The Supreme Court’s landmark decision in Citizens United v. Federal Elections Commission has the potential to remake the electoral landscape, pushing candidates to be more beholden to corporate interests. In its Jan. 21 decision, the court ruled that corporations have the same free speech right as an individual to spend unlimited amounts of money buying advertisements in support of or in opposition to ballot issues and candidates.
Elected officials on both sides of the aisle predict dire consequences for the nation as a result of the ruling, though Republicans are likely to be the early beneficiaries, as corporations rally behind candidates who oppose Democratic regulatory initiatives.
One reasonable response is the Shareholder Protection Act of 2010, sponsored by Rep. Michael Capuano, a Massachusetts Democrat, and co-sponsored by Maine’s Rep. Chellie Pingree, also a Democrat.
The bill does not reverse the high court’s ruling, but rather inserts some accountability into the process; the accountability flows from the corporations to people, or at least those people who are corporate shareholders. If any corporation spends more than $10,000 on political activities in a given fiscal year, the bill proposes, it must first obtain written authorization to do so from a majority of shareholders. There are exemptions for corporations whose sole business is the publication or broadcasting of news, commentary and other work.
As Rep. Pingree says, “It really increases the transparency.”
The bill’s text notes that corporations “make significant contributions and expenditures that directly or indirectly influence the election of candidates and support or oppose political causes. Decisions to use corporate funds for political contributions and expenditures are usually made by corporate boards and executives, rather than shareholders.” Since corporations exist to “conduct business for the best interest of their owners, the shareholders … boards and executives that use corporation funds to support and oppose political candidates, parties and causes in opposition to the interests of their shareholders are not acting for the best interests of the corporation.”
Historically, shareholders have no way to know in advance or to influence a corporation’s political activities. “Corporations should be accountable to their shareholders prior to making political contributions,” the bill asserts.
Of course, a corporation’s board may be able convince shareholders of the efficacy of backing a particular candidate, so the proposed law would not block all electioneering. But the bill would force a company’s executives to persuade stockholders that support-ing a candidate helps the corporation’s bottom line, not just executive earnings.
Rep. Pingree offers a hypothetical scenario in which a company that wants to pursue offshore oil exploration backs a candidate who supports lifting environmental restrictions. But shareholders may conclude the company can make more money in the long-term by pursuing renewable energy, and so they vote against backing the candidate.
The bill is expected to be heard by the House Financial Services Committee in the coming weeks.