Money and Politics

  I have been devoting my energies to writing about the ongoing health care debate and will continue to do so hereafter, but we are faced with a situation that so fundamentally changes the character of our Democracy, that I must digress to alert my readers.

 As early as the 19th century Mark Twain said, “We have the best government that money can buy.”

This was dramatically illustrated when in 1896 the champion of the masses, of the debtor classes, William Jennings Bryan, ran against the champion of the entrenched business interests, corporations, and the banking industry, William McKinley. McKinley, who outspent Bryan by an estimated 10 to 1, won handily, proving Hanna’s famous dictum: “There are two things that are important in politics. The first is money, and I can’t remember what the second one is.” By 1904 the popular outcry was so great that the then losing Democratic candidate declared, “The greatest moral question which now confronts us is shall the trusts and corporations be prevented from contributing money to control or aid in controlling elections?” In 1907, Congress passed the Tillman Act, the first federal law barring corporate campaign contributions. States adopted similar laws. Since then, Congress has repeatedly ratified the federal ban. In 1925, it folded the Tillman Act into the Federal Corrupt Practices Act. In 1947, it made clear that the ban included not just corporate contributions, but corporate expenditures on campaigns — and that it also applied to labor unions. In the 2002 McCain-Feingold law, Congress once again underscored that corporations cannot contribute to campaigns. See here.

Thus this principle has stood the test of time, having been affirmed by the people’s elected representatives in Congress time and time again and by the Supreme Court as well.

But now with a court dominated by these same interests, it appears that they are getting ready to strike down these essential restrictions and open the floodgates to the domination of the political process by the billions upon billions contained in corporate treasuries.

The Los Angeles Times summarized potential result when they wrote: “If the justices were to issue such a ruling in the next few months, it could reshape American politics, beginning with the congressional campaign in 2010…

“For example, the health insurance industry would have a much greater ability to target for defeat lawmakers who supported a so-called public option for medical insurance. Banks and investment firms could oppose representatives who favored stricter regulation of the financial industry…And far more money could flow into elections. Last year, the political parties spent about $1.5 billion on campaigns, while corporations earned more than $600 billion in profits.” See here.

Justice Scalia and his brethren on the Right by their questions during argument suggested that in their view corporations are no different from individuals or association of individuals and are entitled to the same rights, but for one who claims to be an “originalist” he ignores that the constitution gives no such rights to “artificial persons” and that Jefferson in 1816 even expressed the hope to, “crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” See here.

To suggest that corporations are no different from associations of individuals they would not have the many rights that are unique to them, such as limited liability or as the Solicitor General put it, “Corporations are artificial persons endowed by the government with significant special advantages that no natural person possesses,’’ or as the Boston Globe wrote, “publicly traded business corporation, driven to maximize profits by market competition and its own charter, can’t rise above that mission any more than it can dance nude. Corporations aren’t “voluntary associations’’ with republican intentions, as Justice Antonin Scalia claims; in a civic sense, they’re mindless, because their shareholders change with every stock-price fluctuation.” See here.

But last, but not least, corporations don’t even represent the views of their stockholders. As I wrote on my blog in another context, “Unfortunately, it is not shareholders who decide on compensation. It is the Board of Directors! And who chooses the Board of Directors? Usually the CEOs. To be sure Shareholders get a chance to vote at shareholder meetings for the Board, and whatever issues are placed before them, but the only choices they really have is to vote yes or no on whatever the management chooses to let them vote on. And increasingly, shareholder meetings are held at out of the way places so as to discourage shareholders from attending. God forbid, they might ask embarrassing questions. They are asked to send in their proxies to confirm what has already been decided. The Chinese communist voting system is not much different.” See here. Thus Corporate CEOs, a small select group would have the power to spend untold billions to further whatever their political predilections may be.

A few years ago in a dissenting opinion, Justice Antonin Scalia sought to counter concerns by reform advocates about the potential corrupting influence of money in politics. Justice Scalia alluded to the signers of the Declaration of Independence as pledging their "fortunes" as well as their "sacred honor."

The solicitor General commenting on this put it very well when she said, "John Hancock pledged his own fortune, …When the CEO of John Hancock Financial uses corporate-treasury funds for electoral advertising, he pledges someone else's."

The impending decision of the Supreme Court may well be the most important event of a century. It could well end Democracy in the US as we know it. Instead of “power to the people” we may have “power to a few oligarchs.”