Lobbyists Rush to Hold the Floodgates Open

We noted with interest reports that subsidiaries of foreign corporations from across the globe have launched a lobbying campaign in Washington to protect their newfound power to influence American elections under the Citizens United case.  About 160 of these U.S. subsidiaries of foreign-owned or controlled corporations are involved in a lobbying group trying to stop President Obama and Congress from enacting limits on their spending in political campaigns.  Worse still, the lobbyist leading the effort refused to disclose all the companies involved in the lobbying campaign.  But it appears that the group of companies has the potential to spend hundreds of millions of dollars to influence American elections. 

All of this demonstrates why the President was right to criticize the Supreme Court’s recent decision in Citizens United – and why he is also right to call for reform of the lobbying laws, including tough new rules on lobbyist disclosure, that build on the dramatic steps he has already taken in his first year in office to change Washington.

In Citizens United, a narrow 5-4 majority of the Supreme Court overturned a century of law that had barred corporations from using their financial clout to directly interfere with elections.  As a result of this decision, American corporations owned in whole or in part by foreign companies—and even by foreign governments—are no longer restricted from making expenditures to elect or defeat federal candidates.

Some have argued that Citizens United will not increase foreign influence, but they are mistaken.  The four Justice dissent, authored by Justice Stevens, specifically pinpoints the fact that the majority opinion opens the door to foreign influence -- see page 33 and page 75.   The majority openly acknowledged that foreign influence could pose a potential issue here, as did the lawyer for Citizens United.  And, a stream of independent, non-partisan experts have echoed the President’s concerns:

• Fred Wertheimer of Democracy 21 stated that “there is no statutory prohibition against foreign-controlled domestic corporations from making expenditures to influence federal elections, following the Citizens United decision.”
• Common Cause and Public Campaign issued a joint statement that the Court’s opinion “will allow corporations, including those owned by a majority of foreign entities, to spend without limit to influence US elections.”
• Norm Ornstein of the American Enterprise Institute stated that: “Citizens United opens up opportunities for American subsidiaries of foreign companies, including those owned by foreign governments, to spend huge amounts to influence American elections.”
• Gerald Hebert of the Campaign Legal Center stated that “With the corporate campaign expenditure ban now being declared unconstitutional, domestic corporations controlled by foreign governments or other foreign entities are free to spend money to elect or defeat federal candidates.”

Others assert that subsidiaries of foreign companies already spend millions on independent expenditures and so the Citizens United decision will make no difference.  That misses the point.  The electioneering communications law that was struck down restricted corporate ads naming elected officials in the crucial 60 days before general elections and 30 days before primary elections.  Now those corporations can spend freely on those ads during the most critical periods in elections and the express message can be to vote for or against a named candidate.  That constitutes an enormous expansion of corporate power to influence elections.

Others claim existing law is sufficient to protect against foreign influence in our elections. That too is wrong.  Although the Federal Election Commission (FEC) restricts foreign nationals from spending or directing spending in American elections, it does not prohibit corporations in which foreign nationals are shareholders or hold significant sway or de facto control from making such expenditures.  For example, foreign-controlled corporations making independent expenditures cannot be relied upon to make decisions contrary to the political interests or preferences of their owners.  Before Citizens United, these problems did not exist at the federal level since the corporations themselves were limited in what they could do regardless of whose money or influence was behind them.  But now that restriction is no more.  Accordingly, because of these realities of how foreign control can operate, a stronger rule is needed to protect our domestic politics from foreign influence.

In the State of the Union, the President called for a series of steps to fix the problems caused by this case and also by the problem of special interests and their lobbyists having too much influence in Washington.  In addition to closing the loopholes opened by Citizens United, including the one that could allow foreign interests to influence our elections, the President also called on Congress to:

• Establish carefully-tailored, low-dollar limits on the contributions lobbyists may bundle or make to candidates for federal office;
• Toughen lobbyist disclosure rules so that – like the voluntary step the President has taken to disclose visitors to the White House – lobbyists must disclose the details of every lobbying contact, including what the meeting was about;
• Close the loophole that allows foreign agent lobbyists to avoid full disclosure of their activities;
• Fully disclose all earmark requests on a comprehensive, bipartisan, state-of-the-art disclosure database that allows Americans to examine the details of every proposed request.

The proposals are detailed in this White House fact sheet.

For at least a century, it was considered perfectly legal to treat corporations differently than people in the context of political activity.  The Supreme Court’s decision changes that century-old legal principle.  As Justice Stevens wrote in dissent, “Congress has placed special limitations on campaign spending by corporations ever since the passage of the Tillman Act in 1907... The Court today rejects a century of history when it treats the distinction between corporate and individual campaign spending as an invidious novelty born of [more recent Court decisions].”

The American people have a compelling interest in preventing foreign interests from influencing our domestic political process.  A strong legislative response is required given the stakes: Americans’ control over their own electoral process.  That is why the President is working with Congressional leadership to move rapidly to pass legislation that protects our politics from undue special interest influence.

Norm Eisen is Special Counsel to the President for Ethics and Government Reform