Part Two-Understanding Citizens United: Why Segregated Funds are Insufficient

In a previous post, I argued that the Court could have concluded that because Citizens United is a non-profit corporation and because it received a de minimis amount of contributions from for-profit corporations, the federal statute forbidding corporations from making campaign expenditures from their general treasury does not apply to Citizens United and non-profit corporations like Citizens United. I argued that the Court did not opt for that option because it wanted to find the prohibition unconstitutional. In this post, I explain why the Court did not find the segregated fund requirement sufficient.

Even though Justice Kennedy's opinion for the majority in Citizens United (CU)describes the federal statutes as prohibiting corporate speech, that description is not fully accurate. What the statutes at issue basically say to corporations (and unions) if you want to spend money on campaigns, you have to create a separate, segregated fund or PAC, for that purpose; you may not use funds from your general treasury. Thus, as a matter of fact, corporations could spend, they just had to create a separate fund to do so. So, why was that not good enough?

The Court's first argument is that a PAC is a separate association from the corporation. Thus, when the PAC speaks, it is the PAC speaking and not the corporation speaking. It seems to me that the Court simply made-up that argument and it is demonstrably wrong. The PAC can easily speak on behalf of the corporation. Afterall, this is the corporation's PAC. The money comes from the corporation's employees and officers. Alternatively, the corporation can choose to use the PAC to speak but obscure the association between the corporation and the PAC. It is pure sophistry to conclude that when the corporation's PAC speaks it is not the corporation that speaks.

The Court's second move is more compelling than the first. Here the Court argues that setting up a PAC is a burdensome affair: they're expensive to administer, they're subject to extensive regulations, you have to file detailed reports etc.

So, the question for the Court then is whether there is a good reason for the government to require corporations to assume what the Court views as a tremendous burden before the corporation can engage in political speech.