Corporate ownership of the U.S. political process 

Part one of this two-part series, "Have 'money addicts' taken over our political system?", posited three tangentially linked premises:

1) Money addiction is a major contributor to the financial industry's usurpation of the political (regulatory) system.

2) The U.S. Supreme Court requires proof that corporate political influence constitutes corruption before it will allow regulation of the political process. What constitutes corruption in campaign financing varies over time. However, there is no debate about the positive effect corporate political contributions have on the contributing corporations' bottom line.

3) By financing political candidates, parties, and causes, corporations in general and financial institutions in particular have commandeered the political process and taken effective control of the government.

Only by dismantling the plutocracy that has resulted from the undue influence exerted by corporations over the political system will it be possible to ensure that "government of the people, by the people, for the people shall not perish from the earth."

Corporations qualify for personhood under the law, but they also qualify as money addicts. The sole purpose of a corporation is to maximize profitability for their shareholders. As corporate political power grows, the negative effect of corporate money addiction on U.S. citizens increases. Can a society predicated solely on profit motive survive? Can such a society stay true to the democratic principles that serve as the foundation for our republic? Only if the citizenry is aware of all the factors affecting their voting decisions will our nation's future be assured. In the cloaked, shadowy world of corporations, no such transparency exists.

Party perpetuation trumps service to the constituency

Politicians now spend as much as 80 percent of their work time soliciting donations.[1] Their loyalty is to their party, to which they owe their elected positions. Political careers come and go in the blink of an eye; the party goes on in perpetuity.

While the bulk of contributions to Congressional campaigns are from individual donors in amounts below $200, such donations account for a small percentage of the millions of dollars candidates raise and spend to be elected, according to figures compiled by OpenSecrets.org.[2] For example, in the 2012 election cycle, small donations from individuals represented 11 percent of the money raised by House Democrats, 11.5 percent raised by House Republicans, 14.3 percent raised by Senate Democrats, and 7.9 percent raised by Senate Republicans.

As Reuters' Andy Sullivan reported in June 2013, members of Congress spend as much as half their workday -- and sometimes more -- soliciting donations from the rich.[3] The impact of the time spent hustling for campaign contributions goes far beyond the time Congress members are unable to spend dealing with their constituents and conducting the actual business of legislating. Those rich donors maximize their access to legislators, filling the politicians' ears with their concerns, which usually boil down to how the politicians can help them preserve and grow their wealth ("Help my business, don't raise my taxes!")

Like all professions, politicians have limited "bandwidth" and must expend their time and effort judiciously. They may be aware of the negative impact of non-stop fundraising on their ability to do the job they were elected to do, but they likely justify the money solicitations as a requirement of the job. After all, if they can't get elected, they've got no job at all. The people best served by the current state of political financing are the financiers themselves. In fact, some would argue that they are the only people served by the current state of political affairs.

Party loyalty trumps independent thought

As reported in the January 27, 2014, edition of the Washington Post, Thomas Carsey, a professor of political science at the University of North Carolina at Chapel Hill, and Geoffrey Layman, professor of political science at the University of Notre Dame, blamed "identification with and commitment to political parties" as the primary cause of what they label "conflict extension."[4] The researchers define conflict extension as "the growth of party polarization across all of the major issue agendas in domestic politics."

The researchers claim that because most people "feel an emotional connection to and social identity with their political party," they tend to change their political positions to match those of the party they identify with. As each major party moves to the more extreme end of the political spectrum on nearly every issue, the party members move along with them. As an example, the researchers cite support for NSA surveillance programs: in 2006, 37 percent of Democrat identifiers and 75 percent of Republican identifiers approved of the surveillance. By 2013 those numbers had reversed: 64 percent of Democrat identifiers approved, and 52 percent of Republican identifiers approved. Rather than indicating that massive numbers of people had switched parties, the change is attributed by the researchers to the fact that there was a Republican in the White House in 2006 and a Democrat in residence in 2013.

As Carsey and Layman conclude:

"A large part of why Democrats and Republicans hold increasingly divergent issue positions is simply because they are Democrats and Republicans committed to their parties. Parties signal to voters where they stand on issues, and those who identify with and are committed to a party view those signals through partisan colored lenses and adopt the positions of their partisan 'teams.'”

It follows that the party leaders are in control, and they stake their claim to political positions in an effort to cement their control. The Supreme Court's decision in McCutcheon v. FEC may have cemented party leader's control of the U.S. political system.[5] As Lisa Mascaro points out in the April 3, 2014, Los Angeles Times, "the demise of the $123,200 limit for the two-year election cycle [allows] party stalwarts such as House Speaker John A. Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.)... to raise multimillion-dollar checks from wealthy contributors for new campaign committees."[6]

Mascaro states that following the 2010 Supreme Court decision in Citizens United v. FEC,[7] "corporations, unions and the very wealthy [were freed] to spend unlimited sums on independent election campaigns." This allowed "outsiders" such as "Karl Rove's American Crossroads and the Democratic-aligned Emily's List" to usurp some of the political power wielded by the Democratic National Committee, the Republican National Committee, and their counterparts in the House and Senate, according to Mascaro.

Justice Stephen G. Breyer's dissenting opinion in McCutcheon warned of the potential corruption that could result from the decision:

"Will party officials and candidates solicit these large contributions from wealthy donors? Absolutely. Such contributions will help increase the party’s power, as well as the candidate’s standing among his colleagues.

"Will elected officials be particularly grateful to the large donor, feeling obliged to provide him special access and influence, and perhaps even a quid pro quo legislative favor? That is what we have previously believed."[8] Breyer cites McConnell v. FEC: “Large soft-money donations at a candidate’s or officeholder’s behest give rise to all of the same corruption concerns posed by contributions made directly to the candidate or officeholder.”[9]

In his majority opinion in McConnell, Chief Justice John G. Roberts Jr. countered Justice Breyer's concerns by inviting Congress to pass legislation prohibiting "illegal earmarking" of large campaign contributions to any single candidate. Justice Roberts seems not to appreciate the irony of expecting members of Congress to enact a law that goes against not only their individual interests, but also those of the party to which they owe their elected position.

The roots of corporate 'personhood'

In Economic Power and the Corruption of the American Political System, Jeremy Cloward of Diablo Valley College traces the roots of corporate influence in the U.S. political system to the Supreme Court's decision in Dartmouth College v. Woodward,[10] which recognized a corporation's right to have its charter honored as a contract. By extension, the decision granted individual property rights to corporations. Then in Santa Clara County v. Southern Pacific Railroad,[11] the court ruled that the Fourteenth Amendment applied to corporations as well as to people. While Cloward and other observers chalk up this finding to a clerical error, subsequent Supreme Court decisions cemented the legal standing of corporations as people.

What's missing from decisions stretching from Pembina Consolidated Silver Mining Co. v. Pennsylvania[12] (1888) to Citizens United is a clear explanation of the court's rationale for its determination. In some instances when finding liability or criminality, courts distinguish a corporation from its officers/agents (and shareholders), while in others a corporation and its officers, managers, and shareholders appear to be synonymous. Consider who is actually doing the "speaking" when a corporation exercises its Constitutional right to free speech.

Is political corruption actually on the rise? Who knows?

Making the scientific connection between corporate political influence and the inequities (if not down-right corruption) that results is Mara Faccio, who studied thousands of corporations in dozens of countries and found that "[p]olitically connected firms have higher leverage (in the form of preferential loans), pay lower taxes, have regulatory protection, are eligible for government aid, and have stronger market power. They differ more dramatically from their peers when their political links are stronger, and in more corrupt countries, although these characteristics can be observed worldwide."[13] (PDF)

Faccio defines a politically connected firm as "[a] company where at least one of its large shareholders (anyone controlling at least ten percent of voting shares) or one of its top officers (CEO, president, vice-president, chairman, or secretary) is a member of parliament, a minister, or is closely related to a top politician or party." Her definition would appear to exclude non-relatives, but I would argue that a non-relative with extremely deep pockets will exert similar influence over the politicians to whom they donate.

However, in an article in the New York Times following the Citizens United decision, David D. Kirkpatrick points out the inability of researchers to show that the lack of campaign-contribution regulations leads to corruption, nor that the presence of such regulations prevents corruption.[14] Also, scientists haven't been able to draw a correlation to date between contributions made by corporations and the performance of their stock price: increased contributions don't necessarily translate to higher corporate value, and decreased contributions don't necessarily translate to lower corporate value. Is campaign finance reform a solution looking for a problem? That would appear to be a possibility, at least based on research conducted in the U.S. and in countries with more and less regulation of campaign funding (the United Kingdom and Australia are cited as examples of more and less regulation, respectively).

However, the lack of evidence of the negative effect of the unfettered campaign contributions, and of the positive effect of regulation, begs the question: What's the difference between actual influence and the mere perception of influence? As with many important issues in the Information Age, the key to an informed electorate is transparency. A report authored by Brendan Fischer of the Center for Media and Democracy and Blair Bowie of the U.S. PIRG Education Fund found that nearly 17 percent of all business donations to Super PACs in the 2012 national election were from "phony for-profit corporations."[15] (PDF) The report claims that "dark-money" non-profits (organizations that don't disclose the source of their funds) contributed in excess of $299 million to campaigns in 2012. The organizations are able to skirt disclosure requirements by running "issue ads" that are ostensibly unaffiliated with any particular candidate. As the authors point out, "it is almost impossible to identify violations of election or tax law, such as the infiltration of foreign funds" when dealing with such shell corporations and dark-money non-profits.

Experience shows that throwing legislation at a problem is no guarantee of a solution. To quote Thomas Jefferson, "Whenever the people are well informed, they can be trusted with their own government; that whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights." Determining whether there is indeed an undue -- perhaps illegal -- influence by corporations on politics in general and elections in particular starts with disclosure. Campaign financing must come out from the shadows, whether voluntarily or by force of law. An informed electorate depends on it.


[1] http://www.huffingtonpost.com/2014/07/28/michelle-nunn-fundraising_n_5628018.html
[2] http://www.opensecrets.org/bigpicture/wherefrom.php?cycle=2012#
[3] http://www.reuters.com/article/2013/06/12/us-usa-congress-fundraising-insight-idUSBRE95B05520130612
[4] http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/01/27/how-our-partisan-loyalties-are-driving-polarization/
[5] McCutcheon v. FEC (2014) 134 S.Ct. 1434 [188 L.Ed.2d 468].
[6] http://articles.latimes.com/2014/apr/03/nation/la-na-congress-fundraising-leaders-20140404
[7] Citizens United v. FEC (2010) 558 U.S. 310 [130 S.Ct. 876, 175 L.Ed.2d 753].
[8] McCutcheon v. FEC, supra, 134 S.Ct. 1434 at 1472-73.
[9] McConnell v. FEC (2003) 540 U.S. 93, 308 [124 S. Ct. 619 | 157 L. Ed. 2d 491].
[10] Dartmouth College v. Woodworth (1819) 17 U.S. 518.
[11] Santa Clara County v. Southern P. R. Co. (1886) 118 U.S. 394.
[12] Pembina Consol. Silver Mining & Milling Co. v. Pennsylvania (1888) 125 U.S. 181.
[13] http://www.sciencedaily.com/releases/2010/09/100921101348.htm; http://news.heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/28756.pdf
[14] http://www.nytimes.com/2010/01/24/weekinreview/24kirkpatrick.html?_r=0
[15] http://www.prwatch.org/news/2013/01/11944/“elections-confidential”-report-reveals-role-dark-money-nonprofits-and-shell-corp; http://www.prwatch.org/files/Elections_Confidential.pdf