Communication Currents

The American public has significant disdain for political advertising, especially those citizens living in battleground states where television and radio airwaves are flooded with campaign ads in the months leading to Election Day.  This election season, in addition to advertising sponsored by candidates, political parties, and issue groups, the American public is likely to witness a new form of political ads: corporate political advertising.  While corporations view their right to sponsor political ads as a victory for the First Amendment, political observers caution that such ads could drown out citizen voices in our political process.

In a controversial 5-4 decision, the U.S. Supreme Court earlier this year removed a century-old ban against direct corporate spending on political campaigns. The Court overturned the long-standing ban through its ruling in the case of Citizens United v. Federal Election Commission (FEC).  Citizens United v. FEC stems from the 2008 Democratic presidential primary campaign in which Citizens United wanted to air Hillary: The Movie, a 90-minute, feature-length documentary film critical of then-Sen. Hillary Clinton (D-NY).  The FEC disallowed Citizens United from airing the film on the grounds that it violated existing campaign finance laws by expressly advocating for Clinton’s defeat. 

Under prior campaign finance laws established in Buckley v. Valeo (1976), the Supreme Court distinguished between “express advocacy” and “issue advocacy.” Express advocacy includes communication that explicitly asks voters to “vote for” or “vote against,” “reject,” “defeat,” “elect,” or “cast a ballot” for a candidate or referendum whereas issue advocacy appeals aim to shape policy and public opinion without using “express” language endorsing or opposing a specific candidate.  In the past, such express advocacy was not allowed if corporations were using their treasuries.

While the Supreme Court ruling maintains the ban against corporate donations directly to candidates, they are now allowed to use their corporate treasury to sponsor political ads or other election communications aimed to elect or defeat candidates.  Corporate spending limits and restrictions on political activity have existed since Congress passed the Tillman Act in 1907, which prohibited corporations from making direct contributions to candidates.  Although corporations found loopholes in the Tillman Act and exploited it through bonuses paid to employees with the intent that such bonuses would go to support political candidates, Congress tightened the restrictions on corporations as a feature of the Taft-Hartley Act of 1947, which prohibited corporations from making independent expenditures to expressly support or oppose political candidates.  Corporate restrictions on political campaign expenditures had been upheld by the Court several times since 1947, including the fairly recent Bipartisan Campaign Reform Act of 2002, also known as the McCain-Feingold Act.

The ruling is controversial not only because it appeared to pit corporate free speech protections on one side and political corruption and moneyed interests on the other side, but also due to the 5-4 conservative-liberal split among the justices. The five Supreme Court justices typically associated with conservative views (Justices Anthony Kennedy, Samuel Alito, Antonin Scalia, and Clarence Thomas, and Chief Justice John Roberts) sided with Citizens United, essentially arguing that the group’s free speech rights were violated by the FEC ban. Conservatives and libertarians support the decision as a victory for free speech, whereas liberals and progressives contend the decision opens the floodgates for undue corporate political influence. 

For example, liberals and progressive consider the decision a significant victory for the oil and gas industry, banking and financial institutions, and health insurance companies. They also seem worried that corporate political advertising may overpower or drown out citizen voices since corporations now are allowed to spend unlimited amounts of money on independent political advertising and other election communications. 

Corporations were able to contribute to political campaigns in the past so long as they did not exceed federal campaign limits in place. Ironically, the most recent campaign finance legislation, the Bipartisan Campaign Reform Act of 2002, was intended to reduce the influence from labor and corporate political action committees by restricting advertising from these groups in the months immediately prior to a federal election. Now, corporations are not only permitted to spend as much as they want but also able to do so at any time in the political process so long as they do so independently – or without coordination or consultation from candidates.   

In its January 21, 2010 ruling, the Supreme Court upheld portions of prior campaign finance laws requiring that corporations report all independent expenditures and electioneering communications to the Federal Election Commission.  Also upheld were provisions of McCain-Feingold that required political ads to disclose their sponsor. Aspects of the Tillman Act were upheld as direct corporate contributions to candidates remain prohibited as an effort to thwart political corruption. 

Furthermore, corporate ads will be required to include sponsor disclaimers such as “Paid for by Company A.”  However, sponsor disclaimers are informative for voters only when voters recognize the company name. President Obama, in his Sept. 18 weekly radio address, expressed concern over the Supreme Court decision:

“Because of the Supreme Court’s decision earlier this year in the Citizens United case, big corporations – even foreign-controlled ones – are now allowed to spend unlimited amounts of money on American elections. They can buy millions of dollars worth of TV ads – and worst of all, they don’t even have to reveal who’s actually paying for the ads. Instead, a group can hide behind a name like ‘Citizens for a Better Future,’ even if a more accurate name would be ‘Companies for Weaker Oversight.’ These shadow groups are already forming and building war chests of tens of millions of dollars to influence the fall elections.”

The requirement that corporations would be forced to disclose their sponsorship for political ads may be a deterrent for political advertising sponsorship as such involvement in politics could alienate consumer publics or shareholders. Since companies are aware of this danger, the fear, as Pres. Obama identifies, is that ambiguous shadow organizations will be formed to carry out a corporation’s political efforts.

A key facet of the ruling hinges on the independent expenditures aspect of political spending.  Corporations are not allowed to coordinate efforts with political candidates or their campaigns.  Based on the Supreme Court’s view, independent spending, rather than coordinated spending with campaigns, diminishes the likelihood that corporate contributions could corrupt the political process.  Concerned voters can thwart the potential influence of corporate ads by fact-checking the claims made in the ads. While an Internet search for fact-check sites offers citizens a range of options, factcheck.org, politifact.com, and washingtonpost.com/factchecker are three sites that offer information on a wide range of candidates and issues. Additionally, voters can investigate the money trail behind political ads by visiting sites like opensecrets.org, which claims to be a nonpartisan guide to money’s influence on U.S. elections.

To date, evidence of corporate political advertising in the 2010 midterm elections is limited. In fact, some organizations, such as JPMorgan Chase, Goldman Sachs, Dell, IBM, and Microsoft have pledged not to spend treasury money on campaign ads due in part because public opinion is overwhelmingly unfavorable concerning the Supreme Court decision.  Perhaps companies are fearful of a potential backlash or consumer boycott like the one waged against Target late this summer for its $150,000 contribution to a pro-business group MN Forward of Minnesota, where Target’s corporate headquarters are located.  Since there is no federal requirement for companies to disclose when they spend on political advertising, and many companies are able to funnel contributions through political organizations not required to report their donors, tracking corporate spending will be very difficult.  At least three liberal organizations, MoveOn Political Action, Media Matters Action Network and ThinkProgress.org, announced plans to investigate the political money trail.  Voters will need to be hyper-vigilant in their analysis of ad claims, sponsor, and moneyed interests.  In addition to visiting fact check websites and consulting multiple media sources to validate advertising claims, voters should be on the look-out for political adwatches, which are media critiques of political ads.  Many news organizations dissect political advertisements through adwatches in an effort to help inform voters about the accuracy of political advertising.  Since many news organizations post their adwatches online, citizens can look beyond their local media for assistance in understanding the validity of messages contained in this new breed of political ads. Voters beware.