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Court white paper


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Court white paper

  1. 1. AMERICAN COMPANIES UNLIMITED What Citizens United v. Federal Election Commission Means for Companies’ Political Campaign Spending WHITE PAPERJUNE 2011
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  3. 3. Introduction With President Barack Obama now in re-election mode and Republican presidential hopefuls visiting key primary states, the 2012 presidential campaign is under way. Every day, there seem to be even more Republican and independent potential contenders thinking about whether they want to take a leap into presidential politics or sit this cycle out. As the race begins to heat up, candidates will need to raise a record number of campaign dollars. Presidential candidates, as well as candidates running for other federal and state offices, will find new challenges because of the recent Supreme Court ruling on Citizens United v. Federal Election Commission. The dramatic court ruling resulted in a decision that allows, for the first time in more than 60 years, corporations and unions to give unlimited amounts of money from their treasuries for political advertisements and broadcasting—even to companies owned by foreign corporations. In fact, corporations and unions are equated with individuals. This means they can spend unlimited amounts of money on supporting or even opposing a specific candidate for public office up to the day of the primary or general election, which was not the case in any former presidential race. Before any corporation or union decides to invest large amounts of money in any specific candidate, it will need to know more about the challenges, as well as the opportunities. Companies will need to carefully consider many aspects of this decision, such as: • The ruling is a radical shift in policy that will affect the cost and access of media buys for corporations, unions and candidates during primary and general races. • Opposition to the ruling has resulted in companion legislation introduced in both the U.S. House of Representatives and the U.S. Senate to combat the impact of the decision. • National polls show that the concept of a foreign-owned company interfering with U.S. elections makes Democratic, Republican and non-party-affiliated consumers uncomfortable. • The risks involved for any corporation or union to be viewed as partisan by its customers, consumers or members might outweigh any benefits. • Some corporations and unions will take the risk; therefore, they will need to evaluate what’s best for them to stay competitive. Corporations and unions will need to assess their brand, where and when they could be involved with a candidate or campaign, and how it will affect their business. Euro RSCG Worldwide commissioned political consultant Jennifer Ryan Safsel of Sagamore Strategies to write this white paper to help companies understand their options and the facts surrounding the Citizens United v. Federal Election Commission ruling. Safsel works with nonprofits, private corporations, campaigns and small businesses on political, grassroots, strategy and public affairs projects. Read on for explanations of the major arguments of the ruling, reactions from U.S. senators and congressmen, key points that will affect businesses and possible political implications. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 3;Thispage(fromtop);;
  4. 4. Executive Summary RULING OVERVIEW On Jan. 21, 2010, the U.S. Supreme Court case of Citizens United v. Federal Election Commission (docket No. 08-205) rejected a ban on corporate spending in federal elections in the final 60 days of a general election or 30 days of a primary election cycle. This ruling overruled two precedents: Austin v. Michigan Chamber of Commerce, a 1990 decision that upheld restrictions on corporate spending to support or oppose political candidates, and McConnell v. Federal Election Commission, a 2003 ruling that upheld part of the Bipartisan Campaign Reform Act of 2002 (BCRA) that restricted spending by corporations and unions. Corporations have been banned since 1947 from using their profit to endorse or oppose candidates for elective office, a restriction that the Court now ruled unconstitutional. The divided Supreme Court ruling, with a vote of 5-4, was a sharp turn from decades of finance reform legislation put in place to control the amount of money corporations could spend on broadcasting political advertisements and documentaries in support of or against an individual candidate. It was viewed by some as a step forward in protecting First Amendment principles: the right to engage the freedom of speech, particularly political speech, and the right of free association. As a result, the decision removes limits on independent expenditures that are not coordinated with candidates’ campaigns; therefore, corporations and not-for-profits can spend any amount of money they want to run ads, and there’s no limit as to 4 WHITE PAPER: AMERICAN COMPANIES UNLIMITED
  5. 5. when those ads can be run. Corporations and nonprofits are, however, still limited in what they can directly donate to a candidate’s campaign committee. The ruling might affect state as well as federal campaigns. LEAD ARGUMENTS Justice Anthony Kennedy wrote the majority decision. As his argument to overturn the current ruling, he invoked the First Amendment right of freedom of speech that confirms the freedom to think for ourselves. He said that the marketplace of ideas guaranteed by the Constitution includes corporations, which, after all, represent a significant segment of society and of our economic life. He emphasized: “When Government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought. This is unlawful. The First Amendment confirms the freedom to think for ourselves.” Justice John Paul Stevens, who wrote part of the decision for the case that was overturned (the BCRA, also known as the McCain-Feingold Act), called the five- justice majority’s decision a “radical departure from what had been settled First Amendment law.” In his dissent, Stevens warned that “[t]he Court’s ruling threatens to undermine the integrity of elected institutions across the Nation.…In the context of election to public office, the distinction between corporate and human speakers is significant. Although they make enormous contributions to our society, corporations are not actually members of it. They cannot vote or run for office. Because they may be managed and controlled by nonresidents, their interests may conflict in fundamental respects with the interests of eligible voters.… It might also be added that corporations have no consciences, no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their ‘personhood’ often serves as a useful legal fiction. But they are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.” In concurring with Kennedy’s written argument, Justice Antonin Scalia wrote: “The authorized spokesman of a corporation is a human being, who speaks on behalf of the human beings who have formed that association—just as the spokesman of an unincorporated association speaks on behalf of its members. The power to publish thoughts, no less than the power to speak thoughts, belongs only to human beings, but the dissent sees no problem with a corporation’s enjoying the freedom of the press.” In Citizens United, the Court ended the suppression of corporate and union speech. Many have predicted this will have dire consequences. Says Sen. Mitch McConnell (R-KY): “What they fail to mention is that 26 states already allow corporate and union speech, something that has had no discernable adverse impact. Any proponent of free speech should applaud this decision. Citizens United is and will be a First Amendment triumph of enduring significance.” WHITE PAPER: AMERICAN COMPANIES UNLIMITED 5
  6. 6. Points of the Ruling •The ruling strikes down a 63-year-old ban on corporations and labor unions using money from their corporate treasuries to produce and air campaign ads in races for Congress and the White House. •Under the ruling, corporations and unions can spend unlimited amounts of money to air campaign ads 30 days before a primary election and 60 days before a general election. •The ruling does keep in place a ban on direct coordination with the candidates and/or their campaign committees. This means the corporations and unions must act independently from the candidates’ election committees and cannot strategize on an ad or its content. •The decision does not address companies or unions contributing directly to candidates. Therefore, corporations and unions will still need political action committees (PACs) to donate directly to candidates. PACs are still limited to $5,000 donations in a primary and $5,000 in a general campaign cycle, a total of $10,000 per candidate, per election. Not all candidates for U.S. Senate and Congress take PAC money, however. •Foreign-owned corporations can air advertisements or documentaries that support or oppose a candidate. Not in 100 years has this been allowed. 6 WHITE PAPER: AMERICAN COMPANIES UNLIMITED
  7. 7. Case Background The nonprofit corporation Citizens United (Citizens), a 501(c)(4) tax-exempt entity, produced the 2008 documentary Hillary: The Movie, about Hillary Clinton, to coincide with the presidential election. Citizens planned the releases of and advertising for the movie around important 2008 events—state presidential primaries and caucuses, the Democratic National Convention and the general presidential election—to affect the races. The documentary critically depicted Clinton’s record as first lady, U.S. senator and presidential candidate and expressed the nonprofit’s opinions about whether she was qualified to be president. Citizens knew the movie would be perceived as “electioneering communications” within 30 days of a primary election or 60 days of a general election. Therefore, knowing it would conflict with the BCRA (the McCain-Feingold Act), Citizens sought an injunction to block the Federal Election Commission (FEC) from enforcing sections 201, 203 and 311 of the law on the grounds that they violated the First Amendment to the U.S. Constitution. According to Section 203, corporations and unions are prohibited from airing “broadcast, cable or satellite” communications made within 30 days of a primary election or 60 days of a general election. Disclosure of electioneering communications restricts nonprofit corporations, for-profit corporations and labor unions from funding electioneering communications from their general funds except under certain specific circumstances—for example, candidate forums. They are still subject to regulations adopted by the commission. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 7
  8. 8. If a person gives a total of $10,000 or more a year for the production and airing of electioneering communications, he or she is required to disclose the full amount with the FEC within 48 hours. The disclosure must include the names and addresses of person(s) who have contributed more than $1,000 to accounts paying for the communication—although corporations and their donors should be aware that they more likely will have to give their name, address and employer information when contributing $200 or more. Section 311, which contains a disclaimer provision for electioneering communications, says that an entity responsible for the communications, if not authorized by the candidate or the candidate’s political committee, must contain a statement that the organization “is responsible for the content of this advertising.” BCRA’s Section 403 sets rules for constitutional challenges to its provisions. A three-judge panel of the U.S. District Court for the District of Columbia must handle such claims. Appeals from this court go directly to the U.S. Supreme Court. The district court refused to grant Citizens’ request in Citizens United v. FEC. The court noted that the Supreme Court upheld BCRA’s Section 203 in McConnell v. FEC and rejected the argument that the funding of electioneering communications “constituting express advocacy or its functional equivalent” is protected under the Constitution’s First Amendment. “As applied” challenges— specific applications of the law to certain communications—are a different matter. In FEC v. Wis. Right to Life, Inc., the high court held that advertisements only constitute express advocacy or its functional equivalent if they are “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” The district court held that Citizens’ movie was the “functional equivalent of express advocacy” and ruled that its critique of Clinton’s presidential character, candidacy and qualifications was intended to convince voters that she should not be elected. 8 WHITE PAPER: AMERICAN COMPANIES UNLIMITED
  9. 9. “I am disappointed by the decision of the Supreme Court and the lifting of the limits on corporate and union contributions. However, it appears that key aspects of the Bipartisan Campaign Reform Act (BCRA), including the ban on soft money contributions, remain intact.” —U.S. Sen. John McCain (R-AZ), co-author and co-sponsor of the Bipartisan Campaign Reform Act of 2002 (Public Law 170-155), also known as the McCain-Feingold Act SEN. JOHN MCCAIN’S VIEW WHITE PAPER: AMERICAN COMPANIES UNLIMITED 9
  10. 10. “It is important to note that the decision does not affect McCain-Feingold’s soft money ban, which will continue to prevent corporate contributions to the political parties from corrupting the political process. But this decision was a terrible mistake. Presented with a relatively narrow legal issue, the Supreme Court chose to roll back laws that have limited the role of corporate money in federal elections since Teddy Roosevelt was president. Ignoring important principles of judicial restraint and respect for precedent, the Court has given corporate money a breathtaking new role in federal campaigns. Just six years ago, the Court said that the prohibition on corporations and unions dipping into their treasuries to influence campaigns was ‘firmly embedded in our law.’ Yet this Court has just upended that prohibition and a century’s worth of campaign finance law designed to stem corruption in government. The American people will pay dearly for this decision when, more than ever, their voices are drowned out by corporate spending in our federal elections. In the coming weeks, I will work with my colleagues to pass legislation restoring as many of the critical restraints on corporate control of our elections as possible.” —Former U.S. Sen. Russ Feingold (D-WI), co-author and co-sponsor of the Bipartisan Campaign Reform Act of 2002 (Public Law 170-155), also known as the McCain-Feingold Act FORMER SEN. RUSS FEINGOLD’S VIEW CourtesyRussFeingoldpressoffice 10 WHITE PAPER: AMERICAN COMPANIES UNLIMITED
  11. 11. Although the movie about Hillary Clinton might have been subject to BCRA Section 203, the FEC conceded that advertising for the movie was not. However, Citizens objected to disclosure and disclaimer requirements under BCRA, claiming they did not apply because they weren’t “express advocacy or the functional equivalent” under Wis. Right to Life. The district court held that McConnell and Wis. Right to Life did not apply that standard to the disclosure and disclaimer requirements, provisions to which the Supreme Court had shown some approval in the past. Citizens appealed the case to the U.S. Supreme Court. After hearing arguments on the case in March 2009, the Supreme Court did not render an opinion. Instead, the case was rescheduled for reargument on whether the Court should reverse prior holdings sanctioning laws that restrict how corporations can make political contributions. It was phrased this way: For the proper disposition of this case, should the Court overrule either or both Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), and the part of McConnell v. Federal Election Comm’n, 540 U.S. 93 (2003), which addresses the facial validity of Section 203 of the Bipartisan Campaign Reform Act of 2002, 2 U.S.C. §441b? The Austin opinion held that a Michigan law that prohibited nonmedia corporations from using general funds to make political contributions, requiring such contributions to be made through “separate segregated funds” set up for political purposes, was constitutional. As noted earlier, McConnell held that Section 203 in BCRA is also constitutional. The ruling overruled these precedents: Austin is overruled, and thus provides no basis for allowing the Government to limit corporate independent expenditures. Hence, §441b’s restrictions on such expenditures are invalid and cannot be applied to Hillary. Given this conclusion, the part of McConnell that upheld BCRA §203’s extension of §441b’s restrictions on independent corporate expenditures is also overruled. Oral argument on these issues was held on Sept. 9, 2009. This was the first case heard by Associate Justice Sonia Sotomayor, who replaced Associate Justice David Souter. The 5-4 ruling was on Jan. 21, 2010. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 11
  12. 12. Political and Policy Implications POLITICAL OUTCOMES Given that two of Bush’s appointments struck down any ban on corporate spending, some people have suggested that this Supreme Court outcome is a direct result of the Bush administration’s Supreme Court justice nominations.The Supreme Court’s ruling seven years ago to uphold the McCain-Feingold legislation was due to the fact that Justice Sandra Day O’Connor supported the bill’s constitutionality. Since she has stepped down and was replaced by Justice Samuel Alito, and with the appointment of the new Chief Justice, John Roberts, the makeup of the court has shifted.The change in the Supreme Court and the power shift it causes might be used by some as a possible election issue; some candidates could highlight the ruling in advertisements and label their opponents to be for big business and against the average American. In addition, given the public’s dislike of this ruling, some candidates might use it as a clear example of the importance of the 2012 presidential election, highlighting the power of the president to choose Supreme Court nominees. 12 WHITE PAPER: AMERICAN COMPANIES UNLIMITED CollectionoftheSupremeCourtoftheU.S.
  13. 13. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 13 CITIZENS UNITED’S IMPACT ON THE 2010 MIDTERMS The Citizens United v. Federal Election Commission decision resulted in record amounts of money spent in the 2010 midterm elections. According to estimates by the Center for Responsive Politics, a nonpartisan organization that tracks money in politics, the total amount of money spent in the midterm elections was about $4 billion. That’s up from $2.85 billion in 2006. During those midterm elections, 527 organizations had the option, by filing additional paperwork, to solicit unlimited contributions from individuals and corporations to spend on independent political efforts. These 527s are required to disclose their donors. Their ability to gather and then spend unlimited amounts of money in the midterm elections would not have been allowed in previous elections. The court decision also allows 501(c)(6)s—groups such as trade organizations and business leagues, which are funded by payments of member corporations—to not be required to disclose their donors. Those groups capitalized on the new ability to spend on independent expenditure campaigns. The U.S. Chamber of Commerce, for instance, spent $32.9 million from its corporate-funded treasury on independent political communications. That group has a deep roster of corporate members, but it did not disclose contributors that provided the funding for its political advertising.
  14. 14. 14 WHITE PAPER: AMERICAN COMPANIES UNLIMITED It is this lack of full disclosure that concerns many policymakers and citizen watchdog groups. Many feel that money spent in elections should be linked with advertisements or candidates. According to a Washington Post–ABC News poll of 1,004 people randomly surveyed, 65 percent “strongly” oppose the ruling.There is little difference by party line: Eighty- five percent of Democrats, 76 percent of Republicans and 81 percent of independents oppose the ruling. Some corporations might choose to set up PACs within their company, while others will decide not to get involved in elections at all. But corporations with specific legislative needs that affect their bottom line are expected to be even more proactive in the upcoming 2012 election cycle. According to the Sunlight Foundation, 40 percent of outside money in the 2010 midterms came from money that was made possible by the Supreme Court ruling.The ability for, say, a former longtime party leader to organize, raise unlimited amounts of money and contribute large amounts to oppose a candidate all without disclosing donors would not have been allowed before the Supreme Court ruling.These types of unlimited and undisclosed contributions can very well—and did in some instances— make or break a race. Russ Feingold, for instance, a longtime proponent of campaign finance reform and the co-sponsor and co-author of the Bipartisan Campaign Reform Act of 2002 (Public Law 170-155), also known as the McCain-Feingold Act, lost his race to millionaire plastics CEO Ron Johnson, who outspent him four to one with help from outside organizations. Corporations donated to both Republicans and Democrats. But some did experience consumer backlash. Last summer,Target Corp. was one of the first companies to test the 2010 midterm election political waters. It donated campaign contributions to MN Forward, a newly formed Chamber of Commerce–affiliated group, which in turn used the campaign funds to back Minnesota Republican gubernatorial candidate Tom Emmer. Target found itself boycotted for the candidate’s anti-gay-marriage stand and his ties to anti-gay groups.Target made a public apology. This situation clearly illustrates the difficulties corporations face when their consumers discover that their money is going for something other than what they expect it to.
  15. 15. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 15 CourtesyChrisVanHollenpressoffice IMPLICATIONS FOR REPUBLICANS Republicans who tend to have strong ties with corporation and business leaders will benefit greatly in the upcoming 2012 elections from this ruling. Conservative Republicans, however, might benefit most in Republican primaries. The ruling still upholds that corporations, foreign nationals, government contractors or labor organization treasury funds cannot give directly to a candidate or coordinate with a campaign committee’s strategy and messaging. But in this age of technology, social media and fast-paced coverage, the reality is that it doesn’t take much for a company to copy or mirror a campaign. IMPLICATIONS FOR DEMOCRATS Democrats, who usually have more union support, will also benefit. Most Democrats, however, believe in general that they will be at a disadvantage because big corporations will pour large amounts of money into expensive media buys, therefore driving up the cost of prime media buys and drowning out their policy and campaign messages, making it difficult to get their message out to voters. PROPOSED LEGISLATION On April 29, 2010, U.S. Sens. Charles E. Schumer (D-NY), Russ Feingold (D-WI), Ron Wyden (D-OR), Evan Bayh (D-IN) and Al Franken (D-MN) formally announced their Senate bill to combat what they believe are dangerous impacts of the Supreme Court’s decision to allow corporations and other special interests to spend unlimited sums to influence elections.The legislation (S.3295) is the Democracy Is Strengthened by Casting Light On Spending in Elections Act, or the DISCLOSE Act. A bipartisan-supported companion version of the bill, with the same name (HR 5175), was drafted in the House of Representatives by Reps. Chris Van Hollen (D- MD), Mike Castle (R-DE), Walter Jones (R-NC) and Robert Brady (D-PA).
  16. 16. “At a time when the public’s fears about the influence of special interests were already high, the Court’s decision stacks the deck against the average American even more. Our bill will follow the money. In cases where corporations try to mask their activities through shadow groups, we drill down so that ultimate funder of the expenditure is disclosed. If we don’t act quickly to confront this ruling, we will have let the Supreme Court predetermine the outcome of next November’s elections. It won’t be Republicans or Democrats; it will be Corporate America and other special interests.” —U.S. Sen. Charles Schumer (D-NY), co-sponsor of the DISCLOSE Act SEN. CHARLES SCHUMER’S VIEW 16 WHITE PAPER: AMERICAN COMPANIES UNLIMITED
  17. 17. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 17 MinimalistPhotography The legislation sought to prevent foreign-owned corporations and government contractors from spending money on U.S. elections. Schumer, for example, has cited the governments of Venezuela, which owns the oil company Citgo, and China, which owns part of several large corporations, as the types of companies he feels should not be able to spend unlimited amounts of money on advertisements to affect U.S. elections. According to Section 102 of the DISCLOSE Act, to close the loophole, the legislation extends the existing prohibition on contributions and expenditures by foreign nationals to include domestic corporations under the following circumstances: 1. If a foreign national owns 20 percent or more of voting shares in the corporation, which is modeled after the control test in many states, including Delaware; 2. If a majority of the board of directors are foreign nationals; 3. If one or more foreign nationals have the power to direct, dictate or control the decision-making of the U.S. subsidiary; or 4. If one or more foreign nationals have the power to direct, dictate or control the activities with respect to federal, state or local elections. The concept of a foreign-owned company interfering with U.S. elections makes people on both sides of the aisle uncomfortable. In fact, a Washington Post-ABC News poll indicated that 72 percent of people polled, including Democrats, Republicans and non- party-affiliated voters, would support legislation to curb the Supreme Court ruling. And 79 percent of respondents disapproved of the ruling, according to a nationwide poll by Quinnipiac. In addition, the DISCLOSE Act would ban government contractors and companies that have received government assistance from making political expenditures—and also require corporations, unions and other organizations that make political expenditures to disclose their donors and stand by their ads. It includes strict reporting timelines and requires disclaimers by senior leaders of corporations, unions and organizations to identify themselves with their political ads, similar to the disclaimers required by candidates. Said Sen. Wyden: “I wish Congress didn’t have to take action to ensure that a citizen’s voice doesn’t get buried by new and larger mountains of corporate cash; but that is what our legislation will do. If the Supreme Court wants to treat corporations as individuals, then we will hold those entities to the same standards of accountability that we do individuals, which means requiring that CEOs, labor leaders and even political consultants stand by their ads.”
  18. 18. “the disclosure of campaign-donor information is essential to our democracy. The absence of transparency will enable special interest groups to bankroll campaign initiatives while operating under a veil of anonymity. I will continue to press for greater donor disclosure in the courts, and in Congress, in order to bring in the much-needed sunlight. We have been unable to enact enhanced disclosure requirements through Congress. However, we have found that the requirements in existing law have been significantly loosened by the FEC’s interpretation. The lawsuit I am filing…seeks to restore the statutory requirement that provides greater disclosure of the donors who provide funding for electioneering communications. If this standard had been adhered to, much of the more than $135 million in secret contributions that funded expenditures in the 2010 congressional races would have been disclosed to the public.” —U.S. Rep. Chris Van Hollen (D-MD), co-sponsor of the DISCLOSE Act REP. CHRIS VAN HOLLEN’S VIEW 18 WHITE PAPER: AMERICAN COMPANIES UNLIMITED Wikimediacommons
  19. 19. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 19 On the House side, Van Hollen has used AIG or a big Wall Street firm or other firms that received Troubled Asset Relief Program (TARP) money as an example of types of conflicting interest. His point is that if a corporation got federal assistance to be bailed out, then that company should not be able to spend unlimited amounts of money because those are no longer corporate funds but federal taxpayers’ money until the company repays them to the taxpayers. The legislation passed the House but was one vote short in the Senate; therefore, it did not get passed in the 111th Congress. In the new 112th Congress, U.S. Sen. Harry Reid and 11 co-sponsors have introduced Senate bill S.9, the Political Reform and Gridlock Elimination Act, which includes the DISCLOSE legislation provisions. The bill has been referred to the U.S. Senate Committee on Rules and Administration. Legislators would like to pass S.9 legislation before the 2012 presidential election cycle. To get it passed, they will have to make it a “voting issue” and tap into the public’s dislike of the Supreme Court’s ruling, which is perceived to favor the voices of business over theirs. The DISCLOSE Act has not been able to be reintroduced in the House. The new Congress is not expected to act on the legislation, but the public does not seem happy with the idea of advertisements and political messaging done without their knowing who is behind the messaging. According to a New York Times/CBS poll, 92 percent of the people polled believe candidates should be legally required to disclose how much money they raised and where it came from. On April 21, 2011, Rep. Van Hollen filed a lawsuit against the FEC regulations that have undermined the campaign finance disclosure requirements established in the Bipartisan Campaign Finance Act of 2002 (McCain-Feingold) to require groups that pay for so-called electioneering communications ads to disclose the donors who provided funds for them. These disclosure requirements apply to nonprofit corporations and other groups that conduct outside spending campaigns that influence federal elections. According to a statement from Van Hollen’s office, the law requires the disclosure of the identity and contribution amounts of donors who fund electioneering communications. The FEC, in its regulation implementing the law, requires disclosure of donors only when the donation “was made for the purpose of furthering electioneering communications” by the spender. This restriction on contribution disclosure is not found in the statute. “Congress did not include a ‘state of mind’ or ‘purpose’ condition tied to ‘furthering’ electioneering communications in the relevant McCain-Feingold disclosure provision,” said Van Hollen. “The FEC, by adding this requirement in its regulations, has contravened the plain language and meaning of the statute and gutted the contribution disclosure requirements for ‘electioneering communications.’” In addition, the White House has noted that President Obama is considering an executive order requiring federal contractors to disclose political donations, even to nonprofit organizations such as the U.S. Chamber of Commerce. A presidential order would take effect immediately and would affect fundraising for the 2012 elections.
  20. 20. “The Court ruled unconstitutional sections of federal law that barred corporations and unions from spending their own money to express their views about issues and candidates. This was the right decision because democracy depends upon free speech, not just for some but for all. As Justice Kennedy, writing for the majority, concluded: ‘Under our law and our tradition it seems stranger than fiction for our Government to make political speech a crime.’” —U.S. Sen. Mitch McConnell (R-KY), Senate Republican leader SEN. MITCH MCCONNELL’S VIEW 20 WHITE PAPER: AMERICAN COMPANIES UNLIMITED Wikimediacommons
  21. 21. WHITE PAPER: AMERICAN COMPANIES UNLIMITED 21 FEDERAL OVERSIGHT Currently, the Federal Elections Commission (FEC) tracks campaign finance donations and spending. As a result of the Supreme Court’s decision, the Securities and Exchange Commission (SEC) will also be involved in tracking such expenditures when made by public corporations. Under SEC rules, corporations generally must disclose “major events” to shareholders. According to section 212 of the proposed DISCLOSE legislation, if a covered organization makes a disbursement for campaign-related activity, the CEO must file a statement with the FEC certifying that the expenditure was not made in coordination with a candidate, that funds designated by the donor that aren’t to be used for campaign-related activity have not been used for any campaign-related activity, and that the spending has been fully disclosed and made in compliance with the law.
  22. 22. 22 WHITE PAPER: AMERICAN COMPANIES UNLIMITED Conclusion The Supreme Court has ruled to allow corporations, even those that are owned by foreign companies, to spend unlimited amounts of money on airing commercials and documentaries in support of or opposition to a political candidate. The ability to air commercials right up to the day of an election will change how candidates and their campaigns can and need to respond to attack advertisements in print, broadcast and online, as well as get-out-the-vote strategies. There is no doubt that there will be more money spent than ever by corporations and nonprofits in 2012 presidential and congressional primary and general election advertisements and message campaigns. Corporations should plan ahead and know how best to get their message or cause heard during these important elections. Many corporations should be tracking key races for U.S. Congress and Senate and state races in order to affect primary and general elections. As they develop their communications outreach strategies, they must be mindful of their tactics so that they don’t adversely affect their business or create public backlash against their corporation. In addition, corporations must know the election law and work independently from candidates’ committees.
  23. 23. This white paper is the latest thought leadership pursuit by Euro RSCG Worldwide over the past decade (and more) to address issues of national importance in the United States and how they affect consumers and brands. In August 2001, Euro RSCG wanted to find out what exactly the “American way of life” was at the start of a new century, so we asked a random sample of 500 Americans online, aged 21 to 54, their feelings about the United States, among other topics. The white paper based on the data, called “American Audit,” says that in order to understand America, “one must first understand its citizens—and the dramatic shifts that are helping to reshape the national culture.” It features not only analysis but also implications for marketers. Then in April 2010, Euro RSCG Worldwide PR and Euro RSCG Life, the public relations arm and the health-focused communications network of Euro RSCG, commissioned two surveys to try to gauge the mood of Americans on such hot-button issues as healthcare, the economy, education, jobs and the political direction of the country. One survey questioned people nationwide; the other polled residents of the bellwether state of Connecticut (which ultimately saw a Democratic sweep in the 2010 midterm elections, the opposite of the national trend, and thus worthy of our close study). The resulting “U.S. Mind and Mood Report” shows a new normal: fear and anxiety replacing confidence and hope. Optimism was out and pessimism was in. To see the data and our implications, please go to and look under “Brain Food.” For “American Companies Unlimited,” Euro RSCG Worldwide wanted to help companies understand their options and the facts about political- and issues-related advertising in the face of a landmark Supreme Court decision and new legislation. Companies large and small will need to be familiar with the rules before the 2012 elections. Through such research and analysis, we are addressing topics that are not only imperative to our clients and our own growth but are also driving news about the future. The studies are places to listen and learn. They’re propelling momentum for companies, brands and causes. They’re satisfying the new value exchange, where consumers want brands that listen, converse and enable them. Please join us in the conversation. CEO Euro RSCG Worldwide PR, North America 200 Madison Avenue, 2nd floor New York, NY 10016 P: 212-367-6811 E: T: @mariansalzman Marian Salzman