Supreme Court Term 09: Paul M. Smith on Citizens United and Court "Activism"

The United States Supreme Court has recently heard oral argument in Citizens United v. FEC. If the Supreme Court decides this case favorably to corporations, it will overrule longstanding case law, and invalidate virtually all restrictions on corporate spending for political purposes. A decision favoring corporate interests will eliminate the need for PACs, and corporations will be allowed to make unlimited financial contributions directly from the corporate treasury. The effect on the democratic process will be dramatic, and vast sums will be spent to support elected officials who support a corporate agenda, and against those officials who opposed that agenda. Because of their vast resources, corporations will acquire a powerful disproportionate impact on electoral and political outcomes. The premise of this post is that this result is extremely destructive to American democracy.

The government should prepare immediate action in anticipation of a decision in Citizens United favorable to corporate interests. Short of an unlikely constitutional amendment, Congress or the SEC can enact a regulation restricting all publically held corporations from spending for political purposes, as defined herein, more that $100,000 per year without prior authorization of 2/3 of the corporation’s shareholders at the next annually scheduled meeting of shareholders.

Such a regulation won’t absolutely restrict corporate political spending. It will simply require that the shareholders, in whose interest the corporation is operated, approve of an expenditure not directly related to the operation of the corporation. This regulation is directed at corporate governance, and not campaign finance reform. It has the incidental effect of creating a check on otherwise unrestricted corporate political spending.