At the dawn of this election year, American democracy is emerging as a victim of collateral damage in a long war over the responsibilities corporations bear to their shareholders and the nation.
The battle has been underway since at least 1970, when John Gardner, a Republican who had earlier resigned from President Lyndon Johnson’s cabinet, founded Common Cause and sparked the movement for campaign finance reform. On one side were men like Gardner and Edmund W. Littlefield, a natural resources company executive who then headed the Business Roundtable. They argued that a truly responsible CEO has equal and concurrent responsibility to his employees, shareholders, customers, communities and the nation.
Their views long held sway. So much so that, in 1981, the Business Roundtable and the nation’s most prominent CEOs formally embraced the multi-constituent view of corporate responsibility and, along with it, opposition to undue and inappropriate influencing of politics by corporations.
But beginning with a much-publicized, May 1970, New York Times Magazine article by economist Milton Friedman, conservatives have gradually redefined corporate responsibility. Friedman held that CEOs and corporations had responsibility only to maximize the value of shareholders’ equity and that a substantial portion of that equity should be held by senior management in the form of stock options.
By 1997, the same Business Roundtable which in 1981 so honorably defined corporate responsibility formally reversed its view. This embrace of the Friedman view has prompted big business to open wide its previously rather pinched-off spigot of campaign contributions and lobbying budgets, turning a multi-decade period of corporate responsibility into the era of corporate irresponsibility.
The shift is largely why income inequality in the United States is now the most extreme since 1928 and why the average public company CEO now earns 400 times as much as his average employee.
While relatively few bulwarks remain against this rising tide of oligarchic corporate influence, Common Cause has continued to work for campaign finance reform, including the McCain-Feingold Bipartisan Campaign Reform Act of 2002. But the progress forged through McCain-Feingold was dealt a near fatal blow in 2010 with the Supreme Court’s landmark decision in Citizens United v. FEC.
In Citizens United, the Court determined that corporations essentially are “people” and that the First Amendment prohibits government from limiting political speech funded by corporations or unions. The decision did not remove the ban on direct corporate contributions to candidates and parties. But by giving corporations and unions the unlimited ability to fund “independent” political ads, it handed a relatively small group of CEOs near-unlimited powers of persuasion in what the Founding Fathers intended as the quintessential democratic process of the Republic.
Another ruling in 2010, by the District of Columbia Court of Appeals, applied Citizens United to allow SpeechNOW.org, a not-for-profit organization, to accept unlimited contributions from individuals for independent expenditures. Thus “Super PACs” were born.
Before we as a nation succumb to the abandonment of fairness and balance in our electoral process, we need to press the current Congress to stop the bleeding. And we need to use the 2012 election cycle to determine whether the values and views of the candidates can provide the long-term electoral process fixes we need and thought we had found in McCain-Feingold.
To start, institutional investors, policy makers and voters should demand administrative policies, legislative action, and voluntary steps by corporations to limit corporate political spending.
The Securities and Exchange Commission, in conjunction with the FEC, should use its existing powers to force public disclosure of all corporate political contributions and lobbying to the investing public. The disclosure requirement should include contributions made through a “bundler” or intermediary such as the U.S. Chamber of Commerce or the Business Roundtable.
Separate and apart from any regulatory action the SEC might take, executives should be pushed to make a voluntary choice not to use company funds to influence elections.
The two best ‘voices’ to help advance this cause and begin to again redefine corporate responsibility are the nation’s public pension funds and progressive civil rights organizations.
The civil rights community traditionally has been little interested in campaign finance reform. But it is indisputable that big business and its massive campaign contributions to Congressional candidates have directly enabled insensitive immigration policies, regressive tax policies, and continuing attacks both on reproductive rights for women and equal rights for gays and lesbians. That should spur civil rights organizations to demand an end to political contributions which work against a fair and inclusive society.
We are at a genuine turning point in electoral politics, when as a nation we will decide whether corporations and a few extremely wealthy individuals or the working majority of blue- and white collar workers, small business people, students and others striving for the American Dream, will control our government. If we don’t rein in corporate political contributions and their influence, then for the middle class the analogy of bringing a pocket knife to a gunfight will continue to stand true.
Special thanks to Common Cause and Mr. Hindery for allowing us to use this column in its entirety.
—Leo Hindery Jr. is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with USW President Leo Gerard) of The Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media, and is currently an investor in media companies.
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