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Campaign finance ruling leaves Democrats with few options

By Dan Eggen and Ben Pershing
Washington Post Staff Writer
Saturday, January 23, 2010; A01

Frustrated Democrats began laying plans Friday to chip away at a landmark Supreme Court decision unleashing corporate expenditures in political campaigns, but the ruling's broad sweep will make it difficult to stem a tidal wave of new spending in this year's pivotal midterm elections.

Major corporations and advocacy groups immediately began devising ways to take advantage of the 5 to 4 decision, which concluded that corporations have the same First Amendment rights as individuals and, therefore, can spend as much company money as they wish to oppose or support individual political candidates.

The ruling, announced Thursday, opens a significant new channel of funding for major corporations and their lobbyists in political campaigns. It is seen as particularly helpful for Republicans because of their party's traditional bonds with industry groups and its strong opposition to financial regulations proposed by the Obama administration. Labor unions, which strongly support Democrats, are also likely to take advantage of the ruling.

The decision further weakens the power of the major political parties, which must adhere to campaign restrictions enforced by the Federal Election Commission. Trade organizations such as the U.S. Chamber of Commerce and the National Association of Manufacturers, by contrast, are now free to use money from their members to pay for ads explicitly targeting lawmakers who vote for legislation the groups do not like.

Rob Jordan, vice president for federal and state campaigns at the conservative FreedomWorks, said his Washington-based group could reap particular benefits from a portion of the ruling that threw out restrictions on running political ads in the weeks leading up to an election.

"We expect to have upside potential in the multimillions, and we expect to be major players," Jordan said of his group's plans for the midterms. "This will probably put ads on our radar screen more than they would have been."

Democrats hurried Friday to lay out possible legislative responses to the ruling, even while acknowledging that only a constitutional amendment -- which is exceedingly unlikely -- could strike at the heart of the decision. Most campaign finance experts agreed.

"There is not much that Congress can do," said Robert K. Kelner, a Republican lawyer at Covington & Burling. "It's hard for me to see any obvious route for campaign finance reformers to take aside from tinkering around the edges."

Sen. Charles E. Schumer (N.Y.), the former Democratic Senatorial Campaign Committee head, and Rep. Chris Van Hollen (Md.), the Democratic Congressional Campaign Committee chairman, are working with the White House to craft a new campaign finance bill. They are almost certain to call for strengthened disclosure requirements for companies that directly sponsor ad campaigns, and they may push for requiring shareholders to approve political expenditures by publicly traded companies. They are also studying ways to prohibit campaign spending by corporations such as American International Group or General Motors that received federal bailout money, as well as companies that have federal contracts or registered lobbyists.

Democrats are also eyeing restrictions on U.S. companies that are subsidiaries of foreign-owned corporations; they believe the public will be outraged by the possibility of foreign influence in U.S. election campaigns. The high court's majority opinion avoided addressing possible implications for foreign-owned firms, which are barred from direct participation in U.S. elections but can use their American subsidiaries to form political action committees.

The subsidiaries now appear free to spend as much as they wish on ads targeting specific U.S. election candidates, and critics said the opinion could be applied even more broadly.

"Do you really want the Chinese or any other country to be able to spend money on our elections?" Van Hollen asked.

Opposing the ruling fits neatly into the Democrats' recent embrace of populist themes, including efforts to crack down on corporate excesses. "The voices of average Americans could be drowned out by Wall Street banks, big oil, health insurance companies and other special interests," House Speaker Nancy Pelosi (D-Calif.) said in a statement this week.

Rep. Dan Lungren (Calif.), the ranking Republican on the House committee that oversees federal elections, said his party has little to fear from such a message. "Republicans are on the side of the First Amendment," he said.

In his majority opinion, Justice Anthony M. Kennedy left little apparent room for a congressional response, calling corporations' right to political speech fundamental under the First Amendment. But Justice John Paul Stevens, in his dissent, left open the possibility of requiring shareholders to approve corporations' political spending.

"Legislatures remain free in their incorporation and tax laws to condition the types of activity in which corporations may engage, including electioneering activity, on specific disclosure requirements or on prior express approval by shareholders or members," Stevens wrote in a footnote.

Even without such legislation, executives could expose themselves to shareholder lawsuits if they spend money in ways unrelated to their core business. "I think corporations are going to be very careful in using this," said Stanley Sporkin, a former federal judge and regulator who now advises corporations.

Schumer and Sen. Russell Feingold (D-Wis.) eventually hope to persuade Sen. John McCain (R-Ariz.), a past sponsor of campaign finance reform with Feingold, to join the Democrats' effort. McCain issued a statement Thursday saying he was "disappointed" by the ruling in Citizens United v. Federal Election Commission, but his office declined to comment Friday on whether he would seek legislative redress.

Opponents of the decision hope that a bipartisan consensus will materialize.

"It may just be that this decision is so outrageous that it will be the catalyst to get the kinds of reforms we needed," said Mark McKinnon, a former campaign adviser to President George W. Bush who supports new restrictions.

House Democratic Caucus Chairman John B. Larson (Conn.) also has introduced a bill -- the Fair Elections Now Act -- that would set up a voluntary system in which congressional candidates would abide by certain restrictions in exchange for public financing of a portion of their campaigns. The measure has 126 House co-sponsors, and Senate Majority Whip Richard J. Durbin (D-Ill.) has offered the same bill in his chamber.

Such a system would allow candidates to "run for office without any big money from Wall Street PACs or lobbyists," said David Donnelly, an official with the Public Campaign Action Fund.

Staff writers Robert Barnes and David S. Hilzenrath contributed to this report.

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