[Senate Hearing 111-621]
[From the U.S. Government Publishing Office]
``WE THE PEOPLE'' ? CORPORATE SPENDING IN AMERICAN ELECTIONS AFTER
CITIZENS UNITED
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 10, 2010
__________
Serial No. J-111-79
__________
Printed for the use of the Committee on the Judiciary
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58-420 WASHINGTON : 2010
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COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin JEFF SESSIONS, Alabama
DIANNE FEINSTEIN, California ORRIN G. HATCH, Utah
RUSSELL D. FEINGOLD, Wisconsin CHARLES E. GRASSLEY, Iowa
CHARLES E. SCHUMER, New York JON KYL, Arizona
RICHARD J. DURBIN, Illinois LINDSEY GRAHAM, South Carolina
BENJAMIN L. CARDIN, Maryland JOHN CORNYN, Texas
SHELDON WHITEHOUSE, Rhode Island TOM COBURN, Oklahoma
AMY KLOBUCHAR, Minnesota
EDWARD E. KAUFMAN, Delaware
ARLEN SPECTER, Pennsylvania
AL FRANKEN, Minnesota
Bruce A. Cohen, Chief Counsel and Staff Director
Matt Miner, Republican Chief Counsel
C O N T E N T S
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STATEMENTS OF COMMITTEE MEMBERS
Page
Cardin, Hon. Benjamin L., a U.S. Senator from the State of
Maryland, prepared statement................................... 81
Cornyn, Hon. John, a U.S. Senator from the State of Texas........ 18
Feingold, Hon. Russell D., a U.S. Senator from the State of
Wisconsin...................................................... 15
prepred statement............................................ 97
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 1
prepred statement............................................ 122
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama.... 3
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode
Island, politico article....................................... 203
WITNESSES
Kendall, Douglas T., President, Constitutional Accountability
Center, Washington, DC......................................... 10
Rosen, Jeffrey, Professor of Law, George Washington University,
and Legal Affairs Editor, The New Republic, Washington, DC..... 5
Smith, Bradley A., Chairman, Center for Competitive Politics,
Alexandria, Virginia and Josiah H. Blackmore III/Shirley M.
Nault Designated Professor of Law, Capital University Law
School, Columbus, Ohio......................................... 7
QUESTIONS AND ANSWERS
Responses of Douglas T. Kendall to questions submitted by
Senators Cornyn, Hatch and Sessions............................ 39
Responses of Jeffrey Rosen to questions submitted by Senators
Cornyn, Hatch and Sessions..................................... 49
Responses of Bradley A. Smith to questions submitted by Senators
Sessions, Cornyn and Hatch..................................... 59
SUBMISSIONS FOR THE RECORD
Arnebeck, Clifford O., Jr., Columbus, Ohio, statement............ 77
Clements, Jeffrey D., Clements Law Office, Concord,
Massachusetts, statement....................................... 83
Institute for Justice, Arlington, Virginia, political books...... 103
Kendall, Douglas T., President, Constitutional Accountability
Center, Washington, DC......................................... 105
Law Professors Letter to Senators Leahy and Sessions, Citizens
United......................................................... 119
Organization for International Investment, Washington, DC,
statement...................................................... 125
Rosen, Jeffrey, Professor of Law, George Washington University,
and Legal Affairs Editor, The New Republic, Washington, DC,
statement...................................................... 129
Smith, Bradley A., Chairman, Center for Competitive Politics,
Alexandria, Virginia and Josiah H. Blackmore III/Shirley M.
Nault Designated Professor of Law, Capital University Law
School, Columbus, Ohio, statement and attachments.............. 140
``WE, THE PEOPLE'' ? CORPORATE SPENDING IN AMERICAN ELECTIONS AFTER
CITIZENS UNITED
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WEDNESDAY, MARCH 10, 2010
U.S. Senate,
Committee on the Judiciary,
Washington, D.C.
The Committee met, pursuant to notice, at 10:08 a.m., in
room SD-226, Dirksen Senate Office Building, Hon. Patrick J.
Leahy, Chairman of the Committee, presiding.
Present: Senators Leahy, Feingold, Schumer, Cardin,
Whitehouse, Klobuchar, Kaufman, Specter, Franken, Sessions,
Hatch, and Cornyn.
OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM
THE STATE OF VERMONT
Chairman Leahy. Good morning. Today's hearing is another in
a series we have held that focus on how recent activist
decisions by very narrow majorities on the Supreme Court affect
the lives of hard-working Americans. We did this, of course, on
the Lilly Ledbetter case where the Supreme Court basically said
women could be paid less than men for the same kind of work.
And in a case called Citizens United v. Federal Election
Commission, five of the nine Justices acted to overturn a
century of law designed to protect our elections from corporate
spending. They ruled that corporations are no longer prohibited
from direct spending on political campaigns. They extended to
corporations the same First Amendment rights in the political
process that are guaranteed by the Constitution to individual
Americans.
And I believe the Citizens United decision turns the idea
of Government of, by, and for the people on its head. It
creates new rights for Wall Street at the expense of the people
on Main Street. It threatens to allow unprecedented influence
from foreign corporations into our elections. You can imagine
what China could do with an American subsidiary if they wanted
to influence an election, perhaps to defeat somebody who would
criticize the use of basically slave labor or unsafe practices
in China. And I think Americans concerned about fair elections
have rightfully recoiled.
Our Constitution begins with the words, ``We, the People of
the United States.'' In designing the Constitution, States
ratifying it, adopting the Bill of Rights, and creating our
democracy, we spoke of and thought of and guaranteed
fundamental rights to the American people, not to corporations.
There are reasons for that. Corporations are not the same
as individual human Americans. Corporations do not have the
same rights, the same morals, or the same interests. And
corporations cannot vote in our democracy.
Teddy Roosevelt proposed the first campaign finance
reforms, limiting the role of corporations in the political
process. Those reforms, proposed by a Republican President,
were preserved and extended through another century of legal
developments that followed. Eight years ago, it was these same
values that informed bipartisan efforts in Congress, on behalf
of the American people, to enact the landmark McCain-Feingold
Act, and that legislation strengthened the laws protecting the
interests of all Americans by ensuring a fair electoral process
where individual Americans could have a role in the political
process, regardless of their wealth.
Six years ago, in McConnell v. Federal Election Commission,
the Supreme Court upheld the key provisions of the McCain-
Feingold Act against a First Amendment challenge. Now, a thin
majority of the Supreme Court, made possible by President
Bush's appointment of Justice Samuel Alito, reversed course on
the same question. In doing so, this activist majority
discarded not only the McConnell decision, but ran roughshod
over longstanding precedent, and took it upon itself to
effectively redraft our campaign finance laws. As Justice
Stevens noted in dissent, ``The only relevant thing that has
changed since . . . McConnell is the composition of the
Court.'' The Constitution has not changed. In fact, nowhere in
Constitution do we even mention corporations.
At the core of the First Amendment is the right of
individual Americans to participate in the political process--
to speak and, more crucially, to be heard. That is what the
campaign finance laws were designed to ensure--that Americans
can be heard and fairly participate in elections. Five Justices
overruled Congressional efforts to keep powerful, moneyed
interests from swamping individuals' voices and interests. They
showed no deference to Congress and little to the precedents of
the Supreme Court.
Now, Vermont is a small State. We have only 660,000 people.
It is easy to imagine corporate interests flooding the airwaves
with election ads and transforming even local elections there.
It would not take more than a tiny fraction of corporate money
to outspend all of our local candidates, both Republicans and
Democrats combined. If a local city council or zoning board is
considering an issue of corporate interest, why would the
corporate interests not try to drown out the views of ordinary
Vermonters, hard-working citizens though they are? I know that
the people of Vermont, like all Americans, take seriously their
civic duty to choose wisely on election day. Vermonters cherish
their critical role in the democratic process. They are staunch
believers in the First Amendment.
Vermont, in fact, would not ratify the Constitution until
the adoption of the Bill of Rights in 1791. I think the rights
of Vermonters and all Americans to speak to each other and to
be heard should not be undercut by corporate spending. And I
fear that is exactly what will happen unless both sides of the
aisle--both Republicans and Democrats have a stake in this, and
they should join with the President to try to restore the
ability of every American to be heard and effectively
participate in free and fair elections.
When the Citizens United decision was handed down, I said
that it was the most partisan decision since Bush v. Gore. As
in Bush v. Gore, the conservative activists on the Supreme
Court unnecessarily went beyond the proper judicial role to
substitute their own personal preferences for the law. With all
the talk about judicial modesty and judicial restraint from the
nominees at their most recent confirmation hearings, those
nominees of President Bush, we have seen all a Supreme Court
these last 4 years that has been anything but modest and
restrained.
I am just concerned that this case is going to open the
floodgates for corporate spending. And in these tough economic
times, I believe individual Americans should not have their
voices drowned out by unfettered corporate interests. I am also
very concerned that this decision is going to invite foreign
corporate influence into our elections. We are in unchartered
territory, and I am concerned about what this might do.
Senator Sessions, please go ahead, sir.
STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE
OF ALABAMA
Senator Sessions. Thank you, Mr. Chairman.
I see my colleague Senator Cornyn. I know he would like to
share a few opening comments. Maybe we could swap out on that.
If you would think about it, I would appreciate it.
The first thing, on Lilly Ledbetter, the Supreme Court had
a responsibility to interpret a poorly written Congressional
statute on the statute of limitations. They ruled the way they
felt was correct. I think it was a decision that they could
very well be justified. And then Congress acted promptly and
changed it and clarified it. That is the way the system is
supposed to work, and I do not think we should attack the
Court's integrity basically and accuse them of being political
agenda-oriented on that case because we may have disagreed with
how they interpreted a rather unclear statute.
I think Citizens United was a very important affirmation of
a fundamental American liberty, it seems to me, enshrined in
the First Amendment that ``Congress shall make no law''
infringing the right of freedom of speech. And I think the
Court simply said an assembly of people can have the right to
speak also. And I think the criticisms are overwrought, and it
should not be nearly as personal as it is on the Court, and
that this is a legitimate interpretation of the words and
spirit of the First Amendment which favors the liberty of
advocacy in a very clear way.
The sacred right of free speech is enshrined in our
Republic from the beginning and one that becomes stronger when
we protect it even for those who we disagree with, and we have
a tradition of that. So I think it would be a good opportunity
today to look at it honestly and accurately and talk about the
Supreme Court's ruling that appeared to me to be strengthening
the First Amendment rather than constricting the First
Amendment.
I am concerned, though, that there has been too much
alarmist rhetoric that has been flying around since this
decision, and I hope that today's hearing can shed some light
and not misrepresent the nature of the decision or impugn the
integrity of the Justices.
I do not think the Court is above criticism. I think they
can be criticized. But I got to say, I was disappointed--
dismayed, really--to hear the President of the United States
mischaracterize the decision of the Supreme Court and scold the
members of the Court in his State of the Union address for
something they did not do, mischaracterized the case.
The President claimed that the decision ``reversed a
century of law'' and ``opened the floodgates'' for special
interests and foreign powers to ``bankroll American
elections.'' And I do not believe that was an accurate
statement from an individual who should know better because he
has taught constitutional law. If you are going to challenge
the Supreme Court in the presence where they have no
opportunity to respond and defend themselves, you ought to be
absolutely accurate in your criticism. They are not above
criticism. It does not affect their independence. They have got
a lifetime appointment. So I am not worried about their
independence. Sometimes they wail about it. They can be
criticized, but it ought to be honest and fair.
I think the President was in error in a number of ways. It
is critical for us to remember Citizens United found that
independent expenditures, advertisements, pamphlets, books,
documentaries produced independently from a party or
candidate's campaign cannot be suppressed under the First
Amendment simply because the funds for this political speech
came from the coffers of a labor union or a corporation.
Citizens United did not change the laws restricting corporate
contributions to political parties or to campaigns. And let me
say that again. It did not lift restrictions on contributions
to political campaigns from corporations or labor unions.
As the Court has recognized for 30 years, there is a
difference between political campaign contributions, which
carry a risk of a quid pro quo type corruption--and there is
some sense of that. If you give a large amount of money to a
candidate for their campaign, it has implications of a quid pro
quo. But that has been held to be different from independent,
uncoordinated expenditures by individuals, advocacy groups, or
other associations who wish to make their views heard to the
American people even before an election. When do you want to
speak out if it is not before an election?
So the President's charge right there before all the
American people that the Court had opened the door to special
interests, bankrolling elections, I think was very misleading.
It is not about independent--it is about independent political
speech, not about filling the campaign coffers of a party or a
candidate.
Second, it did not reverse a century of law because there
was no law limiting independent expenditures until 1947, when
Congress passed the Labor-Management Relations Act. That Act
was passed over the veto of our Democratic President Harry
Truman who warned that the law was ``a dangerous intrusion on
free speech.'' So critics of the Citizens United decision like
to point to the Tillman Act of 1907 as the first campaign
finance restriction, but the Tillman Act barred contributions;
it did not bar independent political speech funded by labor
unions or corporations. Citizens United did reverse the 1990
decision in Austin, but the majority opinion and the
concurrence by Chief Justice Roberts clearly explained the
Austin decision itself was an aberration. It was a departure
from the Court's earlier First Amendment cases and a case based
on a legal theory really that the Obama administration
attorneys could not bring themselves to defend, really.
Third, the President's statement and accusations by others
who have echoed him claim that the Supreme Court made the
political system vulnerable to independence from foreign
corporations, but the Court explicitly noted in Citizens United
it was not changing the Federal law that already bans foreign
corporations from participating in the Federal process.
The constitutional issues identified by the Court I do not
think should surprise us. Many of us will recall that we have
spent years debating campaign finance reform. A number of our
members offered a constitutional amendment to amend the First
Amendment, to restrict the First Amendment, in order to
explicitly allow Congress to pass these kind of spending limits
on advocacy and politics. And pretty soon that was all voted
down, and we have not heard from that again, thank goodness.
But in a way, this is a similar thing to ask the Court to
affirm a statute that does the same thing. And the Court was
worried about it.
As I said at the time that amendment was offered, it was an
astounding, a thunderous, a remarkable change in policy for
America. And I believed it then, and I think in the long run we
are better off allowing this cauldron of competing interests to
express themselves than to create a Government power to pick
and choose what group of people can express themselves in a
campaign.
So, Mr. Chairman, I do not know, maybe I am wrong about
this. We have got some great witnesses today. Let us talk about
it. But I absolutely believe that this is not the kind of open-
and-shut question people say. At best, the critics ought to
acknowledge this is a close call. And, in fact, I think they
would have to admit that if the Court had ruled otherwise, the
power of people to collectively participate in campaigns and
speak out freely in America would have been constrained.
Therefore, I think the Court did right. Thank you.
Chairman Leahy. Well, let us give the panel then a chance
to respond. We will start with Professor Jeffrey Rosen who
teaches constitutional law at George Washington University. He
has authored several books on the Supreme Court. He is Legal
Affairs editor for The New Republic.
Mr. Rosen, good to have you here.
STATEMENT OF JEFFREY ROSEN, PROFESSOR OF LAW, GEORGE WASHINGTON
UNIVERSITY, AND LEGAL AFFAIRS EDITOR, THE NEW REPUBLIC,
WASHINGTON, DC
Mr. Rosen. Thank you very much, Senator Leahy and members
of the Committee. Thank you for inviting me to testify in this
important hearing.
The 5-4 ruling in Citizens United has been strongly opposed
by Americans of both political parties: last month, in a
Washington Post-ABC News poll, 80 percent of respondents said
they opposed the Court's decision to allow unregulated
corporate spending in general elections, with relatively little
difference between Republicans and Democrats. That is not a
surprise during a time of financial crisis when the influence
of money in politics--Justice Louis Brandeis called it ``our
financial oligarchy''--is the most pressing political question
of the day.
Brandeis, who denounced the ``curse of bigness'' that led
large corporations to take risks with other people's money, and
also thought that the purpose of the First Amendment was to
make men and women free to develop their faculties--not
corporations but men and women--would not have approved of the
Citizens United decision, and his prescient book ``Other
People's Money and How the Bankers Use It'' makes that clear.
You asked me to testify about the constitutional
implications of the decision. Unfortunately, the implications
are not encouraging.
Senator Sessions, you ask critics to acknowledge that this
is a close case, and you express concern about people impugning
the integrity of the Court. I agree it is a close case. I agree
that many civil libertarian liberals support the result. And I
believe that the Justices made their decision in good faith. It
was a principled decision.
What it was not is a restrained decision. It was not
restrained by any measure of restraint that the Justices of the
Roberts Court have embraced. It was precisely the kind of
divisive and unnecessarily sweeping decision that Chief Justice
Roberts pledged to avoid in his confirmation hearings and
after, when he said he would try to promote narrow, unanimous
opinions, rather than deciding hotly contested questions by
ideologically polarized, 5-4 votes.
Chief Justice Roberts laid out this vision shortly after he
took office. He did it at a commencement speech at Georgetown
University Law Center and in interviews with several people,
including me, and he said that he was concerned that his
colleagues were acting more like law professors than members of
a collegial court. He said this was bad for the Court and bad
for the country in a polarized age. And he said he would
embrace the vision of his greatest predecessor, John Marshall,
by trying to promote narrow, unanimous opinions.
I was impressed by the Chief Justice's concern about the
bipartisan legitimacy of the Court and have no doubt that he
meant what he said. I watched with interest his efforts to
promote unanimity over the past few terms, and he met with
mixed success. In the 2007 term, the number of 5-4 decisions
soared to 33 percent, a 10-year high. It dipped up and down in
subsequent years. But the most striking area in which Chief
Justice Roberts has been able to achieve a relative measure of
unanimity is in cases affecting business interests which now
represent 40 percent of the Court's docket. Seventy-nine
percent of these cases are decided by margins of 7-2 or better,
and the U.S. Chamber of Commerce, which represents the unified
interests of American business, has had remarkable success
before the Roberts Court during the past few years. In 2006 the
Chamber's litigation center filed briefs in 15 cases and won 13
of them, the highest percentage of victories in the center's
13-year history.
So this was the record before Citizens United, divisive
decisions, 5-4, in cases involving affirmative action, voting
rights, abortion, campaign finance, and religion, and relative
unanimity in these business cases.
Citizens United is disappointing, Senator Sessions, even to
those critics like me who acknowledge that it is principled,
because it was so unnecessary. You could have protected the
free speech rights of producers of ``Hillary: The Movie'' by
holding that Congress never intended to regulate video on
demand or groups with minimal corporate funding. But the Court
chose not to take that narrow route. It is a broad, sweeping
opinion, much of the kind that Chief Justice Earl Warren might
have issued. It is unconnected to arguments about
constitutional original understanding, which my colleague Doug
Kendall will discuss, the traditions of Congress, and it is
rather radical in uprooting precedents that date back for more
than a century.
Why should the public care that the Roberts Court now seems
willing to impose these ideologically divided, constitutionally
polarizing opinions rulings? It is because when the Court tries
to challenge the public on matters of economic justice that the
public cares intensely about, it often provokes backlashes that
can harm the Court and the country. We know this from the
experience during the 1930s, and there is a serious question
about whether that historical error will be repeated. It is
impossible at the moment to tell precisely what the future will
bring. I still continue to hope that Chief Justice Roberts has
enough political savvy to avoid this backlash, but there is no
doubt that the stakes could not be higher. His success or
failure will turn on his ability to make good on his promise of
narrow, unanimous decisions. We have seen narrow conservative
majorities strike down economic regulations in the name of
corporate rights before, and it always ends badly for the
Court.
Thank you so much.
[The prepared statement of Mr. Rosen appears as a
submission for the record.]
Chairman Leahy. Thank you very much, Professor Rosen.
Next we have Bradley Smith, Professor Bradley Smith, who
teaches law at Capital University Law School in Ohio. He served
on the Federal Elections Commission and is currently Chairman
of the Center for Competitive Politics.
Professor Smith, thank you for taking the time. Please go
ahead.
STATEMENT OF BRADLEY A. SMITH, CHAIRMAN, CENTER FOR COMPETITIVE
POLITICS, ALEXANDRIA, VIRGINIA, AND JOSIAH H. BLACKMORE II/
SHIRLEY M. NAULT DESIGNATED PROFESSOR OF LAW, CAPITAL
UNIVERSITY LAW SCHOOL, COLUMBUS, OHIO
Mr. Smith. Thank you, Chairman Leahy, Ranking Member
Sessions, and members of the Committee. I appreciate the
opportunity to be here this morning.
Rarely does a decision provoke as much--I cannot use
another word but ``hysteria'' as Citizens United. For example,
many States which have long allowed unlimited corporate
spending--Vermont is one of those States--have suddenly swept
in, in great alarm in their legislature, to say, ``Oh, now we
must do something.'' A month ago--well, I guess I should say 2
months ago, nobody in Vermont was clamoring to change the
State's election law to prevent unlimited corporate spending in
campaigns. Now because the Supreme Court comes down merely
saying, ``Vermont, this case does not affect you at all,'' the
people, the legislature of Vermont seems to be freaking out,
for lack of another word.
Chairman Leahy. Professor Smith--and this will come out of
my time--why don't you let me talk about the reactions of the
Vermont Legislature? I think I understand it one heck of a lot
better than you do.
Mr. Smith. My point, Mr. Chairman, is that there has been a
great deal of reaction by people, and I could use another
State. I could use Maryland if you would prefer.
Chairman Leahy. These are a group of very hard-working
citizen legislators. They do not freak out, to use your
expression. This is very much of a typical, far more taciturn
New England legislature. We do not freak out, to use your term.
Mr. Smith. Senator, I have been called here, I think, to
offer my expert opinion. In my expert opinion, they are
freaking out.
Now, to continue on, let us talk about where else we stand
here. This decision was one that is clearly correct, and
Citizens United had to win the case, and pretty much everybody
agrees with that. All you have to do to come to that conclusion
is look at what the position of the U.S. Government was. It was
the position of the U.S. Government that under the Constitution
it could prevent a publisher, such as Random House or the Free
Press or Simon and Schuster, from publishing a 500-page book
containing even one line advocating the election or defeat of a
candidate. I am not sure that many people really want to defend
that position.
It was the position of the U.S. Government that it could
prevent a corporation, such as Amazon or Barnes & Noble, from
using technology for Kindle and Nook to distribute books. I do
not think many people think that is a correct interpretation of
the First Amendment.
It was the position of the U.S. Government that it could
prevent a union from hiring a person to write a book, maybe
something like ``Why Working People Should Support the Obama
Agenda,'' and that was struck down or not allowed by the Court
to have that kind of agenda in the Court.
It was proposed, of course, that you could limit the
discrimination of Citizens United's movie, and I think, again,
that is something that people clearly disagreed with. In fact,
when we actually look at what the public feels and asks them
specifically do they agree with any of those conclusions that
the Government actually argued in this case, as opposed to
asking them sort of a loaded question--Do you think
corporations should spend unlimited sums?--if we actually asked
them, by a 3-1 majority, as we did in a poll at Citizens
United--or I mean at the Center for Competitive Politics, we
found that by a 3-1 margin they agreed that the company should
be able to air ads. By a 3-1 margin, they agreed that they
should be able to run movies by video on demand technology.
In fact, there was much more support for Citizens United's
position in this case than there was when we asked them if you
should censor the press, in which 30 percent favored censoring
the press, but only 17 percent favored censoring Citizens
United from distributing its movie.
So you are playing with fire when you start saying--working
up hysteria about people participating in these things.
Animosity toward the institutional press, which I think
everybody thinks must be protected, is much, much higher.
Now, in terms of the activism of the Court's decision,
there is a problem with activism, and it comes from the Court's
dissenters. The Court's dissenters would have swept away 200
years of precedent. We have quotes in Mr. Kendall's testimony
and I have quoted from Dartmouth College v. Woodward about how
corporations are artificial beings and exist only in the
contemplation of law. That is cited all the time now. Let us
remember, Dartmouth College v. Woodward found in favor of
corporate rights. It is remember, it is still included in law
books precisely because it is an affirmation of the power of
citizens against the Government, not an affirmation of
Government power to regulate people simply because the forum in
which they choose to associate--and those association rights
are very important here--is a corporate forum.
And the dissent offers no principled basis for how it would
distinguish. Obviously, corporations have many rights. I do not
think that anybody on the panel--I hope--believes that you
could simply take corporate property without providing them
with due process. I hope you do not think that you can just go
to Capital University, which is a corporation, and take over
our dorms and quarter soldiers there because we are a
corporation and we have no rights. Clearly, corporations have
rights, and the question is: What rights do they have? And
individuals, I think, have a right to gather and to speak about
issues that are important to them.
Many people on this panel attack corporations. Many people
in the public attack corporations. And the citizens who own
those corporations have a right to speak in return. And the
dissenters in this case would have overturned over 100 years of
precedent and dozens and dozens of cases to get there.
So let us stay focused on what is really at stake, and I
think if we do that, we will see that this was a very, very
rational decision, one that almost everybody would agree with
the specific holding. If it went too far in certain small
particulars, it is fairly easy to do legislative fixes on those
particulars.
Thank you very much.
[The prepared statement of Mr. Smith appears as a
submission for the record.]
Chairman Leahy. Thank you very much, Mr. Smith, and I will
be interested in seeing if anybody in the Vermont Legislature
cares to see how a professor at Capital University Law School
feels about their reactions.
Doug Kendall is the Founder and President of the
Constitutional Accountability Center. He has co-authored
several books and articles about federalism and the courts.
Please go ahead, Mr. Kendall.
STATEMENT OF DOUGLAS T. KENDALL, PRESIDENT, CONSTITUTIONAL
ACCOUNTABILITY CENTER, WASHINGTON, DC
Mr. Kendall. Thank you, Chairman Leahy, for holding this
important hearing on the Constitution and the Citizens United
ruling and for inviting me to testify.
I am the President of Constitutional Accountability Center,
a non-profit think tank, law firm, and action center dedicated
to the Constitution's text and history. The center is releasing
today a report entitled ``A Capitalist Joker: The Strange
Origins, Disturbing Past, and Uncertain Future of Corporate
Personhood in American Law,'' which examines the Constitution's
text and history and the Supreme Court's treatment of
corporations from the founding era to the Court's ruling in
Citizens United.
The Constitution's text reflects a fundamental difference
between corporations and the ``We the People'' identified in
the Preamble of the Constitution. As artificial entities, it is
awkward, if not nonsensical, to describe corporations engaging
in the ``freedom of speech,'' practicing the ``free exercise''
of religion, ``peaceably . . . assembl[ing],'' or ``keep[ing]
and bear[ing] Arms.''
The debate about how to treat corporations--which are never
mentioned in the Constitution's text, yet play an ever-
expanding role in American society--has raged since the
founding era. The Supreme Court's answer to this question has
long been a nuanced one: Corporations can sue and be sued in
Federal courts and they can assert certain constitutional
rights, but they have never been accorded all the rights that
individuals have, and have never been given rights of political
participation.
The Court, under Chief Justice John Marshall and many times
since, has emphasized that because corporations are artificial
entities and receive special privileges, such as perpetual life
and limited liability, they are subject to greater regulation
by the State. Only once before, during the darkest days of the
Lochner era, has the Supreme Court seriously entertained the
idea that corporations are entitled to the same constitutional
rights enjoyed by ``We the People.'' And even in the Lochner
era, these equal rights were never extended to the political
process.
The idea of equal constitutional rights for corporations
has a truly bizarre origin. In the 1886 case of Santa Clara v.
Southern Pacific Railroad Company, the Supreme Court reporter
decided to include in his published notes a remark by Chief
Justice Waite to the effect that corporations were persons
within the meaning of the Constitution's Equal Protection
Clause. Through this highly irregular move, the idea that
corporations were persons was introduced into American law.
Eleven years later, in Gulf Railroad v. Ellis, the Court
cited Santa Clara in holding that ``a State has no more power
to deny to corporations the equal protection of the law than it
has to individual citizens.'' This ruling, combined with other
important rulings that same year, ushered in the Lochner era, a
period today almost universally condemned as one of the darkest
eras in Supreme Court history.
In 1937, the Supreme Court recognized its errors, and the
Lochner era's constitutional revolution came crashing to a
halt. Virtually every aspect of the Lochner era's protection of
corporate constitutional rights was repudiated by the Court,
with the Court ultimately dismissing the idea of equal rights
for corporations unanimously as ``a relic of a bygone era.''
In the face of these losses, corporations started
aggressively fighting back. In 1971, Lewis Powell--a Virginia
corporate lawyer who would soon be nominated to the Supreme
Court--wrote a now famous memorandum to the Chamber of Commerce
advising that corporations look to relief in the courts, noting
that ``the judiciary may be the most important instrument for
social, economic, and political change.''
Powell's strategy started to come to fruition just 7 years
later in First National Bank of Boston v. Bellotti, when
Justice Powell authored a 5-4 ruling for the Supreme Court that
struck down limits on a corporation's ability to oppose ballot
initiatives under the First Amendment.
Though deeply problematic, Bellotti was expressly limited
to ballot initiatives, and two subsequent rulings held that the
Constitution does not grant corporations the right to spend
unlimited amounts of money to favor the candidates of their
choice.
Citizens United wiped these later rulings off the books,
and while the Citizens United majority offered reasons for its
decision, none of them is persuasive or comes close to
justifying the momentous changes in constitutional law ushered
in by its opinion.
Corporations do not vote. They cannot run for office, and
they are not endowed by the Creator with inalienable rights. We
the people create corporations, and we provide them with
special privileges that carry with them restrictions that do
not apply to living persons. These truths are self-evident, and
it is past time the Supreme Court got this right.
Thank you.
[The prepared statement of Mr. Kendall appears as a
submission for the record.]
Chairman Leahy. Thank you very much.
Mr. Kendall, let me just follow up on this. Justice Sandra
Day O'Connor recently spoke about the risks posed to our
independent judiciary by the millions of dollars flowing into
State judicial campaigns. Last year, the Court seemed to share
that view of the potential massive corporate spending to
distort elections by handing down a case called Caperton v.
Massey. In fact, John Grisham wrote a book that sort of
referred to that.
In that case, Justice Kennedy wrote that the risk of bias
due to campaign contributions in a State judicial election
meant that the judge was wrong not to recuse himself from
deciding a case involving a defendant who spent $3 million to
elect him to the bench. I found it interesting. We do not elect
judges in Vermont. Our State Legislature is pretty staid and
conservative, and it allows them to be appointed with consent
by the Governor.
Why do you believe the Supreme Court only months later in
Citizens United did not apply these same concerns and obvious
logic to corporate spending? It just seemed after Caperton it
ruled differently.
Mr. Kendall. I agree, Senator Leahy. And what I actually
find most disturbing about the ruling in Caperton is that the
four dissenting Justices actually believed that there was no
problem with the extreme factual circumstances, there was no
violation of the Due Process Clause in that case.
I think Justice Kennedy was obviously the swing vote in
Caperton and Citizens United, and I think what he would say is
that there is a difference between the obligations of a judge
to recuse under the Due Process Clause and the First Amendment
rights of corporations to spend unlimited amounts in elections.
But I do not think those two issues can be separated that
easily. The reason the judge has an obligation to recuse is
because of how much money the corporation is spending in the
election, and I think the reasons for recusal also support the
legislature's decision in States around the country to limit
corporate campaign expenditures in judicial elections. And the
great irony of the pattern that you reflect where the Court
requires recusal in the Caperton case and strikes down limits
on corporate campaign expenditures in elections in States
around the country is--the Court is basically saying there is a
huge problem here, but you, Congress, you, States across the
country, cannot do anything about it.
Chairman Leahy. It is interesting, because she was on the
Court, I believe 6 years ago, when the McCain-Feingold Act's
restrictions on corporate campaign spending were declared
constitutional. Now she is off, and so 6 years later, basically
we have a different answer.
I am wondering what this does for the ability of State and
local governments to police their own elections. We have 24
States that have laws restraining corporate spending in
elections. Some of these laws date back 100 years. Others have
laws that they allow corporate spending, but they restrict the
amount that can be spent.
Are these laws all called into question now?
Mr. Kendall. I think they are called into question, Senator
Leahy. I think that is one of the dramatic impacts of this
ruling. And I think as you mentioned in your opening statement
and Justice Stevens said in dissent, the Constitution has not
changed in the last 7 years, the law has not changed. The only
relevant thing that has changed is the membership of the Court.
And it is really more dramatic than what has happened over the
last 7 years.
If you take and put side by side the Supreme Court's
majority opinion in Citizens United and the ruling by a
unanimous Court written by Justice Rehnquist in a 1982 case
called FEC v. National Right to Work Committee--which is a case
that upheld limits on the ability of corporations to collect
donations for PACs. If you put those two opinions side by side,
I think what you see is that not a single member of the Court
in 1982 would have signed on to the majority ruling in Citizens
United today, which is how dramatically the Court has changed
on these issues.
Chairman Leahy. Well, in fact, on that, Professor Rosen has
in his book, ``The Most Democratic Branch''--you argue that the
judiciary more than any other branch of Government most
reflects the views of mainstream Americans. Would Citizens
United be consistent with that?
Mr. Rosen. It is not consistent, Senator Leahy. It seems
ironic that the Court tends over history to reflect rather than
challenge the constitutional views of the majority of
Americans. But that is the case. There is a wonderful new book
by Barry Friedman, ``The Will of the People,'' that makes this
case in even greater detail.
What is so striking about the history is on the very few
occasions when the Court has challenged the views of the
majority of Americans on things they care intensely about, it
has often provoked backlashes that necessitated judicial
retreat. That was the lesson of the Dred Scott decision before
the Civil War. It is the entire lesson of the legacy of the
progressive era in the 1930s when a narrow group of five
conservative Justices thought they could impose this contested
vision of corporate rights on the country, provoking President
Roosevelt's court-packing threat and the judicial retreat. And
that is what makes Citizens United such an outlier. Eighty
percent opposition shared similarly by Republicans and
Democrats? This is very, very unusual for the Supreme Court.
Now, Mr. Smith has his own poll which shows more
favorability, but he did not ask the relevant question. You did
not ask, Mr. Smith, ``Do you support lifting all Government
limitations on corporate spending from general treasury funds
in U.S. elections? '' And on that proposition, it is not a
surprise that the public is opposed to this because it so goes
against this strong strain in our history. Doug Kendall's
report is eloquent about how the suspicion of monopolies is
deeply rooted in our history--and this is another important
distinction. It is not opposition to all corporate forms. It is
big money, the curse of bigness. It is investment banks and
Exxon. That is what people like Louis Brandeis and Theodore
Roosevelt were concerned about. Franklin Roosevelt was
concerned about it. And the American people are obviously
centrally concerned about this during a time of economic
crisis.
So for all those reasons, Senator Leahy, this is not
consistent with the general sensitivity of the Court to the
views of the American people.
Chairman Leahy. Thank you, and my time has expired, and I
yield to Senator Sessions.
Senator Sessions. Well, Mr. Rosen, when you come to
fundamental rights such as free speech, surely you would not
contend that we ought to run a poll to decide how that is done.
I think 80-plus percent believe that the act of burning the
American flag is not speech and thinks that the Supreme Court
was wrong on that. And the free speech advocate group on the
Court was the same one basically that voted for this, with some
exceptions, I suppose.
I will ask Mr. Kendall and Mr. Rosen this. In Mr. Smith's
written testimony for today, he noted that the Obama
administration in this case, in their arguments before the
Court, took the position that the Federal Government and/or the
States could prevent a corporate publishing house, such as
Simon and Schuster, from publishing or distributing a book if
that book contains a single sentence opposing a candidate for
political office. Mr. Smith states in his testimony that he
would like to know whether the other members of the panel
agree.
So I guess I would ask you. Do you think that if your view
of the First Amendment was in place that the Solicitor
General's Office for the Obama Department of Justice is correct
and that you would favor the ability of the Government to limit
those kind of publishing events?
Mr. Rosen. Well, I certainly would not, Senator Sessions,
and I do not think that the Obama administration would either.
It seemed to me that in the oral argument Solicitor General
Elena Kagan explicitly distinguished books and media from the
questions at issue in this case and resisted the hypotheticals
about banning books.
But one thing is clear, Senator. It would have been easy
for the Roberts Court to carve out an exception that would have
completely protected books and the media and avoided all of the
parade of horribles that Mr. Smith makes in his----
Senator Sessions. Well, I do not know. If you----
Mr. Rosen [continuing]. Testimony.
Senator Sessions. If a corporation cannot produce a movie,
why can't--if they can be prohibited from producing a movie,
why can't they a book? Mr. Kendall----
Mr. Rosen. Could I just say--respond to----
Senator Sessions. Wasn't that the whole point of the first
oral argument? When that question was raised and the Solicitor
General admitted it contained--it could constrain the
publishing of books by Simon and Schuster or any other group,
that that is what caused the Court to have a new argument and
to state explicitly they were concerned about the Austin case?
Mr. Rosen. In the second argument, the Solicitor General
explicitly responded to that. She disavowed a desire to ban
books. And Justice Stevens charges in his dissent that the only
reason the Court asked for re-argument was because it was
determined to overrule Austin, that it was really reaching out
for this question on its own.
Senator Sessions. Professor Kendall.
Mr. Kendall. There is a hard, narrow question about whether
the specific 90-minute documentary, which is fairly viewed as a
90-minute campaign ad against Hillary Clinton, was covered
within the act. And if the Court had simply ruled on the basis
that it was not, I think that we would not be here. We would
not be having this argument.
Senator Sessions. But isn't it true that a ruling on that
matter--I just would like to ask a follow-up legitimately with
him. Isn't it true that that implicated, though, these other
questions? It would be difficult to separate that issue from
the one the Court ultimately decided. Surely you would agree
that implicated those issues significantly.
Mr. Kendall. Right, but I think that Justice Stevens in
dissent has a very good response about why the ruling, a ruling
that permits regulation of that particular attack ad does not
open up the floodgates to regulation of every book or every
film.
Senator Sessions. Well, that was Mr. Stevens' view, but
five did not agree.
Mr. Smith, would you comment on that?
Mr. Smith. If I could just address that briefly, a couple
things.
First, Solicitor General Kagan at re-argument said, as
Professor Rosen said, she denied the desire to ban books. But
she did not deny the authority to ban books. And she did say,
``Well, we regulate pamphlets.'' I do not know if this is a
pamphlet or a book, and I do not know at what stage it becomes
a book and at which stage it is a pamphlet that can be
prohibited. And that was the Government's position in briefing
as well. This was not--you know, Deputy Solicitor General
Stewart was not speaking out of school.
Second, it is not clear to me that it is easy to make these
distinctions. Notice that none of the dissenting Justices
actually was willing to concur in the judgment on any of these
more narrow grounds. All of them said, ``Yeah, they can't do
it,'' period. And I think there was some realization there that
such a scheme would be very unstable and not likely to hold up.
But at a minimum, what you have is overkill. Statutes
provide overkill responses. So when you have statutes
attempting to totally ban this type of corporate speech, you
may get a Supreme Court ruling that says, no, you cannot do
that.
Congress might be able to come back in and say--you know,
the early laws, we have talked about some. Elihu Root talked
about corporate contributions, big corporations, as Professor
Rosen notes, contributing amounts that in today's dollars would
be well in excess of $1 million. But I suppose if Congress did
some serious finding to show a measure of corruption and had a
limit on corporate expenditures up in the realm of $2 million
supported by this type of fact finding about the corruption
there, and a narrowly tailored response, in other words, that
it could hold up. But you cannot just go and say every
nonprofit corporation, every nickel-and-dime small business in
the country is absolutely prohibited. That is not a narrowly
tailored solution that is satisfactory to abridge First
Amendment rights.
Senator Sessions. My understanding is that Solicitor
General Kagan said with regard to that issue, ``We haven't done
that yet.'' And she said, ``The author would have a good claim
if he wanted to sue.'' In other words, she thought that if an
author was stopped from publishing their book or so forth, that
they would have to sue to defend their rights, at least. Thank
you for the good panel we have.
Senator Hatch. Mr. Chairman, I have to be necessarily
absent, so I would like to submit my questions in writing to
all three, if I can.
Chairman Leahy. Of course, and we will keep the record open
for the rest of the day for any further questions and also any
statements anybody wishes to make on both sides.
[The questions of Senator Hatch follow:]
Chairman Leahy. Senator Feingold.
STATEMENT OF HON. RUSSELL D. FEINGOLD, A U.S. SENATOR FROM THE
STATE OF WISCONSIN
Senator Feingold. Mr. Chairman, I, of course, particularly
thank you for holding this hearing. The Citizens United
decision was a tragic mistake. A mistake because the Court
reached out to decide constitutional questions that were not
necessary to decide the case and not raised or addressed by the
courts below. Tragic because the Court damaged its own
reputation and integrity by reversing precedents unnecessarily
and, most important, because it opened the door to a political
system that, more than ever, can and likely will be dominated
and distorted by corporate wealth.
The Court showed a remarkable ignorance of how campaign
money can affect legislative decisions. Just last term the
Court held in the Caperton case that a State judge should have
recused himself because one party to a case had made large
independent expenditures to elect him. Yet somehow the Court
concluded in Citizens United, ``[I]ndependent expenditures,
including those made by corporations, do not give rise to
corruption or the appearance of corruption.'' And, incredibly,
the Court even cast doubt on one of the central holdings in
Buckley v. Valeo--that Congress can enact campaign finance laws
not only to prevent actual corruption but also to prevent the
appearance of corruption. The Court said in Citizens United,
``That speakers may have influence over or access to elected
officials does not mean that those officials are corrupt. And
the appearance of influence or access will not cause the
electorate to lose faith in this democracy.''
No matter what their political persuasion, all Members of
Congress strive all the time to show their constituents that no
one has influence over them and that no group has special
access. The idea that these appearances have no effect on the
confidence that the electorate has in us and in our democracy
is naive, to put it mildly.
What is perhaps most disturbing is that the Court made
these pronouncements without allowing any opportunity at all
for a factual record to be developed. When it considered a
facial constitutional challenge to the McCain-Feingold bill,
the Court had before it an enormous legislative record
developed over many years on the corrupting influence of soft
money, along with a huge amount of discovery taken in the case
itself. The Citizens United Court overturned a century of
Federal and State law without considering such a record. The
participation of the over 20 States whose laws were essentially
thrown out in this case was limited to a single amicus brief. I
simply do not understand why the majority felt that it was
justified in taking this tremendous shortcut.
Now, we are in a period of great political turmoil, and the
American people are expressing their opinions forcefully. They
are rightfully demanding that their elected representatives
listen to them and respond to their views and their needs. I
think it is for that reason that so many people are baffled and
angered by the Court's decision. The people I talk to in
Wisconsin do not want elected officials to be more responsive
to corporations. They do not think that corporations have too
little power in our legislative process or that they need to be
able to spend freely to elect a legislature that will do their
bidding. They want a Government ``of the people, by the people
and for the people,'' as Abraham Lincoln famously put it in the
Gettysburg Address. In its haste to impose its own skewed
vision of the First Amendment, where a corporation has the same
rights of political expression as a person, the Supreme Court
seems to have forgotten that bedrock principle.
Mr. Kendall and Professor Rosen, Professor Smith says in
his testimony, ``While corporations do not have the ability to
exercise, as corporations, all constitutional rights, they have
long been recognized as able to assert constitutional rights
where doing so is necessary to preserve the rights of the
corporate members or shareholders. Thus, when a corporation
asserts a right to speak, it is really the members of the
corporation asserting a right to associate and to speak as a
group.''
What do you think of that statement? And then I will let
Professor Smith have a chance to respond. Professor Rosen.
Mr. Rosen. Thank you, Senator, for that eloquent statement.
I do not mean to plug Justice Brandeis too much today, but
he was our greatest theorist both of free speech and of the
dangers of corporate power in American life, and he would have
strenuously resisted Mr. Smith's statement. In ``The Curse of
Bigness,'' he talks about how huge corporations--investment
banks, mostly -cannot possibly be an amalgam of the expressive
interests of their members because they are so complicated that
the people in charge do not even understand the risks that they
are taking. They take these huge risks with other people's
money. They end up not serving the public interest but their
own interests. And that is why Brandies wanted taxation to
break up these huge corporations, and his entire vision of free
speech emphasized the idea that individuals have a duty to
develop their faculties. Participation is a public duty. So his
vision of the First Amendment, unlike the one Senator Sessions
embraced, was that laws that promote public deliberation, far
from threatening the First Amendment, actually serve it.
And then, finally, he was very keen on disclosure. Sunlight
is the best disinfectant, electric light the best policeman.
So for all these reasons, he would have completely resisted
and rejected the idea that a corporation actually meaningfully
expresses the political views of its individual members. He
wanted to protect small businesses and minority shareholders,
and it is his vision, far more than that of Mr. Smith, that
really represents the great American free speech tradition.
Senator Feingold. Thank you so much.
Mr. Kendall.
Mr. Kendall. Well, I think, Senator Feingold, you know
better than anyone in the world that the campaign finance
system in this country is actually not blunderbuss like Mr.
Smith describes it, but actually quite nuanced and so it allows
the speech of individuals that are parts of corporations, it
allows corporations to form PACs and have voluntary donations
to the PACs, which allows the corporation itself to speak to a
degree. And the idea that corporations, these large
corporations, are simply associations of citizens gathering
around to express political expression just belies their very
nature. We create corporations as an engine of economic growth.
We give them a fiduciary duty to advance the profits of the
corporations. Most people invest simply to make money--and to
describe that as this core political association I think is
just to belie the nature of corporations and the history of our
treatment of them.
Senator Feingold. Thank you.
Professor Smith.
Mr. Smith. Thank you, Senator. I appreciate your giving me
an opportunity to comment on this as well.
One of the focuses, of course, here today that we keep
hearing is large corporations, large corporations, large
corporations. And as I just indicated, one of the problems with
having sort of a blunderbuss statute that prohibits all
corporations from doing any political spending from dollar one
is that you get a response that also goes to the opposite sort
of extreme.
Most corporations in America, of course, are small
corporations, and many, many, many of them, like Citizens
United, are nonprofit corporations that are specifically
organized truly for speech. And most corporations are too small
to support a PAC and pay the administrative costs of a PAC, and
they do not have enough people to solicit to even have money in
the PAC to speak. But they have interest.
For example, in the recent Senate race in Massachusetts,
there was a little wine distributors that distributes wine
through the mail that sent a notice out to people saying, ``We
think you should vote against one of the candidates in that
election because that candidates wants to tax wine shipments
through the mail.'' This is a classic case where it is of
interest to the consumers of that company, it is of interest to
the shareholders and the owners of that company, and it is in
their interest to speak not as individuals but as a corporation
to something that directly threatens the economic purposes for
which they have joined together. And we allow corporations to
do that kind of speech all the time under the business judgment
rule.
And it goes beyond just pure political speech. It includes,
for example, charitable giving to controversial groups like
Planned Parenthood, or even the Boys Scouts now are often
controversial. It allows clearly commercial ads. Some of you
may have seen the Audi Green Police ad during the Super Bowl,
and if you did not, go to YouTube and watch it. It basically
portrays environmentalists as being sort of a bunch of petty
little neo-Nazi sorts. And I am not sure that a lot of
shareholders of Audi really were pleased with that perhaps if
they were also members of environmental groups. But that is
what the business judgment has historically allowed.
So, again, the problem is this sort of blunderbuss statute
rather than anything that is narrowly tailored to address First
Amendment concerns based on clear findings of a problem with
independent expenditures of that type, and that might change
the analysis here.
Chairman Leahy. Senator Cornyn.
STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE STATE OF
TEXAS
Senator Cornyn. Thank you, Mr. Chairman.
Mr. Chairman, I think that both sides of this debate have
good intentions, and I wish there was a way we could limit the
impact of unlimited money affecting elections. But, frankly, I
think what started from good intentions in 2002 to try to limit
the impact of money in politics has been an abysmal failure.
I would just cite the point that in 2008 President Obama
raised $740 million, a new record, which was twice as much
money as was raised by Senator Kerry and President Bush in
2004. In the two Presidential elections since the campaign
finance reform legislation passed, the candidates have raised
more and spent more than the candidates in the seven previous
Presidential elections combined.
And I remember what happened, for example, in the most
recent special election in Massachusetts. There were 13
different organizations and entities spending money for and
against the candidates in that campaign toward the end.
Thirteen. So to Mr. Kendall's point that there are PACs, there
are 527s, there are 501(c)(4), there are legal entities through
which individuals and corporations and other concerned citizens
can contribute money to engage in the political process, I
think we have seen an unprecedented amount of money go into
political campaigns.
My own view has evolved over time because I think now what
we need more than anything else is greater transparency and
accountability, because I am not convinced that we can stick
our finger back in the dike. I think the dike is not only
leaking, but it has exploded. And as we have seen in other
areas of free speech, the solution for this is not less speech
but, I think, more speech to get everyone's voices and views
out into the public square and to allow the voters to do the
best they can to try to understand the issues, the
qualifications of candidates, and then make a choice informed
by whatever actor, whatever speaker that they choose or that
they find more persuasive.
I really think the carve-out that was created in the
McCain-Feingold legislation in 2002 demonstrates the weakness
of the argument that corporations somehow do not have free
speech of First Amendment rights. Indeed, the New York Times
corporation and the Washington Post corporation appropriately
have all the free speech rights that are conferred by the
Constitution of the United States, the First Amendment. We
would not have it any other way.
But why would Congress have the authority to suppress the
free speech rights of one corporation when another corporation
has a complete right to express their views to advocate for and
against a candidate in an election?
Indeed, I think I find myself aligned with some of Mr.
Smith's arguments with regard to the hysteria with which this
decision has been greeted. I do not think there is going to be
any Fortune 500 corporations that are going to spend money
advocating for or against candidates in elections because they
have to be worried about their shareholders; and if they are
wasting corporate money, they may subject themselves to a
breach-of-fiduciary duty lawsuit. I think they are going to be
entirely circumspect about that sort of activity.
On the other hand, I do think that there are organizations
like the NRA, the NAACP, the Sierra Club--let us say, for
example, a nonprofit corporation was concerned about the
tragedy of homelessness in America. Why in the world couldn't
they--if they adopted the corporate model of doing business,
why couldn't they advocate for or against candidates who
supported or failed to support their agenda of dealing with the
tragedy of homelessness? If there are organizations of people
who want to band together in a nonprofit corporation to speak
out against reckless spending in Washington and the
accumulation of huge deficits and the failure to meet our
unfunded Federal liabilities, why shouldn't they be able to
band together as a corporation, as a sole proprietorship, as a
partnership, any other format to do that?
So I think, Mr. Smith, if I could just ask you, what is the
answer in terms of the huge volumes of money being spent
largely in a non-transparent and opaque way by people who have
enough resources to hire lawyers to create 527s, PACs,
501(c)(4)s, where should we draw that line?
Chairman Leahy. And, Mr. Smith, I try to extend as much
help and courtesy to members here. Even though Senator Cornyn's
time has expired, please go ahead.
Mr. Smith. I will try to be very brief. Obviously, it is a
very complex question. My own view, which is expressed in
numerous writings is that the complexity of the law makes it
harder and harder for average citizens to participate. You
know, the joke is if you want to run for Congress, but even if
you want to try to influence your Congressman and organize a
group, you have to immediately hire a lawyer.
The really big corporations can get around it because they
can hire the consultants and the lobbyists and the lawyers who
know how to work the system, the accountants and so on. And we
also need to bear in mind that large corporations, of course,
spend far more money lobbying than they spend on campaign
contributions. And so one of the odd effects of allowing
corporations to directly make campaign expenditures is that it
would actually be a little bit equalizing; that is, a car
dealer may not be able to afford a lobbyist in Washington, but
he can put $25,000 in expenditures out in a race.
So regulation here, as it often does, tends to harm the
small players, whereas the big actors can cope with it.
Chairman Leahy. Thank you very much.
If Senator Whitehouse does not mind, I am going to put into
a record an op-ed piece that he wrote for Politico on this
issue. And hearing no objection----
[Laughter.]
Chairman Leahy. It will be made part of the record.
[The op-ed appears as a submission for the record.]
Chairman Leahy. Senator Whitehouse, please go ahead, sir.
Senator Whitehouse. Thank you very much, Chairman.
We have been discussing this decision as an ideological
exercise, but, Professor Rosen, in your testimony, you also
point out that there is a pattern that has developed over at
the Supreme Court, and I happen to agree with you. The pattern,
I think, is beyond distinct. It is now unmistakable. And it is
that where corporate interests are involved, the corporation is
highly likely to win. And where issues that are part of the
core Republican ideology are involved, the Court becomes
unhesitant about taking its 5-4 majority to take broad leaps--
brand-new constitutional rights to own guns, brand-new
constitutional rights of corporations to spend unlimitedly--
that had never been noticed before and indeed often had
overruled substantial settled precedent.
My question is: At what point should the Court lose the
benefit of the doubt that these are each independent on the
merits decisions as the evidence piles up and piles up and
piles up that when the outcome actually comes down, it is the
Republican ideology and the corporate benefit that appear
almost now reflexively to be the winners?
Mr. Rosen. Senator, the question of when should the Court
lose the benefit of the doubt is one that I have struggled with
personally. I had this interview with Chief Justice Roberts
where he laid out this very appealing bipartisan vision, and I
was very galvanized by it. I wanted to give him the benefit of
the doubt. Some people thought I was too charmed by him. I came
home from the interview, and my wife decided I developed a
``man crush'' on Chief Justice Roberts.
[Laughter.]
Mr. Rosen. Which is just false. I just deny that. It did
not happen at all.
But, nevertheless, you know, I spent 3 years, benefit of
the doubt----
Chairman Leahy. I would note in my years on this Committee,
that is the first time that expression has been used here.
Please go ahead.
[Laughter.]
Mr. Rosen. Thank you. I try to do my best. Precedents are
sometimes important to overturn.
So, you know, I have been giving him the benefit of the
doubt for 3 years. But when this decision was so easy to avoid
and could have been decided on narrower grounds, it is hard to
continue that benefit of the doubt.
Now, one thing I want to say, these pro-business decisions
are not--there is nothing corrupt about them. And, remember,
they are joined by Democratic as well as Republican Justices.
They are 7-2 or unanimous.
Senator Whitehouse. In some cases.
Mr. Rosen. In some cases.
Senator Whitehouse. In some cases it is the 5-4 bare
majority working its will.
Mr. Rosen. That is true, too.
I think you would have to say there are very few economic
populists on this Court, and these Justices share a suspicion
of regulation by litigation. But in the end, as you say, if the
pattern just continues, it is the 13th chime of the clock, at
some point you are going to have to say regardless of what is
in their mind--and no doubt they are deciding things in good
faith to the best of their ability--you would have to say the
pattern is so unmistakable that Congress has a right to object.
Senator Whitehouse. And with respect to the pattern, one of
the things that most concerned me about the Citizens United
decision was not actually in the decision itself but in Justice
Roberts' opinion, in which he said--and I will be asking this
to you, Mr. Smith. He said that stare decisis effect is
diminished ``when the precedent's validity is so hotly
contested that it cannot reliably function as a basis for
decision in future cases . . . '' And he went on to say that
``the simple fact that one of our decisions remains
controversial does undermine the precedent's ability to
contribute to the stable and orderly development of the law.''
I read that as the Chief Justice putting the rest of the
Court on notice that a persistent attack on existing precedent
by his 5-4 majority should as a matter of law be allowed to
undermine settled precedent by virtue of the hot contest that
they maintain against settled precedent.
Is it your view that precedent, once settled, is indeed
settled? Or would you accept the notion that an activist group
of a Court by consistently attacking precedent have a
legitimate means of undermining it for future cases rather than
accepting it as the law of the land?
Mr. Smith. Thank you, Senator. You know, I cannot speak for
Justice Roberts, but I think, you know, my understanding or my
sense would be that his point is that where a case has never
been broadly settled or broadly, that is to say, agreed on by
the Court--it has always been viewed as a close call--that
precedent simply has less force. So Austin was a close decision
itself. I believe it was 6-3 at the time. Austin itself seemed
to undercut, to work against prior precedents. Austin really is
out of step with most of the Court's campaign finance
jurisprudence. And even academics in the field who have long
thought Austin is correct have recognized that its reasoning is
really out of step with Buckley and Bellotti and other cases.
And the same is true for McConnell, which was 5-4.
So I presume his argument is that simply unlike a case
like, say, Miranda where it really does become fixed over time
and Justices constantly reaffirm it, some things are up in the
air. I do not know.
I will say this: On the area of campaign finance,
ultimately what you have here are two very conflicting visions,
and I do not mean to say that--I mean, it obviously is clear
which side I come down on. I do not mean to say that they are
illegitimate considerations, but you have one group of Justices
who essentially see that one of the problems in American
democracy right now is too much speech by particular types of
actors, that they have too much influence and that this
influence is corrupting and that it clogs up the process and it
gives special interests too much power. And you have got
another group who believe that the problem is too little
speech, that regulations of speech clog up the process and give
special interest too much power. And they cannot both be
correct, and they are going to be at odds, and we are going to
have, I think, a lot of continuing 5-4 decisions in this area.
Senator Whitehouse. Well, my time has expired so I should
end this.
Mr. Smith. Thank you.
Senator Whitehouse. But I do think it is regrettable that
the five-member majority of the Supreme Court found as a fact
on that question, because I do not think it is appropriate for
Supreme Courts to be finding things as a fact, particularly
without a record, and indeed particularly with a record as to
the contrary.
Thank you.
Chairman Leahy. Thank you very much.
Senator Klobuchar.
Senator Klobuchar. Thank you very much.
I am just trying to bring this down a little to where my
constituents are, who I will say, Mr. Smith, are ``freaking
out''--we have gotten hundreds of letters about this--and I
think for good reason.
We have just endured in this country and are only beginning
to recover from a financial crisis that occurred, I think in
part, because certain interests for many years were allowed to
trump the interests--it is Wall Street trumping Main Street in
this country. Loopholes were left open. People were put in
place that did not make the kind of decisions they were
supposed to make. And, understandably, regular citizens are
wondering if their voices have just been completely squelched,
if some interests in this country have a megaphone and they can
do nothing except write a letter to their representative in
Washington. And it is a major problem.
I also want to inject some reality of what it is really
like when you raise money. When I started out, I did not know
anyone in Washington to raise money. I went in a little room
for hours a day and called and tried to get $500, $1,000. I did
in this process set an all-time Senate record of raising
$17,000 from ex-boyfriends. No one has met that yet.
[Laughter.]
Senator Klobuchar. But I called everyone I knew, and that
is how I started, and I think that is what people want from
their elected officials. And it is far from, as Senator Cornyn
pointed out, a perfect system. But the last thing I want to do
is to make it worse.
And when I hear these numbers--I think this was in your
testimony, your written testimony, Mr. Kendall. You said that
in 2008 ExxonMobil generated profits of $45 billion, and with a
diversion of even 2 percent of these profits to the political
process, this one company could have outspent both Presidential
candidates and fundamentally changed the dynamics of the 2008
election.
Goldman Sachs just this year gave $16.2 billion--this is
this year--in bonuses, and Senator Cornyn noted that Barack
Obama raised $740 million. Well, one company's bonuses alone is
twice that amount. I mean, this is what--more than twice that
amount, $740 million. Is that what it is? I mean, it is an
infinitesimal amount compared to one company's bonuses that is
going out there. So that is what I am worried about.
We can talk all we want about what the Court has done here
and the process of the Court, but I am more interested in
fixing this. And I guess my first question--Senator Schumer is
working on a bill--is just how we fix this. And one of the
ideas here is to have more transparency, to require
shareholders to vote before a corporation spends any money in
favor of a candidate, require significant additional paper
trails to ensure that shareholders can trace how corporate
dollars are being spent on elections. I guess I would ask you
first, Mr. Rosen: Would this work? Also, what do you think
about this idea of opening--does this decision potentially open
the door to allow foreign corporations that have American
subsidiaries to have an outsize influence over American
elections? Or are there some things we can do to fix that?
Mr. Rosen. Thanks very much, Senator. The question of
disclosure is going to be hotly contested, and if you pass
Senator Schumer's bill, that will be challenged in the Court as
another violation of the First Amendment. And in the Citizens
United case, Justice Thomas has a dissent where he says that he
thinks that disclosure violates the rights of anonymous speech.
He was alone in that regard, but there is a serious question,
as you will see from Mr. Smith's testimony, about whether the
same five-member majority would have some question about
disclosure requirements.
I want to cite Justice Brandeis again because he is the
greatest free speech thinker, and he was often in favor of
disclosure. During the time that he wrote ``Other People's
Money,'' the same concerns about huge bonuses, underwriting
commissions, and unfair treatment of investment bankers existed
as exist now, and Brandies thought that disclosure, sunlight,
forcing people to disclose their bonuses and the underwriting
Commissions, would lead to reaction and accountability and
basically disclosure is the way to go.
Senator Klobuchar. OK. So you think there might be trouble
with transparency. This idea with the foreign corporations, is
there something we can do with that?
Mr. Rosen. You know, this is a technical question which I
could give a shot to, but I think I am not going to free-lance
on it.
Senator Klobuchar. OK. Mr. Smith, you talked about your
poll. Did you ever ask in your poll if the American people
think a corporation should be a person for purposes of the
First Amendment?
Mr. Smith. No.
Senator Klobuchar. Thank you.
Mr. Kendall, any ideas for how we can fix this decision?
Mr. Kendall. Well, I think the rest of my testimony and my
concerns that the Court's sweeping ruling in this case is not
easy to fix, and that there are implications beyond what the
Court holds in this case. If you look at the dissenting
opinions by Justices Kennedy, Scalia, and Thomas in prior
cases, they suggest that contributions directly to candidates
would be unconstitutional. So we do not know if that has five
votes on the Court right now, but it is certainly in play. And
I think while the Court says, ``Oh, we are not talking about
foreign companies here,'' the thrust of the ruling, which is
that you cannot distinguish between corporations and
individuals, would arguably, you know, put those restrictions
in jeopardy.
Senator Klobuchar. The restrictions on individual
contributions?
Mr. Kendall. The Court says there is no distinction between
the speaker, and that is a sweeping holding, which, as Justice
Stevens said, if taken seriously, would mean Tokyo Rose gets
the same protection as General MacArthur, which is absurd.
Senator Klobuchar. There is a lot of emphasis on the
testimony about how 28 States already allow corporate
contributions in their State elections. Our State does not, and
I think it has been a blessing. We have also some good matching
fund laws that allows for people to not have to raise as much
money for State legislative races. So will this decision
potentially also intercede in those State races as well, the
ability of States to ban corporate money?
Mr. Kendall. I think it will, and I think the problem and
the thing we do not know is exactly how corporations are going
to respond to the idea now that they have First Amendment
rights to spend unlimited amounts to influence candidate
elections, which is something we have never had in this
country. And I think the idea that Exxon has not spent billions
of dollars so far, while it may be true----
Senator Klobuchar. They have not had that opportunity.
Mr. Kendall.--they have not had the opportunity. And we do
not know how corporations are going to respond to this, but the
idea that they are equal to individuals in terms of First
Amendment rights and have exactly the same protection is one
that could have broad ramifications in our campaigns.
Senator Klobuchar. Thank you very much. I have gone over my
time.
Thank you, Mr. Chairman.
Chairman Leahy. Senator Franken.
Senator Franken. Thank you, Mr. Chairman, for calling this
critical hearing.
My office has received 220 letters just on the Citizens
United decision, and it might surprise Mr. Smith that by last
night's count, 204 of those 220 Minnesotans were opposed to the
decision. So this is something my constituents are really
worried about. And when you said that you had done a poll--you
have heard of Freud, haven't you? I really find the results
very unpersuasive considering the questions that you asked.
Now, Mr. Smith, after the Citizens United decision,
responding to those concerned Americans and Minnesotans, I
introduced a bill called the American Elections Act. It said
that if a foreign national has a controlling share of a
company, that company should not be spending unlimited amounts
in America. And it looks like Senator Schumer may include this
provision in his own Citizens United bill.
Now, you criticized this in your written testimony. You
said, and I quote, ``A provision to ban companies with more
than 20 percent `foreign' ownership would only restrict the
rights of U.S. nationals to associate for political involvement
because of a non-controlling foreign shareholder.''
Now, let me underscore that you are saying that 20-percent
ownership does not constitute control. Is that right?
Mr. Smith. Yes.
Senator Franken. Yes. So let us look at how the law
actually defines a controlling share, because you said rather
confidently to the Chairman that you are here to share your
expertise. So let us look at how States define a controlling
shareholder.
Yes or no, please. Do you know how Delaware, the leading
State for corporate law, defines a controlling shareholder?
Mr. Smith. No, I do not, nor do I think it is relevant to
the question of whether control----
Senator Franken. I asked you to respond yes----
Mr. Smith. Well, the question is----
Senator Franken.--or no, sir, and you said no, you do not--
--
Mr. Smith. Then the question is whether you actually want
serious answers or whether you are engaged in a little
showmanship. If it is the latter, I will accept that.
Chairman Leahy. All right. Mr. Smith----
Senator Franken. Sir----
Chairman Leahy.--that ranks with your putdown of the
Vermont Legislature. Please, Senator Franken, go ahead.
Senator Franken. Sir, you answer me yes or no that 20-
percent ownership does not constitute control. I think it is
important that the State of Delaware says it is.
Now, do you know, for example, what the State I represent,
the State of Minnesota, what we define as a controlling
shareholder?
Mr. Smith. Mr. Franken, Senator Franken, laws are written
for different purposes, and they are defined for different
purposes. So a law that is written for one purpose is not
necessarily applicable to another purpose, that is, the law----
Senator Franken. Well, this purpose is to decide what a
controlling interest is. They have not written what a
controlling interest is for election law because we have had
100 years of precedents that corporations cannot give in
campaigns.
Mr. Smith. Then it would----
Senator Franken. But there is a reason that there is no law
for this. Now, I asked you to answer yes or no, but you get the
picture.
Now, the fact is that 32 States that define control with a
number, 31 of them define it as 20-percent ownership or less,
most of them less. And without objection, I would like to
submit a copy of these States' statutes for the record.
Chairman Leahy. Without objection.
[The information appears as a submission for the record.]
Senator Franken. So while you assert that 20 percent is not
control, if a foreign entity owns 20 percent of a company, 31
of 32 States who define what control is do. And I think that is
very important.
Venezuela owns Citgo. Are we going to have Citgo putting
billions of dollars into our elections?
Mr. Smith. The answer would be no.
Senator Franken. And why would that be, sir?
Mr. Smith. Do you actually want me to answer this? OK.
First, the law prohibits foreign nationals from contributing
any money or spending any money in any U.S. election. Under the
FEC's----
Senator Franken. Wait. We have a statute that bans direct
or indirect giving by foreign nationals, but this law is vague,
it is out of date. Under Citizens United, it still allows a
foreign-controlled subsidiary to spend unlimited amounts in our
elections.
Now, you just said the law prohibits foreign nationals from
participating in giving, but it does not.
Mr. Smith. Now, the law allows as U.S.-incorporated and
U.S.-headquartered company--that is, a U.S. company which is a
subsidiary or which has foreign ownership--and, of course, U.S.
citizens have great ownership in many foreign companies as
well--to make--a U.S. company, in other words, can make
expenditures in races.
Now, nobody believes that the 2 U.S.C. 441(b) was passed in
order to prevent foreign corporations from participating. If
this is a particular interest of Congress, then it may be
something that Congress can address with a narrowly tailored
solution. But I would also note that FEC regulations, which, of
course, as you know, have the force of law, prohibit any
foreign national from being involved in any decision that a
corporation might make.
Senator Franken. Well, if the foreign national owns 20
percent, they are not going to have any influence over this,
that the people in the room making this decision are not going
to know this?
Justice Kennedy explicitly reserved judgment on whether or
not there is a compelling interest to limit foreign individuals
or associations from influencing our Nation's political
process, and you know that.
Mr. Smith. Yes, I do.
Senator Franken. In fact, Justice Kennedy assumed for the
sake of argument that such an interest does exist----
Chairman Leahy. Senator Franken.
Senator Franken. My time has expired. Thank you.
Chairman Leahy. Senator Cardin.
Senator Cardin. Mr. Chairman, thank you very much. This has
been a very interesting hearing.
I think you all would understand that the people of
Maryland, whenever I go around my State, they are very
interested in the way we conduct financed campaigns. It is a
subject that they have very strong views about. They think the
campaigns are too long. They think they are too expensive. And
they think that the way that we finance campaigns is corruptive
to our political system. And I agree with the way Marylanders
feel about that, and this is all before the Citizens United
case.
Every 2 years, we find elections becoming longer and more
expensive, and more special interest dollars are finding their
way into the system. That is, again, before the Citizens United
case.
Marylanders want fundamental change in the way that we
finance campaigns in this country, and I want fundamental
change. And I guess my concern is, Professor Rosen, when we
mention some of the ways that perhaps we could counter the
Citizens United, you raised concerns as to whether any of those
could withstand the challenge of the make-up of this Court.
And as I look at additional challenges that are likely, it
seems to me that this Court is going to move us in a
direction--the wrong direction, the opposite direction of which
we need to do, and that is fundamental reform in the way that
we conduct elections.
It is Congress' responsibility to set up the system for
fair and open elections in the United States. It is not the
Court's responsibility to do that. It is clearly the Court's
responsibility to make sure that we are consistent with our
Constitution. But it is Congress' responsibility to develop the
nuts and bolts on how we conduct elections in this country.
And I guess my concern is--and this is a very reluctant
conclusion I am coming to. It is, I guess, my conclusion that
with the make-up of this current Court it is unlikely that we
can pass the type of laws that can make the fundamental changes
that the people of Maryland would like to see us make and that
I agree with them that we need in order to protect the
integrity of our system on electing our public officials.
So I come to the conclusion that we have to seriously
consider amending the Constitution of the United States in
order to deal with this issue, and I would like to get the
panelists' views as to whether you believe--if you agree with
the people of my State and their Senator that we need
fundamental change, can we do it by legislation? Or will it
require amending the Constitution? Professor Rosen, I will let
you go first.
Mr. Rosen. Senator, you express so well the frustration
that Congress should feel in the face of uncertainty about
whether it can pass these reforms. And it is striking--this is
why the debate about activism is important. Conservatives said
for 40 years that judges should interpret the law, not make it,
and should defer to Congress about contested constitutional
questions. So the fact that there is uncertainty about how the
Court will treat these reforms--and I should stress when I say
this majority might not uphold them, I am not saying that they
should not uphold them. I think they are constitutional. But it
is not a clear case.
A constitutional amendment? Well, that is always a great
thing to propose, and if the intensity of public opposition to
this decision is so strong, perhaps it is not implausible that
it might proceed. But you know better than anyone, Senator, how
hard it is to pass an amendment even with public support.
Senator Cardin. Let me make it clear. I am going to work
with my colleagues here on legislation because a constitutional
amendment takes a lot of time. But I think we need to seriously
consider whether there has been a fundamental shift in who
determines how elections are conducted in the United States.
The Congress expressed its view. The Supreme Court knocked it
down. And I really do not understand the basis of their
opinion, but I must express the Supreme Court is the arbiter on
the Constitution. Therefore, there is a fundamental flaw. The
only way it appears to me that we may be able to correct it is
through a constitutional amendment.
Mr. Smith, I welcome your thoughts on this. I think we all,
all three of you would agree it is up to Congress to determine
the fundamental structures of how elections are conducted in
this country.
Mr. Smith. Senator, I would say that, yes, I think the kind
of major changes that I think you are thinking about would
require a constitutional amendment. I do think that there are
some actions that Congress can take, that it may want to take,
that it feels would improve the process that would be okay
within Citizens United. I do not like to use the phrase ``fix
Citizens United'' because I think it is fine. But if you want
to use the phrase ``fix Citizens United,'' I think there are
some things you could do.
And I would also urge members to consider responses that--
for example, lifting the limits on party and candidate
coordinated expenditures, because right now, for example,
parties which can only raise hard money cannot coordinate, so
if a corporation spends a lot, it is hard for the candidate to
raise money, but the party may be able to.
Senator Cardin. But that just puts more money into the pot.
Believe me, there is enough money in the pot.
Mr. Kendall, very quickly, because my time is----
Mr. Kendall. Sure. I agree with everyone you said. I think
that there are problems that Citizens United creates that
Congress will have a very difficult time fixing. I think that
the only way this gets truly fixed is if the Supreme Court
reverses course again or if we pass an amendment to fix it.
I do think that there are some things that this body is
already considering that would help and that would probably
withstand scrutiny. I hope that is true.
Senator Cardin. Thank you, Mr. Chairman.
Senator Specter. [Presiding.] Thank you, Senator Cardin.
Senator Kaufman.
Senator Kaufman. Yes, I would just like to make a few
comments.
First off, I am not freaked out on this, but I am very,
very concerned--I mean, I cannot think of anything that
happened recently that has caused me more concern than this
decision. And I am not running for re-election so it is not
some populist speech or anything else. It just in so many
different ways affects me, and I think sitting here and
listening this morning, it does--I teach a course at Duke Law
School, and I taught it for 20 years in the Congress. And we
spend time with some very smart students going through the
election law. And I have a more and more difficult time--
Senator Cornyn is right. It is very difficult, the system that
we have now, and the money is growing. I do not know what I
would say to them this year, because--and I mean this with all
respect, Mr. Smith. This is a blunderbuss. This is taking a
system that, while not--the only disagreement I have with
Senator Cornyn is I hate to think what the numbers would have
been in the last couple elections without McCain-Feingold. I
mean, you look at what is going on, I mean, it just would have
been absolutely, in my mind, you know, incredible. And a lot of
them have been caused, frankly, by the Supreme Court rulings
before this one, and it was caused by people--and we sit and
listen to these discussions--that are really, really, really
smart people and really, really, really know a lot about the
law and know nothing about campaign financing and refuse to
lean on the Congress and what the Congress thinks and what the
Congress found as facts in making the decisions.
It is sort of like advertising. Everybody thinks they are
an expert on advertising. Everybody thinks they are an expert
on campaigns. ``After all, I see the campaign ads. I know what
is going on.''
But when you sit with the students and you go through it,
while this thing did generate more money, it was an incredible
effort trying to deal with legitimate concerns the Supreme
Court addressed in Buckley v. Valeo, but on about free speech,
which we are all concerned about. But to take a blunderbuss and
blow the whole thing into next year, to say that corporations
now can spend from--as Senator Klobuchar said--I mean, Goldman
Sachs has a lot of interest and expressed--and I am concerned
about small business people. But small business people, by and
large, they can contribute their own. They can get it done.
This is not about small business. It really is not. This is
about very, very, very big business because this is about very,
very, very big money.
So, anyway, I think this is--and I do not think there are
ways out. I mean, Senator Cornyn said he is interested in
transparency. I spend a lot of time on this law. I do not know
how we get transparency based on Mr. Smith's definition of what
this ruling means, because corporations, they are very, very
smart. ExxonMobil, if they decided to put $1 million into a
campaign, $5 million, $10 million into a campaign, they are not
going to do it. It is going to be the Committee for Clean
Government that they are going to give to one of their
subsidiaries. No one is ever going to know where the money
comes from. You can pick up the Hill magazine or Roll Call or
Politico, and you will see page after page after page of ads
trying to influence the election where no one who it is that is
involved.
Now, I do not see how we can get to that based on Mr.
Smith's analysis of the law and sections of the ruling. That is
why I am so concerned.
Now, one other thing I just want to spend a minute and talk
about is judicial activism because we hear a lot about judicial
activism, and the Ranking Member and I have had a number of
discussions.
Professor Rosen, you and Mr. Kendall both talk about
Citizens United as an activist decision. Can you explain that
in the context of judicial activism as we know it over the
last, say, 15 years?
Mr. Rosen. Thanks for that question, Senator. As you know,
activism is a hotly contested term. It is in the eye of the
beholder. Everyone has his own definition. This decision is
activist by any definition of activism, so let us take the
different definitions, and they point in different directions.
First, deference to text and original understanding of the
Constitution. As Mr. Kendall shows, this is not deferential to
the history and ignores the text's distinction between the
Press Clause and the Free Speech Clause.
Second, deference to precedent. As you suggested, this is a
blunderbuss to precedent.
Third, deference to history and tradition. This uproots
decades of tradition and legislation dating back to the
progressive era.
And then, finally, pragmatic considerations, many people
think irrelevant. This is highly unpragmatic and refuses to
defer to Congress in the face of uncertainty.
So it is not that it is unprincipled. Again, Earl Warren
could have written this decision. And Justice Kennedy is not a
restrained Justice, so that is fine for him. But the other
members of the conservative majority care a lot about
restraint. They say they are minimalists. This is why it is
important--Chief Justice Roberts said in his hearings, ``I am a
bottom-up rather than a top-down judge. I want to move
incrementally.'' The fact that he did not do that even though
he could have is what makes this so activist and what makes it
so troubling.
Senator Kaufman. Mr. Kendall?
Mr. Kendall. I think Professor Rosen did a tremendous job
of explaining my points. The one other point that I would make
is Chief Justice Roberts goes through the factors of stare
decisis, and one of the things he relies most heavily on is
this tension between Bellotti and Austin, which are these two
earlier rulings, and he completely ignores the fact that--and
Justice Stevens points this out very skillfully in the dissent.
He ignores the fact that there is a footnote in Bellotti that
expressly leaves open the issue addressed by Austin. And so if
you look at those two opinions, they really can be put together
and make total sense together, and that is where the Court's
rulings were, and yet the Court came back in Citizens United
and found a problem where it really did not exist, and I think
that is one definition of activism.
Senator Kaufman. I have felt for many years that judicial
activism is in the eye of the beholder, that, you know, if it
is going your way, it is not judicial activism, if it is not--I
think that has kind of put that to rest. I think we can have
judicial activism on the left side of the spectrum, and we can
have judicial activism on the right side of the spectrum.
Thank you very much, Mr. Chairman.
Senator Specter. Thank you, Senator Kaufman.
Professor Rosen, your testimony, your written testimony is
very critical of Chief Justice Roberts. Among other things, you
say it is precisely the kind of divisive and unnecessarily
sweeping decision that Chief Justice Roberts pledged to avoid
in his confirmation hearings.
When he testified on confirmation, he spoke very strongly
against a ``jolt to the legal system'' and amplified by saying
that it is not enough that the prior decision was wrongly
decided, but you ought to look to other factors like settled
expectations, the legitimacy of the Court, whether the
precedent has been eroded by subsequent developments. And he
was also very emphatic in his confirmation hearings about
deference to Congressional fact finding. He said the reason--
well, let me pause there and ask you some questions.
Do you think this case was a jolt to the legal system?
Mr. Rosen. The Citizens United case certainly was, Senator,
for the reasons that you and your colleagues have explained
very eloquently.
Senator Specter. Could you fathom more of a jolt to the
legal system than this decision, 100 years corporations cannot
engage in political advertising?
Mr. Rosen. It is very disruptive, Senator.
Senator Specter. How do you square that very forceful
testimony with this very sweeping overruling of 100 years of
law?
Mr. Rosen. Senator, I have thought about that long and hard
because, as I say, I do respect Chief Justice Roberts and his
vision. There is one sentence in his concurring opinion that
perhaps is the most revealing on this score. He says, ``We
cannot embrace a narrow ground of decision simply because it is
narrow. It must also be right.'' And that confidence that this
was the right decision obviously is what motivated him to join
here, and that must have been what was in his mind. But that
vision that he alone knows what is right is not the vision that
he embraced in his confirmation hearings. He embraced the
vision of Justice Holmes who said the Constitution is made for
people of fundamentally different points of view.
Senator Specter. Professor Rosen, in light of the limited
time, let me move to another issue. Chief Justice Roberts at
his confirmation hearing said this with respect to
Congressional fact finding. He said, ``The reason that
Congressional fact finding and determination is important in
these cases is because the courts recognize that they cannot do
that. Courts cannot have, as you have said, whatever it was,
the 13 separate hearings before passing particular legislation.
Courts, the Supreme Court, cannot sit and hear witness after
witness in a particular case and develop that kind of a record.
Courts cannot make the policy judgments about what type of
legislation is necessary in light of the findings that are
made. We simply do not have the institutional expertise or the
resources or the authority to engage in that type of a process.
So that is the sort of a basis for the deference to the fact
finding that is made. It is institutional competence. The
courts do not have it. Congress does. It is constitutional
authority. It is not our job. It is your job. So the defense in
Congressional findings is an area that has a solid basis.''
Now, in the voting rights case, although decided on
narrower grounds, Chief Justice Roberts was very dismissive of
the vast record that was compiled in this room on the voting
rights case, saying, ``They are too sweeping''--''they are
sweeping far more broadly than they need to in addressing the
intentional discrimination under the 15th Amendment.''
Now, how does that statement by Chief Justice Roberts of
the oral argument square with the vast deference he articulated
for Congressional fact finding?
Mr. Rosen. Senator, I agree with you that it is troubling.
The voting rights case was one where Chief Justice Roberts did
come up with a narrow grounds of decision. He invented an idea
that Congress had not anticipated and said that electoral
districts could bail out of preclearance. But he did not have
to question Congress' fact finding there. Justice Souter said
they should have found there was no standing to bring the suit.
That would have been far more respectful of Congress, and I
think you have long focused on this Senator. You are right to
question this.
Senator Specter. Professor Rosen, what is the value of
confirmation hearings if you have those statements at
confirmation by a nominee and these kinds of decisions?
Mr. Rosen. Senator, you are right to ask that question, and
it was not just in his confirmation hearings that he said this.
He said this in speeches and interviews afterwards.
Senator Specter. I know I am right to ask that question.
What I would like is an answer.
Mr. Rosen. Well, you will have to ask Chief Justice Roberts
that, but I think you are right to note the tension between
what he said in his hearings and his performance on the Court.
Senator Specter. Somebody send for the Chief Justice.
Mr. Rosen. I am sure he will be glad to come down on a
moment's notice.
Senator Specter. Well, my time is up. A second round,
Senator Sessions.
Senator Sessions. Thank you, Senator Specter.
Chief Justice Roberts did a fabulous job when asked about
stare decisis in his hearing, and he explained what the
standards were classically understood to be the basis for
overturning prior decisions. And I think his opinion indicates
he felt it fell within that range, and he never said that he
was going to defer to Congressional decisions on constitutional
questions that violated the Constitution. And we violate it
regularly around here, in my opinion, and I predicted this case
violated the First Amendment--this legislation when it passed,
and so did a lot of other people. We knew this was at the very
edge and really thought it was over the edge of what the First
Amendment would allow the Government to prohibit. And so I do
not know.
I do say this: that it does appear to me that the case did
implicate big issues. It was hard to decide this on a strictly
narrow basis. You could have done so perhaps, but if we were
proceeding under matters that, fairly considered, violation the
constitutional right of a group of people to speak out, then
doesn't the Supreme Court, Mr. Smith, have a right to say no,
and even if Congress in its wisdom thought it was legitimate in
doing so?
Mr. Smith. Well, again, I think when precedent should be
overturned is a complex question, but what I would say about
this case is, for example, suppose the Court had said that
while the statute did not really intend to cover video on
demand transmissions, first, that would have done some abuse to
the statute because the statutory language pretty clearly does
cover it. But they could have argued that in some way.
The next question would have been, the next case would have
come up, which is, OK, can you ban a book, can you ban a
pamphlet or whatever have you. If you ban a book in the next
one and the Court said, no, you cannot ban a book, they would
have gone to a pamphlet.
Similarly, you know, if you look at the various other
grounds that have been offered, like, well, what if--Citizens
United in a nonprofit. Well, what about the fact that they
accepted contributions from for-profit companies? And then
people would say, ``Well, if it was a de minimis amount.'' And
the next case would be, ``Well, what is a de minimis amount?''
In other words, I think what the Court recognized in this
case and I think one reason none of the dissenters would
actually concur in the judgment on any of these grounds is
because doing so would not have led to a stable system. It just
would have put off a series of complex questions, and it would
have further rewarded, again, the lawyers, the consultants, the
lobbyists who know how to game the system and know exactly what
you can do and what you cannot. So I think that a sweeping
decision----
Senator Sessions. Well, along that line, I believe the
Chief Justice--someone noted that none of the dissenters
proposed a narrow ground. They took a constitutional view of
it, apparently, and so we had, didn't we, Mr. Rosen, a
constitutional difference of opinion?
Mr. Rosen. Justice Stevens addresses that in his dissent,
Senator, and he says it is common for lawyers to argue in the
alternative. It is possible if the Chief Justice had actually
in good faith embraced this narrower ground, the dissenters
might have changed their mind, just as they did in the voting
rights case where they embraced a reading of the statute that
they might not have chosen as a primary matter, but were
willing to take as a compromise.
Senator Sessions. It is possible, but it is also possible
that he had two different views of what the Constitution says,
it seemed to me. And I think it is a big issue, and sometimes
you just have to decide those questions.
I do think that the----
Mr. Kendall. Senator, if I may?
Senator Sessions. Yes.
Mr. Kendall. I think the best way to describe what this
case was about was the way Citizens United initially litigated
it. They did not challenge the 1947 statute. They put the
challenge to Austin as a total afterthought in their briefs. It
was only when the Court came back and said, no, let us brief
specifically whether Austin should be overturned that Mr. Olson
focused on that question. So you are saying it raised big
questions, but it raised big questions only because the Court
changed the question on the litigants. And I think the----
Senator Sessions. But Citizens United had an interest in
winning the case, and they did raise the other issues, but
really the case took on a different dimension when the
Solicitor General made arguments that indicated that she
believed books published before an election could be banned,
that the U.S. Congress has the power to ban the publishing of
books. And this is a big deal. It implicates the First
Amendment, and it would be the first time in the history of the
Republic, would you not agree, that the courts or the Congress
had ever banned the publishing of a book?
Mr. Kendall. Again, I do not think that was Solicitor
General Kagan's position. It was Malcolm Stewart who initially
argued it, and I do not know how that changes--I mean, again,
the narrow question of whether the specific 90-minute attack ad
was within the campaign finance is a fairly narrow question
that was litigated on that ground. The questions that the
Justices asked the SG's office and the implications that it got
into, it is really about the way the case is handled by the
Court, not about what the question presented by Citizens United
and fairly within the briefing of the initial case----
Senator Sessions. Well, she said in her argument, later I
guess, ``We haven't done that yet,'' but indicated that there
might be a possibility it could be done and that an author
would--they could always fight it in court.
Mr. Kendall. I think what she was saying is that we haven't
done it and we won't do it, and if there was--if we did it, it
could be challenged.
Senator Sessions. I thank you. It is a great discussion, an
important issue, and all of you have made good points. And I
would say, Mr. Smith, Senator Leahy is going to defend his
Vermont Legislature.
[Laughter.]
Senator Sessions. As he did ably.
Mr. Chairman, good to be with you.
Senator Specter. Thank you, Senator Sessions.
Senator Kaufman.
Senator Kaufman. Yes. The Ranking Member is quite eloquent
in these, but I think with all due respect, even superficial
knowledge would see that this was not going to be decided on--
when he got to the point in the oral argument, this was not
going to be a case decided on narrow arguments. So I think it
is reasonable to believe that the minority knew what was coming
and acted accordingly. That is just--everybody has got a right
to their opinion, but that is kind of my opinion.
Senator Sessions. Well, no, I think that is why they asked
for new argument, and they made it publicly clear and allowed
the debate to go forward on a larger basis. Rightly or wrongly,
that is what they did.
Senator Kaufman. I would not want to miss this opportunity
to follow up on both Senator Whitehouse and separate comment by
Senator Klobuchar. One was Senator Whitehouse talking about the
pro-business bent of the Court.
Sitting here listening, you would say, well, they
overturned this one case, and it was a 100-year precedent, and,
wow, you know, they have been doing this kind of on a regular
basis, haven't they, in the business area? And the one that
comes in common that Senator Whitehouse has, they all seem to
benefit business. So, Professor Rosen, Mr. Kendall, could you
kind of talk about the business activism part of this case?
Mr. Rosen. The statistics in recent years are really
striking. When you look at the 46 business cases before the
Roberts Court in which the Chamber of Commerce participated,
the majority of them go the Chamber's way in areas ranging from
punitive damages, preemption, False Claims Act, securities, and
antitrust cases.
If you want some more stats, they are striking. The Court
accepts less than 2 percent of the petitions it receives every
year. The Chamber of Commerce's petitions were granted at the
rate of 26 percent, and with a success rate for those of 75
percent. So the claim that this is a pro-business Court is
increasingly hard to dispute.
Senator Kaufman. A pro-business activist Court.
Mr. Rosen. A pro-business activist----
Senator Kaufman. In terms of Leegin, where they overturned
96 years of antitrust law, Exxon, so there is a constant theme
that goes through. It is not just this case where they
overturned 100 years of precedent.
Mr. Rosen. That is right, Senator.
Senator Kaufman. Mr. Kendall? Mr. Smith?
Mr. Kendall. I think your concern is entirely valid. I
think it traces from a 40-year effort by the Chamber to take
advantage of what Justice Powell said was an opportunity for
corporations in the Court. If you look at some of the recent
cases that the Chamber and corporations have funded a
tremendous amount of research on, things like attacking jury
verdicts--there are few things that mattered more to James
Madison than the jury trial, civil and criminal jury trials,
and yet corporations have aggressively taken on the idea that
there should be a trial for anything and tried to advance the
idea that everything should be handled by arbitrators that
typically they hire.
And so it has really been an assault on one of the most
essential values of our Framers and the Constitution itself,
and that has had tremendous success. They have won just about
every case expanding this Federal Arbitration Act from
something that was intended to be a fairly narrow statute into
something that throws just about every business case out of the
Federal courts entirely.
Senator Kaufman. Let me ask another question, and that is,
you know, I think most of us think that based on the recent
financial meltdown, the incredible pain it has caused to so
many people, I think there is total agreement on that. I think
most people think that part of that was caused by, as Alan
Greenspan said, a self-regulation that did not work, that he
was dismayed about, and that a major part of it was
dismembering of the rule of laws and regulations we put in
place, laws we put in place after 1929, from Glass-Steagall to
setting up the SEC to the uptick rule to all the things that we
put in place in a period of just slowly but surely under both
administrations dismembering this. And I think most people
think that we have to go back to have more regulation--not
overregulation but more regulation.
Looking at the Supreme Court, what are the prospects that
someone that is going to sit here and have to try to deal with
this and write laws that whatever we do in the regulatory area
could be overturned by this Court?
Mr. Rosen. Senator, this is a very serious question,
obviously. The Troubled Asset Relief Program has already been
challenged by libertarian organizations, and that will work its
way up to the Supreme Court, and other of the regulations that
you mentioned will be challenged as well.
Will this Court give a full-scale assault against these
regulations in the way that the pre-New Deal Court did?
Predictions are not worth much. I would doubt that they would
go that far, largely because of the most conservatives on the
Roberts Court, you could call them pro-business rather than
libertarian conservatives. Only Justice Thomas might really
believe that the post-New Deal regulatory state is
unconstitutional.
But that does not mean that they could not strike down a
whole lot of stuff and do a lot of damage. Later this term,
they are going to decide whether the Public Company Accounting
Board to create----
Senator Kaufman. Right.
Mr. Rosen. You know, whether that is unconstitutional. Lots
of people think--the betting is that that might well fall.
One of the striking lessons of history is it only takes a
couple of really activist decisions to tar a Court as pro-
business and activist in the eye of history. The New Deal Court
upheld as much as it struck down. It upheld FDR's gold policy.
It upheld the Tennessee Valley Authority by a vote of 8-1. But
we remember the decision striking down the NRA and other
aspects of the regulatory state.
So this Court is on very dangerous ground, and just a small
misstep, even a few more decisions like this, could galvanize
the populist outcry against Citizens United into much broader
discontent with the Court, and the question of how Congress
will respond will be just as urgent and serious nowadays as it
was in the 1930s.
Senator Kaufman. Thank you very much, Mr. Chairman.
Senator Specter. Thank you, Senator Kaufman.
Without objection, a statement from Senator Feinstein will
be entered into the record.
[The prepared statement of Senator Feinstein appears as a
submission for the record.]
Senator Specter. Professor Kendall, I ask you the same
question I asked Jeffrey Rosen, Professor Rosen. How would you
square Chief Justice Roberts' confirmation testimony that he
would not jolt the system with the holding in Citizens United?
Mr. Kendall. Senator Specter, I share your concerns about
it. My organization, which is a progressive legal organization,
supported John Roberts, to a great deal of criticism from my
progressive friends, based on his testimony, which I found
inspiring and spoke to me as a lawyer, and I thought as
somebody who I had litigated around John Roberts in a case, I
had seen him at work. I had hoped that he would be the Chief
Justice that Jeffrey Rosen speaks of him being.
And so to see a ruling like this, which really does fly in
the face of so many things that he testified about and so many
things that he said he would be as Chief Justice, both in his
hearings and in his interviews, really does throw many of those
hopes to the wind. And I think it is----
Senator Specter. Professor Kendall, how about his broad
testimony at confirmation about Congressional fact finding and
the deference, because only Congress can find the facts, and
then his dismissive attitude about it in the oral argument in
the voting rights case?
Mr. Kendall. Right. I would like to take issue with what
Senator Sessions said, which is this is just a finding about
whether it is constitutional. The Supreme Court has very clear
guideposts as to when Congress can limit speech if it requires
them to meet strict scrutiny, and you have to show a compelling
interest.
What the Court did and one of the things we have not talked
about much was what the Court did in Citizens United is really
change the goalposts and change the definition of what is a
compelling interest. And so it basically threw out--you know it
changed on this body what it had to show and said, oh, all of
this evidence of an appearance of corruption is not good
enough, you have to show basically quid pro quo corruption.
And so the Court just basically dismissed all of the fact
finding and said it was not relevant and said you have not met
our burden. And it really has changed the goalposts and
dismissed the evidence that you assembled over years of
hearings.
Senator Specter. Professor Kendall, what is the value of
our confirmation hearings if we rely upon testimony we will not
jolt the system and it has been exactly the contrary, we are
going to be deferential to Congress and it is dismissive? What
is the value of the confirmation hearing?
Mr. Kendall. I think, unfortunately, the confirmation
hearing has become a kabuki dance in certain respects, and you
said this before, Senator Specter. It is a very large problem.
Senator Specter. Professor Smith, you say, ``Congress
should abandon any attempt to circumvent the Citizens United
decision.'' What about some limitation, such as the--eight of
the Justices, with only Justice Thomas being on the other side,
said that there could be a requirement of disclosure on
corporate campaign-related expenditures. Any problem with that?
Mr. Smith. Senator, no, I think obviously clearly the Court
has upheld disclosure rules and so on. The point that I was
trying to make there is that reaction by Congress and by State
legislators needs to be aimed at the actual problem, and what
we see in many of the proposals that I have seen just tossed
around are proposals that seem pretty clearly intended to try
to stop corporations from using their rights. And as you now,
the Court has long held that you cannot do indirectly what you
cannot do directly.
So there may be some things like added disclosure. There
may be something that could be done to make a more refined
foreign corporation law or, you know, subsidiary law that might
be possible. But, again, they should not be subterfuge to just
try to stop corporations from speaking as they are allowed to
do under the decision.
Senator Specter. Professor Rosen, what do you think
Congress could do consistent with the case?
Mr. Rosen. Senator, my view of the First Amendment issue is
broad, so I think you should do whatever you please. And the
fixes will be challenged. Disclosure will be challenged. The
limits on foreign corporations will be challenged. But I hope
that this Court will be more restrained in those future cases
than it was in Citizens United and will uphold whatever fixes
you pass.
Senator Specter. What is your optimism based on?
Mr. Rosen. In this business, I long got out of the habit of
making predictions, but I guess since you ask, Senator--it is a
serious question. I have enough faith in the fact that Chief
Justice Roberts thinks that he is being incremental and picking
and choosing his battles that he will not follow this
blunderbuss with another one.
Senator Specter. You think he thinks this is incremental,
Professor Rosen?
Mr. Rosen. Senator, I guess he would not think that this
decision is incremental, but he would think that its breadth is
required by the Constitution, and I would hope that in other
cases he would be less confident that he knows the right answer
than he did in this one.
Senator Specter. Professor Kendall, what would you suggest
by way of legislative changes not inconsistent with the case?
Mr. Kendall. We do not, my organization does not support
any particular legislations. We have not taken a position on
them. I think that some of the disclosure laws, some of the
enhanced limits on foreign corporation contributions should be
upheld by the Court and I think would help----
Senator Specter. What kind of limits?
Mr. Kendall. I do not really have the specifics of the
legislation in hand enough to speak knowledgeably about that.
Senator Specter. If you have any suggestions, Professor
Kendall, Professor Rosen, we would be interested in receiving
them.
Mr. Rosen. Thank you, sir.
Mr. Kendall. Thank you, Senator.
Senator Specter. Even your suggestions, Professor Smith, if
you have any that you would care to share.
That concludes our hearing. Thank you very much, gentlemen.
[Whereupon, at 12:10 p.m., the Committee was adjourned.]
[Questions and answers and submissions for the record.]
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