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AMERICAN COMPANIES UNLIMITEDWhat Citizens United v. Federal Election CommissionMeans for Companies’ Political Campaign Spending

WHITE PAPER JUNE 2011

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IntroductionWith President Barack Obama now in re-election mode and Republican presidentialhopefuls visiting key primary states, the 2012 presidential campaign is under way.Every day, there seem to be even more Republican and independent potentialcontenders thinking about whether they want to take a leap into presidential politicsor sit this cycle out.

As the race begins to heat up, candidates will need to raise a record number ofcampaign dollars. Presidential candidates, as well as candidates running for otherfederal and state offices, will find new challenges because of the recent SupremeCourt ruling on Citizens United v. Federal Election Commission. The dramatic courtruling resulted in a decision that allows, for the first time in more than 60 years,corporations and unions to give unlimited amounts of money from their treasuriesfor political advertisements and broadcasting—even to companies owned by foreigncorporations. In fact, corporations and unions are equated with individuals. Thismeans they can spend unlimited amounts of money on supporting or even opposing aspecific candidate for public office up to the day of the primary or general election,which was not the case in any former presidential race.

Before any corporation or union decides to invest large amounts of money in anyspecific candidate, it will need to know more about the challenges, as well as theopportunities. Companies will need to carefully consider many aspects of thisdecision, such as:

• The ruling is a radical shift in policy that will affect the cost and access of mediabuys for corporations, unions and candidates during primary and general races.

• Opposition to the ruling has resulted in companion legislation introduced in boththe U.S. House of Representatives and the U.S. Senate to combat the impact ofthe decision.

• National polls show that the concept of a foreign-owned company interferingwith U.S. elections makes Democratic, Republican and non-party-affiliatedconsumers uncomfortable.

• The risks involved for any corporation or union to be viewed as partisan by itscustomers, consumers or members might outweigh any benefits.

• Some corporations and unions will take the risk; therefore, they will need toevaluate what’s best for them to stay competitive.

Corporations and unions will need to assess their brand, where and when they couldbe involved with a candidate or campaign, and how it will affect their business.

Euro RSCG Worldwide commissioned political consultant Jennifer Ryan Safsel ofSagamore Strategies to write this white paper to help companies understand theiroptions and the facts surrounding the Citizens United v. Federal ElectionCommission ruling. Safsel works with nonprofits, private corporations, campaignsand small businesses on political, grassroots, strategy and public affairs projects.

Read on for explanations of the major arguments of the ruling, reactions from U.S.senators and congressmen, key points that will affect businesses and possiblepolitical implications.

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Executive Summary

RULING OVERVIEWOn Jan. 21, 2010, the U.S. Supreme Court case of Citizens United v. FederalElection Commission (docket No. 08-205) rejected a ban on corporate spending infederal elections in the final 60 days of a general election or 30 days of a primaryelection cycle.

This ruling overruled two precedents: Austin v. Michigan Chamber of Commerce, a1990 decision that upheld restrictions on corporate spending to support or opposepolitical candidates, and McConnell v. Federal Election Commission, a 2003 rulingthat upheld part of the Bipartisan Campaign Reform Act of 2002 (BCRA) thatrestricted spending by corporations and unions. Corporations have been banned since1947 from using their profit to endorse or oppose candidates for elective office, arestriction that the Court now ruled unconstitutional.

The divided Supreme Court ruling, with a vote of 5-4, was a sharp turn from decadesof finance reform legislation put in place to control the amount of moneycorporations could spend on broadcasting political advertisements and documentariesin support of or against an individual candidate. It was viewed by some as a stepforward in protecting First Amendment principles: the right to engage the freedom ofspeech, particularly political speech, and the right of free association.

As a result, the decision removes limits on independent expenditures that are notcoordinated with candidates’ campaigns; therefore, corporations and not-for-profitscan spend any amount of money they want to run ads, and there’s no limit as to

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when those ads can be run. Corporations and nonprofits are, however, still limitedin what they can directly donate to a candidate’s campaign committee. The rulingmight affect state as well as federal campaigns.

LEAD ARGUMENTSJustice Anthony Kennedy wrote the majority decision. As his argument tooverturn the current ruling, he invoked the First Amendment right of freedom ofspeech that confirms the freedom to think for ourselves. He said that themarketplace of ideas guaranteed by the Constitution includes corporations,which, after all, represent a significant segment of society and of our economiclife. He emphasized: “When Government seeks to use its full power, including thecriminal law, to command where a person may get his or her information orwhat distrusted source he or she may not hear, it uses censorship to controlthought. This is unlawful. The First Amendment confirms the freedom to thinkfor ourselves.”

Justice John Paul Stevens, who wrote part of the decision for the case that wasoverturned (the BCRA, also known as the McCain-Feingold Act), called the five-justice majority’s decision a “radical departure from what had been settled FirstAmendment law.”

In his dissent, Stevens warned that “[t]he Court’s ruling threatens to underminethe integrity of elected institutions across the Nation.…In the context of electionto public office, the distinction between corporate and human speakers issignificant. Although they make enormous contributions to our society,corporations are not actually members of it. They cannot vote or run for office.Because they may be managed and controlled by nonresidents, their interests mayconflict in fundamental respects with the interests of eligible voters.… It mightalso be added that corporations have no consciences, no beliefs, no feelings, nothoughts, no desires. Corporations help structure and facilitate the activities ofhuman beings, to be sure, and their ‘personhood’ often serves as a useful legalfiction. But they are not themselves members of ‘We the People’ by whom and forwhom our Constitution was established.”

In concurring with Kennedy’s written argument, Justice Antonin Scalia wrote:“The authorized spokesman of a corporation is a human being, who speaks onbehalf of the human beings who have formed that association—just as thespokesman of an unincorporated association speaks on behalf of its members. Thepower to publish thoughts, no less than the power to speak thoughts, belongs onlyto human beings, but the dissent sees no problem with a corporation’s enjoying thefreedom of the press.”

In Citizens United, the Court ended the suppression of corporate and unionspeech. Many have predicted this will have dire consequences. Says Sen. MitchMcConnell (R-KY): “What they fail to mention is that 26 states already allowcorporate and union speech, something that has had no discernable adverseimpact. Any proponent of free speech should applaud this decision. Citizens Unitedis and will be a First Amendment triumph of enduring significance.”


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Points of the Ruling

• The ruling strikes down a 63-year-old ban on corporations and labor unions using money from theircorporate treasuries to produce and air campaign ads in races for Congress and the White House.

• Under the ruling, corporations and unions can spend unlimited amounts of money to air campaign ads 30days before a primary election and 60 days before a general election.

• The ruling does keep in place a ban on direct coordination with the candidates and/or their campaigncommittees. This means the corporations and unions must act independently from the candidates’ election committees and cannot strategize on an ad or its content.

• The decision does not address companies or unions contributing directly to candidates. Therefore,corporations and unions will still need political action committees (PACs) to donate directly to candidates.PACs are still limited to $5,000 donations in a primary and $5,000 in a general campaign cycle, a totalof $10,000 per candidate, per election. Not all candidates for U.S. Senate and Congress take PACmoney, however.

• Foreign-owned corporations can air advertisements or documentaries that support or oppose a candidate.Not in 100 years has this been allowed.

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Case Background

The nonprofit corporation Citizens United (Citizens), a 501(c)(4) tax-exemptentity, produced the 2008 documentary Hillary: The Movie, about Hillary Clinton,to coincide with the presidential election. Citizens planned the releases of andadvertising for the movie around important 2008 events—state presidentialprimaries and caucuses, the Democratic National Convention and the generalpresidential election—to affect the races.

The documentary critically depicted Clinton’s record as first lady, U.S. senator andpresidential candidate and expressed the nonprofit’s opinions about whether shewas qualified to be president. Citizens knew the movie would be perceived as“electioneering communications” within 30 days of a primary election or 60 daysof a general election. Therefore, knowing it would conflict with the BCRA (theMcCain-Feingold Act), Citizens sought an injunction to block the Federal ElectionCommission (FEC) from enforcing sections 201, 203 and 311 of the law on thegrounds that they violated the First Amendment to the U.S. Constitution.

According to Section 203, corporations and unions are prohibited from airing“broadcast, cable or satellite” communications made within 30 days of a primaryelection or 60 days of a general election. Disclosure of electioneeringcommunications restricts nonprofit corporations, for-profit corporations and laborunions from funding electioneering communications from their general fundsexcept under certain specific circumstances—for example, candidate forums. Theyare still subject to regulations adopted by the commission.


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If a person gives a total of $10,000 or more a year for the production and airingof electioneering communications, he or she is required to disclose the fullamount with the FEC within 48 hours. The disclosure must include the names andaddresses of person(s) who have contributed more than $1,000 to accountspaying for the communication—although corporations and their donors should beaware that they more likely will have to give their name, address and employerinformation when contributing $200 or more. Section 311, which contains adisclaimer provision for electioneering communications, says that an entityresponsible for the communications, if not authorized by the candidate or thecandidate’s political committee, must contain a statement that the organization“is responsible for the content of this advertising.”

BCRA’s Section 403 sets rules for constitutional challenges to its provisions. A three-judge panel of the U.S. District Court for the District of Columbia must handle such claims. Appeals from this court go directly to the U.S. Supreme Court.

The district court refused to grant Citizens’ request in Citizens United v. FEC. The court noted that the Supreme Court upheld BCRA’s Section 203 inMcConnell v. FEC and rejected the argument that the funding of electioneeringcommunications “constituting express advocacy or its functional equivalent” isprotected under the Constitution’s First Amendment. “As applied” challenges—specific applications of the law to certain communications—are a differentmatter. In FEC v. Wis. Right to Life, Inc., the high court held thatadvertisements only constitute express advocacy or its functional equivalent ifthey are “susceptible of no reasonable interpretation other than as an appeal tovote for or against a specific candidate.” The district court held that Citizens’movie was the “functional equivalent of express advocacy” and ruled that itscritique of Clinton’s presidential character, candidacy and qualifications wasintended to convince voters that she should not be elected.

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“I am disappointed by the decision of the Supreme Courtand the lifting of the limits on corporate and unioncontributions. However, it appears that key aspects ofthe Bipartisan Campaign Reform Act (BCRA), including theban on soft money contributions, remain intact.”

—U.S. Sen. John McCain (R-AZ), co-author and co-sponsor of the Bipartisan CampaignReform Act of 2002 (Public Law 170-155), also known as the McCain-Feingold Act

SEN. JOHN MCCAIN’S VIEW

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“It is important to note that the decision does not affect McCain-Feingold’ssoft money ban, which will continue to prevent corporate contributions to thepolitical parties from corrupting the political process. But this decision was aterrible mistake. Presented with a relatively narrow legal issue, the SupremeCourt chose to roll back laws that have limited the role of corporate moneyin federal elections since Teddy Roosevelt was president. Ignoring importantprinciples of judicial restraint and respect for precedent, the Court has givencorporate money a breathtaking new role in federal campaigns. Just six yearsago, the Court said that the prohibition on corporations and unions dipping intotheir treasuries to influence campaigns was ‘firmly embedded in our law.’ Yetthis Court has just upended that prohibition and a century’s worth of campaignfinance law designed to stem corruption in government. The American peoplewill pay dearly for this decision when, more than ever, their voices aredrowned out by corporate spending in our federal elections. In the comingweeks, I will work with my colleagues to pass legislation restoring as many ofthe critical restraints on corporate control of our elections as possible.”

—Former U.S. Sen. Russ Feingold (D-WI), co-author and co-sponsor of the Bipartisan CampaignReform Act of 2002 (Public Law 170-155), also known as the McCain-Feingold Act

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Although the movie about Hillary Clinton might have been subject to BCRA Section203, the FEC conceded that advertising for the movie was not. However, Citizensobjected to disclosure and disclaimer requirements under BCRA, claiming they didnot apply because they weren’t “express advocacy or the functional equivalent”under Wis. Right to Life. The district court held that McConnell and Wis. Right toLife did not apply that standard to the disclosure and disclaimer requirements,provisions to which the Supreme Court had shown some approval in the past.

Citizens appealed the case to the U.S. Supreme Court. After hearing arguments onthe case in March 2009, the Supreme Court did not render an opinion. Instead, thecase was rescheduled for reargument on whether the Court should reverse priorholdings sanctioning laws that restrict how corporations can make politicalcontributions. It was phrased this way:

For the proper disposition of this case, should the Court overrule either orboth Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), andthe part of McConnell v. Federal Election Comm’n, 540 U.S. 93 (2003),which addresses the facial validity of Section 203 of the BipartisanCampaign Reform Act of 2002, 2 U.S.C. §441b?

The Austin opinion held that a Michigan law that prohibited nonmedia corporationsfrom using general funds to make political contributions, requiring suchcontributions to be made through “separate segregated funds” set up for politicalpurposes, was constitutional. As noted earlier, McConnell held that Section 203 inBCRA is also constitutional. The ruling overruled these precedents:

Austin is overruled, and thus provides no basis for allowing the Governmentto limit corporate independent expenditures. Hence, §441b’s restrictions on such expenditures are invalid and cannot be applied to Hillary. Given this conclusion, the part of McConnell that upheld BCRA §203’s extension of§441b’s restrictions on independent corporate expenditures is also overruled.

Oral argument on these issues was held on Sept. 9, 2009. This was the first caseheard by Associate Justice Sonia Sotomayor, who replaced Associate Justice DavidSouter. The 5-4 ruling was on Jan. 21, 2010.


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Political and Policy Implications

POLITICAL OUTCOMESGiven that two of Bush’s appointments struck down any ban on corporate spending,s ome people have suggested that this Supreme Court outcome is a direct result ofthe Bush administration’s Supreme Court justice nominations. The Supreme Court’sruling seven years ago to uphold the McCain-Feingold legislation was due to the factthat Justice Sandra Day O’Connor supported the bill’s constitutionality. Since she hasstepped down and was replaced by Justice Samuel Alito, and with the appointment ofthe new Chief Justice, John Roberts, the makeup of the court has shifted. The changein the Supreme Court and the power shift it causes might be used by some as apossible election issue; some candidates could highlight the ruling in advertisementsand label their opponents to be for big business and against the average American. Inaddition, given the public’s dislike of this ruling, some candidates might use it as aclear example of the importance of the 2012 presidential election, highlighting thepower of the president to choose Supreme Court nominees.


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CITIZENS UNITED’S IMPACT ON THE 2010 MIDTERMSThe Citizens United v. Federal Election Commission decision resulted in recordamounts of money spent in the 2010 midterm elections. According to estimates bythe Center for Responsive Politics, a nonpartisan organization that tracks money inpolitics, the total amount of money spent in the midterm elections was about $4billion. That’s up from $2.85 billion in 2006.

During those midterm elections, 527 organizations had the option, by filing additionalpaperwork, to solicit unlimited contributions from individuals and corporations tospend on independent political efforts. These 527s are required to disclose theirdonors. Their ability to gather and then spend unlimited amounts of money in themidterm elections would not have been allowed in previous elections.

The court decision also allows 501(c)(6)s—groups such as trade organizations andbusiness leagues, which are funded by payments of member corporations—to not berequired to disclose their donors. Those groups capitalized on the new ability to spendon independent expenditure campaigns. The U.S. Chamber of Commerce, for instance,spent $32.9 million from its corporate-funded treasury on independent politicalcommunications. That group has a deep roster of corporate members, but it did notdisclose contributors that provided the funding for its political advertising.

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It is this lack of full disclosure that concerns many policymakers and citizen watchdoggroups. Many feel that money spent in elections should be linked with advertisements orcandidates.

According to a Washington Post–ABC News poll of 1,004 people randomly surveyed,65 percent “strongly” oppose the ruling. There is little difference by party line: Eighty-five percent of Democrats, 76 percent of Republicans and 81 percent of independentsoppose the ruling.

Some corporations might choose to set up PACs within their company, while others willdecide not to get involved in elections at all. But corporations with specific legislativeneeds that affect their bottom line are expected to be even more proactive in theupcoming 2012 election cycle.

According to the Sunlight Foundation, 40 percent of outside money in the 2010midterms came from money that was made possible by the Supreme Court ruling. Theability for, say, a former longtime party leader to organize, raise unlimited amounts ofmoney and contribute large amounts to oppose a candidate all without disclosingdonors would not have been allowed before the Supreme Court ruling. These types ofunlimited and undisclosed contributions can very well—and did in some instances—make or break a race.

Russ Feingold, for instance, a longtime proponent of campaign finance reform and theco-sponsor and co-author of the Bipartisan Campaign Reform Act of 2002 (Public Law170-155), also known as the McCain-Feingold Act, lost his race to millionaire plasticsCEO Ron Johnson, who outspent him four to one with help from outside organizations.

Corporations donated to both Republicans and Democrats. But some did experienceconsumer backlash. Last summer, Target Corp. was one of the first companies to testthe 2010 midterm election political waters. It donated campaign contributions to MNForward, a newly formed Chamber of Commerce–affiliated group, which in turn used thecampaign funds to back Minnesota Republican gubernatorial candidate Tom Emmer.Target found itself boycotted for the candidate’s anti-gay-marriage stand and his ties toanti-gay groups. Target made a public apology.

This situation clearly illustrates the difficulties corporations face when their consumersdiscover that their money is going for something other than what they expect it to.

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IMPLICATIONS FOR REPUBLICANSRepublicans who tend to have strong ties with corporation and business leaders willbenefit greatly in the upcoming 2012 elections from this ruling. ConservativeRepublicans, however, might benefit most in Republican primaries. The ruling stillupholds that corporations, foreign nationals, government contractors or labororganization treasury funds cannot give directly to a candidate or coordinate with acampaign committee’s strategy and messaging. But in this age of technology, socialmedia and fast-paced coverage, the reality is that it doesn’t take much for acompany to copy or mirror a campaign.

IMPLICATIONS FOR DEMOCRATSDemocrats, who usually have more union support, will also benefit. Most Democrats,however, believe in general that they will be at a disadvantage because bigcorporations will pour large amounts of money into expensive media buys, thereforedriving up the cost of prime media buys and drowning out their policy and campaignmessages, making it difficult to get their message out to voters.

PROPOSED LEGISLATION On April 29, 2010, U.S. Sens. Charles E. Schumer (D-NY), Russ Feingold (D-WI),Ron Wyden (D-OR), Evan Bayh (D-IN) and Al Franken (D-MN) formally announcedtheir Senate bill to combat what they believe are dangerous impacts of the SupremeCourt’s decision to allow corporations and other special interests to spend unlimitedsums to influence elections. The legislation (S.3295) is the Democracy IsStrengthened by Casting Light On Spending in Elections Act, or the DISCLOSEAct. A bipartisan-supported companion version of the bill, with the same name (HR5175), was drafted in the House of Representatives by Reps. Chris Van Hollen (D-MD), Mike Castle (R-DE), Walter Jones (R-NC) and Robert Brady (D-PA).

“At a time when the public’s fears about the influence ofspecial interests were already high, the Court’s decision stacksthe deck against the average American even more. Our bill willfollow the money. In cases where corporations try to mask theiractivities through shadow groups, we drill down so that ultimatefunder of the expenditure is disclosed. If we don’t act quickly toconfront this ruling, we will have let the Supreme Courtpredetermine the outcome of next November’s elections. It won’tbe Republicans or Democrats; it will be Corporate America andother special interests.”

—U.S. Sen. Charles Schumer (D-NY), co-sponsor of the DISCLOSE Act

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The legislation sought to prevent foreign-owned corporations and governmentcontractors from spending money on U.S. elections. Schumer, for example, has citedthe governments of Venezuela, which owns the oil company Citgo, and China, whichowns part of several large corporations, as the types of companies he feels should notbe able to spend unlimited amounts of money on advertisements to affect U.S.elections.

According to Section 102 of the DISCLOSE Act, to close the loophole, the legislationextends the existing prohibition on contributions and expenditures by foreign nationalsto include domestic corporations under the following circumstances:

1. If a foreign national owns 20 percent or more of voting shares in the corporation,which is modeled after the control test in many states, including Delaware;

2. If a majority of the board of directors are foreign nationals;

3. If one or more foreign nationals have the power to direct, dictate or control thedecision-making of the U.S. subsidiary; or

4. If one or more foreign nationals have the power to direct, dictate or control theactivities with respect to federal, state or local elections.

The concept of a foreign-owned company interfering with U.S. elections makes peopleon both sides of the aisle uncomfortable. In fact, a Washington Post-ABC News pollindicated that 72 percent of people polled, including Democrats, Republicans and non-party-affiliated voters, would support legislation to curb the Supreme Court ruling.And 79 percent of respondents disapproved of the ruling, according to a nationwidepoll by Quinnipiac.

In addition, the DISCLOSE Act would ban government contractors and companiesthat have received government assistance from making political expenditures—andalso require corporations, unions and other organizations that make politicalexpenditures to disclose their donors and stand by their ads. It includes strictreporting timelines and requires disclaimers by senior leaders of corporations, unionsand organizations to identify themselves with their political ads, similar to thedisclaimers required by candidates.

Said Sen. Wyden: “I wish Congress didn’t have to take action to ensure that acitizen’s voice doesn’t get buried by new and larger mountains of corporate cash; butthat is what our legislation will do. If the Supreme Court wants to treat corporationsas individuals, then we will hold those entities to the same standards of accountabilitythat we do individuals, which means requiring that CEOs, labor leaders and evenpolitical consultants stand by their ads.”

“the disclosure of campaign-donor information is essential to our democracy. Theabsence of transparency will enable special interest groups to bankroll campaigninitiatives while operating under a veil of anonymity. I will continue to press for greaterdonor disclosure in the courts, and in Congress, in order to bring in the much-neededsunlight. We have been unable to enact enhanced disclosure requirements throughCongress. However, we have found that the requirements in existing law have beensignificantly loosened by the FEC’s interpretation. The lawsuit I am filing…seeks to restorethe statutory requirement that provides greater disclosure of the donors who providefunding for electioneering communi cations. If this standard had been adhered to, much ofthe more than $135 million in secret contributions that funded expenditures in the 2010congressional races would have been disclosed to the public.”

—U.S. Rep. Chris Van Hollen (D-MD), co-sponsor of the DISCLOSE Act

REP. CHRIS VAN HOLLEN’S VIEW

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On the House side, Van Hollen has used AIG or a big Wall Street firm or other firmsthat received Troubled Asset Relief Program (TARP) money as an example of typesof conflicting interest. His point is that if a corporation got federal assistance to bebailed out, then that company should not be able to spend unlimited amounts ofmoney because those are no longer corporate funds but federal taxpayers’ moneyuntil the company repays them to the taxpayers.

The legislation passed the House but was one vote short in the Senate; therefore, itdid not get passed in the 111th Congress. In the new 112th Congress, U.S. Sen.Harry Reid and 11 co-sponsors have introduced Senate bill S.9, the Political Reform and Gridlock Elimination Act, which includes the DISCLOSE legislationprovisions. The bill has been referred to the U.S. Senate Committee on Rules andAdministration. Legislators would like to pass S.9 legislation before the 2012presidential election cycle. To get it passed, they will have to make it a “votingissue” and tap into the public’s dislike of the Supreme Court’s ruling, which isperceived to favor the voices of business over theirs.

The DISCLOSE Act has not been able to be reintroduced in the House. The newCongress is not expected to act on the legislation, but the public does not seemhappy with the idea of advertisements and political messaging done without theirknowing who is behind the messaging. According to a New York Times/CBS poll, 92 percent of the people polled believe candidates should be legally required todisclose how much money they raised and where it came from.

On April 21, 2011, Rep. Van Hollen filed a lawsuit against the FEC regulations thathave undermined the campaign finance disclosure requirements established in theBipartisan Campaign Finance Act of 2002 (McCain-Feingold) to require groups thatpay for so-called electioneering communications ads to disclose the donors whoprovided funds for them. These disclosure requirements apply to nonprofitcorporations and other groups that conduct outside spending campaigns thatinfluence federal elections. According to a statement from Van Hollen’s office, thelaw requires the disclosure of the identity and contribution amounts of donors whofund electioneering communications. The FEC, in its regulation implementing the law,requires disclosure of donors only when the donation “was made for the purpose offurthering electioneering communications” by the spender. This restriction oncontribution disclosure is not found in the statute. “Congress did not include a ‘stateof mind’ or ‘purpose’ condition tied to ‘furthering’ electioneering communications inthe relevant McCain-Feingold disclosure provision,” said Van Hollen. “The FEC, byadding this requirement in its regulations, has contravened the plain language andmeaning of the statute and gutted the contribution disclosure requirements for‘electioneering communications.’”

In addition, the White House has noted that President Obama is considering anexecutive order requiring federal contractors to disclose political donations, even tononprofit organizations such as the U.S. Chamber of Commerce. A presidential orderwould take effect immediately and would affect fundraising for the 2012 elections.

“The Court ruled unconstitutional sections offederal law that barred corporations and unions fromspending their own money to express their views aboutissues and candidates. This was the right decision becausedemocracy depends upon free speech, not just for somebut for all. As Justice Kennedy, writing for the majority,concluded: ‘Under our law and our tradition it seemsstranger than fiction for our Government to makepolitical speech a crime.’”

—U.S. Sen. Mitch McConnell (R-KY), Senate Republican leader

SEN. MITCH MCCONNELL’S VIEW

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FEDERAL OVERSIGHT

Currently, the Federal Elections Commission (FEC) tracks campaign financedonations and spending. As a result of the Supreme Court’s decision, the Securitiesand Exchange Commission (SEC) will also be involved in tracking such expenditureswhen made by public corporations. Under SEC rules, corporations generally mustdisclose “major events” to shareholders. According to section 212 of the proposedDISCLOSE legislation, if a covered organization makes a disbursement forcampaign-related activity, the CEO must file a statement with the FEC certifyingthat the expenditure was not made in coordination with a candidate, that fundsdesignated by the donor that aren’t to be used for campaign-related activity have notbeen used for any campaign-related activity, and that the spending has been fullydisclosed and made in compliance with the law.


Conclusion

The Supreme Court has ruled to allow corporations, even those that are owned byforeign companies, to spend unlimited amounts of money on airing commercials anddocumentaries in support of or opposition to a political candidate. The ability to aircommercials right up to the day of an election will change how candidates and theircampaigns can and need to respond to attack advertisements in print, broadcast andonline, as well as get-out-the-vote strategies.

There is no doubt that there will be more money spent than ever by corporations andnonprofits in 2012 presidential and congressional primary and general electionadvertisements and message campaigns. Corporations should plan ahead and knowhow best to get their message or cause heard during these important elections. Manycorporations should be tracking key races for U.S. Congress and Senate and stateraces in order to affect primary and general elections. As they develop theircommunications outreach strategies, they must be mindful of their tactics so thatthey don’t adversely affect their business or create public backlash against theircorporation. In addition, corporations must know the election law and workindependently from candidates’ committees.

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This white paper is the latest thought leadership pursuit by Euro RSCGWorldwide over the past decade (and more) to address issues of nationalimportance in the United States and how they affect consumers andbrands.

In August 2001, Euro RSCG wanted to find out what exactly the“American way of life” was at the start of a new century, so we asked arandom sample of 500 Americans online, aged 21 to 54, their feelingsabout the United States, among other topics. The white paper based on the

data, called “American Audit,” says that in order to understand America, “one must firstunderstand its citizens—and the dramatic shifts that are helping to reshape the national culture.” It features not only analysis but also implications for marketers.

Then in April 2010, Euro RSCG Worldwide PR and Euro RSCG Life, the public relations arm andthe health-focused communications network of Euro RSCG, commissioned two surveys to try togauge the mood of Americans on such hot-button issues as healthcare, the economy, education, jobsand the political direction of the country. One survey questioned people nationwide; the other polledresidents of the bellwether state of Connecticut (which ultimately saw a Democratic sweep in the2010 midterm elections, the opposite of the national trend, and thus worthy of our close study). Theresulting “U.S. Mind and Mood Report” shows a new normal: fear and anxiety replacing confidenceand hope. Optimism was out and pessimism was in. To see the data and our implications, please goto eurorscgpr.com and look under “Brain Food.”

For “American Companies Unlimited,” Euro RSCG Worldwide wanted to help companies understandtheir options and the facts about political- and issues-related advertising in the face of a landmarkSupreme Court decision and new legislation. Companies large and small will need to be familiarwith the rules before the 2012 elections.

Through such research and analysis, we are addressing topics that are not only imperative to ourclients and our own growth but are also driving news about the future. The studies are places tolisten and learn. They’re propelling momentum for companies, brands and causes. They’re satisfyingthe new value exchange, where consumers want brands that listen, converse and enable them.

Please join us in the conversation.

CEOEuro RSCG Worldwide PR, North America200 Madison Avenue, 2nd floorNew York, NY 10016www.eurorscgpr.comP: 212-367-6811E: [email protected]: @mariansalzman

Marian Salzman

american companies unlimited

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