Would Independent Spending Have Been 40 Percent Lower Without Citizens United?

The Sunlight Foundation's Paul Blumenthal complains that "the Supreme Court's Citizens United ruling allowed this election to be the costliest and least transparent midterm in recent history." He estimates that "outside money made possible by the Citizens United ruling" accounted for "40 percent of the total spent by outside groups" in the run-up to this week's elections. He arrives at this figure by adding together "$126 million in undisclosed money" (by which he means money from groups that are not legally required to disclose their donors) and "$60 million spent by groups that were allowed to raise unlimited money, but still had to disclose." Divide $186 million by $454.7 million (the Sunlight Foundation's latest figure for "total outside spending"), and you get 41 percent. But it is misleading to imply that none of that money would have been spent (mostly on defeating Democrats and electing Republicans) if it weren't for Citizens United v. FEC, the January  decision in which the Supreme Court overturned restrictions on political speech by unions and corporations.

The groups that don't have to disclose donors (to which Blumenthal attributes $126 million of the independent spending) include labor unions such as AFSCME, trade groups such as the U.S. Chamber of Commerce, and "social welfare" nonprofits organized under Section 501(c)(4) of the Internal Revenue Code, such as the National Rifle Association. Prior to Citizens United, these groups were prohibited from 1) explicitly calling for a federal candidate's election or defeat or 2) sponsoring "issue ads" that are the "functional equivalent" of such express advocacy (i.e., "susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate"). By lifting those bans, Citizens United gave all of these organizations more freedom to talk about politics close to elections, although 501(c)(4) groups still have to worry about IRS rules that say they may not focus mainly on partisan politics.

While unions took advantage of Citizens United early on to engage in newly permitted express advocacy, many other groups have been more cautious, sticking with "issue ads" that might or might not qualify as the "functional equivalent" of express advocacy. Although it is fair to say that much of this speech would have been illegal prior to Citizens United, we don't know exactly how much, and we don't know where the money that funded it would have gone if the Supreme Court had never issued its ruling. It is plausible that the ability to give without disclosure prompted some donations that would not otherwise have occurred. But a lot of the money that went to 501(c)(4) groups this year might have gone instead to groups organized under Section 527 of the Internal Revenue Code, which have to disclose donors but were permitted to sponsor campaign ads even before Citizens United.

Speaking of which, I'm not sure which organizations Blumenthal has in mind when he says "groups that were allowed to raise unlimited money, but still had to disclose" (to which he attributes $60 million of the independent spending). If he is including 527 groups in that category, he is exaggerating the impact of Citizens United, which did not affect their legality.

I am not saying Citizens United had no impact on independent spending. Groups like Karl Rove's American Crossroads GPS (a 501(c)(4) spinoff of the 527 group American Crossroads) were created especially to take advantage of the freedom allowed by the decision. But its impact on the overall level of independent spending probably was modest in this year's political environment, which guaranteed that Republicans eager to take control of Congress would spend a lot of money.

That same political environment also meant that spending more money was not the key to victory. Once you consider party and candidate spending as well as spending by independent groups, Democrats outspent Republicans by a substantial margin, for all the good it did them.

Previous coverage of Citizens United's impact on this year's elections here. Look for my cover story about the decision's causes and consequences in the current (December) issue of Reason.