DEFINING THE FUTURE OF CAMPAIGN FINANCE 

IN AN AGE OF SUPREME COURT ACTIVISM 

HEARING 

BEFORE THE

COMMITTEE ON HOUSE 

ADMINISTRATION 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

Held in Washington, DC, February 3, 2010 

Printed for the use of the Committee on House Administration 

( 

Available on the Internet: 

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DEFINING THE FUTURE OF CAMPAIGN FINANCE IN AN AGE OF SUPREME COURT ACTIVISM 

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55–410 2010

DEFINING THE FUTURE OF CAMPAIGN FINANCE 

IN AN AGE OF SUPREME COURT ACTIVISM 

HEARING 

BEFORE THE

COMMITTEE ON HOUSE 

ADMINISTRATION 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

Held in Washington, DC, February 3, 2010 

Printed for the use of the Committee on House Administration 

( 

Available on the Internet: 

http://www.gpoaccess.gov/congress/house/administration/index.html 

rfrederick on DSKD9S0YB1PROD with HEARING

(II) 

COMMITTEE ON HOUSE ADMINISTRATION 

ROBERT A. BRADY, Pennsylvania, Chairman 

ZOE LOFGREN, California, 

Vice-Chairwoman 

MICHAEL E. CAPUANO, Massachusetts 

CHARLES A. GONZALEZ, Texas 

SUSAN A. DAVIS, California 

ARTUR DAVIS, Alabama 

DANIEL E. LUNGREN, California, 

Ranking Minority Member 

KEVIN MCCARTHY, California 

GREGG HARPER, Mississippi 

JAMIE FLEET, Staff Director 

VICTOR ARNOLD-BIK, Minority Staff Director 

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(1) 

DEFINING THE FUTURE OF CAMPAIGN FINANCE IN AN AGE OF SUPREME COURT ACTIVISM 

WEDNESDAY, FEBRUARY 3, 2010 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON HOUSE ADMINISTRATION, 

Washington, DC. 

The committee met, pursuant to call, at 1:53 p.m., in Room 1310, 

Longworth House Office Building, Hon. Robert A. Brady [chairman 

of the committee] presiding. 

Present: Representatives Brady, Lofgren, Davis of California, 

Davis of Alabama, Lungren, McCarthy, and Harper. 

Staff Present: Jamie Fleet, Staff Director; Tom Hicks, Senior 

Elections Counsel; Janelle Hu, Elections Counsel; Jennifer Daehn, 

Elections Counsel; Matt Pinkus, Professional Staff/Parliamentarian; Kyle Anderson, Press Director; Joe Wallace, Legislative 

Clerk; Daniel Favarulo, Legislative Assistant, Elections; Darrell 

O’Connor, Professional Staff; Shervan Sebastian, Staff Assistant; 

Peter Schalestock, Minority Counsel; Karin Moore, Minority Legislative Counsel; Salley Collins, Minority Press Secretary; and Mary 

Sue Englund, Minority Professional Staff. 

The CHAIRMAN. Good afternoon, everybody. The Committee on 

House Administration hearing on Defining the Future of Campaign 

Finance in an Age of Supreme Court Activism will come to order. 

In his State of the Union speech in 1905, Republican President 

Teddy Roosevelt said, ‘‘All contributions by corporations to any political committee for any political purpose should be forbidden by 

law.’’ On January 21, 2010, in a single sweeping opinion, the conservative majority of the Supreme Court threw out nearly 100 

years of laws and destroyed decades of commonsense legislation 

and regulations designed to adhere to that basic principle. 

Imagine Wall Street bankers creating political campaigns to target Members as we debated the TARP plan. Does anyone think 

that giving the Gordon Gekkos of the world access to corporate 

funds to wage political campaigns will make our democracy any 

stronger? I doubt it. Imagine foreign investors waging political 

campaigns during the negotiation of American trade policy. 

I am hopeful that we will be able to reach across party lines to 

ensure that, at a minimum, corporations, particularly those that 

are foreign controlled, cannot exert undue influence on American 

elections. Strengthening disclosure requirements, protecting the interests of shareholders, and safeguarding against foreign influence 

are three areas where we can start. 

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Many Members of Congress have already acted, including Mr. 

Capuano, a member of our committee, who introduced the Shareholder Protection Act. Mr. Capuano’s bill requires corporate CEOs 

to disclose to their investors or shareholders how corporate treasury funds are being spent to influence elections. 

In his State of the Union Address last week, President Obama 

said that the Supreme Court decision will open the floodgates for 

special interests, including foreign corporations, to spend without 

limits in our elections. At least one jurist seems to believe that this 

is simply not true. I say today to Justice Alito, prove it; prove that 

Citizens United will not lead to an election system that is, in the 

words of the President, ‘‘bankrolled by America’s most powerful interests, or worse, by foreign entities’’. 

Today we begin the process. This is the committee of jurisdiction 

over Federal elections. So, make no mistake, any law or legislation 

that defines Federal elections in the wake of Citizens United will 

be considered by this committee. This is our responsibility, and we 

intend to meet it. To this end, this committee will conduct hearings 

that will allow for a full airing of all viewpoints. 

We understand that in the intersection of free speech and fragile 

election law, opinions diverge and passions flair. This hearing will 

therefore not be constrained by a 5-minute rule. Members will be 

given an opportunity to fully air out their concerns, but the committee will not, in its relaxation of the rules, let it get so relaxed. 

We respect all opinions, but we are also aware that at the end of 

the day our constituents expect us to act. 

I would now like to recognize my friend from California, Mr. 

Lungren, for an opening statement. 

Mr. LUNGREN. Thank you very much, Mr. Chairman. 

We have worked on a bipartisan basis through this Congress. I 

knew there would be a point in time when we might reach more 

contentious issues, and I think that point has been reached. 

The CHAIRMAN. But we are going to do it with a smile on our 

face. 

Mr. LUNGREN. We shall. We shall. 

I might just start out by saying the first amendment is an inconvenient truth. The Constitution is a series of inconvenient truths. 

They have within them various principles articulated that establish 

the relationship of individuals to the Federal Government, and 

sometimes they do not allow us to do things we might feel we want 

to do. But the test of time has reached a conclusion that, by and 

large, we were served well with it. 

This hearing comes amidst a flurry of bills introduced in response to the Supreme Court’s recent decision in Citizens United 

v. Federal Election Commission. We still await a promised legislative proposal from the chairman of the committee charged with 

electing Democrats to the House and the former chairman of the 

Senate counterpart. In the meantime, let us consider some of the 

fundamental issues at stake. 

The first amendment states very simply, ‘‘Congress shall make 

no law abridging the freedom of speech.’’ Let me say that again. 

‘‘Congress shall make no law abridging the freedom of speech.’’ 

Mr. Chairman, we know that historically the most sacred kind 

of speech for the Founders was political speech; and even though 

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the Supreme Court for decades, in my opinion, has spent a lot more 

time dealing with questions of nude dancing and other kinds of 

issues that probably never were contemplated by our Founding Fathers, the essential part is, as Justice Kennedy said in his majority 

opinion, ‘‘The essence of the protected speech in the first amendment is political speech,’’ and that ought to be our focus. 

Our government was not organized to quash dissent, minority 

views, or respected interests of various kinds, but, rather, to make 

those interests compete against one another in the court of public 

opinion. And frankly, it was not just to compete but to compete 

robustly, to have the clash of ideas presented as the way that we 

would best come to conclusions as to how we would order ourselves 

under the Constitution, not say there will be disfavored speech or 

disfavored individuals or disfavored groups. 

To attempt to root out free speech and to ration the arguments 

and voices of persons and entities within this country by controlling the timing, the manner, the character, and mechanisms of political speech defies our tradition rather than defines it, defies our 

Constitution, defies our system of ordered liberty, and I would 

argue it defies common sense. It is, in my judgment, judicial activism to read words into the Constitution that do not exist or to ignore words that are there. Taking the words of the Constitution at 

face value is not judicial activism, it is giving effect to the words 

or the work of our Founders. 

It is this long-held and long-revered truth that the Court, in my 

judgment, affirmed in the decision in Citizens United. Far from 

being the undoing of our system of free and fair elections—dangerous hyperbole that I have heard from a number of this decision’s 

critics—this decision was the affirmation of one of the first principles of our democracy, that as Madison wrote during the height 

of the debate surrounding the Alien and Sedition Acts, the ‘‘right 

of freely examining public characters and measures and of communication is the only effectual guardian of every other right.’’ 

What I find most troubling in the midst of this debate is the 

penchant or an apparent indifference by some to speech rationing 

and speech restrictions. As far back as 1976, the Supreme Court 

has worried that limits on political spending allow the government 

to restrict the speech of some elements of our society in order to 

enhance the relative choice of others. Mr. Chairman, I believe the 

government should never be in the position of deciding what voices 

are worthy of being heard. 

I hear many say, well, the answer to all of our problems is more 

restrictions under campaign finance reform. I happen to remember 

as a student in college that there was somebody called Clean Gene. 

His name was Gene McCarthy. He rallied the young people of 

America in an effort to deal with the question of an unpopular war. 

President Lyndon Johnson was President of the United States. 

Most people expected that he would basically sail to victory in the 

next election, but Gene McCarthy began the ‘‘children’s crusade’’ 

against him. Interestingly enough, Eugene McCarthy was backed 

by five multimillionaires to provide the essence of his ability to 

speak. Stewart Mott gave him a huge amount of money. Today, Mr. 

Mott would go to prison for giving that amount of money to any 

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individual. And yet it was Eugene McCarthy who brought down 

Lyndon Johnson. 

I remember studying at the library at the University of Notre 

Dame when all of a sudden I heard students running, running 

through the floors yelling at the top of their lungs. And what they 

were running about is that President Johnson had just announced 

he was not going to stand for reelection. 

Now, Eugene McCarthy was not the nominee. His position was 

later taken essentially by Robert Kennedy; and, unfortunately, we 

had the tragedy of the assassination of Robert Kennedy in southern 

California. But the fact of the matter is the unseating of a President, who was leading us at that time in an unpopular war, was 

effectuated by a lone voice in the United States Senate who was 

allowed to multiply his impact because he was assisted by funding 

from a number of individuals. 

Now, some people interpret that history differently than I do, but 

I have always been struck by the irony of that. Eugene McCarthy 

could not become the candidate he was in 1968 today because he 

wouldn’t have that voice. 

During the oral arguments in this case that we are talking about 

here today, the Deputy Solicitor General went so far as to suggest 

that laws passed by Congress would allow the government to ban 

books. I happen to think that is essentially when the Supreme 

Court began to realize what they had in front of them. When the 

Deputy Solicitor General said, yes, if you had this book put out by 

a corporation, 500 pages, and at the end it said vote for or against 

someone, would the government be able to ban that book? And the 

answer was yes. Have we gone so far that we believe that banning 

books are allowed under the first amendment? 

As Justice Kennedy powerfully wrote, ‘‘When government seeks 

to use its full power, including the criminal law, to command where 

a person may get his or her information or what distrusted source 

he or she may not hear, it uses censorship to control thought.’’ 

Mr. Chairman, many say they want to stop corruption and the 

appearance of corruption. I, too, support these worthy goals. But 

quashing political speech is not the way to accomplish that. That 

is, frankly, in the opposite direction of where the Constitution directs us. The most effective way is to have more information, more 

openness, more transparency, and more accountability in the way 

we do the people’s business here in the U.S. Congress. 

‘‘Congress shall make no law abridging the freedom of speech.’’ 

Mr. Chairman, I hope that, whatever we do, we will not abridge 

that freedom. Let’s not be tempted with abridging that freedom. 

Let’s make no law abridging, constricting, or shrinking political 

speech and the societal spaces in which it thrives. Let us instead 

support, strengthen, and encourage speech, that very same freedom 

we are using here today in these important deliberations. 

And so, Mr. Chairman, I would say I look forward to hearing 

from our panel of witnesses. I think you have given us an array 

of distinguished witnesses, and I think we are going to engage in 

some healthy debate under the concept of free political speech. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Ms. Lofgren. 

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Ms. LOFGREN. Thank you, Mr. Chairman. 

I think you are right. We don’t see this eye to eye. I will say that, 

in reading the majority opinion in the Citizens United case, I was 

really shocked by the lack of judicial restraint and the departure 

from stare decisis, really just defining that, since we don’t agree, 

would ditch the precedent. It is really not something you usually 

see in reading Supreme Court decisions, and it is really a case of 

very strident activism, I think. 

I am concerned about the impact on free elections. I was interested that a former Justice, Sandra Day O’Connor, who recently, 

I just think yesterday, indicated that she is concerned that corporate money will influence not only the outcome of legislative and 

executive races throughout the country but has expressed concern 

that the rush of corporate money will be problematic—and this is 

a quote—‘‘for maintaining an independent judiciary’’. And certainly 

that is of concern. 

I would note that the first amendment really is first because it 

is probably the most important, and yet we do sometimes regulate 

speech. For example, we prohibit Federal employees from doing 

certain political activities because of the concern that the mixing 

of Federal employment and the political spectrum might taint both 

services. We prohibit illegal aliens from contributing to political 

campaigns; and no one has said, well, what about their free speech 

rights if they are here? The remedy to the free speech of illegal 

aliens would be the speech of legal residents or U.S. citizens. So 

it is simply not correct to say that we never regulate in the area 

of speech. 

I think it is important to note that when the Founders formed 

this great union, the idea of corporate speech was really quite foreign to what they were thinking of when they wrote the Constitution. 

But, having said all of that, I recognize that we have a Court decision. I may agree with Justice Stevens’ dissent a lot more than 

I do with the majority opinion, but that really is not what is before 

us. We have the Court’s decision. There is no appeal from the 

Court’s decision. And so I read the decision looking at what can be 

done, given the new legal realities that we face? 

It seems to me that the Court really did invite certain things. 

They embrace disclosure as a remedy to whatever problems might 

be attendant to the majority decision, and so I think we need to 

take a look at our disclosure laws and make sure that they are 

really up to date. 

The Court spoke with great favor on the Internet and the ability 

to instantly let everyone know who was saying what, and I think 

that bears examination. 

There was more than one reference to the role of corporate democracy and what remedy shareholders might have if they were 

concerned about the speech of a corporation. And, actually, let’s be 

honest, corporations are people only as a fiction. It is really the 

shareholders who own it, and yet the shareholders don’t have a say 

in what is happening. So I think we need to think through how do 

we provide mechanisms for shareholders to be fairly dealt with? 

And I am hoping that the witnesses will accommodate that. 

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Corporations are entirely creatures of law, and so I think we 

need to think through what of the various elements that we grant 

to corporations are important relative to this new freedom that 

they have in political advertising. I mean, it is worth noting that 

if you added up all that was spent on congressional elections in the 

last cycle—and this is information that I got off the FEC—the average amount for winning a House seat in the 2008 cycle was $1.4 

million. During that same cycle, ExxonMobil had $80 billion in 

profits that same cycle. So if ExxonMobil used just 1 percent of 

their profits on political activity, it would be more than all the 435 

winning congressional candidates spent to win their races. I mean, 

the scale of what one corporation could do versus what every candidate could do is pretty stunning. 

So I think we need to take a look at those tax issues, corporate 

law issues. And I also hope that we can take a look at a bill that 

our colleague, John Larson, has introduced that would allow an 

opting out of this whole situation, where, on a voluntary basis, you 

could have public funding of campaigns. That is not going to be the 

only answer to this situation, but I think it is time to throw that 

whole concept into the mix of this discussion, and I hope some of 

the witnesses can discuss that as well. 

I want to thank you, Mr. Chairman, for holding this hearing. I 

think it is extremely important that we pay attention to what the 

Court has wrought and that we avail ourselves of the invitation the 

Court had in its decision to remedy whatever holes have been created from the new law. 

With that, I yield back. 

The CHAIRMAN. I thank the lady. 

Mr. McCarthy. 

Mr. MCCARTHY. Thank you, Mr. Chairman. 

I am actually very eager to hear from the witnesses today. As 

you know, the room is actually packed, and it is nice to see. 

One thing I would say, in listening to the opening statements, as 

my colleague from California also brought up, public financing, I 

hope we care as much about the taxpayer who would be that shareholder as we conveyed from the other side of how much input the 

shareholder would have from corporations. 

In reading what the Supreme Court wrote, it talked more also 

than just corporations. It talked about free speech. But it also 

talked about the idea I hope comes out within here that we are 

able to hear about, what about those members of unions that don’t 

have the say? A shareholder can even sell the stock. A union individual would have to quit their job if they didn’t like the way the 

money was spent. So I hope we get a very fair treatment to all taxpayers and to all citizens out there and we keep the First Amendment in the process as we go through and we actually find common 

sense. 

When you go out and listen to Americans today and they see 

what transpires in back rooms that has been happening with different bills through here, they are frustrated. I like the idea of 

what the Supreme Court said about transparency. I like the idea 

that everybody can see what is happening on the table, that the 

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portunity to see what is all being done and let them make the judgment at the end of the day. 

So I yield back, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. 

Mr. Chairman, generally, I don’t do comments in the beginning, 

but I feel today it is important that we do. 

Though I respect some of the comments that were made, I 

thought I was listening to Justice Douglas about freedom of speech. 

And I just wish that if that is the only thing you will agree with 

him on, that is wonderful, but I would hope that you would agree 

with Justice Douglas in everything else he ever wrote as well, a 

fine, wonderful Justice. 

At the same time, we have always had some limitation on freedom of speech, and I would suggest that what we are doing now— 

what I am doing now—is trying to search for a way that is a reasonable, thoughtful, legal, constitutional way to do that. And I understand fully well that that is what we do here. We try to find 

ways to do what we are trying to accomplish without breaching the 

Constitution. And if the Court has said that—in a 5–4 decision, if 

I remember correctly—so be it. So I think, for me, I am searching 

for other ways to give the American people what I think they really 

want, which is an unfettered opportunity to make their own decisions on a level playing field. 

And I would argue that this is only one aspect of it. I think we 

need to talk about other things. I like some of the transparencies. 

I would love to get rid of the 527s, and I invite anybody to work 

with me to do that. If we can’t get rid of them because, again, they 

might be free speech things, for me, I have no problem with an ad 

going up saying, Mike Capuano is Terrible, brought to you by the 

Exxon Corporation—let my voters know who is bringing it—as opposed to, Mike Capuano is Terrible, brought to you by Americans 

for a Better World, funded by the Exxon Corporation. 

I think those are the things we need to talk about, and those are 

things we need to work on. And I look forward to doing so over the 

next couple of months with people who are serious about this. 

I will tell you that this campaign finance bill that we passed a 

couple of years ago, I was never thrilled with a lot of these things. 

We talked a good game. But one of the worst things we did was 

increase the amount of money that individuals can give. I don’t 

know, maybe I am the only person here who has a hard time finding many people who can donate $2,400 at a clip. And that is only 

part of the game because it is really $4,800, we all know that, and 

if they have a spouse, it is really $9,600. Now, I have some constituents who can do that, and some do, but I hate asking people 

for $10,000. And I would argue that we should be looking at ways 

to get rid of that as well. 

I know that that is a little bit beyond today’s scheme, but really 

what I think today is talking about is trying to find a way to get 

the election system back in the hands of the average voter so they 

can make a thoughtful, level-playing-field decision, not just on me 

but on all of us and on issues. 

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So I am going to try my best to avoid—which is going to be hard 

to do, of course—to avoid some of the high-flying commentary 

about freedom of speech and everything else. And I actually agree 

with Mr. McCarthy’s comment about unions. I am looking for ways 

to get union members to have a say in that manner. I think that 

is a fair commentary, and I would love to work with you or anybody else to try to do so. 

I am not trying to stop people from being involved. Corporations 

were always involved. The question is, to what degree? And the 

same thing with unions or anybody else. What I would love to do 

is get everybody out of it, go to public financing and let that decide 

it, let the taxpayers who have to rely on us pay for it. I know that 

is probably beyond the scope of what we can do, but that is the best 

way to get rid of everybody, get out of this business, and let the 

voters have an equal say on everything. 

Nonetheless, I actually look forward, and I hope that we can get 

beyond some of the political rhetoric of all of us—we all engage in 

it, me, too—to get to a point where we can actually maybe try to 

work on trying to find some ways to make this work. 

And, again, I understand if somebody thinks, forget it, just total 

free speech, everybody can do whatever they want with as much 

money as they want. I respect that opinion. I don’t agree with it, 

but I respect it. I think it is reasonable one, a thoughtful one, but 

just say it. If that is what you want, a free for all, anybody with 

the money can put as much money as they want on the table, fine, 

but then don’t pretend that somehow you want to level the playing 

field. It is not a level playing field. 

That is what I am looking for, is reasonable, thoughtful ways to 

do it in reaction to a Supreme Court decision, which I disagree 

with, but it is not the first Court decision I have disagreed with 

and it won’t be the last, regardless of how the Court is made up. 

And to try to find ways to do so legally, thoughtfully, with transparency, that hopefully we can all find a way to work together. I 

don’t know that we can; and, if we can’t, I will be happy to do my 

best to then defeat those people who don’t agree with me. But that 

is what the system is all about. 

I hope that none of us have to hang a sign underneath our nameplates, Brought to You by Exxon. I won’t be hanging that particular nameplate, because I don’t think they would probably be donating a whole lot to me, but I do expect that maybe I will be 

brought to you in spite of Exxon. 

With that, Mr. Chairman, I yield back. 

The CHAIRMAN. I would like to thank the gentleman and clear 

the record: Mr. Capuano is not a terrible guy. 

Mr. Harper. 

Mr. HARPER. Thank you, Mr. Chairman. 

So far, the discussion of Citizens United has been filled with 

much rhetoric about catastrophe. There have been dire warnings 

about foreigners taking over our elections and corporations flooding 

our airways with political advertisements. What there has been relatively little discussion of or adherence to are actual facts. That is 

what I hope we will hear from our witnesses today and what I 

would like to talk about for a few minutes. 

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First, let’s dispense with the oft-used talking points that Citizens 

United changed a century of American law. The law that is a century old bars corporations and unions from contributing to candidates out of their general funds. That law still exists in full force 

today, and Citizens United did nothing to change that or disturb 

that. 

Next, let’s suspend with the talking points that the Citizens 

United decision will allow foreign corporations to spend without 

limit in our elections and that American elections will be 

bankrolled by America’s most powerful interests or, worse, by foreign entities. Existing statutes and regulations, undisturbed by 

Citizens United, address this. 

As we sit here today, it is illegal for any foreign national to directly or indirectly make contributions or expenditures in any 

American election or to direct the decisions of any corporation or 

union’s election-related activities. 

We have also heard talk about banning entities that employ lobbyists from making political expenditures. That seems to be saying 

that if you exercise your first amendment right to petition the government for a redress of grievances, then you must sacrifice your 

first amendment right to speak on political issues. 

We have heard that some corporations are so close to the government or look so much like the government that they should be 

treated like they are the government and not allowed to speak. Do 

not mistake the breathtaking scope of this claim. The examples 

cited include Wal-Mart and health insurers. And, of course, we 

have heard that the way to solve all of these problems is to use taxpayer funds to pay for congressional campaigns. 

All of these points lead in one direction, toward the government 

deciding who can speak, who can’t speak, and how much they can 

speak. That is exactly the position our Founders rejected when 

crafting the first amendment, and it is exactly the position the Supreme Court rejected in Citizens United. 

Another claim that we hear often these days is that Citizens 

United was an exercise in judicial activism. Ignoring words in the 

Constitution is judicial activism. Reading words into the Constitution that aren’t there is judicial activism. It is not judicial activism 

to decide that a law banning speech is invalid in the face of constitutional language that ‘‘Congress shall make no law restricting 

the freedom of speech.’’ 

It is obvious that many individuals, especially on the Democratic 

side, disagree with the Supreme Court’s decision, but to resort to 

misleading and overblown rhetoric does force us to wonder how 

much of the response is based on a policy disagreement and how 

much is based on a desire to manipulate the rules to benefit their 

own candidates. For example, they do not seem concerned about 

the ability of labor unions to spend freely to support or oppose candidates or show any interest in subjecting unions to the same kind 

of restrictions they would place on corporations. 

As we move toward considering legislation, I encourage this committee to take great care that its work is not designed to benefit 

either political party over the other. 

Thank you, and I reserve the balance of my time, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

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Mrs. Davis. 

Mrs. DAVIS of California. Thank you, Mr. Chairman. I really 

came to hear the panel. I appreciate you all being here. I didn’t realize my colleagues were reading speeches today. There are a few 

things I just wanted to mention then, since it looks like I am going 

to have to go lead my own subcommittee a little before 3 o’clock. 

I think the basic questions really are, where are the voters in 

this? I think what we always want to do is encourage involvement 

and not turn people away nor create apathy. So I think that is an 

issue that we want to think about as we do this and how we continue to engage them. 

The other issues, of course, are around disclaimers, which people 

have mentioned. What is the most efficient way that one can have 

a disclaimer? Because I think asking people to go to another Web 

site is probably not realistic. People are not going to do that. How 

much can you get into a disclaimer that is fair, that really represents what is happening? Do we need CEOs to be there saying, 

I approve this ad, and then you have a candidate perhaps, in some 

cases, doing the same. 

That leads to the other question of coordination. The courts 

threw out, as I understand it, any definitions in terms of coordination. Does that mean that elected officials can call up a CEO and 

say, hey, why don’t you guys go get an ad out for me? I would like 

that. What is happening then? Where is that line going to be 

drawn? I think that is a very important one. 

The other thing that has been mentioned in terms of unions, and 

I think that we need to look at the history in terms of the ways 

that some organizations, some unions have handled this, because 

they have created a wall of separation in some cases. Someone who 

chooses not to avail themselves of the benefits of the union and yet 

is paying for that representation can pay a minimal amount and 

their dollars do not go to PAC money. 

So we already have that. There are places that do that. I think 

that is worthy to take a look at and understand how that could 

happen. And, obviously, it will happen in terms of shareholders if 

we can come up with something that actually is meaningful and 

works. 

So I appreciate the time, and I certainly appreciate the panel 

being here. Thank you. 

The CHAIRMAN. Thank you. 

As I said earlier, I wanted everybody to get a chance to speak, 

and I didn’t want anybody’s voice not being heard, including all of 

yours. I thank you for being here. 

We would like to introduce the panel. 

Mr. Robert Lenhard. Mr. Lenhard is currently of counsel of Covington and Burling D.C. offices and a member of the firm’s Election 

and Political Law Practice Group. Prior to his work with the Covington and Burling law firm, he served as Chairman of the Federal 

Election Commission in 2007 and Vice Chairman in 2006. He also 

previously served as Associate General Counsel for the American 

Federation of State, County, and Municipal Employees. 

Judith A. Browne-Dianis. Ms. Browne-Dianis is currently the CoDirector of Advancement Project, a legal action group committed to 

racial justice and fighting for fair elections. Prior to her work with 

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the Advancement Project, Ms. Browne-Dianis worked with the 

NAACP Legal Defense and Education Fund, practicing law in the 

area of voting rights. 

Mary Wilson. Ms. Wilson is the President of the League of 

Women Voters. Ms. Wilson has been with the League of Women 

Voters for nearly 20 years in leadership positions at the national, 

State and local level. Prior to her work with the League, Ms. Wilson was counsel with the United States Department of Energy and 

the United States Equal Employment Opportunity Commission. 

Ms. Torres-Spelliscy is currently counsel with the Brennan Center for Justice Democracy Program. Ms. Torres-Spelliscy has 

worked to defend campaign finance and public funding laws in 

courts across the country. Prior to her work with the Brennan Center for Justice, Ms. Torres-Spelliscy was a staff member to Senator 

Durbin’s office and worked at the law firm of Arnold & Porter. 

Allison Hayward. Ms. Hayward is an Assistant Professor of Law 

at George Mason University School of Law where she teaches constitutional law, election law, ethics, and civil procedure. Prior to 

teaching at George Mason University, Ms. Hayward was counsel to 

former FEC Commissioner Bradley Smith; an associate at Wiley, 

Rein & Fielding in Washington, D.C.; and of counsel at Bell, 

McAndrews & Hiltachk in Sacramento, California—you California 

guys jumped in on that one. 

Steve Simpson. Steve Simpson is a senior attorney with the Institute for Justice, a public interest law firm dedicated to issues of 

civil liberties. Before coming to the institution, he spent 5 years as 

a litigator with the national law firm Sherman and Sterling. 

I thank all of you for being here today and for testifying. 

As I said, we were lax on the 5-minute rule up here. I will be 

lax on the 5-minute rule down there. But if you get a little too far 

out, you will see me squirming a little bit, and then I will ask you 

to sum up. And then there will be time for questions, so you will 

be able to get—anything you couldn’t get in in your statement, I 

am sure you will be able to answer a question and be able to filter 

that in, too. 

STATEMENTS OF ROBERT LENHARD, OF COUNSEL, COVINGTON & BURLING LLP; JUDITH A. BROWNE-DIANIS, CO-DIRECTOR, ADVANCEMENT PROJECT; MARY G. WILSON, PRESIDENT, LEAGUE OF WOMEN VOTERS; CIARA TORRESSPELLISCY, COUNSEL, BRENNAN CENTER FOR JUSTICE; ALLISON HAYWARD, ASSISTANT PROFESSOR OF LAW, GEORGE 

MASON UNIVERSITY SCHOOL OF LAW; AND STEVEN M. SIMPSON, SENIOR ATTORNEY, INSTITUTE FOR JUSTICE 

The CHAIRMAN. Mr. Lenhard. 

STATEMENT OF ROBERT LENHARD 

Mr. LENHARD. Thank you. 

Chairman Brady, Ranking Member Lungren, distinguished members of the committee, I want to thank you for the opportunity to 

come and testify today. 

As the chairman noted, I have practiced in the area of campaign 

finance law for close to 20 years, both providing advice and counsel 

to individuals, unions, corporations, and trade associations to try to 

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comply with the law, as well as serving as a regulator at the FEC 

trying to faithfully interpret and enforce the laws that Congress 

has passed. 

This has left me with a number of impressions of the Supreme 

Court’s decision in Citizens United and the implications of it; and 

while I have submitted a somewhat more lengthy written testimony, there are four points that I wanted to raise briefly at the beginning. 

The first is that I think the popular perception that this was a 

dramatic change in the law is correct. For as long as I have been 

alive, it has been illegal for corporations to make either contributions or expenditures to influence Federal elections. The Supreme 

Court’s decision in Citizens United changed that. The Court made 

clear that the first amendment protects the right of corporations to 

make expenditures expressly advocating the election or defeat of 

candidates so long as they do so independently of the candidates. 

The consequence of this is that there will be more corporate spending in elections, and we can all guess or debate how big we think 

that increase is going to be. 

I like to look at the problem a little differently. I would like to 

look at it just very briefly from the perspective of candidates, particularly candidates in very closely fought races. Because I think 

the decision, combined with existing law, makes those candidates 

particularly vulnerable now, and the reason for that is this: 

The Supreme Court has made clear that corporations can spend 

unlimited sums advocating the election or defeat of candidates, and 

yet the laws that regulate the collection of those funds, the sources 

of those funds vary dramatically between corporations and candidates. Corporations can raise those funds through commercial 

transactions and can spend as much as they have. Candidates are 

constrained by the contribution limits. They can raise no more than 

$2,400 from individuals, $5,000 for most PACs. And, consequently, 

my sense is that outside organizations that want to influence close 

elections can have a great effect by coming in and making very 

large ad buys very late in the race that are very negative, because 

my sense is that those kinds of ads can shave several percentage 

points of support off a candidate, and in a close election they can 

be decisive. 

The problem for a candidate is that if you face that kind of a situation, you are vulnerable in a number of ways. First off, you don’t 

know the money is coming. Your opponent, you can look at their 

campaign fund-raising reports and see how much they have raised, 

how much you have, and make some rational budgetary decisions. 

Money coming from outside groups is unexpected. It is like an ambush. 

The second is the amount of money you can raise is limited by 

the statute, and most of the people whom you can pick up the 

phone and call and ask for money, you have already asked and 

they have already given. So as you get to the very last days of a 

campaign, that money is very, very hard to raise. 

And the other thing the law does is, because the prohibition on 

coordination is still in place and because coordination includes ads 

spent at the request or suggestion of a candidate, you really can’t 

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ical parties and ask them for help. Because, if you do, the spending 

that follows is an illegal coordinated expenditure or in-kind contribution, which would be illegal, even in a post–Citizens United 

world. 

That is true even for the political parties. Political parties by 

statute have a very low amount of money which they can spend in 

coordination with the campaign. Under the Constitution, they can 

spend unlimited sums independently. But in terms of your reaching 

out and calling for help, there are very, very few places where you 

can make that call. 

There is a possibility to change that. It will be possible for Congress to repeal the limits on how much a party can spend in coordination with a campaign, and it would provide vulnerable candidates with someplace they can call and seek an influx of money 

to help balance or counterbalance money coming from outside, especially in the context of Citizens United. 

This has, I think, a number of advantages. One is that the 

money is hard money. It remains under the restrictions of McCainFeingold prohibiting the use of soft money because all that national 

party committee money is hard money, and the McCain-Feingold 

prohibitions remain in place. 

Second, because that money can be spent in coordination with a 

candidate, the candidate retains some control over the message. 

And one of the problems with outside spending is candidates do 

lose control of the themes that are driving voters in their elections. 

And, lastly—and it is a personal view—I think that it helps 

strengthen the parties, makes the parties more relevant, which I 

personally think would be a good thing. Other people may disagree, 

but I think it does make the parties more central and would provide candidates who are vulnerable—and I think candidates on 

both sides of the aisle are vulnerable to these outside spending 

ads—some way to try and help counterbalance that effect. 

The next thing I would like to talk about very briefly is disclosure. Congress has created really three different disclosure regimes 

that cover ads in this area. The first is the disclosure regime that 

exists within the Federal Election Commission. Entities that qualify as political committees face a relatively rigorous set of disclosure rules. They have to disclose all their receipts and disbursements, and they have to itemize where that money came from or 

where it went to if it exceeded very low limits—$200 from money 

coming in, $250 for money coming out. 

For organizations that do not qualify as political committees—political committees would include PACs as well as candidate committees—for organizations that don’t meet those definitions, there 

are really two different points at which they have to file reports 

with the FEC. The first is if they make independent expenditures, 

expressly advocating the election or defeat of candidates. The second is if they make electioneering communications, which was a 

term Congress created in McCain-Feingold (BCRA), which essentially covers ads that feature candidates and that run very close to 

an election—30 days with the primary, 60 days with the general— 

and target in the district in which the Member of the House or the 

Senate is running. 

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And there are more abbreviated disclosure forms that organizations that run those kinds of ads have to fill out essentially saying 

how much they spent, and in certain circumstances where that 

money came from. 

The third disclosure regime you have created covers 527 organizations. These are entities that operate under Section 527 of the 

Tax Code which covers entities trying to elect or defeat candidates. 

Congress requires the IRS administer a requirement that those 

kind of entities disclose where the money came from and what they 

spent it on to the degree that it reaches slightly higher thresholds—$500 for money coming in, $800 for money coming out. 

There are a number of exceptions to who has to file those reports 

with the IRS. And the IRS reports are all on the Internet. You can 

go right now and log in and call them up. 

The first is there are certain kinds of entities that are already 

reporting somewhere else, and they are exempt from the IRS rule. 

So, for example, if you are reporting to the FEC, you don’t have to 

also report to the IRS. If you are only involved in State elections 

and you report to the State, you don’t have to report to the IRS. 

But Congress’ goal there was to try and capture the 527 entities 

a number of years ago when they were quite controversial. 

There is an exception there which allows organizations not to 

disclose donors if they are willing to pay the tax, and the tax is 

steep. It is the highest corporate rate, which I think runs about 35 

percent now. But there have been a couple of groups over time that 

would rather pay the tax than disclose the source of their contributions. 

But as you think about this area of the law, there are really 

three different areas where you have created existing disclosure regimes. 

And the last thing I want to touch on very briefly is coordination, 

which remains a valid statutory provision. The Court has not 

struck down the statute. It is illegal to coordinate with campaigns. 

There is a great deal of back and forth about what the nuanced 

interpretations of that law is. The FEC has come up with regulations a couple of times. The courts have struck them down a couple 

of times. The FEC is in ongoing rulemaking right now as we speak 

trying to come to grips with that. But there is, I think, some amorphousness as to what that law exactly means today; and the question of what is coordination and what disclosure exists really, I 

think, are going to be the two areas of law post–Citizens United 

that are the most debated. 

Thank you very much. 

[The statement of Mr. Lenhard follows:] 

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The CHAIRMAN. Thank you. 

Ms. Browne-Dianis. 

STATEMENT OF JUDITH A. BROWNE-DIANIS 

Ms. BROWNE-DIANIS. Thank you, Chairman Brady and members 

of the committee. 

My name is Judith Browne-Dianis and I am Co-Director of Advancement Project, a civil rights organization that supports organized communities in their struggles to achieve universal opportunity in a just democracy. 

Almost since our inception Advancement Project has been involved in the important voting rights issues of our day, including 

issues related to the administration of elections, and the elimination of barriers to voting through our voter protection program. 

We have been advocating for the automatic restoration of voting 

rights of persons with felony convictions. We have represented communities of color in redistricting. And, lastly, we have initiated a 

campaign for a constitutional amendment for a right to vote. 

In addition to the written testimony I submitted, I would like to 

note a few things. 

First, I wanted to note the irony of having this discussion today 

about a case opening the door to the unbridled corporate influence 

on elections on the anniversary of the ratification of the 15th 

amendment, which happened on February 3, 1870, prohibiting the 

denial of the vote on the basis of race, color, or servitude. 

The Supreme Court’s decision in Citizens United clearly ushers 

in a new and unprecedented era of direct corporate wealth influence in our elections. This means that lower- and middle-income 

Americans, who compromise the clear and overwhelming majority 

of the country, will have much less of an opportunity to gain access 

to and interact with their political representatives or to help shape 

the debate in ways that serve the interests of the majority of Americans. 

But the wealth disparity in campaign finance is not just an issue 

of class. It is also an issue of race. Unfortunately, we still live in 

a country where race and wealth are intertwined such that people 

of color have accumulated less wealth; and, under this new regime, 

this corporate takeover of our democracy, the voices of people of 

color will be drowned out in the efforts to influence the outcomes 

of our elections. 

Given the historical and lingering racial disparities in wealth distribution and transfer caused by government and private actions 

over hundreds of years, coupled with the low representation of people of color in the management sphere of our Nation’s largest corporations and the overwhelmingly white demographic of major 

campaign contributors, it is easy to see why any campaign finance 

regime that allows and relies heavily upon private financial contributors, especially major corporations, would structurally exclude 

people of color from any significant degree of effective political influence. 

To alleviate the racially discriminatory burdens of money and 

wealth in the campaign finance system, Congress must act boldly 

to strengthen public financing in all Federal and State elections, 

including passing the Fair Elections Now Act, establishing direct 

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expenditure and electioneering limits on all Federal contracts, and 

requiring States that receive Federal election funds to amend their 

laws to require explicit shareholder and member approval for electioneering expenditures. 

What is also disconcerting about the Citizens United decision is 

the Supreme Court’s willingness to sell our democracy off to the 

highest corporate bidder in the name of free speech and participation while in other instances eviscerating protections for citizens— 

real, live people—to have their voices heard by voting. The Court 

applied the most restrictive standard of review in its consideration 

of whether the campaign finance statute issued in Citizens United 

ran afoul of the first amendment, but it is not so exacting when 

it comes to looking at barriers to voting. 

Specifically, in Citizens United, the Supreme Court determined 

that political speech of corporations was subject to strict scrutiny 

under the first amendment, requiring a compelling State interest 

to infringe upon that right. Yet when considering Indiana’s law requiring voter identification in the Crawford case, the Court departed from past precedent and used a less stringent standard of 

review where there was a clear burden on the opportunity to vote. 

It is outrageous that voting is not entitled to review under the most 

stringent protections that now apply to corporate influence in the 

outcomes of elections. 

As Justice Stevens rightly noted in his dissent, ‘‘While American 

democracy isn’t perfect, few outside the majority of this Court 

would have thought its flaws included a dearth of corporate money 

in politics.’’ 

To ensure vigorous protection of individual voting rights, Advancement Project urges Congress to enact House Joint Resolution 

28 to amend the Constitution to enshrine an express right to vote. 

We do not have a right to vote in this country, along with 11 other 

democracies and Iran and Libya. Without a Federal guarantee of 

the right to vote, the judiciary will continue to regard voting rights 

as something to be balanced while still claiming them as fundamental, and States will continue to use their vast control over this 

basic citizenship right in a patchwork quilt of arbitrary rules with 

vast consequences for close elections. 

Finally, Congress should realize that voting is the last frontier 

of our democracy. No matter how much money corporations may 

choose to spend to influence elections in the political debate in the 

wake of Citizens United, the one thing they will never be able to 

do—at least I hope—is to cast a ballot on Election Day. It is therefore incumbent upon Congress to ensure that all American citizens, 

especially traditionally disadvantaged and disenfranchised citizens 

of color, do not encounter needless roadblocks to registration and 

voting. To that end, Advancement Project urges Congress to enact 

the Protection Against Wrongful Voter Purges Act, which amends 

the NVRA and HAVA in a number of ways to strengthen protections against the wrongful removal of registered voters from the 

roles and the wrongful denial or delaying of voter registration applications. 

Advancement Project also recommends that Congress enact the 

Provisional Ballot Fairness in Counting Act of 2009, H.R. 3552, 

which would eliminate the wrong precinct rules that relates to 

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counting provisional ballots in fair elections. In particular, it would 

require that provisional ballots cast by a voter registered anywhere 

in the State be counted for President and Senate elections and ballots cast in correct congressional districts be counted for U.S. representatives. 

These two bills would provide immediate fixes to many of the perennial voter registration and list maintenance issues that have 

prevented eligible voters from becoming registered to vote and have 

their ballots counted since the 2000 elections. 

In the longer term, Congress should work to improve voter registration by enacting legislation that will require automatic registration of all eligible voters and permit Election Day registration 

to those who are not already registered. 

We clearly believe that in light of Citizens United we must 

strengthen our democracy by ensuring that individuals who are actually eligible to cast a ballot have an opportunity to do that. This 

is the only way to balance out the power corporations have been 

given. The one great equalizer, in our democracy is going into the 

election booth to cast that ballot. This must be a protected right in 

order to secure our democracy. 

Thank you very much. 

[The statement of Ms. Browne-Dianis follows:] 

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The CHAIRMAN. Thank you. 

Ms. Wilson. 

STATEMENT OF MARY G. WILSON 

Ms. WILSON. Thank you. 

Mr. Chairman, members of the committee, I am Mary Wilson, 

President of the League of Women Voters of the United States. I 

am very pleased to be here this afternoon to talk to you about the 

League’s support for legislation that would protect our electoral 

system in the wake of Citizens United v. FEC. 

There is one simple message that I hope the committee members 

will take away from the hearing this afternoon; and that is: because the 2010 elections are fast approaching, it is imperative for 

Congress to act swiftly to pass legislation and send to the President 

for signature legislation that governs corporate and union spending. That legislation must take effect immediately. Waiting until 

after the 2010 elections is simply not a viable option. 

The League of Women Voters of the United States has for the 

last 90 years been working to educate voters, register voters, and 

make sure that citizens have an opportunity to participate in our 

electoral process. I can tell you without a doubt that voters want 

election results that reflect their honestly held opinions, not results 

that derive from big money in elections. The voters depend on you, 

their elected representatives in Congress, to protect that open, honest government and a healthy democracy. 

The Court’s decision in Citizens United upends basic campaign 

finance law that Congress has carefully crafted over many years. 

This fundamental change—with perhaps more coming as the Court 

considers other cases—requires a strong response from Congress 

and the President. Now, I must say we do not expect that legislation that would be adopted this year can address every possible 

issue, but some basic voter protection can and must be enacted this 

year. 

There are numerous protections that could be enacted, and in my 

lengthy written statement there are a number of issues that I 

raise, but I want to talk today about enhanced disclosure. It is the 

most basic step toward protecting the role of the voter in making 

decisions in elections. 

The Citizens United decision appears to make it possible for corporations, and perhaps unions, to secretly use funds that they receive from another corporation to intervene in an election. This is 

not acceptable. Voters need information about the sources of funding for those charges and countercharges that always come during 

election campaigns. This is basic. It is one of the few ways by 

which a voter can test the accuracy of campaign statements. And 

I must say, indeed, the Court in Citizens United supported such requirements, as they said, ‘‘so that the people will be able to evaluate the arguments to which they are being subjected.’’ We couldn’t 

agree more with that statement. 

The League of Women Voters supports strong disclosure requirements for both those who receive election funds and those who provide such funds. For example, if corporation A receives significant 

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ture and the contribution from corporation B, and corporation B 

should disclose its contributions to corporation A. 

We believe that corporations should have the responsibility for 

providing disclosure to the public, through disclaimers and on the 

Internet, directly to their stockholders or members, as the case 

may be, and to the Federal Election Commission and the Securities 

and Exchange Commission. 

Disclaimers on public communications should be required for 

every corporation that provides funds above a certain amount either directly or indirectly to an election expenditure. The Supreme 

Court clearly approved of disclaimers in Citizens United and in fact 

remarked that, ‘‘With the advent of the Internet, prompt disclosure 

of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.’’ 

After providing enhanced disclosure, the next most important 

step for Congress is to do no further harm. A decision as far-reaching in its implications as Citizens United will, I am sure, provoke 

a number of proposals that we, the League of Women Voters, believe could make our election system and our government processes 

worse. 

Some, I am sure, will call for increasing or doing away with contribution limits to candidates and PACs. There will likely be calls 

to allow corporations and unions once again to make huge contributions to political parties, effectively repealing the soft money ban 

in BCRA. There may even be those who call for unlimited corporate 

and union contributions to candidates. 

On behalf of the League of Women Voters, I strongly urge you 

not to do any of these things. Each of these steps would increase 

corruption or the appearance of corruption. We need fair elections, 

not greater involvement of big money in elections and government. 

In conclusion, the League of Women Voters believes that the 

Court’s majority decision in Citizens United was fundamentally 

wrong and a tragic mistake, but this is the decision of the Court. 

Congress needs to respond now, recognizing its own authority and 

responsibility to uphold the Constitution and protect the voters. 

Fair and clean elections, determined by the votes of American citizens, should be at the center of our democracy. 

Thank you. 

[The statement of Ms. Wilson follows:] 

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The CHAIRMAN. Thank you. 

Ms. Torres-Spelliscy. 

STATEMENT OF CIARA TORRES-SPELLISCY 

Ms. TORRES-SPELLISCY. Good afternoon. Thank you for having 

me here today. 

I request that my report, ‘‘Corporate Campaign Spending: Giving 

Shareholders A Voice,’’ be entered into the record. 

The CHAIRMAN. Without objection, so ordered. 

Ms. TORRES-SPELLISCY. Thank you. 

[The information follows:] 

Ms. TORRES-SPELLISCY. We at the Brennan Center encourage 

Congress to respond to Citizens United in a holistic way. In the 

near future, corporate managers may be using shareholder money 

to play in politics. While other witnesses today may argue that 

nothing has changed because corporate money was already in politics, I would respond that while you may have been wading in special interest money up to your waist at this point, in the future you 

may be up to your eyeballs or over your head. 

Congress should act to ensure that voters and citizens remain 

the central actors in our elections. We suggest a range of reforms, 

including public financing, universal voter registration, and empowering shareholders. Today I am going to focus on shareholder 

empowerment. 

Citizens United permits corporate treasury funds to be spent on 

express advocacy for the first time in 63 years. The crux of the 

issue is this: When a corporate manager spends ‘‘corporate money’’ 

on politics, this includes other people’s money. There are two basic 

problems under the current law: a lack of consent and a lack of 

transparency. This is an important issue, because one out of every 

two American households is invested in a publicly traded company. 

So when I say that shareholders are not sufficiently protected, I 

am not talking about elites. I am talking about average Americans 

who rely on their investments for their current income and for 

their future retirements. 

When we were studying this issue at the Brennan Center, we 

had a chance to ask some big structural questions. One of the questions we asked was, if an investor wanted to know the total 

amount of political expenditures by a given corporation, would she 

be able to find that? And the answer in many cases is no. Second, 

if an investor happened to discover a particularly boneheaded, illadvised political expenditure, what recourse would that shareholder have? And the answer to that is there is very little legal recourse for a dissenting shareholder. 

In asking these big structural questions, we discovered that there 

are some very problematic gaps between the corporate law and the 

campaign finance law that leaves shareholders unprotected, and 

this problem has increased tenfold with Citizens United. 

The first problem is a lack of consent, and the big picture is this: 

Under current law, including the new developments in Citizens 

United, corporations can spend vast amounts of corporate treasury 

funds on politics, and they can do so without notifying their shareholders either before or after the fact, and they can do it without 

getting shareholder consent or authorization. 

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Then there is the related problem of a lack of transparency. It 

is extraordinarily difficult for shareholders to learn the total universe of political corporate spending. The short answer to why this 

is is that neither the Securities and Exchange Commission nor the 

Federal Election Commission require full disclosure directly to 

shareholders. So this led us to think about shareholder protections 

that Congress could enact. 

We conclude that legislation should have the following three 

prongs: Corporate managers should get shareholder authorization 

of all future political spending; two, companies should provide periodic notice of political spending to shareholders; and any unauthorized corporate political spending should trigger liability. We base 

this policy proposal in part on the British, who have had these protections for their shareholders since the year 2000. 

These reforms make sense from the point of view of the integrity 

of our capital markets. If a particular company is trying to game 

the system through political spending, then I think that the market 

and investors should know that. And these reforms also make good 

sense from the point of view of our democratic norms because we 

want consenting individuals at the center of our politics. 

I thank you for the opportunity to present today. 

[The statement of Ms. Torres-Spelliscy follows:] 

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The CHAIRMAN. Thank you. 

Ms. Hayward. 

STATEMENT OF ALLISON HAYWARD 

Ms. HAYWARD. Thank you, Mr. Chairman, Ranking Member Lungren, and the committee for providing me the opportunity to talk 

to you today. 

I have provided longer comments for the record, but what I want 

to do today is highlight a couple of things. 

Two points predominantly. First, that, in my view anyway, the 

Citizens United opinion is a sound opinion and one that falls within the progression of precedent that the Court has enunciated when 

it has been dealing with independent expenditures. Secondly, my 

skepticism that the consequences from Citizens United are going to 

be as dramatic as maybe some of the colleagues that I have on this 

panel would believe. 

First of all, Citizens United fits within the Court’s jurisprudence 

when you look particularly at what the Court has enunciated with 

regard to independent expenditures. 

When the Court was faced initially with the question of how to 

interpret the expenditure ban, it was in a test case teed up by a 

labor organization after the 1947 amendments to the Taft-Hartley 

Act, which, by the way, were added at the 11th hour in conference 

committee—not that any of you would be familiar with how that 

works—and without a lot of debate. Labor unions were fairly well 

convinced that it was going to be unconstitutional, and so were 

very comfortable with bringing a test case. 

The Court in U.S. v. CIO, which came down in 1948, wasn’t very 

helpful in providing constitutional guidance, because what they did 

is they looked at the law and said, whatever this law is intended 

to cover, it couldn’t possibly cover your newsletter because that 

would be unconstitutional. So, no case. 

A series of lower court cases, also test cases teed up by unions, 

did not go well for the Department of Justice either. In fact, the 

Department of Justice, through the late ’40s and early ’50s, adopted a policy of non-enforcement out of fear that enforcement of the 

Taft-Hartley amendment would be unconstitutional. And you don’t 

have to take my word for that. There is testimony provided by the 

Assistant Attorney General at the time in 1955 to a Senate committee where he says essentially that. He is very open about it. 

And the Court looks again at the law in the Autoworkers decision from 1956, I believe. And there Justice Frankfurter writing for 

the Court says, well, we are going to look at this again. It was a 

case involving some TV spots. The Autoworkers had a weekly television program, and some of these programs included advocacy for 

and against particular lawmakers, incumbents. And so a few episodes of this larger series were the subject of the prosecution, and 

the Court there said this is the kind of expenditure that the 

amendment was designed to address, but because the court below 

dismissed that question, we have to remand it back to the district 

court. On remand, they had a trial, and the jury acquitted the 

union of making an expenditure. 

So, as you can see, as the cases start to develop on the expenditure ban, especially with regard to labor organizations that were 

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bringing these challenges—I think it is interesting to note that corporations weren’t testing the law to the same degree of vigor and 

enthusiasm that unions were—you don’t get a very clear enunciation of the constitutionality of an expenditure ban. You get a 

‘‘sort-of-there-but-not-there’’ kind of cloud. And that cloud persists 

until I think Austin v. Chamber of Commerce. 

In the interim, you have other questions involving independent 

expenditures, however, where the court is very clear that expenditure prohibitions are not constitutional. You have the independent 

expenditure cap in Buckley v. Valeo. You have the independent expenditure cap in the publicly funded presidential general election, 

which is the NCPAC decision. 

And you have Justice Brennan—no conservative he—looking at 

the independent expenditure ban in MCFL and saying, okay—and 

this will sound familiar—whatever Congress meant to regulate, it 

wasn’t this. And so the legacy in MCFL is an exception to the expenditure ban when you have political nonprofits that are not 

using corporate money and there is no sense that there are shareholders whose money might be used against their will. 

Then you have the Austin case, which Citizens United expressly 

overrules. The Austin case looked at, using strict scrutiny, the 

Michigan law that prohibited a Chamber of Commerce from doing 

the same thing that MCFL wanted to do. You can kind of see 

where the Austin lawyers thought this might be the next step. 

And, applying strict scrutiny, the court held that in fact that was 

constitutional, but using reasoning that was controversial at the 

time and I think has been controversial for a lot of scholars since 

then. 

So when people look at Citizens United as a departure from doctrine, I am not so sure. The doctrine was never very well enunciated. It has been under a constitutional cloud. I think it is instructive that in the immediate aftermath of the passage of TaftHartley prosecutors were reluctant to prosecute on it because they 

didn’t want that bad precedent blowing up a tool that they were 

concerned might be helpful at least as a deterrent. 

I want to talk quickly about consequences in the wake of Citizens 

United. I don’t know what the consequences will be. I am not sure 

anyone else does either. Corporations do spend money in the context of politics now. They are just issue advocacy not express advocacy. Now they can say directly what they couldn’t before. 

Will that mean there is more spending or different scripts but 

the same spenders? I don’t know. But I just want to suggest that 

it is not a foregone conclusion that there will be a rush for additional money but simply that the people who are already spending 

might spend slightly differently. 

Moreover, I would like to note that States that allow corporate 

expenditures in their campaigns have not seen fit to alter their corporate law or other aspects of their State laws that regulate those 

corporations in any sort of novel or dramatic ways and seem to be 

fairly comfortable with corporations and unions as participants in 

political dialogues. 

Briefly—I think this has been mentioned, but I will say it from 

the panel—the foreign national ban remains the law. That is to say 

that foreign nationals cannot make contributions or expenditures 

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in any elections—Federal, State or local. Congress has exercised its 

authority in matters of foreign affairs and foreign policy to provide 

for a broad ban in the law. That has been interpreted by the FEC 

to include foreign national individuals and their ability to make decisions in fund raising. It might be that it is a comfort to some for 

that interpretation to be codified. I don’t suggest that as my suggestion, but if there is a felt need to clarify or reiterate that ban, 

that would be one way to go. 

On shareholder democracy, just real quickly. Shareholder democracy isn’t very democratic if you have worked with corporations. 

For one, not all corporations are alike. I don’t think anyone here 

is worried about the closely held corporation where you have five 

shareholders who also happen to be the same people who are officers and the same people who are directors. The corporate roster 

in any State is filled with those. These are people who are incorporating so that they can have a fictitious business name to do 

business so that they can sign leases in the name of a fictitious 

person, not in the personal name of the individual business person. 

Let’s set those aside because I don’t think those are what people 

are worried about. 

When you have large corporations in a shareholder democracy, 

you have a couple of qualities in voting that I just want to alert 

you to; and the recommendation I would have is that you should 

find a corporate scholar to help you along the road if you feel like 

this is the place you want to go. 

In corporate voting, you can buy votes. It is perfectly legal. You 

can enforce a contract to buy and sell your shareholder vote. You 

can engage—or hedge funds can engage, not you personally or me 

personally—in what is called empty voting, where you borrow the 

voting rights for somebody else. So you can vote in a way that is 

insincere to the corporation’s interests because you have another 

investment interest over here. It is controversial, but it is an aspect 

of corporate governance today that you should know about. So you 

will want to tread carefully when you start looking at the shareholder feedback loop. 

Another question that came up in my mind, just listening to my 

fellow panelists, was, suppose the shareholder is themselves a corporation or a labor organization. Do you have to have a second-tier 

approval process, and how attenuated does that chain need to be 

before you feel confident that there is consent? It may be something that you can’t satisfy. 

So, in closing, Congress has latitude in many areas of regulation 

that may relate to this. I just want to point out that Congress has 

latitude in setting the rules for who can contract with the Federal 

Government. So instead of looking at this as a regulation of political activity, you might look at it as a regulation of government 

contracting. Congress, of course, has great latitude in how it structures its ethics rules. You might look at tax incentives as another 

way to go. 

And then, finally, I would like to endorse my fellow panelist Bob 

Lenhard’s proposal about raising or eliminating the coordinated expenditure restrictions that apply to political parties. I think that 

would be a very healthy thing to do. 

Thank you. 

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[The statement of Ms. Hayward follows:] 

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The CHAIRMAN. Thank you. 

Mr. Simpson. 

STATEMENT OF STEVEN M. SIMPSON 

Mr. SIMPSON. Mr. Chairman, Ranking Member Lungren, and 

members of the committee, thank you very much for inviting me 

to testify here today. 

The Supreme Court’s decision in Citizens United is one of the 

most important first amendment decisions in a generation. It arose 

because the campaign finance laws prevented a corporation from 

disseminating a film and even threatened to regulate the publishing and dissemination of books. As the Court stated in the decision, ‘‘If the first amendment has any force, it prohibits Congress 

from fining or jailing citizens or associations of citizens for simply 

engaging in political speech.’’ 

Critics have lodged a number of wild claims about the decision, 

but in assessing its impact we should follow the Court’s own wise 

counsel and not let rhetoric obscure reality. Toward that end, I 

would like to address some of the more prominent myths that have 

been offered about the Citizens United decision. 

First is the idea that under Citizens United corporations will be 

able to buy elections. Now, a corporation can no more buy an election with political advertising than they can buy market share with 

commercial advertising. If they could, we would all be driving 

American cars and drinking new Coke, Michael Huffington would 

have been voted Senator a long time ago, Ross Perot would have 

been voted President, John Corzine would not have lost in New 

Jersey. The list goes on and on. 

While it is certainly true that money is necessary to win a campaign, that simply does not translate into victory for the biggest 

spender. Indeed, as Professor Hayward made clear, 26 States allow 

corporations to make independent expenditures in elections. They 

have not become hotbeds of corruption, nor have corporations been 

able to buy their elections. 

But the claim that anyone can buy an election, whether a corporation or anyone else spending money on advertising in an election, is not only false, it contradicts the very idea of our constitutional republic. As the Court said in Citizens United, ‘‘The first 

amendment confirms the freedom to think for ourselves.’’ In short, 

corporate spending does not buy elections anymore than anyone 

else’s spending does. It buys speech that seeks to persuade. For 

those who don’t agree with that speech, the Court provided the answer in Citizens United, ‘‘It is our law and our tradition that more 

speech, not less, is the governing rule.’’ 

The second myth I would like to address is that corporations, unlike people, have no free speech rights. Now, it is true certainly 

that corporations are not people, but they are made up of people 

just like any other association that exists today. Indeed, concerns 

about corporate speech obscure the fact that campaign finance laws 

in essence treat all groups basically the same way. 

A case in point is a case called SpeechNow v. FEC, a case that 

I am now litigating along with the Center for Competitive Politics 

in the D.C. circuit. SpeechNow is an unincorporated association. It 

is a group of individuals who wish to get together, exercise their 

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right of association, and spend their money advocating the election 

or defeat of candidates. 

The campaign finance laws treat this group, this unincorporated 

association, essentially exactly the same as a corporation. To speak, 

they must become a political committee, and they must comply 

with the same onerous burdens that the Supreme Court just struck 

down as they apply to corporations. Neither the FEC nor campaign 

finance reform groups have said that SpeechNow.org should be relieved of these burdens because it is not a corporation. And critics 

have responded that the laws that were struck down in Citizens 

United don’t actually prevent anyone from speaking, they merely 

regulate the funding of that speech. 

But this ignores the very real burdens of political committee status that the Supreme Court highlighted, excuse me, in the Citizens 

United decision. For instance, in a recent study conducted by Dr. 

Jeffrey Milyo of the University of Missouri on behalf of my organization, the Institute for Justice, 255 individuals were asked to comply with the regulations that apply to ballot issue committees in 

the States. On average they managed to correctly complete just 41 

percent of the tasks that they were asked to complete. After the exercise many expressed frustration, saying things like this was 

worse than the IRS and a person needs a lawyer to do this correctly. 

It is no exaggeration to say that the campaign finance laws often 

rival the Tax Code in their complexity. Indeed, during the oral argument in the Speech. Now in this case I had the surreal experience of debating with several judges on the D.C. Circuit as to 

whether the tax laws are more or less burdensome than the campaign finance laws. Now, reasonable minds can disagree on that 

question, but it ought not be debatable that if Americans come to 

regard speaking out about political elections, as they do filing their 

income tax returns, far fewer of them would bother to try to speak 

out at all. 

In conclusion, in today’s world money and organization are not 

merely important to political speech, they are absolutely indispensable to it. As Chief Justice Roberts said in his concurring opinion 

in the Citizens United decision, the first amendment protects more 

than just the individual on a soap box and the lonely pamphleteer. 

The first amendment’s protections apply whether the speaker is an 

individual or a group, whether he uses a quill pen, a printing 

press, or the Internet. That the Supreme Court understands this 

is not cause for concern, it ought to be cause for celebration. 

Thank you. 

[The statement of Mr. Simpson follows:] 

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The CHAIRMAN. Thank you and thank all of you. We will now 

open up for questions, and I would like to start and just ask all 

of you the same exact question if you would just respond briefly. 

I am not an expert on constitutional law, but I am a union member and a union official for the last 45 years. I know the difference 

between individuals who join unions and individuals who purchase 

stocks. Unions are membership organizations, union leadership 

democratically elected and held accountable to its members in regularly scheduled elections. Unions are nonprofit organizations 

bringing together individuals, individual interests for the purpose 

of increasing bargaining power and effectively petitioning government. Corporations have shareholders. Neither boards nor their executive management teams are democratically elected. They are 

constituated to accumulate wealth in the form of a shareholder 

value rather than represent the board interest of the shareholders 

and petition their government. 

Does this distinction between the unions and their corporation 

merit different treatments for unions and corporations in America, 

election law and the election law in the wake of citizen alliance? 

In other words, should unions and corporations be treated differently? 

Start with you, sir. 

Mr. LENHARD. I guess the—— 

The CHAIRMAN. Because they are lumped in in this decision and 

I would like to know. 

Mr. LENHARD. The easy answer is I don’t know. Having been 

both a member of a union and a shareholder, I found the democratic experience in the union far preferable to that of being a 

shareholder. I think that there are a number of procedural protections that union members have, both in terms of the—and I actually practiced in this area of law for a while early in my career. 

The courts and in some cases legislatures have given people who 

are covered by collective bargaining agreements the right to dissent 

and to reduce the amount of money they pay the union by the proportion of the union’s expenditures that are attributable to political 

activity, and it is not just campaign contributions, a lot of political 

activity. And people do actively use that right and they do pay reduced sums. And they—so there is, I think, a reasonably robust 

process whereby people who want to both get information about the 

money that is spent on political activities and the ability to get a 

portion of that back. 

The same is far from true in the corporate setting, where shareholders have a very limited set of rights to vote for the board, approve auditors, and particular transactions. 

My sense is that the—and the other factor in this—is the enormous disparity in wealth available to unions and available to corporations make them very, very different entities. Unions are 

viewed as more politically powerful because the members are very 

active and volunteer their time. But the size of resources the 

unions have is really tiny in comparison to that of corporations. 

The CHAIRMAN. Thank you. Ms. Dianis. 

Ms. DIANIS. I am going with his answer. I have nothing to add 

to that. I think that the point of the activity and involvement of 

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tinction and that they should be treated differently because of that. 

Again, the point about the activity of union members and their political activity brings it also different from the shareholder who 

gets a piece of mail every once in a while and asking basically for 

their proxy instead of their real involvement. 

The CHAIRMAN. Ms. Wilson. 

Ms. WILSON. I certainly think that you, Mr. Chairman, summed 

up the differences between unions and corporations in terms of 

their governance, and I think that is a very key point in the discussion. But I also would like to look at it from the voters’ perspective, 

and from the voters’ perspective I believe that the disclosure and 

disclaimer requirements, whether or not it is a union-paid advertisement or a corporation-paid advertisement, may indeed look very 

similar. 

Thank you. 

The CHAIRMAN. Ms. Spelliscy. 

Ms. TORRES-SPELLISCY. To be honest, the Brennan Center has 

not looked at the union question, but we love a good hypothetical. 

And if the committee is interested in that particular question, I 

would be happy to get my cracker jack lawyers on that question. 

[The information follows:] 

The CHAIRMAN. That is why I asked the question because I am 

interested in it, and I appreciate your help. 

Ms. Hayward. 

Ms. HAYWARD. I have not written anything formally on this but 

I have thought about it a lot in my research of the history of the 

law, because it does seem to me that the reason labor unions and 

corporations are treated identically in the law has much more to 

do with the political context and a little tit-for-tat game going on 

between Democrats in the White House and Republicans in—at 

least after the 1946 election controlled both Houses of Congress 

with fairly great majorities. And they are different in such different 

ways that I don’t think that you can say that one deserves less regulation than the other. They deserve different tailored regulations 

to address the fact that labor unions are membership organizations 

with a great deal of job basis power over their members where publicly held corporations have this very dispersed and dissolute relationship with hundreds of thousands of people that any individual 

shareholder may or may not care about very much, especially if he 

owns the shares sort of indirectly through a fund. 

I think maybe you could make an analogy between a local labor 

organization and a small closely held corporation and the kinds of 

tensions you would have there, but even there I think the differences are much greater than the similarities. That is in fact an 

area of legislation that would take a lot of hard original thinking 

to think about the differences in governance and oversight and the 

relationship between the decision makers and the rank and file of 

the shareholders. And it would be a great thing to do because it 

hasn’t been done, and I think that is just more evidence that the 

law that we have is not closely tailored. 

The CHAIRMAN. Mr. Simpson. 

Mr. SIMPSON. As long as association with either a union or a corporation is voluntary then for political speech purposes they should 

be treated identically. Now that has not always been the case. 

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Under many State laws members of unions and even nonmembers 

in certain occupations have to pay dues to the union and the Supreme Court has dealt with that by effectively requiring the unions 

to allow them to opt out of paying for political speech. I think that 

is appropriate. 

One thing though that is lost in this debate about corporations 

is that shareholders buy their stock voluntarily. Indeed, with publicly traded corporations it is probably easier to disassociate yourself from a corporation than it is for any other entity ever devised 

by the mind of man. You can go on the Internet, you can sell your 

stock in 5 minutes. That is not true of any government I am aware 

of, it is not true of unions, and the idea that shareholders who buy 

shares of stock really want to manage the corporation and make 

decisions about what the corporation spends its money on is 

counterintuitive, it is counterfactual. That is why they are shareholders, because they don’t want to run the corporation. 

The CHAIRMAN. Thank you. It is the selling of the stocks that 

is—it is not the troubling part as to who is buying them. But just 

for the record, every union, any expenditure, whether it comes from 

the general treasury, from a political action fund gets voted on by 

the members. 

Mr. SIMPSON. I am sorry. 

The CHAIRMAN. Every union, every union that has an expenditure, whether it may be from the general treasury or from their political action fund, gets voted by the members or ratified by the 

members, everyone, not by proxy. You have to be there. They can 

vote yes or they can vote no. So they are going to vote on that. 

But I appreciate that and I appreciate your answers and thank 

you for your testimony today. 

Mr. Lungren. 

Mr. LUNGREN. I would just like to offer a hypothetical to all of 

you. Let’s say on election day at 5:00, polls are going to close at 

8:00, an organization has robo calls going to the households of a 

single party in which they indicate that the results are in in the 

East and the Midwest and the candidate of the other party has 

succeeded and it will make no difference whatsoever in the vote 

turnout in California. This goes only to the party that they are suggesting is losing the presidential election, it goes on at 5:00; that 

is, with 3 hours left in the voting. Is that kind of a communication 

the kind of communication that should be controlled, required disclosure, or does it depend on the organization? 

Mr. Lenhard. 

Mr. LENHARD. I guess that ultimately is a question for you to decide. Currently under the statute I think it would be. I think that 

you would have to provide some sort of disclaimer. There is a bit 

of a struggle at the FEC over whether certain kinds of media, of 

communication, robo calls being one, polling being another, would 

require a disclaimer, but I think that the state of the law now is 

that it would. 

Mr. LUNGREN. The interesting thing that happened is, that happened in my election. In fact, I was the recipient of one of those 

calls and we were told that because they did not specifically advocate it was merely a news report, that it did not—was not required 

to be reported. And I guess what I am just trying to point out is 

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that it is very difficult to kind of control the language because they 

didn’t advocate one way or the other. Now obviously it was a suppression call. It was only to people registered in my party to try 

to suppress the vote in our elections, and we had no recourse. It 

is kind of interesting how those things can kind of go on and, you 

know, technically it is true, they didn’t say vote for someone, but 

I think we know what the purpose was. The difficulty is for the 

government then to come in and to try and figure out what the motivation was and then punish you or say, no, we are not going to 

punish you, I think is giving government a tremendous amount of 

power that I don’t want them to have, even though it was against 

me and the candidates that I supported. 

At least three of the panelists here today have advocated taxpayer financing of congressional campaigns. Ms. Torres-Spelliscy, 

you did specifically and your organization does. What do you say 

about taxpayers who disagree? For instance, we have the scenario 

now where you have—where usually—it used to be that major candidates for the presidency opted for the public financing, but we 

have had a guy named Lyndon LaRouche who goes around with 

public financing even from—I think at one point in time from a 

prison cell for President. I didn’t want to see money used for that 

purpose. Of course that was the voluntary system. But as I understand those who are advocating this, you are not talking about a 

voluntary system that is only based on taxpayers’ contributions, 

you are talking about from general revenues. 

Wouldn’t the taxpayer be put in the same position as the stockholder that you have talked about but even in a more difficult situation in that you really wouldn’t have any more recourse because 

the Federal Government was making this money available with 

candidates with whom you may have a very, very strong disagreement? 

Ms. TORRES-SPELLISCY. Well, as you said, it really depends on 

how you structure FENA. The way that the presidential public financing system has always worked is it is paid for by a taxpayer 

checkoff. 

Mr. LUNGREN. Right. Do you assume that there is sufficient support for that, for public financing for all congressional campaigns, 

all elections, that that would be sufficient funding? 

Ms. TORRES-SPELLISCY. It could be if you had a good public education campaign and people realized the difference between a privately funded candidate and a clean elections candidate. 

Mr. LUNGREN. Do all of you agree that at least one of the decisions or the fundamental premises of Buckley v. Valeo is that 

money is speech, at least as defined as someone’s ability to express 

themselves, to use it on behalf of themselves if they run for office 

or to use it on behalf of expressing a political position? Does anybody disagree with that being a fundamental part of Buckley v. 

Valeo? 

Mr. LENHARD. I guess if I could—I mean, I think I would frame 

it somewhat differently. I think money is a means by which one 

projects one’s speech, amplifies one’s speech beyond the sound of 

your voice. 

Mr. LUNGREN. Let me put it this way, isn’t one of the conclusions 

of that interpretation of the Constitution that, for instance, Steve 

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Forbes was unable to contribute whatever amount of money he 

wanted to to Jack Kemp when Jack Kemp ran for President in 

1988, and short of that, then Steve Forbes became a candidate. 

Maybe it is a rhetorical question, but I will ask it anyway: Why 

was the country better served by having Steve Forbes who, while 

he supported the same positions Jack Kemp did, was certainly not 

as good a presidential candidate, why is the country better off that 

the person who is clearly not a viable presidential candidate is able 

to spend his money, as long as he is the candidate, but somehow 

we corrupt the system if he gave the money to a Jack Kemp, who 

has the same ideas but would have been a much better candidate 

but didn’t have the resources? That is a question I have tried to 

figure out in my own mind. Maybe I am biased on it because I happened to be part of Jack’s campaign and I thought it was a terrible 

tragedy that he wasn’t able to sustain it. But sometimes I just wonder whether we are looking for answers to the question of corruption in the wrong places. I just—I find it hard to believe that we 

are better off with Jack Kemp not being able to compete in that 

campaign because frankly we couldn’t raise the money for it and 

Steve Forbes, a genuinely nice man who had the same views, could 

use his own money but was not nearly as good a candidate. Those 

are the kinds of real life consequences that would bother me when 

we theoretically think about how we are going to sort of set the 

system up so that we make sure the corruption is not here. And 

yet we still have the first amendment which we have always said 

allows you to use your money to express your point of view. 

A rhetorical question, but it is one that I grapple with all the 

time in looking at these issues. I respect all of your opinions here, 

I may disagree with some of them, but these are thorny issues that 

are important issues because it really does go to the question of 

how do we have earnest and active and robust debate and maybe 

disclosure? 

And lastly, I would just say I would hope that others would think 

about the idea of allowing more cooperation and coordination from 

the parties to the candidates, because frankly I think that is one 

of the answers to these other issues that are out there. I would 

rather be held responsible for my views in my campaign. I would 

rather my party be held responsible. And if we could work together, then the people know what my message is and what my 

party’s message is. If we coordinate it, that is so much the better. 

Anyway, thank you for your suggestions there. Thank you, Mr. 

Chairman. 

The CHAIRMAN. I thank the gentleman. 

Ms. Lofgren. 

Ms. LOFGREN. Well, thank you, Mr. Chairman. And Mr. Lungren, 

you and I don’t agree on everything but I think the idea that parties are so constrained is really something we ought to talk further 

about, because I am not sure that is good for the American system 

at all. And I am not exactly sure how to deal with it, but I think 

it deserves some future discussion and I think maybe we can do 

something together on that. 

Ms. Torres, I particularly found your testimony helpful because 

I have been thinking, clearly we have got some work to do, I think, 

on the disclosure end and several of the witnesses mentioned that, 

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and I think we need to think through what that is exactly. I mean 

the Court mentioned the immediacy of technology. And you can— 

if you make a contribution, there is not a reason in the world you 

can’t have the fact of that contribution on your Web site within the 

hour. I mean it is easy to do. And so since it is easy to do, maybe 

there ought to be a requirement to do that. 

But I am looking at your testimony. On page 4 you say since 

shareholder money is at stake, shareholders deserve more say 

about whether that money is spent on political contributions and 

expenditures, and note that there is a process in Britain to do that. 

But Britain doesn’t have a first amendment and I am looking at 

the Court’s opinion, Justice Kennedy, on page 55 of the Supreme 

Court draft. At the end of that paragraph he says, the first amendment protects political speech and disclosure permits citizens and 

shareholders to react to the speech of corporate entities and shareholders—of corporate entities in a proper way. And from that I 

think he refers to the first sentence in that same paragraph about 

corporate democracy being the proper way. And that makes me 

think about really that the Court is envisioning a reaction rather 

than a prospective approval, although they don’t say so directly. 

And it also makes me think that we should examine corporate democracy, because if they are saying that is where shareholder remedies are if they are agreed then we ought to look at what can a 

shareholder do retroactively, and the answer in most cases is nothing. 

And so I am wondering in your opinion if we enhance disclosure, 

so for example, I am Good Smelling Soap Corporation and I decide 

that I am going to spend, you know, 3 percent of my profit this 

year campaigning against Mr. Capuano because I think that he is 

dirty and I am a soap guy, right? I am just making this up as I 

go along. My shareholders are aggrieved, but what can they do 

about it? Nothing. If I engage in activity that triggers disclosure, 

should then shareholders have additional rights under corporate 

democracy to hold officers and directors accountable in some way 

for profitability or for failure to disclose or for other things? Would 

that be a burden on the First Amendment in your judgment? 

Ms. TORRES-SPELLISCY. I do not think that giving shareholders 

the ability to consent to political expenditures is implicated by the 

First Amendment. I think this is a question of using other people’s 

money in a way in which they have had no say. And so I think it 

is good corporate governance and it is good for our democracy to 

change the securities laws to give shareholders more meaningful 

rights. 

What I find so interesting about Kennedy’s opinion is that he 

seems to believe that shareholders already have these rights. 

Ms. LOFGREN. That is right. 

Ms. TORRES-SPELLISCY. And I think that is an invitation, an 

opening for Congress, that he is not against shareholders exercising control over management’s spending in politics. 

Ms. LOFGREN. Let me ask you this, the business judgment doctrine really protects officers, and you reference that in your testimony, from any kind of breach obligation, but those business judgments tend to—they relate to running a business, whereas political 

speech generally has been held to be in a different sphere. Should 

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we directly repeal or modify the business judgment doctrine when 

it comes to speech that triggers disclosure? And again, would that, 

do you think, be an improper burden on exercise of First Amendment rights by the corporation? 

Ms. TORRES-SPELLISCY. Yeah—I mean, business judgment is usually—it is something that State courts use to be deferential to how 

corporate managers manage the day-to-day workings of a business. 

So I actually haven’t wrapped my head around how Congress could 

change the business judgment rule, which tends to be exercised by 

State court judges. 

Ms. LOFGREN. That goes to my next question, if I may, because 

we do generally have the ability to regulate corporations under the 

Commerce Clause. We regulate to the Securities and Exchange 

Commission. So clearly it seems to me we would have the ability 

to create certain Federal requirements, at least for those companies 

that are regulated by the Securities and Exchange Commission. 

Ms. Hayward has mentioned several times closely held corporations, and the Court itself criticized the regulatory scheme as not 

making distinctions between different corporate entities, and I 

think there is some truth to some of that. For example, if the corporation is just me, obviously I should not have to go ask myself 

permission. 

On the other hand, I represent Silicon Valley and there are plenty of people who are working for a corporation that hasn’t gone 

public yet, but their entire future net worth is in stock options or 

stock that they can’t sell because it is not publicly traded. In fact, 

they may be at a greater disadvantage than a publicly traded corporation for somebody who engages in speech and puts everything 

they worked for at jeopardy. 

And so I am wondering in terms of litigation, the Cort v. Ash 

case that you reference, again it is not a Federal issue, but it could 

become a Federal issue, whether there is a need to provide in cases 

where activity triggers disclosure some remedy for shareholders if 

shares are damaged in some way or the trademark is diluted. I am 

not sure what all the details would be—and that would give—I am 

thinking aloud, but that would give protection to shareholders even 

when there has not been an IPO, and arguably whether you are 

even more at risk because you can’t sell your stock. And yet for the 

corporation that has one shareholder, you obviously would never 

sue yourself, so it wouldn’t invite those kinds of abuses. Do you 

think that would run afoul of the First Amendment? 

Ms. TORRES-SPELLISCY. I do not. And Cort v. Ash is a very interesting case because this is when the corporate ban was in effect 

and a corporation arguably violated the ban, a shareholder tried to 

sue under FECA and the Court said no, there is not a private right 

of action under FECA. Even though the corporation is violating 

FECA, you as a shareholder don’t have a right to enforce that. And 

so part of what you might look at is where do you create those private rights of action. 

Ms. LOFGREN. And only when the—I am just thinking when you 

engage activity that triggers a new disclosure activity, then you 

might have a different set of rules to protect shareholders. I will 

just ask one more question because I know others want to speak. 

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On Sub S corporations and some others, I am looking at will you 

spend—when we give benefits to corporations, tax benefits, and 

again this is a question do you think this would be an unfair burden on First Amendment exercise. If a certain percentage of your 

revenue or your value is expended in activity that must—that triggers disclosure, would that that be—we might then question is this 

really a corporation that deserves the benefit of the corporate code 

or is it really just a shell to get tax benefits for political speech and 

whether at some level you say okay, we are going to trigger, you 

are no longer really legitimately a corporation. You are really just 

trying to get the taxpayers to subsidize your political activity and 

we are not going to give you those corporate tax benefits anymore. 

Do you think that would be an unfair burden on the First Amendment? 

Ms. TORRES-SPELLISCY. I think the difficulty, and one of the proposals I have seen floating around, is basically you would say in, 

say, the State of Delaware, if you conduct independent expenditures then you cannot get a Delaware corporate charter. I think 

that probably goes too far and you—— 

Ms. LOFGREN. I think so, too. 

Ms. TORRES-SPELLISCY. Yes, because Citizens United is Citizens 

United, it says that corporations have free speech rights and so I 

don’t think you could take that away—— 

Ms. LOFGREN. What I am asking you is not do they have free 

speech rights, they do, the Court already told us that. The question 

is do they have tax benefit rights? And at what point does that— 

we are giving corporations tax benefits for a public purpose, which 

is to engage in economic activity and that creates wealth for the 

Nation and the like. We are not really giving those tax benefits to 

run political campaigns. Where is that line drawn and does that 

run afoul of the First Amendment? 

TORRES-SPELLISCY. Under IRC, I think it is 162(e), contributions 

and other political expenditures are already not tax deductible for 

corporations. So the Tax Code does speak to some of those issues. 

Ms. LOFGREN. But the independent expenditures, we are in a 

whole new world. 

Ms. TORRES-SPELLISCY. Yes. 

Ms. LOFGREN. Mr. Chairman, thank you for your indulgence in 

letting me ask these questions. 

The CHAIRMAN. Thank you. We are going to have votes at 4 

o’clock. They are the last votes of the day. I would like to try to 

get this done and adjourn rather than bring everybody back here 

again. I mean, I will come back if you will come back, but sometimes my colleagues don’t always join us. So if they would be a little short I would appreciate you getting to the pertinent questions. 

Mr. McCarthy. 

Mr. MCCARTHY. Before I begin, Mr. Chairman, I want to thank 

you in the style in which you are holding this hearing. The freedom 

that you allowed the speakers to go longer is very productive for 

all of us, even on the questioning. I understand we are going to 

have quite a few hearings on this as we go forward. And I appreciate the style in which you are holding it. 

If we are going to be studying this, let’s analyze what the case 

actually said and, Ms. Hayward, you said the Court came down 

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and it didn’t change the status of the corporation under the First 

Amendment but it allowed a corporation and a union to change 

from an issue ad to a direct ad. So maybe you could explain a little 

of that so we are all on the same page. 

Ms. HAYWARD. Okay, the way I see it, what Citizens United did 

was say explicitly what the Court had been sort of hinting around 

in a series of cases, Austin being the notable exception, that it was 

focusing more on the independent expenditure quality of activity 

than the identity of the speaker. And so independent expenditures 

received full First Amendment protection, which means they get 

strict scrutiny and States have to have a compelling state interest 

and use the least restrictive means to restrict independent expenditures. The wholesale corporate expenditure ban doesn’t fly under 

that test. I think that is a reasonable continuation from prior cases. 

Mr. MCCARTHY. If I could be quick. So an issue ad from a direct 

ad, would I be wrong in saying it is changing three words at the 

end of the ad to calling somebody to either voting for or opposing? 

Ms. HAYWARD. Quite possibly. 

Mr. MCCARTHY. And there would be the timing, either 60–day or 

up to the election. Is that why you come to the conclusion, Mr. 

Simpson, that there won’t be that much more money different in 

this campaign spent by corporations? Because they can already 

spend it, it is the timing of when you spend it or a union in that 

matter? 

Mr. SIMPSON. That is a large part of the reason, yes. The other 

part is that we can look to States like California and other States 

and it is not as though corporate speech has overtaken their elections. Before we decide that the sky is falling from this, we might 

want to actually look at the States that allow corporate independent expenditures and these other things. And I think if we do 

we will see that corporations have not spent jillions of dollars in 

those States. 

Mr. MCCARTHY. I come from California and they allow it in the 

State house. President Obama was a representative in Illinois and 

they allowed it. Chris Van Hollen from Maryland, they allowed it 

as well. So we have seen this play. 

I want to go back to Mr. Lenhard. With this Court case, can a 

corporation give money to a Member of Congress. Has that changed 

at all? 

Mr. LENHARD. No, it has not. 

Mr. MCCARTHY. You said, I think it was in the questioning with 

Mr. Lungren—no, no, with Chairman Brady—that between a union 

and a corporation you were concerned because the corporations 

were so much larger in scope playing politically? 

Mr. LENHARD. No, I think what I was trying to say is that it was 

possible to distinguish them because the potential pool of resources 

was so much larger. 

Mr. MCCARTHY. Do you know off the top of your head who has 

the largest political PAC in the country, who is the most active? 

Mr. LENHARD. Yeah, the largest political PAC—I am not sure. 

Certainly the labor—the largest—labor union PACs are among the 

largest PACs in the country. 

Mr. MCCARTHY. Does their money go 50/50 both parties? 

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Mr. LENHARD. No, I think that they give more money to Democrats than Republicans. I am not sure if you looked at overall, the 

accumulation of all PAC spending. My guess is that if you looked 

at all PAC spending it probably went to whichever party was in the 

majority. 

Mr. MCCARTHY. I just checked OpenSecrets, and you are right. 

Operating Engineers are the largest, which is a union, they do 80 

percent. The second is a corporation, AT&T, they do 50/50. And the 

third largest is International Brotherhood, a union, and they do 99 

percent. The next is a corporation, Honeywell, and they do 61 percent to Democrats. 

It made me think again on the questioning of Ms. Lofgren to Ms. 

Torres here, when you are asking that last question there that 

somehow corporations get some type of tax benefit so you would 

have to look at it. Could you not make that same argument, when 

we were talking here about health care and the way unions’ health 

care was treated, if that bill that got the deal in the Senate would 

be to pass, would the unions not have a special tax incentive for 

their union members in health care and would that not give them 

a greater advantage because they wouldn’t be taxed on it so they 

would have more money to play politically; could you make that argument? 

Ms. TORRES-SPELLISCY. You could make all sorts of arguments. 

I am not a tax attorney, and so—— 

Mr. MCCARTHY. Well, she was asking you tax questions. 

Ms. TORRES-SPELLISCY. Yes, I probably should have said that to 

her as well. So I just can’t comment on the tax consequences of 

these things. 

Mr. MCCARTHY. Last question. You did the study, Ms. Torres, on 

the concern that you said for the shareholders. And you weren’t 

talking about the big wealthy shareholders, you were talking about 

so many of us who invest each month in our 401(k)s and others, 

and you thought there had to be a change. If that change would 

take place that we had to approve, would that be an opt-in or an 

opt-out? 

Ms. TORRES-SPELLISCY. What we are proposing is an up or down 

vote. So the company would propose a political budget, we are 

going to spend a million dollars and then a line on the proxy that 

goes to the shareholder would say do you want corporation X to 

spend a million dollars in the coming year, yes or no. So if you 

want to look at that as an opt-in, then—— 

Mr. MCCARTHY. Since the Court case dealt with corporations and 

unions, would you not ask the same question of the union so that 

union member that is middle class that is getting money taken out 

but has to opt out for it, would it not be the same question to them 

as well; if you were crafting a legislation would you not want that? 

Ms. TORRES-SPELLISCY. As I said earlier, we haven’t really looked 

at the union question. 

Mr. MCCARTHY. But would it be fair and in the same plane so 

if we did craft legislation and a corporation was asked that to a 

shareholder, wouldn’t that same American that is a union worker 

have the same because they will probably be shareholders too? So 

you would probably agree with the statement that we should do the 

same for both? 

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Ms. TORRES-SPELLISCY. I will decline to agree with you at this 

point. 

Mr. MCCARTHY. So we should treat them differently? They are 

different people? 

Ms. TORRES-SPELLISCY. I honestly would rather do some thoughtful study and then give written testimony to the committee. 

[The information follows:] 

Mr. MCCARTHY. Their money must be different. Okay, I yield. 

The CHAIRMAN. Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. Mr. Chairman, I will 

be brief because I know we have to go vote. I got to tell you, after 

listening to most of this discussion I really wish I had paid more 

attention to corporate law. All I remember from corporate law is 

you are supposed to borrow somebody else’s money, make a profit 

and keep both. That is all I remember from corporate law. 

Mr. LUNGREN. Law school? 

Mr. CAPUANO. No, it was run by Jesuits as a matter of fact. 

Mr. Chairman, I don’t approach it through the technicalities of 

everything and that is why I don’t really have any questions. I am 

looking forward to working with people on this panel. 

The question I have for everybody, and it is how I come to the 

issue, is what is it that I want? What is the goal that I want? I 

am not looking to thread a needle with a constitutional issue, I am 

not looking to parse this out. What I really want, I really want upfront, straightforward elections. I want everybody out of the elections except the voters and the candidates. If I could, I would have 

no money at all for anybody. I mean maybe a few dollars for some 

literature so people can get educated, and that is it. A level playing 

field. 

Everybody says you need millions of dollars to run for Congress. 

Why? The only reason you need it is because the other guy has it. 

If the other guy doesn’t have it, you don’t need it. Elections should 

be decided by regular people, getting rid of all the extraneous material. 

Now I know that that is a dream and I know I can’t get there. 

My goal is to try to find ways with the stupid laws and stupid legal 

decisions we have. How do I get through all of that to get as close 

to that ideal that I want—I know that others don’t share it—as 

possible. And that is all I want to do. 

So I am asking the panel, not necessarily today, we don’t have 

time today, and I am asking members of this committee to try to 

come up with what is it that you want? I am not looking for Democrats to win or Republicans to win. I know that you don’t believe 

me, and that is fine. I am not. I am looking for voters to make honest, open, unfettered decisions. Not based on who has more money, 

not based on who is part of the political machine. 

The last thing I would want is to bring the Democratic Party into 

my elections. Keep them out. I want the Republican Party in, 

please, get me a candidate. I want voters to decide on the basis of 

the people on the ballot. I do agree with not cluttering up the ballot. I totally agree I don’t want public money going to fringe candidates. There is no question, but I think there are ways we can 

avoid that. 

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The truth is I don’t really want public money. I just see it as the 

only alternative we have left available, as the best of a bunch of 

bad alternatives. What I want is voters to have the equal opportunity to hear the ideas of different candidates, from school committee to president, on a level playing field and make thoughtful 

decisions on that, which requires some involvement by voters. I 

wouldn’t mind requiring them to come to debates. I don’t know how 

you quite do that. Another court case, I am sure. But for me that 

is the goal and everything else is extraneous. And what we are 

doing today, I would argue, I am trying to find ways to get there. 

And I would ask the panelists, again not today, I know we have 

to go vote, but you will be hearing from me in the next month or 

so. I would ask you to look at it with that goal in mind, how do 

I get there? How do I get as much of this nonsense out, not just 

corporate money. Corporate money happens to be the debate today. 

But I have no problem getting it all out so that we can have honest 

debates and honest elections and let the chips fall where they may. 

I am satisfied with that. That is all I want. 

Mr. Lungren, I will tell you that what happened to you was 

wrong, and I would not have any problem at all making it illegal, 

clearly and unequivocally, but it is not the only dirty trick I have 

ever heard of. And it doesn’t make it right. It is actually pretty 

easy compared to some of the stuff I know. But it doesn’t make it 

right and it doesn’t make it good for the voters. They should be 

able to come and vote as they please each and every election. So 

if there are ways to do that, I want to work with anybody who 

wants to do it, and without the partisanship as best I can, without 

the ideological answers. I want voters to decide. If they want to go 

to the hard right, I can say they are wrong, but it is okay with me, 

it is okay with me. 

We just lost an election in Massachusetts. It is okay with me. We 

had a huge turnout for a January election. I was on the other side, 

we lost. But you know what, voters came out and voted it was okay 

with me. It was actually a pretty straight up election. That is what 

it should be about, and that is what I am here for. I am not here 

for money or no money or anything else. 

And with that, Mr. Chairman, I apologize, but that is what I am 

asking. I am not asking a question today, I am asking you to think 

about it and help us through this, help me through this. Thank 

you. 

The CHAIRMAN. Thank you, we have 31⁄2 half minutes for a vote. 

Mr. Harper. 

Mr. HARPER. I will be quick so Mr. Davis will have a moment, 

too. 

Public financing of elections I think is not a good idea and a good 

road for us to go. But I would ask, if I could ask Mr. Lenhard, do 

you believe that the individual contribution limits should be done 

away with? 

Mr. LENHARD. No. No, I think that there is certainly the potential, and in some cases actual corruption when people can give 

very, very, very large amounts of money to politicians. I think that 

that has underlain the restrictions and the law and the court’s decisions for a long time. I don’t think—there are politicians who are 

above that and it doesn’t matter who gives them money and who 

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doesn’t. But I think sometimes it does and at minimum the appearance of giving someone $100,000 or $600,000 would be corrupting 

or appear so. 

Mr. HARPER. In light of what Ranking Member Lungren said 

about Jack Kemp and Steve Forbes and that race, there is somebody who can use all their individual money. Shouldn’t this be 

about full disclosure so we know exactly where the money is coming from and who this is. Does anybody on the panel support doing 

away with the individual limits on campaign contributions with 

full disclosure? I would just be curious. 

Mr. SIMPSON. I actually agree with Congressman Lungren to the 

extent that he laments the fact that people cannot finance candidates that they wish. I think that the answer to the problems on 

this committee is dealing with in the sense of corporations or other 

groups being able to outspend politicians. The answer is allow politicians to compete on the same basis. So I would do away with or 

raise them so that politicians can actually compete with all of the 

voices. 

The CHAIRMAN. Two minutes to the next vote, 2 minutes. 

Mr. DAVIS of Alabama. Thank you, Mr. Chairman. Thank you, 

Mr. Harper, for your courtesy in being brief. Obviously given the 

time constraints, I really only have time to make an observation to 

the two members of the panel who were supportive of the United 

decision. It seems a lot of the arguments frankly that you made, 

Mr. Simpson, were probably the very same arguments that were 

made prior to Buckley v. Valeo. Before Buckley v. Valeo it was not 

at all taken for granted that contributions could be capped. A number of the points you made about the first amendment were made 

by the people who argued for striking down the caps on contributions during Buckley v. Valeo. But if memory serves me correctly 

the Court’s logic was that in the context of speech if there was a 

compelling enough public interest in reining in speech, that the 

Court could impose caps and could impose limits. 

So I would just end with this observation. Right now if a Member 

of Congress sits down with a corporation, there is a difference of 

opinion on issue, the most a corporation can implicitly say to you 

is I won’t write you a check or I will write a check to your opponent 

and they will limit it to the tune of whatever the limits are in their 

PAC, $5,000 per cycle. Candidly that is not much of a threat in the 

modern context of campaigns. It would seem that after this decision the worst that a corporation can say to a Member ratchets up 

considerably: If you don’t vote with me I will put a million dollars 

into defeating you in the next election. I can’t imagine a greater 

threat to independent decision making by this body than corporations implicitly or explicitly being able to say if you don’t follow my 

line, I will single-handedly put enough resources into that contest 

to defeat you. 

The CHAIRMAN. Zero time, sir. 

Mr. DAVIS of Alabama. All right. 

The CHAIRMAN. I don’t want to cut you off, but I don’t want you 

to miss the vote either. Thank you all. We really appreciate you 

being here and it was very, very enlightening. Thank you for your 

testimony. I am sure we will be hearing more from you; you will 

be hearing more from us. 

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I ask unanimous consent that the following statements be part 

of the hearing record, statements by the Campaign Legal Center, 

statements by the People for the American Way, statements by 

SEIU, statements by U.S. PIRG, statements by the President of 

UAW and the President of the Communications Workers of America, and an article published by the Brookings Institution. I ask the 

record be left open for 5 days to accept testimony from others. 

[The statement of the Campaign Legal Center follows:] 

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[The statement of People for the American Way follows:] 

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rfrederick on DSKD9S0YB1PROD with HEARING


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rfrederick on DSKD9S0YB1PROD with HEARING


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rfrederick on DSKD9S0YB1PROD with HEARING


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[The statement of SEIU follows:] 

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rfrederick on DSKD9S0YB1PROD with HEARING


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[The statement of U.S. PIRG follows:] 

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rfrederick on DSKD9S0YB1PROD with HEARING


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[The statement of UAW and Communications Workers of America follows:] 

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rfrederick on DSKD9S0YB1PROD with HEARING


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[The statement of the Brookings Institution follows:] 

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The CHAIRMAN. This hearing is now adjourned, and again I 

thank our panel. 

[Whereupon, at 4:05 p.m., the committee was adjourned.] 

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