Coping with the New American Tradition; Campaign Finance; Perhaps Shareholders Should Vote on Companies' Political Donations; OTHER VIEWS

Article excerpt

On June 25, the U.S. Supreme Court reaffirmed its unpopular Citizens United decision and blithely stripped Montana of a century- old law that protected its elections from corporate politicking. The court decided that Montana would not even get the opportunity to present evidence in its case. Instead, the court summarily reversed the Montana Supreme Court, which had upheld Montana's law just six months before.

The Montana case, American Tradition Partnership v. Bullock, was seen as the last best chance in perhaps decades to get the Supreme Court to reconsider its position on Citizens United. Now that hope is gone. OK. So now what?

There is plenty of work to do to keep American democracy robust in light of Citizens United and its little sister, American Tradition. For one, now that corporations are in our elections to stay, we need some new rules of the road that are tailored for corporations.

If I'm buying political ads as an individual, then I am spending my own money. This is quite distinguishable from a corporate manager at a public company buying political ads with corporate resources. In that case, the money isn't just attributable to him or her. Instead, the corporate manager is using what Justice Louis Brandeis once termed "other people's money."

The other people in this case include investors, who may have zero interest in subsidizing the manager's pet political projects. Thus, different rules should apply when managers spend other people's money in politics rather than their own.

What would these different rules look like? First, there should be clear disclosure to investors that the spending is happening. Second, there should be some ability of investors to approve the political expenditures. As the Supreme Court just stated in the union context, an opt-in mechanism is key.

To see how such rules would work in the real world, check out the United Kingdom. In 2000, the United Kingdom amended its Companies Act to better protect investors from politically active corporate insiders. There are two aspects to the law: public companies in the United Kingdom report political spending down to the pound to investors, and investors get to vote on the political budgets of public companies before the money is spent.

So how do we get these reforms implemented here? First, we have to remember that because of our system of federalism, there are two types of elections: state and federal. And to further complicate things, at the federal level, different administrative agencies have overlapping jurisdiction regulating money in politics. …