Politico Arena asked a second question today:
Will Citizens United alter American campaigns and if so, how?
My response:
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Politico Arena asked a second question today:
Will Citizens United alter American campaigns and if so, how?
My response:
A Swiss court just threw a wrench in the gears of an IRS effort to impose bad U.S. tax law on an extraterritorial basis, ruling that Switzerland-based UBS does not have to hand over data to the American tax authorities. This ruling nullifies an agreement that the Swiss government was coerced into making with the U.S. government last year.
In typical arrogant fashion, the IRS already has indicated that it still expects acquiescence, notwithstanding Switzerland’s strong human rights policy on personal privacy. The Bloomberg story excerpted below has the details, but it’s worth noting that this entire fight exists solely because the Internal Revenue Code imposes double taxation on income that is saved and invested, and imposes that bad policy on economic activity outside America’s border. But just as other governments should not have the right to impose their laws on things that happen in America, the United States should not have the right to trample the sovereignty of other nations:
The failure by U.S. citizens to complete certain tax forms or declare income doesn’t constitute “tax fraud” that would require Switzerland to disclose account data, the country’s Federal Administrative Court ruled in a judgment released today. …“The prosecutors at the Justice Department are not going to be happy with this opinion,” Namorato said in an interview in Washington. …U.S. Justice Department spokesman Charles Miller declined to comment. …The Internal Revenue Service said in a statement that while the agency hadn’t reviewed the ruling it “had every expectation that the Swiss government will continue to honor the terms of the agreement.” …Switzerland distinguishes between tax fraud, which is a crime, and tax evasion, which is a civil offense.
This battle is part of a broader effort by uncompetitive nations to persecute “tax havens.” Creating a tax cartel for the benefit of greedy politicians in France, Germany, and the United States would be a mistake. An “OPEC for politicians” would pave the way for higher taxes, as explained here, here, and here.
But this also is a human rights issue. Look at what happened recently in the thugocracy known as Venezuela, where Chavez began a new wave of expropriation. The Venezuelans with money in Cayman, Miami, and Switzerland were safe, but the people with assets inside the country have been ripped off by a criminal government. Or what about people subjected to persecution, such as political dissidents in Russia? Or Jews in North Africa? Or ethnic Chinese in Indonesia? Or homosexuals in Iran? And how about people in places such as Mexico where kidnappings are common and successful people are targeted, often on the basis of information leaked from tax departments. This world needs safe havens, jurisdictions such as Switzerland and the Cayman Islands that offer oppressed people the protection of honest courts, financial privacy, and the rule of law. Heck, even the bureaucrat in charge of the OECD’s anti-tax competition campaign admitted to a British paper that “tax havens are essential for individuals who live in unstable regimes.” With politicians making America less stable with each passing day, let’s hope this essential freedom is available in the future.
Yesterday, The Hill asked various pundits and politicos to respond to the Supreme Court’s Citizens United ruling. The Big Question (as their periodic feature is called) was, “Will corporate money change campaigns?” You can read my response here.
Today, that same newspaper invited me to blog some further thoughts on the Citizens United decision. Here’s what I wrote:
Critics of yesterday’s decision say the sky of American democracy is falling. Supporters—including myself—say it’s a great day for the republic and a vindication of the freedom of speech. How can this be? Are nonprofit think tanks and advocacy groups like my own Cato Institute, the ACLU, the NRA, and many other odd bedfellows who supported Citizens United all in the pockets of Wall Street, Big Oil, insurance companies, and others that President Obama assails as corrupting our politics? Leaving aside the issue of why the politician who got more of his campaign funding from Goldman Sachs than any other source would be going after the very industries that most support him, the asymmetry in this debate rests on the myth that money is an evil in the political system, and that therefore the American people want so-called campaign finance reform to “clean up” government.
Money is no more an evil in politics than it is in life generally. Some people may not like mud-slinging attack ads, but some people also don’t like SUVs, the Super Bowl, the Jay Leno Show, and many other things that people spend money on—including donations to Cato, the ACLU, the NRA, etc. The problem with money in politics isn’t the money, but rather the politics. So long as the government is powerful enough to dole out tax breaks, subsidies, stimulus funds, regulations, earmarks, and a whole host of other goodies (and baddies), those that stand to benefit (and lose) will spend money on the political process. The way to get rid of this behavior and spending—which is constitutionally protected in a whole host of ways: freedom of speech, freedom of association, the right to petition the government for redress of grievances, etc.—is to reduce the government’s power to affect so many people’s lives and transform economic incentives for businesses big and small. Reduce the size of government and K Street will melt away.
Finally, as my colleague Roger Pilon points out, 26 states have minimal campaign finance laws, with no evidence that those states have more corruption—or a more unequal “political playing field”—than states that strictly regulate. And that’s because the real reason we have campaign finance regulations—the dirty little secret behind the whole convoluted regime—is that it’s an incumbency protection racket. From the so-called “millionaire’s amendment” that the Supreme Court struck down in 2008 to the limits on corporate and union advocacy that the Court struck down yesterday, McCain-Feingold and all other campaign finance legislation—passed by self-interested politicians—is designed to make it harder for challengers. After-all, incumbents have the benefit of name recognition, taxpayer-funded travel to and around their home districts and states, taxpayer-funded campaign literature disguised as informational flyers touting all the great things a congressman is doing, and a host of other advantages.
The First Amendment is not a “loophole” for big business and those of us who want freer speech—without bureaucrats deciding who gets to speak when and how much—are not corporate shills. Free speech is the very foundation of our democracy, and we are stronger today for the Citizens United decision.
Today Politico Arena asks:
The road ahead for the White House? Are the Clinton and Reagan lessons useful for Obama?
My response:
Are the Clinton and Reagan lessons useful for Obama? Sure — if he paid them any heed. Reagan had a game plan from day one, grounded in reality, and he stuck with it even after the modest but expected electoral set-backs of 1982: Lower taxes, less regulation, and, with those signals, the economy would correct itself, as it did. Clinton was less focused and therefore was able eventually to shift when reality, in the form of the 1994 elections, forced itself upon him: He finally accepted the welfare reform congressional Republicans had crafted, admitted that “the era of big government is over,” and the stability that Reagan had secured after the turbulent Carter years continued.
So far, however, there are few signs that Obama will heed such lessons. He’s perhaps the most ideologically driven president we’ve ever had, but his ideology comes out of the left, which means that it clashes with the real world and with the larger part of the American electorate, once they’ve come to see it in practice. In that respect, in fact, a single example sometimes captures the character of an entire administration. Although there’s no shortage of such examples in this case, the eminent historian James Q. Wilson discusses one such in this morning’s Wall Street Journal — the administration’s decision to try confessed 9/11 mastermind Khalid Sheikh Mohammed and his four al-Qaeda cohorts in a civilian court in downtown Manhattan.
Set aside the profound legal questions that decision has raised — classified evidence, confrontation rights, finding an impartial jury, speedy-trial rights, protecting witnesses and jurors, pre-trial prejudice (Obama: “when he’s convicted and when the death penalty is applied to him”; AG Holder: “failure [to convict] is not an option”), procedural compromises needed to convict spilling over to ordinary trials, to cite just a few — Wilson asks a simple question: Will Washington pay for the terror trials? He starts with the nonmonetary costs, zeroing in on the actual real estate at play in the “inner perimeter” — the government buildings, churches, apartment buildings, public garages: Everyone who wants to get to one of those, he notes, “will face road blocks, car searches, radiation monitors and pedestrian checks,” for the year the trial is expected to last. And the monetary costs, excluding those of the federal government, are estimated to be $216 million, for a city that has lost over 6,000 officers in recent years due to budget cutbacks. And here’s the kicker: The decision to hold this trial not before a military commission on a secure army base but in crowded downtown Manhattan was made with no consultation with city officials.
The indifference to the practical, to say nothing of the legal and political, problems surrounding this decision bespeaks an arrogance so surpassing that it can be explained only by an ideologically driven vision of the world — an arrogance that in other hands and other centuries has led to human tragedies of incalculable proportions. We’re fortunate in America that we have constitutional checks on such power, as we saw yesterday, when the Court put a halt to congressional incumbents’ efforts to hobble challengers, and on Tuesday, when the people themselves put a halt to machine politics as usual. So will Obama learn? Not likely, but if he doesn’t, we are not without recourse.
As several of my colleagues noted yesterday, the Supreme Court handed down its landmark decision in Citizens United v. FEC. While I regarded the decision as a victory for free speech, a large number of folks on the left — many of whom support free speech in other contexts — were aghast at the decision, arguing that it would vastly enhance the influence of large corporations in the political process.
Part of my disagreement with these guys is that I’m just a free speech zealot. The First Amendment says “Congress shall make no law … abridging the freedom of speech,” and I don’t see how that language can be squared with a statute that limits the distribution of a political documentary. The best you can say, I think, is that limiting corporate influence is a “compelling state interest” sufficient to overcome the First Amendment’s ban on speech abridgment, but that’s just another way of saying that you don’t care about free speech very much.
Second, I think it’s important to remember that “corporations” encompass much more than large, for-profit businesses. They also include a wide variety of non-profit and advocacy groups, including the ACLU, the NRA, and NARAL, that are, by any reasonable definition, grassroots organizations advocating the views of large numbers of voters. Indeed, as the ACLU pointed out in its amicus brief, the Bipartisan Campaign Reform Act (BCRA) prohibited the ACLU from running ads criticizing members of Congress who voted for the awful FISA Amendments Act of 2008. Even if you think it’s appropriate for Congress to regulate the speech of Exxon-Mobil and Pfizer, I think it’s awfully hard to square the First Amendment with a law that limits the ability of NARAL or the NRA to advocate for its members’ views.
But more fundamentally, I don’t buy the idea that limiting corruption is a state interest sufficiently compelling to overcome the First Amendment interest in free speech. I think supporters of BCRA misunderstand how corporations wield influence and dramatically overestimate the power of television advertisements. It’s true, of course, that a corporation prepared to spend $1 million on ads criticizing a particular legislator will get that legislator’s attention. But there’s nothing unique about this. It can also get his attention by hiring a lobbying firm that employs a former staffer. It can get his attention by arranging $100,000 in bundled contributions from executives, clients, and friends of the company. It can get his attention by creating astroturf organizations. And there are probably lots of other mechanisms I haven’t thought of.
The key difference between independent expenditures and the other mechanisms is that independent expenditures are the most open and transparent. To run an effective “issue ad,” a corporation has to make an argument that is persuasive to voters. I don’t want to sugar coat the situation; sometimes independent expenditures finance ads that are sleazy and misleading. But given a choice between corporations spending their money on ads about how Senator Smith hates America or spending their money on K Street, I’ll take the ads, because at least voters still get the final decision.
Secretary of State Hillary Clinton gave a major speech on Internet freedom today. The text has been posted on the State Department web site, and Adam Thierer has a review of it up on the TechLiberationFront blog.
As a signal to other governments, it was a good speech. It placed the United States government on the side of freedom movements around the world and extolled how technology empowers them.
From a domestic perspective, it was nothing special. References to the liberating power of the Internet were carefully caveated with cautions about online dangers that could justify government intrusion on the Internet. Secretary Clinton was particularly equivocal about online anonymity.
The irony, of course, was provided by the breaking news of the day: the Supreme Court’s decision in Citizens United, discussed by my colleagues here, here, and here, as well as in this podcast. The case dealt with speech critical of Secretary Clinton produced by a corporation during her candidacy for the presidency. It reversed precedents allowing a ban on corporate and union speech about political candidates.
The Court said in Citizens United:
Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people. The right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it.
The fact that speech issues from people organized as corporations or unions makes no difference.
In her speech, Secretary Clinton echoed similar themes. “Countries that censor news and information must recognize that from an economic standpoint, there is no distinction between censoring political speech and commercial speech.” Perhaps she was trying to distinguish between economic consequences of speech and other consequences, but later she said:
[C]ensorship should not be in any way accepted by any company from anywhere. And in America, American companies need to make a principled stand. This needs to be part of our national brand. I’m confident that consumers worldwide will reward companies that follow those principles.
The Citizens United case is the product of a company taking such a stand, though not in the way Secretary Clinton meant it.
At Politico Arena, today’s focus is on the Court and campaign finance.
My comment: