The Supreme Court ruled in Austin v. Michigan Chamber of Commerce that corporations may be restricted from making independent expenditures for political candidates. The Austin Court established a new standard of constitutional evaluation for campaign finance regulation. This regulation is constitutionally justified due to the distorting effect of corporate wealth on ideas marketplace. This Court’s decision allowing regulation on the basis that a speaker’s wealth is and corporate form is a significant departure in previous campaign finance jurisprudence.
The Michigan Chamber of Commerce, which is a non-profit organization, decided in 1985 that it would use funds from its general Treasury to print a newspaper ad encouraging voters to vote for a particular candidate in the upcoming special election to Michigan’s State House. This advertisement would have been in violation of Michigan’s campaign finance laws, which prohibit the use of corporate funds for state election campaigns. Chamber filed suit to block enforcement of the law at a federal district court, arguing that it was unconstitutional. Although the statute was approved by the district court, the Sixth Circuit Court of Appeals ruled against it. The Sixth Circuit Court of Appeals argued that the restrictions violated Section 1 of the Constitution. A divided Supreme Court reaffirmed the appellate court’s decision and declared the statute constitutional in accordance with both the First and 14th Amendments. Justice Marshall wrote for six members of the majority. He found that while the statute was burdensome on political expression, it was constitutional since it was “narrowly tailored” to serve a compelling public interest. Finally, the majority addressed concerns about the fourteenth amendement. The Court observed that the same imperative state interests that supported constitutionality of the statute under its first amendment also applied in equal protection analysis. Justice Marshall again dismissed arguments that the statute was too restrictive in not including unincorporated labor unions. Justice Marshall also rejected arguments that the statute exempted media organizations from the Equal Protection Clause.
Buckley (v. Valeo), a landmark Supreme Court Case, challenged the Federal Election Campaign Act’s new contributions and expenditure limits. The Court ruled that Buckley was unconstitutional as it imposed restrictions on First Amendment freedoms of speech, association and speech. Buckley Court decided that while government interests are justified in limiting campaign contribution, similar restrictions to independent expenditures don’t outweigh individual and collective interests in free speech as well as the unimpeded sharing of political ideas. Two things drove the Buckley Court to distinguish contributions from independent expenditures. The Court stated first that, while campaign-related spending is protected speech, restrictions on independent expenditures would “necessarily limit[ ] expression by restricting topics discussed and their depth exploration and the size to which they are reached.” But contributions are a significantly symbolic form of speech that the Court does not place any restrictions on the contributors’ communication abilities.
The Court concluded that the Act’s contribution limit and its expenditure limit both directly affect fundamental First Amendment principles, but its expenditure ceilings impose much more severe restrictions than their financial contribution limits on protected rights of association and expression. The Court upheld the statute’s contribution restrictions on the basis that it had a primary purpose, which was to “limit[ing] corruption’s actuality and appearance.” The Court argued that large contributions, which are used to obtain a political “quid pro quo” from potential and current office holders, clearly compromise representative democracy’s integrity. The Court also expressed concern over “the effect of corruption stemming in public awareness about the abuse potential inherent in large individual contributions.” These governmental interests were not sufficient to support restrictions on independent spendings, the Court ruled. These limitations, according to the Court, restrict political expression “at core of our electoral proces and of the First Amendment rights.” Furthermore, the Court stated that the Court found insufficient governmental interests to support restrictions on independent expenditures. The Court rejected arguments that the statute could be justified because of the government’s interest equalizing the influence of individuals and organizations on elections. The Court ruled that such a concept was “wholly foreign to” the First Amendment. Although the Buckley decision didn’t address the regulation of corporate campaign spending, it set the stage for the Court’s next major decision on campaign finance, First National Bank in Bellotti. The Court pointed out that the first Amendment protects corporate speech if it is detrimental to society’s interest of free and open debate. The Court found that the Massachusetts law had prohibited speech that was essential to democratic decision-making. Accordingly, the Court declared that the statute violated the First Amendment.
Further, the Court observed that Massachusetts could deny corporations protection because corporations are creatures under statute. The Bellotti Court rejected arguments claiming Massachusetts had a compelling public interest in protecting shareholders’ rights. This was because the statute did not prohibit corporate political expressions other than lobbying or discussion about public concerns that were not related to a specific election.
