By Doug Pinkham
Public Affairs Council President

January 26, 2010

When the Supreme Court, in a 5-4 vote, ruled on Jan. 21 to permit corporations and unions to spend unlimited amounts of money to support or oppose federal candidates, you'd have thought the world had come to an end.

President Obama called the decision "a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests." But that was mild. Campaign finance reformer Fred Wertheimer said it was "a disaster for the American people." U.S. Rep. Alan Grayson (D-FL) suggested politicians would have to wear corporate logos like NASCAR drivers. MSNBC's Keith Olbermann, never one to shy from hyperbole, predicted: "Within 10 years, every politician in this country will be a prostitute."

The court's ruling in Citizens United v. Federal Election Commission probably won't open the floodgates to corporations directly supporting or opposing candidates. But it will certainly change the political landscape.

Under the ruling, corporations, associations, unions and other advocacy groups can now use money from their general treasuries to fund advertising in congressional and presidential campaigns. The court also lifted the ban on independent campaign ads in the last 60 days before a general election (and 30 days before a primary).

Let's start by addressing critics' greatest fear: that the Fortune 500 will spend huge sums of money to advertise during upcoming elections. The reality is that corporations are not likely to get involved in controversial campaigns that anger shareholders and employees or hurt their brands. It simply won't be worth it - especially with public hostility toward business so high.

While the Supreme Court threw out the ban on expenditures, it upheld the need for disclaimers at the end of ads so that voters know who is sponsoring commercials. CEOs are going to carefully weigh the pros and cons of having their company name and logo appear at the end of a 30-second campaign spot.

If you're looking for further proof that companies have been reluctant to run election ads, I noted in my Sept. 9 post that when corporations were given the opportunity to fund issue advertising through section 527 organizations, the vast majority didn't. Big corporations have also declined to use PAC dollars to support or oppose a candidate, though this practice has been legal for years.

The real beneficiaries of the court's ruling will be trade and business associations, unions and advocacy groups. Organizations such as the U.S. Chamber of Commerce, the AFL-CIO and the NRA will certainly have more funds to spend on political advertising. The ruling will also help new political movements (e.g., the Tea Partiers) become full-service, ideological homes for supporters. That will further weaken the national political parties, which are still prohibited from taking soft money contributions.

Even though associations, unions and advocacy groups will be better funded, it is an open question whether the court's decision will add hundreds of millions of new advertising dollars to federal elections. That's because issue advertising has already learned to walk and talk like campaign ads. As Mark Schmitt, editor of The American Prospect and a critic of the court's decision, wrote in his blog last week, it's clear that issue advertising and similar strategies helped to change the healthcare debate and create an environment in which Scott Brown was able to win Ted Kennedy's Senate seat. Old restrictions on advertising didn't achieve all that much anyway, he said.

In other words, if existing laws permitted groups such as the U.S. Chamber to air ads in 2008 encouraging voters to "Tell Al Franken that high taxes aren't very funny," then how many more dollars could they have raised to say "Don't vote for Al Franken because of his position on taxes"?

We don't yet know, but we're about to find out. Even without the court ruling, we would still have seen a jump in campaign-related spending because of the challenges facing the Obama presidency and the number of mega-issues before Congress. The ruling will certainly provide an additional boost, but much of it may not be in the form of traditional advertising. For example, groups and individuals will likely contribute to get-out-the-vote campaigns, both online and on the ground, that are organized by business associations and unions to support or oppose candidates.

One of the critics' major concerns is that the court has upset the balance of power between businesses and unions. Before assuming that corporate interests will have a huge advantage, keep in mind that in the last election, the playing field for soft money contributions was remarkably level. During 2008, said the Campaign Finance Institute, soft money political spending was split 50-50 between section 527 groups and 501(c) groups. Democratic-leaning 527s held more than a 2-to-1 advantage over Republican-oriented ones, but Republican-leaning 501(c) groups had the same edge over their pro-Democratic rivals. In election advertising, that was the closest we've come to equilibrium.

Throughout this nation's history, free-speech issues have always been controversial. But why has this case generated so much angst? At the core of the drama surrounding the Citizens United decision is the assumption that corporate money in politics inevitably leads to corruption. It's a view shared by many Americans, and especially by those who seek to reform campaign financing rules. Yet the facts show otherwise.

In the majority opinion, Justice Anthony Kennedy wrote that there is no evidence to prove that unrestricted campaign funds have ever led to quid pro quo deals with lawmakers. "In fact," he said, "there is only scant evidence that independent expenditures even ingratiate."

In a recent New York Times column, David D. Kirkpatrick also reviewed the lack of correlation between tighter campaign financing rules and good government. "There is no evidence that stricter campaign finance rules reduce corruption or raise positive assessments of government," Kenneth Mayer of the University of Wisconsin-Madison told the Times. "It seems like such an obvious relationship but it has proven impossible to prove."

This is a key finding, said Kirkpatrick:

As always, the court's decision will create both intended and unintended consequences. Campaign commercials may become more negative. Candidates may lose control of their messages. The airwaves and Internet may be swamped with ads, calls to action, incendiary websites and inflammatory blogs. There will be more information and certainly more noise in our communications channels.

But, said the court, that's the whole point of the First Amendment, which is designed to protect even the most undesirable forms of expression. Said Kennedy in his majority opinion: "[it] is our law and our tradition that more speech, not less, is the governing rule."

Comments? Email me at http://pac.org/contact/blog.