For 13 years, the progressives have yearned to kill the US Supreme Court’s decision in Citizens United. This year, they tried an end run around it in Washington’s state legislature. It didn’t work, but it could easily be tried somewhere else.
Citizens United v. Federal Elections Commission was the ruling in 2010 that declared that corporations have a First Amendment right to contribute money in election campaigns. The progressives argue that corporations are not people and for that reason are not entitled to First Amendment rights. They argue that Citizens United allows corporations to corrupt our democracy with their money. In the Democratic Party, repeal of Citizens United is part of the national platform.
In Citizens United, the Court ruled that political speech is a right held by everyone, and that government has no business “allowing speech by some but not others” by imposing “restrictions on certain disfavored speakers.”
Progressives dismiss that concern. They also rarely mention that the ruling applies equally to labor unions and to other nonprofit groups.
If the government had the right to ban speech by corporations, the Court said, it could control news organizations and book publishers, most of which are owned by corporations.
The progressives dismiss that concern. They also rarely mention that the ruling applies equally to labor unions, which are also not “natural persons,” and to other nonprofit groups, which is what Citizens United was. (It was a political group that made a move opposing Hillary Clinton.) The progressives complain only about corporations, and the end run they attempt applies only to corporations.
The end run is to make a special rule forbidding political contributions from foreign-influenced corporations and to define “foreign-influenced” to include almost everyone.
Their proposal came from a Washington, DC-based progressive group, the Center For American Progress. On its web page it says, “The United States’ largest corporations are spending hundreds of millions of dollars directly from their corporate treasuries to influence elections.” To imagine these nefarious aliens, the Center for American Progress asks people to think about “Russian oligarchs, the Saudi royal family, European financiers or Chinese corporate conglomerates.”
These, however, are relatively small. As of 2021, investors from nine foreign countries have at least $100 billion invested in the United States. In descending order, the top 10 are:
- Japan, $721 billion
- Germany, $637 billion
- Canada, $607 billion
- United Kingdom, $565 billion
- Ireland, $353 billion
- France, $326 billion
- Netherlands, $251 billion
- Switzerland, $229 billion
- Australia, $102 billion
- Spain, $81 billion
China stands at $54 billion and Saudi Arabia at $10 billion. Russia is far down the list at $4 billion.
Consider also Norway, a Scandinavian country with a population (5.4 million) not much larger than South Carolina’s. Norway has $33 billion invested in the United States. Much of this is from its government fund, managed by Norges Bank, that invests the government’s money from North Sea oil. Of the companies in my area, Norway’s fund owns more than 1% of Weyerhaeuser, Microsoft, Costco, Starbucks, T-Mobile, and Zillow. Among other U.S. companies, it owns 1% or more of Caesar’s Entertainment, Paypal, Apple, Domino’s Pizza, Coca-Cola, Hostess Brands, McDonald’s, Marriott, Home Depot, Lowe’s, Netflix, Verizon, Pfizer, News Corp. (Fox News and the Wall Street Journal), Bank of America, and General Motors.
The progressives complain only about corporations, and the end run they attempt applies only to corporations.
And that’s just one fund, in Norway. There are lots of foreign funds with comparatively small holdings in the United States.
In addition to a one foreigner, 1% standard, the Center for American Progress proposes that a company be labeled “foreign influenced” if all foreign owners together own 5% of the stock. Under these two rules, it says, 109 of 111 corporations it studied among the Standard & Poor’s 500 stock index are foreign-influenced and should be barred from making political contributions in the United States.
You can read about the Center’s ideas here and here. It defends its 1%, 5% threshold by saying that even the Business Roundtable — the advocacy group for the largest US corporations — agrees that “1% is the threshold at which a single shareholder is able to influence corporate decisions.” I found it startling that the Roundtable would say such a thing. Conveniently, the Center for American Progress provides a footnote to a Business Roundtable report, here. If you follow the link and read the report, you’ll see that what it says is nothing like what the progressives allege. It’s laughable.
Amazon’s spending backfired, and the leftists were reelected. And when the new year rolled around, they were ready for payback.
Putting the idea into US law is not so funny. St. Petersburg, Florida, was the pathbreaker. In 2017, it defined a foreign-influenced corporation as one in which one foreign entity had at least 5% of the stock, or all foreign entities combined had at least 20%. (In 2021, the Florida legislature overrode that decision.) In January 2020, the city of Seattle went for the full measure, defining as “foreign-influenced” any company with 1% held by a single foreign owner or 5% by all foreign owners. The rule applies to companies, not to their officers or employees.
Seattle had (and still has) a left-wing city council, one of whose members is a Trotskyist. In the months before the January 2020 vote, Amazon.com dumped $1.5 million into council races to defeat those members, including the Trotskyist. Amazon’s spending backfired, and the leftists were reelected. And when the new year rolled around, they were ready for payback.
In Seattle’s January 2020 city council meeting, the council president read a statement taken straight from the Center for American Progress web page: “Foreign interests can easily diverge from U.S. interests. That is true nationally and can be certainly true locally.” To protect their citizens from the nefarious foreigners, the council voted unanimously to impose the 1%, 5% rule.
There were no takers. Public companies are shut out of Seattle election campaigns, and the law remains.
One of the city’s principal law firms issued a public letter arguing that the new city ordinance was unconstitutional under Citizens United. Essentially, the firm was offering its services to challenge the ordinance in court. The state’s former Republican attorney general, Rob McKenna, who is a member of a San Francisco law firm, also made it known that he was willing to make such a challenge. There were no takers. Public companies are shut out of Seattle election campaigns, and the law remains.
This spring, Democratic State Representative Joe Nguyen, assistant majority floor leader in Olympia, attached the 1%, 5% rule to an agency-request bill. The bill, ESSB 5284, passed the Senate and almost got through the House without many of the state’s corporations knowing about it. The bill was killed in committee, but it was a close thing.
After all this, Citizens United remains in effect. The ruling affirms that the First Amendment applies to political speech. In the controlling opinion, former Justice Anthony Kennedy wrote there is “no basis for the proposition that, in the context of political speech, the Government may impose restrictions on certain disfavored speakers.” The Court, he wrote, has “rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not ‘natural persons.’”
There is a loophole, though. Kennedy also wrote, “We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process.” That creates the opening for the progressives to define a “foreign-influenced corporation” in an outlandish way, and thereby cancel the First Amendment rights of a class of participants they don’t like.