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Steve Simpson on Continuing Threats to Corporate Free Speech

From The Objective Standard, Vol. 7, No. 2.

I recently had the pleasure of interviewing Steve Simpson, a senior attorney at the Institute for Justice. Among Mr. Simpson’s many accomplishments, he authored a friend-of-the-court brief in the landmark case Citizens United v. FEC, served as lead counsel in SpeechNow.org v. FEC, helped overturn aspects of Colorado’s campaign finance laws that restricted people’s ability to fund political speech, and helped overturn New York’s ban on direct shipping of wine. Simpson has contributed articles to Legal Times, The Washington Post, the Chicago Tribune, and The Washington Times, among other outlets. He is also the author of “Citizens United and the Battle for Free Speech in America,” which was published in the Spring 2010 edition of The Objective Standard. —Ari Armstrong

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Ari Armstrong: Following the Supreme Court’s Citizens United decision of 2010, the left has continued to evade the fact that corporations—including newspapers, nonprofits, and businesses large and small—are composed of individuals with inalienable rights. This enables the left to systematically ignore the violations of individual rights inherent in the censorship of corporations’ political speech. How does the left get away with this? And what motivates them?

Steve Simpson: I think the answer ultimately comes down to what Objectivists would call the anti-conceptual mentality, which results in two key errors in this context. First is the failure to distinguish between economic “power” and political power, or efforts to convince and efforts to compel.

A lot of people (mostly on the left, but often on the right as well) view corporations, “big business,” and the rich as having power over individuals that is similar to the power that governments possess, which is the power to compel. If you think spending money in voluntary transactions amounts to force, then you are going to want to control that spending, even when the money is used to buy speech that attempts to convince people to vote one way or the other.

Second is the failure—or refusal—to understand what corporations are. We often hear that “corporations aren’t people,” which, of course, is true. They are groups of people. More particularly, they are legal entities that are composed of and operated by people who have voluntarily associated with one another and who want to voluntarily associate with others as a legal entity. As such, corporations have the same legal rights as the people who compose them (at least those that people can exercise in cooperation with one another), no more, but no less.

The motives of those who attack corporate speech and Citizens United are twofold. First is the desire for political power. Elections are the path to political power, so those who want that power try to control who can influence the outcome of elections. One way to do that is to restrict who can speak by restricting how they finance their speech.

But I also think that campaign finance laws in general are motivated by a desire to evade the consequences of the political system we have today. Modern government is a political spoils system in which citizens often elect representatives for the express purpose of redistributing wealth, regulating business, restricting property rights, and doling out costs and benefits to various interest groups. These are not just incidental effects of otherwise legitimate functions; they are held out by most people as part of the core purpose of government.

But these functions are inherently corrupt. There’s no legitimate way to take one person’s wealth or property and give it to others, or to prevent him from pursuing legitimate business or associating with whomever he pleases. I think the proponents of unlimited government recognize this on some level and look for ways to make the exercise of that power seem legitimate. They have no problem with a government that possesses almost unlimited power, but they view it as unseemly when people try to use that power for their own benefit. So they try to limit the influence of certain groups or require disclosure of their political activities and the like, as though the power to control the lives of others will become legitimate if it is “democratized” and distributed equally among a larger group of voters or interest groups.

AA: Free-market economists describe the problem of “concentrated benefits and dispersed costs” associated with many government spending programs and economic controls. No doubt some special interests really do seek to buy illegitimate political favors. What is the solution to this problem, if not controls of political speech?

SS: The solution is limiting government to its proper purpose, which is to protect rights, not to redistribute wealth, or restrain competition, or regulate business, or prevent “harm” outside the context of protecting rights. A properly limited government wouldn’t have any political favors to give, so there would be no incentive to spend as much time, effort, and money trying to influence it as various interest groups currently do.

But we also need to be clear about what we can legitimately call a “problem” under our current system. As I mentioned, the prevailing view of modern government is that it is supposed to redistribute wealth, restrain business, and force people to serve the “greater good.” It makes no sense to say that it is legitimate for government to have this power but illegitimate for people to try to influence how it is used.

A representative form of government means that citizens have the right to try to convince their representatives to support some laws and policies and oppose others. If it is legal for government to tax and regulate us, it cannot properly be illegal for us to ask government to do so in a particular way, or regulate or tax our neighbors more than us. Indeed, every election season, Americans are invited to participate in the spoils system and vote for politicians who will redistribute others’ wealth and property to them, tighten the shackles on their competitors, and the like. We can certainly lament that government has this power and judge some efforts to influence government to be immoral, but we should place the blame where it deserves to be placed—on unlimited government and those who advocate it. It is bad enough to have a government with as much power over our wealth, property, and business as ours currently possesses. It would be far worse to give that government the power to control our ability to influence it as well.

AA: In thinking of rights violations, there are always “the seen” and “the unseen.” Clearly, the rights of individuals involved in corporations are being violated when they are forbidden to express their political views. But what are some of the unseen consequences of these violations? For instance, to what degree do speech restrictions result in dollars being funneled away from candidates to political action committees, and what are the consequences of this?

SS: Campaign finance laws are a perfect example of the principle that regulation begets regulation and leads to all sorts of allegedly unforeseen consequences. The main consequence of campaign finance laws is that as one avenue for influencing elections is cut off, people find other avenues, leading to the call for more regulation to close those “loopholes,” and so on until all efforts to influence elections—that is, to support some candidates, oppose others, and speak to voters—are cut off.

Political action committees (PACs) are one example. They exist largely because of the restrictions placed on corporate political donations in the early 20th century, which resulted in corporations creating these groups so they could continue to donate to campaigns. That, in turn, led to the claim that special interests were influencing politics through “shadowy” groups with confusing names, which in turn led to the call for more regulations.

So-called “issue ads” are another example. Campaign finance laws prevented corporations from spending money to “influence elections.” To prevent that restriction from reaching too broadly, the Supreme Court interpreted it to apply only to money spent for speech that expressly advocated the election or defeat of a candidate, using terms such as “vote for” and “vote against.” So corporations began running “issue ads” that criticized candidates but did not tell people how to vote. This led campaign finance reform groups to complain that the corporations were being dishonest, because they really wanted people to vote against the candidates they were criticizing. The McCain-Feingold law, which prevented corporations from even naming a candidate near an election, was the result. (Thankfully, the Supreme Court overturned that aspect of McCain-Feingold in Citizens United.)

Two other examples are independent expenditures and super PACs, both of which are very much in the news these days. An independent expenditure is money spent by someone who is not working with a candidate but wants to advocate for his election or the defeat of his opponent—in short, it is money spent for one’s own political speech. The legal concept “independent expenditure” exists because the campaign finance laws limit direct contributions to candidates, and the law needed some way to distinguish between direct contributions and money spent on one’s own speech. As long as you don’t coordinate your spending with a candidate, you can spend as much money on political ads as you want. Of course, it isn’t exactly difficult to figure out which messages will help or hurt a candidate’s campaign, so supporters of campaign finance laws have complained for years that independent spending isn’t really “independent.” And because of contribution limits, people end up spending more on independent ads, which has led reformers to claim that independent spending was having too much influence and should be limited.

The Supreme Court put a stop to efforts to restrict independent spending in the Citizens United case, when it struck down limits on independent spending by corporations. But because contribution limits still exist, a lot of the money that would go directly to candidate campaigns instead goes to independent groups. Soon after Citizens United came down, the Institute for Justice won a case called SpeechNow.org v. FEC, which freed noncorporate groups to raise unlimited funds for independent ads. The result was the creation of super PACs and the predictable cries from supporters of campaign finance laws and many in the media that these PACs are spending “obscene” amounts of money. Now they want to amend the Constitution to reverse Citizens United and other decisions that protect free speech.

You can see from all of this that campaign finance laws are, to put it mildly, a byzantine mess. The solution is to scrap them and respect the rights of individuals and corporations to spend their own money on advocacy as they see fit. If voters don’t like candidates receiving large amounts of money for their campaigns, they can vote against them.

AA: The left apparently is obsessed with the idea that corporations can sway people’s minds through political advertisements. This clearly denies the individual’s power of choice and independent thought. How do you respond to those who claim “money in politics” determines political outcomes?

SS: Corporations can no more control with political expenditures how people vote than they can control with advertising expenditures what people buy. What corporations—and anyone else—buy when they spend money in elections or on advertisements is the ability to try to convince people to buy their products or support their favored candidates. But the consumer or the voter ultimately makes the decision.

If spending money on ads, whether political or commercial, were enough to win elections or gain market share, then General Motors—which spends more money on advertising than does any other company in the country—wouldn’t have needed a government bailout. There are too many examples of expensive advertising flops or rich candidates who lost elections to take seriously the claim that money buys elections. Ross Perot, Michael Huffington, Meg Whitman, Jon Corzine—the list of candidates who have spent huge amounts of money and lost goes on and on. A certain amount of money is necessary to be a contender in an election. Beyond that, candidates win or lose because they have messages and support policies that the voters like.

AA: The so-called “People’s Rights Amendment,” endorsed by Nancy Pelosi and various other politicians, would gut the First Amendment and enable the government to censor political speech outright. What are your thoughts on this effort?

SS: The amendment, and others like it, are awful and would gut much more than the First Amendment. The People’s Rights Amendment would eliminate any constitutional protections for corporations and limited liability companies by construing the Constitution’s protections not to apply to them. So that would mean, for example, that the Fourth Amendment’s protections against unreasonable searches and seizures would not apply to most businesses and employers in the country, which would allow the government to storm into businesses and confiscate anything it wanted without a warrant.

The amendment is also self-contradictory, in that it goes on to say that nothing in the amendment shall be construed to limit the “people’s” rights protected under the Constitution. But the rights of corporations and other associations are derived from and an expression of the rights of individuals. That’s the basis on which the court protected corporate free speech rights in Citizens United. So how is a court supposed to interpret an amendment that purports to protect the “people’s” rights while denying them the right to associate with others when they exercise those rights?

This amendment is a monstrosity. It’s not a serious effort to implement anything that can be described as law. It’s an assault on the very purpose of the Constitution.

AA: Some on the left ultimately want to ban independent political speech altogether and move to a system of strictly tax-financed campaigns. What’s wrong with that idea?

SS: There’s nothing right with that idea. In principle, it’s an effort to systematically violate everyone’s inalienable right to freedom of expression. In practice, strictly tax-funded campaigns would constitute a single-payer system for campaign speech, and would end up putting the government in control of speech in the same way that socialized medicine puts the government in charge of medical care.

The government cannot fund everyone’s speech, so the first thing it must do is limit those who are eligible to receive government campaign financing. And it cannot provide unlimited funds to those who qualify for government financing, so it also has to limit the amount of money that qualifying candidates can spend—which means that it must limit their speech.

But if the government does that, the candidates who participate will be outspent by independent groups and others who want to support or oppose certain candidates. So the only way to make a government campaign financing system work is to impose limits on individuals and groups who want to speak independently. And, of course, the media will then have far more influence over campaigns, which will lead either to calls to limit the media, or, more likely, a fairness doctrine in which all political speakers are entitled to equal time and equal media coverage. When that happens, candidates and others will turn to the Internet, so the government will have to limit that as well. And so on.

By the way, nothing I’ve mentioned here is a new idea. Advocates of campaign finance laws have proposed every one of these restrictions and tried many of them. They are all logical consequences of the premise that the government must limit and regulate campaign spending, which spending is an exercise of the right to free speech. This right is not permission from government that can be granted or revoked. It’s a moral prerogative that exists apart from and in advance of government. The proper role of government, as specified in the First Amendment, is to protect this right. But when government violates the right to free speech anywhere, it ends up violating the right everywhere.

AA: The mainstream debate seems to have shifted to the question of whether government should mandate disclosure of political spending, rather than censor it directly. Yet, as I discovered in fighting a Colorado ballot measure, these reporting requirements are quite onerous, and they especially discourage small groups from advocating their views. What is the scope of disclosure and reporting requirements, and in what ways do they violate free speech?

SS: As a general matter, disclosure laws apply to any money that people raise and spend to influence an election, whether for candidates or ballot issues. So at the federal level, if you give more than $200 to a candidate or political committee, you will be listed as a contributor to that entity on the Federal Election Commission’s website. If you raise more than $1,000 to spend on political advocacy, you have to register as a political committee and comply with a whole host of disclosure laws and administrative requirements. The same is basically true at the state level, although the reporting thresholds are usually lower, and the laws apply to money spent advocating for and against ballot issues as well. Increasingly, states are also applying disclosure laws to groups that simply advocate for and against legislation. So, for example, in Washington State, if you start a group that opposes, say, a new tax or environmental law and you try to convince other people to tell their legislators to vote against the law, you will have to register your group with the state and track any money you raise or spend and report it all.

All of these laws violate the right to free speech, in my view, because they require speakers to disclose information they don’t want to disclose as a condition of speaking out. Imagine if a state tried to require newspapers to report more facts in their news stories than they chose to or to disclose the political affiliations, incomes, or investments of their reporters. Readers might like to have that information, but whether to report it is up to the newspaper, not the government. That’s what the “freedom” in freedom of speech means—you get to decide how you speak and what you say. If readers don’t think you have reported all the relevant facts, or don’t trust anonymous sources, they can choose not to listen.

Another problem with disclosure laws is that they can be extremely burdensome. To pick one example, I currently represent Dina Galassini, a resident of Fountain Hills, Arizona, who wanted to join with some neighbors on a street corner last November to oppose a bond issue. But under Arizona law, they were a “political committee” because they wanted to influence an election. The law required Dina to register with the town (which she had to do in person), open a bank account, appoint a chairman and treasurer for her group, and then track any money spent by anyone who showed up to her rally for things such as signs and even the gas they used driving there. She had to do all this because she wanted to get together on a street corner with others and hold up signs that said vote against the bond. But, again, laws such as these are inevitable if you accept the premise of campaign finance laws.

AA: The call to censor political speech strikes at the heart of the U.S. Constitution and the American system of governance. Could you briefly trace the major ideological developments that led to this anti-American trend?

SS: For campaign finance laws, like so many other bad laws and legal trends we have these days, you can blame the progressives of the late 19th century. More than any other group, they are responsible for undermining our constitutional system. In fact, progressives such as Woodrow Wilson, Frank Goodnow, John Dewey, and others set out to do just that. They recognized that the Constitution, with its limits on government, separation of powers, and protections for rights, prevented them from creating a social welfare state of the type that existed in Germany and other European countries. They were very explicit about their goals and they largely succeeded.

Of course, government cannot be all-powerful if “special interests” are able to convince voters to oppose its programs, so progressives supported early campaign finance laws primarily to prevent corporations and businesses from influencing elections. In fact, the very term “special interest” comes from this period. It was meant to marginalize businesses that opposed progressive reforms by smearing them as selfish “special” interests that opposed the enlightened progressives, who were allegedly acting in the “public” interest.

Later in the 20th century, campaign finance took on a more egalitarian gloss, as proponents claimed that it was unfair for some people to have the ability to influence elections more than others. Yale law professor Owen Fiss provided a succinct statement of this view in a book called The Irony of Free Speech when he said that the government may “have to silence the voices of some in order to hear the voices of . . . others. Sometimes there is simply no other way.” That’s campaign finance law in a nutshell.

AA: What can advocates of free speech do to advance this cause?

SS: They can do two things at the very least. First, don’t inadvertently accept the premises of those who support campaign finance laws by focusing too much on influence peddling. As Ayn Rand recognized, “pull-peddling” is grotesque, but it’s an unavoidable consequence of unlimited government. Businesses and other groups that lobby and try to influence government often have no choice if they want to continue to exist and remain competitive. The type of government that supporters of campaign finance laws want is a government that promotes influence peddling, whether they know it or not. So don’t let them get away with claiming that they want to eliminate an effect of big government when they support the cause.

Second, defend the courts when they strike down campaign finance laws. The Supreme Court is nowhere near perfect, but it does arrive at the right result in some cases, even if its reasoning is often flawed. Citizens United is a good example, and most people who favor limited government don’t understand just how good that decision is when compared to many other First Amendment cases. Yet, I hear people criticize the decision (and other good Supreme Court decisions) because the reasoning is flawed. Fair point, but so is the reasoning of pretty much every other Supreme Court decision in history. One day we will fix that. But for now, be sure at least to defend the courts for reaching the right result. Others will attack the courts for reaching the right result, so we need to make sure we defend them for doing so.

The left is really stepping up its attacks on the Supreme Court, largely because of Citizens United, but also because they suspect the court will strike down Obamacare. If the court does that, the left will go apoplectic, and I think we will see an attack on the court that rivals the attacks mounted by progressives in the 1930s. The right has always been squeamish about the role of the courts, and many on the right are hostile to judicial review. So there are few voices out there willing to stand up for the courts when they do the right thing. We need to defend decisions such as Citizens United.

AA: Other than defending freedom of speech—as if that weren’t enough—what is on the Institute for Justice’s agenda at present?

SS: We just released a comprehensive report on occupational licensing nationwide that we’ve been working on for a couple years. It provides great ammunition for anyone who wants to take up the cause against licensing laws.

About a year ago, we launched the Center for Judicial Engagement, which presents a principled alternative to the left’s judicial activism and the right’s judicial restraint. In our view, courts should not be reluctant to strike down unconstitutional laws, but at the same time, they obviously must respect the terms of the Constitution and not make up new provisions or reinterpret the meaning of the document in light of current circumstances. So we are poised to defend the proper role of the courts from their current detractors on all sides of the political spectrum.

Beyond that, we continue to defend individual rights in court as we have been doing for the past twenty years.

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