Foreign Money Is Flowing Into U.S. Elections, Alito’s Lying Lips Notwithstanding

An FEC commissioner argues that any direct, <em>Citizens United</em>-style political spending by publicly traded corporations may be illegal.

Photo: Drew Angerer/Getty Images

IN HIS 2010 State of the Union address, Barack Obama attacked the then-new Citizens United Supreme Court decision for making it possible for U.S. elections to be bankrolled by “foreign entities.”

Justice Samuel Alito, part of the Citizens United majority, was in the audience, and shook his head and seemed to mouth “not true.”

But a member of the Federal Election Commission sounded the alarm Wednesday, explaining that it is indeed true — and quixotically calling on her chronically deadlocked colleagues to make it stop.

Alito was right to the extent that Citizens United didn’t change the law that forbids political spending by “foreign nationals” (which covers foreign governments, corporations, and individuals). Federal contractors also may not engage in such spending.

But what Citizens United did do was make it possible for U.S. corporations to spend unlimited amounts directly from their corporate treasuries on electioneering — and the money in corporate treasuries belongs to the company’s shareholders.

“Arguably, then,” wrote Ellen Weintraub, one of the six members of the FEC, in a New York Times op-ed, “for a corporation to make political contributions or expenditures legally, it may not have any shareholders who are foreigners or federal contractors.”

Since essentially all significant publicly traded “American” corporations are owned to some degree by foreign nationals (and certainly some have shareholders who are federal contractors), that means that any electoral spending by such corporations is potentially illegal.

That would presumably be even more the case for subsidiaries of foreign companies that are wholly owned by their parent company but incorporated in the U.S.

Weintraub says that at the next FEC meeting, she “will move to direct the commission’s lawyers to provide us with options on how best to instruct corporate political spenders of their obligations under both Citizens United and statutory law.”

One possible solution she mentions would be to “require corporations that spend in federal elections to verify that the share of their foreign ownership is less than 20 percent, or some other threshold.”

Of course, as Weintraub acknowledged in an interview, it’s unlikely the FEC will do anything at all, since the FEC now almost always deadlocks 3-3 along partisan lines. (While the commissioners are appointed by the president, no more than three can belong to the same party.)

But, said Weintraub, “One of my goals is to try to jump start a national conversation” on current U.S. campaign finance law in general and the potential of foreign money seeping into elections via corporations specifically.

Bradley Smith, a former FEC commissioner and one of the main intellectual forces behind the ongoing deregulation of the U.S. campaign financing system, disagrees strenuously with Weintraub.

First, as Smith accurately points out, Citizens United has to date resulted in comparatively small amounts of direct political spending by corporations. According to the Washington Post$68 million, or 12 percent, of the $549 million raised by Super PACs for the 2016 election has come from companies’ treasuries. (This is separate from the much larger amounts raised by regular corporate PACs, but they were legal before Citizens United.)

Add the hundreds of millions raised in regulated increments from Americans by candidates and party committees, and it’s clear that the quantity of cash coming from foreign sources is a tiny percentage of the total in the U.S. political system. And while nobody knows who is funding the “dark money” political entities active in this election, that likely doesn’t change the overall calculations very much.

Second, Smith again correctly says, foreign nationals already had many means pre-Citizens United to influence the U.S. political system, including lobbying the government, owning newspapers, and contributing to think tanks.

Third, he asserts, the FEC already has rules that forbid foreign nationals from making any of the decisions about where to direct political spending, directly or indirectly.

So this all adds up, Smith argues, to Weintraub cynically engaging in “xenophobia” and “Trumpism” by using “hysteria over foreign funds to try to whip up public opposition to American participation in politics.”

I personally don’t find Smith’s perspective convincing. Americans (and citizens of most countries) have historically believed that any foreign influence over their political system is too much. When Greece’s version of the CIA funneled $549,000 to the Nixon campaign in 1968, Nixon didn’t announce that no one should be worried because this was a small percentage of the money he was getting from Americans; instead, he covered it up.

Likewise, most Americans likely also object to the pre-Citizens United avenues that foreign nationals have to influence U.S. politics. And their existence doesn’t mean that it’s wrong to object to a new avenue, particularly one that so directly bears on who holds political office.

It’s also not particularly reassuring that the FEC demands that the decisions about political spending be made by U.S. citizens. Even assuming full disclosure of spending and vigorous FEC enforcement, American corporate executives are certainly intelligent enough to figure out where their parent companies or foreign shareholders would like money directed without being told.

Finally, what Smith describes as “xenophobia” and “Trumpism” on Weintraub’s part, others might call “George Washingtonian.” After all, Washington warned in one of the most famous political speeches in U.S. history of “foreign influence and corruption … through the channels of party passions” — exactly what Citizens United may make possible.

That said, Smith is right that a zero-tolerance rule for corporations with any foreign ownership could lead in unexpected directions. For instance, the largest single shareholder in the New York Times is Mexican billionaire Carlos Slim, who owns 16.8 percent of the company — so Weintraub’s op-ed itself could be seen as foreign influence on U.S. politics. Of course, while Smith would argue that such a point of view is “hysteria,” others might see it as the beginning of a useful debate about whether Americans want wealthy foreigners to own their most important newspapers.

Top photo: A demonstrator holds a sign outside the U.S. Chamber of Commerce in Washington, D.C., during a rally against the Supreme Court’s Citizens United decision, Jan. 21, 2015.

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