In Citizens United v. FEC, No. 08-205 (Jan. 21, 2010), the Supreme Court struck down a major portion of the Federal Election Campaign Act and the 2002 Bipartisan Campaign Reform Act (McCain-Feingold), saying it violates the free-speech rights of corporations to engage in public debate of political issues. 

McCain-Feingold had prohibited corporations (and labor unions) from making independent expenditures advocating the election or defeat of a candidate for federal political office. This decision invalidated that portion of the law and overruled two earlier decisions holding that political speech may be banned on the speaker’s corporate identity. McConnell v. Federal Election Comm’n, 540 U.S. 93, 203-09 (2003) and Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990).

As a result of the Supreme Court’s decision, corporations may now spend their general treasury funds to influence the outcome of federal elections. The decision is expected to have major political and practical consequences, as many states have congressional primaries scheduled as early as February and March of this year. This decision will also affect similar laws governing state and local campaigns, as its First Amendment analysis applies to all levels of government.

Almost immediately following the Supreme Court’s release of the decision, President Obama issued a statement condemning the opinion, calling it “a major victory for big oil, Wall Street banks, health insurance companies and other powerful interests”. President Obama instructed his Administration to immediately begin working with bipartisan Congressional leaders to develop a forceful response to the decision. 

Congressional Democrats have uniformly criticized the Court’s decision, vowing to legislatively limit the impact of the ruling, while most Congressional Republicans are praising the decision. Notably two Republican Senators, Olympia Snowe (R-ME) and John McCain (R-AZ) have both criticized the opinion. Given the current make-up of the US Senate, these two Republicans could be key to any new campaign finance legislation.

In the coming days, legislative proposals are expected that would limit the impact of the decision in time for the November 2010 mid-term elections. It remains unclear what form this legislation might take. However, it should be noted, the Supreme Court's decision did not alter the prohibition on direct corporate contributions to federal political candidates and committees. Nor does it allow corporations to make expenditures in coordination with federal political candidates or committees.

For more information, please contact the author of this alert, Mary Streett.

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