The University of Texas at Austin
  • The effect of corporate cash on the 2010 elections

    By Steve Bickerstaff
    Steve Bickerstaff
    Published: Oct. 13, 2010
    The

    Steve Bickerstaff is adjunct professor in the university’s School of Law and an expert in constitutional law, regulating the use of money in politics, local government law, election law, voting rights, public policy litigation and telecommunications regulation. He is the author of “Lines in the Sand” (2007) about the controversial 2003 congressional redistricting in Texas and co-author of “International Election Principles” (2009). Previously, Bickerstaff served as Parliamentarian of the Texas Senate and special assistant Texas Attorney General before founding Bickerstaff & Heath, one of the premier election law firms in the country.

    The upcoming elections are the first time that corporate funds can be legally used to expressly advocate the election or defeat of specific candidates.

    Earlier this year, a five-judge majority of the United States Supreme Court held that corporations have the same right as natural citizens to spend money to expressly advocate the election or defeat of political candidates. In order to rule in this manner, this majority found it necessary to take the extraordinary steps of overruling precedent, disregarding the issues developed in the courts below, ignoring the requests of all of the parties to the litigation (no party asked that the ban on corporate campaign expenditures be declared unconstitutional) and conducting a special hearing on the validity of the federal ban. This majority of the Court could easily have given the appellants the relief that they requested without insisting on such a hearing or ruling, or could easily have fashioned relief in 2010 that allowed Congress an ample opportunity to act.

    Instead, the Court acted in a manner that dramatically changed the campaign finance rules in time for the 2010 election cycle. Congressional efforts to mitigate the effect of the majority’s decision were easily blocked by Republicans in the U.S. Senate. As a result, the election system has been immediately and widely opened to large amounts of corporate cash that can be raised and used while leaving the corporations anonymous. The 2010 elections will show the effects of this phenomenon.

    Corporations often have a great deal at stake in legislative decision-making. Therefore, they are anxious to win the favor of current officeholders or candidates who they perceive are in a position to help them on important pending or planned legislation. This effect was shown in Texas in 2002 when then Congressman Tom DeLay raised $749,000 from 20 corporations in support of his private organization (Texans for a Republican Majority). Many of the corporate executives knew at the time that the contributions were of questionable legality and knew little or nothing about DeLay’s plans for the funds. They knew, however, that DeLay wanted the funds and that pleasing DeLay was important to the corporation’s objectives in Congress.

    Now, after the Supreme Court’s ruling, similar private organizations, such as Karl Rove’s American Crossroads (Crossroads GPS), are soliciting tens of millions of dollars from corporations. The corporations themselves remain anonymous behind the cover of the private organizations. These organizations are poised to raise and spend upwards of $50 million of corporate money in the final days before the general election to expressly advocate the defeat of certain Democrats and the election of certain Republicans. Such conduct is specifically what was illegal before the majority’s ruling.

    Most corporations are good citizens, but some are not. Some have wrongly benefited financially from this nation’s follies (for example, Iraq) and lack of effective regulation. These businesses generally were shocked by the election of Obama and the possibility of changes that might limit or prevent this flow of profits. They now see an opportunity to forestall or reverse this change and, instead, to restore the relationships in Washington that were essential to their prior success.

    As important as the defeat of Democrats may seem to some persons in 2010, however, this election is likely just a dry run for using corporate funds to defeat Obama in 2012.

    Did each Justice of the majority of the Supreme Court intend to create this flow of corporate funds to aid Republican candidates? I do not know. There is no doubt, however, that the effect of its unnecessary ruling was foreseeable and will be hugely felt in the upcoming 2010 elections and thereafter.

    Visit the mid-term elections blog series home page for a complete lineup of faculty experts’ analyses.

    • Quote 2
      Keith Funding said on Nov. 2, 2010 at 10:00 a.m.
      "Most corporations are good citizens, but some are not. Some have wrongly benefited financially from this nation’s follies (for example, Iraq) and lack of effective regulation." This is common - and it will be interesting to see what occurs after the elections this year. I know many large and small corporations have a lot riding on the up and coming legislative elections and it'll be interesting to see how it plays out. In all honesty, I want our economy to recover even if it means a few fouls here and there. As long as the consumer isn't screwed completely, then corporations must take the valiant efforts necessary to revive this economy.
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      John Robinson said on Nov. 1, 2010 at 3:11 p.m.
      Quite frankly I'm appalled by the totally partisan nature of these Mr. Bickerstaff's analysis. One would hope that he would have displayed the professionalism to at least create the appearance of impartiality.
    • Quote 2
      LeCoeur BA '74, JD '78 said on Oct. 27, 2010 at 11:09 p.m.
      Excellent post by Professor Bickerstaff. The bulk of the comments above are mostly sophomoric in ignoring the identified and basically undisputed problem with unlimited and undisclosed campaign contributions by corporate entities that stand to reap substantial financial benefit from manipulating either candidates or the electoral process with money, whether it is "conservative" corporations or "liberal" unions.
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      Fred Goodwin said on Oct. 18, 2010 at 9:37 a.m.
      I don't have similar info for other industries, but according to the U.S. News and World Report Web site, the telecom sector (since 2009) has given more to Democrats (in total and on average) than to Republicans.
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      dom said on Oct. 18, 2010 at 8:37 a.m.
      I was hoping to find a balanced article on campaign finance (after seeing a blurb on Trial Lawyers lobby giving which btw is strictly Democratic?) which those of every political persuasion can get currently. Your piece came up on a google search. You leave out the major corporate giving to the Democrats and also major institutions such as the labor unions who throw a lot of cash into elections. My hope was unfounded. An unbalanced, biased piece. Too bad.
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      Bryan Blake said on Oct. 14, 2010 at 2:06 p.m.
      SCOTUS has been restricting our constitutional rights since the "war on drugs" began in the early 1970s. We are only as free as the rights we afford criminal defendants against the state. Now SCOTUS has taken our political rights from us. SCOTUS in Bush v. Gore meant to install a Republican president. In my opinion, in Citizens United, SCOTUS meant to unleash the hounds of facism. Within three to six election cycles we will be a facist nation. A Congress and a president paid for by corporations will make dissent a criminal offense. The remaining Constitutional rights to defend ourselves against the state will be tossed aside by SCOTUS.
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      Charles Wilson LLB, U.T. 1960 said on Oct. 14, 2010 at 9:13 a.m.
      Facts speak for themselves, and strongly suggest that the Citizen's United majority knew exactly what it was doing, and that it's objective was to establish a permanent "conservative" government that would redistribute the wealth of our nation upward. It is foolish to assume that the U. S. Supreme Court is incorruptible.
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      Fred Cook '71 said on Oct. 14, 2010 at 8:57 a.m.
      I feel compelled to comment on this article because of the misleading nature of the title of the article. while the author sites some impacts of corporation's cash contributions on elections, clearly half of this article contains his railings against a court he dislikes and a biased set of examples of corporate giving run amuck - all being Republican based. I also find his reference to any corporation involved in support of Iraqi efforts as being "bad citizens." In the future if you have guest contributors please have them provide balanced arguments that remain on point to the purpose of the article.
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      Lori said on Oct. 14, 2010 at 8:51 a.m.
      This is an interesting piece of information, however I find it disturbing that no mention of "corporate" or large organizational funding given to the democratic party and/or its candidates are mentioned. Surely the same type of thing goes on on both sides of the aisle. To suggest otherwise is naive. I would appreciate a more balanced look at how corporate fundraising affects elections, regardless of affiliated party.
    • Quote 2
      Egberto Willies said on Oct. 14, 2010 at 8:46 a.m.
      I agree completely. Unfortunately we have a population that does not see that they are manipulated by corporations to vote against their own financial interest.
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      Lynne Teinert said on Oct. 14, 2010 at 6:03 a.m.
      Corporate money is no more influential nor corrupting than labor union money or trial lawer money.
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      Nate said on Oct. 14, 2010 at 1:51 a.m.
      Written by a law professor who would easily fit in on Team Obama and the Democratic National Committee legal staff. This is a hit piece on Republicans, plain and simple. It does not stick to "just the facts", imposing the writer's supposition as to the motive and intent of corporate executives, asserting that some unprecedented distortion of the law as it has always existed took place. Fact is, Citizens United was brought in response to the McCain-Feingold law passed by Congress in 2002, a law that broke with all precedent by prohibiting advertising for movies deemed political within a window immediately prior to an election, because it could be considered an "electioneering communication" by a corporation. The ruling also had the effect of overturning a 1990 case, Austin v. Michigan Chamber of Commerce, hardly sanctified by long-standing case history, aka stare decisis. The ruling did not remove the prohibition on direct contributions by corporations to candidates or political parties, they remain in place, contrary to the inference of the Mr. Bickerstaff. Mr. Bickerstaff went to great lengths to bemoan the activities of conservative entities supporting Republicans, throwing out liberal red meat like Karl Rove, Tom Delay, describing Iraq as an example of the "nation's follies". Of course making no reference to the unchecked influence of unions and, John Podesta's Center for American Progress and the unchecked, undisclosed contributions by uber-liberal billionaire hedge-fund trader George Soros, MoveOn.org and other groups that utilized loopholes written for the benefit of impacting the elections of 2006 and 2008 to huge advantage of Democrats. Putting aside the legal arguments, that Mr. Bickerstaff clearly has sore loser sentiment about, why shouldn't corporations have an ability to communicate their preference for public policy makers by educating the public about the impact of decisions made by elected officials? Are we to support the notion that millions of individuals with hands held out should be allowed to advocate unchecked for the confiscation of businesses by government, while the necessarily smaller universe of business owners sit idly by, subject to demonizing by anti-capitalist interest groups that stoke populist takings? If politicians with an agenda harmful to business survival are running for office that business has a duty, and obligation to communicate with voters the precise impact on local economies, jobs, corporate philanthropy, etc. will have. Elections have consequences on every entity, since even corporations, though not natural citizens, are comprised of and owned by real-live human beings, families, retired investors, who would otherwise be harmed by silencing the truth. I'm rather disgusted that my university (BBA 1990) would publish this acutely biased tripe to alumni weeks ahead of an election with no balance. I would submit that this article could be considered an "electioneering communication" by UT-Austin, prohibited by the very law that the Supreme Court in it's wisdom overturned. I suppose the irony would be lost on Mr. Bickerstaff, however.
    • Quote 2
      Mel Hopkins said on Oct. 13, 2010 at 8:53 p.m.
      Your statements about former Leader Tom Delay are unfair and a stretch at the very least. Before the recent Supreme Court case saying corporations had the right the free speech happened obviously after Tom DeLay's efforts to redistrict in 2003 which was upheld by the Supreme Court 9-0. How will the new SCOTUS effect this election, we will have to see. But Tom DeLay goes to trial Oct 26th and it will be proven without a doubt that nothing was done outside the law. And I want it to stop that Leader DeLay somehow did something wrong.
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