Corporate Influence, Special Interests, and Citizens United (2020 Presidential Election)

Source: The New Yorker

How did we become so divided?  It’s a question we hear all the time.  We hear that we are more divided and more partisan than ever.  In 1958, 73% of Americans reported that they trusted government to do the right thing most of the time.  In 2019, just 17% said the same thing. This is a multifaceted issue, but I offer up one part of what has led us to this division: the corruption of our politics due to the hold that special interests and corporations have over our lawmakers.

This rant by former MSNBC host, Dylan Ratigan, illustrates quite well why it is so difficult to make bipartisan progress.  What sticks with me to this day is the part that starts around 2:10 where they are talking about the money in politics and the lack of moving forward due to the Congress being bought.

So, how did we get here?  As early as 1905, Theodore Roosevelt called for campaign finance reform and called for legislation to ban corporate contributions to political campaigns.  The Tillman Act of 1907 did just that.  The Federal Corrupt Practices Act of 1910 built on that.  The aims of these acts were to regulate corporate spending on campaigns and to mandate public disclosure of campaign donors.  The Smith-Connally Act  of 1943 extended this ban to unions.  It was after this that the first Political Action Committee (PAC) was born.

In 1972, Richard Nixon signed the Federal Election Campaign Act of 1971 which consolidated the above acts along with a couple others.  In 1974, in the aftermath of Watergate, the act was amended under the Gerald Ford administration to place legal limits on campaign contributions, campaign spending, and created the Federal Elections Commission (FEC).  The commission’s purpose remains to enforce campaign finance law. Then, in 2002, the Federal Election Campaign Act was amended in the form of the Bipartisan Campaign Reform Act, also known as the McCain-Feingold Act.  

So, there’s a brief timeline of the major legislative efforts to regulate corporate influence and campaign spending.  But, what exactly are PACs? Recall, the first PAC came to be in the 1940’s as a result of a ban on unions contributing to campaigns directly.  PACs pool contributions from members and donate these donations to campaigns, and to work for or against ballot initiatives or other legislation.  An organization becomes a PAC when it receives or spends more than $1,000 for the purpose of influencing a federal election. Still, corporations and unions cannot legally contribute to PACs, however, they can sponsor a PAC by providing funding for the administration of the PAC and its fundraising.  There are limits on a PACs contributions to campaigns. In each election, they can donate up to $5,000 to a candidate. In each year, they can donate up to $5,000 to another PAC and up to $15,000 to a political party. But, there is no limit to what they can spend to promote a candidate or political party.

These were the rules of campaign finance and campaign spending until 2010.  In 2010, the conservative non-profit group, Citizens United, filed a lawsuit against the FEC in what became known as Citizens United vs. FEC.  The organization wanted to air and advertise a film critical of Hillary Clinton, but this violated the McCain-Feingold Act which prohibited corporations and unions from making any expenditure which advocated for the election or defeat of any candidate at any time.  The court ruled that due to the First Amendment’s protection of free speech, the government couldn’t restrict independent expenditures for political contributions by corporations, non-profit groups, or labor unions.

Basically, the decision determined that corporations and unions could contribute unlimited funds in essentially advertising for or against a candidate which really changed the landscape of political advertising.  Out of this decision, Super PACs were born.  Unlike PACs, these Political Action Committees cannot directly contribute to a candidate’s campaign, but raise more money than either political party giving them power on behalf of the candidates or issues.  Campaigns have limits on spending, but Super PACs have no limits on political spending. Since the Citizens United decision, spending by outside groups on political campaigns has more than tripled.

Super PACs must disclose their donors, but the Citizens United decision also allowed dark money contributions to surge.  In some elections, dark money groups have surpassed PACs and Super PACs.  Dark money refers to political spending by non-profit organizations that don’t have to disclose their donors.  Basically, what happens is a non-profit can receive unlimited donations from corporations, individuals, and unions and don’t have to disclose their donors.  Then, the non-profit, that doesn’t have to disclose its donors, donates to the Super-PAC. So donors, including corporations, can spend to influence elections without voters knowing where the donations came from.  Some of the largest dark money groups include American Petroleum Institute which represents the oil and natural gas industry, PhRMA which represents the pharmaceutical industry, the United States Chamber of Commerce, and  Freedom Partners which was partially funded by the Koch brothers to promote the “benefits of free markets and a free society.” 

In 2014, Freedom Partners was identified as the poster child for the rise of dark money.  Unlike most trade associations or chambers of commerce that have many employees and devote only about 6% to outside groups such as PACs or Super PACs, Freedom Partners had zero employees and donated about 99% went to other groups.  It existed for the purpose of raising money from donors who did not want to be disclosed and went right into political spending. So, essentially, corporations and individuals can contribute as much as they want to nonprofits and then the nonprofit can donate as much as it wants to a Super PAC without being tracked.  The money could come from anywhere, including foreign sources.  Swing states see the largest dark money spending meaning that the money is likely coming from people who don’t even reside in the state, but influence the outcome of the state’s election.

There is no doubt that now wealthy special interests, corporations, and foreign influences have a greater grip on the policy process in Washington than the people do.    And, much of that is a result of how we now finance elections. We can’t make progress on even some of the most popular legislative proposals because of the money in politics that keeps politicians beholden to their donors and not their constituents.

Based on my research, there seems to be the two primary sides to the issue of campaign finance:

Side #1:  This side believes that elections are now bought by the super wealthy and the government is no longer “for the people.”  This extends into the belief that elected officials do not represent the people and they are forced to vote on issues based on where their funding comes from or risk losing their seat.

Side #2:  Money is free speech and therefore there should not be regulated.  People and businesses should be allowed to donate as much as they want regardless of the influence that may come with that money.

But, elections aren’t the only way corporations influence policy.  In 2016, 75% of the money raised by the group organizing the Democratic National Convention came from just 17 donors.  Bank of America, Peco Energy, Comcast, and Facebook each donated over $1 million.  As a result, their lobbyists were everywhere and filled the VIP suites.

Trump’s 2016 inauguration donors included AT&T, Bank of America, Exxon Mobil, General Motors, Coca Cola, Pepsi, and private prisons, among others.  Just 250 donors donated over $100,000 each making up 91% of donations. Obama’s inauguration included donations from Microsoft, Boeing, Chevron, Genetech, and many other federal contractors.  Many of the preceding corporations have federal contracts and business that comes before congress, and at the point in which it does, they’ve already curried favor with the president and vice president through their inaugural donations.

Outside of corporate influence, individual donors are also currying favor.  There is a long, bipartisan tradition of granting ambassadorship to wealthy donors.  The most recent impeachment investigations highlighted the case of Gordon Sondland, the United States Ambassador to the European Union.  Prior to his ambassadorship, he had no foreign policy experience, but rather was in the hotel business. However, he aggressively lobbied to get into Trump’s sphere, including paying a million dollars for tickets to his inauguration.  His money paid off resulting in his ambassadorship.

Here is where the candidates stand on this issue.   (If this is a stand alone issue for a candidate, I have linked their entire plan to their name):

Joe Biden:  Biden says we need to create a public financing system for federal campaigns.  He also says we need to pass a constitutional amendment overturning Citizens United in order to “amplify the voices of individual Americans and ensure elected officials are working for the people.”  He believes the public has a right to know who is contributing to which advertisements and campaign initiatives.

Pete Buttigieg: Buttigieg’s policy proposal includes a small donor matching system for federal elections.  He says this will allow for the average citizen to run for office funded by their communities and not big donors.  He calls for what he calls common-sense campaign finance rules that establish that corporations do not have the same rights as people so that “dollars cannot outvote human beings.”  He says that the amendment system was created to fix problems like this and proposes overturning Citizens United, if necessary by constitutional amendment. His policy also proposes strengthening the Federal Election Commission.

Amy Klobuchar:  Within her first 100 days, Klobuchar vows to shine a light on corporate dark money spending by requiring publicly traded companies to disclose all political spending over $10,000 to their shareholders.  She will also direct the IRS to require that tax-exempt organizations that engage in issues advocacy disclose the names of individual donors that donate more than $5,000 a year.

Bernie Sanders:  Sanders would ban all corporate contributions to the Democratic Party Convention and inaugural events while capping individual donations at $500.  He would abolish the Federal Elections Committee and replace it with the Federal Election Administration. He would enact mandatory public financing laws for all federal elections.  He would also work to pass a constitutional amendment that makes clear that money is not speech and corporations are not people.

Tom Steyer:  Steyer says corporations aren’t people and they shouldn’t be controlling our politics.  He says Citizens United must be overturned and campaigns should be publicly financed.  He also has a plan to restructure the FEC.

Donald Trump:  As a presidential candidate in 2016, Trump called the effects of Super PACs horrible.  He saw candidates as beholden to their PACs which caused them to disregard public interest.  By the end of his campaign, however, he had more than 100 Super PACs lobbying for him, spending more than 72 million dollars to influence the election.  He then enlisted Citizens United president, David Bossie, as deputy campaign manager.  As president, he nominated Neil Gorsuch to the Supreme Court who, in his history on the bench, supported the decisions that corporations are “persons.”  His former personal lawyer, Michael Cohen, was sentenced to three years for campaign finance violations related to hush money payments made to cover up affairs by Trump.  Over 40% of his appointments to ambassadorships come from campaign donors.

Elizabeth Warren:  Warren has pledged to not take any money from lobbyists or PACs.  She won’t take contributions over $200 from executives from fossil fuels, big pharma, big tech, big banks, private equity firms, or hedge funds.  She won’t give ambassadorships to wealthy donors. She wants to pass a constitutional amendment to overturn Citizens United. She will ban corporate contributions to the Democratic Party Convention.  She wants to make it illegal for corporate PACs to donate to campaigns. She also wants to ban the consideration of campaign donations in the appointment of ambassadors. She will enact strict limits on inaugural committee contributions, require disclosure of major donors to presidential campaigns, update campaign finance laws to address on-line political advertising, and shine a light on where the dark money is coming from by requiring donors to be disclosed.  She has a plan to create a public financing program that would give a 6-1 match for donations under $200. She would lower the individual contribution limits. Her Accountable Capitalism Act requires 75% of shareholders and 75% of board members to approve political action taken by a corporation.  She also wants to enhance FEC enforcement. In addition to campaign finance, she also has a plan for reducing corporate influence at the Pentagon and strengthening congressional independence from corporate lobbyists.

Andrew Yang:  Yang will push for a constitutional amendment to overturn Citizens United.