How the New Campaign Finance Rules Will Change Politics



For more than 20 years, corporations were discouraged from using company funds to create or run campaign ads, either for a particular politician or regarding a particular issue. This was strengthened by 2003’s Bipartisan Campaign Reform Act (passed by Senators John McCain and Russ Feingold) which mandated that corporations fund ads referring to particular candidates within 30 days of a primary and 60 days of a general election with “hard money.” Indeed, as Reason Magazine pointed out, McCain-Feingold ultimately defined “corporations” to include even non-profit organizations. So unyielding was this new definition of corporations that Brooklyn Law School professor Joel Gora protested, “…the law drew no distinctions between General Motors and the ACLU.” Despite being passed with little criticism by Congress or the Supreme Court, McCain-Feingold was roundly castigated on both ends of the political spectrum. While Professor Gora lamented that, “…there are no ACLU ads challenging President Bush on civil liberties in the war on terror”, the conservative National Right to Life Committee likewise complained ,”…what the Supreme Court has done is make it possible for these guys to set limits on how and when they’re criticized.”

However, a January 21, 2010 Supreme Court ruling, “…struck down a major portion of the landmark McCain-Feingold campaign finance laws that prevented union and corporate paid issue ads in the final 30 days of election campaigns”, according to On top of that, the Supreme Court ruled to allow corporations to spend as much of their own money as they wish, supporting any politician or cause they choose. Today, MintLife looks at how the new ruling changes campaign finance, as well as how it might affect the American public.

How It Changes Campaign Finance

(Robert Scoble)

The Supreme Court ruling has generated substantial controversy, largely because of the long-standing precedents that it overturns. As noted, corporations had been prohibited from running campaign ads out of their general treasuries for twenty years. Furthermore, it has been centuries since corporations were permitted to spend as much as they wished on campaign ads. This does not mean corporations were completely divorced from campaigning, of course. However, their direct monetary influence was limited by restricting their contributions to “hard money” – that is, money contributed directly to a specific candidate, up to a limited amount, with the source publicized and the Federal Election Commission monitoring the donation. Under such restrictions, corporations could only donate to certain candidates, and then, not within 30 days of a primary or 60 days of a general election. Presumably, the intent was preventing wealthy corporations from blitzing the public with TV and radio ads in time to drastically alter the election results. What was forbidden of them was to make “soft money” contributions – that is, contributions to an entire party, of any amount and by any person (including those who choose not to publicize themselves) to be used for general party expenses.

The most immediate, practical effect of the Supreme Court’s ruling is that corporations can flex their political muscles during the upcoming 2010 midterm elections., for instance, suspects that, “…corporations will have more financial freedom to attack Democratic efforts to reform healthcare, curb climate change, and institute financial regulations on Wall Street.” It remains to be seen how many ads directly criticize or oppose these things. However, one expects that the quantity of political advertising – on TV, radio and the Internet – will surely reach new heights now that corporations and unions are unrestricted in how much they can spend and how often they can agitate for their preferred candidates and causes. It’s not a stretch to imagine bitterly contested battles between say, a corporation and a union, playing out on national TV in the form of progressively more biting ads in the days and weeks leading up to crucial elections. America is about to get a much clearer idea of the political opinions of organizations that have long been limited in their ability to express them openly.

The Greater Significance


Most publicized opinions (at least from people in high places) about the Supreme Court ruling concern what corporations are now able to do. President Obama, for instance, went on record as saying that the ruling was, “…a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans”, according to USA Today. Obama went on to pledge that he and Congressional allies would, “…develop a forceful response to this decision” because, he contends, “…the public interest requires nothing less.” Senator John Kerry likewise testified to a recent Senate Committee on Rules and Administration that the Supreme Court had, “… issued a decision inflating the speech rights of large faceless corporations to the same level of hard-working everyday Americans”, as RTT News reports. Kerry, it has since been reported, actually plans to introduce a Constitutional amendment, “…to make it clear once and for all that corporations do not have the same free speech rights as individuals.” Both before the ruling and especially after, much has been made of the adverse consequences of corporations being able to influence elections. And indeed, we are likely to see significantly more political advertising out of America’s biggest and most wealthy companies as a result of this ruling. It is entirely conceivable that more campaigning by corporate America could influence or perhaps even decide important elections. Nor are conservative politicians the only likely beneficiaries. Ralph Nader, for example, has long distanced himself from the Democratic Party (despite their ideological closeness) because they accept corporate donations just as frequently as Republicans.


What has been largely ignored, however, is the greater flexibility that unions now have in their campaign efforts. Unions have a long history of political involvement (at least as long as corporations) and have even gone so far as to use membership dues to fund political activities, regardless of whether union members prefer that. According to, Rutgers economics professor Leo Troy estimated in 1996 that, “…union political expenditures total about $500 million in each election cycle”. Furthermore, “…total union political expenditures reached $925 million in the 2004 cycle”, and the Center For Responsive Politics states that, “…eight of the top ten all-time political contributors are labor unions.” And unlike corporations, unions have overwhelmingly biased their contributions to Democrats and the Democratic party. UnionFacts marshals several facts demonstrating that, including how despite CNN exit polls showing, “…38 percent of union members voted for President Bush in the 2004 election”, unions nevertheless contributed more than 95% of their funds to Democratic candidate John Kerry. Whether this is good or bad is not our concern. The point is that both corporations and unions are now free to donate more than ever to political candidates, while one donates to both parties and the other donates predominantly to just one.

Of course, many claim that the Supreme Court’s ruling simply echoes the spirit of the Constitution, which is that any group or individual can express its political preferences in whatever peaceful way they choose. According to that strain of opinion, the ruling will encourage a greater variety of opinion leading up to all future elections.

The Takeaway

While opinions on the Supreme Court’s ruling are plentiful, the truth is that no one knows the long-term impact it will have. What we do know is that many years of precedent on campaign finance have been overturned, which gives corporations and unions considerably greater flexibility in both how much they can spend on political campaigning and how often they can engage in it. It seems safe to assume that more campaign advertising will be done than ever before, especially in the days and weeks immediately preceding elections. It is also conceivable that Democratic politicians will get a boost from unions, who have historically donated far more to them anyway. Beyond that, only time will tell how big of an affect it tangibly has on given elections and politics in general.


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