Despite ‘Citizens United’, politics remains hazardous for corporations

June 29, 2012

Business

JOHN STODDER, MBJ blogger

The controversial Citizens United decision ostensibly unleashed American corporations to spend more freely on political advocacy. But despite the green light, many of the most powerful consumer brands in America are under pressure to get out of politics. And due to the added scrutiny, some have heeded the call.

In the 2010 decision in Citizens United vs. FEC,  the U.S. Supreme Court held that corporations and unions were like individuals, with free speech rights to spend money on “electioneering communications.”

But freer corporate speech has brought with it greater scrutiny of corporate politicking.

Wal-Mart, Kraft, PepsiCo, Coca-Cola, Amazon.com and McDonald’s all recently dropped out of the conservative American Legislative Exchange Council (ALEC), despite having been members for decades. These companies yielded under pressure from activists whose actions made it clear that the companies’ consumer-friendly branding could be threatened by their association with the organization.

Quoted in Advertising Age, Common Cause Deputy Director Doug Clopp said he believed the companies were concerned about their reputation, especially among minority consumers.

“Kraft knows who buys lots of mac and cheese,” Clopp said. Common Cause is a long-standing not-for-profit that pushes government accountability.

Citizens United opponents said in a petition to Congress to amend the Constitution that the Supreme Court’s 2010 ruling means corporations now are “entitled by the U.S. Constitution to buy elections and run our government.”

But recent events at ALEC might alleviate that fear. Pressure from social media, street protests and the fear of consumer abandonment has caused major corporations to stop the politicking they were comfortable doing until very recently.

ALEC is a 39-year-old not-for-profit organization chartered as an educational organization. It is conservative, dedicated to “limited government, free markets [and] federalism,” according to its website. Its founders included Paul Weyrich, a pioneer in political direct mail who helped elect Ronald Reagan and helped found the conservative Heritage Foundation. In its early years, ALEC was heavily involved with the Reagan Administration’s Task Force on Federalism.

Over time, ALEC became known mostly for drafting model legislation for state legislators to introduce on issues like educational vouchers, pension reform, Enterprise Zones and deregulation.

After ALEC got involved in causes that seemed to drift from its pro-business agenda, such as immigration enforcement and voter identification, the organization became a target of high-profile protests.

In Arizona, the site of ALEC’s last annual meeting, protests by Occupy Phoenix and Occupy Tucson were seen by Arizona activists as having prompted Arizona Public Service, the state’s largest energy utility, to drop out too, although the company said its decision “has nothing to do with the state that ALEC is currently in.” Instead, APS lobbyist Jessica Pacheco told the Arizona Capitol Times that the decision was based on “cost cutting.”

One protester, Diane D’Angelo, who was stationed outside the ALEC meeting in Scottsdale, summarized what activists believe the association and its members are all about: “Exxon, Wal-Mart, private prison companies, the Koch brothers: they meet with our legislators in closed door sessions, then bills that serve those corporations’ interests get passed by those same legislators,” she was quoted as saying in the Arizona Capitol Times.

According to NJ.com, Wal-Mart’s defection, announced June 1, came because ALEC “was delving too much into non-economic issues.” That statement refers to ALEC’s purported association with the increasing number of state laws requiring voters to have photo IDs, strict policies regarding illegal immigration, and the “Stand Your Ground” laws that make it easier for gun owners, in the wake of shooting incidents, to claim self-defense.

Wrote Maggie Sans, Wal-Mart’s vice president for public relations and government affairs: “We feel that the divide between these activities and our purpose as a business has become too wide.”

Common Cause has branded ALEC a lobbying organization and has filed complaints in 35 states accusing the organization of campaign-finance violations. In addition, Common Cause has filed a whistleblower suit charging ALEC with defrauding the IRS by engaging in influence-peddling that is forbidden to 501(c)(3) organizations.

ALEC’s spokesperson, Kaitlyn Buss, said in a statement to Advertising Age that the corporate dropouts were due to “smear campaigns that produce manufactured outrage and the façade of grassroots support … bankrolled by extreme liberal front groups and union leaders [whose] goal is to simply demonize anyone who rejects their big-government agenda.”

Buss added that Wal-Mart’s decision was understandable, because it and other companies have been under intense pressure to leave ALEC. She also pointed out that many other corporations, including AT&T, Bayer Corp., ExxonMobil Corp and Johnson & Johnson, have retained their memberships.

Nonetheless, in April, even before Wal-Mart’s defection, ALEC issued a press release quoting its chairman as saying the group would be “redoubling our efforts on the economic front.” ALEC has eliminated two task forces that had been charged with addressing gun laws and voter identification, two issues that lacked any obvious “economic front” connections, but are staples of the conservative movement.

The changes and defections illustrate new realities for businesses that seek to influence politics.  Any political involvement by business could be controversial with anti-business activists, but when an organization that brands itself a business group strays into lobbying on issues that have no direct impact on the corporate bottom line, the reaction might threaten a member company’s reputation and brand.

Perhaps the latitude Citizens United gave corporations to play politics isn’t as unlimited as some feared and others hoped.

– John Stodder

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