Seattle Moves To Silence Dissent From Corporations

January 15, 2020   •  By Eric Wang   •    •  ,

This piece originally appeared in Daily Caller on January 15, 2020.


When government seeks to enact laws that harm your interests, should you have a right to speak out to defend yourself?

The Seattle City Council recently voted to shut down such public dissent. Using foreign attempts to interfere with U.S. elections as an excuse, the city council passed a bill to retaliate against American companies that had opposed an onerous city tax on employers. The move is the latest in a string of attempts around the country by politicians to enact campaign finance restrictions to immunize themselves from public accountability.

In 2018, the Seattle City Council voted to enact a per-employee “head tax” on the city’s largest employers. After companies objected and sought to put the issue to a direct vote by city residents, the council abruptly reversed itself and repealed the tax. This is how democracy is supposed to work: elected officials responding to public debate and stakeholders’ feedback instead of dictating by fiat. If Seattle officials believed they had public support for the tax, they were free to let the public vote on it.

Instead of being embarrassed by their overreach, city politicians sought legislative retaliation. On Monday, Seattle’s City Council passed a bill that borrowed heavily from provisions in congressional Democrats’ 2019 H.R.1 legislation — provisions so extreme that even H.R. 1’s sponsors abandoned them before the bill passed the U.S. House of Representatives.

At first glance, the Seattle bill purports to prohibit any “foreign-influenced corporation” from making campaign contributions or independent expenditures in connection with city elections. In a New York Times op-ed, Commissioner Ellen L. Weintraub of the Federal Election Commission touts the bill as being consistent with the federal ban on foreign political spending, over which she and her agency have jurisdiction. This is overly simplistic and disingenuous. The bill would actually prohibit and deter just about any American public company from standing up for the political interests of its employees, shareholders, and customers.

Incorporating language and concepts from congressional Democrats’ initial H.R. 1 proposal, the Seattle bill vaguely defines a “foreign-influenced corporation” to include any company in which any single foreign person or entity has “direct or indirect” ownership of even one percent, or in which any combination of foreign owners has “direct or indirect” ownership of five percent. CEOs of companies that make political contributions or independent expenditures in Seattle would have to certify under penalty of perjury that they are not “foreign-influenced.”

With billions of shares publicly traded on American stock exchanges each day and the proliferation of mutual funds, exchange-traded funds, and other investment vehicles in which foreigners may “indirectly” own shares of American companies, it is impractical or impossible for any public company to comply with the Seattle bill. No CEO would be willing to risk personal and corporate liability in certifying that the company does not meet the bill’s vague and arbitrary “foreign influence” definition. Tellingly, sponsors of the H.R. 1 legislation in the U.S. House of Representatives jettisoned a similar measure from their bill before passing it last year, after realizing the provision’s draconian effects.

The FEC’s Weintraub defends the Seattle bill for being generous, arguing that it is “not as tight as the zero-tolerance standard that a strict reading of federal law would suggest.” Actually, the federal foreign national ban only applies, in relevant part, to any corporation “organized under the laws of or having its principal place of business in a foreign country.”

The federal law says nothing about American companies with even a miniscule level of direct or indirect foreign shareholders. And while Weintraub recently has taken an absolutist “zero-tolerance” position, her stance is situational and opportunistic. In 2006, Weintraub voted for an FEC ruling permitting a domestic subsidiary wholly owned by a foreign corporation to engage in political spending in the United States, within certain parameters. What changed for Weintraub and proponents of measures like the Seattle bill is the Supreme Court’s 2010 Citizens United ruling, which gave corporations a greater ability to participate in public debates over issues that impact them.

In light of Citizens United, Weintraub now breathlessly suggests in her New York Times piece that an American corporation with even one foreign shareholder participating in American politics amounts to an “unconditional national surrender to foreign attempts to undermine our democracy.” The Seattle bill’s preamble suggests such political participation is the same as “Russia, China, Iran, and other foreign actors engaged in ongoing campaigns to undermine democratic institutions.”

These hyperbolic false equivalencies obscure — barely — the ulterior motives for the jingoistic legislative efforts purporting to address foreign electoral influence: Most are aimed at undermining Americans’ free speech rights and their ability to criticize elected officials.

Eric Wang

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