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Supreme Court Hears Campaign Finance Arguments

September 9, 2009 at 12:00 AM EDT
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The Supreme Court convened Wednesday for a special hearing on campaign finance rules. Marcia Coyle reports.

JIM LEHRER: Now, today’s Supreme Court arguments about a major campaign finance case. Gwen Ifill has our story.

GWEN IFILL: Today was round two for a case involving an anti-Hillary Clinton documentary produced during the 2008 presidential campaign.

Last spring, the justices declined to rule on whether broadcasting the film violated campaign finance regulations. Instead, they asked the lawyers to come back to court, this time to argue the virtue of rolling back campaign finance laws entirely.

Marcia Coyle of the National Law Journal was at the court today, and the court released audiotapes of what turned out to be lively arguments, Marcia.

So how do we go from a case that involved this movie called “Hillary: The Movie,” how did that morph into a huge assault on campaign finance law?

MARCIA COYLE: Well, it was a surprise, basically, to, I think, many people. We were expecting a decision on whether the McCain-Feingold act’s provision on broadcast ads that advocate the election or defeat of a candidate applied to this particular movie in June.

And in June, instead, the court issued the order for a number of — well, recent years, a number of justices have voiced skepticism about campaign finance laws and their constitutionality under the First Amendment. And so the court, I think responding to some of those justices’ concerns, issued the order, asking the parties in this case to address whether it should overrule in whole or in part two key precedents, one from 1990 and another from 2003, that essentially banned the use of general treasury funds by corporations and unions in campaign spending.

GWEN IFILL: So it would roll back everything — potentially, it could roll back all these fundraising limits we’ve seen put in place over the years.

MARCIA COYLE: Well, as it relates to corporate and union expenditures, and I’m talking here about indirect spending. There are limits on direct contributions to candidates, and they would still stand, but this is just using general treasury funds.

Right now, the law allows corporations and unions to speak in campaigns through political action committees, which they can create but have to be funded by individual contributions. Corporations and unions may not use general treasury funds. So that’s what is at stake here, a lot more money.

Uphill battle for administration

GWEN IFILL: So because the Obama administration is charged with defending the existing law, we heard for the first time today from President Obama's solicitor general, Elena Kagan, who -- this was her first time arguing before the court.

MARCIA COYLE: It was first time making an appellate argument in any court. And she faced an uphill battle here, because three justices -- Justices Kennedy, Scalia and Thomas -- have already said in prior decisions that they would overrule this 1990 precedent, Austin v. Michigan Chamber of Commerce, in which the court upheld the ban on corporate expenditures.

And she also faced the fact that the justification, the government interest for upholding the ban on those expenditures has been criticized in recent opinions by Chief Justice Roberts and Justice Alito. So she had potentially five votes against her going in here.

GWEN IFILL: Well, I said we heard -- we'd get to hear some of the audio tape from the argument today, and Chief Justice Roberts and General Kagan got into it a little bit. Let's listen to that first exchange.

JOHN ROBERTS: A large corporation, just like an individual, has many diverse interests. The corporation may want to support a particular candidate, but they may be concerned, just as you say, about what their shareholders are going to think about that. They may be concerned that their shareholders would rather they spend their money doing something else. The idea that corporations just are different than individuals in that respect, I just don't think holds up.

ELENA KAGAN, solicitor general: Well, all I was suggesting, Mr. Chief Justice, is that corporations have actually a fiduciary obligation to their shareholders to increase value. That's their single purpose, their goal.

JOHN ROBERTS: So if a candidate -- take a tobacco company -- and a candidate running on the platform that they ought to make tobacco illegal, presumably that company would maximize its shareholders' interests by opposing the election of that individual.

ELENA KAGAN: But everything is geared through the corporation's self-interest in order to maximize profits, in order to maximize revenue, in order to maximize value.

Individuals are more complicated than that, so that when corporations engage the political process, they do it with that set of, you know, blinders -- I don't mean it to be pejorative, because that's what we want corporations to do, is to...

JOHN ROBERTS: Well, I suppose some do, but let's say, if you have 10 individuals and they each contribute $1,000 to a corporation, and they say, "We want this corporation to convey a particular message," why can't they do that, when if they did that as a partnership, it would be all right?

ELENA KAGAN: Well, it sounds to me as though the corporation that you're describing is the corporation of the kind that we have in this case, where one can assume that the members all sign on to the corporation's ideological mission, where the corporation, in fact, has an ideological mission.

Government interest in decision

Marcia Coyle
National Law Journal
Solicitor General Kagan is saying, we need to keep this ban in place because one of the government interests here that justifies it is shareholder protection, and that is the exchange.

GWEN IFILL: Why is that distinction important?

MARCIA COYLE: Solicitor General Kagan is saying, we need to keep this ban in place because one of the government interests here that justifies it is shareholder protection, and that is the exchange.

She was trying to show, as well, that corporations engage the political process in a way that's very different from the way individuals do, and that's what makes them potentially so dangerous.

So one of the government's interests here, she says, is shareholder protection. The second government interest that she argued today -- and she also encountered sharp questioning from the justices that I mentioned earlier -- is to avoid, prevent quid pro quo corruption.

GWEN IFILL: Well, it was interesting, the flip side of this argument was -- the liberal side of the court, I suppose, Justice Breyer, who got into it a little bit with Ted Olson, who's the attorney on behalf of Citizens United, the ones who produced this film. And they were more about the consequences of what this ruling could be. Let's listen to that exchange.

STEPHEN BREYER, justice, Supreme Court: Suppose we overrule these two cases. Would that leave the country in a situation where corporations and trade unions can spend as much as they want in the last 30 days on television ads, et cetera, of this kind, but political parties couldn't, because political parties can only spend hard money on this kind of expenditure and, therefore, the group that is charged with the responsibility of building a platform that will appeal to a majority of Americans is limited, but the groups that have particular interests, like corporations or trade unions, can spend as much as they want? Am I right about the consequence? If I'm right, what do we do about it?

TED OLSON, attorney: I think you're wrong about the consequence. There are 27 states that have no limitations on either contributions or expenditures and that -- the Earth has not...

STEPHEN BREYER: No, I'm not -- I am saying, am I right in thinking that, if you win, the political party can't spend this money -- it's limited to hard-money contributions -- but corporations and trade unions can spend unlimited funds?

TED OLSON: Well, if the court decides in favor of the arguments that we are making here, I think what you're suggesting is that, because there are other limitations that someone has not challenged in this case, that that would be somehow unfair and unbalanced.

STEPHEN BREYER: No, I'm not suggesting that. I am suggesting we'll make a hash of this statute. And if we're going to make a hash of this statute, what do we do about it?

First Amendment implications

Marcia Coyle
National Law Journal
[T]he First Amendment protects corporations and individuals. The Supreme Court has said so

GWEN IFILL: It's fun to hear the back-and-forth that those of -- we peons don't ever get to hear among the justices and the lawyers before them. Making a hash of the statute, this goes to the breadth of this possible decision.

MARCIA COYLE: It does, absolutely. Mr. Olson has sort of a fundamental First Amendment argument here, and that is that the First Amendment protects corporations and individuals. The Supreme Court has said so.

If the government wants to regulate speech, particularly political speech, which lies, he says, at the core of the First Amendment, it has to have a compelling reason.

The two reasons offered by Solicitor General Kagan, he said -- and Chief Justice Roberts got her to concede this -- have never been accepted by the court as justification for restricting corporate spending.

GWEN IFILL: By conceding that, does she also concede that she's in kind of a poor position?

MARCIA COYLE: No, she doesn't, because she comes back and says the situation today is not what it was in 1990, and the interests that the government is offering now were shown to be justified by Congress when it enacted the McCain-Feingold act in 2002.

The Congress found -- and Justice Breyer pointed this out -- that people believe that their representatives could be bought. And as Justice Breyer said, isn't that a sufficient government interest to justify this ban?

GWEN IFILL: And, of course, we're all watching -- or, in our case, listening to or listening for -- Justice Sotomayor, the newest member of the court, who jumped right into the argument today, and focused -- it sounded a lot like -- on defining whether this was a constitutional issue or something that Congress could handle. Let's take a listen to Justice Sotomayor.

SONIA SOTOMAYOR: Mr. Olson, are you giving up on your earlier arguments that there are ways to avoid the constitutional question to resolve this case? I know that we asked for further briefing on this particular issue of overturning two of our court's precedents. But are you giving up on your earlier arguments that there are statutory interpretations that would avoid the constitutional question?

TED OLSON: No, Justice Sotomayor. There are all kinds of lines that the court could draw which would provide a victory to my client. There are so many reasons why the federal government did not have the right to criminalize this 90-minute documentary that had to do with elections.

But what the court addressed specifically in the Washington Right to Life case is that the lines, if they are to be drawn, must not be lines that are ambiguous, that invite litigation, that hold the threat of prosecution over an individual, and in practical application, that is what the...

SONIA SOTOMAYOR: Mr. Olson, my difficulty is that you make very impassioned arguments about why this is a bad system that the courts have developed in its jurisprudence, but we don't have any record developed below.

You make a lot of arguments about how far and the nature of corporations, single corporations, single stockholder corporations, et cetera. But there is no record that I'm reviewing that actually goes into the very question that you're arguing exists, which is a patchwork of regulatory and jurisprudential guidelines that are so unclear.

Sotomayor's first day

Marcia Coyle
National Law Journal
She seemed right at home. It didn't take her long to get involved.

GWEN IFILL: Listening to Justice Sotomayor for the first time, how did she do compared to other justices' first time?

MARCIA COYLE: She seemed right at home. It didn't take her long to get involved. And her question reminded the court of another issue, very important here, that guides the court in making decisions, what's called constitutional avoidance.

Whenever possible, the court tries to avoid a constitutional question if it can decide the case on other grounds, and that's what she was getting at. Shouldn't they avoid it if they can decide this case on narrow ground?

GWEN IFILL: Which justices are we watching in this case for the outcome?

MARCIA COYLE: Well, after the argument -- well, going into the argument, we were watching Justice Alito in particular. He had voiced skepticism about this. I'd say, after the argument, it seems that he is on the side of perhaps overruling the two precedents.

We know that Kennedy, Scalia, and Thomas would vote similarly, we think, and the chief maybe. Whether he's willing to take this big step or not, it's unclear.

GWEN IFILL: So there's room between outright overruling or overturning these two precedents and -- doesn't the chief believe in stare decisis? Didn't we hear a lot about that during his...

MARCIA COYLE: That's the other issue that's hanging over this case that actually Justice Sotomayor did bring up and so did others. Justice Alito didn't seem to think that a decision from 1990 and a decision from 2003 were all that old and perhaps not deserving of stare decisis.

This case, if the court does overrule these two -- especially the 1990 decision -- would mark a fundamental change in how our elections are funded. Opponents and supporters of the restriction on corporate spending here disagree on the practical impact.

The supporters of the restriction believe it would be like turning a spigot on full force in terms of money flowing into campaigns. But the opponents of the restriction argue there are 23 states that don't have restrictions and nobody's saying they're overwhelmingly corrupt.

GWEN IFILL: And Congress might end up rewriting campaign law in the middle of a campaign year.

MARCIA COYLE: It just might, Gwen.

GWEN IFILL: That would be fun. Thank you very much, Marcia Coyle, as always.

MARCIA COYLE: My pleasure.

JIM LEHRER: You can listen to all of today's arguments at the Supreme Court on our Web site,