Corporate Personhood Isn’t Such a Bad Thing

Much of the discussion around corporate personhood has centered around campaign finance reform and the Supreme Court’s ruling in Citizens United v. FEC, but Wendy Kaminer broadens the lens and cautions against denying certain rights to corporations.

“If progressives had their way, the ACLU’s latest challenge to the NSA’s domestic surveillance would easily be dismissed… Of course, ACLU is not merely seeking to protect its interests in this lawsuit: It seeks to protect the interests of clients and prospective clients whose identities are revealed by the metadata… But, again, the ACLU is the plaintiff in this case, representing itself, defending its own corporate constitutional rights.”

“I’m not denying the corrosive, anti-democratic effects of big money. I’m asking progressives to stop denying the liberty interests served by corporate constitutional rights. If ACLU v Clapper doesn’t make those interests clear, then I suspect nothing will.”

Arizona Voting Case Raises More Questions

The Supreme Court held in Arizona v. Inter Tribal Council of Arizona that an Arizona law requiring voters to provide proof of citizenship when registering to vote violated the National Voter Registration Act, but left the door open for states to raise such a requirement by other means. Lyle Denniston explains.

“For those who would look to Congress to keep open, and expand, the right to vote for the presidency and for members of Congress, Justice Antonin Scalia’s opinion for a majority (seven to two on several points, six to three on one other very key point) promised that Congress could pass its own laws on the voter registration process, and states would have to yield to those.”

“On the particular point at issue in this case…the Scalia opinion said that a state was free to ask the federal government for permission to add that requirement.   And, Scalia said, if that doesn’t work — either because the federal agency that would deal with such a request is either not functioning or says no — then a state would be free to go to court… The opinion seemed to leave little doubt that, if Arizona or another state went to court to try to establish such a constitutional power, it might well get a very sympathetic hearing.”

Congressional Term Limits Are Not the Answer

As Rep. John Dingell (D-MI) prepares to become the longest serving member of Congress on Friday, Tim Kane argues that term limits are not the answer to the staying power of incumbents.

“The reason I say that is because they are a shortcut. We wish democracy worked better and didn’t allow incumbency to self-serve. But it doesn’t, so instead of reducing the power of incumbency, we treat it superficially.”

“What natural rule changes would reduce the power of incumbency?  One would be to make gerrymandering unconstitutional (again). Another good reform would be to allow individual candidates to raise unlimited funds, instead of channeling finances through the established political parties.  And the good news is that the U.S. is moving in the right direction on both of those fronts.”

Christie’s Special Election Decision Is Good Policy

New Jersey Gov. Chris Christie (R) announced that the state will hold a special election in October to fill the vacant Senate seat left by the death of Sen. Frank Lautenberg (D-NJ). While much of the discussion has focused on the political implications of the decision, Ethan Leib and Michael Serota make the case that this was the moral policy choice.

“Inheriting the idea of a ‘public fiduciary’ from Cicero and John Locke, America’s framers understood the essential ethical dimension to political office in the same terms that we understand other fiduciary relationships — those trusting relationships in which one person exercises discretion and control over the legal and practical interests of another, making decisions for them and standing in their place.”

“The beneficiaries of a fiduciary relationship in the private context can bring a lawsuit for a fiduciary’s self-interested behavior. Such a legal remedy does not exist in the public political sphere. Even so, the moral force of the doctrine remains. Christie is like any CEO with fiduciary obligations to the ‘corporation’ — in this case, the body politic.”

Should Corporations Disclose Political Spending?

“A logical implication of the view that corporations are ‘people’ is that shareholders should learn about the political spending carried out by the companies in which they invest. Disclosure may help democratize political donations, preventing them from having an undue influence in elections,” says Luigi Zingales.

“Not only do companies refuse to disclose to their shareholders how much they spend on political campaigns; they also are lobbying hard to prevent any rule that would require them to do so… The current political game in the US is one in which both Republicans and Democrats compete for corporate money, which they then deploy in expensive campaigns to preserve or increase their power.”

“The winners are not the Republicans or the Democrats, or even the companies that fund them. The winner is a corrupt form of capitalism that is undermining the US economy, making it less productive and undermining people’s sense of fairness. I doubt that a mandatory disclosure rule alone could fix the problem. But it would be an important step in the right direction.”

The IRS Can Still Implement Obamacare

The IRS scandal currently roiling the political world has prompted a number of conservative critics to question whether the agency is capable of neutrally administering significant portions of President Obama’s health care reform law. But according to The Hill, the IRS is more likely to serve as a “neutral clearinghouse charged with black-and-white decisions under healthcare reform.”

“The nonpartisan IRS is charged with some of the law’s most important functions, such as distributing tax credits and enforcing the individual mandate to buy health insurance… Health policy experts say the IRS’s enforcement duties under ObamaCare are guided by congressionally mandated formulas that do not allow for discrimination.”

The IRS Scandal Highlights the Failure of Disclosure

The news that the Internal Revenue Service subjected Tea Party and conservative organizations to greater scrutiny for tax exempt status has been the major political story of the week, but Rick Hasen says there are also deeper policy implications.

“This is all about the failure of Congress to require the disclosure of donors who bankroll groups designed to influence elections… When Karl Rove began his super PAC American Crossroads, at first his fundraising was pretty anemic. He then set up Crossroads GPS, under section 501(c)(4) of the tax code, which is for ‘social welfare’ organizations, which are supposed to further the general welfare.”

“To keep your (c)(4) status, though, campaign activity cannot be your primary purpose. This is what the fight at the IRS has been all about… The solution is actually pretty straightforward: Congress should set clear rules to require any entity, regardless of its tax status, to disclose donors whose money pays for federal election ads.”

Obama Frustrates Campaign Finance Reformers

“President Obama’s once-broad ambitions to clamp down on the influence of special interests have been largely abandoned since his reelection, dismaying longtime allies in the campaign-finance reform movement,” according to the Washington Post.

Among the complaints: “The president has not made a nomination to the FEC, which enforces the nation’s campaign finance laws, in more than three years… Obama’s decision this year to transform his campaign committee into an advocacy group, Organizing for Action, that can collect unlimited donations… the White House has not filled a position overseeing ethics and lobbying issues for more than two years — a job Obama created with great fanfare when he took office in 2009.”

Abstract of the Week

Rick Hasen has an intriguing essay exploring the pitfalls of significantly altering the US political system via constitutional reform to deal with current gridlock.

“I briefly examine four arguments against making constitutional change to deal with current political dysfunction. The first two arguments contend that the current governmental system is not that dysfunctional. First, the current political stalemate may reflect the preferences of the median voter or the public at large. Second, the current political system actually produces a good amount of legislation, and a parliamentary democracy might produce too much rash legislation. The third argument accepts the premise that the current system is dysfunctional, but contends the dysfunction could be cured by sub-constitutional change, such as eliminating the filibuster or adopting additional open primary systems to produce more moderate candidates. The fourth argument also accepts the premise that the current system is dysfunctional, but sees that dysfunction as temporary, and expects dysfunction to be self-correcting as voters reject the current Republican Party far from the median voter, leading the Republican Party, and then Democrats, to move to the center.”

SEC Should Force Campaign Finance Transparency

New York State Comptroller Tom DiNapoli and New York City Public Advocate Bill de Blasio took to the New York Times to urge Mary Jo White, nominee to head the Securities and Exchange Commission, to “mandate that publicly held corporations disclose their political spending.”

“By putting in place comprehensive disclosure rules, however, the S.E.C. can plug a major loophole in the law, forcing companies to also reveal what they give to tax-exempt ‘social welfare’ groups and trade associations, including chambers of commerce. These entities have often been used as vehicles for political spending by way of so-called issue ads.”

Obama Chooses Perez to Head Labor

The Huffington Post reports that President Obama will nominate Tom Perez, head of the Justice Department’s Civil Rights Division, to serve as Secretary of Labor.

“Perez was easily confirmed by the Senate for his Justice Department post, but since then, some GOP lawmakers have criticized his role in persuading the city of St. Paul, Minn., to withdraw a lending discrimination lawsuit from the Supreme Court. In exchange, the Justice Department declined to join two whistle-blower lawsuits against St. Paul that could have returned millions in damages to the federal government.”

Suzy Khimm has more about Perez: “Under Perez, the Justice Department opened a record number of civil rights investigations into local police departments accused of brutality and/or discrimination… Perez led the push to challenge voter ID laws in Texas and South Carolina.”

Voting Rights Act Faces the Court

The Supreme Court will hear oral argument on Wednesday in the case of Shelby County v. Holder, a challenge to two key provisions of the Voting Rights Act of 1965. Lyle Denniston lays out five options the court has in deciding the case, including the following three outcomes.

“Option # 1: Strike down both of the two sections at issue… To go the furthest in doing away with the 1965 Act’s basic scheme, the Court could strike down both Section 5′s “preclearance” requirement, and Section 4′s coverage formula.”

“Option # 2:  Strike down Section 5… If the Court did that, there would be no need to separately address Section 4, because a coverage formula is not needed if Section 5 goes.”

“Option # 3: Strike down Section 4 only… The Court could say that Section 5 can only be enforced if the coverage formula is modernized, and perhaps expanded beyond the two measures now in use: the record of minorities who register to vote, and who actually go to the polls.”

The Paradox of Current Campaign Finance Laws

The Supreme Court’s decision to hear a challenge to the cap on aggregate campaign donations “puts the court’s conservatives in a bind,” according to Noah Feldman.

“The purpose of the aggregate limit — and its constitutional justification — has always been to avoid the appearance of corruption in our politics while affording an opportunity to circumvent the anticorruption policy.”

“In a world where I can make unlimited contributions to a super-PAC, what difference does it make if I can’t also funnel unlimited contributions to multiple candidates or to national committees? The only way for the court to distinguish the two situations is to insist that the super-PACs’ uncoordinated advocacy is categorically different from the coordinated efforts of national parties.”

Distinguishing Campaign Donations and Spending

The Supreme Court will return to the issue of campaign finance next term with a case on campaign donation limits. Lyle Denniston explains how this case differs from the Citizens United ruling on campaign spending.

“Since the Court’s landmark opinion in 1976 in Buckley v. Valeo, it has always given government more leeway to control contributions to candidates or political organizations than over spending by candidates or by independent political activists… because donations had more potential to corrupt the political process.”

“So far, the current Court has given no indication that it is ready to reconsider the distinction drawn in the Buckley case, but that has not deterred challengers to campaign finance restrictions from repeatedly attempting to raise the issue anew.  That is what McCutcheon and the RNC seek to do.”

Supreme Court to Look at Campaign Donation Limits

The Supreme Court has “agreed to take up a challenge brought by an Alabama man who claims it’s unconstitutional to prevent him from giving more than $46,200 to candidates and $70,800 to PACs and political committees,” NBC News reports. The Republican National Committee has joined the challenge.

USA Today: “Groups that favor restrictions on political giving say ending the cap on aggregate donations could allow a single individual to pump millions into the campaign bank accounts of parties and candidates’… Dismantling the federal limit also could cast into doubt on state laws around the country.”

The Court will hear the case during its next term, which starts in October.

White's First Test At SEC

“A proposal to force public companies for the first time to disclose all their political activity to investors is emerging as an early litmus test for Mary Jo White, Barack Obama’s nominee to head the Securities and Exchange Commission,” the Financial Times reports.

“If passed the proposal, which is still at an early stage, would shed light on companies’ political donations and lobbying – including fees paid to groups such as the Chamber of Commerce… it will ultimately fall to Ms White, once she is confirmed, to pass it with the help of the agency’s two Democratic commissioners.”

“Many observers say they are unsure whether Ms White would back it given the sheer volume of other regulations she must complete once she is confirmed, including rules mandated by the Dodd-Frank financial reforms and last year’s Jobs Act.”

Abstract of the Week

Raymond La Raja looks at the role of the current campaign finance system on the concentration of power in our political system.

“The growth of political spending by outside groups reflects the demise of a campaign finance system that was designed during an era when candidates largely controlled their electoral destinies. The original 1974 law assumed a candidate-centered framework in which political parties mattered less as sources of electoral support. Since the 1980s, partisan polarization and intense competition for control of government has pushed the candidate-centered framework to its limits. Partisans have strong incentives to organize collectively through party organizations and party allied groups to maximize opportunities for taking control government.”

“The campaign finance system, however, is unsuited to the emergent party system because of its unwieldy restrictions on political parties and excessively low contribution limits, which have declined in value due to inflation. The current system induces a highly inefficient redistribution of regulated funds from incumbent officeholders to parties, and the escalating use of unrestricted funds by Super PACs and other weakly transparent campaign groups, which have strong legal protections in the wake of judicial decisions such as Citizens United v. Federal Election Commission.”

Chart of the Day

– The Georgetown Public Policy Review looks at the potential impact of creating a path to citizenship for undocumented immigrants on congressional race results, including this chart (click for a larger version) showing “the shifts in Hispanic voting that would have been necessary to produce a victory for the losing side in the 2012 election” under different Hispanic voter turnout projections.

“ There are 39 Republican districts that are more than 20 percent Hispanic, and only five that are more than 50 percent Hispanic (compared to Democrats’ 76 and 28 districts, respectively)… shifts away from Democrats by Hispanics could be devastating. Under the 42 percent scenario, a…10 percentage point shift to the right would have handed Republicans 12 seats.”

“Democratic political operators must know that a bipartisan compromise on immigration reform might derail any attempt to retake the House if it allows the GOP to gain even a little ground with Hispanics.”

The Year of the Corporation

Tim Fernholz names American corporations the “persons of the year” for their growing size and expanding influence.

“Corporate profits now make up more than one-tenth of the whole economy! This is a highly unusual situation to be in, and well worthy of recognizing… And it’s not just that corporations are competing with real people in the economic environment. They are also doing so in the political sphere, using $1 billion to influence the 2012 presidential election.”

Ben Walsh provides brief synopses of the many “investigations, lawsuits, fines, and settlements at the world’s biggest and most important banks” in 2012.

Money is Ruining Elections, Even if it isn't Deciding Them

Al Hunt: “The fat cats, unshackled by U.S. Supreme Court and lower court decisions, weren’t able to buy the presidency or the Senate. True. It also misses the point… The bankruptcy of the money-driven system was evident in the amount of time the presidential candidates spent fundraising.”

“In the three weeks after the Republican convention, Romney held 12 rallies, three press conferences and 18 fundraisers… It was at a fundraiser, which he thought was private, as most were, that Romney made his infamous comment about the 47 percent of Americans… Obama hustled almost as much, taking time away from governing and campaigning. Spending so much time in the opulent homes of donors, filled with priceless art and antiques, reinforced the president’s view that the rich can afford to pay higher taxes.”

Super PACs Facing State Scrutiny

The Los Angeles Times notes that while federal efforts to promote campaign finance reform and disclosure have met gridlock in Congress and the Federal Election Commission, state governments have been much more active.

“This month, California’s Fair Political Practices Commission forced an Arizona-based group to reveal the source of $11 million it gave for two ballot initiative campaigns. The funds were traced to a Virginia nonprofit that also does not reveal its donors. That hasn’t satisfied the commission, which has begun an investigation to uncover the original source.”

“Shortly before election day, judges in Idaho and Montana required the disclosure of contributors to two nonprofit organizations that had drawn the attention of state regulators with their political activity.”

Chart of the Day

– Chart showing the top five contributing sources to President Obama and Mitt Romney’s respective campaigns, via Open Secrets.

John Kemp: “Wall Street and the fossil energy industry now must decide how to cope with the new reality that the White House and the executive branch will remain under Democratic control for the next four years, while Democrats will control the Senate until the start of 2015… The two industries could continue to mount a guerrilla campaign against the new regulations in the courts and the House, harrying regulators with legal challenges, cuts to agency budgets and congressional hearings… In fact there are a variety of issues on which the two sides could reset the relationship. Fiscal reform is one area in which there could be scope for compromise. Business and financial leaders have been signaling for weeks that they are ready to support moderate tax increases as part of an overall tax and spending package to avert the fiscal cliff.”

The Ethically Bankrupt Election

Peter Singer is troubled by the presidential election’s “failure to meet a series of ethical benchmarks for democratic choice.”

“According to the US-based Center for Responsive Politics, spending on the election – for President and Congress, and including spending by outside groups as well as by the candidates and their political parties – is estimated to have exceeded $6 billion. That makes the 2012 US election the most expensive ever held… No one really expects political advertising to provide citizens with the information they need to assess the candidates’ merits properly. For the presidential election, however, the practice of holding three televised debates between the two major parties’ candidates should be an opportunity for a thorough airing of those issues. Unfortunately, the most recent debates failed to achieve that goal.”

The Shadowy Campaign Money Game

The campaigns leading up to today’s election have raised and spent record amounts of money, but Gillian Tett says that “what really provokes unease among many American voters – and shock among non-Americans – is not so much the absolute $6bn price tag but how the money is being raised and spent.”

“Until recently, it was relatively easy for groups such as the Center for Responsive Politics to track election cash flows, since American laws mandated high levels of disclosure. But a Supreme Court ruling in early 2010 permitted the creation of ‘super-Pacs’, which can raise and spend money with far less transparency. At least $750m of funds is thought to have flowed through these groups in recent months (although nobody is entirely sure.) It appears that those shadowy funds have been funnelled into closely fought races in places such as Ohio and contributed a dramatic increase in the volume of negative, targeted advertising.”

The Most Expensive Election Cycle in History

The Center for Responsive Politics has a new report revising its estimate for spending in the 2012 election cycle upward to $6 billion, surpassing the next most expensive cycle by over $700 million.

“The most significant difference compared with earlier cycles is the unprecedented money being raised and spent by outside — and ostensibly independent — organizations, which we are predicting will spend more than $970 million.”

Counter intuitive: “The presidential election alone accounts for $2.6 billion of the overall $6 billion predicted cost, which is actually a decrease from 2008 when, all told, nearly $2.8 billion was directed at the presidential race.”