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Legislative Response to Unlimited Corporate Political Spending Is a Good First Step, but More Must Be Done

Feb. 11, 2010

Legislative Response to Unlimited Corporate Political Spending Is a Good First Step, but More Must Be Done

Shareholder Approval and the Fair Elections Now Act Must Be Enacted; Constitutional Amendment Ultimately Needed

 WASHINGTON, D.C. – Public Citizen finds promise in the legislative framework offered today by congressional leaders to help rein in the damage caused by last month’s stunning U.S. Supreme Court’s ruling, which allows unlimited corporate spending in elections. Sen. Charles Schumer (D-N.Y.) and Rep. Chris Van Hollen (D-Md.), representing congressional leadership, today announced a series of legislative goals to address the expected corporate onslaught in the 2010 elections and beyond.

 “Last month’s Citizens United v. Federal Election Commission decision gives giant corporations a right to trample our democracy. We, the People, are charged with rescuing our endangered democracy,” said Robert Weissman, president of Public Citizen.

 “Fixing Citizens United will require a constitutional amendment to restore the First Amendment and firmly establish that corporations are not entitled to First Amendment speech protections, least of all the right to spend money to influence election outcomes,” he said. “While efforts to enact a constitutional amendment are under way, Congress and the executive branch should take important steps to mitigate the harm of the Supreme Court’s decision. The legislative framework introduced today is a promising start, but whether the proposals work to offset the damage of Citizens United will depend entirely on the details. We are encouraged that Rep. Van Hollen recognized the Fair Elections Now Act, introduced by Rep. John Larson (D-Conn.), as a very important measure, though one that will go on a separate track. We urge Congress to waste no time in moving this bill forward so that independent-minded candidates will be able to run viable campaigns.”

 Some of the more significant principles touched upon in today’s unveiling of the legislative framework, and the ways in which Public Citizen would like to see these principles shaped in specific legislation, include:

• Improving corporate governance.  Recognizing that corporate treasury funds are the property of shareholders, not CEOs, is a vital reform principle. Any corporate political spending must be subject to informed consent of shareholders, and affirmative approval by an outstanding majority of all shareholders should be required of any corporate political expenditures. Rep. Michael Capuano (D-Mass.) has introduced a version of a shareholder protection act, and Van Hollen has indicated that a shareholder approval provision would be included in the package if the House financial services committee approves it.
• Banning political spending by foreign interests. Though the court did not invalidate the law or regulations banning foreign principals from spending in U.S. elections, the decision pokes a gaping loophole in the law by apparently allowing the same foreign interests to funnel political money through U.S. subsidiaries of foreign corporations. This loophole needs to be closed.
• Enhancing transparency. If this ruling is allowed to stand, corporations could easily fund massive attack ads against candidates and hide their involvement by laundering the money through some innocuous sounding group, like Americans for Job Security. Legislation needs to ensure robust disclosure of which corporations are directly or indirectly supporting or attacking which candidates.

 “Enhancing corporate accountability in politics goes a long way toward reducing abuses of big money in politics,” said David Arkush, director of Public Citizen’s Congress Watch division. “Combined with a good, robust public financing system to provide substantial resources to qualified candidates to answer corporate attack ads, it would meaningfully undo the damage done by the court in Citizens United.”

 If Congress is slow to act, President Obama could establish several of these reforms through executive actions, Weissman said. Government contractors, for example, could be required to forfeit campaign expenditures for or against those ultimately responsible for issuing the contracts. And the reform community is still waiting for Obama to fix the deadlocked Federal Election Commission by replacing the commissioners whose terms have expired – commissioners who are responsible for promulgating implementing regulations but whom have instead blocked enforcement of the laws.

 “The legislative framework shows that congressional leaders are very concerned and that they are prepared to take some positive actions,” said Craig Holman, government affairs lobbyist for Public Citizen. “But the devil is in the details. Improving corporate governance is a good principle, but we need specific, strong legislation to offset this threat to our democracy.”

 In addition to a strong shareholder protection act, similar to that introduced last week by Capuano, and a powerful public financing system for candidates, championed by Sens. Richard Durbin (D-Ill.) and Arlen Specter (D-Pa.) and Reps. Larson and Walter Jones (R-N.C.), Public Citizen advocates a constitutional amendment establishing that corporations are not, and never were, provided free speech rights under the First Amendment.
 So far, calls for a constitutional amendment in response to the Citizens United decision have come from Sens. John Kerry (D-Mass.), Christopher Dodd (D-Conn.) and Specter, and Reps. Donna Edwards (D-Md.), John Conyers (D-Mich.), Marcy Kaptur (D-Ohio), Leonard Boswell (D-Iowa) and Dennis Kucinich (D-Ohio). More are expected soon.

 For more information about the Citizens United decision and Public Citizen’s response to it, go to www.DontGetRolled.org.