[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
FIRST AMENDMENT AND CAMPAIGN FINANCE REFORM AFTER CITIZENS UNITED
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE CONSTITUTION,
CIVIL RIGHTS, AND CIVIL LIBERTIES
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 3, 2010
__________
Serial No. 111-71
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas DANIEL E. LUNGREN, California
MAXINE WATERS, California DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr., TRENT FRANKS, Arizona
Georgia LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois TED POE, Texas
JUDY CHU, California JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois TOM ROONEY, Florida
TAMMY BALDWIN, Wisconsin GREGG HARPER, Mississippi
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York
[Vacant]
Perry Apelbaum, Majority Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
------
Subcommittee on the Constitution, Civil Rights, and Civil Liberties
JERROLD NADLER, New York, Chairman
MELVIN L. WATT, North Carolina F. JAMES SENSENBRENNER, Jr.,
ROBERT C. ``BOBBY'' SCOTT, Virginia Wisconsin
WILLIAM D. DELAHUNT, Massachusetts TOM ROONEY, Florida
HENRY C. ``HANK'' JOHNSON, Jr., STEVE KING, Iowa
Georgia TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
JOHN CONYERS, Jr., Michigan JIM JORDAN, Ohio
STEVE COHEN, Tennessee
SHEILA JACKSON LEE, Texas
JUDY CHU, California
David Lachmann, Chief of Staff
Paul B. Taylor, Minority Counsel
C O N T E N T S
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FEBRUARY 3, 2010
Page
OPENING STATEMENTS
The Honorable Jerrold Nadler, a Representative in Congress from
the State of New York, and Chairman, Subcommittee on the
Constitution, Civil Rights, and Civil Liberties................ 1
The Honorable F. James Sensenbrenner, Jr., a Representative in
Congress from the State of Wisconsin, and Ranking Member,
Subcommittee on the Constitution, Civil Rights, and Civil
Liberties...................................................... 3
The Honorable Lamar Smith., a Representative in Congress from the
State of Texas, and Ranking Member, Committee on the Judiciary. 4
The Honorable Steve King, a Representative in Congress from the
State of Iowa, and Member, Subcommittee on the Constitution,
Civil Rights, and Civil Liberties.............................. 6
The Honorable Mel Watt, a Representative in Congress from the
State of North Carolina, and Member, Subcommittee on the
Constitution, Civil Rights, and Civil Liberties................ 6
WITNESSES
Mr. Laurence H. Tribe, Carl M. Loeb University Professor, Harvard
Law School, Cambridge, MA
Oral Testimony................................................. 9
Prepared Statement............................................. 12
Ms. Monica Y. Youn, Counsel and Director of the Campaign Finance
Reform Project, Brennan Center for Justice, New York University
School of Law, New York, NY
Oral Testimony................................................. 28
Prepared Statement............................................. 31
Mr. Sean D. Parnell, President, Center for Competitive Politics,
Alexandria, VA
Oral Testimony................................................. 48
Prepared Statement............................................. 50
Mr. Donald J. Simon, Partner, Sonosky, Chambers, Sachse, Endreson
& Perry, LLP, Washington, DC
Oral Testimony................................................. 70
Prepared Statement............................................. 73
APPENDIX
Material Submitted for the Hearing Record........................ 111
FIRST AMENDMENT AND CAMPAIGN FINANCE REFORM AFTER CITIZENS UNITED
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WEDNESDAY, FEBRUARY 3, 2010
House of Representatives,
Subcommittee on the Constitution,
Civil Rights, and Civil Liberties,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:08 a.m., in
room 2141, Rayburn House Office Building, the Honorable Jerrold
Nadler (Chairman of the Subcommittee) presiding.
Present: Representatives Nadler, Watt, Scott, Delahunt,
Johnson, Baldwin, Cohen, Jackson Lee, Sensenbrenner, King,
Jordan, and Gohmert.
Also present: Representative Smith, ex officio.
Staff present: (Majority) David Lachmann, Subcommittee
Chief of Staff; Elizabeth Kendall, Counsel; and Paul Taylor,
Minority Counsel.
Mr. Nadler. Good morning. This hearing of the Subcommittee
on the Constitution, Civil Rights, and Civil Liberties will
come to order.
I will start by recognizing myself for an opening
statement.
Today's hearing examines the Supreme Court's recent
decision in the case of Citizens United v. FEC. It is a case
which poses a great threat to the integrity of our democratic
system.
The subcommittee will examine the Court's reasoning, the
scope of the decision, its likely impact and what options
Congress may have at its disposal remaining to deal with the
problems we are likely to encounter now that the Court has
declared open season on democracy.
One of the things that strikes me, and I am sure that my
colleagues on the other side of the aisle who are constantly
assailing judicial activism will agree, is the extent to which
an extraordinarily activist Court reached out to issue this
decision.
The justices answered a question they weren't asked in
order to overturn a century of precedent which they had
reaffirmed only recently. The only real change has been one of
Court membership.
The Court sought to decide the case on the broadest
constitutional grounds when it could easily have resolved the
question on much narrower grounds.
Finally, the Court substituted its judgment of what
constitutes corruption in politics for that of the
democratically representatives in the Congress and in most of
the State legislatures who have actually participated in the
process and who understand firsthand the corrosive effect of
money in politics. The absence of Justice O'Connor, the only
former legislator on the Court, may have made a real difference
in this case.
Chief Justice Roberts' concurrence in particular was a
virtual manifesto for the judicial activists looking to
overturn--looking for an excuse to overturn longstanding
precedent even when those precedents weren't properly before
the Court.
It can be considered a warning shot and it bodes ill for
the future and certainly ill for stare decisis in the future.
His opinion hardly reads like the words of an umpire who is
simply following precedent in deciding cases as narrowly as
possible.
In fact, it certainly doesn't sound like the man who
presented himself to the Senate at his confirmation hearings.
In fact, it certainly raises questions as to the truthfulness
of his testimony at the confirmation hearings.
Justice Stevens stated the basic issue clearly in his
dissent, ``The conceit that corporations must be treated
identically to natural persons in the political sphere is not
only inaccurate but also inadequate to justify the Court's
disposition of this case.
``In the context of election to public office, the
distinction between corporate and human speakers is
significant. Although they may make enormous contributions to
our society, corporations are not actually members of it. They
cannot vote or run for office. Because they may be managed and
controlled by non-residents, their interests may conflict in
fundamental respects with the interests of eligible voters.
``The financial resources, legal structure and instrumental
orientation of corporations raises legitimate concerns about
their role in the electoral process. Lawmakers have a
compelling constitutional basis, if not a democratic--if not
also a democratic duty, to take measures designed to guard
against the potentially deleterious effects of corporate
spending in local and national races.''
I would even wonder, in light of the majority's finding
that a corporation and a natural person are the same, et
cetera, what this means for our antitrust law.
Is it against the Constitution for Congress to decree, for
example, that corporations may be too big, that they must be
broken up under certain circumstances, without having found
them guilty of serious felonies?
We couldn't impose a death penalty on an individual just
because we didn't like his or her influence. Are we now going
to face that with corporations? That is the implication.
Former Justice O'Connor discussed the threat to the
integrity of the judiciary in a recent speech at Georgetown
University Law Center. She said, ``This rising judicial
campaigning makes last week's opinion in Citizens United a
problem for an independent judiciary. No State can possibly
benefit from having that much money injected into a political
campaign.'' And she was, of course, referring specifically to a
judicial political campaign.
So now that corporations, including those controlled by
foreign interests, have the same rights as any voter, what is
in store for our democracy? What other rights will the Court
confer on corporations? Perhaps one day we will have Exxon as a
colleague here in Congress. Many would say we already do.
And what can Congress, within the bounds set by the Court,
still do to control the influence of the monied aristocracy in
our political process?
I look forward to the testimony of our witnesses on this
very important issue, and I yield back the balance of my time.
The Chair now recognizes the distinguished Ranking Member
for 5 minutes for an opening statement.
Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
Guess what? I don't agree with his analysis at all. And
prior to the----
Mr. Nadler. Right. Yes.
Mr. Sensenbrenner [continuing]. Prior to the Supreme
Court's decision in Citizens United v. FEC, Federal law
prohibited corporations and unions from using their general
treasury funds to make independent expenditures for speech
expressly advocating the election or defeat of a candidate for
Federal office.
Those formerly illegal electioneering communications were
defined as any broadcast, cable or satellite communication that
refers to a clearly identified candidate for Federal office and
is made within 30 days of a primary or 60 days of a general
election.
The Supreme Court concluded that these laws constituted an
outright ban on speech backed by criminal sanctions and in
clear violation of the First Amendment.
In particular, the Court stated that under that
unconstitutional law, the following acts would be felonies: The
Sierra Club runs an ad within the crucial phase of 60 days
before the general election that exhorts the public to
disapprove of a congressman who favors logging in national
forests; the National Rifle Association publishes a book urging
the public to vote for the challenger because the incumbent
U.S. senator supports a handgun ban; and the American Civil
Liberties Union creates a Web site telling the public to vote
for a presidential candidate in light of that candidate's
defense of free speech.
The Court concluded that these prohibitions are classic
examples of censorship and appropriately struck down the law.
Now we are going to hear about all sorts of attempts to
undercut the Supreme Court's ruling by statute.
But the Supreme Court in its decision made clear that any
alternative regulations that produced a chilling effect on free
speech would also be unconstitutional, including any
alternative that requires lengthy legal proceedings to
determine what sort of speech a corporation can or cannot
engage in during Federal elections.
As the majority wrote, ``It is well known that the public
begins to concentrate on elections only in the weeks
immediately before they are held. There are short time frames
in which a speech can have influence. The speaker's ability to
engage in political speech that could have the chance of
persuading voters is stifled if the speaker must first commence
a protracted lawsuit. By the time the lawsuit concludes, the
election will be over and the litigants in most cases will have
neither the incentive nor perhaps the resources to carry on.''
So in expressing its appropriate concern for alternative
regulations that would chill free speech, the Court has already
gone a long way toward pouring cold water on a lot of proposals
made by opponents of the decision to further limit free speech.
The hysterical cries in some quarters, maybe here today,
regarding the Supreme Court's decision are in stark contrast to
the everyday unconstitutional--uncontroversial, I am sorry,
democratic elections that have been held in 26 States
representing 60 percent of the Nation's populations that
already allow corporate independent expenditures in State
elections.
The result will be no different when the same rules are
applied that were already applied in 26 States in their State
elections when they are applied to Federal elections.
The Citizens United case has also caused some opponents of
the decision to focus their attention on another piece of
Federal legislation called the Fair Elections Now Act, which
would use tax dollars to fund congressional campaigns in what
amounts to a hundreds of millions of dollars taxpayer bailout
of politicians.
This solution to what opponents call the problem of free
speech is a red herring, since corporations will still be able
to make independent expenditures regardless of how their
candidates fund their campaigns.
This would also make the White House red-faced, as
President Obama became the first presidential candidate in
history to forego public financing in the general election
because he expected he could raise millions more without it,
and did.
With those concerns in mind, I look forward to hearing from
all of our witnesses today and yield back the balance of my
time.
Mr. Nadler. I thank the gentleman.
In the interest of proceeding to our witnesses and mindful
of our busy schedules, I normally ask that other Members submit
their statements for the record.
I understand that a number of Members have asked that they
be able to deliver an opening statement, and I will recognize
them as they seek recognition, but first I will recognize the
distinguished Ranking Member of the full Committee, Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman, for recognizing me.
In 2002, Congress passed Federal campaign finance
restrictions that I, along with most Republicans, opposed
because we felt they were unconstitutional.
That legislation limited how much money corporations,
nonprofits and unions could spend on television ads that
support or oppose a Federal candidate 30 days before a primary
election and 60 days before a general election.
Corporations, nonprofits and unions are simply collections
of individuals who have pooled their financial resources to
pursue common goals. The law Congress passed severely limited
these groups' ability to voice their political opinions.
Last month the Supreme Court held that the political speech
restrictions in that law are unconstitutional under the First
Amendment.
As the Court stated, political speech is ``indispensable to
decision-making in a democracy,'' regardless of whether the
speech comes from an individual or from a corporation. In other
words, free speech is free regardless of whether it is
exercised by one person or collectively by 100 people.
The law the Supreme Court struck down also exempted media
corporations from those restrictions. This gives the national
media's well established bias free reign during elections while
muzzling the voices of many citizens.
The national media largely criticized the Supreme Court's
ruling. The New York Times called it disastrous and the
Washington Post called it dangerous.
An exception was my hometown newspaper, the San Antonio
Express-News, which pointed out the unfairness of campaign
finance laws restricting the free speech of all organizations
except the media.
As the Express-News stated, while the media could make
endorsements right up to the day of an election, all other
organizations were restricted in their opinions. As the
editorial explained, it makes no sense to restrict speech prior
to an election, arguably the period when the exercise of
political speech is most important.
The national media should acknowledge that free speech is
free regardless of whether it is exercised by newspaper
editorial boards or by everyday Americans.
As the Supreme Court determined, the views expressed by
media corporations often ``have little or no correlation to the
public support'' of those views. As such, other corporations
should be treated no differently than media corporations.
Finally, some opponents of the Supreme Court's decision in
support of free speech, including the President, claim the
decision would open the floodgates to foreign influence in
American elections. Not true, as someone said recently.
The Supreme Court's decision actually kept in place current
laws that prohibit foreign corporations from influencing
American elections.
Under current law, a foreign national may not directly or
indirectly contribute to a candidate or party or pay for a
broadcast, cable or satellite communication that refers to a
Federal candidate before an election.
Current Federal Elections Commission regulations, untouched
by the Citizens United case, also provide that a foreign
national may not direct, control or indirectly participate in
the decision-making process of any corporation, labor union or
political committee in its election-related activities.
Obviously, the floodgates to foreign influence can't be opened
if the dam is still in place.
The Supreme Court's decision rightly restores to Americans
the right to voice their opinions during an election and sends
a strong message to future congresses that attempt to limit
free speech. I hope this Congress hears that message loud and
clear before considering President Obama's call to reinstate
unconstitutional restrictions on free speech.
Mr. Chairman, on the way to yielding back, let me say I am
trying to get to the House floor, so I will miss at least part
of the witnesses' testimony, and that I regret. And I will
yield back.
Mr. Nadler. I thank the gentleman.
Does any other Member seek recognition?
The gentleman from Iowa?
Mr. King. Thank you, Mr. Chairman. And I will make this
just a brief statement. I echo the statement made by the
Ranking Member of the full Committee and the Ranking Member of
the Constitution Subcommittee.
I would make this point, that I think was the most
important point, which is we have gone along since 2002 without
hearing a complaint that, at least I recall from the Democrat
side of the aisle, about the corporate speech of the major news
media.
And the major news media in this country has actively been
seeking to influence elections. I can recall a newspaper that
was very involved in a presidential race in Iowa, and when I
looked at the returns county by county, and it looked like it
reflected the distribution of that newspaper almost exactly.
And when I wrote a letter to the editor and said, ``This is
the result of what you have been doing by your partisan and
unobjective approach,'' the editor's response to me was, ``I
hope so. It was my intent to influence the election.''
And I think we all have some kind of experience in that
fashion. It is hard to convince the American people, Mr.
Chairman, that the news media has not been involved in seeking
to influence elections most aggressively.
And so I do not understand the aversion to allowing
corporate speech in a broader category than those people that
have full access to the news media and can spend their dollars
more effectively than perhaps any other corporate structure.
And in addition, I would point out that I think there is
something we might get to see here that is a difference. I
don't think it is going to be a dramatic change with the
Supreme Court decision that immediately makes a shift.
But when I start thinking about corporations that have
taken positions supporting legislation that is anathema to
their corporate interests, and I wonder why--and it is because
they are trying to mitigate the legislative damage that might
be brought upon them.
And the cap and trade legislation is a--I think an
excellent case in point where the balanced scales of all of
those entities that were against it began to be convinced that
something was going to pass, so they lobbied for their carve-
outs, and slowly a cap and trade bill passed the House of
Representatives.
And I believe that, on balance, it is against the interests
in this country, and we have that disagreement, Mr. Chairman.
But my point is corporations now under this decision, Citizens
United, may be more bold in their involvement.
They may decide they want to engage in this speech within
that 60-day window more aggressively, and perhaps that will be
a way that legislation that I believe is bad for America is
prevented from coming to passage.
So it is going to be a very interesting hearing. I
appreciate you holding this. I appreciate being recognized. And
I yield back the balance of my time.
Mr. Nadler. I thank the gentleman.
I now yield--I now recognize, rather, the gentleman from
South--North Carolina.
Mr. Watt. Thank you. Thank you for elevating me back to
North Carolina. Don't say South Carolina.
Let me thank the Chair for holding the hearing first, and I
am looking forward to the witnesses' testimony. I have not read
the case, and I come down kind of between the Ranking Member
and the Chair in my initial reactions to this.
I have a lot of ambivalence on this issue. Some of you have
heard me say on prior occasions that I learned more about the
First Amendment and free speech in one experience than I
learned from my constitutional law classes in law school when
my senior law partner sent me to a county to represent some
Native Americans who had been demonstrating with tomahawks and
other native paraphernalia.
And I got there and, of course, they had been arrested for
various things--resisting arrest, parading without a permit,
this and that. And I got there and found that what they were
demonstrating about was that they didn't want to go to school
with black kids.
And so I rushed back several counties over to my law office
and confronted my senior law partner about why he would send
me, an African American, to represent the Native Americans who
were demonstrating against going to school with black kids, and
he looked at me without even hesitation and said, ``Don't you
believe in the First Amendment?''
I think I learned something there that kind of permeated
the law firm that I came out of, that even when you disagree
with what people are saying, you have to tolerate it and shore
yourself up and keep moving if you really believe in free
speech.
And I guess it was out of that experience that our law firm
went on to represent the Ku Klux Klan in several demonstration
cases, even though we were vigorously opposed to everything
they stood for.
So I take the First Amendment and free speech very
seriously, but I do want to make three quick points about this
argument. First of all, I think it is a mistake for any of us
to treat this as a partisan divide. It is not a partisan issue.
You know, sometimes this Democratic President may benefit
from it. Sometimes prior Republican Presidents may have
benefitted from it. So you know, speech is not Republican or
Democratic. It is speech. It is First Amendment right. And we
need to keep the partisan rhetoric out of this discussion. I
think that is a serious mistake that some of my colleagues are
making.
Second, I am concerned that while I am a strong, strong
believer in free speech and the First Amendment, that the
courts--or the Supreme Court seems to have equated speech and
money as if they were one and the same. Speech is one thing.
Money, just because you have it, doesn't necessarily give you
any greater free speech rights.
Next, I am concerned that the Supreme Court seems to define
the rights of corporations as being identical to the rights of
individuals. And I would like to hear the panel's evaluation of
that issue.
And finally, I have some very serious concerns that the
Court has engaged systematically on taking over prerogatives
that the legislative branch should be able to exercise, and
that these people who say that they don't believe in
legislating from the bench have been the ones who seem to be
most guilty of doing exactly that.
I can't even remember, Mr. Chairman, how I voted on McCain-
Feingold, to be honest with you. I haven't gone back to check.
Remember, I had some serious reservations about it, about the
free speech aspect of it, and I may have resolved those
concerns to vote for it.
Mr. Nadler. I think you may have voted for McCain and
against Feingold, or maybe the other way around. [Laughter.]
Mr. Watt. Might have been. But I don't know that that is
the issue. I think this is a serious issue, and we need to
treat it so, and that is why I came today, to listen to this
outstanding panel. Maybe I will have a more fixed opinion by
the end of the day about where I come down on this very
delicate issue.
But maybe that sounds like I am somewhere between the
Chairman and the Ranking Member, who seem to be--seem to have
pretty vigorous opinions, opposite sides. So I am here to
listen, and I appreciate the Chairman indulging me.
Mr. Nadler. Thank you.
Does anyone else seek recognition? Very good.
Without objection, all Members will have 5 legislative days
to submit opening statements for inclusion in the record.
Without objection, the Chair will be authorized to declare
a recess of the hearing at any time, although I do not intend
to call a recess unless we are interrupted by a vote.
We will now turn to our panel of witnesses. As we ask
questions of our witnesses, the Chair will recognize Members in
the order of their seniority on the subcommittee, alternating
between majority and minority, provided that the Member is
present when his or her turn arrives.
Members who are not present when their turns begin will be
recognized after the other Members have had the opportunity to
ask their questions.
The Chair reserves the right to accommodate a Member who is
unavoidably late or only able to be with us for a short time.
Our first witness is Professor Laurence Tribe, who is the
Carl M. Loeb University Professor at Harvard Law School, where
he has taught since 1968. He has argued numerous times before
the Supreme Court, where he also served as a law clerk to
Justice Potter Stewart.
He received an A.B. summa cum laude from Harvard College
and a J.D. magna cum laude from Harvard Law School.
Monica Youn--and I hope I am pronouncing that correctly--
Monica Youn is the director of the Campaign Finance Reform and
Money in Politics Project of the Brennan Center for Justice.
She served as counsel of record for the center's Supreme Court
amicus brief in Citizens United v. FEC.
Prior to joining the Brennan Center, she worked in private
practice and also served as a law clerk to Judge John T.
Noonan, Jr. in the United States Court of Appeals for the Ninth
Circuit. Ms. Youn received her J.D. from Yale Law School, her
master in philosophy from Oxford University, where she was a
Rhodes Scholar, and her B.A. from Princeton University.
Sean Parnell is president of the Center for Competitive
Politics. Previously, Mr. Parnell was vice president for
external affairs at the Heartland Institute in Chicago.
Prior to joining Heartland, he worked on political
campaigns in Iowa, managed a successful congressional campaign,
and served as finance director for a U.S. Senate race. Mr.
Parnell received a degree in economics from Drake University.
Don Simon is counsel to Democracy 21. He is currently a
partner at the firm of Sonosky Chambers Sachse Endreson &
Perry, LLP where he specializes in litigation and
administrative law.
From 1995 to 2000 Mr. Simon served as executive vice
president and general counsel of Common Cause. In that
capacity, he directed the legislative and legal programs for
the reform organization. Mr. Simon received his B.A. magna cum
laude in 1975 from Harvard College and his J.D. cum laude from
Harvard Law School in 1978.
I am pleased to welcome all of you. Your written statements
in their entirety will be made part of the record. I would ask
each of you to summarize your testimony in 5 minutes or less,
although I am a little loose with the gavel on time.
To help you stay within that time, there is a timing light
at your table. When 1 minute remains, the light will switch
from green to yellow and then red when the 5 minutes are up.
Before we begin, it is customary for the Committee to swear
in its witnesses.
[Witnesses sworn.]
Mr. Nadler. Let the record reflect the witnesses answered
in the affirmative.
You may be seated.
I now recognize Professor Tribe for an opening statement.
TESTIMONY OF LAURENCE H. TRIBE, CARL M. LOEB UNIVERSITY
PROFESSOR, HARVARD LAW SCHOOL, CAMBRIDGE, MA
Mr. Tribe. Thank you. Chairman Nadler, Members of the
Committee, I am honored by your invitation that I testify this
morning.
And with my prepared statement entered into the record, I
will just touch briefly on where I believe the Court went
wrong, why it matters, what Congress should do about it and why
Congress needs to act quickly.
Where did the Court go wrong? In my view, the majority and
concurring opinions are no match for Justice Stevens' 90-page
dissent. He shows convincingly, even to someone who is a strong
free speech believer, as I am, that the majority reached far
beyond the issues actually presented, failed to justify tossing
aside decades of precedent, and profoundly distorted both the
original meaning and the evolving understanding of free speech.
Why does it matter? When ideological groups or corporate
PACs collect and spend the money of those who want to support
or oppose particular candidates--examples like the Sierra Club
or the NRA or other PACs--corporations can focus hundreds of
thousands of dollars on campaign ads, and that is exactly as I
believe it should be, if that is how people want to spend their
money on politics. That is how much--what they want to spend.
But when entire corporate treasuries become available for
electioneering, even though the shareholders who own that money
never entrusted it to management to use in that way, the amount
that can be used to drown out individual voices artificially
multiplies exponentially, given the trillions of dollars in
corporate profits that suddenly become available.
A company like Exxon Mobil just needs to threaten that it
will spend whatever it takes to defeat a candidate who fails to
toe the line, and it can greatly improve the odds of getting
its way.
Indeed, just the perception that that is going on breeds a
degree of cynicism and distrust that can kill meaningful
political participation and endanger viable self-government.
What should Congress do about it? First, I think Congress
should start by guarding American elections from direct or
indirect manipulation by foreign entities and foreign funding.
The majority in Citizens United emphasized that it didn't
have that case before it. But of course, that didn't stop it
from reaching out to decide lots of questions it didn't have
before it.
The fact that it carefully tiptoed up to the water's edge
and not beyond I think is a strong signal that the majority
agreed with the Stevens dissent that the tradition of guarding
against foreign influence in American politics would trump the
majority's abstract theory that the identity of who is speaking
or bankrolling speech makes no First Amendment difference. But
the existing restrictions on foreign influence are riddled with
loopholes and need to be tightened.
Second, I think Congress should enact legislation giving
States permission to do what would otherwise violate the
commerce clause--namely, protect their own State elections from
manipulation by businesses and dollars from other States. That
is something that many of the 39 States that elect their judges
might well want to do.
Third, acting again under its commerce power, Congress
should protect corporations--let me repeat that, protect
corporations--doing business with government from being
pressured to pay if they are going to play. It should do that
by prohibiting such companies from spending money in connection
with candidate elections.
Nearly 75 percent of the 100 largest publicly traded firms
are Federal contractors. But there is no need for Congress to
limit its protection of unfettered commerce to the Federal
level because you do not need the Federal spending power to
justify such a law.
It can be justified the way the Supreme Court has justified
Hatch Act and other protections for employees whose employers
or unions might otherwise pressure them into supporting causes
that they do not endorse.
Fourth, I think Congress should give more meaningful
protection to those who buy shares in for-profit companies or
funds not in order to influence elections but in order to earn
a profit. The Citizens United majority insisted that the
procedures of corporate democracy could do the job. But the
dissent showed how inadequate those procedures are at present.
The majority said fine but ``the remedy is to consider and
explore other regulatory mechanisms.'' I think Congress should
take the Court up on its invitation and should adopt reforms
requiring shareholder pre-approval for campaign expenditures by
for-profit business corporations and by making it easier for
dissenting shareholders to sue for corporate waste. My prepared
statement spells that out in more detail.
Fifth, to protect both shareholders and voters, the
disclaimer and disclosure requirements that the Court upheld 8-
1 in Citizens United have to be tightened so that money cannot
be funneled through shells with innocuous names like Citizens
for Good Health and Clean Energy when the real source is
Novartis or Mobil Oil.
And the CEOs of for-profit corporations that bankroll
either positive or negative ads should have to own up to their
responsibility under oath and certify on camera the business
purposes of their political expenditures.
I see the light is on, but if I could go on for a few
seconds, I would appreciate it, Mr. Chairman.
Sixth, even after Citizens United, the law bars corporate
contributions to candidates and electioneering expenses that
are coordinated with their campaigns. But the rules defining
coordination are hopelessly fuzzy and loophole-ridden.
So a lot of de facto contributions can sneak under the wire
as if they were independent. Waiting until the FEC acts is like
waiting for Godot. Congress needs to codify the rules itself.
Seventh, public financing needs to be explored, things like
the Fair Elections Now Act, but that is a far reach in terms of
ever ultimately solving the problem, and we can't afford to
wait.
That is the key point I want to leave with you. Why do we
need to act now? The reason is that unless Congress adopts
reforms like these before the November elections, large
business interests, including those indirectly funded from
overseas, may give us a Congress pre-selected with a view to
opposing these various reforms, and then it will be too late to
do what is needed to hold back the potentially distorting
corporate flood.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Tribe follows:]
Prepared Statement of Laurence H. Tribe
__________
Mr. Nadler. I thank you.
Ms. Youn, you are recognized.
TESTIMONY OF MONICA Y. YOUN, COUNSEL AND DIRECTOR OF THE
CAMPAIGN FINANCE REFORM PROJECT, BRENNAN CENTER FOR JUSTICE,
NEW YORK UNIVERSITY SCHOOL OF LAW, NEW YORK, NY
Ms. Youn. Thank you for inviting me to testify today.
As we all know, Congress is debating a range of policy
proposals to mitigate the disastrous potential consequences of
Citizens United. These proposals, particularly public
financing, voter registration modernization, disclosure and
shareholder protection, are discussed at greater length in my
written testimony.
And I agree with Professor Tribe that it is crucial that
Congress act, and act quickly. But whatever legislation
Congress ends up adopting, this we know for sure--the new
reforms may be on a collision course with the present majority
of the Supreme Court.
In the meantime, challenges to other Federal and State
campaign finance reforms, including public financing,
disclosure laws, PAC requirements and soft money restrictions,
are on a fast track to the Supreme Court as well, brought to
you by many of the same lawyers that brought Citizens United.
In defending these reforms, then, and in enacting new ones,
it is crucial that we push back against the faulty factual
assumptions upon which the Citizens United majority based its
decisions.
These five justices were in such a hurry to strike down 60
years of campaign finance safeguards that they couldn't even
wait for a factual record to be developed. But by rushing to
judgment, these five justices based their decision on nothing
more than their own gut instincts about how politics actually
works.
These instincts turned out to be, at best, extremely naive,
as Senator John McCain put it; at worst, dangerous; and at
root, just plain wrong.
This Committee can play a crucial role in setting the
record straight by convening hearings that develop the factual
record to provide a reality check for the current Supreme Court
majority. I want to focus my testimony today on three of these
faulty assumptions.
First, the Court assumes that limits on corporate political
spending exist because incumbent politicians wish to silence
their most effective opposition. In fact, Justice Kennedy goes
even farther, stating that these laws violate the First
Amendment because the government has ``muffled the voices of
corporations in politics.''
I defy anyone watching the debates in Congress regarding
the banks, health care and climate change to say with a
straight face that corporations have been unable to express
their point of view on these matters either to Members of
Congress or to the public at large.
What corporations have not been able to do up until this
point is to buy an election, to bring their treasury funds
directly to bear in our most sacred of democratic institutions.
Second, the Court assumes that shareholders have oversight
over political spending by corporate managers and that
disclosure laws ensure that voters know who is paying for our
politics.
Once again, this assumption is faulty. First, as a recent
Brennan Center report points out, Federal law does not
currently require corporate political spending to be disclosed
either to shareholders or to corporate boards.
Similarly, voters can't detect corporate political activity
since, as Professor Tribe pointed out just now, corporations
commonly mask their corporate spending behind misleadingly
named euphemisms. In most of the cases, by the time these
groups are unmasked, the election is already over.
But disclosure alone is not an adequate safeguard of our
democracy. If you fear burglars, you don't stop locking your
doors just because you have invested in a security camera. By
the time the damage is detected, it is far too late.
Finally and most disturbingly, the Court assumes that
unlimited corporate spending poses no threat of corruption. The
Court seems woefully ignorant of the countless examples of
influence peddling resulting from corporate independent
expenditures.
But you know, this woeful ignorance is not without limit.
For example, in the Caperton case, faced with the ugly truth of
what corruption looks like in practice, the Court blinked. It
pulled back.
Justice Kennedy there voted with the four pro-reform
justices rather than with the Roberts bloc because he was
unable to deny, faced with the facts, the reality of political
corruption, at least in judicial campaigns.
By building a strong factual record on this and other
issues, the Committee can ensure that this Supreme Court base
future decisions in the area of money and politics, on facts
rather than fiction.
Thank you for inviting me to testify.
[The prepared statement of Ms. Youn follows:]
Prepared Statement of Monica Y. Youn
__________
Mr. Nadler. I thank you.
Mr. Parnell is recognized.
TESTIMONY OF SEAN D. PARNELL, PRESIDENT, CENTER FOR COMPETITIVE
POLITICS, ALEXANDRIA, VA
Mr. Parnell. Thank you, Chairman Nadler, Ranking Member
Sensenbrenner, Members of the Subcommittee. Thank you for
inviting me to testify today.
To begin, I would like to address the issue of so-called
unlimited corporate spending. A review of recent political
spending in other areas by incorporated entities shows that the
lack of statutory limits on spending has not led to
corporations emptying their treasuries in support of political
agendas.
For example, in the 2002 election cycle, the Republican and
Democratic Parties raised approximately $300 million combined
in soft money from businesses, unions and other organizations
during a period when after-tax corporate profits totaled over
$1 trillion.
Corporations also failed to avail themselves of their
amassed wealth in the 2004 election cycle when so-called 527
groups spent approximately $612 million in connection with all
elections. Most of the 527 funding in 2004 came from
individuals, ideologically oriented and issue-driven groups,
and unions.
Looking only at Exxon Mobil, which appears to be the
popular villain of the day, lobbying expenditures in 2008
totaled roughly $29 million, while they earned over $45 billion
in profits that year.
And finally, an internal memo regarding Exxon Mobil's
giving to public policy groups in 2002 States that they gave
only $5.1 million to such groups. In 2002 Exxon Mobil had
annual profits of approximately $11.46 billion.
Simply put, in the past, business corporations, unions and
ideologically oriented groups have had ample opportunities to
pour unlimited amounts of money into the American political
system through soft money, 527 groups, lobbying and public
policy groups and have shown very little interest in putting
more than a tiny fraction of their resources into these
efforts.
While the Citizens United decision does not pose nearly the
threat to America's political system as detractors claim, there
may, in fact, be some legislation that ought to be considered
in light of this ruling.
When considering policy responses, however, it is important
to note that there are some things which it is clear that
Congress simply cannot do in light of the Citizens United
decision and other rulings on campaign finance and the First
Amendment.
Among the options that are unlikely to be permitted by the
courts would be any sort of tax levied on the exercise of the
constitutional right, as proposed in H.R. 4431, or the
enactment of legislation that would simply restore pre-Citizens
United status quo through the back door, such as H.R. 4435, a
bill that would apparently forbid publicly traded company from
being listed on stock exchanges if they engage in independent
expenditures.
Another consideration to keep in mind is the Supreme
Court's admonishment that ``the First Amendment stands against
attempts to disfavor certain subjects or viewpoints or to
distinguish among different speakers which may be a means to
control content. There is no basis for the proposition that in
the political speech context the government may impose
restrictions on certain disfavored speakers.''
This strongly suggests that the courts are likely to be
skeptical of laws and regulations that impose burdens only on
some disfavored incorporated entities while leaving other
favored speakers free of similar burdens.
For example, laws that require for-profit corporations to
seek shareholder approval for expenditures, such as H.R.s 4487
and 4537, might be struck down in court because no similar
requirement is imposed on unions or other nonprofits.
The pre-Citizens United status quo may be gone, but there
are several policy changes that Congress should consider,
including eliminating the limit on coordinated expenditures
between parties and candidates and raising contribution limits
for individuals, parties and PACs to fully account for
inflation since they were first imposed in 1974.
We at the center believe these measures would be consistent
with the First Amendment and are actually likely to draw money
out of the newly permitted world of relatively unregulated
corporate express advocacy and into the more heavily regulated
sphere of candidates, parties and PACs.
I have attached to my submitted testimony a document
entitled ``After Citizens United: A Moderate, Modern Agenda for
Campaign Finance Reform'' that provides additional information
on these suggestions and others.
Finally, I want to make one comment that was not made at
the Senate hearings yesterday and has not been raised by
anybody here so far. And that is the subject of book banning.
The United States Supreme Court, when they first heard oral
arguments in Citizens United, was presented by the deputy
solicitor general of the United States with the argument that
under campaign finance regulations it was permitted for the
government to ban books.
That is, I would hope, a matter of some interest to the
Subcommittee on the Constitution, Civil Rights and Civil
Liberties.
It is speculation on my part, but it is my belief, when
people ask why did the United States Supreme Court potentially
reach for this decision when it was not presented initially
with questions of whether it should overturn Austin v.
Michigan--but it is my own speculation that the United States
Supreme Court, when informed by the deputy solicitor general of
the United States that, yes, the Federal Government could under
campaign finance regulations ban books--that the Supreme Court
simply decided, ``If you believe that you have the authority to
ban books, we really need to revisit exactly what authority it
is that you believe allows you to ban books.''
I would be happy to talk about this or anything else during
the question-and-answer period or at any other time. Thank you.
[The prepared statement of Mr. Parnell follows:]
Prepared Statement of Sean D. Parnell
ATTACHMENT
__________
Mr. Nadler. I thank the gentleman.
Mr. Simon?
TESTIMONY OF DONALD J. SIMON, PARTNER, SONOSKY, CHAMBERS,
SACHSE, ENDRESON & PERRY, LLP, WASHINGTON, DC
Mr. Simon. Thank you, Mr. Chairman, Members of the
Subcommittee. I appreciate the opportunity to testify this
morning.
The Citizens United decision represents an enormous
transfer of power, political power in our country, from
citizens to corporations. Until 2 weeks ago, the financing of
Federal elections had been limited by law to individuals and to
groups of individuals functioning through political committees.
Corporations had been prohibited from using their corporate
wealth to influence Federal campaigns, a policy that dates back
to 1907 when Congress first banned corporations from directly
or indirectly making contributions in Federal elections.
But now, corporate wealth accumulated in the economic
marketplace can be brought to bear directly and without
limitation on political campaigns. This will have a major
negative effect on the conduct of Federal, State and judicial
elections throughout the country.
An avalanche of independent spending by one or more
corporations or trade associations, particularly in the form of
negative attack ads, and particularly at the end of a campaign,
could make it virtually impossible for the candidate to respond
and could easily have a decisive impact on the outcome of the
election.
Even the threat of such spending is in itself likely to
distort the legislative process. Members of Congress will, in
effect, have a Sword of Damocles hanging over their heads.
Any wrong vote by a Member on an issue of importance to a
corporation or trade association could trigger a multi-million-
dollar campaign to defeat the Member. And every Member will be
forced, as a practical matter, to consider this consequence in
deciding how to vote on legislation.
Now, some have argued that corporations will not take
advantage of this new opportunity, that the Supreme Court's
decision is really no big deal. These words are comforting, but
logic and history suggests otherwise.
During the 1990's, when corporations were able to make soft
money donations to the political parties for use in Federal
elections, they did so in the tens and hundreds of millions of
dollars in each election cycle, until the soft money system was
shut down in 2002.
The fact that corporate America had trillion-dollar profits
and could have spent even more hardly means that the huge sums
they did spend showed a lack of corporate interest in
exploiting opportunities to use their wealth to buy access and
influence.
Given the ongoing legislative agendas that corporations
have here in Congress, and given the huge financial stakes they
have in these issues, there is little reason to think companies
will not accept the court's invitation to mount campaigns
directly for and against candidates.
Serious students of Congress agree with this view. Former
Republican senator Chuck Hagel, for instance, said before the
decision was issued that allowing corporate spending would be
an astounding blow against good government and responsible
government.
Longtime Washington observer Norm Ornstein wrote in Roll
Call last week, ``It is not even the money that might be spent.
It is the threat of spending that will alter many equations on
Capitol Hill. The impact often will be felt at the margin
behind closed doors but with huge effects on policy.''
Now, it is certainly true that some companies may not want
their names associated with campaign spending. But they may not
be at all constrained from making expenditures indirectly and
secretly by giving corporate funds to third-party groups such
as the Chamber of Commerce, trade associations or other
intermediaries which then spend the money.
These expenditures will be made in the name of the
intermediary but designed to further the political interests of
the corporate donors who are the true sources of the funds.
It is essential for Congress to move swiftly to enact
legislation to mitigate the damage done by the decision. The
organizing principle should be to advance legislation that
directly responds to the impact of this decision and that can
be enacted in time to take effect for the 2010 congressional
elections.
With this in mind, Congress should focus on enacting new
disclosure rules that would require full disclosure of
expenditures, including disclosures of transfers of funds used
to make such expenditures; enacting corporate governance
provisions that would grant shareholders a voice in the
political spending done by their corporations; strengthening
existing pay-to-play rules to prohibit government contractors
from using corporate funds to make independent expenditures;
strengthening existing coordination standards to ensure that
independent spending by a corporation is truly independent of
any candidate or party and not coordinated in a de facto
fashion; addressing the problem created by Citizens United
which allows a domestic corporation owned or controlled by a
foreign national to spend money to influence Federal elections.
Now, let me just take a minute on that. It is true that
foreign corporations are still banned by Section 441(e) from
making campaign expenditures. But domestic corporations owned
or controlled by a foreign corporation or, indeed, by a foreign
government are not covered by Section 441(e) and now are no
longer subject to a general corporate ban.
So these domestic subsidiaries are free to spend money.
Although an FEC regulation does address this situation, it does
so, I believe, inadequately, and existing protections should be
strengthened and made a matter of statutory law.
Finally, reforming the existing lowest unit rate
requirements in order to provide better access to low-cost TV
to candidates and parties so they have the resources to respond
to corporate spending.
Now, let me just say that this agenda, I think, is notable
in its modesty. Each of these reforms I think is fully
consistent with the majority opinion in Citizens United and
most of them, indeed, are invited by the majority opinion.
Final word is that there is one more thing Congress should
do, which is to resist any call to raise contribution limits or
to repeal the soft money rules. To use Citizens United as an
excuse to revive the soft money system is nothing less than an
argument that one means of corruption justifies the
introduction of another means of corruption. Adding to a
problem is no way to solve it.
Thank you very much.
[The prepared statement of Mr. Simon follows:]
Prepared Statement of Donald J. Simon
__________
Mr. Nadler. I thank you.
We will begin the questioning by recognizing myself.
Professor Tribe, let me ask you a number of questions.
Let's talk about disclosure, first of all. Let's say that
Exxon--we will use them as our bogeyman today for no particular
reason except that they are well known and large--let's say
that Exxon wants to contribute a lot of money to a given
candidate and wants to do it through the Citizens for a Clean
Environment, which they invented.
Now, we could, obviously, require that an ad run by such a
group, if it were completely funded by Exxon, say this ad is
funded by Exxon, could we not?
Mr. Tribe. Yes, certainly----
Mr. Nadler. Now, let's assume----
Mr. Tribe [continuing]. You could say that.
Mr. Nadler [continuing]. Thank you. But let's assume that
Exxon got together with 20 other corporations to provide the
financing for Citizens for a Clean Environment. Could we
require that they list all their contributors or their five
largest contributors in this 30-second ad?
Mr. Tribe. I think it is purely a prudential and not a
constitutional matter. That is, in the markup of such a bill,
you would have thresholds, and you would certainly indicate
that any corporation above a certain size that had contributed
more than a stated percentage of----
Mr. Nadler. Okay, thank you.
Mr. Tribe [continuing]. The cost has to be disclosed.
Mr. Nadler. Now, you mentioned pay or play, and you
mentioned the Hatch Act. Do you think it would be
constitutional with this Supreme Court majority for us to say
that any corporation that does business with the Federal
Government cannot use its corporate treasury to fund campaign
ads?
Mr. Tribe. I believe that would be permissible under the
rationale of this opinion because the Court is talking about
the rights of corporations, and one could protect those rights
by shielding them from being pressured to pay to play.
Mr. Nadler. And the same thing with protecting
shareholders--could we require that before the corporate
treasury is used to do campaign ads that they must get the
written permission of 5 percent of the shareholders?
Mr. Tribe. I think you could certainly require that as to
for-profit business corporations where there is reason to think
that people invest either directly or through intermediaries
not for ideological reasons. I don't think you could do that
with respect to corporations which are essentially ideological
groups and happen----
Mr. Nadler. But the for-profit----
Mr. Tribe [continuing]. To be in corporate form.
Mr. Nadler [continuing]. Do you think we could require that
they get the permission on--to engage in a campaign by a
specified percentage of the shareholders?
Mr. Tribe. I believe you could.
Mr. Nadler. Thank you. Let me turn to foreign control,
foreign subsidiaries. Now, a number of the princes of Saudi
Arabia have recently said publicly that their number one danger
to their kingdom is that America might become energy
independent, and that would be a terrible danger to them
because we wouldn't buy their oil, and they are right, I think.
And I hope we do that.
Now, they have a motive, therefore, to influence our
politics to see that we don't become energy independent, and
they have a lot of money. Could we require that no corporation
with more than, say, 5 percent ownership of non-American
citizens can use its corporate treasury?
Mr. Tribe. I believe, though the majority opinion carefully
doesn't address that--it simply says that there are certain
limits on foreign entities--I believe that there would be five
votes at least to uphold such a requirement. I can elaborate if
you want to know what my thought process is, but----
Mr. Nadler. Well, let----
Mr. Tribe [continuing]. That is my conclusion.
Mr. Nadler [continuing]. We will talk later to elaborate,
but not in this 5 minutes.
So controlled by foreign nationals, owned or controlled--we
know they don't have to own 50 percent of shares in a company
to have effective control, nor does it have to be a domestic
subsidiary. It could be an American company with X percent of
foreign control, and it is effective control.
Mr. Tribe. Right. There are lots of ways that foreigners
could control and influence the American electoral process, and
any----
Mr. Nadler. Let me----
Mr. Tribe [continuing]. Reasonable way of excluding that--
--
Mr. Nadler [continuing]. Let me ask one other question, and
then I will get to a different witness. The Court seemed to
say--and I read the opinions last night. The Court seemed to
say very--that a corporation essentially is identical to a
natural person.
Now, we don't treat corporations identically to natural
persons. If natural persons commit felonies, we put them in
jail. When we put them in jail they are deprived of their civil
rights--the right to vote. The courts have held that people in
prison have--lose a lot of their First Amendment rights.
Could we constitutionally do the same thing to a
corporation if we found it guilty of an election law violation
and sentence it to do no business for 5 years, or sentence it
to speak not at all for 3 years?
Mr. Tribe. Perhaps. I think it would depend on the design
of the law. But obviously, the equation of corporations with
individuals is only partly metaphoric. That is, as you pointed
out in your opening statement, you can break up a corporation
if it gets too big to fail. You can't break up a person if
that----
Mr. Nadler. Well, I am beginning to--I am beginning to
wonder if the Court is going to tell us we can't break up a
corporation unless we convict it of a capital crime.
Mr. Tribe. Well, I suppose that is right. The death penalty
is a separate controversy, of course.
Mr. Nadler. Yes.
Mr. Parnell, let me ask you the following. This is an
actual case that occurred in New York a number of years ago.
How would you deal with it? How do you think we can
constitutionally deal with it?
The town or city--there is a town of Poughkeepsie and a
city of Poughkeepsie; I forget which it was. It is a small city
in New York.
People typically spend $4,000 or $5,000--or at least this
was true 20 years ago when what I am about to say occurred.
People would typically spend $4,000 or $5,000 at the outside to
be elected to the, I think, nine-or ten-member city council at
the time.
A very large company wanted to build a mall in the--
somewhere in Poughkeepsie, and the then-Democratically
controlled city council for some reason didn't want them to do
that, so they refused to let--to give them permission to build
the mall.
The local Republicans were in favor of the mall, basically,
and so in the next election the local Republicans did what they
normally did, spent $4,000 or $5,000 apiece to run for office,
but this company came in and spent $20 million on an
independent campaign expenditure, completely bowled over the
local Republicans, who had no control of what was going on,
made all sorts of allegations against the other people, made
all sorts of claims on behalf of the Republicans, who had
nothing to say about the matter and repudiated it afterwards,
said, ``I didn't mean that. I didn't say that.''
Be that as it may, the Republicans got elected. As they had
said they would do, they approved the mall. The company then
started building. Eventually the mall was built. All of this
came out in public. The local electorate got infuriated. They
couldn't punish the company, so they punished the local
Republicans, who were really not at fault at all.
But the mall got built, and the local democratic procedure,
the--of everybody was completely overturned by some company
coming in and spending--I forget how many millions of dollars
in a campaign that normally wouldn't have totaled, for all
people involved, $20,000, $30,000, and just completely
overwhelmed the local system.
How do we protect against the use of corporate assets to
completely stifle a democratic procedure in a case like that,
given this decision?
Mr. Parnell. Well, I think I would disagree with one of the
fundamental premises of your statement there, which is that the
democratic procedure was somehow thwarted or overturned,
because the voters of those towns--they were the ones that----
Mr. Nadler. One town.
Mr. Parnell. I am sorry?
Mr. Nadler. One town.
Mr. Parnell. Oh, I am sorry, one town. They were the ones
who had to listen to this million dollars, $500,000, 20--
whatever amount of money was spent--they were the ones that had
to listen to the arguments made in those campaign ads or
mailers, or whatever it was, and ultimately decide, ``Do I
believe this? Do I agree with this? Does this make sense to me?
Or do I not?''
Mr. Nadler. So in other words, someone has a corporate
interest to build a mall.
Mr. Parnell. Right.
Mr. Nadler. They come in and spend $20 million, or $5
million, or whatever it was, never mentioning the mall, saying
that the local councilmen on the other side were terrible for
some extraneous reason having nothing to do with the mall. They
get the people they like elected, although they liked them only
on one thing, the mall. The mall gets built.
As soon as the electorate finds out what happened, they get
infuriated, do what they can, throw out the hapless
beneficiaries of this corporate spending. But the town never
got a fair hearing on the mall.
Mr. Parnell. I, again, don't know that I would agree with
your description. I mean, there are always factors that come
into elections for city council or any other. You have
endorsements by organizations. You have media coverage.
Mr. Nadler. Okay. So you think that what happened there is
okay and we shouldn't be concerned about something like that
being replicated.
Mr. Parnell. I think that what you--if you want to be
concerned about anything, I would be concerned about an
electorate that maybe was not paying attention or discerning
enough to be able to say, ``These allegations----
Mr. Nadler. Okay.
Mr. Parnell [continuing]. Are not worth considering in my
voting process.'' I mean, ultimately, voters are sovereign.
They are responsible for----
Mr. Nadler. But they are sovereign--and you believe that
this kind of overwhelming thing doesn't defeat the sovereignty
of the voters. Okay, that is a philosophical distinction--
difference. Thank you very much.
I will now recognize the distinguished Ranking Member of
the Subcommittee, the gentleman from Wisconsin.
Mr. Sensenbrenner. Well, thank you very much.
Listening to the Democratic witnesses today, I get the
impression that they think the sky is falling. And I don't
think the sky is falling, but I think that the Citizens United
case is a natural progression to what has happened over the
last 35 or 40 years on the whole issue of campaign finance.
You know, let me say that every time Congress and the Court
has tightened the screws relative to campaign finance,
something has happened where there is more money that has been
gone off the books and away from the direct control of
candidates and the direct responsibility of candidates.
And let me give you a historical progression. In 1972 there
was a man that gave several million dollars to Nixon's
campaign. Nixon disgraced the presidency. The Watergate
Congress passed a campaign finance bill that limited
contributions. And what did we get? We got PACs, political
action committees.
In 1976 the Supreme Court decided the Buckley case. And the
Buckley case essentially said that Congress and the States
could regulate candidates but could not regulate individuals
and equated the spending of money to influence campaigns as
something that was protected by the First Amendment. Shortly
afterwards, we ended up getting soft money as a result of that.
The McCain-Feingold bill attempted to get rid of soft
money, which was money not given for candidate advocacy but
given to parties for party-building activities like voter
registration, absentee ballots, get out the vote drives and
stuff like that. So McCain-Feingold made that illegal, and we
had more and more money go off the books for the so-called
independent expenditures.
And now the chickens have come home to roost as a result of
all of these decisions that have been made either legislatively
or judicially with the Citizens United case.
Now, you know, maybe, you know, I am a little bit, you
know, over reactive as the Democratic witnesses are on this.
But I have always believed that we don't need a First Amendment
to protect politically correct speech. The reason the First
Amendment was passed by the first Congress was to protect
politically incorrect speech.
And the three Democratic witnesses, I think, have
accurately zeroed in on speech that is politically incorrect
which the Court has said is protected by the First Amendment.
And they kind of sent the message that no matter how hard we
try with the statute to correct the Citizens United speech--or
Citizens United decision, we are--that also is going to meet a
similar fate as a result of this Supreme Court majority.
Now, that being said, you know, let me ask the three
Democratic witnesses, should we try to amend the statute to try
to deal with this, as each of you have said in a little bit
different way, which will result in litigation and perhaps the
same result? Or should we deal with this issue by a
constitutional amendment, as Senator Kerry and Committee
Chairman Conyers have recognized and have introduced?
And I would just like to ask a yes or no answer, beginning
with you, Professor Tribe.
Mr. Tribe. If the only word I can use is yes or no, it
would be no. But if I may ask, as a matter of personal
privilege, to address the question of whether we are
``Democratic witnesses,'' I very much agree with Congressman
Watt that this is not and should not be a partisan issue.
I know it was the majority that called us here, but I have,
for example----
Mr. Sensenbrenner. Well, I am running out of time. Mr.
Parnell was invited by me.
Yes or no, Ms. Youn?
Ms. Youn. I would have to say no. I would say let's push
back against the First Amendment which, until last month, did
not permit this distortion of our democracy.
Mr. Sensenbrenner. Okay.
Mr. Simon?
Mr. Simon. I don't support a constitutional amendment as
the remedy for this decision.
Mr. Sensenbrenner. Well, I am glad you said--all three of
you have said that, because if we have a constitutional
amendment that would mean that Congress would be amending the
Bill of Rights for the first time in history, and that opens up
a very disturbing Pandora's Box, and I would not support a
constitutional amendment.
Going to the next step, if we want to have political
responsibility consistent with the First Amendment, what about
getting rid of all of these restrictions and instead have a
Federal law that channels all of the money through candidate
committees, where the candidate is responsible for the source
of the financing, the amounts of the financing and how that
money is expended, but also have a law that requires that all
of this information be placed on the Internet before the money
hits the candidate's bank account?
Wouldn't that be the way to very clearly constitutionally
deal with this issue in a way that does not raise any First
Amendment questions either as a result of the Citizens United
decision or as a result of any of the previous decisions the
Court has made?
Let's start with you, Mr. Parnell, since you were off the
hook on the last question.
Mr. Parnell. Thank you, Congressman. Obviously, yes, I
believe that--well, actually, I need to kind of separate. You
have two different statements in there.
The idea of simply allowing people to contribute to
candidates that they support, they believe in, without limits,
without restrictions--that is certainly what we believe the
First Amendment protects, and so we would be all in favor of
the general proposal as outlined by you.
One thing, though--and I may have misunderstood what you
were saying--you said channeling all of the money through
candidates, and that would, if I am understanding you
correctly, exclude still independent groups--the National Rifle
Association, Exxon Mobile, the United Auto Workers.
Mr. Sensenbrenner. Well, the point that I want to make is
that if any of us up here on the dais accepts a million dollars
from Exxon Mobil and discloses that prior to the money hitting
our bank account, I think we all would have a very tough time
persuading voters to vote for us when the election comes.
Mr. Parnell. Yes. Yes. I just wanted to make the point that
I was a little unsure of what you were saying in terms of
independent spending and whether independent spending would
still be allowed under the statute that you proposed. And
obviously, we are very keen----
Mr. Sensenbrenner. I don't think we can prohibit it.
Mr. Parnell. Exactly. I just----
Mr. Sensenbrenner. Yeah.
Mr. Parnell [continuing]. Wanted to make sure that----
Mr. Sensenbrenner. And that was not Citizens United. That
was Buckley.
Mr. Parnell. That was Buckley, exactly.
Mr. Sensenbrenner. Okay.
Mr. Parnell. One of the things that has kind of gotten lost
here in talking about precedents being overturned is that
Austin v. Michigan was, in fact, a rejection of a part of
Buckley that ruled that independent expenditures are not
corrupting. They cannot be corrupting.
And so to the extent that the argument is being made that
the Supreme Court went way out on a limb here in rejecting
precedent, all they did was actually bring back the original
1976 precedent, which I think everybody in the world of
campaign finance understands is the guiding precedent in the
world of campaign finance.
Mr. Sensenbrenner. Thank you.
I yield back the balance of my time.
Mr. Nadler. I thank you, and--I thank the gentleman.
And I will now recognize the gentleman from North Carolina
for 5 minutes.
Mr. Watt. Thank you, Mr. Chairman.
If it is any consolation to Mr. Sensenbrenner, I want to
assure him that I don't support a constitutional amendment to
address this issue either, not that that matters, I am sure.
I actually have two questions that I--maybe will convert
this from somewhat of an esoteric discussion that sometimes
constituents can't understand to a real-life situation. And I
am going to tie the two questions together because I think they
are related.
First of all, my first question is do corporations have the
same rights under our Constitution as individuals, and second,
to, related to that, find out what--whether there are any
limitations left after this Supreme Court decision on what a
corporation can do either as an independent uncoordinated
expenditure or what--whatever, by postulating this example,
which I think my constituents will understand very well.
I come from Charlotte. That is the largest center of my--in
my congressional district, happens to be the--at least up until
the banking and economic meltdown, the second largest financial
center next to Wall Street. I had more financial interests in
my congressional district than any other Member of Congress
other than Carolyn Maloney.
I am on the Financial Services Committee, and we have had a
number of very, very difficult issues both before the financial
meltdown and since the financial meltdown in which the banking
and financial services industry--I won't call particular names,
but everybody in my congressional district will understand who
I am talking about--were not all that happy with where I come
down on a lot of these issues--predatory lending.
I was out there very much aggressively in the front of
consumer financial protection agency. I am a strong advocate of
finding some solution to this whole too-big-to-fail issue where
there are entities in my congressional district that everybody
acknowledges under the old criteria have been too big to fail.
Now, the question I want to pose is would there be any
limits if one or more of those financial entities in my
congressional district--would there be any limits left in--
after the Supreme Court's decision on what they could do if
they really decided they want to just get rid of this person in
Congress?
That seems to me to convert this from a constitutional
theoretical discussion into a real-life potential, although I
am not anticipating that any of them are going to do that.
I just want to know what the limitations are left and
whether there is any way that we can constitutionally
reconstruct those limitations as Congress that the Supreme
Court as currently constituted might uphold.
I will stop and listen to Professor Tribe and right on down
the line, to the extent we have time. Yes.
Mr. Tribe. Congressman Watt, I think it is a very realistic
example, obviously. It is what is real. And the fact is that
after this decision, the limits that are left on what they can
do are rather paltry.
They can't directly contribute. They can't tell you,
``Congressman Watt, we will give you $100,000, a million
dollars, if you back off in terms of a predatory lending or too
big to fail or a consumer protection agency.'' But there are no
limits on what they can independently spend getting you
defeated or your opponent elected.
But that doesn't mean that Congress can't do something
between now and November to reinstate limits. That is, these
are not ideological groups. They have ideologies, but they are
not like the National Rifle Association or the Massachusetts
Council----
Mr. Nadler. Would the gentleman yield for a moment?
Mr. Watt. I am happy to yield.
Mr. Nadler. Thank you. Just on that point, would it be
legal under this decision for some corporation to say to a
congressman, ``I have $10 million to spend for you or against
you depending how you vote on this bill,'' or would that be
bribery?
Mr. Tribe. Unfortunately, it is legal. But what we could do
is say that since these are not----
Mr. Nadler. I thank the gentleman.
Mr. Tribe [continuing]. Ideological groups, they are
business groups, what they are trying to do is deploy their
shareholders' money, money that isn't theirs, money they
haven't given--been given specific permission to spend this
way, on political causes.
And therefore, solutions that focus on corporate democracy,
corporate governance, as well as solutions that focus on
disclosure, could at least reinstate not in full the limits
that existed before Citizens United, the Citizens United, but
they could restrict the degree to which the corporations that
you are talking about could flood the market.
Ms. Youn. I wanted to respond first to your first question
about whether corporations are, indeed, identical to people.
Corporate spending of the kind at issue in Citizens United is
regulated as a commonplace matter by this Congress all the
time.
Corporations really do differ in that regard from
individuals. A corporation cannot spend its money in violation
of the business judgment rule. I don't have to subscribe to
such a rule in my personal spending.
I am allowed to waste as much of my money as I want to on
anything I want to. A corporation is not entitled to waste
corporate assets. Corporate spending is regulated all the time,
and it has never been considered a problem for the First
Amendment.
But secondly, I wanted to respond to your very pressing
question, because these are exactly what we believe the stakes
to be in this decision. Prior to this decision, if a
corporation wanted to come after you or after any swing vote on
a matter--you know, on a matter of great policy urgency, you
know, they had two primary options.
They could lobby, or they could ask their--you know, they
could ask people to contribute to their PAC, subject to
contribution limits. They could also engage in some limited
electioneering-type activity.
But what this allows them to do is to use every dollar in
their treasuries to come after you or any other swing voter
directly, to use every dollar to try to get--you know, to try
to take you out.
And they don't have to do so based on your support of, for
example, the--you know, a consumer financial protection agency.
They can do so based on whatever smear they feel like is the
best expenditure of a $100 million advertising campaign.
Mr. Parnell. Congressman, I think $100 million against you
might be a bit of overkill. I don't think you need to worry
about that sort of expenditures.
No, there are no limits on how much a corporation or a
union or an advocacy group can spend attempting to either
bolster your campaign or oppose it. I would like to talk about
two limits that do exist, however. And these are limits on you.
And this is a limit on how much you are able to coordinate
with your party, who presumably would like to see you continue
in office. Right now, there is a very limited amount of money
that you are able to coordinate with them.
I would think that it might be beneficial, if you are the
target of a large expenditure aimed at unseating you--I would
think it might be beneficial for you to be able to have
unlimited coordinated expenditure with your political party
which, after all, exists in part to help you get elected.
And then of course, there is also the contribution limits
that remain on you and were not fully indexed for inflation
from the 1974 limits that really limit your ability to raise
funds in order to get--communicate with the voters on why you
should, in fact, retain your office.
Mr. Watt. I am not real anxious to raise those limits, I
would have to tell you. I think that would be--who was it that
made that point? I am sorry, I wasn't supposed to interrupt.
Go ahead, Mr. Simon. My time is way over--expired, but----
Mr. Simon. I will be brief. We have heard the Chairman's
scenario about what happens at--or has happened at a local
level with corporate spending, and your hypothetical of what
can happen at the Federal level.
And I think, unfortunately, this--both are correct. Both
are a vision of the world we are now in, and I think that is
why it is so disturbing.
In addition to what Professor Tribe suggested in terms of
disclosure remedies, which I think are very important, and
corporate governance remedies, which may be some way to get a
handle on this, I think there are no--there is no way to impose
a direct limit on independent spending by a corporation.
In your particular hypothetical, however, if the----
Mr. Watt. Why not, if a corporation is not the equivalent
of an individual?
Mr. Simon. Well----
Mr. Watt. I just don't understand that.
Mr. Simon [continuing]. Because five justices of the
Supreme Court have said that Congress lacks that power at this
point. I mean, that is the harm caused by the majority opinion.
Let me just add, though, in your particular hypothetical,
if the financial institutions you are talking about are
recipients, say, of TARP money or Federal bailout money, there
may be a way on a sort of pay-to-play theory to pose limits on
independent spending, because I think Federal contractors,
recipients of large Federal funding, do offer an opportunity
for congressional action.
Mr. Nadler. I thank the gentleman.
Before recognizing the gentleman from Iowa, I would just
point out factually to Mr. Parnell that the law was changed a
number of years ago. The campaign contribution limits were
raised since 1974, and they have been indexed to inflation. In
fact, there is a cost-of-living increase now in the law.
The gentleman from Iowa is recognized.
Mr. King. Thank you, Mr. Chairman.
I am not aware that that is the case for PAC contributions,
but individuals? Would that be a clarification? Yes.
And I would turn my first attention to Professor Tribe.
And I appreciate all the witnesses being here today, and it
is a civic service you are all providing.
And you referenced in your opening statement, Professor,
about Justice Stevens' dissent, which I have to confess I have
not read. But I would ask if you could, in a succinct way,
address anything he might have written in his dissent that
actually focuses on the constitutional question rather than
anything that might be broader.
I have heard a lot about the implications of the decision,
not very much about the dissent on whether the majority's
opinion was grounded in the Constitution. So what was his
argument?
Mr. Tribe. Well, Representative King, it--I couldn't do
justice to all of his 90 pages, and it would take up more than
your 5 minutes. But his argument was entirely about the
Constitution.
That is, he did rhetorically say that he feared the
consequences for democracy, but he went back to the founding,
talked about the concept--how shocked the founders would be if
they thought--if someone suggested that corporations in general
had the same rights as individuals.
Indeed, the equation of money with speech is a rather
modern innovation. Used to be that money talks was kind of a
metaphor and an insult, but it now has become the Constitution
of the United States.
And that really begins with decisions like Buckley. It was
not part of the founding. So he says if you are a genuine
originalist, he explains in very great historical detail--which
Justice Scalia tries in his concurring opinion to answer but in
my view not very successfully, though, believe it or not, I
very often agree with Justice Scalia on First Amendment
matters.
He tries to show, Justice Stevens does, that at the
founding no one would have thought that corporations in general
have the same rights as people, especially in the electoral
area. That is, there was a voter-focused concept at the
founding.
Voting was basic, although it wasn't extended, as we all
know, tragically, to the entire electorate. And the idea that
entities that couldn't vote, like foreign corporations, could
influence American elections would have been anathema.
And then he proceeds with the jurisdictional and
jurisprudential development of the law and really takes apart
in a way that would be an instructive sort of lesson for law
students every argument in the majority.
The majority's response is at a very abstract level. The
majority says, ``We have long had a principle that someone's
identity is irrelevant to the value of his speech.'' And then
he refers to a case, First National Bank of Boston v. Bellotti.
Now, that is a case with which I agree. But the difference
there is that the State of Massachusetts tried to engage in
controlling politically incorrect speech. That is, they
basically----
Mr. King. If I could interrupt for a moment, please,
Professor, and if I could go back to the point about----
Mr. Tribe. Sure.
Mr. King [continuing].--Justice Stevens, did he write about
or consider the requirements in our past history of ownership
of property as a condition to the right to vote? Was that
considered in the decision?
Mr. Tribe. I don't think that there is a reference to it,
except that there is a footnote that talks about how the right
to vote has been broadened by the poll tax amendment.
Mr. King. Okay. Well, thank you. I think that lays a little
bit of the background, and I just wanted some of that into the
record.
And then, I just recall, Ms. Youn, when you talked about
the--actually, I think you said, ``I defy anyone to take the
statement that corporations have been unable to express their
point of view.''
And in keeping with my opening remarks--and I expressed
that they are constrained from expressing their point of view,
and as I operate inside this political bubble that we are in, I
see them continually constrained from expressing their point of
view.
And I think they are intimidated from expressing their
point of view for fear they will be punished. In fact, in a--
and this just comes across my mind--an Energy and Commerce
markup of that bill that I mentioned, the cap and trade bill,
one of the most stellar witnesses who testified most vigorously
against cap and trade before he walked out of the room was
handed a letter that his corporation would be investigated.
And so that was a complete open and blatant example of
intimidation of a corporation. The rest of the--many of the
other corporations--I can't speak for all of them--were
constrained in their testimony because they feared they would
be investigated. This corporation was handed the letter as the
star witness walked out of the chamber.
So I think they have been constrained. I think they have
been unable to express their point of view out of fear that--as
you referenced, interest for their shareholders and their
assets.
And so I make the argument back to you and give you an
opportunity to rebut my argument.
Mr. Tribe. Are you directing that----
Mr. King. To Ms. Youn, please.
Mr. Tribe. Okay.
Mr. King. Thank you, Professor.
Ms. Youn. I don't know the circumstances of the exact
investigation that you reference. I would say that
investigation that is solely done to harass a corporation or an
individual for its viewpoint is intensely problematic.
But what I would say is that it is important to distinguish
in these instances between intimidation for whatever reason and
government censorship.
For example, I might be intimidated from, you know,
expressing my views on--I don't know--politics in a variety of
fora. I might fear that someone would come up with a rejoinder.
But that is not the same thing as censorship.
Mr. King. Well, thank you. And then I would turn to Mr.
Parnell.
And I will make this statement. I am a person who comes at
this thing from a constitutional perspective, and our hearing
here is about how do we shape legislation that will not be
overturned by the Court by their view of constitutional
perspective.
But I am not hearing argument about what the Constitution
actually allows, and it does go back, in my view, just simply
to the definition of what is a person, what is an entity, how
is your voice heard. There are a lot of different ways to
analyze that.
And I would make, again, the point that I want to see free
enterprise of speech the same way I want to see free enterprise
economically. And this Nation is founded on free enterprise
capitalism.
And some of those freedoms are rooted back in the First
Amendment and that ability for that free speech. And as you
heard my remarks on--in the beginning, Mr. Parnell, about how
corporations are intimidated from actually the full-throated
voice in the political arena.
And I had some reservations, too, because I often sit in a
meeting and--or I will hear legislation here, and they will
say, ``I just want to level the playing field.'' But generally,
that means that it wants to be tilted a little bit in favor of
the advocate for changing the angle of the playing field.
And I understand that this path that has been directed and
opened up is fraught with peril. But freedom is always fraught
with peril, and I would ask if you could speak to that issue
from your perspective.
Mr. Parnell. Sure. I mean, obviously, I largely agree with
the sentiments that you expressed. You know, talking about
intimidation of corporations--and certainly, unions get
intimidated. Activists get intimidated.
I note that Congressman Cohen is here. He is the sponsor, I
believe, of an anti-SLAPP law that my organization recently
signed on that is designed to prevent people from filing
lawsuits against people with the aim of silencing their voices
and prohibiting them from participating in politics.
The political process is messy and chaotic, and I am not
telling you anything that you don't know, that you have to deal
with people who criticize you and who don't particularly think
you are doing a good job in office, and it takes money to
criticize you. It also takes money to praise you. It takes
money for you to explain to the voters why they should vote for
you.
My group starts with the premise that Congress shall make
no law, and that kind of settles a lot of these questions for
us, and I think that that maybe ties in with your perspective
on this. You know, I don't really know that I have a lot to add
to that.
Mr. King. Well----
Mr. Nadler. The gentleman----
Mr. King [continuing]. Thank you, and I--as watching my
time conclude, I will restrain my concluding statement and
yield back to the Chairman.
Mr. Nadler. I thank the gentleman.
The gentleman from Virginia is recognized.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Chairman, I think this whole thing started when we
tried to regulate issue ads. We had always regulated express
advocacy, where you are telling somebody who to vote for and
who to vote against, but had given a pretty much free pass on
issue ads, where you can talk about an issue and then tell the
public to call them and tell them to stop voting that way, or
tell them to vote this way or that way.
The issue ads became ``sham'' issue ads because although it
said it was really advocacy, and that line was in a fairly
bizarre place, but the only thing worse than where the line was
was anywhere else you tried to put it. And so we were kind of
stuck in that place.
I guess we tried to do that with McCain-Feingold, and what
the Supreme Court apparently did is just wipe out the whole
matrix. It said, ``Issue ad, express ad, well, you can do
anything you want anyway.''
Is there any way that we can get back to pre-McCain-
Feingold where we could at least put some limit on express
advocacy and give free speech to issue advocacy?
Mr. Tribe. Congressman Scott, I think the answer is no. You
can improve disclosure, corporate governance, try to restrict
pay to play, which really could take care of a lot of problems,
because a lot of these companies are on the receiving end of
government contracts, government bailouts.
But even if someone says, quite up front, vote for or
against Congressman Scott, vote for his opponent, that is
clearly something that, if it is independent, they could spend
all the money in their general treasury on after this decision.
And since I am not in favor of a constitutional amendment,
and the Court has the last word on the meaning of the First
Amendment, that is going to stay, and you have to operate
within that framework.
You know, the Court--I think Justice Jackson once said--is
not infallible because it is final. That is, it has the last
word, but that doesn't make it infallible. Nonetheless, that is
what we have to work with.
Mr. Scott. Is there any way--you could put limits on what
someone can contribute to an individual. Is there no limit on
what individuals and now corporations can spend independently?
Mr. Parnell?
Mr. Parnell. Congressman, no, there are no limits that
are--based on what an individual or a corporation can spend
independently.
Buckley v. Valeo--the Court ruled that individuals could
not be restrained in any way in their ability to spend
unlimited sums. And now, obviously, in Citizens United that has
been extended to the incorporated entities.
Mr. Scott. Could we do anything under a public financing
matrix that could limit anyone, or are we still stuck with the
candidates limited by public financing and everybody else
spending unlimited amounts?
Ms. Youn. The voluntary restrictions that candidates accept
when they enter into a public financing system would allow
their spending and potentially their acceptance of beneficial
independent expenditures to be regulated.
But the Court's current ruling does not permit independent
expenditures outside that arena to be restricted.
Mr. Scott. Wait a minute. You mean coordinated independent
expenditures. If you have a totally uncoordinated independent
expenditure, could a public financing matrix limit that
expenditure if it is not coordinated?
Ms. Youn. It couldn't limit that expenditure, no. But what
it could do----
Mr. Scott. So you might find yourself in a situation where
the candidate is locked into an agreement to spend so much and
then, out of the blue, is overwhelmed and limited and
defenseless against express advocacy ads taking over the
campaign.
Mr. Simon. Congressman, if I might answer that, heretofore
public financing systems have in that situation either lifted
the spending limit imposed on the opt-in candidate
participating in public financing or given additional public
funds to the opt-in candidate in order to address unlimited
outside spending.
Unfortunately, there is a trend in a couple of lower court
provisions that have invalidated those kinds of remedies for
opt-in candidates which is, I think, a controversial reading of
a different Supreme Court decision a couple of years ago in
Davis v. FEC.
So I think that particular issue you are pointing to is a
matter of unsettled law at the moment.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Nadler. Thank you.
The gentleman from Texas is recognized.
Mr. Gohmert. Thank you, Mr. Chairman.
And do appreciate the point of view of all the witnesses.
And in hearing the discussion earlier about corporate
America and making it sound as if Republicans believed that
corporations were too big to fail, I would point out to my
friends that on the TARP bailout there were twice as many
Democrats that voted to protect these groups that were too big
to fail as there were Republicans, and that the reports
indicate that the contributions from Wall Street executives to
the Democratic Party is consistent with what was contributed to
President Obama, and that is 4-1 contributed to Democrats and
President Obama over Republican candidates--that of the Wall
Street executives.
Some of us wanted to see AIG go to bankruptcy, and those
parts that were productive and were making a profit be broken
up so we didn't have to worry about too big to fail in the
future.
And I am not nearly as concerned as some of our witnesses
about corporations being able to make contributions and
actually toward commercials, toward advertising, because what
we have seen is corporations are probably the most easily
intimidated group of persons, as they are defined, in America.
It doesn't take much of a boycott to seem to set them on a
different course.
So it seems to me that the most important thing that we
should never get away from--and I know this has been mentioned,
but it is transparency. And I would love to co-sponsor any kind
of legislation that required greater transparency.
And I would be open to anything you might suggest in the
way of laws to control foreign contributions toward
manipulation of our elections.
I don't know whether you would want to put a limit, say, at
5 percent--no greater than 5 percent ownership of a corporation
by foreign entities, and what kind of disclosures might be most
helpful in getting to transparency, because I don't mind
corporate persons buying advertising, but I sure do want to
know who owns that corporation and make sure that it is not a
significant amount of foreign ownership trying to manipulate
our U.S. elections.
So as you have time to think in the days ahead, I would
love to hear from you on any thoughts you might have. If you
have some today, I am glad to hear that, too.
Mr. Tribe. Congressman Gohmert, I certainly agree with you
that transparency is extremely important. And in my prepared
statement, I tried to suggest how the disclosure requirements
should be tightened.
But I think the Chairman's example of the company that was
really interested in having that mall built, and it was willing
to spend millions of dollars to completely swamp the amounts
that were otherwise spent--that is a good example of how
transparency alone won't solve the problem.
Everyone knew which companies were putting that money in.
The fact is that those companies could not constitutionally be
required to disclose all of their motives. They came in and had
ads that didn't say anything about the mall one way or the
other.
And that is why other forms of protection--I mean, a lot of
people who invested in those companies that wanted to build the
mall didn't put their money there because of that alone. They--
--
Mr. Gohmert. And I can understand that example, and I see
my time is going to an end. But I would also point to you
numerous times when, you know, as we have seen repeatedly,
Americans love an underdog. And if it looks like the big guy is
whipping up on the little guy, they seem to flock to the little
guy.
If one party ends up having the White House and both
houses, then people start being bothered by--like that. They
like what the founders did, and that is contention. That is a
little bit of gridlock so government doesn't run out and make
too many laws to take away their liberties.
And I would also mention, when we talk about government
intimidation, how about--and I hope my friend as Chairman of
the Crime Committee--he and I are working on over-
criminalization.
I see this morning a story that the IRS has put out--posted
a solicitation for 60 new Remington model 870 Police 12 gauge
pump shotguns, and maybe we need a hearing to see what the IRS
wants to do with those 60--because that sounds intimidating to
me. I don't know, maybe----
Mr. Tribe. I think it would intimidate not only a
corporation, but it would scare me.
Mr. Gohmert. Well, thank you.
But I appreciate the time, Mr. Chairman.
Mr. Nadler. I thank the gentleman.
I will now recognize the gentleman from Massachusetts.
Mr. Delahunt. On this issue, I heard the Ranking Member of
the full Committee talk about the issue of foreign corporations
or foreign influence.
You know, my understanding of the financial markets is that
American domestically-domiciled corporations are open to have
their shares traded on the financial markets. Am I correct in
that rather----
Mr. Tribe. Certainly.
Mr. Delahunt. You know, one could develop scenarios where
simply because an American corporation was incorporated in the
State of Delaware, for example--might very well have a
significant share of its stock held by foreigners.
One can even speculate that national corporations, whether
they be state-owned oil companies or state-owned enterprises,
could, in fact, have substantial holdings in American
corporations.
Does that present a problem to any of you?
Mr. Tribe. I think it is a terrible problem, Congressman
Delahunt. That is, if you believe, as the founders did, that
one of the dangers America faces is the danger that nations and
their residents that are not necessarily friendly to us will be
able, behind the scenes, to manipulate American elections.
Current law is not structured adequately to protect against
that. Even a wholly-owned domestic corporation with Saudi
Arabia or some other country pulling the financial strings is
liberated by this decision to powerfully affect the outcome of
State, local and Federal elections.
And the only way to deal with that--and it is important
that it be dealt with quickly--is to tighten dramatically the
restrictions on foreign influence on American elections. That
is where I think Congress ought to start, because I believe
there would be wide consensus on the virtue of doing that. That
is not a Democratic or a Republican issue.
We have always said that politics stops at the water's
edge. That usually means that when people go abroad we are one
Nation indivisible. But here, I think it should work the other
way, that we really don't want other nations directly or
indirectly to be pulling the strings in American elections. And
the law should be tightened to deal with that.
Mr. Delahunt. You know, when I hear the statement made by
my good friend from Texas that, you know, there--or at least
the inference that I drew from his observation was that we
don't have to be concerned about it because our laws are on the
books.
But that seems--if I can finish, Mr. Parnell----
Mr. Parnell. I am sorry, I thought you were wrapping up.
Mr. Delahunt. Oh, no. No.
Mr. Parnell. Okay.
Mr. Delahunt. I am not wrapping up yet. But I will let you
know when I wrap up.
But my point is that there is a concern that I have about
foreigners, foreign corporations. In some cases I don't know
who owns what anymore in this global economy. We talk about the
global economy, and we don't know who owns what.
You know, we talk about Exxon Mobil. Who are the
shareholders of Exxon Mobil? Are there relationships between
State oil companies elsewhere and subsidiaries, therefore, Ms.
Youn?
Ms. Youn. Well, I mean, that is exactly one of the issues.
I mean, China Telecom America is a U.S. corporation that is
incorporated in Delaware. China Construction America is
incorporated in Delaware. Two----
Mr. Delahunt. Now, China Telcom--is that a state-owned--
Chinese Communist state-owned entity?
Ms. Youn. I don't have that information. But I think that
the----
Mr. Delahunt. So we don't know.
Ms. Youn. I don't know. But the foreign-owned corporations'
problem is only, I think, a subset of the bigger problem where,
if a corporation is to buy an election out from under us, we
the voters don't have anyone we can hold accountable, like in
the Poughkeepsie example. There is no one we can vote out in
that----
Mr. Delahunt. Right, but my point is--and I understand the
larger issue, but my point is we hear a lot here in Congress
and obviously in the media about terrorists and terrorism.
You know, one can conjure up a conspiracy, if you will,
that there is a cabal out there that is purchasing X number of
shares of an American corporation that will exercise influence
not in the best interests of the United States, necessarily.
And I think we all know that, you know, shareholders do
have some influence occasionally but, you know, maybe there is
a director that is susceptible to certain influence. I know
this sounds like a Ludlum novel, but a lot of what I hear today
sounds like a Ludlum novel.
I mean, I think we have got to be concerned about the
possibility of individuals or corporations or adversaries who
are hostile to the United States and to our interests and who
might very well be advocates for acts of terrorism against the
United States to be influencing our elections.
And I have now wrapped up. And with that, I yield back.
Mr. Nadler. I thank the gentleman.
I now recognize the gentleman from Georgia for 5 minutes.
And we have a series of five votes which will probably take
about 45 minutes. Maybe we can wrap up in time.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Parnell, can you tell us who the Center for Competitive
Politics is?
Mr. Parnell. Sure. The Center for Competitive Politics was
founded by former FEC commissioner Bradley Smith in 2005. Our
mission is to focus on promoting and protecting the First
Amendment political rights of speech, assembly and petition----
Mr. Johnson. Where do you get your funding from?
Mr. Parnell. We get our funding from American citizens who
share our perspective on the First Amendment.
Mr. Johnson. How do you market to them, through what
vehicles?
Mr. Parnell. Sure. We find individuals who we believe share
our perspective on campaign finance, and we ask them to
contribute. It is probably not that much of a different process
from what you go through when you are raising money.
Mr. Johnson. Well, let me ask you this. Isn't it true that
your firm--you are the president--Center for Competitive
Politics--isn't it a fact that you also accept contributions
from corporations?
Mr. Parnell. I would accept contributions from
corporations, but I----
Mr. Johnson. But do you?
Mr. Parnell [continuing]. Have not yet received any, at
least not----
Mr. Johnson. Have you ever received in connection with the
Center for Competitive Politics a contribution from
corporations?
Mr. Parnell. In 2008 I received one contribution that
amounted to about 1 percent of our total receipts. And in 2007
I received another corporate contribution that also amounted to
about 1 percent of our receipts.
Mr. Johnson. Well, now, you don't have to make any kind of
public disclosure of who you receive money from, is that
correct?
Mr. Parnell. I am sorry, the question was did I oppose----
Mr. Johnson. No, no. You don't have to disclose to the
public who your corporations or who your contributors are.
Mr. Parnell. That is correct. All (c)(3) organizations--
well, most (c)(3) organizations do not have to disclose their
donors. There are some circumstances under which some donations
are disclosed.
Mr. Johnson. Now, it seems a little suspicious to me that
on the eve of this hearing you would then be announced as the
Republican witness. How long ago did you agree to testify in
front of this panel in a private way with your Republican
friends?
Mr. Parnell. I was asked last week.
Mr. Johnson. And any particular reason why you did not want
that information to get out until yesterday?
Mr. Parnell. I was asked by the minority not to preempt the
Committee's announcement that I would be testifying. My
understanding is that it is kind of considered bad form to
announce that you are testifying before the Committee has
officially invited you----
Mr. Johnson. Okay.
Mr. Parnell [continuing]. To testify.
Mr. Johnson. All right. Well, and the Committee in this
sense would be the minority party, the Republicans. They would
be the ones that would extend the invitation to you, correct?
Mr. Parnell. Officially, the letter I received was from
Chairman Nadler. But yes, it was through Chairman
Sensenbrenner's staff or the Committee minority party staff
that I was invited.
Mr. Johnson. Well, now, let me ask you this question. You
are not here to support the notion that corporations should
have a right to actually vote in the United States political
arena.
Mr. Parnell. Certainly not.
Mr. Johnson. And so they are a little different than
individuals, persons, here in America, live human beings
registered to vote, correct?
Mr. Parnell. Of course they are.
Mr. Johnson. And now, I am wondering whether or not this
ruling in Citizens United has adversely impacted the ability of
the average American walking the streets, blood flowing through
their veins and through their heart and everything and, you
know, breathing the air--that we are trying to get cleaned up,
by the way--against the insidious advertising budgets of
corporations like Exxon--$45 billion dollar a year profit.
But do you think that our--don't you think--let me ask it
like that--that the citizens' right to control what goes on in
the political arena--their right to vote--is adversely impacted
by this decision in Citizens United?
And also, I want to get into your explanation for why you
thought--or your speculation as to why you think the United
States Supreme Court would stoop to this level of judicial
activism and also this legislating from the bench argument,
those two arguments being used against Democratic nominees for
judgeships, Federal judgeships.
Mr. Nadler. The gentleman's time has expired.
The witness may answer briefly.
Mr. Parnell. Okay. I will try. The first thing to remember
about corporations, whether they are unions, whether they are
for-profit corporations, or whether it is the National Rifle
Association, is they are associations of individuals gathered
together for a particular purpose--perhaps collective
bargaining, perhaps to make a profit.
So no, I don't believe that the rights of average citizens
are, you know, diminished by this because average citizens are
union members. They are stockholders. They are members of NARAL
Pro-Choice America. They are members of the Sierra Club.
What this decision does is it allows those associated
entities to speak on behalf of, in a more effective manner, you
know, what citizens could do by themselves.
Mr. Nadler. Thank you. The gentleman's time has expired.
I now recognize the gentlelady from Wisconsin.
Ms. Baldwin. Thank you, Mr. Chairman.
I know in thinking about the impact of this case, a lot of
us, since we have all stood for election and do every 2 years,
think about it in the context of congressional races. But I am
very, very intrigued about the impact this could have on
judicial races.
I know, Professor Tribe, you referenced that in your
opening statement. My home State of Wisconsin has seen in the
last couple of election cycles some of the nastiest and most
partisan judicial races for our State supreme court in a long
time. And also, there is--clearly, we have local judgeship
elections in the State of Wisconsin also.
In your testimony, Professor Tribe, you said 39 States have
judicial elections. I think it is 21 that have supreme court
judge--they are elected by the voters.
I wonder if you could speak in a little more detail about
the impact that you believe Citizens United may have on
judicial races.
Mr. Tribe. Certainly, Representative Baldwin. I think that
Citizens United, by extension of its reasoning, prevents States
from imposing flat prohibitions on business for-profit
corporations' independent expenditures in State and local
elections, including judicial elections.
Now, some of those States already failed to have limits,
but they were considering imposing them in light of the
experiences in Wisconsin, in Minnesota, in Michigan, in some
other States.
But this pours cold water on those direct efforts, which is
why in my testimony I suggested one possibility for States, and
that is at least trying to prevent out-of-state interests from
influencing the outcome of those elections, something that you
couldn't do because of the commerce clause without Congress
giving permission.
It is sort of like the situation in the health insurance
industry where I think the permission that States were given to
build a wall proved to be a terrible idea, and one of the
things that I guess you all are considering now is changing the
antitrust exemption.
But one area where it might make sense to take advantage of
the ability of States to ensure that foreigners, as it were--
and Justice Stevens pointed out that vis-a-vis your State of
Wisconsin the citizens of other States may be foreigners--that
they are not allowed to influence outcomes.
But one other thing that I think this decision does, by
signaling the danger of virtually unlimited independent
corporate expenditures--and some of them, until we tighten the
coordination rules, may not be all that independent.
But one thing it does is highlight the necessity to
seriously consider what Justice O'Connor has made really a
crusade, in which I am going to be helping her in every way I
can, for States to consider whether they should go to a
different way of selecting judges, perhaps merit selection
followed by retention elections, because the importance of
preserving an independent State judiciary is extremely crucial
to the rule of law in this country, as I am sure you know.
And I think this decision may give an impetus to that
movement, because even if you do all the things that I have
recommended in terms of transparency, corporate governance, the
exclusion of outsiders, the exclusion of pay to play--even if
you do all of that, this decision still leaves a margin of
corporate influence that you might want to try to restrict by
not having elections for judges.
Ms. Youn. What the----
Ms. Baldwin. Ms. Youn? Yes.
Ms. Youn [contiinuing]. What the Wisconsin example really
brings home as well is the extent to which the deregulatory
push by the Roberts Court is taking options off the table for
State government.
Wisconsin, in response to this massive corruption scandal,
recently passed a judicial public financing system. That
judicial public financing system is now being constitutionally
attacked by the same groups that brought the Citizens United
challenge.
And you know, the degree to which a State can act to keep
even its judiciary clean is being radically constricted.
Mr. Parnell. If I could, I want to take exception to
something that Ms. Youn said where she described the scandal or
corruption in Wisconsin. I don't regard people speaking up,
saying, ``This is a terrible candidate,'' or, ``This is a great
candidate,'' as corruption.
It may be in some minds unwelcome, or unpleasant, or false,
even, but I would really hesitate before describing free speech
in the context of a political campaign as somehow being
corrupting.
And real quickly, if I could----
Ms. Baldwin. Well, no, actually, I am running out of time
to ask my final question, but----
Mr. Nadler. I am sorry, the gentlelady's time has expired.
Ms. Baldwin. Oh.
Mr. Nadler. We have 18 seconds to go on the vote on the
floor.
The gentlelady from Texas has agreed to 1 minute so we
could wrap the hearing up and not ask the witnesses to stay for
an hour of votes on the floor.
Gentlelady from Texas is recognized for 1 minute.
Ms. Jackson Lee. Thank you, Mr. Chairman.
Professor Tribe, my son went to Harvard, and I am going to
try and be bionic in my words and point to you. Judge Alito
was, seemingly was very unhappy with the President's comments
during the State of the Union.
My question to you is--we have to live with the First
Amendment. My question to you is how badly will this skew not
only the First Amendment and one's right to stand on a
position, but what legislative fix would you say this Congress
needs to look at again?
Mr. Tribe. It seems to me, without taking too much of your
time, that there are several things that you should look at--
limiting foreign influence; limiting influence of out-of-State
corporations in State elections; limiting pay to play by
enacting rules that tell companies that are contracting with
State, local or Federal Government or receiving Federal money
that one condition of that is that they not engage in
electioneering, which in turn could expose them to all kinds of
pressures; looking at better disclosure rules so that
disclosure is required not only of the identity of the group
that puts the ad but where their money is coming from; tighter
anti-coordination rules; and finally, protections for genuine
shareholder democracy by requiring shareholder approval.
Those are things I think you can look at, and I don't think
that Justice Alito's statement or mouthing of the words that I
am sure he didn't expect to be on camera, that ``you are not
correct,'' really should be seen as negative. On the contrary,
that gives us an insight.
What that means is that he probably would support
restrictions on foreign corporate intrusion into elections,
because that is what he was reacting to.
Mr. Nadler. I thank the gentleman.
I thank the lady for----
Ms. Jackson Lee. Thank you.
Mr. Nadler. We thank the lady for cooperating.
Without objection, all Members have 5 legislative days to
submit to the Chair additional written questions for the
witnesses which we will forward and ask the witnesses to
respond as promptly as they can so that their answers may be
made part of the record.
Without objection, all Members will have 5 legislative days
to submit any additional materials for inclusion in the record.
We thank the witnesses.
And the hearing is adjourned.
[Whereupon, at 12:08 p.m., the subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record