Full Disclosure: Reining in Citizens United

Photo by wallyg via Flickr

Matthew Marino, Associate Member, University of Cincinnati Law Review

I. Introduction

In the United States, corporations have a constitutional right to finance political campaigns. In Citizens United v. Federal Election Commission, the Supreme Court held that the First Amendment of the United States Constitution prohibits the government from restricting a corporation’s speech because of its corporate identity.[1] Because campaign finance has long been considered a form of protected free speech under the First Amendment, allowing people to voice support for candidates through campaign spending, corporations have the right to finance campaigns as a form of protected free speech.[2]  

Corporations fund campaigns through contributions and expenditures.[3] Contributions refer to money sent directly to a candidate during an election.[4] Expenditures refer to money spent on political communications, such as advertisements, during elections.[5] Unlike contributions, expenditures do not take the form of direct payments to candidates, and therefore candidates are presumed to have little to no control over campaign expenditures.[6] While contributions require disclosure, expenditures do not. Many perceive that campaign donors disguise contributions as expenditures to avoid disclosure requirements and mask association between the candidate and donor.[7]

After Citizens United, corporations have continued to reserve substantial portions of their budget for campaign expenditures, resulting in calls for campaign finance reform to reduce the appearance of corruption among politicians associated with wealthy corporate donors.[8] The DISCLOSE Act (DISCLOSE), which has now been incorporated in the For the People Act (FPA),[9] would require candidates to disclose all corporate sources of campaign expenditures, in addition to disclosed contributions, in order to promote transparency in campaign finance at the federal level.[10] Congress should pass DISCLOSE to restore the power in the hands of individual voters to influence elections.

II. Background

A. Campaign Finance as a Constitutional Right

Since the 1976 case of Buckley v. Valeo, the Supreme Court has characterized campaign spending as a form of protected speech under the First Amendment of the Constitution because such spending allows party-building, issue orientation, and advocacy that contribute to public discourse.[11] In that case, the Court held that spending money to influence elections is constitutionally protected speech and struck down provisions of the Federal Election Campaign Act of 1971 establishing limits on general campaign expenditures, independent expenditures for specific candidates, and expenditures by individual candidates from their personal funds.[12] The Court reasoned that restricting persons’ or groups’ abilities to make expenditures during a campaign reduces the number of issues discussed, the analysis of those ideas, and the size of the audience reached.[13] Therefore, the Court held that laws restricting such expression should be viewed with more scrutiny. However, the Court upheld limits on contributions because the government’s interest in reducing the appearance and risk of corruption was strong in the context of contributions.[14] Contributions involve direct contact between the donor and candidate and therefore carry the appearance and risk of corruption.[15]

B. Limitations on Campaign Finance

As time went on, campaign expenditures were viewed as having a stronger bearing on the outcome of elections.[16] In 2002, Congress passed the Bipartisan Campaign Reform Act (BCRA) in response to demands for campaign finance reform.[17] Title II of the BCRA prohibited corporations and unions from using their general treasury funds for expenditures on “electioneering communications,” defined as speech “advocating the election or defeat of a candidate.”[18] Title II corresponded with then-Supreme Court precedent in Austin v. Michigan Chamber of Commerce, where the Court held that states could constitutionally limit corporations’ spending on electioneering communications.[19]

In McConnell v. Federal Election Commission, the Court held that Congress may constitutionally limit some types of political campaign contributions and communications if doing so promotes a compelling governmental interest, which can include reducing the appearance of corruption in the electoral process.[20] The Court held that Title II of the BCRA restrictions on electioneering communications would serve the interest of reducing the appearance of corruption by preventing the use of contributions masked as expenditures in order to avoid disclosure requirements.[21]

C. Citizens United v. Federal Election Commission

In Citizens United, the Supreme Court held that the government may not suppress political speech, which includes campaign finance, on the basis of a speaker’s corporate identity.[22] The Citizens United Court reversed course from Austin and McConnell and struck down provisions of the BCRA restricting corporate campaign spending. The Court held that the First Amendment protects corporations’ rights to express preferences for political candidates through campaign expenditures as a form of protected speech.[23] The Court revisited its decision in Austin, which relied on the assumption that corporations may gain an unfair advantage in politics by using money obtained in the market to influence the outcome of elections.[24] However, due to the skyrocketing costs of running a campaign, the Court held that the individual candidates’ interests in accumulating financial support from all interested donors to fund expensive campaigns was stronger than the government’s interest in neutralizing the playing field in elections for federal office through campaign expenditure limits.[25]

The Court also revisited its position in Austin that corporate spending on elections distorts public support in elections, because amassed corporate wealth does not reflect the support of individual voters.[26] However, the Court responded by illustrating that all campaign contributions distort public support because individuals use money acquired in the market to individually support candidates in the same manner as corporations.[27] Therefore, the Court held that restricting corporate speech because of its corporate character was unconstitutional under the First Amendment.[28] Nevertheless, like the Court in Buckley, the Court in Citizens United upheld limits on campaign contributions in order to reduce the appearance and likelihood of corruption in the electoral process.[29]

D. The DISCLOSE Act

The DISCLOSE Act is a campaign finance reform bill that has been continually reintroduced in the U.S. House of Representatives since 2010.[30] DISCLOSE is designed to require greater and faster disclosure of campaign spending to harness the influence of mass campaign expenditures from undisclosed sources.[31] Within 24 hours of making an expenditure of $10,000 or more, DISCLOSE would require corporations and labor organizations to disclose that expenditure to the Federal Election Commission.[32] Additionally, through “stand-by-your-ad” provisions, DISCLOSE would require leaders of corporations or other organizations to claim responsibility for funding political advertisements.[33] DISCLOSE would repeal earlier laws prohibiting the Securities and Exchange Commission from requiring disclosure of corporate political spending to shareholders.[34] Further, DISCLOSE would impose campaign spending limits for organizations with substantial foreign control and restrict the use of shell companies as discrete channels for campaign support.[35]

III. Discussion

As of 2020, over half of Congress members are millionaires and the median net worth for a Congress member is around $1 million.[36] Election success has long been based on wealth and visibility in the media due to the prevalence of TV and the internet.[37] Elections should hinge more on a candidate’s merit and potential to better society rather than their connections to wealthy donors who facilitate the candidate’s visibility in advertisements through undisclosed expenditures. DISCLOSE, as incorporated in the FPA, will: (1) better equip the public to scrutinize candidates for their corporate donors and potential bias toward those donors; (2) improve officeholder accountability through faster and more comprehensive disclosure provisions; and (3) open the door for younger, equally qualified candidates with fewer resources to have a running chance in federal elections.

A. DISCLOSE will Enhance Public Scrutiny of Elections

Citizens United encourages corporate leaders to spend large portions of their budgets on campaign expenditures, in order to further their goals in Congress.[38] Corporations generally have far more resources than individual persons to spend on campaigns. Therefore, the Court in Citizens United was irresponsible in equating individual campaign spending with corporate campaign spending[39] because corporations are far more equipped to influence the outcome of elections through massive campaign spending. Further, unlike corporations, individual voters fund campaigns for a bevy of personal, moral, and political reasons. Corporations support candidates to improve their financial status in the market through favorable economic policies and regulations.[40] Therefore, because of the disconnect between corporate and human interests, and the disproportionate influence of corporations on elections,[41] officeholders need to be held accountable for their relationships with wealthy corporate donors to ensure that no improper biases toward those donors are guiding their decision-making. DISCLOSE will allow members of the public to track candidates’ decision-making and the impact of those decisions on candidates’ corporate donors, allowing voters to assess candidates for improper favoritism for corporate donors.

B. DISCLOSE will Promote Officeholder Accountability

With more transparency surrounding the source of candidates’ campaign funding, officeholders will shift their focus to the reputation, as opposed to the wealth, of their corporate donors. DISCLOSE provides for corporate disclosure of expenditures of $10,000 or more within 24 hours of making the expenditure. Therefore, DISCLOSE requirements would expose ties between large corporate campaign expenditures and individual candidates, which could tarnish candidates’ reputations if their donors are unpopular among their constituencies. Rather than rely on the wealth of corporate donors to create visibility for themselves in the media, candidates may instead rely on corporate donors for their positive image, as voters will build associations between candidates and their corporate donors.   

C. DISCLOSE will Open the Door for Younger, Qualified Candidates

With more incentive for federal officeholders to rely on corporate donors’ reputations as opposed to their massive wealth, the door will open for younger, qualified candidates with fewer resources to have a fighting chance in federal elections. Statistically, people are more likely to develop fondness of a person if they have already encountered that person’s image.[42] But younger, equally qualified candidates with fewer connections in politics will have trouble circulating their image. DISCLOSE would actually prompt skepticism when members of the public encounter a highly visible candidate. High visibility might become associated with connections to and bias for wealthy corporate donors. With visibility in the media as less of an important factor to election success, the door might open for younger candidates with exceptional merit but fewer connections and financial resources.

IV. Conclusion

The incumbency rate for U.S. Congress members hovers around 95%, demonstrating that our system favors incumbents with political notoriety.[43] This is not necessarily a negative thing, as longer tenures in federal offices can foster the development of important relationships between government officials and leaders of industry that are essential to effectuating long-term change. However, incumbents should be held accountable and challenged for their relationships with wealthy corporate donors. Wealthy corporate donors may be largely responsible for candidates’ continued visibility in advertisements and ensuing success in elections. The public deserves to know who is responsible for that success.  

DISCLOSE, as incorporated in the FPA, will better equip the public to scrutinize candidates for their donors and potential bias toward those donors. DISCLOSE will improve officeholder accountability, making elections more about candidates’ relationships with donors and whether they create a positive image, rather than the wealth of those donors and whether they promise to ensure the candidate’s visibility in the media. Lastly, DISCLOSE will open the door for younger, qualified candidates. With less reliance on the wealth of donors for success in federal elections, younger candidates with less financial support will be better equipped to run for office. With full disclosure of large donations made public under DISCLOSE, younger candidates will also be better equipped to challenge officeholders who may have conflicting obligations between their corporate donors and their constituents, providing a check on candidates’ fitness for office. For all these reasons, Congress should pass DISCLOSE to restore power to individual voters to influence the outcomes of elections.

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[1] 558 U.S. 310, 347 (2010).

[2] See Buckley v. Valeo, 424 U.S. 1, 22 (1976).

[3] See Id.

[4] Id. at 21.

[5] See Id. at 7.

[6] Id. at 46.

[7] Holly Kathleen Hall, Justice for Sale? The Shadow of Dark Money in State Judicial Elections, 19-1 Comm. Law Rev. 1, 31 (2020).

[8] Lawrence Norden & Daniel I. Weiner, Corporations and Fixing Campaign Finance, Brennan Ctr. for Justice (Jan 21, 2021), https://www.brennancenter.org/our-work/analysis-opinion/corporations-and-fixing-campaign-finance.

[9] Whitehouse Introduces Disclose Act to Restore Americans’ Trust in Democracy, Sheldon Whitehouse U.S. Sen. For R.I. (Apr. 11, 2019), https://www.whitehouse.senate.gov/news/release/whitehouse-introduces-disclose-act-to-restore-americans-trust-in-democracy.

[10] John Samples, The DISCLOSE Act, Deliberation, and the First Amendment, 664 Policy Analysis 1 (2010).

[11] Buckley, 424 U.S. at 26-30.

[12] Buckley, 424 U.S. at 143-44.

[13] Id. at 19.

[14] Id.

[15] Id. at 26.

[16] See Lawrence & Weiner, supra at note 8.

[17] Bipartisan Campaign Reform Act, Ballotpedia, https://ballotpedia.org/Bipartisan_Campaign_Reform_Act.

[18] Id.

[19] See 494 U.S. 652, 658-59 (1990).

[20] 540 U.S. 93, 143 (2003).

[21] Id. at 119-20.

[22] Id. at 351

[23] 558 U.S. at 347.

[24] Id. at 350.

[25] Id.

[26] See Id. at 351.

[27] Id.

[28] Id. at 347.

[29] Id. at 459.

[30] See T.W. Farnam, The Influence Industry: Disclose Act could deter involvement in elections, Wash. Post  (May 13, 2010), https://www.washingtonpost.com/wp-dyn/content/article/2010/05/12/AR2010051205094.html; see Andy Kroll, Senate Democrats Re-up Their Dark-Money Disclosure Bill-and Dare GOPers to Block It, Mother Jones (June 24, 2014); https://www.motherjones.com/politics/2014/06/senate-disclose-act-dark-money-mitch-mcconnell/; see Fred Wertheimer & Donald Simon, Rebuttal of Attacks on Dark Money Disclosure Requirements in H.R. 1, Democracy 21 (March 4, 2019), https://democracy21.org/news-press/press-releases/rebuttal-of-attacks-on-dark-money-disclosure-requirements-in-h-r-1.

[31] See Wertheimer & Simon, supra at note 30.

[32] Supra at note 9.

[33] Id.

[34] Id.

[35] Id.

[36] Karl Evers-Hillstrom, Majority of lawmakers in 116^th Congress are millionaires, Ctr. for Responsive Pol. (April 23, 2020), https://www.opensecrets.org/news/2020/04/majority-of-lawmakers-millionaires/.

[37] Charles H. Franklin, Senate Incumbent Visibility Over the Election Cycle, 18-2 Leg. Studs. Quarterly, 271 (1993).

[38] Lawrence & Weiner, supra at note 8.

[39] See supra note 37.

[40] See Norden & Weiner, supra at note 8.

[41] Id.

[42] Why do we prefer things that we are familiar with? The Mere Exposure Effect, explained, The Decision Lab, https://thedecisionlab.com/biases/mere-exposure-effect/.

[43] Reelection Rates Over the Years, Ctr. for Responsive Pol. (2018), https://www.opensecrets.org/elections-overview/reelection-rates.