Supreme Court opens floodgates for political spending


On January 21, the U. S. Supreme Court held that sections of federal law barring corporations, unions, and other groups from spending money to espouse their views about public issues and candidates for office were unconstitutional restrictions on First Amendment protected free speech, stating that: "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech."

During Wednesday evening's State of the Union address the controversy surrounding this campaign finance related ruling by the Supreme Court reached into the homes of the nationwide audiences watching the speech when President Barack Obama took the perhaps unprecedented step of publicly rebuking a recent Supreme Court ruling while Associate Justice Samuel Alito, also unusually, visibly demurred.

The controversial 5-4 Court decision, Citizens United v. Federal Election Commission, grew out of a case brought by the makers and distributors of a scathing documentary film  attacking Hilary Clinton, which was produced to be aired during the 2008 Democratic primary campaign. The Federal Election Commission ruled that because some of the money used to create/or distribute the film came from corporations and because it was to be aired late in the campaign and created during the time when it might have had the most impact on the election, and because it was, they decided, an unmistakable message to vote against her, the FEC viewed it as criminal.

In the ruling the Court asserted that the persons associating in Corporations, Unions, and other groups were exercising core protected First Amendment free speech rights-particularly as regards their right to spend money in support of political candidates and political issues. 

Echoing many campaign finance reform activists, President Obama said, in his State of the Union Address, that "The Supreme Court reversed a century of law to open the floodgates for special interests -- including foreign companies -- to spend without limit in our elections. Well I don't think American elections should be bankrolled by America's most powerful interests, and worse, by foreign entities." On the other hand, ABC News reports that Politifact, the Pulitzer prize winning Web site of the St. Petersburg Times, states that current federal law prevents "a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country" from making, "directly or indirectly," a donation or expenditure "in connection with a federal, state, or local election," to a political party committee or "for an electioneering communication." The implication is that these are laws that, presumably, would not be impacted by the Court decision.

The controversy promises to rage on with many lawmakers and the President calling for Congress to quickly pass statutes limiting the impact of the Court decision and equally vociferous professed First Amendment advocates and libertarians touting the decision as a triumph for free speech advocates and constitutional protections under the First Amendment.

Almost all agree that the ruling could have profound effects on the Fall 2010 federal, state, and local elections. Among concrete questions are those concerning the effects of the ruling and any consequential executive and legislative branch responses on the financing of U.S. House of Representatives and U.S. Senate races, as well as the financing of state and local gubernatorial, legislative, and judicial election campaigns during the  2010 election cycle, There also are a growing host of questions and speculations about federal, state, and local jurisdictional responses and legal maneuverings during this important election year.

You may like these other stories...

Scott London, a former senior audit partner at KPMG LLP, was sentenced to 14 months in federal prison on Thursday for providing inside information about several of his firm’s clients to a friend, who used it to make at...
In need of CPE credits? Well, if you are an enrolled agent or CPA, you could earn as much as 18 credits by attending one of five IRS Nationwide Tax Forums this summer.The IRS Nationwide Tax Forums are three-day events that...
Russia races to dodge sanctions by adapting law to FATCARussia is in a race against the clock to adapt its laws to the Foreign Account Tax Compliance Act (FATCA) and save its banks from financial sanctions, Peter Hobson of...

Upcoming CPE Webinars

Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.
May 14
Save your relationship in those few situations where your performance falls far from perfect. It’s easy to want to brush service failures under the rug, hope no one notices and assume that somehow everything will be all right. In this workshop, Kristen Rampe, CPA will give you the tools to strengthen your professionalism in the face of the worst-case-scenario. Don’t let experience be your only teacher on these topics!