New Weapons for Lobbyists

U.S. corporations may now spend unlimited amounts of money on election campaigns. This may well make the difference between victory and defeat in this fall’s congressional elections.

The scenario is familiar from the political thrillers we’ve read: An influential conglomerate, whether from the oil, chemical or armaments industry, is looking to put a promising candidate with “reasonable views” into the U.S. Congress and pumps millions of dollars into his campaign. Thanks to a bottomless money pit, the opposition candidate is simultaneously attacked with a mudslinging campaign. The election concludes successfully — for the corporation.

What really sounds like a John Grisham mystery is about to become reality. Congressional elections in the USA will take place this November and many senators, as well as all House members, will be up for election. President Obama’s congressional majority hangs in the balance. In offices on infamous K Street in Washington, where many of the major lobbyists are ensconced, political pros are finalizing business plans for their customers in the energy, insurance, financial and weapons industries. They’re analyzing the election crisis: Which candidate is against election reforms? Which of them favors loosening restrictions on gun ownership? And where are the races so close that a few million dollars could determine the outcome?

All this is now completely legal, thanks to decision No. 08-205 handed down by the Supreme Court. With a thin 5-4 majority, the justices removed limits on the amount of money corporations and labor unions are allowed to donate to political campaigns. Corporations may now campaign for or against individual candidates, including the use of TV and radio spots, along with personal appeals to voters. They’re now allowed to give unlimited amounts of money, something previously forbidden. Until now, corporations could only express their views about the content of television advertising and direct mention of a specific candidate was forbidden during the final weeks of a campaign.

That gives lobbyists like Patton Boggs, Akin Gump Strauss Hauer & Feld and Van Scoyoc Associates (to name just the largest three) brand new tools with which they can dazzle their customers. On both sides of the political spectrum, deliberations are ongoing as to how and where the new opportunities can be best applied. “We were just sort of debating the pros and cons on targeting candidates for various advertising campaigns,” says Tony Podesta, whose Podesta Group is ranked fourth on K Street. “Had it not been for the Supreme Court decision, we wouldn’t have had that conversation,” he added.

“The decision has already changed the dynamics of the election,” says Ohio State University’s Edward Foley. He predicts that in the coming election, political contributions by corporations will increase by 500 percent. “It also holds true for political advertising that repetition works. Whoever has the deepest pockets will win.” Those branches most affected by major legislation will give the greatest amount of money, namely banks (finance reform) and the pharmaceutical and insurance industries (health care reform). Entire industries will throw massive support to those candidates who are sympathetic to their desires, but Foley and others say no one can predict what effect that will have on electoral outcomes yet.*

Critics of the decision mainly fear that politicians will no longer be mindful of donations and will be more subject to blackmail. “The Supreme Court has handed lobbyists a new weapon,” said a New York Times editorial. “We have got a million we can spend advertising for you or against you — whichever one you want,” a lobbyist can threaten lawmakers.**” And the left-liberal TV moderator Keith Olbermann noted on his MSNBC political show, “ … within ten years, every politician in this country will be a prostitute.”

This court decision is part of George W. Bush’s legacy. The former president was able to appoint two new justices to the court, thereby assuring a conservative majority on the bench. The justices voted along party lines on this issue; the conservatives voted to end all limits on donations and the left-liberal justices voted against it. The decision vacates two opposing court decisions of prior years: In 2003 and 2009, the court ruled in favor of retaining corporate contribution limits. Now the court is saying that the government may not limit freedom of expression and therefore does not have the right to limit political contributions. “Censorship is illegal” was the bottom line of the 183-page decision.

One of the dissenting justices reacted frankly in his written opinion. “The majority is making a great error,*” wrote Justice John Paul Stevens, adding that when corporate money drowns politics, democracy is corrupted. “This is the worst Supreme Court decision since the Dred Scott case,” said Democratic Congressman Alan Grayson. That 1857 decision ruled that slaves could never be granted full civil rights.

Barack Obama expressed concern about the decision as well. “It is 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,” the president said. He repeated his criticism during his State of the Union Address with the justices seated directly before him in the first row. The court’s decision is a blow to the president’s efforts to curb the influence of lobbyists on legislation or to at least make it more transparent.

Professor Foley said sardonically that it wasn’t as if corporations weren’t already able to influence legislation, pointing out that they had poured hundreds of millions of dollars into recent years’ elections. Sheila Krumholz, director of the Center for Responsive Politics, says that investments in lobbying bring the greatest return. Her favorite example is Bank of America’s $14.5 million in political donations for which they later received a sensational $45 billion from the George W. Bush administration’s Troubled Asset Relief Program (TARP).

The capital is host to an entire industry that profits handsomely from lobbying and while it’s true the president tightened ethics rules for lobbyists on his first day in office, making expensive feasts, luxury travel and costly gifts taboo for those in Congress, nothing much has really changed since Obama took office. Additionally, anyone who previously lobbied for a specific industry may no longer be appointed to a position in any governmental department that oversees that industry.

Despite that, the lobbying business is booming as never before. With proposals to change the health care, financial and environmental protection industries, Obama is taking on those corporations with the deepest pockets. If he wins, they lose a lot of money. That’s why they are all scrambling to hire all manner of lobbyists and their companies to influence lawmakers. According to the Center for Responsive Politics, during the first few months of last year lobbyists took in money at a rate that promises to exceed the records set in 2008, when they earned more than $3 billion.

A confederation of NGOs and politicians like John Kerry are now fighting a nationwide campaign to try to get the Supreme Court decision overturned. Kerry called the ruling a blow to democracy and added. “I think we need a constitutional amendment to make it clear once and for all that corporations do not have the same free speech rights as individuals.” The first step toward that end will be a tightening of transparency regulations to make clear who is responsible for any advocacy advertising. Until now, corporations could farm out their political operations to subsidiary organizations. In this way, a corporation like Exxon, for example, could run television spots sponsored by an entity called “Americans for Jobs,” keeping the corporate name completely out of the public eye.

“Corporations are not people, they do not vote, and they should not be able to influence election outcomes,” said Craig Holman, a lobbyist for the NGO Public Citizen. Holman further stated, “It is time to end this debate by amending the Constitution to make clear that First Amendment rights belong to natural persons and the press and do not apply to for-profit corporations.” Additionally, campaign donations should be approved by shareholder vote and made public. “Corporate executives should not be able to take other people’s money —corporate funds from investors and shareholders, including funds that citizens invest into retirement accounts — and spend it to further their own political agenda without shareholders’ consent or even knowledge,” Holman said.

A foretaste of what voters may expect this fall came in the Massachusetts special election to replace the late Sen. Edward Kennedy. Thanks to a loophole in the regulations, organizations such as the U.S. Chamber of Commerce as well as the corporate sponsored “Americans for Job Security” were able to flood the airwaves with campaign spots supporting Republican candidate Scott Brown while simultaneously campaigning against his Democratic opponent. Brown won the Senate seat; he was the first Republican to do so in nearly four decades.

Editor’s Notes:

*Quotes by Edward Foley and Justice John Paul Stevens could not be verified.

**This quote was attributed to Lawrence M. Noble, a lawyer at Skadden Arps in Washington, in a New York Times article.