure to pay poll tax.” This milestone of the Civil Rights movement, designed to enfranchise minority voters, also serves as a reminder that the right to be heard should not be filtered by the depths of our pockets.