As angry voters flock to primaries in the first major vote since January’s Citizens United Supreme Court decision, the question of how corporate political contributions impact the integrity of our elections simmers in the background. On one front, Harvard Law School’s Lucian Bebchuk and Columbia Law School’s Robert Jackson call upon lawmakers to adopt rules aligning corporate political speech decisions with shareholder interests. On another, Congress faces a decision on the Shareholder Protection Act, which puts a check on the flood of corporate money into electoral campaigns. And Lawrence Lessig warns us about our elected representatives’ dangerous dependence on raising money, and what should be done.
First, some context from yesterday’s Harvard Kennedy School event, “Leadership for Social Change,” featuring former presidential advisor and political analyst David Gergen talking with Arianna Huffington, who was in town promoting her new book, Third World America. Gergen said that many historians now believe our political system began to break down in the 1970s, due to the influence of big money; Huffington added that since then, political lobbyists emerged as co-conspirators. Indeed, the rise of the political consultant marked the beginning of the end—after all, the money to pay all those high-priced advisors, with their media ad-buys, had to come from somewhere. Nowadays, as Brody Mullins reports in today’s Wall Street Journal, conservative and business groups “fueled by newly legal large donations from corporations” plan to spend $300 million on the 2010 campaign, “which would match major labor unions’ and liberal organizations’ plans as described by those groups’ leaders.”
Lucian Bebchuk and Robert Jackson focus on corporate behavior rather than campaign finance in their discussion paper, Corporate Political Speech: Who Decides? “Under existing corporate-law rules, corporate political speech decisions are subject to the same rules as ordinary business decisions,” they write. “Consequently, political speech decisions can be made without input from shareholders, a role for independent directors, or detailed disclosure.” They believe this is wrong, and that lawmakers should design special rules concerning how corporations make these decisions. Such rules would:
- grant shareholders a role in deciding both the amount and target of political spending;
- require that political speech decisions “be overseen by independent directors”; and
- mandate detailed disclosure to shareholders of political spending amounts and beneficiaries, both direct or through intermediaries.
A similar argument undergirds the Shareholder Protection Act, H.R. 4790, which the House Financial Services Committee approved on July 29th. Introduced by Rep. Michael Capuano (D-MA), the measure requires annual majority shareholder approval of political expenditures. H.R. 4790 now awaits a floor vote, according to UMass Amherst legal scholar Jennifer Taub.
Voter discontent is so high it’s hard to tell what impact massive political spending will have on the final tallies. We do, however, agree with Harvard Law professor Lawrence Lessig’s argument that Citizens United has a corrosive impact on public trust because it fosters “institutional corruption”. Lessig distinguishes institutional corruption from individual vice (“bad souls acting badly”) by defining it as “an influence, financial or otherwise, within an economy of influence, that weakens the effectiveness of an institution, especially by weakening public trust in that institution.” He’s referring to the current system of funding Congressional campaigns, but the problem goes beyond that. Institutional corruption, he says, “has likely done more damage to the United States in the last decade than all of the quid pro quo corruption in American history combined.” The solution? Change our current system of campaign finance, with its “fundamental gap between voters and contributors”.
Whatever results come of today’s primaries, the gaps between company and shareholder interests, between voters and contributors, remain wider than ever. We should act on ideas such as these that propose to shrink the gaps, while restoring integrity to politics and public life.