New legislation offered to limit corporate speech

Congressman Michael Capuano (D-Mass.) will today introduce legislation to curb the First Amendment rights of for-profit corporations that were recognized and restored (along with those of unions, nonprofit organizations, and other forms of association) in the Supreme Court’s Citizens United decision.

One thing should probably be noted upfront – while most of the self-anointed campaign finance ‘reform’ community engage in verbal gymnastics worthy of Mary Lou Retton to avoid sounding like they want to silence certain voices in the political process, Congressman Michael Capuano is refreshingly straightforward on this subject. During hearings for the thankfully-failed DISCLOSE Act last year, Capuano had the following to say about the chilling effect the bill would have on speech:

“I hope it chills out all-not one side, all sides! I have no problem whatsoever keeping everybody out. If I could keep all outside entities out, I would.”

While Representative Capuano’s commitment to the First Amendment may be suspect, his honesty on the subject is not.

The so-called “Shareholder Protection Act” is less forthright, although it isn’t hard to discern what the intent is. There is a coalition that has formed to support the bill, with the usual suspects (Common Cause, CREW, Democracy 21, Demos, Public Campaign, Public Citizen, USPIRG, etc) behind it.

Called the Corporate Reform Coalition, the home page lays out the goal:

Following Citizens United v FEC, spending by outside groups funded largely by corporate interests exploded. Outside groups spent more than three times as much money to influence the 2010 elections as they did in 2006, the last mid-term cycle. The ads funded by unaccountable corporate interests fueled massive attacks that helped to shape the 2010 election cycle. Though it cannot undo the Court’s decision, several key approaches can help to blunt unchecked corporate spending by forcing greater disclosure of corporate contributions to political campaigns and by allowing the shareholders who own the corporation greater input. This campaign will work to limit the impact of the Citizens United decision by exposing corporate influence in our elections and bringing new accountability to corporate behavior via shareholder protection solutions.

Apparently, it hasn’t occurred to the Corporate Reform Coalition that passing laws to “blunt” political speech isn’t much more acceptable than laws banning political speech directly, under the well-established doctrine that Congress cannot do indirectly what it is prohibited from doing directly.

It is interesting, however, that the Coalition concedes that “forcing greater disclosure of corporate contributions” will help to stifle political speech.

While legislative language isn’t available yet, a press release out today describes the Shareholder Protection Act as follows:

The Shareholder Protection Act would require CEOs to receive annual shareholder approval of an overall political expenditure budget and mandate board ratification of specific campaign expenditures in excess of $50,000. Shareholders and investors would be notified of these campaign spending decisions, which also would be posted on the Internet for the public to see.

We’ll have a more detailed critique and analysis of this once the actual legislation is revealed, but one of the biggest problems with this proposal is pretty obvious. The legislation would impose a cumbersome process on corporations in order to speak, something that doesn’t allow at all for the oftentimes fast-moving political process. A candidate might take a position vital to a corporation’s interests, even their survival, shortly before an election. Instead of being able to quickly respond and either praise or criticize the candidate, the corporation would be silenced because it would take too long to organize a vote.

It also ignores that one of the main purposes of the corporate form is, in fact, to separate ownership from having to become involved in the day-to-day management of the company like setting budgets. This separation is what allows Americans to invest in multiple companies, even hundreds or thousands of companies (through mutual funds, typically) without having to learn the minutiae of the companies’ operations. This bill seeks to reverse this separation, forcing shareholders to become far more intimately involved in a company’s inner workings then they have any interest in.

The Shareholder Protection Act is simply the latest effort by so-called ‘reformers’ to silence political voices they do not believe the American public should hear from, and I trust Congressman Capuano will be as forthright about this as he was about the DISCLOSE Act.

The Center for Competitive Politics is now the Institute for Free Speech.