For democracy lovers, a January 2010 U.S. Supreme Court vote was like a "shot heard 'round the world". In its landmark decision, the Court took the position that corporate funding of independent political broadcasts in candidate elections cannot be limited under the First Amendment of the Constitution, which upholds the right to free speech.
The Court's 5-to-4 vote effectively struck down a provision of a campaign finance law that prohibited all corporations, both for-profit and not-for-profit, and unions from broadcasting “electioneering communications" that mentioned a candidate within 60 days of a general election or thirty days of a primary.
President Obama stated that the decision "gives the special interests and their lobbyists even more power in Washington - while undermining the influence of average Americans who make small contributions to support their preferred candidates." He later elaborated in his weekly radio address saying, "this ruling strikes at our democracy itself" and "I can't think of anything more devastating to the public interest". On January 27, 2010, Obama further condemned the decision during his 2010 State of the Union Address stating that, "Last week, the Supreme Court reversed a century of law to open the floodgates for special interests - including foreign corporations - to spend without limit in our elections. Well I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities." [See Wikipedia for quotes]
Significantly as a result of this ruling, as of early October, interest groups are spending five times as much on the 2010 congressional elections as they did on the last midterms. By a ratio of 7 to 1, these are conservative (not liberal) donations, which finance the campaigns of Republican candidates.
Interest groups cannot finance the Republican or Democratic Party apparatus; only modest individual contributions can. In this arena, Democrats are contributing more than Republicans.
For years, many Americans have watched with increasing dismay as corporations have bought US votes in Congress. Indeed, this process has led to regulatory capture as one industry after another finances campaigns of candidates who pledge to deregulate the economy. For instance, there are three or four financial sector lobbyists for every member of the US Congress. These lobbyists do not only affect the financial reform agenda, they also influence the outcomes of legislation relating to most other issues, such as health care, energy and climate change.
Both in Europe and the US, there is increasing recognition of the fact that the power of the financial services lobby undercuts the normal functioning of democracy.
There is tremendous anger at the grassroots that the financial institutions that acted so recklessly in triggering the financial crisis are the beneficiaries of government largesse. In fact there are estimates that in Europe and the US, some $14 trillion has been spent to bailout and provide guarantees to financial institutions. However, in the United States, financial institutions have become more consolidated than they were before the crisis and traders are still earning enormous bonuses. In some cases, the bigger and riskier the deals, the larger the bonuses received. These perverse incentives enrage the growing numbers of unemployed and underemployed people as well as the millions that have lost their homes to foreclosure.
This grassroots anger fueled the formation of American for Financial Reform (AFR) -- a coalition of over 200 organizations -- that came together in 2008 in order to lobby on the Dodd-Frank Financial Reform legislation that recently became law. Because of the efforts of the AFR, the law includes many provisions that protect the public good and the rights of consumers.
European Members of Parliaments are launching a "Finance Watch," in order to counter "dangers to democracy" arising from the asymmetry between the power of the financial services lobby and the relative absence of counter-expertise of civil society. The Finance Watch Declaration states that "When it comes to the environment or to public health, non-governmental organizations (NGOs) have developed a counter-expertise which reports a different point of view compared to the one of corporations. The same happens when it comes to social policies and industrial relations, where the voice of employers is balanced by the one of trade unions. These disputes allow elected officials to hear opposite points of reasoning. But when it comes to finance, this is not the case. Neither trade unions nor NGOs have developed an expertise capable of countering the banks' expertise."
Transatlantic relationship will be impaired if watchdog groups such as AFR and Finance Watch do not thrive and ensure that the financial system is accountable to voters.
Regulatory capture or the control of government institutions by corporate institutions is anathema to democracy. It was possibly the major factor leading to a series of debacles: the US financial crisis (which erupted globally), the Gulf oil spill, and the upsurge in contaminated food.
Many Americans have long seen campaign finance laws as the best hope for restoring democracy in the US and were glad to hear President Obama's pledge to work with the Congress to overturn the Supreme Court decision. But the political tides are not moving in favor of democracy. Money can't buy love or democracy.
By Nancy Alexander