On January 21, 2010, the day the Supreme Court delivered its landmark decision on Citizens United vs. Federal Election Commission that it would overturn most of a century’s worth of regulations on corporate political spending, the $140 billion New York State Common Retirement Fund corporate governance department happened to be meeting to discuss the problem of untraceable political spending by companies in its portfolio. Patrick Doherty, the fund’s director of corporate governance, was making the pitch to New York State Comptroller Thomas DiNapoli that the political spending issue should be a central focus of New York Common’s corporate governance campaign for the coming year. The overlap was coincidental; before the court’s final decision on Citizens United, the case hadn’t attracted too much attention in the comptroller’s office or among most of the general public. That changed after January 21. Despite New York Common’s pre-Citizens United efforts to improve disclosure around corporate political spending — which primarily consisted of a concerted support of any shareholder resolution pushing the issue — the fund’s leaders hadn’t heard constituents express their opinions on the topic. But they spoke up after the decision on Citizens United, says DiNapoli.
“Since Citizens United, many folks expressed concern,” he says, adding that New York Common changed tack after the court’s January 2010 decision, too. “We’ve always put a priority on the transparency and accountability of a company’s operations, but all that was obviously heightened by the Supreme Court decision and a sense that some corporations were going to embark on an even more aggressive pattern of engaging in corporate spending for political campaigns.”
The court’s decision on Citizens United cleared the way for an avalanche of corporate money to fall into the political process by striking down constraints on political spending from companies’ corporate treasuries as a violation of the freedom of speech protected by the First Amendment. (The law still prohibits direct corporate contributions to federal candidates, but otherwise, companies face no restrictions as to the amount, recipient or timing of their political contributions.) The consequences of the court’s decision came into sharp relief right away. According to data from Public Citizen’s Congress Watch division, spending by outside groups between the 2006 and 2010 midterm elections jumped from about $50 million to $275 million. This year’s presidential, state and local races are expected to set records as far and away history’s priciest; in April alone, Barack Obama and the Democratic National Committee took in $43.6 million, and Republican candidate Mitt Romney’s campaign and the Republican National Committee raised $40.1 million.