Bulls & Bears Make Money; Corporations Get Free Speech?
Good Morning: I will briefly dispense with yesterday’s muted market activity before tackling a recent Supreme Court decision that could vastly extend corporate influence in political campaigns. I think we can use the very logic offered in the majority opinion to hoist those five Justices by the own petard.
Compared to the harrowing decline and sizzling rally after the unemployment figures were released on Friday, Monday’s market action was almost boring. With no economic data scheduled for release, and with stock markets overseas mixed (Asia down; Europe up), U.S. stock index futures correctly foretold a mixed opening in New York yesterday. The averages hovered just over and under the unchanged mark until the final hour of trading. Some fresh worries about Greece , courtesy of a rumor that had Deutsche Bank refusing to lend to Greek banks in the Repo market, seemed to weigh on stocks late in the session. The sell off that ensued left the averages with losses ranging from – 0.7% (NASDAQ) to -1.1% (Russell 2000). Bonds were little changed, as was the dollar. Only commodities could buck the dullness, and the CRB index rode the strength of the grain markets to a gain of 1.1% on Monday.
Amendment I
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” (First Amendment to the Constitution of the United States)
This space is usually reserved for opinions that try to take the high road when discussing high finance, but today I ask for indulgence as I stroll down the low road of political finance. Let me say from the outset that I am a patriotic defender of our nation’s Constitution, as well as the first ten amendments to it that are more commonly known as “The Bill of Rights”. These documents are simple, elegant, and powerful. And, unlike almost every piece of legislation authored today, copies of them can comfortably fit in one’s pocket or purse. Embracing an enduring form of brevity, our Founding Fathers were green in a way that should make the modern lawmaker envious.
I am an ardent supporter of the rights bestowed by “We the People” to citizens of these United States by the First Amendment to the Constitution. I benefit from its protection every time I use this forum to convey my views and opinions. Because I have so much respect for our Constitution and the Bill of Rights, I am usually sympathetic to judges who hail from the “strict constructionist” wing of jurisprudence. As opposed to those judges who use modern interpretations of the Constitution to enable them to legislate from the bench, a strict constructionist tries to rule based on laws as they are written. Judges of this philosophical bent are usually fonder of precedent than are those who wish to give either older legislation or even the Constitution itself a face lift based on the “spirit” of said law. The make up of our sitting Supreme Court is said to contain more strict constructionists than not.
Corporate Campaign Spending Backed by U.S. High Court
Imagine, then, the shock with which lovers of either free speech or strict constructionism (or both) viewed this recent ruling by the Supreme Court in “Citizens United v. Federal Election Commission”. In a 5-4 decision, the Supreme Court ruled that corporations no longer are bound by decades of precedent that restricted their influence over elections to voluntary contributions made by individuals in said corporation to a Political Action Committee (or PAC). Now, says the Supreme Court, corporations will be able to spend whatever general corporate funds they deem necessary to take to the air waves and target an ad campaign for or against any issue about which they would like to persuade the voting populous. What were the folks on the High Court smoking?
The rationale, if one could call it that, seems to be one which very strictly interprets the First Amendment: “Congress shall make no law…abridging the freedom of speech…” From the majority opinion, penned by Justice Kennedy:
“The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether,” Kennedy wrote.
Defenders of free speech were dumbstruck by the ruling, but I, for one, will not remain mute. After reading again our Constitution and its Amendments, I have one simple question: How can a corporation be granted the same rights under law that are expressly and only reserved for individual citizens?
The Constitution of the United States
The Bill of Rights
Corporations, though composed of individuals bearing rights, are not citizens. Ergo, their “speech” is not protected. From newspaper stands to members of the S&P 500, corporate entities do not have rights granted them by our Constitution. You don’t have to trust me on this issue; read for yourselves what our Founding Father proscribed for our democratic republic in the core documents that endure more than two centuries after their ratification in 1789. Rights are bestowed upon individuals, first and foremost, and the only entities conveyed any rights or roles in governing those individuals are the following: both houses of Congress (the legislative branch), the President (the executive branch), the Supreme Court (the judicial branch), and State governments. That’s it. Nowhere will you find the word “corporation”, nor will you find a reference to any entity even faintly resembling the eighteenth century equivalent of a Dow 30 constituent.
There are many other reasons why this ruling ranges from the puzzling (i.e. can money be considered speech?) to the dangerous (corporate PACs and lobbies already have undue political influence, so this ruling will only encourage citizens to believe — rightly or wrongly — that corporations “own” the political system). This ruling will be corrosive to the ties that bind us all. Many already suspect — again, rightly or wrongly — that the banks lobbied to have financial regulations stripped away in the decade prior to the financial crisis, only to come running for a taxpayer-funded bailout when the system their campaign donations helped design came apart at the seams in 2008. Giving corporations even more power and political influence will only cause this nascent mistrust to spread.
But rather than fight the corporations (though we, as shareholders, should at least try to stop them from spending our undistributed profits on politics), perhaps our best chance lies in using the strict constructionist argument against the Justices themselves. I hope someone like Charlie Rose can persuade Justice Kennedy or Chief Justice Roberts to be interviewed during their next break. If Mr. Rose can use the Socratic method to ask them about the Constitution, their adherence to strict constructionism, and just where in the document we can read about “corporate political speech”, then the silence that follows will be something to behold. If the Justices want to strictly interpret the Constitution, then they must – by their own logic — agree that only individuals are granted rights under it.
Unless these Justices can be shown the folly of their ways (and it’s an extreme long shot), then the only other avenue for reversing this ruling involves the drawn out process of passing a Constitutional Amendment. Despite the recent bluster you saw during the State of the Union address, don’t count on Congress for help. It would be easier to find a “man bites dog” story than to see our elected officials try to sew shut the pockets that finance their careers. Sadly, it just might be this newly legal form of corporate campaign finance that enables incumbents to survive during the fall elections. So unless voters decide to throw off their apathy and clamor for a Constitutional Amendment, perhaps throwing out the entrenched politicians on both sides of the aisle this autumn will suffice. Without action of some sort, there is a risk that a growing number of Americans will feel disenfranchised by corporate political influence. How such a group will some day seek to “redress their grievances” is anyone’s guess.
– Jack McHugh — on the lighter side of Constitutional matters, please read both the article below and the accompanying passage from our Constitution. I wonder if the Maestro ever received Congressional approval before he was knighted by Queen Elizabeth for his “contribution to global economic stability” in 2002? Not only was his Knighthood for “economic stability” a tad premature, it may have been — to a strict constructionist — unconstitutional.
Knighthood for Fed’s Greenspan
“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” (Article I, Section 9, Paragraph 8 of the Constitution of the United States)
February 9th, 2010 at 2:20 pm
Sorry, Jack. As sympathetic as I am to your take on this, the issue isn’t citizenship, it’s personhood, as in the Corporate Person. The Supreme Court interpretation of the Fourteenth Amendment’s Due Process requirement as extending to corporate persons in the late 19th century was the game-changer.
Non-citizens have important constitutional protections as well.
February 9th, 2010 at 2:24 pm
What I find fascinating is that the same court (pretty much) said it’s just fine if the government seizes your private property by force, in order to transfer it to another individual or corporation.
How do you reconcile these two decisions?
February 9th, 2010 at 4:12 pm
I wrote an article which I’ve been meaning to update, and finally did, on this subject: http://philsbackupsite.wordpress.com/2010/02/09/citizens-united-case-2/
Interestingly, the first comment brings up what my article also brought up – the fourteenth amendment and whether we should – i.e. the court – should be looking at the nature of corporate “persons” as equivalent to natural persons and groups of freely associating individuals support common ideas.
February 9th, 2010 at 4:14 pm
support = supporting – wish this had a edit function…
February 9th, 2010 at 5:19 pm
Folks, here is the 14th Amendment to our constitution. Judge for yourselves whether there is such a thing as a “corporate person”. Note the dates (1866-68, during Reconstruction after the Civil War) and how they bear on the intended meaning of due process and equal protection. Note also that Congress is specifically charged with the power to enforce provisions of this Amendment via legislation.
AMENDMENT XIV
Passed by Congress June 13, 1866. Ratified July 9, 1868.
Note: Article I, section 2, of the Constitution was modified by section 2 of the 14th amendment.
Section 1.
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Section 2.
Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age,* and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.
Section 3.
No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.
Section 4.
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Section 5.
The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.
*Changed by section 1 of the 26th amendment.
February 9th, 2010 at 5:28 pm
http://freespeechforpeople.org/the-solution
Sign the petition if you want to support the “free speech for people” amendment to the constitution.
February 9th, 2010 at 7:58 pm
People (and justices) seem to forget that at the time of the Bill of Rights, corporations were relatively few and far between. The modern status or influence of corporations was never envisioned by the authors of the Bill of Rights. It would have been as foreign as the idea of an airplane.
At the time of Andrew Jackson, there was great debate as to whether corporate forms should be allowed generally (and whether the US should have a central bank — a different topic). The thought was that an individual or partnership could be held personally responsible for his/its debts (and sent to prison if necessary), but a corporation might not be similarly accountable.
Unfortunately, corporations were eventually equated with natural persons for many things. Why they would be deemed to have first amendment rights still escapes me. They can’t vote and don’t have the same fourth, fifth and sixth amendment rights as natural persons. And it would be really strange if they were granted second amendment rights (corporations bearing arms and forming militias anyone?) So treating them as citizens for first amendment purposes never made any sense to me.
Frank
February 9th, 2010 at 9:18 pm
One idea to dampen the corporation’s zeal in spending the money would be for Congress to disallow the tax deduction for any expenditure for political advertising by corporations. Should be easily done.
February 9th, 2010 at 10:31 pm
The 14th wasn’t good enough to give women the vote; clearly their personhood is so much less compelling than that of corporations.
All the same, the discussion of strict construction is pretty shallow. It was the attack ground when the court allowed married individuals to use contraception in Griswold v. Conn. It has been 45 years that we have lived with this ruling ( a right to privacy in our bedro0ms). Do you really feel the holding clashes with your sense of what is protected by the bill of rights? I certainly am comfortable thinking that the government has no place making birth control between a husband and wife illegal.
February 9th, 2010 at 10:39 pm
As commenter Transor Z says, the Supreme Court ruled in the 1886 case Santa Clara County v. Southern Pacific Railroad that corporations are persons for the purposes of constitutional law.
That’s close. The truth is actually a little more complicated, and most elegantly summarized by Art Earthmann: corporate personhood “… was caused by the Clerk of the Supreme Court casually writing said idea on the header of his notepad in the Santa Clara County v. Southern Pacific Railroad Case in the US in 1886. The court never issued said opinion, but the informal comment was subsequently used as precedent …” Yup, some clerk wrote it down and it has been treated as law ever since. True story.
Now, the ramifications are fascinating. Corporations pay lower rates of income taxes than a lot of people. Corporations between the ages of 18 and 25 don’t have to register for Selective Service; people (or maybe just guys; I can’t remember) in that age range do. Corporations don’t get to vote; people do. I see all kinds of 14th Amendment (equal protection under the law) issues arising from this.
Anyway, you’ve got a good point, but not a point with any legal standing. In this country, if you see a blue sky and Roberts, Alito, Scalia, Kennedy and Thomas see a purple sky with pink polka-dots, well, the sky is purple with pink polka-dots. Try not to get a headache.
February 9th, 2010 at 10:40 pm
Hmmm. Lets see then NBC, CBS, ABC, Fox News , NYTimes, Unions, Moveon, Accorn etc must be exempted in your interpretation somehow. Most are corps with near billions, picking and choosing candidates. Slanting their editorial pages, news casts, organized protests etc to support their candidates that they openly champion in the MSM on a daily basis. Where were those stories about John Edwards? Who can forget Dan Rather playing the village idiot trying to turn an election. Lets not even talk about Hollywood. Personally I have no problem with it. If Exxon is stupid enough, I’m smart enough to take their money.
Lost in the shuffle, this case was about the government, through the courts, banning a movie put together by a small group of people who formed a corp to produce the movie vs Hillary the candidate. (Inquiring minds would be interested to know if a lower court would have stepped in if the movie was directed at Bush or a Cheney or John McCain.) When questioned the gov admitted books could be next using their own logic. Boy there’s a memory, cold night, books in a fire….
While I realize I have no hope of changing partisan political minds I would suggest, on your own in secret of course, that you peruse Reason.com to hear alternative views on this subject. At least Bill Moyers did. He even did a show on it.
February 9th, 2010 at 11:37 pm
Just as Gratham did, you missed the point, McHugh. Why should non-media-owning corporations not be allowed to speak freely when media-owning corporations , unions, wealthy individuals like George Soros and other organizations such as the Plaintiffs Bar are allowed to? Union campaign contributions are a bigger problem than corporate political spending is. If you don’t think that’s true, then why are states like California and my home state of Illinois in such dire financial straits? And why can’t we get tort reform passed in the US? Because politicians are bought off by plaintiffs attorneys, thats why.
I am as disgusted with the way money has corrupted the political process as anybody, but let’s not put all the blame on corporations when other organizations are even worse. The playing field should be level for all organizations regardless of their structures. How about a law that resticts contributions to $100 annually for any entity or person? That would level the playing field more than a foolish ban on corporate spending.
February 9th, 2010 at 11:51 pm
Hey Big Picture: How about some writers who present counter arguments on this subject? So far, the contributors have been heavily biased against corporations. Apparently the spending isn’t really the problem, it only matters if it’s someone they don’t like who is doing it. I encourage all BP readers to check out the op-ed “How the Plaintiffs Bar Bought the Senate” by James R Copland in the Feb 8 issue of the WSJ.
February 10th, 2010 at 3:42 am
Mr McHugh,
Didn’t you study “We, the corporations…” in school? no? Well, it’s time to start teaching it to our kids, because this decision is merely a formality. Corporate money has been controlling our government for a long time, and this just makes it official. The large sums necessary to participate in elections are only available by tapping into the assets of a very large group of people (preferably untaxed). And it’s even cheaper if they use government money! The “W” administration, for example, used government money to pay newspaper columnists to write stories favorable to their policies. Do you really think they stopped there? Why were taxpayers even paying Rove’s salary? And his staff? Who paid all those “journalists” to plant false stories about the Iraq war? (Jessica Lynch, etc.) It’s appalling the way corporate money and misappropriated government funds are controlling the media and the political process. Banks were previously able to buy off enough congressmen to pass the bailout bill, supposedly transferring Congressional spending power to a single man, Hank Paulson. But this makes it legal! Why bother with all the hearings and negotiations and time-consuming rigamarole when it’s so much more efficient to make politician buying legal? I’m sure new and uglier consequences will be revealed daily, but it’s time for Americans to realize the kind of political system we really have. We should build a new monument on the Washington mall to Ken Lay, who symbolizes the founding of this new political system.
February 10th, 2010 at 1:09 pm
IRS should now impose tax rates and tax restriction on corporations, unions and individuals alike. I can’t deduct advertising … I can’t deduct lobbying … and my tax rate is a whole lot higher. Let’s really impose “equal protection”.
February 11th, 2010 at 7:50 am
as a follow up…..http://www.mercurynews.com/bay-area-news/ci_14376994?source=rss&nclick_check=1
“Frightened that Jerry Brown’s campaign coffers aren’t rich enough to battle a billionaire to become California’s next governor, three separate Democratic and pro-labor groups are poised to raise more than $40 million to start trashing GOP front-runner Meg Whitman.”
Oh, look over there is that Exxon lurking?
March 5th, 2010 at 3:28 am
Barry, you said: “I am an ardent supporter of the rights bestowed by “We the People” to citizens of these United States by the First Amendment to the Constitution.” That statement contains a critical error. The constitution does not bestow rights. It is an effort to prevent the government from violating each individual’s inherent and inalienable rights, as per our chartering document, the Declaration of Independence. The first amendment starts “Congress shall make no law….”. People frequently refer to “constitutional rights”. Very dangerous. The implication is that a constitutional amendment could erase our individual rights, which is not the case. The fact that the government feels comfortable violating our rights is because many folks don’t even understand this, and more importantly, we have let them (government) get away with it. We really do need to “t’row da bums out” to even make a start on the gargantuan task of restoring the Republic.
With respect to corporations having free speech rights: utter nonsense. Only individuals persons have rights. If five Supreme Court justices think corporations (or unions, or boy scout troups, etc.) possess rights distinct from the rights of the people making up those organizations they are clearly wrong. We hire them to think, and to follow the Constitution (and by implication the Declaration). If some previous Court said up is down, they need to point out that is patently ridiculous and make a sane ruling. What is the impeachment process? (Oh oh, maybe we left something important out of the Constitution…!)