In a significant reversal of court precedent, the Supreme Court today invalidated decades-old federal legislation restricting corporate spending in political campaigns.
In a 5-4 decision, the court called into question the constitutionality of all federal and state regulation of independent corporate political advocacy, including a federal law dating back to 1947 and the laws of dozens of states.
President Obama today assailed the ruling and promised a "forceful response" to the court's decision, which he says gives "a green light to a new stampede of special interest money in our politics."
The court effectively struck down restrictions on corporations and unions for how and when they spend money on ads and other political communications during campaigns.
Writing for the majority, Justice Anthony Kennedy concluded, "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. This is unlawful."
Lawyers for the Obama administration had argued that such a ruling would "make vast sums of corporate money available for overt electioneering."
While corporations and unions may now spend more freely, the ruling does not overturn an existing prohibition on direct contributions to candidates.
At issue were two previously decided cases -- Austin v. Michigan State Chamber of Commerce and McConnell v. Federal Election Commission -- which upheld restrictions on corporations and non-profits, making it a felony to advocate for or against a candidate weeks before an election.
The court today overturned portions of that precedent, writing, "The First Amendment does not permit laws that force speakers to retain a campaign finance attorney, conduct demographic marketing research or seek declaratory rulings before discussing the most salient political issues of our day."
The court rejected a narrower ruling suggested by the government by saying, "The court cannot resolve this case on a narrower ground without chilling political speech."
Justice John Paul Stevens, in a dissenting opinion joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor, said the court's decision "operates with a sledge hammer rather than a scalpel" and warned that it may "undermine the integrity of elected institutions across the nation.
"The court's opinion is thus a rejection of the common sense of the American people," Stevens wrote, "who have recognized a need to prevent corporations from undermining self-government since the founding and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt."
Today's ruling is a setback for generations of reformers who have sought to limit corporate and union power in U.S. elections.
Republican Sen. John McCain of Arizona and Democratic Sen. Russ Feingold of Wisconsin co-sponsored legislation in 2002 that became law, setting set strict limitations on independent corporate and union expenditures in elections.
It bans corporations and unions from funding advertisements 30 days before primary elections and 60 days before general elections. The law also bans ads that expressly advocate the election or defeat of individual candidates.
The court has now ruled the measures unconstitutional, potentially unleashing more than $1 trillion a year in corporate money for political advertising in all forms. By comparison, Obama, McCain and the political parties spent $1.5 billion combined in the 2008 election; the most expensive in history.
"Ignoring important principles of judicial restraint and respect for precedent, the court has given corporate money a breathtaking new role in federal campaigns," Feingold said in a statement. "The American people will pay dearly for this decision when, more than ever, their voices are drowned out by corporate spending in our federal elections."
McCain also expressed disappointment with the ruling but insisted that some of the reforms imposed in 2002 still hold.
"It appears that key aspects of the Bipartisan Campaign Reform Act, including the ban on soft money contributions, remain intact," McCain said in a statement.
The soft-money ban regulates the financial contributions corporations and unions can make directly to political parties or candidates.
House Speaker Nancy Pelosi, D-Calif., said the Court's action "strengthens the hand of special interests in elections" and that her staff is closely examining the ruling.
But Republican National Committee chairman Michael Steele praised the Court's action, calling it an affirmation of Americans' constitutional rights. "We need to encourage a vibrant debate on the issues and not restrict the free exchange of ideas," he said.
Today's ruling is directly a victory for Citizens United, the conservative non-profit advocacy group that brought the suit, which had argued that the government was attempting to suppress corporate political speech.
The group produced in 2008 "Hillary: The Movie," a critique of then presidential candidate Hillary Rodham Clinton. The group decided to distribute its movie through a "video on demand" service accessible to cable subscribers.
The Federal Election Commission banned the release, ruling that the movie was a so-called "electioneering communication" -- comparable to an ad attacking a candidate -- and because it had been made with corporate funds was subject to restrictions imposed under the 2002 McCain-Feingold campaign finance law.
Citizens United sued arguing that its movie was not an "electioneering communication," and the case was initially heard last spring by the high court. But in late June, instead of an opinion, the justices issued a stunning order:
The court wanted to re-hear the case and directed parties to brief on a much broader issue: whether two court precedents dealing with the regulation of corporate spending -- Austin v. Michigan Chamber of Commerce and parts of McConnell v. FEC -- should be overturned.
The court held hearings in the case a month before the 2009 term officially began.
Lawyers for Citizens United argued that the government was attempting to suppress corporate political speech. Olson, a former solicitor general, arguing on behalf of the group, said, "Robust debate about candidates for elective office is the most fundamental value protected by the First Amendment's guarantee of free speech."
Elena Kagan, Obama's solicitor general, made her debut argument in the case, urging the court to avoid striking down campaign finance regulation but instead rule more narrowly.
Not all liberals have aligned on the same side of the issue. Lawyers for the Reporters Committee for Freedom of the Press are siding with Citizen's United in the case out of First Amendment concerns.
The group feared that the government might interpret the law to prohibit a book endorsing a candidate from being published by a corporation prior to an election. In briefs, attorney Lucy Daglish argued, "This court has never tolerated such an infringement on freedom of the press."
In a nod to the blogosphere and growing popularity of social networking sites online, the court claimed today that its decision is on the side of tomorrow while the laws are stuck in the political marketplace of yesterday.
"Rapid changes in technology -- and the creative dynamic inherent in the concept of free expression -- counsel against upholding a law that restricts political speech in a certain media or by certain speakers," Kennedy wrote. "[McCain-Feingold] would seem to ban a blog post expressly advocating the election or defeat of a candidate if that blog post were created with corporate funds. The First Amendment does not permit Congress to make these categorical distinctions."