06/01/2012 08:44 am ET Updated Aug 01, 2012

How Citizens United Can Be Used to Curtail Super PAC Spending

The orgy of political spending that has been unleashed by super PACs in the current election cycle exceeds what a free democracy can bear. A president who is obligated to repay even a fraction of the political debts created by special interests' funding of super PACs is a president who will be greatly challenged to govern in the public interest.

This sorry state of affairs is blamed on Citizens United v. FEC, the controversial Supreme Court decision striking down, on First Amendment grounds, legal obstacles to spending on elections by corporations (and also labor unions). While there is some basis for this finger-pointing -- a lower federal court relied on CU in a decision deregulating super PACs -- CU, in fact, is not an obstacle to reining in the spending of super PACs.

On the contrary, super PACs, I believe, are vulnerable to challenge under the First Amendment because they lack the "independence" from political candidates that is an essential requirement of CU.

Super PACs are the political equivalent of hedge funds: professionally managed investment vehicles pooling the contributions of like-minded, high-net-worth individuals to support a candidate. CU opens the door to the legal argument that aggregating contributions from multiple donors into a common pool can never be independent, constitutionally-speaking, of the candidate.

Before getting deeper into this analysis, however, some truth-telling about the CU decision is in order. Hopefully, I will be seen as possessing at least a little credibility in this matter, having participated in the writing of a friend-of-the-court brief supporting the losing side in the CU case in the Supreme Court.

First of all, it is crucial to understand that CU has not opened the floodgates of campaign spending by public corporations, as was widely feared and predicted. While contributions to super PACs by wealthy individuals (and entities they control, like trusts, partnerships, privately-held companies, and the like) have reached flood levels, spending by public corporations -- corporations whose shares are traded on the major stock exchanges -- barely registers in the required disclosures of Republican and Democratic super PACs.

Public corporations just aren't using corporate funds to back candidates through super PACs. Although it's possible that public corporate money has been diverted to nonprofit entities that do not have to disclose their donors (so-called Section 501(C) 4 & 6 organizations), there is no evidence that that has happened, and it is unlikely that public companies would pump huge sums into nonprofit entities over whose spending priorities they would have so little control.

More plausible is the explanation that public corporations -- whose shareholders, roughly speaking, consist of as many Republicans as they do Democrats -- see little strategic benefit in making a big financial wager on one presidential candidate versus another. Better, from a business standpoint, for public corporations to sit on the sidelines or to contribute equally to both major parties. These corporations are more likely to use their political funds to make targeted investments in specific legislation whose costs or benefits to the corporation can be quantified.

A second misconception about CU is that it stands in the way of disclosure of political campaign contributions and expenditutes. Although CU was a 5-4 decision, eight of nine justices made clear that compelled disclosure of campaign contributions was fully permissible under the First Amendment. The bottom line is that obstacles to disclosure have little to do with the Supreme Court and everything to do with political calculations by various Washington, D.C., factions.

Congress, following the CU decision, considered legislation that would have closed major loopholes in federal disclosure requirements (particularly for the nonprofit spending entities), but the bill failed. Republicans were against it -- -despite the fact that for more than 25 years Republicans have claimed to favor disclosure over regulation on this area. Also opposed were liberal interest groups that typically complain about the inadequacy of disclosure. The ACLU, for one, claimed disclosure would infringe the rights of contributors to give money anonymously. (Translation: transparency for contributions could hurt the ACLU's own fundraising.)

More recently the broadcast media elevated self-interest to a high art in their efforts to stop the FCC from mandating disclosure, on the internet, of prices and other specifics about sales of radio and TV political ads, most of which are bought by super PACs. Fortunately, the industry's clout was not sufficient to derail the FCC initiative, which, in the future, may prove to be a rich source of data on campaign spending.

There is, in other words, no shortage of hypocrisy on both sides of the debate about disclosure of election spending after the CU decision.

Getting back, for a minute, to the proposition that the First Amendment permits limits on spending by super PACs . . . . In CU, the Supreme Court, reaffirming a key distinction in its seminal campaign finance decision, Buckley v. Valeo, over 30 years ago, held that corporations, while subject to limits in their contributions to candidates, are nonetheless free, under the First Amendment, from limits on their own "independent" expenditures that happen to support a candidate.

The question left unanswered by CU is: When is an expenditure sufficiently independent of a candidate to trigger First Amendment protection? Although federal law and FEC regulations purport to give answers, they are irrelevant (not to mention toothless, see below) because CU's requirement of independence is a requirement of constitutional dimension.

The answer, I believe, is that any aggregation of multiple contributions to an expenditure fund crosses the constitutional line. The First Amendment safeguards the right of an individual citizen (or corporation or other entity, acting unilaterally) to spend money without limit to express views about a candidate. However, the right to speak (through the purchase of TV and radio ads or otherwise) by combining one's contribution with those of others is outside the zone of First Amendment protection and subject to government limits.

Gorge Soros, on his own, is therefore free to spend millions to benefit President Barak Obama. So is Warren Buffett. However, Soros and Buffett may not combine their over-sized contributions to spend, jointly, through a super PAC. The right to spend without limit in support of a candidate is a personal, individual right -- not a group right.

Wealthy political activists who wish to join forces and organize as a group in support of a candidate can do so, but subject to the limits on contributions to a political party. The aggregation of contributions into a common fund is, in principle, no different from contributing to a political party. If, consistent with the First Amendment, contributions to a party may be capped, then caps may also be placed on contributions to an expenditure pool that combines the contributions of multiple donors.

Without a strict independence requirement, expenditure organizations will always operate as extensions of campaigns. Consider the major super PACs supporting Mitt Romney ("Restore our Future") and President Obama ("Priorities USA Action"). Although nominally adhering to FEC regulations against coordination with candidates, these super PACs are shadow campaign organizations run by political consultants whose ad-buying and other decisions are in perfect lockstep with their respective candidates. The closeness of the super PACs and campaigns renders meaningless the limits on contributions to the candidates.

The CU decision is not the constitutional nightmare that it is often claimed to be. It has not created a stampede of political spending by public corporations or thwarted meaningful disclosure requirements. And while CU gave a green light to individual political expenditures, it also contains the rationale for enforceable limits on spending by super PACs.
Peter Scheer, a lawyer and journalist, is executive director of the First Amendment Coalition, a nonprofit group advocating freedom of speech and government transparency. The views expressed here are his alone; they do not necessarily reflect the views of FAC's Board of Directors.