Friday, January 29, 2010

Achilles heel

As you've probably seen, ad nauseum, by now, when President Obama attacked the Supreme Court's recent campaign-finance ruling, Justice Samuel Alito shook his head and seemed to mouth the words "Not true." (Some commentators thought he said more.)

Some people have compared Alito to Joe Wilson (R.Whacko), who called Obama a liar during a speech earlier this year. But give the Justice a pass: he had just been dissed, from about 12 feet away, by the most powerful man in the world, and dozens of millions of people around the world were watching.

The President's ire was understandable on a number of levels. As a constitutional-law expert (he taught the subject), he is aware of how the majority reached out for a case that would give it the opportunity to reach a decision that was (a) not required; (b) far broader than necessary to reach the issues raised; and (c) unnecessarily overturned 100 years of understanding about the nature of campaign-finance laws. From a political perspective, logic suggests that the decision will heavily favor Republicans. So it's not surprising that Obama was ticked.

In his address, the President raised a sore point about the decision: it seems to open the door to foreign money flooding into US elections. Although Justice Kennedy's decision said that the court would reserve a decision on foreign money to another day, in truth under his decision there is no way to keep contributions from other nations out.

The fact is, there is no clear way to define a foreign corporation for purposes of the Supreme Court's decision. If a corporation is organized in another country, but owned by Americans, is it an American company? If a corporation--like CITGO--is organized here, but owned by people from another country (in CITGO's case, Hugo Chavez's Venezuela), is it a US corporation? What about a US subsidiary of a foreign company? The financial world treats a public corporation as being effectively owned by anyone with a bloc of 15-20% of the outstanding stock (unless someone else controls as much or more). So, if a foreign person or company owns 20% of a large, otherwise American company, can that controlling foreign company direct the subsidiary's money to US campaigns?

That is the Achilles heel of the decision. There is widespread, indeed, I think general agreement that we should not let foreign contributions affect the selection of our leaders. And this is a question that the Supreme Court will have to confront. Indeed, the best chance for getting the court to re-think last weeks' ruling is for a state or, better, Congress to pass a law defining and restricting contributions by corporations that are defined as foreign. When confronted with having to decide what a foreign corporation is, the justices may realize how wrong-headed they're ruling was.

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