Analysis: Door to big, undisclosed campaign contributions swung open before Citizens United decision

Conventional wisdom is taking hold in the news media and the political arena that the U.S. Supreme Court’s landmark Citizens United decision has opened the floodgates to big, secret money donations to conservative Republican candidates.

Legal experts say that conventional wisdom is misleading and overstated. Even before Citizens United, corporations could make unlimited corporate contributions to advocacy groups.

“Citizens United has become a whipping boy for criticism of money in politics,” wrote Bruce La Pierre, a Washington University Law School professor and expert on campaign finance law. “Many doors were left wide open before Citizens United and corporations and wealthy individuals were taking advantage of them. Citizens United’s door is not particularly attractive to most corporations because they would have to disclose, I think, their ‘vote for X’ statements. So corporations are using other vehicles to support candidates — other vehicles available before Citizens United.”

In Citizens United, the court ruled 5-4 that corporations could use unlimited treasury funds to purchase ads advocating the election of a particular candidate in the days leading up to an election. The court tossed out a provision of the McCain-Feingold law that had barred those expenditures, concluding the law violated the corporation’s First Amendment rights.

But even before Citizens United, corporations were able to make unlimited contributions of treasury funds to advocacy groups that placed issue ads criticizing a candidate for a stand on an issue. The court ruled in 2006 that a not-for-profit Wisconsin corporation opposing abortion could run ads criticizing Sen. Russ Feingold, D-Wisc., in the period just before the election. The only change that Citizens United made was to allow such ads to advocate specifically for the election or defeat of a candidate.

President Barack Obama and campaign finance reform groups like Democracy 21 have been highly critical of Citizens United. Much mainstream media coverage of big contributions by groups associated with Karl Rove, the GOP operative, picked up the refrain, asserting that Citizens United opened the door to big, undisclosed contributions to Rove’s groups, which have in turn spent the money on Senate races like the one in Missouri.

During his State of the Union speech, shortly after the January decision, Obama blasted the Supreme Court, with some of its justices in attendance, for having “reversed a century of law to open the floodgates — including foreign corporations — to spend without limit in our elections.” He has repeated this claim in recent days, maintaining that the U.S. Chamber of Commerce was using foreign contributions to fund political ads against Democrats, a charge the chamber denies.

Critics say the president overstated his case. Columbia University Law Professor Henry Paul Monaghan said this to Adam Liptak in last month’s Columbia University Law Magazine. “Citizens United is very far from a radical departure from existing precedent or an act of judicial usurpation. The court has been unfairly excoriated by the media, and members of the court treated rather poorly by Obama during his State of the Union address.”

Justin Levitt, a law professor at Loyola Law School in Los Angeles, also points to the exaggeration of Citizens United in an article in the Yale Law & Policy Review. He wrote: “Perceived corporate power has spurred a recent populist backlash, on both political left and political right. In this atmosphere, the Supreme Court’s 2010 decision in Citizens United vs. Federal Election Commission, granting corporations the right to spend directly on express political advocacy, has become the target of particularly heated critique….although the decision was a bold stroke in many ways, its impact on the scope of permissible campaign finance regulation is far less substantial than commonly assumed.”

David Roland, a lawyer at the Show-Me Institute, wrote in an email that “it would be an oversimplication to suggest that the Supreme Court’s decision accounts for all of the additional political spending this year.” But he added, that Citizens United has had a psychological impact of alleviating “the concerns that many organizations had about the potential for running afoul of the laws.”

Richard L. Hasen, the Loyola law professor who writes the Election Law blog, argues that Citizens United with other factors has contributed to this year’s large anonymous political expenditures. In an article in Slate on Monday, he wrote that Citizens United, “as well as a combination of lower court cases, Federal Election Commission action, and byzantine tax rules has led to record spending on this election and the least amount of disclosure of its sources since Watergate.”

Justice Anthony Kennedy’s majority decision in Citizens United left the door open to Congress passing a law requiring disclosure of corporate contributions, but Republicans blocked a bill to do that.

Much of the big money this year is being funneled through 501(c)4 groups to limit disclosure.

Rove’s Crossroads GPS group, which is advertising in major Senate races, is a 501(c)4 group. It doesn’t need to disclose its donors until after the first of the year, but it also must make sure that it spends the bulk of its money on issues.

The ad involving Secretary of State Robin Carnahan is a good example. Lawyers say it can be considered an issue ad, rather than a political ad advocating her defeat. Instead of using words like elect or defeat, its criticism of her support of Obama’s health law concludes with the words, “Tell Carnahan to get in touch with Missourians and support the health-care challenge.”

Democracy 21, the campaign finance group, has filed a complaint with the IRS claiming that Rove’s group “is operating in violation of its tax status because it has a primary purpose of participating in political campaigns in support of, or in opposition to, candidates for public office.”

Roger A. Greenbaum, a California lawyer, said that the importance of Citizens United may be less its practical impact and more what it says about the Supreme Court.

“I wonder if the problem is not so much the substantive change effected by Citizens United,” he wrote in an email, “as the underlying crudity of the exercise of power by the majority to which Justice Kennedy was enlisted. The developments that worry me most…are those brought out by Justice Stevens in his Citizens United dissent: that the Roberts-Scalia-Alito-Thomas faction is rash and activist in its determination to alter constitutional law, belying its claim to wear the mantle of judicial restraint.”

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