In 1907 Congress banned corporate contributions to political campaigns; on June 25, 2007, in a 5-4 decision, the U.S. Supreme Court gave a green light to such contributions. "After today," Justice David Souter wrote in his dissent to last week’s decision, Federal Election Commission v. Wisconsin Right to Life, "the ban on contributions by corporations and unions and the limitation on their corrosive spending when they enter the political arena are open to easy circumvention." A century of reform aimed at mitigating what a 1986 Court ruling called the "distortive effects of immense aggregations of wealth" on politics may be unraveling.
Interviews: "The Dark Side of the Gilded Age" (June 12, 2007)
Jack Beatty, the author of Age of Betrayal, talks about the poverty, inequality, and corrupt politics that marred America's past and set us on a course toward today.
How did we end where we began? Souter’s dissent furnishes a roadmap to futility. The story begins in the Gilded Age, when the political parties funded campaigns by assessing the salaries of government employees like Deputy Inspector No. 75 of the United States Custom Service on Manhattan’s Hudson River Piers—Herman Melville. For 20 years Melville, who had so fallen from the favor of the reading public that he seriously considered publishing under another name, remitted 2 percent of his $4-a-day salary to the New York Republican Party. And for a stretch in the 1880s, the same cut went to the national Republican Party. Passage of the Pendleton Civil Service Act in 1883 ended the jobs-for-kickbacks system of campaign finance. "Not unnaturally, corporations filled the vacuum," Souter dryly notes. In the 1896 presidential election, direct contributions from corporate treasuries helped swell William McKinley’s Republican campaign fund to $16 million against the $600,000 raised by the Democrat-Populist William Jennings Bryan. "All questions in a democracy [are] questions of money," said McKinley’s campaign manager, Mark Hanna, prophet.
"Political Assessments in the Coming Campaign" (July 1892)
An argument for campaign-finance reform. By Theodore Roosevelt
Public recoil against the corruption of politics by business led McKinley’s successor, Theodore Roosevelt, to act. In his 1905 message to Congress, Roosevelt condemned the perception that the dollar speaks louder than the vote. "No enemy of free government [is] more dangerous,” he stated, “and none so insidious." Roosevelt called for a ban on "all contributions by corporations to any political committee or for any political purpose." In 1907, Congress obliged, passing the Tillman Act. Its sponsor found it a "sad thought that the Senate is discredited by the people of the United States as being a body more or less corruptible or corrupted." Forty years later, in the Taft-Hartley Act, Congress extended the ban on corporate donations to labor unions, leaving open, in Souter’s words, the "right of a union to spend money on electioneering from a segregated fund raised specifically for that purpose from members, but not drawn from the general treasury." This so-called PAC (Political Action Committee) exception for both corporate and union electioneering was formalized in the Federal Election Campaign Act of 1971.
A controversial court decision, Buckley v. Valeo (1976), cracked opened the door to direct corporate contributions, holding that the congressional ban applied only to "communications [radio and television ads] that in express terms advocate the election or defeat of a clearly identified candidate for federal office." The test for "express terms" was the use of so-called "magic words"—"vote for," "elect," "defeat," "reject." Corporations and unions could pay for "issue advocacy" ads out of their treasuries so long as they eschewed the "magic words."