A Brief History of Citizens United and Corporate Power

Let’s talk Citizens United and Corporate Power.

Citizens United is a symptom of a bigger, longstanding threat: for decades the largest corporations have been building power over our political process.

The 1960s and 1970s were some of the most trans-formative years in American history. The 1960s saw the rise of social movements across the nation demanding an equal share in the society the people helped built. Civil rights, women’s rights, voting rights, environmental rights, economic rights, etc. etc. In short, the country was becoming more democratic.

In the 1970s, corporate power fought back the democratic aspirations of the people. The business community felt threatened, spurred into action, and initiated plans take even further control of the American political process.

In 1971, Lewis Powell was a well-connected partner in the Richmond-based law firm of Hutton, Williams, Gay, Powell and Gibson and sat on the boards of 11 major corporations, including the tobacco giant Philip Morris. He also had served as chairman of the Richmond School Board from 1952 to ‘61 and as president of the American Bar Association from 1964 to ‘65.

On August 23 of the same year, Powell wrote a memo to his friend Eugene Sydnor, Jr., the Education Director of the U.S. Chamber of Commerce. The memo was titled Attack on American Free Enterprise System.

Two months later, Powell was nominated to the U.S. Supreme Court by President Nixon. He was confirmed by the Senate by a vote of 89-1.

Powell began his analysis:

No thoughtful person can question that the American economic system is under broad attack, … We are not dealing with sporadic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued. It is gaining momentum and converts.

Powell continued:

The time has come — indeed, it is long overdue — for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it.

There should be no hesitation to attack the Naders, the Marcuses and others who openly seek destruction of the system. There should not be the slightest hesitation to press vigorously in all political arenas for support of the enterprise system. Nor should there be reluctance to penalize politically those who oppose it.

Powell asked directly in the memo, “What specifically should be done?” to awaken the business community from its torpor, spur it to counter the New Left and reassert its political and legal hegemony.

The first step, he reasoned, was “for businessmen to confront this problem [the threat to the system] as a primary responsibility of corporate management.” In addition, resources and unity would be required.

This is a vast area of opportunity for the Chamber, if it is willing to undertake the role of spokesman for American business and if, in turn, business is willing to provide the funds.

Powell then gave the key to achieving his goals and those of the business community he represented:

Under our constitutional system … the judiciary may be the most important instrument for social, economic and political change.

This is why Powell became a Supreme Court Justice.

Now, in 1971 there was a bill floating around with much support to institute more stringent disclosure requirements for federal candidates, political parties and Political action committees (PACs). This was called the Federal Election Campaign Act of 1971 (FECA). It eventually became the law of the land when it was signed by Nixon on February 7, 1972.

This new law gave way to the creation of the Federal Election Commission (FEC) in 1974.

As you can imagine, the business community was not at all happy with these developments. On one side, the business community had to fight off the democratic aspirations of the people and now they needed to take action against new Federal laws that would hinder their ability to manipulate political elections.

The business community moved quickly.

In 1975, Conservative U.S. Senator James Buckley filed a lawsuit with the Federal Government to challenge the provisions in FECA. The case went to the supreme court as Buckley v. Valeo. The court ruled in favor of Buckley. The majority of judges held that limits on election spending in the FECA of 1971 are unconstitutional.

The court ruled that expenditure limits contravene the First Amendment provision on freedom of speech because a restriction on spending for political communication necessarily reduces the quantity of expression. It limited disclosure provisions and limited the Federal Election Commission’s power.

Lewis Powell was on the court and made good on his word to use the “judiciary” as an “instrument for social, economic and political change.”

This was a good first step for business; however, the country was still in “crisis”.

Just as interesting as the Powell Memorandum, there was another publication that came out from the “liberal” side of the mainstream political spectrum: A the book titled The Crisis of Democracy, published in 1975 by the Trilateral Commission (founded in 1973).

What was the crisis? Pretty much the same as the Powell Memorandum: There’s too much democracy.

Pg. 8:

Yet, in recent years, the operations of the democratic process do indeed appear to have generated a breakdown of traditional means of social control, a delegitimation of political and other forms of authority, and an overload of demands on government.

Pg. 61:

The 1960s also saw, of course, a marked upswing in other forms of citizen participation, in the form of marches, demonstrations, protest movements, and “cause” organizations (such as Common Cause, Nader groups, and environmental groups.) The expansion of participation throughout society was reflected in the markedly higher levels of self-consciousness on the part of blacks, Indians, Chicanos, white ethnic groups, students, and women – all of whom became mobilized and organized in new ways to achieve what they considered to be their appropriate share of the action and of the rewards.

Pg. 64:

The basic point is this: The vitality of democracy in the United States in the 1960s produced a substantial increase in governmental activity and a substantial decrease in governmental authority.

Pg. 114:

The effective operation of a democratic political system usually requires some measure of apathy and non-involvement on the part of some individuals and groups. In the past, every democratic society has had a marginal population, of greater or lesser size, which has not actively participated in politics. In itself, this marginality on the part of some groups is inherently undemocratic, but it has also been one of the factors which has enabled democracy to function effectively. Marginal social groups, as in the case of the blacks, are now becoming full participants in the political system. Yet the danger of overloading the political system with demands which extend its functions and undermine its authority still remains.

Pg. 162:

Authority has been challenged not only in government, but in trade unions, business enterprises, schools and universities, professional associations, churches, and civic groups. In the past, those institutions which have played the major role in the indoctrination of the young in their rights and obligations as members of society have been the family, the church, the school, and the army. The effectiveness of all these institutions as a means of socialization has declined severely.

These two publications differ rhetorically when placed side by side. The Powell Memo is literally a tantrum. The Crisis of Democracy uses big intellectual words, but the message is not very different: the democratization of the country is a threat and action must be taken.

The Buckley v. Valeo case introduced the concept of spending money as a form of unrestricted political speech, but it was not a complete victory for the business community. The court upheld contribution limits because such limits served the government’s interest in reducing election corruption.

In 1976 several corporations, including the First National Bank of Boston, were barred from contributing to a Massachusetts referendum regarding tax policy and subsequently sued. To no surprise, the Supreme Court took the case: First National Bank of Boston v. Bellotti.

On April 26, 1978, the Court ruled 5-4 against the Massachusetts law. Lewis Powell voted in favor of the bank.

This now meant that states could no longer impose specific regulations on donations from corporations in ballot initiative campaigns. It did not affect Federal law. Yet.

Let’s pause for a minute to acknowledge how quickly the business community gathered itself and went on the attack. In a span of less than a decade, the business community managed to infiltrate the U.S. Supreme Court and immediately change the laws to their great benefit.

Things were looking good for the business community. Things got even better with the business friendly presidency of Ronald Reagan.

The business community pressed on.

In 1996, The Colorado Republican Party challenged the Federal Election Commission (FEC) as to whether the “Party Expenditure Provision” of the FECA violated the First Amendment right to free speech. This is known as Colorado Republican Federal Campaign Committee v. FEC. In a 7-2 decision, the Court held that independent expenditures by political parties made without coordination of a candidate are protected by the First Amendment.

This was another big victory for the business community. It enabled parties and candidates to circumvent FECA’s limitations on federal election campaign contributions.

More money then ever started to pour into political elections. Congress started to get worried and pushed for campaign finance reform. The parties felt threatened by each others incredible ability to raise money.

In 2002 finally passed the Bipartisan Campaign Reform Act of 2002 (BCRA) to control the flow money into political elections. There’s a great article in the Atlantic that explains the BCRA and the role of soft money in political elections.

This was a minor setback for the business community. But it was only minor and only temporary.

In the 2008 election season, an extremely business friendly PAC named Citizens United took to action and sued the FEC. Citizens United wanted to broadcast TV ads criticizing presidential candidate Hilary Rodham Clinton, but doing so would violate the 2002 Bipartisan Campaign Reform Act, which barred corporations and unions from paying for media that mentioned any candidate in periods immediately preceding elections.

This is the famous Citizens United v. FEC of 2010.

In a 5-4 ruling, the Supreme Court declared unconstitutional the government restriction on “independent” political spending by corporations and unions, and determined the anti-Clinton broadcast should have been allowed.

The Court ruled that the free speech clause of the First Amendment to the Constitution prohibits the government from restricting independent expenditures for communications by nonprofit corporations, for-profit corporations, labor unions, and other associations.

The Court’s opinion relied heavily on the reasoning and principles of the landmark campaign finance cases from the 1970s: Buckley v. Valeo and First National Bank of Boston v. Bellotti.

Powell wrote in his 1971 memo:

Independent and uncoordinated activity by individual corporations, as important as this is, will not be sufficient. 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 the political power available only through united action and national organizations.

The Citizens United case is not an isolated incident in our democracy. It has history. The business community of this country through “careful long-range planning and implementation” took almost complete control of political elections in this country. Their “consistent actions” over the years and our inability to stop them gave rise Citizens United.

Corporate power is the problem.

Thanks for reading,

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