The New American Oligarchy

It is time to introduce Supreme Court Justice Anthony M. Kennedy to the real world of limitless money in American politics.

Seven years have passed since his landmark opinion in Citizens United and four years since a companion ruling (McCutcheon), which together erased virtually all caps on corporate and individual donations in federal elections. In that time, an extremely wealthy elite and their ingenious lawyers have seized the legal opening, expanding both the dollar value of the U.S. political marketplace and their own substantial influence.

Activist entrepreneurs, hedge fund and private equity titans, and corporate moguls are the new political overlords. They’re not just passively exploiting the age-old leverage of cash to keep friendly incumbents in office. Some are writing checks to shape American society to their own specifications. To better secure a foothold for their personal ideologies, they are hiring media experts, pollsters, lobbyists, and consultants (perhaps the best known is Steve Bannon) to wage a sophisticated, multi-front information war.

This ecosystem bears little resemblance to the garden of fairness that Justice Kennedy portrayed in Citizens. He argued that every individual uses money to purchase speech; why shouldn’t corporations? Sure, donors gain access and even influence over officeholders, he conceded, but it’s not, strictly speaking, bribery. If corporations abuse their rights, he said, shareholders can just exert their “corporate democracy” via proxy voting.

This perspective is grade-school simplistic. Citizens United “will go down as one of the most naive decisions ever rendered by the court,” the Washington political commentator E.J. Dionne has written. Former President Jimmy Carter was grim in a 2015 radio interview, saying that Citizens United has transformed the United States into “just an oligarchy with unlimited political bribery.” He added: “We’ve seen a complete subversion of our political system as a payoff to major contributors.”

It is little wonder that so few Americans vote; many are fed up with a system that is no longer in their hands but floats on the sea of “soft money” and “dark money” that sustains candidates and party committees. Justice David Souter, in a 2007 dissent, wrote that reform efforts focus on “the special access and guaranteed favor that sap the representative integrity of American government and defy public confidence in institutions.”

It could get worse. Billionaire oligarchs, though not exclusively Republican, tend to have conservative leanings. A new generation could change that. But for now, at least, the wealthiest among us have the ability to extend and perpetuate an anti-government, anti-tax, anti-regulation creed. Anyone who believes in a sturdier social contract for the betterment of all is just a Communist.

How did this happen?

It doesn’t take a PhD in jurisprudence to see the pattern of libertarianism in Justice Kennedy’s decisions. Government cannot regulate women’s bodies (Roe). Government cannot interfere in the intimate lives of consenting adults (Romer and Obergefell). Government cannot regulate handguns (Heller). Government cannot unreasonably interfere with a corporation’s right to emit pollutants (Coeur Alaska). And according to Citizens United vs. Federal Election Commission, government cannot limit the amount of money corporations (or unions) can spend to elect or defeat candidates for federal office. Four years later, with Kennedy’s vote, McCutcheon vs. FEC extended Citizens by removing limits on how much an individual can give in aggregate to federal candidates, parties, and corporate Political Action Committees (PACs).

Kennedy anchored his rationale in Citizens to the free speech protections of the First Amendment. If one believes that corporations, which cannot vote or stand for office, are legal persons that enjoy every right to buy limitless political speech, regardless of any other right that might be trampled, Kennedy’s conclusion will make sense. Yet First Amendment rights have never been absolute; they often compete with other legitimate government interests. To buttress his case, Kennedy found that the government’s interest in preventing corruption and securing fair elections fails to outweigh protected free speech. The reason, he wrote, is that limiting corporate speech doesn’t prevent corruption. Importantly, Kennedy defined corruption in its narrowest form: red-handed vote-buying, or its appearance.

Let that sink in. Because corporate spending limits won’t prevent the direct, “quid pro quo” flavor of corruption, Americans must endure a more pervasive and corrosive form: a corrupt system, where companies pour unlimited donations into political war chests to buy access and power over decisions — far greater speech, access, and influence than any individual could reasonably buy. Kennedy’s argument, in effect, is that the system doesn’t end up in the same nasty place as “quid pro quo” vote buying, doesn’t strictly obligate candidates to their financial patrons, doesn’t directly shape party platforms, and doesn’t even have the appearance of influence peddling.

This is a pristine state of human nature and experience that few of us would recognize. Why would anyone bother to bribe a member of Congress when it’s perfectly legal to write limitless checks to a campaign committee, then seek a friendly meeting about policy adjustments? A post-Citizens analysis by the nonpartisan Center for Responsive Politics concluded: “The ‘beauty’ of the campaign finance system — if you’re trying to use it to influence the actions of public officials — is that nobody ever has to break the law for it to work.”

It is ironic that the key vote in Citizens was cast by a third-string nominee to the court. Raised in California in a Catholic family, Kennedy’s resume presented a pillar of the Establishment: Stanford, London School of Economics, Harvard Law, practicing attorney, law professor, assistant to Gov. Ronald Reagan, Army National Guard member. He arrived in Washington only after the Senate had rejected Robert Bork to fill Lewis Powell’s seat. The second nominee, Douglas Ginsburg withdrew (smoked marijuana!). And finally, President Reagan nominated an immaculate 9th circuit appeals court judge, Anthony Kennedy.

Chief Justice John Roberts authored the McCutcheon decision after Kennedy cast his swing. McCutcheon makes the same oversimplified assumption as Citizens — that unlimited spending on elections doesn’t lead to corruption — if by corruption you mean an individual “quid pro quo” transaction amounting to a bribe. Justice Stephen Breyer attached a pointed dissent. McCutcheon is a decision, he argued, “that substitutes judges’ understandings of how the political process works for the understanding of Congress; that fails to recognize the difference between influence resting upon public opinion and influence bought by money alone; that overturns key precedent; that creates huge loopholes in the law; and that undermines, perhaps devastates, what remains of campaign finance reform.”

In 2000, all federal elections cost a total of about $3 billion. By 2016, the total had more than doubled to an estimated $6.9 billion. That’s enough to buy almost 35,000 30-second ads during a prime-time, nationally televised presidential debate. A few clicks through the website OpenSecrets.org, maintained by the Center for Responsive Politics, reveals just how toxic the current system has become:

• More money flows to politicians with real power (incumbents) and especially to members chairing Congressional committees.
• When the balance of power shifts from one party to the other, interest group contributions “shift almost immediately” to the party in power.
• “Money often equals access, and access equals action.”
• “Political operatives have learned they can live on the edge of the law with little fear of interference from the Federal Election Commission.”
• After Citizens United, the 2010 mid-term elections saw an immediate surge in outside money, more than 40% from secret donors who were able to exploit a legal loophole allowing them to funneled anonymous cash through non-profit “front groups.” These groups remain legal.
• There is no way to know whether prohibited foreign money is fueling any of these non-profits, because disclosure isn’t required.

This is Washington’s well-oiled machine. When a congressman on the Armed Services Committee, for example, sends out fundraiser invitations to defense contractors, “nobody bats an eye,” the center says. Exhibit One might be the Michigan heiress Betsy DeVos, who famously conceded in a 1997 article that big donors are indeed buying influence. “We expect a return on our investment,” she wrote. DeVos says her family has probably given at least $200 million to Republicans over the years, but with a straight face she doubts this had anything to do with her nomination by President Trump as Secretary of Education. Exhibit Two might be Representative Chris Collins, the upstate New York Republican who, in a moment of candor before the House voted on a major corporate tax cut in 2017, told journalists: “My donors are saying, ‘Get it done or don’t ever call me again.” His largest 2016 campaign donors were health care providers, oil and gas companies, telecom services, and electric utilities.

Many of the biggest recent corporate contributors to federal campaigns are household names: AT&T, Honeywell, Blue Cross/Blue Shield, Lockheed Martin, Comcast, Boeing, and Northrop Grumman. The top-10 individual donors in the last three federal election cycles (2014–2018) have poured more than half a billion dollars into political efforts. They include Tom Steyer, a private equity investor who tops the list at $169 million (and recently began running TV ads calling for Trump’s impeachment). Others are Michael Bloomberg, the financial data billionaire and former New York mayor; Charles Koch of the privately held conglomerate Koch Industries; the casino magnate Sheldon Adelson; and the hedge fund world’s Paul Singer (Elliott Management), Donald Sussman (Paloma Partners), George Soros (Soros Fund Management), and Steven Cohen (SAC Capital).

Two more hedge fund investors deserve special attention: James Simons and Robert Mercer. They jointly built the quantitative-oriented investment powerhouse Renaissance Technologies and together donated nearly $65 million in the 2014–2016 cycles — Simons to liberals and Mercer to conservatives. How much they might have privately given to non-profit “front groups” is unknown. Mercer is by far the more activist and has been a pivotal financial backer of Bannon, the onetime presidential advisor who runs Breitbart News. Jane Mayer’s riveting profile of Mercer in The New Yorker in March 2017 must be read and re-read by anyone trying to understand how we arrived at this campaign finance abyss and the adjacent Trump presidential swamp. In it, she notes that Mercer’s foundation helped finance the same anti-Hillary Clinton advocacy group whose case yielded Justice Kennedy’s landmark opinion: Washington, D.C.-based Citizens United.

The Citizens ruling upended more than a century of efforts to reform the system and keep elections clean. When corporations began financing party machines around the turn of the century and the electorate rebelled, President Theodore Roosevelt, an ardent progressive, spoke out forcefully, and Congress in 1907 passed the Tillman Act. The law prohibited corporations and national banks from contributing money to federal campaigns. Later laws required campaign finance disclosures, and the Taft-Hartley Act (1947) expanded the corporate money ban to labor unions. In 1971, Congress relaxed this outright ban and opened the door to what became known as Political Action Committees. These allowed corporations and unions to gather voluntary electioneering funds from employees and members so long as they were segregated from the general treasuries.

As is often the case, a mammoth government scandal pushed reform forward. Soon after Watergate resulted in the resignation of President Nixon, Congress enacted strict limits on federal campaign contributions. What was Watergate’s money connection? Investigators found that contributions to Nixon’s Committee to Re-Elect the President had been diverted to finance a team of burglars that picked the locks at Democratic National Committee headquarters to bug the place.

A critical legal test came two years after Nixon’s downfall. In Buckley vs. Valeo, the Supreme Court upheld contribution limits because they served the government’s interest in safeguarding the integrity of elections. The justices also ruled, however, that corporations and unions could use general funds for election communications after all, so long as they did not advocate the election or defeat of a particular federal candidate.

The reversal of Buckley by Citizens and McCutcheon must have Teddy Roosevelt bellowing from the grave. Many commentators believe it will take another monumental scandal, like those that spawned the Progressive Era, plus a sustained public outcry, to turn the tide against unlimited injections of money into federal campaigns. For now, Robert Mercer is to be congratulated. His personal investment in a single advocacy group paid off, leaving the rest of us to scratch for a more perfect union against the power of billionaires and the Fortune 500.

The system is rotten, and everyone knows it. Everyone, that is, except Anthony Kennedy.