[EL] WRtL, CU, and Speech Now -- Which are the source(s) of the current corporate spending practices?
Justin Levitt
levittj at lls.edu
Mon Jul 9 13:14:33 PDT 2012
Technically, I think there's actually a clarification and an addition to
the summary below. First, the "fraught with peril" zone for
contributing to 527s or c(4)s in the mid-2000s was caused not by the
CalMed/McConnell discussion, but by the possibility that the 527/c4
might be deemed a federal PAC, with corporate contributions (at that
time) prohibited by statute.
And second, /SpeechNow/, I believe, opened federal expenditure-only PACs
to unlimited donations by _individuals_. For corporate contributions,
there's one step further down the rabbit hole: FEC advisory opinions in
/Commonsense Ten/ (and beyond) that permitted unlimited corporate
contributions to federal expenditure-only PACs. (Richard Briffault
follows the trail exceptionally clearly in this new piece
<http://ssrn.com/abstract=2040941>.) I think that the logic of
/SpeechNow/ substantially drives that /Commonsense Ten/ AO, but it's
always surprised me that more attention hasn't been paid to the FEC
procedurally getting out in front of the courts in that advisory opinion.
And more FWIW: in this piece <http://ssrn.com/abstract=1676108>, I think
I manage to agree with both Marty (that the real sea change was WRtL)
and Brad (that Citizens United has become the proxy for anger at the
campaign finance regime generally). And that's a zone of agreement that
I hadn't quite expected.
Justin
--
Justin Levitt
Associate Professor of Law
Loyola Law School | Los Angeles
919 Albany St.
Los Angeles, CA 90015
213-736-7417
justin.levitt at lls.edu
ssrn.com/author=698321
On 7/9/2012 12:21 PM, Marty Lederman wrote:
> Making even further sense, now, thanks!
>
> If I understand you, then, post-WRtL but pre-CU, corporations could
> use treasury $$ to pay for non-express advocacy in their own name --
> but they were reluctant to do that, because of disclosure
> requirements. The better option was to contribute treasury funds to
> 527s or to (c)(4)s -- but that option was fraught with peril, not
> because of the Austin rule, but because of the uncertainty occasioned
> by CalMed and those footnotes in McConnell that appeared to bless the
> limits on contributions to expenditure-only PACs. That uncertainty,
> however, cast a shadow not only on such contributions of treasury
> funds, but also on contributions from a corporate PAC, right?
>
> On this theory, if I'm not mistaken, it was not so much CU that led to
> the flood of corporate treasury spending as much as it was the one-two
> punch of WRtL followed by SpeechNow, et al.
>
> Now, one could argue that without the rhetorical flourishes and broad
> pronouncements in CU, the courts of appeals would have been reluctant
> to rule as they did in SpeechNow, et al. But that's a more complex,
> more speculative account, isn't it?
>
> Let me ask the question this way:
>
> If the Court were to overrule CU tomorrow, but did nothing to affect
> WRtL and SpeechNow, then, absent further legislative action, wouldn't
> the current floodgates for expenditure of corporate and union treasury
> funds remain just as wide as they are now, given that virtually all
> advocacy is nonexpress advocacy?
>
> On Mon, Jul 9, 2012 at 3:07 PM, Rick Hasen <rhasen at law.uci.edu
> <mailto:rhasen at law.uci.edu>> wrote:
>
> If a corporation gave money to a c4, and that c4 (or 527) had the
> major purpose of influencing federal elections (and therefore
> should have registered as a political committee), then the
> contribution to the c4 (or 527) would be an illegal corporate
> contribution to a PAC. So it was fraught with legal uncertainty.
>
> As I point out here
> <http://www.slate.com/articles/news_and_politics/politics/2012/03/the_supreme_court_s_citizens_united_decision_has_led_to_an_explosion_of_campaign_spending_.html>,
> the same was true of individual contributions above $5,000 to 527s
> before the CU blessing:
>
> It is true that before /Citizens United/ people could spend
> unlimited sums on independent advertising directly supporting
> or opposing candidates. But that money had to be spent by the
> individual directly. It could not be given to a political
> action committee, which had an individual contribution cap of
> $5,000 and could not take corporate or union funding. In many
> cases, wealthy individuals did not want to spend their own
> money on advertising, which would say "Paid for by Sheldon
> Adelson" or "Paid for by George Soros," so fewer of these ads
> were made. The only way to avoid having your name plastered
> across every ad was to give to the 527s, which claimed they
> could take unlimited money from individuals (including,
> sometimes, corporate and labor union money) on grounds that
> they were not PACs under the FEC's definition of PACs. These
> organizations were somewhat successful, but a legal cloud
> always hung over them. During the 2008 Democratic primary
> season, Bob Bauer, candidate Obama's lawyer, barged in on a
> pro-Hillary Clinton conference call
> <http://electionlawblog.org/archives/010292.html> to say that
> people giving to 527s to support Clinton could face criminal
> liability.
>
> After /Citizens United/, the courts (most importantly in
> /Speechnow.org v. FEC
> <http://scholar.google.com/scholar_case?case=7706190082269594272&hl=en&as_sdt=2&as_vis=1&oi=scholarr>/)
> and the FEC provided a green light for super PACs to collect
> unlimited sums from individuals, labor unions, and
> corporations for unlimited independent spending. The theory
> was that, per /Citizens United/, if independent spending
> cannot corrupt, then contributions to fund independent
> spending cannot corrupt either. (I am quitecritical
> <http://www.cnn.com/2012/01/09/opinion/hasen-super-pacs/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%20rss%2Fcnn_topstories%20%28RSS%3A%20Top%20Stories%29>
> of this theory about corruption
> <http://www.slate.com/articles/news_and_politics/politics/2012/02/justice_ruth_bader_ginsburg_is_ready_to_speak_out_on_the_danger_of_super_pacs_.html>,
> but that's besides the point here.) So what was once of
> questionable legality before the court's decision was fully
> blessed after /Citizens United/.
>
>
> On 7/9/2012 12:01 PM, Marty Lederman wrote:
>> I see. I think. Is this right?: Because WRtL was nominally
>> only a statutory construction decision, then in the period
>> between WRtL and CU, if a corporation wanted to spend treasury
>> funds for /non-/express advocacy -- the only kind of advocacy
>> anyone actually wants to use these days -- it could freely do so
>> in its own name, or by funding a (c)(4) not registered with the
>> FEC. But it could not, pre-CU, achieve the same thing by funding
>> an FEC-registered committee (which it might prefer to do . . .
>> why? less disclosure than w/r/t committees that are not
>> FEC-registered?).
>>
>> If this is correct -- and please forgive me if I still have it
>> wrong -- then the "floodgate" CU opened, over and above what was
>> permitted by WRTL, was to allow treasury funds to be used to fund
>> /FEC-registered/ PACs. And this, in turn, dramatically increased
>> the amount of such funds that were expended -- presumably because
>> corporations were reluctant to fund ads when only the first two
>> options were available post-WRtL. If that's the case, why was the
>> addition of this third option such a sea-change?
>>
>>
>> On Mon, Jul 9, 2012 at 2:49 PM, Rick Hasen <rhasen at law.uci.edu
>> <mailto:rhasen at law.uci.edu>> wrote:
>>
>> If I understand correctly, everything done by a Super PAC
>> (and other political committees registered with the FEC)
>> counts as an IE. When done by a c4 and other outside groups
>> not registered with the FEC, it is not an IE without express
>> advocacy.
>>
>>
>> On 7/9/2012 11:46 AM, Marty Lederman wrote:
>>> Whoa! If I'm reading those charts correctly (and I might
>>> not be), the vast majority of such spending has been on
>>> independent expenditures, not electioneering
>>> communications! And yet in all this time, I don't think
>>> I've seen a /single /ad that uses the magic words, i.e.,
>>> that could not have been characterized as an electioneering
>>> communication subject to WRtL. Is this simply a matter of
>>> self-chosen nomenclature, i.e., calling ECs "independent
>>> expenditures" (perhaps for disclosure reasons)? Or have I
>>> simply missed a huge outpouring of "magic words" ads that
>>> corporations and unions were just chomping at the bit to
>>> subsidize with treasury funds, even post-WRtL, that have now
>>> been unleashed by virtue of CU?
>>>
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