Master Plan 5: Campaign Finance Shift and Corporate Speech

Overview

This episode examines how RFK's 1968 assassination inadvertently enabled a legal transformation that allowed unlimited corporate money in politics. Through strategic Supreme Court cases in the 1970s, particularly Buckley v. Valeo and First National Bank of Boston v. Bellotti, the judicial system equated money with free speech, dismantling post-Watergate campaign finance reforms.

RFK's Assassination and Senator Buckley's Election

• Robert F. Kennedy died June 6, 1968, creating a Senate vacancy in New York
• New York Governor Nelson Rockefeller appointed Republican Charles Goodell to fill Kennedy's seat until 1971
• Goodell became a vocal Nixon critic and Vietnam War opponent, angering the White House
• Nixon's team supported third-party candidate James Buckley of the Conservative Party as alternative
• Vice President Agnew campaigned against Goodell, calling him a "radical liberal"
• James Buckley won as first third-party Senate candidate elected in three decades
• Heavy hitters including bankers and board chairs funded Buckley's campaign through strategic luncheon
• Buckley served one term (1970-1976) but became vehicle for challenging campaign finance laws

Buckley v. Valeo: The First Amendment Challenge

• Federal Election Campaign Act (FECA) amendments signed October 1974 by President Ford
• FECA imposed contribution limits, spending limits, disclosure requirements, and created Federal Election Commission
• Ford's statement questioned "First Amendment implications" and suggested courts would resolve issues
• Lawsuit filed January 2, 1975, one day after FECA amendments took effect
• Senator James Buckley led plaintiff group including Eugene McCarthy, NYCLU, libertarian and socialist parties
• Charles Koch bankrolled lawsuit to support libertarian presidential candidate Roger MacBride
• Plaintiffs argued spending limits stifled political speech and favored incumbents over outsiders
• Ralph Winter argued money enables candidates to reach voters, comparing to restaurant advertising restrictions
• Archibald Cox defended FECA, citing Watergate's "corrosive influence of large contributions"
• Supreme Court heard arguments November 10, 1975; ruled January 30, 1976
• Court upheld contribution limits but struck down expenditure limits as First Amendment violations
• Ruling established that money is constitutionally protected speech, not just corruption tool

Virginia Pharmacy Case and Commercial Speech

• Alternative newspaper editor Jeffrey Bigelow charged for advertising New York abortion services in Virginia
• ACLU represented Bigelow in 1975 Supreme Court case on First Amendment grounds
• Ralph Nader's Public Citizen attorney Alan Morrison filed amicus brief introducing "listener theory"
• Morrison argued Virginia citizens had First Amendment right to receive information about legal services
• Justice Blackmun adopted listener rights argument in Bigelow ruling favoring First Amendment protection
• Morrison applied same logic to Virginia pharmacy case involving Lynn Jordan's prescription drug price challenge
• Thirty-four states prohibited pharmacies from advertising prescription drug prices, raising costs
• May 1976 ruling declared commercial speech protected under First Amendment
• Decision hailed as consumer victory enabling price transparency for drugs, funerals, eyeglasses
• Ruling created precedent that corporations possess First Amendment rights similar to individuals

First National Bank of Boston v. Bellotti

• Massachusetts passed 1976 law barring corporate spending on ballot initiatives unless materially affecting business
• State ballot measure proposed graduated income tax increasing taxes on wealthy individuals
• First National Bank of Boston president Richard Hill challenged law as unconstitutional
• Hill argued Massachusetts law violated corporate First Amendment rights under recent money-equals-speech precedent
• Massachusetts Attorney General Francis Bellotti defended law; argued corporations aren't natural persons
• US Chamber of Commerce and Pacific Legal Foundation filed amicus briefs supporting Hill
• Supreme Court heard oral arguments in 1977; justices initially favored narrow ruling
• Initial conference vote supported limited decision allowing corporations to prove material business interest
• Justice Brennan assigned to write opinion but withdrew, believing broader question would recur
• Lewis Powell wrote memo expressing surprise and pitched himself to write majority opinion instead

Lewis Powell's Strategic Victory

• Powell, author of 1971 Powell Memo advocating corporate political activism, saw opportunity for broad ruling
• Powell argued corporations have same Free Speech rights as individuals in political spending
• Initial 7-1 conference vote favored narrow ruling; Powell alone supported sweeping corporate speech rights
• Powell convinced wavering justices by citing Virginia Pharmacy case's listener rights principle
• Powell argued Massachusetts voters had right to hear corporate views on ballot measures
• Final 5-4 decision struck down Massachusetts law, giving corporations expansive political spending rights
• Justice Powell's written opinion stated corporate speech is "indispensable to decision-making in a democracy"
• Decision established principle that corporations effectively have same First Amendment speech rights as individuals
• Ruling transformed campaign finance landscape by removing restrictions on corporate political expenditures

The Rise of Political Action Committees

• Buckley decision allowed unlimited candidate spending but maintained limited individual contribution caps
• Money flowed through supposedly independent organizations not explicitly coordinating with candidates
• These independent expenditure groups became known as political action committees (PACs)
• In 1974, approximately 600 PACs existed; only 89 had corporate affiliations
• By 1980, PAC numbers nearly quadrupled to 2,300 organizations nationwide
• Nearly half of 1980 PACs had direct corporate ties, enabling massive spending increases
• Independent organizations exploited campaign law loophole allowing unlimited spending for Reagan and other candidates
• Corporate spending on political activities rose exponentially during 1974-1980 period
• Few politicians with power attempted to stop PAC proliferation and influence
• One conservative Republican combat veteran would later crusade against "elaborate influence peddling scheme"