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Matthew Perry Pipes
Professor Salvatore Russo
POL 361 Constitutional Law -Civil Liberties
November 12th
, 2014
Capstone Research Paper - Corporate Money in Politics
There are two different forms of money in politics, money donated, and money spent.
The word “contributions” is used to describe the money donated to campaigns and independent
groups. The word “expenditures” is used to describe the money spent by campaigns and
independent groups. To sway public opinion, campaigns and independent groups engage in
political speech, which costs money to spread across the entire country, the most expensive of
which is buying airtime for endless television ads (Willis). These groups have very aggressive
fundraising tactics in order to receive such large amounts of money. This sets up an inherently
quid pro quo scenario of corruption in which campaign donations, and a myriad of other electoral
favors, are made in the hope of a desired outcome favorable to those donating (Lott). Most
contributors donate expecting a desired outcome. When the contributor is a corporation, what
they expect to see is free all morality and patriotism, which are abandoned in the pursuit of
profits because publicly held corporations have a fiduciary responsibility to their shareholders to
maximize profits. That means they are legally bound to do what they think is in the best interest
of the company. Sometimes, that thinking leads them to decisions that are not in the public
interest, if it will hurt the company.
Why corporations donate to politicians is a long process, the reaction of the business
community to the victories of public interest groups during the 1960’s and 1970’s was a critical
moment (Hacker). Car manufacturers were being held accountable for selling cars that were

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unsafe after Ralph Nader published his book documenting their negligence, “Unsafe At Any
Speed” in 1965 (Teahen). In 1969, the Cuyahoga River was so polluted that it caught on fire,
and Lake Erie had been polluted to the point it was described as dead by Time Magazine
(Selzman). Some of the nation’s waterways were so polluted that simple contact with the water
was cause for medical treatment (Selzman). All of these incidents lead to the creation of the
Clean Water Act which regulated what businesses could put into the nations waterways
(Selzman). Employers were being held accountable for unsafe working conditions, and were
being forced to pay for safety upgrades, and laws like the Federal Water Pollution Control Act
and the Consumer Bill of Rights were beginning to hurt corporations (Hacker). In the eyes of the
polluter, the person selling unsafe vehicles or the the manufacturer of children’s toys with lead
paint, the new regulations were cutting into profits in a way that had previously not happened.
In the period of the late sixties and early seventies the federal government greatly
expanded its regulatory infrastructure in ways it previously had not (Hacker). In reaction to this
expansion of federal regulatory power, corporate lawyer and future Supreme Court Justice Lewis
Powell wrote a letter in 1971 to the Chamber of Commerce which is referred to as the “Powell
Memorandum”. In the memo, Lewis Powell expounds on conservative echo chamber statements
of ideology that the fundamentals of the American capitalist system are under attack by public
interest groups and Communists, like those mentioned above. In his memo to the Chamber of
Commerce, he says;
“Strength lies in organization, in careful long-range planning and implementation,
in consistency of action over an indefinite period of years, in the scale of
financing available only through joint effort, and in the political power available
through united action and national organization.” (Powell)

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To accomplish the goals stated above, Lewis Powell explains that the Chamber of
Commerce must become the public and governmental affairs division of corporate America. To
achieve this, the Chamber must employ academics and scholars, lawyers, and media savvy
individuals to publicly defend the interests of corporations (Powell). Lewis Powell identifies the
courts as an area that corporations have underperformed in. He correctly identifies Supreme
Court justices as being, “activist minded,” and implores corporate America to play that game as
well (Powell). Richard Nixon later appointment Lewis Powell, a conservative corporate activist,
to the Supreme Court of the United States in 1972. The “Powell Memorandum” was not publicly
released until after he had been confirmed to the Supreme Court. The Powell Memo was first
reported by Jack Anderson to moderate public interest, but has become more commonly known
overtime, particularly to the opponents of corporations.
Justice Powell would later go on to write the majority ruling in Bellotti in 1978 which
equated political donations by corporations as protected political speech of regular citizens
(Torres-Spelliscy). Observing the government using its oversight and regulatory power more and
more, corporations saw persuading the lawmakers themselves to ease up on oversight as the best
method to ease the restrictions. Alternatively, they could seek to change the lawmaker all
together with one more favorable to their interests as well. In order to achieve the end of winning
over the lawmakers, corporations wanted to donate money to their re-election/election
campaigns. Due to the skyrocketing costs of campaigns, particularly because of television
advertising, those campaigns were desperate for the money. Some obstacles were in the way of
corporations winning over lawmakers, the biggest being campaign finance laws that restricted
donations to political campaigns. The Supreme Court ended up being the entity to relieve the
restrictions of campaign finance laws. Corporate lawyers began an attempt to expand on the

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definition of the legal doctrine known as corporate personhood. The Court began to decide cases
more favorably for corporations. Two of the more preeminent examples are Buckley v. Valeo,
and Bellotti. The tide that began in those cases did not stop, but continued through to today with
decisions in Citizens United v. FEC, and McCutcheon v. FEC, which have served to advance the
goals of corporations beyond the wildest dreams of Lewis Powell in 1971.
Corporate personhood was the perfect legal vehicle to ram through the campaign finance
laws. It has its roots in one of the authors of the Fourteenth Amendment, Senator Roscoe
Conkling. In 1882 Conkling argued in front of the Court during San Mateo County v. Southern
Pacific Railroad that the protections in the Fourteenth Amendment’s Equal Protection Clause
could be extended beyond “natural persons” to corporations as well. The Equal Protection Clause
of the Fourteenth Amendment stated that states could not, “deny to any person within its
jurisdiction the equal protection of the laws.” If those protections extend beyond natural citizens
then the question is do they extend all the way to corporations (Torres-Spelliscy). In 1886, before
hearing any arguments in Santa Clara County v. Southern Pacific Railroad, it was declared by
Chief Justice Waite:
“The Court does not wish to hear argument on the question whether the provision
in the Fourteenth Amendment to the Constitution which forbids a state to deny
any person within its jurisdiction the equal protection of the laws applies to these
corporations. We are all of opinion that it does” (Torres-Spelliscy).
The opinion of the court was unanimous, and the precedent of corporate personhood was
set in American law. Corporations could now have some rights guaranteed to persons, the only
question was, which rights?
Corporate personhood has very legitimate purposes, such as the right to sue and be sued.
The car manufacturers mentioned earlier were sued for their actions like any other person could

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be sued for their own actions. Corporations can own property, like their headquarters building,
without the property having to be in the name of a single person. Instead, the property can be
held in the name of the corporation. Corporations can enter into contracts and be held to those
contracts like everyday people as well. Some things are absurd and no one would think that
corporate personhood would apply to, such as the right to marry. No one can marry a
corporation. Corporations cannot parent a child or be considered next of kin. A corporation
cannot come visit you in the hospital. Corporations also cannot vote (Torres-Spelliscy).
However, the Court has ruled that they can donate money to politicians; the same politicians that
are setting policy that directly affects those entities. If you are former Supreme Court Justices
Powell, Burger, Blackmun, Stevens, or Stewart, that is quite all right to you.
In Bellotti, it was ruled that corporations have the protected political right of free speech,
as guaranteed under the First Amendment (Torres-Spelliscy) (Wood). Justice Powell, being the
author of the majority opinion, wrote in Bellotti;
“If the speakers here were not corporations, no one would suggest that the State
could silence their proposed speech. It is the type of speech indispensable to
decision making in a democracy, and this is no less true because the speech comes
from a corporation rather than an individual. The inherent worth of the speech in
terms of its capacity for informing the public does not depend upon the identity of
its source, whether corporation, association, union, or individual.” (Harvard Law
Review)
In plain terms, Justice Powell was saying that political speech is indispensable to the
election process. He adds, though, that the source of that speech is unimportant. Corporations
have a duty to make profits for their shareholders though, so moral issues, issues of the collective
good, or concepts of fairness do not factor into their electoral decision making like a normal
person would. Considering that any corporate decision making would be free of morality and

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patriotism, and completely in the corporations own self-interest, it is imperative that we know
which political speech is coming from them.
Some Supreme Court Justices have expressed their concern for this precedent of giving
corporations political speech rights. Justices Hugo Black and William Douglas dissented together
in 1949 in Wheeling Steel Corp. stating that the Fourteenth Amendment was intended to protect
the human rights of the former slaves who had recently been freed, and was never intended to
extend so far as to allow corporations to donate money politically. This is in contradiction to
claims made by the former U.S. Senator Roscoe Conkling, who participated on the committee
that drafted the Fourteenth Amendment. He claims it was intended for the protections contained
inside it to extend to corporations. The allegation has been made by historian Howard Jay
Graham that his assertion was a lie (Torres-Spelliscy). Justice Rehnquist, while dissenting to
Bellotti, warned that corporations “pose special dangers in the political Sphere” (Torres-
Spelliscy).
Later during 2010, corporate personhood was again expanded. Relying on the decision in
Buckley, which stated that spending money on political campaigns was a protected political
speech, and Bellotti, which said First Amendment protections of speech extend to corporations,
the Supreme Court struck down restrictions on corporate and union spending on elections. In
another recent decision unrelated to campaign finance reform, Sebelius v. Hobby Lobby Stores,
it was ruled that corporations have First Amendment religious expression rights to deny
providing contraception on religious grounds. One could be led to believe that pretty soon, it
seems, corporations are going to have powers reserved for the states under the Tenth
Amendment as well given its exact language, “The powers not delegated to the United States by
the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the

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people.” As Mitt Romney once said and immediately regretted, “Corporations are people, my
friend.”
The combined effect of Bellotti and Santa Clara County v. Southern Pacific Railroad
meant that corporations had the protected political right of free speech. What exactly does that
mean? A corporation cannot give a political speech in public or knock on ones door to discuss
the upcoming election. Alternatively, Corporations can purchase things though, and make
donations.
In the annals of campaign finance jargon, and more importantly Supreme Court
jurisprudence and case law, there is a distinction made between the money contributed to
campaigns, and the money spent by campaigns. They use the word contributions to describe the
money donated to campaigns, and expenditures to describe the money spent by campaigns and
independent groups. Expenditure is also used in reference to corporate donations made to
independent campaigns as an expenditure of the corporation, but is still regulated like a
contribution.
Following early attempts to limit the influence of money in our elections, the court was
presented with opportunities to uphold, strike down, or limit statutes that constrained the ability
of wealthy individuals and entities to influence the outcome of elections. So far discussed was
Bellotti in which corporations were granted the protected political speech. Before that case
though, in 1976, was Buckley, which was the first time the court chose to rule on a wide range of
issues dealing with campaign finance laws. It is here in which a tightening effect began on the
ability of legislatures to be able to limit the influence of large sums of money in our election
process. The decision did not go as far as it could have, but the Court did ban laws that capped
campaign expenditures, caps on independent expenditures, caps on how much a candidate can

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donate to their own campaign, and caps on donations to independent expenditure groups. The
portions of campaign finance regulation upheld in Buckley were: limits on contributions to a
candidate’s campaign as well as aggregate limits on donations to a number of candidates’
campaigns, and reporting and disclosure requirements; a ban on unions and corporations
donating directly to candidates, and publicly financed campaigns (Rosenthal). All of the
campaign finance regulations that were upheld were not ruled permanently Constitutional, but
only that significant evidence of their harm had not been presented. What was ruled
Unconstitutional, though, was settled for good, barring future courts overturning Buckley or a
Constitutional amendment (Rosenthal). After this point, the Supreme Court would consistently
rule against campaign finance laws, almost never letting up (Rosenthal). The Court had set a
strong precedent against attempts to limit the financing of campaigns in their to decision to
Buckley. From then on when issues of equal protection and the First Amendment were at odds,
the First Amendment was given the edge (Rosenthal).
Loopholes in the portions of the laws upheld in Buckley allowed money to be donated to
central party organizations for activities that did not expressly endorse candidates. Organizing
such as get out the vote drives and advertising that stopped just short of explicitly endorsing a
candidate were all considered legal due to a loop hole in a law called the Federal Election
Campaign Act of 1971 (FECA), which was partially upheld in Buckley. Independent groups
recognizing this same loophole engaged in similar activities. As long as they did not explicitly
endorse a candidate, they were thought of as issue ads and unregulated by FECA (Epstein).
By 1990, the makeup of the Supreme Court had changed, and they were much more
whiling to side with campaign finance reformers. If a few wealthy donors can finance their own
personal candidates to a limitless end, it stands to reason those few wealthy donors would have

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an outstanding amount of influence in our election process and would undoubtedly be tempted to
use that influence for their own personal gain at the expense of the entire country. In Austin v.
Michigan State Chamber of Commerce, the Court ruled that due to the massive resources
available to corporations, their ability to have a disproportionate influence on elections was
sufficient reason for the government to restrict their speech rights (Epstein). This reasoning was
upheld as late as 2003 in McConnell v. FEC. The Court justified restrictions on corporations and
unions political speech by claiming the restrictions were only partially restrictive of their speech
in that they were allowed to participate in the electoral process through their PAC’s (Harvard
Law Review). Following further changes to the make-up of the court in 2006 with more
conservative, corporation friendly, justices the tide swung back in the direction of corporations.
Following two early cases, Randal v. Sorell in 2006, and Davis v. FEC in 2008, it appeared the
Court was leaning towards freedom of speech rights of donors over the desire to restrict large
amounts of money’s influence on elections.
In 2010 came what campaign finance reformers had feared was coming; In Citizens
United, the Supreme Court took the opportunity to come through huge for corporations. The big
favor they did them was rule Unconstitutional bans on donations to independent groups that
expressly endorse candidates directly from general funds, bypassing PACs. The decision had the
effect of eliminating bans on corporations and unions using general funds to donate to
independent political organizations. The Supreme Court Justice Kennedy quoted Buckley in the
majority opinion;
“…restriction(s) on the amount of money a person or group can spend on political
communications during a campaign…necessarily reduces the quantity of
expression by restricting the number of issues discussed, the depth of their
exploration, and the size of the audience reached.”

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It was essentially the same reasoning as Randall and Davis, that their freedom of speech
was being restricted too much. Kennedy said the ban was more than just a time, manner, and
place restriction of speech, but was intended to silence speech the government deems
undesirable. The precedent in Austin was struck down, and preventing quid-pro-quo corruption
was now the only reason to restrict donations to political campaigns. He continues that strict
scrutiny should be applied to political speech, meaning that to be Constitutional, the law must
advance a compelling government interest, and be narrowly tailored to achieve that interest
(Epstein). The Court had taken a very strict interpretation of Bellotti that the government was
prohibited from banning corporations from political expression. Kennedy points out that
individuals and unincorporated private groups could donate in ways corporations could not and
how this was inconsistent with the principles of the First Amendment. He makes the case that by
limiting how much corporations can spend in elections more than private citizens, the
government is attempting to control thought. In overturning Austin, the Court named preventing
corruption or quid pro quo exchanges as the only reason to limit political speech as far as
donations. The same year in, spending and donation caps were eliminated on organizations that
only engage in political expenditures independent of both parties and candidates. These groups,
known as Super PAC’s, can spend unlimited sums of money, and are allowed to receive
unlimited sums of money from just a single source (Epstein).
In Citizens United, the Supreme Court upheld donation caps to individual candidates, as
well as aggregate caps on total contributions to many candidates. Those were one thousand
dollars per candidate and twenty-five thousand overall. Their reasoning for this was that it was a
means of limiting corruption, or the appearance thereof (Rosenthal). Massive donations would
look like bribes, particularly if politicians made favorable outcomes for those donors. The

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prevention of quid pro quo corruption was deemed a significant enough of a government interest
to restrict the amount that can be donated directly to a candidate. The Court seems to have
forgotten their reasoning about contributions to candidates when it came to contributions to
independent campaigns and money spent by the candidate on their own behalf. Independent
campaigns act like a candidate’s election campaign but are technically unaffiliated. Individual
limits on contributions to these groups were struck down as being too restrictive on the donors
First Amendment right to communicate to the public their political beliefs. In Citizens United,
the Court saw limitations on contributions to candidates as closing a loophole for corruption; the
Court did not see it the same way when it came to contributions to independent groups, choosing
instead to view restrictions on those as too restrictive of political speech.
The practical effect of the rulings in Buckley and Citizens United were significant.
Donors still could not give unlimited sums of money directly to as many candidates as they
pleased, but they could give unlimited sums to as many independent expenditure groups as they
pleased (Rosenthal). These groups often take fluffy names like Americans for Prosperity or
Progressive Change Campaign, and can be funded by a few large donors (Epstein). These
groups, as well as the campaigns of the candidates themselves, can spend unlimited amounts in
any election they please. Individual candidates are the only exception to the cap on contributions
to a campaign. The candidate themselves can donate an unlimited sum of money to their own
campaign. Campaigns and independent groups now have no limit on their expenditures
(Rosenthal), which means there is no longer a ceiling of money that could be spent in a primary
or a general election trying to convince voters to vote for them. This is how we end up with
presidential elections costing one billion dollars per viable candidate, per election. They could

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buy every dollar of advertising space and bury their opponents in an unmitigated amount of
propaganda.
So far unmentioned, and not due to any insignificance, the Supreme Court left in place
bans on corporations and union expenditures from general funds. Corporations and unions were
allowed to engage in the electoral process, but must do so through a political action committee
(Harvard Law Review). Congress has a long history of regulating money given to politicians.
The first of which was in 1867, and it banned federal officers from seeking donations from Navy
Yard workers (Appendix 4: Brief History). In 1907 the Tillman Act banned corporations and
unions from donating directly to candidates for federal office. In 1947, the Taft-Hartley Act
banned corporations and unions from making campaign expenditures from general funds
(Appendix 4: Brief History).
To the Supreme Court, reasoning is everything because without it, what exactly is it that
they do? Buckley was not a total setback for those wishing to restrict the ability of corporations
to purchase politicians decision making. The court was clear that it thought these donations of
incredibly large amounts could lead to quid-pro-quo corruption, meaning it would be
Constitutional to ban a corporation from paying a politician for a specific outcome (Epstein).
Later in 2014 in McCutcheon v. FEC the Court rejected the risk of quid pro quo as a
reasonable justification for limiting aggregate contribution limits to candidates. The court ruled
that contribution limits to individual candidates was enough to prevent quid pro quo corruption
and that aggregate limits were not necessary to achieve that end (Neuborne). After McCutcheon,
the only campaign finance restrictions left standing are those on caps of direct contributions to
candidates, an outright ban on corporations and unions contributing to those campaigns from
general funds, public financing of campaigns, and disclosure requirements. The limitations on

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contributions to independent groups from corporations and individuals, gone. Limitations on
amounts any one campaign can spend? Gone. Aggregate limits on contributions to a number of
candidates are gone. The ability of the government to ensure the disproportionate effect of
money on our election process does not distort the outcome? Gone.
At the end of 2014 Congress passed a spending bill with a law tucked inside that changed
the limit on donations to political parties. The change this time came from Congress itself
(Parker). Before this spending bill the maximum donation limit to political parties was $68,400
every two years (Blumenthal). After the new change though, the new cap on donations to
political parties is now $648,000 every two years (Blumenthal).
Campaign reformers are left with few options around the Supreme Court. The first of
which is to hope that a future court reverses the decisions in not only just Citizens United, but in
Speechnow.org, McCutcheon, Bellotti, and even Buckley. Two options come from Congress. The
first of those options is that Congress can limit the Supreme Court’s jurisdiction to rule on cases
involving corporate political spending and contribution, and contribution and expenditure limits
of candidate campaigns and independent campaigns. Congress has the ability in the Constitution
to limit the appellate jurisdiction of the Court, and could do so for campaign finance reform. The
Congress could then pass laws that have been stuck down on those grounds. The second option
out of Congress is a Constitutional Amendment approved by two thirds of both houses. The last
option is a Constitutional Convention. If two- thirds of the states call a convention, then seventy
five percent of the states ratify any amendment that comes out of that convention it is a valid
amendment to the Constitution and holds as much weight as any other section of the
Constitution.