Advertisement
Business Costs & Regulation

Court Boosts Business Power in Politics

Few Supreme Court rulings will have so much impact on the intersection of business and politics.

Few rulings by the Supreme Court promise to have as much impact on government and politics as the one just handed down to lift long-established restrictions on corporate political activity.

The highly anticipated 5-4 ruling on Jan. 21, which broke along ideological lines favoring the conservative majority of the court, provides a significant benefit to business and often business-friendly Republicans. There’s little disputing the corporate beneficiaries in this case, even as supporters of the decision say it is really more about upholding absolute First Amendment rights to free speech than about favoring businesses. The result will be that businesses large and small, publicly held and privately held, that want a political leg up and a louder election microphone will benefit the most.

Advertisement - Article continues below

While the decision also lifts restrictions on labor union-financed election ads, the real flood of express advocacy ads – many of them sharp-edged attack ads aimed at motivating voters -- will be from corporate interests. In simple terms, the decision says corporations should be treated no differently than individuals when it comes to expressing political opinion. In real terms, it means many more election ads filling broadcast, cable, satellite, publishing, radio and web outlets in advance of elections.

Advertisement
Advertisement - Article continues below

The divided court decision in Citizens United vs. Federal Election Commission may also be a sign of something else, also of great interest to companies. It may signal a more activist high court under Chief Justice John Roberts, a right-of-center court willing to inject itself more into public policy. The campaign finance decision effectively overturned generations of legal precedent restricting corporate activity in elections. It’s conceivable the court could later be amenable, even if divided as it was here, to overturning other precedents in areas such as environmental, labor or regulatory law or on social issues.

Advertisement - Article continues below

Conservatives have long railed against judicial activism, saying legal precedent needs to be respected, but there were no complaints from conservatives on this decision. The case under consideration actually involved a narrow question, but the Roberts court cleared the way for special consideration of it and with an expectation that the decision would go further into other areas of campaign finance law. It certainly did. It’s the most sweeping change in campaign finance law in decades.

Expect a slew of corporate ads by fall in advance of the congressional midterm elections and aimed at candidates' and their positions on such issues as climate change and an energy cap-and-trade pollution credit system, environmental regulation, health care, exports and trade, and business tax policy. To a lesser degree, because they have fewer resources than business, unions will do some of the same with direct advocacy ads about candidates on labor issues such as family leave, discrimination in the workplace, worker organizing rights and the like. Business ads will dominate, though.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

Maybe it is ultimately good that more voices will be heard. No doubt a debate will rage for years about whether the court decision really allows more voices and provides more information for voters or if louder corporate voices will drown out small groups and individuals. Candidates will have to be on guard. Businesses and business groups will threaten repeated attacks if a candidate is seen as bad for a certain business in their state or district. Candidates and the two major party organizations will often find themselves having fewer resources to compete with large corporate ad campaigns.

There’ll be efforts in the Democratic-controlled Congress to pass legislation placing some restraints on business election activity, such as requiring shareholder votes to approve political ad campaigns and disclosing how much company money is being spent on politics. President Obama will also push for Congress to put some fixes on what the court has done.

Such legislation will take a long while to pass, though, and have a limited effect if it does. Campaign finance legislation, almost by definition, is hard for the parties to agree on quickly. So for the foreseeable future, expect the court ruling to give companies plenty of latitude in expressing political opinion.

Most companies will choose to move cautiously on jacking up their political voice. They won’t want to risk alienating customers or shareholders with a heavy dose of political ads on controversial issues. Still, figure on plenty of new political activity from corporations. The temptation to tap a company’s general treasury account to finance ads will be hard for many business executives to resist.

Advertisement

Most Popular

2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020

Recommended

Travel Planning in the Time of Coronavirus
business

Travel Planning in the Time of Coronavirus

Insurance may not cover canceled vacations, but airlines and hotels may be flexible.
June 11, 2020
13 Things That May Soon Disappear Forever (The Pandemic Edition)
business

13 Things That May Soon Disappear Forever (The Pandemic Edition)

Emerging technologies (and now the COVID-19 pandemic) are putting an end to these familiar items and practices.
June 9, 2020
Don't Let the Drama Surrounding PPP Distract You from Running Your Business
business

Don't Let the Drama Surrounding PPP Distract You from Running Your Business

If you're so wrapped up in worry about your Paycheck Protection Program loan not being forgiven, think about the worst-case scenario. It might not be …
June 5, 2020
Another Epidemic to Worry About: Identity Theft
business

Another Epidemic to Worry About: Identity Theft

Fraud losses grew in 2019 and are likely to increase in 2020.
June 5, 2020