July 5, 2010
Cato's Take on Congressional Response to Citizens United
The Cato Institute last week issued its free-market analysis of the DISCLOSE Act, Senator Schumer and Representative Van Hollen's response to Citizens United, the Supreme Court's decision invalidating federal restrictions on direct corporate spending on campaign ads under the First Amendment. The Policy Analysis, titled The DISCLOSE Act, Deliberation, and the First Amendment, by John Samples, argues that the congressional response to Citizens United includes a set of poorly conceived regulations of capital and speech markets that won't substantially benefit shareholders or voters but will chill political speech.
As we posted here (with links to the bills), the DISCLOSE Act increases corporate reporting requirements (upheld under Citizens United) and limits direct campaign spending by government contractors and foreign corporations.
Samples argues that these new proposed regulations interfere with capital markets and the market in political speech, that they won't substantially benefit either shareholders or voters, and that they will chill political speech. From the Executive Summary:
DISCLOSE mandates disclosure of corporate sources of independent spending on speech, putatively in the interest of shareholders and voters. However, it is unlikely that either shareholders or voters would be made better off by this legislation. Shareholders could demand and receive such disclosure without government mandates, given the efficiency of capital markets. The benefits of such disclosure for voters are likely less than assumed, while the costs are paid in chilled speech and in less rational public deliberation. . . . [Moreover,] the case for prohibiting speech by [government contractors, TARP recipients, and companies managed by foreign nationals] seems flawed. In general, DISCLOSE exploits loopholes in Citizens United limits on government control of speech to contravene the spirit of that decision and the letter of the First Amendment.
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