Thoughts on Citizens United

This posting is a slightly modified version of an email I wrote on January 27, 2010, shortly after Citizens United was decided.  I circulated it at that time over the e-mail list that I run.

In this positing, I address the legal, moral, and empirical aspects of the Citizens United case.

1.  The Legal Issue: Did the Supreme Court Correctly Decide the Case?  In my view, Citizens United was incorrectly decided. 

Much of the discussion re. Citizens United has centered on whether corporations are persons under the Fourteenth Amendment and thus have free speech rights under the First Amendment.  If corporations are not persons under the Fourteenth Amendment, then they do not have constitutional rights.  And if they do not have constitutional rights, then of course they do not have free speech rights.  Accordingly, if corporations are not constitutional persons, then Citizens United was clearly incorrect.  However, the Supreme Court ruled in the nineteenth century that corporations are persons under the Fourteenth Amendment.  At least as a matter of precedent, that fatally undercuts a Fourteenth Amendment-based critique of Citizens United.  I remain undecided about whether corporations are persons under the Fourteenth Amendment.  But even if they are persons, I still think the case was legally incorrect.  Let me explain.

Corporations are creatures of the state.  Natural persons do not have a constitutional right to form corporations.  Since corporations are creatures of the state, the state can condition the privilege of using the corporate form on anything it wants, as long as the condition does not run afoul of the Constitution.  The only way a condition on the use of a legal privilege can run afoul of the Constitution is if it violates what is known as the “unconstitutional conditions doctrine.”  The essential principle of that doctrine is that the government may not do indirectly that which it cannot do directly.  For example, the government cannot directly prohibit the free speech of citizens.  In addition, it cannot indirectly do so by conditioning a government benefit on waiver of the right to free speech.  The classic example is a case called Pickering (the foundational case at the center of my law review note in law school).  There, the Court said that even though public employees have no right to a government job (such a job is just a privilege), they cannot be fired for engaging in First Amendment-protected activity.  Thus, if a public school teacher wants to speak out on matters of public concern, the teacher cannot be fired for such speech.  However, the Court did say that public employees could be restricted in their First Amendment activity if their speech or other political activity interfered with their jobs.  Accordingly, for example, public employees must respect the chain of command and must not engage in free speech on the job when doing so is overly disruptive to their public employer.  In sum, the unconstitutional conditions doctrine places important restrictions on the state’s ability to condition government benefits.  But the doctrine only goes so far; it does not restrict all conditioning.

Ultimately, the question of whether corporations may expend general funds on political campaigns is less a question under the First Amendment, and more a question about the application of the unconstitutional conditions doctrines.  Put in different terms, the issue is not whether corporations may engage in unlimited, independent expenditures on political campaigns under the First and Fourteenth Amendments.  Rather, the question is whether the government may condition the right of natural persons to organize their commercial activity via the corporate form on the requirement that the corporation itself not be directly used to engage in politics.  I think the answer to this question is yes.  This is not a case of the government conditioning a privilege on an absolute waiver, as is prohibited in the Pickering/employment context.  The government isn’t saying “if you (the natural person) use the corporate form, you forfeit your right to free speech.”  It isn’t even a partial waiver of a natural person’s right to free speech.  The state is not saying that you waive your right to discuss certain issues or engage in certain types of speech-related activity if you use the corporate form.  The natural persons who participate in the use of the corporation—shareholders, directors, officers, employees, and independent contractors—all retain the freedom to speak or spend their own money however they wish on political campaigns, including in defense of their interests as members of the corporation.  The only thing natural persons are restricted from doing is using the corporate form itself, and the resources held by the corporate entity, to engage in political activity.  From my reading of the key unconstitutional conditions cases, I do not think such a limit violates the unconstitutional conditions doctrine.  Even if it is fairly classified as a partial waiver of the right to free speech (and I don’t think it is), the waiver is considerably smaller than the waiver permissibly forced on employees under Pickering and its progeny.

In sum, I think the government is entitled to condition use of the corporate form (for-profit or not-for-profit) on the requirement that the corporate form itself not be used for certain purposes, including purposes related to political campaigns.  And I believe this is true even if corporations are in fact persons under the Fourteenth Amendment.

The same analysis, by the way, applies to labor unions.  Unions receive special legal privileges that were created by statute.  If a group of employees want to form a “union” that is not constituted under national labor laws, they can use their money however they want.  They would be indistinguishable from any other general association, protected by the rights to speech, assembly and association enshrined in the First Amendment.  But if they organize under our national labor laws, they receive a series of legal privileges similar to (though different from) those natural persons using the corporate form.  I believe the government may condition the privileges granted under our labor laws on the requirement that natural persons receiving those privileges not use the union to engage in political activity.

I have read most of the major campaign finance cases of the last 30 years, but it has been some time since I reviewed most of them carefully.  Ditto with respect to the unconstitutional conditions doctrine caselaw.  If I spent a week carefully going through everything, my legal views might well change.  I had to go through everything above essentially from memory.  But, for now, my view is that Citizens United was incorrectly decided.

2.  The Moral/Policy Issue: Is the Result in the Case Good Policy?  While I believe the case was incorrectly decided, I am reasonably happy about the result.  While I do not think the case will have that much impact (see point 3 below), I think it is a step in the right direction, on policy grounds.

            To elaborate, under our current system of campaign finance, direct contributions to candidates are capped, but expenditures are unlimited—whether the expenditure is by the candidate of his own money or donated money, or the expenditure is by independent persons.  I firmly believe that expenditures by natural persons may not be capped.  I think such caps are a clear violation of the First Amendment.  I also believe that contributions to candidates can be capped, despite the First Amendment.  I think there is rather clearly a compelling state interest justifying contribution limits.  Nonetheless, this system, while constitutionally required in part and permissible in part, has many perverse effects.  Most significantly, by having both contribution limits and unlimited expenditures, politicians are required to raise money from a broad array of sources, and spend a huge amount of time doing so.  This might seem good on the surface, but what it ultimately means is that politicians are beholden to a large number of financial supporters.  Politicians are driven by three things—their donors, the voters, and their conscience.  The more influence the first has, the less influence the latter two can have.  As a person who believes that the latter two are far more important, I am deeply troubled by the status quo.

            What I would like to see happen is the elimination of contribution limits.  In other words, rather than having to spend money on their own once the contribution cap is reached, natural persons (and artificial persons like corporations) could donate unlimited amounts to candidates’ campaigns.  Among other things, this would enable candidates to raise money from fewer sources.  Of course, this would save politicians’ time.  But most importantly, it would mean that candidates would be beholden to a much smaller number of people.  Sure, the degree of obligation to certain donors may be greater, but fewer donors means fewer issues where the candidate would have donors with an axe to grind.  That would free up politicians to focus on the voters and their conscience on a broader array of issues.  It would also enable politicians to raise money solely from ideologically similar donors.  And, again, it would save massive amounts of time—politicians would not have to spend 50% of their time in office raising money since they could get fewer, though larger, checks, and then get back to the business of governing.

            Let me offer an example.  I believe that Steve Forbes once said that the reason he ran for the Presidency is that he could not donate sufficient money to Jack Kemp to make Kemp a viable candidate.  If he could have, Forbes would have given Kemp 500 million dollars.  To oversimplify some, Kemp could then have run without needing to look to anyone else for money.  He could have supported Forbes’ flat tax idea (something he agreed with anyway), and otherwise responded to his conscience and the voters.  Similarly, under my proposed rules, a Liberal, like myself, could run for office and raise sufficient money from solely Liberal individuals and organizations.  I would not need to raise money from anyone with whom I significantly disagree, as I almost certainly would need to under the status quo.

            For those worried that corporations have more money than anyone else, I don’t think that would matter much under my proposed system.  Once a certain threshold of spending is met, further spending just annoys the voters—and I believe the empirical research has shown that extra spending past a certain threshold does not significantly alter the outcome of elections.  Plenty of candidates have won with less money, especially once both candidates are adequately funded such that they can flood the airwaves, pay door-to-door workers, etc.  I think that lifting the cap on contributions would actually do more to level the playing field.  Because corporations already spend so much, spending a lot more wouldn’t do them much good.  But lots of others have money to spend that they currently don’t use because of the contribution limits.

            In sum, my preferred campaign finance system is this—(1) no expenditure limits, (2) no contribution limits, and (3) stringent disclosure requirements.  Everyone would know that Kemp is owned by Forbes (or that I’m owned by George Soros, for example).  But at least Kemp and I could ignore fundraising and the impacts of political donors otherwise.

            It is impossible to keep money out of politics without riding roughshod over the Constitution.  Impossible.  All we’ve accomplished in the last 30 years since Buckley v. Valeo is the development of new ways to get money into politics: independent expenditures, 527s, etc.  There is no way to keep money out.  Since we can’t keep it out, we have to figure out the best way to limit its impact—if, like me, you want voting and conscience to count for more than money as an influence on politicians.  Paradoxically, the way to lessen the influence of money is to open the floodgates.  You allow so much money in that no one really has a significant financial advantage any more.  That is what my system would do, or so I believe.

            Now, why do I like the current ruling?  Because it blows a critical hole in the status quo.  While it is wrongly decided on the law and will not have that much impact on the ground in elections over the next few years (see below), it weakens the fabric of our current regulation.  This will hopefully move us in the direction of eliminating additional regulations—namely, repealing the statutes that limit contributions.  I am not too concerned about the impact of the decision in the near term.  What I like about this decision is that I believe it will continue moving us in the direction of a pure disclosure regime.

            I have used broad language in this part of my post.  I do not think things are as clear cut as I painted them to be.  But, to reduce the length of the post, I left out a lot of the nuances.

3.  The Empirical Issue: Will the Case Have Significant Impacts?  I think the answer to this question is no.  Corporations and unions already have so much influence—they have already done such a good job involving themselves in American politics—that I do not think this decision will matter that much to upcoming elections.  I hope it helps to show the folly of our current system, and leads to the adoption of a pure disclosure regime.  But I do not think it will have a great deal of impact on the ground, election by election.  Bradley Smith, a law professor who has written extensively on campaign finance, has offered some persuasive arguments that states with looser campaign finance regimes do not have significantly different politics.  And I have seen similar points powerfully made by others.  In short, I am willing to chance that this decision will have some negative impacts in the short term in exchange for the chance that, in the long term, it will help us move towards my ultimate goal of repealing contribution limits and adopting a disclosure-only regime of campaign regulation.