In the wake of Citizens United v. FEC and SpeechNow.org v. FEC, American politics has experienced a precipitous escalation of corporate influence in the form of “dependence corruption”—a sort of systemic corruption in which campaigns’ overreliance on private finance distorts the democratic process. Unlike quid pro quo corruption,^[1] however, dependence corruption has no current means of judicial redress. As such, however more diffuse its effects, dependence corruption poses a more tangible threat to democratic institutions. To mitigate its harms, significant reforms are warranted.

The Birth of a New Form of Corruption

To some degree, American politics has always been under the sway of corporate interests. Through the late 19th century, overt corruption was endemic^[2]—political machines paid people to vote for machine-backed candidates, positions of public office could be bought, and industrialists bribed legislators for favorable treatment.^[3] The turn of the century, however, saw the dawn of the Progressive Era, and with it, the administrative state.^[4] Operating through employees who had “no authority other than to guarantee strict compliance” with an expanding regulatory corpus, administrative agencies significantly curtailed the prevalence of the sort of quid pro quo corruption characteristic of the 19th century.^[5]

Today, corruption primarily comes in a subtler, yet equally pernicious, form. Although quid pro quo corruption is tightly policed by a dense web of laws and regulations, private money influences politics under the guise of ”speech”—a reality that can be directly attributed to a series of Supreme Court and Appeals Court decisions that loosened legal constraints on corporate political spending.

In Buckley v. Valeo (1976), the Supreme Court struck down several provisions of the Federal Election Campaign Act (FECA)—most relevant here 18 U.S.C. § 608(e)(1)’s hard cap on the political expenditures of groups not associated with campaigns (hereinafter “independent expenditures”)^[6], which contravened the First Amendment by placing “direct quantity restrictions on political communication.”^[7] The Court found the Government’s asserted anti-corruption interest not sufficiently compelling to justify the free speech burden, reasoning that independent expenditures do not involve “prearrangement or coordination” with a campaign and thus pose no risk of quid pro quo corruption.^[8]

The sea change, however, came with Citizens United v. FEC (2010), where a 5-4 majority voided Bipartisan Campaign Reform Act (BCRA) §203’s prohibition on corporations’ use of treasury funds to run “broadcast, satellite, or cable communication[s]” referring to a “clearly identified candidate for Federal office” within one month of a primary election or two months of a general election (hereinafter “electioneering communications”).^[9] As relevant here, the Government relied heavily on Austin v. Michigan Chamber of Commerce (1990), which had upheld a limit on corporate independent expenditures by reference to the government’s compelling interest in limiting the influence of “huge corporate treasuries”^[10] on election outcomes.^[11] The Citizens United Court rejected this rationale, overturning Austin in holding that the First Amendment prohibits “political speech restrictions based on a speaker’s corporate identity.”^[12]

Just two months after Citizens United, the D.C. Court of Appeals decided SpeechNow.org v. FEC, where it ruled that 2 U.S.C. §441a(a)(1)(C) and 441a(a)(3)’s hard caps on political action committee (PAC) contributions^[13] did not apply to contributions made to PACs “[operating] exclusively through independent expenditures.”^[14] Relying on Buckley and Citizens United, the Court rejected the Government’s asserted anti-corruption interest, observing that when a PAC is not directly coordinating with a campaign, there is no risk of quid pro quo corruption for PAC contributions to exacerbate.^[15] In effect, just as Super PAC spending could not be limited,^[16] contributions to such Super PACs should be similarly unrestricted.

In conjunction with Citizens United, SpeechNow.org catalyzed the rapid proliferation^[17] of what have been aptly termed “Super PACs”^[18]–incorporated entities empowered^[19] to accept unlimited contributions^[20] under the guise of operational independence from campaigns. While independent expenditures roughly doubled each election cycle between 2000 to 2008,^[21] they increased nearly sevenfold between the 2008 and 2012 elections—from $144 million to over $1 billion, over half of which came from Super PACs. And 2012 was no fluke; the 2016 and 2020 elections each also saw billions of dollars in independent expenditures, most of it again coming from Super PACs.

It is important to note that this spending is largely untraceable due to “a substantial loophole in [the] disclosure regime,”^[22] through which Super PAC contributions are funneled through “dark money groups” (DMGs). DMGs, typically organized as 501(c)(4) “social welfare” organizations,^[23] are, like Super PACs, empowered to make unlimited independent expenditures, but differ in two meaningful respects: by having (1) a “primary purpose restriction” that requires that political advocacy account for less than half of the group’s total spending;^[24] and (2) nearly no disclosure requirements^[25] (unlike the extensive disclosure requirements^[26] to which Super PACs are subject).

 

The primary function of a DMG is thus as an intermediate destination of funds.^[27] By contributing to DMGs that, in turn, contribute to Super PACs, corporations can circumvent disclosure requirements.^[28] Independent expenditures arising from this phenomenon have been termed “gray money,”^[29] and have rapidly overtaken direct DMG independent expenditures (“dark money”)^[30] as the primary medium of DMG influence. Indeed, dark money expenditures underwent a decline contemporaneous with the increase in gray money expenditures between 2012 and 2020.^[31] With disclosure requirements so easily circumvented, corporate influence on federal electoral politics is not only widespread, but largely covert.

 

Campaign Finance and Democracy

The ascendancy of Super PACs poses myriad concerns for the health of democracy. Founded on the principle that government is “instituted among Men” and derives its legitimate power “from the consent of the governed,” the Founders envisioned American democracy to be an extension of and empowered by its people.^[32] The surge in corporate political participation in the wake of Citizens United and SpeechNow.org has enabled and incentivized politicians to depend on private finance, distorting policy and reducing the relative political power of the populace.

Such a distortion can be seen in state-level policy shifts that followed Citizens United. For instance, after 23 states dropped pre-existing corporate independent expenditure limits in the wake of the decision, corporate income tax rates in those states decreased by an average of 4%, while policies without clear corporate stakes experienced no statistically significant shifts.^[33] But whatever practical impact Citizens United had and continues to have, it all pales in comparison to the departure from American democratic philosophy that the decision arguably represented.

Indeed, scholars and commentators alike have argued that the unrestricted participation of corporations in the political process represents a significant deviation from the Founders’ vision.  In Captured, Senator Sheldon Whitehouse finds explicit support for this understanding of corruption in the early laws of the Republic. He notes Thomas Jefferson’s call to prevent the rise of an “aristocracy of our monied corporations”^[34]—a comment, Whitehouse argues, that was in no way aberrant, as this sentiment’s thrust had already been enshrined in law: at the time of the Founding, “most states [had] prohibited any political contribution by a corporation.”

Professor Zephyr Teachout goes a step further, arguing that the Constitution itself contains within it an “anti-corruption principle” that reflects the Framers’ “obsession” with corruption^[35]—the understanding that corruption consists in the “self-serving use of public power for private ends” that encompasses not just quid pro quo corruption but “decisions to serve private wealth made because of dependent relationships.”^[36] In the Framers’ view, Teachout posits, money’s impact on politics is “alchemical…changing the nature of the agent that it works upon.”^[37]

Professor Lawrence Lessig, arguably the most prolific scholar in the area, has variously termed the manifestation of the phenomenon Teachout described asor “type 2,”^[38] or “dependence,”^[39] corruption. In his amicus brief for McCutcheon v. FEC, Lessig argues that these sorts of corruption were the Framers’ “dominant concern.” The Founders viewed the American project “as a fresh start from the corruption they saw as endemic…in England,” which stemmed from the “core problem…that Parliament was not dependent on the people because of its conflicting dependence on the King.”^[40]

By virtue of this historical context, Lessig argues, “[t]he Framers had a very specific conception of the term ‘corruption,’” which they “predicated of institutions” and conceived of primarily in terms of the effects of “improper dependence”^[41] on “the general moral health of the body politic.”^[42] Lessig argues that anything other than sole dependence on the electorate would have been sufficient, in the Founders’ view, to give rise to this form of corruption.^[43]

 

The Problem at the Court:

The Supreme Court’s stance on the distinction between quid pro quo corruption and “softer” forms of corruption was not always so hardline. Indeed, as early as the mid-20th century, the Supreme Court had shown itself attuned to and concerned over the rise of corporate political participation. In United States v. Int’l Union United Auto., Aircraft & Agr. Implement Workers of Am. (1957), Justice Felix Frankfurter acknowledged the “evil”^[44] of concentrated wealth in the political sphere, its “deleterious [influence] on federal elections,”^[45] and its potential “to undermine the…integrity of the Republic.”^[46]

In FEC v. Mass. Cit. for Life (1986), Justice Brennan echoed Frankfurter’s concerns in no uncertain terms, drawing a distinction between political speech made by corporations and that made by natural persons.  While the “[r]elative availability of funds” to be allocated to specific political positions can be “a rough barometer of public support,” Brennan observed, the same does not hold true of the availability of corporate funds.^[47] Instead, the availability of corporate funds for political purposes merely “reflect[s]…the economically motivated decisions of investors and customers.” “These resources,” he wrote, “may make a corporation a formidable political presence, even though the power of the corporation may be no reflection of the power of its ideas.” In other words: corporate participation in politics, far from being driven by sincere ideological convictions, is inextricably connected to the interests of stakeholders.

Nearly half a century later, in McConnell v. FEC (2003), Justices Stevens and O’Connor would echo Frankfurter and Brennan’s concerns, acknowledging “the broader threat from politicians too compliant with the wishes of large contributors” even in the absence of “quid pro quo arrangements.”^[48] “[C]orruption,” Stevens and O’Connor emphasized, “extends beyond explicit cash-for-votes agreements to undue influence on an officeholder’s judgment.”

Notwithstanding the Court’s long history of gesturing approvingly toward the project of reigning in something like dependence corruption, Citizens United seems to have quashed any hope of success for such a project. In the view of the Citizens United majority, Austin’s “antidistortion rationale”—that the government has a compelling interest in mitigating “the corrosive and distorting” impact on politics of “immense aggregations of wealth…accumulated with the help of the corporate form”—was not only incorrect but risked producing “dangerous” and “unacceptable” consequences for the First Amendment.^[49] Corporate political spending, insofar as it is not directly coordinated with campaigns, cannot be limited regardless of the concerns that scholars and the Court itself have expressed.

 

Solutions

Counterintuitively, Lessig does not so much take issue with Citizens United as with SpeechNow.org. Citizens United dealt with limits on expenditures that were, for all intents and purposes, totally independent of campaigns. The risk of something like dependence corruption resulting from such expenditures is low by Lessig’s own acknowledgement. SpeechNow.org, in contrast, dealt not with independent expenditures—that is, “political speech presented to the electorate”—but with contributions to bodies that make such expenditures, like PACs.^[50] Lessig argues that there is a legal and logical gap in equating independent expenditures and contributions to PACs making independent expenditures. These actions are sufficiently different, Lessig posits, that the contributions at issue in SpeechNow.org should have been separately assessed for corruption risk without reliance on Citizens United’s holding.

The most practical solutions for dealing with dependence corruption are non-judicial. Broadly, such reforms can take either of two forms: to, as Lessig suggests, “make government more responsive to a democratic will,”^[51] or to, as the Supreme Court suggests, “identify and remove the temptation” to accede to “undue influence.”^[52]

Lessig proposes a solution that consists in incentive realignment—which he believes would be both constitutional under current Supreme Court precedent and effective at reducing corporate influence in federal elections. Such a realignment must make it such that it “[makes] sense for politicians to opt into a different system to fund their elections.”^[53] To accomplish this, he proposes what he terms “the Grant and Franklin Project.”^[54] Under this plan, each voter would get a $50 voucher to donate to congressional candidates, and an additional $100 voucher to donate to presidential candidates—both subsidized by a slight increase in taxes.^[55] The catch: only candidates that agree to fund their campaigns exclusively from these two sources could receive voucher donations^[56]. Lessig argues that a lucrative, alternative source of campaign funding such as this would incentivize candidates to eschew PAC contributions without limiting them.^[57]

The weakness in the proposal, of course, is its narrow scope. Lessig acknowledges this, noting that additional reform would be necessary to address the disproportionate political power of moneyed interests enabled by the lack of restrictions on independent expenditures.^[58] This, he argues, could only be fully addressed through a constitutional amendment that overturns Citizens United (or on separate grounds by the judiciary, as earlier discussed, SpeechNow.org).^[59]

Another solution, albeit also with a narrow scope, is what Professor Bruce Cain terms “semi-disclosure.”^[60] This system would do away with the 501(c)(4) disclosure exemptions, but in a way that would be more politically palatable.^[61] Cain’s proposed system would require publishing anonymized, general information about donors (e.g., which industry they are affiliated with) that would help voters assess politicians’ potential dependence interests.^[62] In effect, Cain, argues this would address a significant part of the problem with dependence corruption: voters’ inability to identify it and elect politicians accordingly.^[63]

Putting aside potential First Amendment issues with Cain’s proposal,^[64] some scholars have argued that much more fundamental reform is necessary. Professor Guy-Uriel Charles argues that dependence corruption itself is merely a symptom of a more significant underlying problem: the private financing of elections.^[65] That is, the issue is not Super PACs, but the system from which Super PACs have arisen. The way in which such a system might be structured is not within the scope of this paper, but there have been many such proposals that are detailed elsewhere.^[66]

 

Conclusion

That corporations play an outsized role in federal politics is inarguable. Where the issue becomes complex is whether and how this role, in its current distorted form, should be addressed. Legislative efforts have historically focused on limiting contributions to PACs. These efforts have failed on First Amendment grounds. Absent the overturning of SpeechNow.org, restrictions on PAC contributions simply will not pass judicial muster. As a practical matter, reform efforts should accordingly focus more on incentive realignment than imposing restrictions on expenditures, contributions, or anything else that might be construed by the Court as First Amendment-protected speech. Incentive realignment could, for instance, take the form of Lessig’s Grant and Franklin Project. While such an effort is yet untested, relatively narrow in focus, and would come at significant taxpayer expense, it would also avoid the First Amendment pitfall that past attempts at addressing dependence corruption have succumbed to. Absent judicial action or fundamental changes to the private electoral finance system, however, there is seemingly no way to fully curb the corporate political participation that Citizens United and SpeechNow.org have made a mainstay of American politics.

 

 

 

^[1] “[T]he notion of a direct exchange of an official act for money.” McCutcheon v. Fed. Election Comm’n, 572 U.S. 185, 192, 134 S. Ct. 1434, 1441, 188 L. Ed. 2d 468 (2014).

^[2] A history of corruption in the United States – Harvard Law School, Harvard Law School (2022),  (last visited May 20, 2024).

^[3] Id.

^[4]Philip K. Howard, From Progressivism to Paralysis, 130 Yale L.J. Forum 370, 375 (2021) (“Today…governance takes place…in dictates imposed by thick books of regulations, administered mechanically by public employees”).

^[5] Id.

^[6] As recently characterized by the U.S. Court of Appeals for the D.C. Circuit, independent expenditures “expressly urge the election or defeat of an identified candidate but without coordination with any candidate.” Citizens for Resp. & Ethics in Washington v. Fed. Election Comm’n, 971 F.3d 340, 342 (D.C. Cir. 2020)

^[7] Buckley v. Valeo, 424 U.S. 1, 18 (1976).

^[8] Id., 424 U.S. at 57. See also Arizona Free Enterprise Club’s Freedom Club PAC, et al. v. Bennett, et al; McComish, et al. v. Bennett, et al., 564 U.S. 721, 751 (2011) (observing that independent expenditures break “[t]he candidate-funding circuit” and thus “[negate] the possibility…of quid pro quo corruption”).

^[9] Citizens United v. FEC, 558 U.S. 310 (2010).

^[10]Austin v. Mich. Chamber of Com., 494 U.S. 652, 669 (1990).

^[11] Citizens United.

^[12] Id., 558 U.S. at 365.

^[13] 2 U.S.C. § 441a(a)(1)(C); 2 U.S.C. § 441a(a)(3).

^[14] SpeechNow.org v. FEC, 599 F.3d 686, 690 (D.C. Cir. 2010).

^[15] Id; see also McCutcheon v. FEC, 572 U.S. 185, 134 S. Ct. 1434, 188 L. Ed. 2d 468 (2014) (affirming Court’s stance on quid pro corruption).

^[16] See Citizens United.

^[17]Since Citizens United, a Decade of Super PACs, Brennan Center for Justice (2019),  (accessed Feb 26, 2024)

^[18] Alternatively called “independent-expenditure-only committees (IEOCs).” See Congressional Research Service, Super PACs in Federal Elections: Overview and Issues for Congress, R42042, at I (Sept. 16, 2016), https://sgp.fas.org/crs/misc/R42042.pdf.

^[19] See Citizens United.

^[20] See SpeechNow.org.

^[21] Center for Responsive Politics, Outside Spending, OpenSecrets.org, https://www.opensecrets.org/outside-spending/summary (last visited Aug. 16, 2024)..

^[22] A Shield for David and A Sword Against Goliath: Protecting Association While Combatting Dark Money Through Proportionality, 133 Harv. L. Rev. 643, 643–44 (2019).

^[23] 26 U.S.C. § 501(c)(4) (2018).

^[24] See Citizens United, 558 U.S. 310; SpeechNow.org, 599 F.3d 686.

^[25] 26 U.S.C. § 6104(d)(3) (2018).

^[26]  11 C.F.R. § 109.10(b),(e); 52 U.S.C. § 30104(b)(2) (2018).

^[27]Center for Responsive Politics, Dark Money Basics, OpenSecrets.org, https://www.opensecrets.org/dark-money/basics (last visited Aug. 16, 2024).

^[28] “[W]hile [super PACs] must disclose their contributors, that reveals little when a contributor is an entity that need not identify its own underlying donors. In that way, entities subject to the Rule can serve as a kind of pass-through, non-disclosure vehicle.” Citizens for Resp. & Ethics in Washington v. Fed. Election Comm’n, 971 F.3d 340, 345 (D.C. Cir. 2020).

^[29] Stuart McPhail, Publius, Inc.: Corporate Abuse of Privacy Protections for Electoral Speech, 121 Dick. L. Rev. 1051 (2017).

^[30] Citizens for Resp. & Ethics in Washington v. U.S. Dep’t of the Treasury, Internal Revenue Serv., 21 F. Supp. 3d 25, 30 (D.D.C. 2014).

^[31]Center for Responsive Politics, Outside Spending by Group, 2020, OpenSecrets.org, https://www.opensecrets.org/outside-spending/by_group/2020?chrt=2016&disp=O&type=U (last visited Aug. 16, 2024).

^[32]The Declaration of Independence, para. 2 (U.S. 1776).

^[33]GILENS M, PATTERSON S, HAINES P. Campaign Finance Regulations and Public Policy. American Political Science Review. 2021; 115(3):1074-1081. doi:10.1017/S0003055421000149.

^[34]Whitehouse, S. (2017). Captured: The Corporate Infiltration of American Democracy. Pg. 5. New York, The New Press.

^[35] Zephyr Teachout, The Anti-Corruption Principle, 94 Cornell L. Rev. 341, 373 (2009).

^[36] Id at 374.

^[37] Id at 376-77.

^[38]Lawrence Lessig, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It (2011). Pg. 228.

^[39] Lessig, Lawrence. “What an Originalist Would Understand ‘Corruption’ to Mean.” California Law Review, vol. 102, no. 1, 2014, pg. 3. JSTOR, http://www.jstor.org/stable/23784363, (accessed 27 Feb. 2024).

^[40] Id at 6.

^[41] Id at 2.

^[42] Id at 7.

^[43]Brief Amicus Curiae of Professor Lawrence Lessig in Support of Appellee, McCutcheon v. FEC, 2013 WL 3874388 (U.S. 2013) (No. 12-536). Pg. 3.

^[44] United States v. Int’l Union United Auto., Aircraft & Agr. Implement Workers of Am., 352 U.S. 567, 577 (1957).

^[45] Id at 585.

^[46] Id at 570.

^[47] FEC v. Mass. Cit. for Life, 479 U.S. 238, 258-59 (1986).

^[48]McConnell v. FEC, 540 U.S. 93, 143 (2003).

^[49] Citizens United at 531.

^[50] Lessig, Lawrence. “What an Originalist Would Understand ‘Corruption’ to Mean.” California Law Review, vol. 102, no. 1, 2014, pg. 21. JSTOR, http://www.jstor.org/stable/23784363, (accessed 27 Feb. 2024).

^[51]Lawrence Lessig, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It (2011). Pg. 234.

^[52] McConnell at 153.

^[53] Lawrence Lessig, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It (2011). Pg. 314.

^[54] Id at 266.

^[55] Id.

^[56] Id at 267.

^[57] Id.

^[58] Id at 272.

^[59] Id.

^[60] Bruce E. Cain, Is “Dependence Corruption” the Solution to America’s Campaign Finance Problems?,” 102 Cal. L. Rev. 37, 46-47 (2014).

^[61] Id.

^[62] Id.

^[63] Id at 47.

^[64] “NAACP v. Alabama ex rel. Patterson protects the privacy of one’s associations, including membership in organizations engaged in issue advocacy.” A Shield for David and A Sword Against Goliath: Protecting Association While Combatting Dark Money Through Proportionality, 133 Harv. L. Rev. 643, 644 (2019).

^[65] Guy-Uriel E. Charles, Corruption Temptation, 102 Cal. L. Rev. 25, 36 (2014).

^[66] See e,.g., Reimagining Federal Election Funding | Bipartisan Policy Center, Bipartisanpolicy.org (2022),  (last visited May 17, 2024).