Ten years ago today, the U.S. Supreme Court in Citizens United v. FEC unleashed a wave of unlimited election spending, as long as that spending was purportedly uncontrolled by a candidate. The Court declared that this spending, even when done by corporations, “do[es] not give rise to corruption or the appearance of corruption,” because, the Court assured, these funds have little-to-no value to candidates. Further, the Court promised that transparency could protect the public and would provide the means to hold candidates and their supporters accountable.
We can now see that the Court’s assurances have proven false and that the promise was broken. Rather, there has been an explosion in untraceable and unaccountable money in our political process, bending elected officials to the influence of unknown, and at times illegal, sources. Unfortunately, the Court’s decisions in the decade since Citizens United have only compounded the problem. At the same time, Congress has deadlocked on needed reforms and the agency charged with enforcing the laws still on the books, the Federal Election Commission, has been hobbled. While these government actors fail to protect democracy, private citizens are taking it upon themselves to do so by bringing their own lawsuits and are achieving noteworthy victories in the process.
Citizens United’s False Assurances and Broken Promises
When the Court issued Citizens United in 2010, election spending by outside groups was modest. In the decade prior to the decision, outside individuals and groups, excluding parties, spent $296 million on independent expenditures – the type of explicit campaign ads corporations could not make prior to Citizens United. In the decade after that decision, outside individuals and groups spend $4.26 billion on independent expenditures, a 14-fold increase. Broadening the scope to include other election-related spending, outside groups were responsible for $4.5 billion over the past decade.
The picture is even starker on the individual-race level where competitive races can attract out-sized attention from outside individuals and groups. Since the decision, these outsiders spent more than candidates in 126 races, including 28 races in 2018 alone. For example, in the 2018 Missouri Senate race, the candidates spent a combined $50.7 million, but outside groups spent $76.7 million, with $40.4 million coming from just two of them. In 13 races in 2018, outside spending exceeded 150% of candidate spending, and in two House races, Minnesota’s District 1 and Nevada’s District 4, outside spending exceeded 200% of candidate spending.
Far from this flood of money reflecting an interested and engaged citizenry, the space is dominated by a few big players. For example, in 2018, 70.6% of contributions to super PACs—a type of outside group created in the wake of Citizens United that can accept unlimited funds—came from just 100 donors. 2020 is shaping up to be even more concentrated, with 82.9% of super PAC contributions to date coming from the top 100 donors.
With such vast sums of money sloshing around, it is unsurprising that the Supreme Court’s assurance that the “value of [these] expenditures to the candidate” would be essentially nothing has proven disastrously wrongheaded. Indeed, the Court itself recently backed off that extreme assumption, recognizing that while an independent expenditure might be less valuable than a direct contribution, its value is “probably not [undermined] by 95%.”
But let’s assume a dollar spent independently is indeed only 5% as valuable as dollar contributed directly. Even then, the $122 million that just one couple devoted to independent spending in the 2018 election cycle is about 2000 times more valuable than the maximum contribution legally allowed to a candidate per race. Even if that money were split evenly among all House and Senate races that year (470 federal races, many of which were not competitive), it would still be almost five times more valuable than a maximum permissible contribution to a candidate in each and every race.
Outside groups are so valuable that they now “effectively operate as extensions of the campaign” and “offer donors a way to continue supporting their candidate after they hit the maximum contribution limits.” Candidates regularly fundraise for these groups—proving the candidates do indeed place value on this independent spending. And that assumes this spending really is independent. Much of the time, it’s not. Groups “regularly flou[t] the rules and systematically coordinat[e] with their preferred candidates.”
Contributors are also seeing a return on their investment, and not always by “persuad[ing] voters.” Even looking to only literal quid-pro-quo corruption, we now have far more than “scant evidence” that these contributions and expenditures can work as bribes. Recently, a foreign national was convicted for using outside contributions “in an effort to buy influence” with elected officials. Another individual was indicted for an effort to “funnel millions of dollars of foreign money from” a Malaysian businessman to “buy access to, and potential influence with, a candidate, the candidate’s campaign, and the candidate’s administration.” Two other foreign businessmen were indicted for making over $340,000 in contributions to “independent expenditure committee[s]” in order to “obtain access to exclusive political events and gain influence with politicians.” An individual in North Carolina was indicted for making contributions “through an independent expenditure committee, in exchange for specific official action favorable” to the contributor. Examples abound.
These are just examples that led to indictments—cases that amount to criminal violations that prosecutors think can be proven beyond a reasonable doubt. It is all but certain they are merely the tip of the iceberg.
The public reaction to these developments gives the lie to the Court’s promise that its decision would “not cause the electorate to lose faith in our democracy.” Americans increasingly view the government as corrupt. The vast majority of Americans believe trust in the government is shrinking, which now sits near historic lows.
Citizens United’s Spawn: The Dark Money Corporation
In the immediate wake of Citizens United, there were fears the decision “paved the way for corporations to use their vast treasuries to overwhelm elections and intimidate elected officials into doing their bidding.” Justice Stevens’ dissent criticized the majority for ignoring the fact the “legal structure[s] of corporations allows them to amass and deploy financial resources on a scale few natural persons can match.” And while Citizens United did indeed loosen the reins on direct corporate spending, the decision’s biggest impact may be it’s empowering donors to use small unknown corporations to obscure and hide influence-peddling.
While the immediate concern from Citizens United was that large blue-chip corporations would swamp individual spending, that largely hasn’t happened—at least in ways that we know about. Research by OpenSecrets found that “just 36 companies on the S&P 500 contributed $25,000 or more to super PACs since 2012.” At least directly, they gave about $301 million, and unions gave about another $298 million. In contrast, just the top ten super PAC donors since Citizens United, all individuals or couples, gave $1.1 billion. One possible reason for the relatively low amount of direct election spending by large established corporations is that viewers, who may very well be their investors or customers, can hold them accountable.
By permitting corporate spending, however, the Court not only permitted these established entities to spend. The Court also permitted dark money companies to spend—companies that can take others’ money to hide the real parties behind the funds and prevent the public from holding either the candidate or supporter responsible.
Instead of seeing that an ad comes from a billionaire magnate, government contractor, or energy company—which information a viewer might use to weigh the message and to hold the ad maker responsible if warranted—an ad could come from a corporation appearing to be an association of workers that the viewer never heard of before and has no interaction with. Corporations can pop-up and be wholly funded shortly before an election to evade reporting deadlines. They can use accounting gimmicks to try to evade reporting thresholds and prevent any disclosure of the corporation’s source of funds to pay for the ads. They can rely on multiple corporate layers to hide their funding’s true source. Or they can just rely on their ability to dissolve to break the law and disappear before anyone can be held to account.
This opportunity to engage in unlimited and opaque or untraceable spending through dark money corporations is perhaps Citizens United’s biggest consequence. Spending by dark money groups without any disclosure of sources has risen to new heights in the wake of the decision. These groups are often funded by an insular group of billionaires, who even prior to Citizens United could have spent unlimited sums in their own name, but who have vastly increased their political spending now that they enjoy the power to hide their activities behind corporate screens. They can also serve to hide spending by larger established corporations, who do not want to be held accountable by the public for their actions. Other times, these dark money corporations can serve to funnel illegal and even foreign funds into American elections.
While the Court in Citizens United promised that disclosure would be an adequate means to “hold corporations and elected officials accountable for their positions and supporters,” the ability to use dark money corporations to hide the true source of election funds has proven that disclosure, though beneficial, is not an adequate “alternative to more comprehensive regulations” needed to guard against corruption. So long as dark money corporations can come and go without consequence and donors can avoid disclosure through artful accounting and shell companies, democracy is at grave risk.
Hobbled Guardians of Democracy
The Court’s broken promise resulted not only from its failure to think through the consequences of its decision, but also from its baseless assumptions about how Congress and the government would or could react. The Court recognized that a “campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today,” but assumed that system could come into being to fill any gaps. Unfortunately, that assumption was at best naïve.
Congress has repeatedly failed to address gaps in disclosure laws. Elected officials who prior to Citizens United supported disclosure dropped that support once they heard the siren call of unlimited and untraceable money. Candidates campaign on eliminating outside spending, only to reverse course once in office.
The response by officials who don’t depend on campaign funds hasn’t been any better. The government body charged with crafting regulations and enforcing campaign finance laws, the FEC, has been operationally defunct for years. The agency, which is evenly split between Republican and Democratic appointed commissioners, has routinely deadlocked on any issue of importance. And now, the Commission does not even have the quorum needed to take action even if it wanted to.
At the same time, the mistakes in Citizens United have not apparently given the Court pause. Rather, it has instead struck down yet more anti-corruption laws. Compounding its original legal error in the campaign finance field, the Court has gone so far as to state that having officials be accountable to their financial backers is a feature of our system, not a bug.
With government bodies failing to police themselves or each other, it falls on private individuals and groups to protect themselves from corruption. Showing some foresight, Congress created just such a backstop when it adopted our nation’s campaign finance laws. Under federal law, groups can sue the FEC for its failure to enforce the law in good faith. Further, an important provision largely forgotten in the forty years since the law’s enactment is getting some new life: one permitting individuals or groups with valid claims to go directly after those who break campaign finance laws.
CREW is currently litigating one such suit, achieving the first ever judicial decision permitting a citizen suit under the federal campaign finance laws. That groundbreaking decision lays out a path for private individuals and groups to protect themselves from dark money without depending on fickle government officials, just as individuals have done to great effect in other areas like civil rights or the environment.
With the FEC currently inoperative, that path is crucial and currently the sole practical means for civil enforcement of our campaign finance laws. Importantly, the path will continue to exist and remain vital even if the Commission regains a quorum. Even when the FEC had its full complement of commissioners, it routinely deadlocked on important issues, letting scofflaws go free and depriving voters of even the minimal information required to be disclosed. A robust citizen suit provision allows individuals to pursue law breakers with legitimate claims if the Commission returns to those ineffectual practices.
CREW’s litigation has led to other successes over the past decade as well. The first ever post-Citizens United disclosure of a dark money groups’ donors occurred as a result of CREW’s successful litigation. In another decision currently on appeal, a district court struck down a FEC regulation that unlawfully limited disclosure: a problem the FEC knew about for years but deadlocked on a fix. In another, a court eliminated one accounting gimmick groups used to evade disclosure.
Private litigation has its limits, but it is proving a viable path to protect from some of the excesses unleashed by Citizens United. Importantly, it is a path that remains independent of certain government actors—those who, as the beneficiaries of corruption, can be tempted to turn a blind eye to it.
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Citizens United assured the public that the spending it unleashed couldn’t lead to corruption, and promised that this money would all be transparent anyway. The ten years since have shown the Court’s error. Corporations are being used to evade the laws that exist, and the government has so far proven incapable of addressing the problem—a task the Court has only continued to make harder. Private litigation is no substitute for a functioning and ethical government, but it is an avenue that is proving fruitful in protecting against some of the grossest abuses to arise in the decade since Citizens United.