Daily Media Links 9/30: Money pouring into Conn. governor’s race despite system, Hybrid PACS — yet another case goes to High Court, and more…

September 30, 2014   •  By Scott Blackburn   •  
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In the News

Wall Street Journal: A Political Attack on Shareholder Value 

By David M. Primo
Last week the Center for Political Accountability and the Zicklin Center at the University of Pennsylvania’s Wharton School released the annual “CPA-Zicklin Index,” which ranks companies based on disclosure policies for political activities. The more you disclose, the better you score. The aptly named Noble Energy and transportation giant CSX topped the list, while 20 companies, including Warren Buffett’s Berkshire Hathaway and household names like Netflix, received scores of zero.
Shareholders and executives may want to take note, though: A high ranking isn’t necessarily good for your company—or for you. The index rests on the view that disclosure reduces the shareholder risk associated with corporate involvement in politics. That’s also the reasoning behind the movement to require shareholder approval for corporate political spending. Yet in reality disclosure and approval requirements tend to hurt shareholders.
This finding emerges from a new working paper that I co-wrote with Indian School of Business finance professor Saumya Prabhat. In 1998 Britain’s Committee on Standards in Public Life issued a scathing report calling for disclosure reforms in the wake of several scandals. In response, the U.K. enacted a law in 2000 that increased disclosure requirements and mandated shareholder approval of political contributions. We studied how this reform process affected shareholder risk and return.
Read more…
Midland Reporter-Telegram: Panel weighs pros, cons of campaign donor reporting 
By Joseph Basco
David Keating, the president of the Center for Competitive Politics, was more critical of the current laws, as opposed to dark money matters.
“To give an idea of how bad the campaign finance laws are, the tax code is a model of simplicity and clarity compared to campaign finance law,” Keating said. “We have freedom of speech in this country and we have people who want to speak out about government, especially during election season. You have to hire a lawyer. I guarantee you, you’re going to trip into some rule, and it’s a situation that has to be fixed.”
Read more…

More Soft Money Hard Law: Justice Stevens and his “Oops”
By Bob Bauer
Justice Stevens has taken the occasion of another address to critique the Supreme Court’s campaign finance jurisprudence. This time, his attention fixed firmly on the McCutcheon case, he asks why the Constitution should protect campaign contributions made by one state or district’s residents to a candidate who represents another. Mr. McCutcheon, he argues, had no clear right as an Alabaman to contribute to candidates in other states, and the Supreme Court mistakenly overlooked this weakness of his case.  The Justice cites as authority for his position the Supreme Court’s validation of Congress’s prohibition on contributions by foreign nationals. Of the Supreme Court’s failure to deal with the question of a contributor’s right—or lack thereof—to support a candidate in another jurisdiction, Justice Stevens writes that it was a glaring oversight—an “oops,” as he puts it.
Federal constitutional law on this point seems to cut in quite a different direction from the one the Justice argues for. The Court has held without dissent that Congress may not enact a sweeping prohibition on political contributions by minors—that is, in young non-voters. Congress in McCain-Feingold had enacted a flat prohibition on contributions from  minors 17 or younger. The Court struck down the provision on First Amendment grounds; it rejected the position that the right to give should be linked to the right to vote.  McConnell v. FEC, 540 U.S. 93, 231-33 (2003). See also Heather Davis, Breaking the Piggy Bank: an Alternative Approach to Campaign Contributions by Minors After McConnell v. FEC, 73 Geo. Wash. L. Rev. 353, 364-65 (2005). Justice Stevens voted with the other Justices on this issue. As the law was then and is now still fashioned, a minor at any age who can meet the law’s conditions—namely that the money is her own and she has full voluntary control over the funds and decision to contribute—may make a contribution in the same amount as any of the state’s voting residents  11 C.F.R. § 110.19.
NY Times: Ruth Bader Ginsburg on the Worst Supreme Court Ruling 
“If there was one decision I would overrule,” she said, “it would be Citizens United. I think the notion that we have all the democracy that money can buy strays so far from what our democracy is supposed to be. So that’s number one on my list.” 
First Amendment News: Hybrid PACS — yet another case goes to High Court
By Ronald K.L. Collins 
The two issues in the case are: (1) Whether a political committee that makes highly restricted direct contributions has a First Amendment right to engage in unrestricted non-contribution activities through a separate and segregated non-contribution account, and (2) Whether the First Amendment forbids a government from restricting political speech based on the disclosure interest—an interest in providing the electorate with information about the sources of election-related spending—including when a more narrowly tailored remedy is available.
The man principally behind the case is a mild-mannered and quiet sort of guy,Dan Backer. He is no big time K street lawyer. No, his professional credentials are much more modest. He is the founder and principal attorney for DB Capitol Strategies, a campaign finance and political law firm in Alexandria Virginia. More importantly (and as David Skover and I noted in our book When Money Speaks), he was one of the driving forces behind the successful litigation of McCutcheon v. FEC (2014). When his team lost that case in the D.C. Circuit (in an opinion by Judge Janice Rogers Brown), it did not stop him — he took the case to the Supreme Court where Erin Murphy successfully argued the case for the Petitioner.
And now, Backer and a new team are at it again, in yet another campaign finance case — and again challenging a ruling by Judge Brown and her colleagues on the D.C. Circuit.

Journal Sentinel: John Doe target strikes back with call for probe of prosecutor 
By Patrick Marley
Madison — Striking back at Milwaukee County District Attorney John Chisholm, a leader of a group that has been investigated for possible campaign finance violations is asking Chisholm to appoint a special prosecutor to determine if he has engaged in misconduct in office.
The move came in a letter dated Friday, just two days after a federal appeals courtthrew out a legal challenge aimed at stopping the campaign finance probe conducted by Chisholm.
State and Local

Connecticut –– AP: Money pouring into Conn. governor’s race despite system  
By Susan Haigh
HARTFORD — When Connecticut set up its public campaign financing system nearly a decade ago, it was supposed to ensure politicians were not beholden to special interests and corporations in the wake of a corruption scandal that ensnared its former governor. But the rules that have been held up as the gold standard of smart campaign finance reform haven’t stopped millions of dollars in outside cash from flooding into this year’s governor’s race.
Two political action committees registered with the IRS — one supporting Governor Dannel P. Malloy, a Democrat, and the other supporting Republican businessman Tom Foley — have amassed a total of nearly $5.5 million in contributions to spend mostly on TV advertising, often condemning the other candidate. Other groups, including gun rights and gun control advocates, are also pumping money into the election.
Connecticut –– Hartford Courant: Dems Charge In Complaint Foley Used Think Tank As “Illegal Arm” Of Campaign 
By Jenny Wilson
The complaint, filed last week with the State Elections Enforcement Commission, follows revelations that Foley included passages in his urban policy plan that were identical in wording to phrases previously published in a report by the Connecticut Policy Institute. Foley founded the think tank in 2011, and for months, Democrats have accused him of using it as a political tool. They argue in the complaint that Foley violated campaign finance law in three ways: by accepting contributions from a business entity, self-funding his campaign, and illegally coordinating donations to a Super PAC supporting his candidacy. All of the allegations are based on his relationship with the non-profit institute.
Campaign finance law prohibits candidates from accepting contributions from business entities, and Democrats allege that Foley violated that statute by using a “pre-packaged policy platform” from CPI.
The Democrats charge that Foley’s “wholesale adoption of CPI policies” is not just a contribution from a business group, but also a form of self-funding. Foley is participating in the state’s public financing program, meaning he is limited in spending to the $6.2 million taxpayer-funded grant he received through the program. In using language from the CPI report, Foley “effectively self-financed major components of his campaign policy platform,” Democrats wrote in the complaint.
Pennsylvania –– The Legal intelligencer: Independent Expenditures and Election Influence 
By Jonathan W. Hugg 
In Citizens United v. Federal Election Commission, 558 U.S. 310 (U.S. 2010), the U.S. Supreme Court held that it was unconstitutional for Congress to restrict independent expenditures by corporations on the ground that corporations have the same free speech rights as individuals, and “no sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.”
However, Pennsylvania’s Election Code broadly bans giving and spending by banks, corporations and unincorporated associations “for any political purpose whatever,” and likewise bars candidates and political committees from accepting corporate funds. There is no exception for independent expenditures.
General Majority sought confirmation from the Pennsylvania Department of State that, in view of Citizens United, the state would no longer enforce the prohibitions in the Election Code on the receipt of corporate funds, as to political committees created for the sole purpose of making independent expenditures. The department refused. Nevertheless, when General Majority sued and sought an injunction, the department conceded that its position was constitutionally untenable.
Scott Blackburn

Scott Blackburn