Despite court ruling, Congress can still limit campaign finance

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By Bruce Ackerman and Ian Ayres
Tuesday, January 26, 2010

Now that the Supreme Court has struck down century-old restrictions on corporate money in politics, is Congress prepared to strike back?

Many suppose that the court has made it impossible for Congress to restrict corporate speech. But this is wrong. While Congress can't issue a broad ban on all companies, it can target the very large class that does business with the federal government and ban those companies from "endorsing or opposing a candidate for public office."

A 2008 Government Accountability Office study found that almost three-quarters of the largest 100 publicly traded firms are federal contractors. If Congress endorsed our proposal, these companies -- and tens of thousands of others -- would face a stark choice: They could endorse candidates or do business with the government, but they couldn't do both. When push came to shove, it's likely that very few would be willing to pay such a high price for their "free speech."

The Roberts court is skeptical -- to put it mildly -- of campaign finance restrictions. But it is still highly unlikely that the justices would strike down a law targeting federal contractors. All nine recognize that Congress may restrict free speech when there is a significant risk of corruption. That risk is obvious when corporate speakers are simultaneously doing business with the government.

Consider the battle over health-care reform. Unless there is a new statute regulating contractors, the court has given Big Pharma a powerful weapon to get special deals. If, for instance, key members of Congress resist drugmakers' appeals for favorable treatment, the companies could respond with multimillion-dollar corporate ad campaigns targeting opposing lawmakers by name during their next election. If targets buckle under this financial pressure and give drugmakers what they want, the deal strikes at the heart of the democratic process. This is the kind of quid pro quo corruption that the court has always recognized as justifying fundamental restrictions on free speech.

Our proposal requires only a modest extension of existing law. Federal contractors already are not allowed to "directly or indirectly . . . make any contribution of money or other things of value" to "any political party, committee, or candidate." This provision arguably bars Big Pharma from launching a media campaign in favor of a candidate who supports its special deals, thereby "indirectly providing" the candidate something "of value." But it doesn't cover the case in which contractors threaten to spend millions to oppose senators and representatives who refuse their excessive demands. There is a need, then, for a new statutory initiative: The same anti-corruption rationale that may prohibit contractors from spending millions in favor of candidates requires a statutory prohibition on a negative advertising blitz.

The constitutionality of the contractor statute has never been seriously challenged. In our search of the law, we found only one district court decision, which upheld the ban because of the "greater likelihood that the public will perceive corrupt relationships" when contractors endorse their friends in power.

But the Supreme Court has addressed a closely related problem. The Hatch Act of 1939 barred federal employees from express endorsements "in a political advertisement, a broadcast, campaign literature, or similar material." Congress worried that employees who wanted to keep their jobs would feel pressure to pay for public endorsements, and the court upheld related provisions of the Hatch Act on three occasions. While Congress has since lifted some of its restrictions on government employees, the court's opinions on this subject remain good constitutional law.

In the recent debate on corporate speech, the special contractor law has gone unnoticed. The prevailing neglect was understandable so long as the broader statutes barring corporate financing remained valid. Now that the Supreme Court has swept them aside, these contractor statutes remain the last effective bulwark against the flood of corporate money.

A congressional determination to shore up this bulwark is important in itself and would put the justices on notice that the court should think twice before continuing its assault on campaign finance laws. These laws are the hard-won product of a generation of democratic effort. The conservative majority on the Roberts court should recognize that Americans will fight every inch of the way to preserve them.

Bruce Ackerman and Ian Ayres, professors of law at Yale University, are the authors of "Voting With Dollars: A New Paradigm for Campaign Finance Reform."


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