Spending and Amending: The Past and Future of Citizens United (Part Two: Corporate Spending Advantage?)

The following post is adapted from my 2012 essay, “Spending and Amending: The Past and Future of Citizens United.” It evaluates four major predictions, identified in “Back to the Future? The Effects of Citizens United v. FEC in the 2010 Election,” by Peter L. Francia, that motivate would-be “reformers” of Citizens United. Taken together, these four predictions comprise the usual “case against Citizens United.” In this series of five posts, I evaluate each prediction and examine whether or not each was supported by data from the 2010 midterm elections. The fifth and final post draws conclusions from the data I have examined.  You can read parts one, three, four, and five at these links.

Prediction 2:  Corporations and pro-business interests would drown out the voices of others in the electoral arena. In the immediate aftermath of the ruling, Fred Wertheimer of Democracy 21 wrote issued the following statement:  “The decision will unleash unprecedented amounts of corporate ‘influence-seeking’ money on our elections and create unprecedented opportunities for corporate ‘influence-buying’ corruption…”

If the increase in spending post-Citizens United came primarily from one source or one type of source, it could be argued that it has distorted the process, either by influencing voters or simply by framing the debate in a particular way. Clearly, if corporate and business interests were able to “drown out” competing voices, this could create a worrisome advantage for certain speakers and their favored candidates. Unlike the first prediction, there are clear normative implications here.

The Court’s holding that corporations could have First Amendment protection as corporations led some to interpret Justice Kennedy’s opinion as creating a kind of “corporate personhood,” which would allow corporations to enjoy the same Constitutional rights and protections as individuals. Even presidential candidate Mitt Romney infamously quipped, “corporations are people, my friend.” This has only increased “reformers’” anxiety over the effects of the ruling.

However, Ilya Shapiro, Senior Fellow in Constitutional Studies at the Cato Institute, explains that so-called corporate personhood is essentially irrelevant to the debate. First, he points out that those fears have not exactly come to pass since 2010. In the 2011 case, FCC v. AT&T, “the Court clarified explicitly that the rights of corporations are not equivalent to the rights of living, breathing human beings.” In that case, the Court held that corporations do not enjoy the same right to privacy as individuals are entitled to; if Citizens United had ushered in a new era of robust corporate personhood as many claimed, the Court would not have made such a distinction. This indicates that the Court does not, and perhaps never did, have any intention of placing corporate rights on par with the rights granted to a “natural person.” Shapiro says FCC v. AT&T confirms that “corporations are artificial persons under the law” and “as ‘artificial entities’…have never enjoyed rights equal to a natural person’s. But, that does not mean that corporations have no speech rights, or had none before Citizens United.”

While many “alarmists,” as Shapiro calls them, continue to fret that Citizens United means “corporations are people,” current precedent and jurisprudence gives no indication that this is the case. Viewed in light of FCC v. AT&T, it is apparent that the Court’s holding in Citizens United was actually rather modest. It simply held that corporations have some free speech rights, but did not stipulate that corporations be treated exactly like persons under the law. Similarly, corporations are protected against unreasonable searches and seizures under the Fourth Amendment, but are not protected against self-incrimination by the Fifth Amendment. Court precedent indicates that corporate rights have been and continue to be a mixed bag, decided more on the basis of the right in question than of the corporate status of the claimant.

If corporations are (still) not persons, Shapiro asks “why do corporations have rights?” The answer, according to him, is that “even though a corporation is not a living, breathing, blood-pumping human being, the individuals who make up those corporations—officers, directors, employees, shareholders—are. It would be a mistake to deny constitutional rights to those individuals on the grounds that the corporation itself is not a real person.” In other words, a corporation, as such, cannot claim the full gamut of Constitutional rights that individuals do. But, in a certain sense, and in certain cases, it may exercise the collective rights and privileges of its individual, human members. When a corporation speaks for and through its individual members, it does not have all of the rights of each of those members, but the Court recognizes that it must have some. Put another way, individuals do not forfeit their right to free speech when they incorporate. “Simply because a group of individuals decide to join together and exercise [their] rights in concert,” Shapiro says, “does not result in those individuals losing their rights.” This principle of constitutional interpretation is fairly well settled, and it nullifies one of the catchier call-to-arms of those who wish to overturn Citizens United through constitutional amendment.

The larger issue, however, is whether Citizens United will allow corporate interests to gain a stranglehold on American politics. Even if we grant that corporations can have First Amendment rights without full-fledged personhood, the question of how they will use those rights remains. If there is good reason to believe that corporations will abuse those rights in a manner that threatens the integrity of national politics, then perhaps there is reason to consider a constitutional remedy.

However, as Richard A. Epstein, a Professor of Law at New York University, argues, corporations have little incentive to play the political bully on that kind of scale. He says that the conventional justification for restricting corporate speech rights is the potential for corruption, but suggests that there is very little evidence that this would occur, especially considering statutory safeguards already in place. He argues that this is because it is very risky for a corporation to publicly throw its weight around in the political arena.

According to Epstein, corporations expose themselves to more vulnerabilities the more they attempt to influence Congress. They face possible backlash from the press, which is always keen to play the watchdog and exploit anti-corporate sentiment. They also face significant legal and practical restrictions, “that can easily dull their ardor to engage in political campaigning…”

In many ways, Epstein argues, corporations “are held hostage to the public” because of their heavy investment in their brands. According to Epstein:  “The logic is simple. Political statements will win a corporation many enemies—enemies who can then boycott your products. The same political statements may win you some friends, but not friends who will double their purchases just because you have taken a stand they find favorable.” Therefore, “the last thing that you want to do as a corporation is get involved with election campaigns when it is clear that no candidate embodies all the positions—and only those positions—that are ideal for the firm.” When a corporation enters the political fray, they risk time and money on the small chance that they can influence enough voters to elect an individual who they hope will contribute to enacting legislation that is more valuable than the time, money, and risk they invest in the original campaign. It seems highly unlikely that many corporations would seek such opportunities on a consistent basis. Profit motives will constrain corporate activism more than the Court ever could.

Furthermore, every corporate expenditure is subject to an analysis of opportunity costs. Every dollar spent on political messaging is a dollar that cannot be spent in other areas, and Epstein points out that most large corporations have far more immediate concerns:  “It seems extremely unlikely that corporations…want to spend their precious capital on elections that concern all sorts of issues about which they hold no distinctive position.”

Corporations are not concerned with the broad spectrum of issues that candidates are associated with, loved, and hated for. Rather, corporations are really only concerned with the regulation of their own industry and are much more likely to lobby on these issues on a bill-by-bill basis. Huge corporations like Verizon and AT&T don’t want to deal with a candidate’s stance on issues like abortion, same-sex marriage, or immigration, and the backlash that such associations often create. They can be more effective, and take on far less risk to their brand’s image, by lobbying existing members of Congress on legislation that affects them directly. If anything, Epstein says, it will be unions – not corporations – that may start engaging in such large-scale campaigning, since they do not face the same constraints.

Epstein makes an important point. Just because Citizens United gives corporations more freedom in the political arena, it doesn’t mean they will necessarily exercise those rights. Most large corporations have been around long enough to figure out how and where they can effectively lobby Congress, and Citizens United is unlikely to change corporations’ cautious approach. The effects of Citizens United are much more likely to be seen in more typically political organizations, and possibly in quasi-political organizations such as labor unions.

Next topic:  Did Citizens United give Republicans a competitive advantage in 2010?

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