Last week, the Department of Health and Human Services announced its intention to bar veteran CEO Howard Solomon from the operations of his employer, Forest Laboratories, Inc. If Forest chooses not to fire Mr. Solomon it will lose its ability to sell its pharmaceuticals to Medicare, Medicaid, and the Veterans Administration. The demand came weeks after Forest and HHS settled allegations that the drug maker had improperly marketed its antidepressants Celexa and Lexapro.
Two weeks ago, Shell Oil Company abandoned efforts to drill in the Arctic Ocean after spending five years and $4.4 billion, largely on leases to the federal government. The EPA’s Environmental Appeals Board decided to withhold the air permits Shell needs to continue. Meanwhile, the U.S. Treasury’s Export-Import Bank subsidizes drilling by Shell competitor Petrobras, in Brazil.
Last month, the National Labor Relations Board sued to keep Boeing from building its new 787 Dreamliner in right-to-work states, which could cost Boeing its $2 billion investment and South Carolinians more than 1,000 jobs.
It is events like these that place the Obama administration’s draft executive order on political disclosure in a disquieting light. As has been reported, the order would require corporations seeking federal contracts to report the political donations of its executives, and include, for the first time, donations to trade associations and advocacy groups. It would exempt unions and grant recipients, and almost certainly chill corporate speakers protected just last year by the Supreme Court in Citizens United.
Even if the draft order is only a trial balloon designed to slow donations to opponents like the U.S. Chamber of Commerce or Crossroads GPS, Rep. Chris Van Hollen (D., Md.) has — after failing to pass his DISCLOSE Act in Congress — sued the Federal Election Commission in a last-ditch effort to broaden the reach of disclosure in time for the 2012 campaign. Donors to Democratic groups competing with Crossroads, like the newly minted Priorities USA, would also have to disclose under Van Hollen’s proposal. But donors to such groups might conclude they have less to fear in the current regulatory environment.
The roots of the issue are deeper than some may imagine.
In U.S. v. Carolene Products (1938), the Supreme Court assured Americans that its decision to remove constitutional protection for economic liberties to make way for New Deal programs would not lead to economic deprivations because open and robust “political processes . . . can ordinarily be expected to bring about repeal of undesirable legislation.”
Thirty-eight years later, in Buckley v. Valeo, the Court dampened political processes by upholding campaign-finance restrictions, which included disclosure for candidate contributions to prevent quid pro quo corruption. Disclosure for advertising that independently advocates the election or defeat of candidates, which the Court held cannot result in quid pro quo, was nonetheless upheld to further “informational interests.” The informational interest allows voters to place “candidate[s] in the political spectrum more precisely than is often possible solely on the basis of party labels and campaign speeches.”
These disclosure restrictions were thought to be so benign that Buckley’s appellants scarcely challenged them.
But socialists challenged them in 1982 (Brown v. Socialist Workers), and the Court agreed that disclosure cannot apply to organizations or individuals that historically have been “the object of harassment by government officials or private parties.” Against the backdrop of a Reagan-era economic expansion, the Socialist Workers exemption is rightly seen as an accommodation for dissidents.
The Court now allows groups “that have no history upon which to draw” an opportunity to make a similar showing. But there is a problem today with the Socialist Workers exemption and an elephant in the room where the burdens and benefits of political disclosure are hotly debated. What is to be done when the chilled donor is no dissident but rather is in the mainstream of American society?
Target Brands, Inc. was targeted for boycotts by MoveOn.org over donations Target made to a political organization. The donations have stopped. Yet no district court will find that a multinational like Target should qualify for an exemption under Socialist Workers.
CEOs aware of the treatment of Shell, Boeing, or Forest cannot claim successfully that the prospect of finding themselves on the short end of regulatory processes the Supreme Court approved last century constitutes “threats, harassment or intimidation” warranting an exemption under Socialist Workers. Yet the facts seem otherwise. Sen. Charles Schumer (D., N.Y.), co-sponsor of the DISCLOSE Act, has said that the deterrent effect of campaign disclosure should not be underestimated.
If businessmen and women are chilled from speaking in the 2012 elections, the Court’s Carolene compromise is already undone, and the promise of political checks as adequate substitutes for constitutional checks rings hollow indeed.
There is no chance the Court will soon revisit its New Deal rulings or reinstate protections against economic deprivations of the kind suffered by Forest, Shell, or Boeing. The answer, then, is for it to revisit disclosure; particularly the legitimacy and scope of the “informational interest.”
Today, only Justice Clarence Thomas would strike down disclosure requirements because they enable “elected officials to implement political strategies specifically calculated to . . . prevent the lawful, peaceful exercise of First Amendment rights.” Other Justices must take notice of a quickly shifting landscape. When American capitalists need the protection of Socialist Workers it’s time the Court revisited its precedents.
— Stephen M. Hoersting is a campaign finance attorney and co-founder of the Center for Competitive Politics.
EDITOR’S NOTE: This item has been amended since its initial posting.