A Penny for Your Votes: Eliminating Corporate Contribution Bans and Promoting Disclosure After Citizens United

A Penny for Your Votes: Eliminating Corporate Contribution Bans and Promoting Disclosure After Citizens United Sarah G. Raaii  ABSTRACT: In 2010, Citizens United v. Federal Election Commission established that the First Amendment protects corporate political speech. Citizens United subjected the federal ban on corporate independent expenditures to strict scrutiny, ultimately holding the ban unconstitutional. This Note argues that courts should also apply strict scrutiny to federal and state bans on corporate contributions because these bans discriminate on the basis of corporate identity, similar to the independent expenditure bans struck down in Citizens United . Even if strict scrutiny reveals that some limits on corporate contributions are necessary, a complete ban is not narrowly tailored to governmental interests and is therefore unconstitutional. Further, as Iowa’s contribution ban exemplifies, many bans in their current form are susceptible to loopholes. To overcome the unconstitutionality of corporate contribution bans and their potential for loopholes, this Note argues that campaign finance disclosure is an ideal alternative for accomplishing the goals of corporate contribution bans.  J.D. Candidate, The University of Iowa College of Law, 2015; B.B.A./B.S., The University of Iowa, 2010. Thank you to my parents, who instilled within me the values that guide me every day. 1358 IOWA LAW REVIEW [Vol. 100:1357 I. INTRODUCTION ........................................................................... 1359 II. CAMPAIGN FINANCE LAW ............................................................ 1361 A. F EDERAL C AMPAIGN F INANCE L AW ......................................... 1361 1. Independent Expenditures v. Contributions ............ 1362 2. The Origins of the Federal Corporate Contribution Ban ............................................................................... 1363 3. Citizens United v. FEC .................................................... 1365 B. I OWA C AMPAIGN F INANCE L AW .............................................. 1367 1. Iowa’s Corporate Contribution Ban .......................... 1367 2. The LLC Loophole ..................................................... 1369 III. STRICT SCRUTINY RENDERS CORPORATE CONTRIBUTION BANS UNCONSTITUTIONAL .................................................................. 1371 A. C ITIZENS U NITED E STABLISHED S TRICT S CRUTINY AS THE S TANDARD FOR I DENTITY D ISCRIMINATION ............................. 1372 B. C ORPORATE C ONTRIBUTION B ANS F AIL S TRICT S CRUTINY B ECAUSE T HEY A RE N OT N ARROWLY T AILORED TO THE I NTERESTS T HEY O STENSIBLY S ERVE ................................................................ 1374 1. The Anti-Corruption Interest ..................................... 1374 2. The Shareholder-Protection Interest......................... 1376 3. The Anti-Circumvention Interest ............................... 1376 IV. CAMPAIGN FINANCE DISCLOSURE AS AN ALTERNATIVE TO CORPORATE CONTRIBUTION BANS ............................................. 1377 A. T HE C ASE FOR D ISCLOSURE .................................................... 1378 B. D EVELOPING AN I NTERMEDIATE C AMPAIGN F INANCE D ISCLOSURE S YSTEM ................................................................................. 1379 V. CONCLUSION .............................................................................. 1380 2015] A PENNY FOR YOUR VOTES 1359 I. INTRODUCTION Money has been intertwined with American politics since the birth of our nation, but the injection of capital into our electoral process has now proliferated to an unprecedented degree. 1 In the 2012 presidential election, for example, Barack Obama and Mitt Romney raised a record-breaking sum of $2.06 billion to fund their respective presidential campaigns. 2 The cost of congressional campaigns has skyrocketed as well, with one senator raising over $45 million in the months preceding the 2014 midterm election. 3 The dramatic growth in campaign fundraising has similarly affected state-level politics; Iowa Governor Terry Branstad, for example, raised $1.26 million in a three-month period leading up to the 2014 gubernatorial election. 4 As money plays an increasingly powerful role in American elections, campaign finance law is crucial to maintaining the integrity of our democratic process. Campaign finance law classifies the use of money in campaigns as political speech: 5 A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money. 6 The landmark campaign finance decision in Citizens United v. Federal Election Commission applied strict scrutiny to the federal ban on corporate independent expenditures, holding that a blanket ban was an unconstitutional restriction on corporate political speech. 7 Citizens United thus 1. See Emily Cahn, House Democrats Break Fundraising Record in September , ROLL CALL (Oct. 18, 2013, 8:40 AM), http://atr.rollcall.com/house-democrats-break-fundraising-record-in-september; Michael Luo, Obama Hauls in Record $750 Million for Campaign , N.Y. TIMES (Dec. 4, 2008), http:// www.nytimes.com/2008/12/05/us/politics/05donate.html. 2. Jeremy Ashkenas et al., The 2012 Money Race: Compare the Candidates , N.Y. TIMES, http:// elections.nytimes.com/2012/campaign-finance (last visited Dec. 31, 2014). 3. Who’s Raised the Most , CTR. FOR RESPONSIVE POLITICS, http://www.opensecrets.org/ overview/topraise.php?cycle=2014&Display=S&Type=M6 (last visited Dec. 31, 2014). 4. Jason Noble, Branstad King in 2014 Fundraising , DES MOINES REGISTER (Oct. 20, 2014, 11:34 PM), available at http://www.desmoinesregister.com/story/news/elections/2014/10/21/ terry-branstad-king-fundraising-iowa-elections-jack-hatch/17647773/. 5. See generally Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), superseded by statute , Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (codified as amended in scattered sections of the U.S.C.), invalidated by Citizens United v. FEC, 558 U.S. 310 (2010); see also First Nat’l Bank of Bos. v. Bellotti, 435 U.S. 765, 772 (1978). 6. Buckley , 424 U.S. at 19. 7. See Citizens United , 558 U.S. at 340. For a discussion on the distinction between independent expenditures and contributions, see infra Part II.A.1. 1360 IOWA LAW REVIEW [Vol. 100:1357 established that the First Amendment protects all political speech, regardless of whether the speaker is a corporation or an individual. 8 The facts of Citizens United only gave the Court an occasion to address the constitutionality of corporate independent expenditure bans. However, because the same identity discrimination concerns also apply to corporate contribution bans, the Court should also subject these bans to strict scrutiny under Citizen United ’s rationale. 9 Even if the Court upholds some limitations on corporate contributions, a blanket contribution ban would fail strict scrutiny because it is not narrowly tailored to governmental interests underlying the ban. 10 Corporate contribution bans seek to avoid corruption and the “appearance of corruption.” 11 This corruption is often described as quid pro quo corruption, or corruption that involves “[a]n action or thing that is exchanged for another action or thing of more or less equal value.” 12 For instance, corruption would occur if a corporation exchanged independent expenditures or contributions for influence over an elected official’s actions. By banning corporate contributions, the government seeks to eliminate opportunities for such quid pro quo corruption. As Iowa exemplifies, however, loopholes in many corporate contribution bans—including the federal bans—render the bans ineffective in preventing corruption or the appearance of corruption. 13 In light of these loopholes, implementing intermediate campaign finance disclosure will more effectively achieve the anti-corruption goals of a corporate contribution ban without restricting corporations’ political speech. 14 This Note argues that the constitutionality of corporate contribution bans should be assessed using a strict scrutiny standard to maintain consistency with Citizens United . Part II provides an introduction to federal campaign finance law regarding corporate contributions. It also describes Iowa’s current corporate contribution law, which presents a case study of state law influenced by the federal contribution ban. Part III explains how the holding of Citizens United supports the application of strict scrutiny to corporate contribution bans. It argues that even if the bans further compelling governmental interests, they are not narrowly tailored to serve those interests, and are therefore unconstitutional. Finally, Part IV advocates 8. Citizens United , 558 U.S. at 353–56. 9. See infra Part III.A. 10. See infra Part III.B. 11. Citizens United , 558 U.S. at 359. 12. BLACK’S LAW DICTIONARY 1443 (10th ed. 2014). The Court similarly defines “quid pro quo.” See, e.g. , Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), superseded by statute , Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (codified as amended in scattered sections of the U.S.C.), invalidated by Citizens United , 558 U.S. 310 (2010). 13. See infra Part II.B.2. 14. See infra Part IV. 2015] A PENNY FOR YOUR VOTES 1361 for intermediate campaign finance disclosure as an alternative to corporate contribution bans. II. CAMPAIGN FINANCE LAW To understand the context in which this Note evaluates the constitutionality of corporate contribution bans, this Part provides a brief introduction to federal campaign finance law. Part II.A addresses the key distinction between contributions and...