Those five … are Samuel Alito, Clarence Thomas (who did not speak during the proceedings), Anthony Kennedy, Roberts and Scalia. That leaves a 5-4 vote, with Ginsburg, Sotomayor, Stephen Breyer and John Paul Stevens largely in support of current campaign finance laws. Kennedy dissented in Austin and could turn that dissent into the majority view now… . Kennedy left little question about his view on the matter during today’s oral arguments.

When the Supreme Court asked to re-hear oral arguments in this case, the justices specifically posed the question whether they should overturn one previous campaign finance case, Austin v. Michigan Chamber of Commerce (1990), and the parts of another, McConnell v. Federal Election Commission (2003), that uphold the regulation of corporate spending in elections.

In Austin, the Court found that electioneering communications rules were in the government’s interest to prevent “the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form.”

The Hill reports on the McCain-Feingold press conference outside the Supreme Court following the reargument:

After the arguments, McCain and Feingold both blasted justices for being dangerously out of touch.

“The questioning shows a real disconnect, a strong disconnect between the justices and political reality,” McCain said at the press conference.

“I wish that one of the justices who were standing up for people’s First Amendment rights had ever run for county sheriff,” he added. The justices showed an “extreme naïveté of the influence of corporate money and soft money.”

The Supreme Court upheld the McCain-Feingold law several times while former Justice Sandra Day O’Connor served on the court. O’Connor was the Senate majority leader in the Arizona state Senate; the court now has no member who has held elected office.

O’Connor’s departure and the arrival of Alito has shifted the balance of the court against McCain-Feingold, according to people on both sides of the debate.

Feingold warned that, should the court roll back sections of McCain-Feingold by overturning Austin and McConnell, it would leave Congress with “no ability” to reform the campaign finance system.

For me, this is very troubling. The Court may find a way to rule narrowly in this case, without drastically altering the law. But if not, my next post on this topic will be titled Notes from the Corpocracy. The Court’s opinion should appear later this year.

B

I watched an excellent debate on these issues on Bill Moyers’ Journal the other night. The transcript is here, or you can watch it. Trevor Potter, an attorney who has filed a friend-of-the-court brief defending the McCain-Feingold legislation observed that oil giant Exxon Mobil, through its political action committee (which accumulates funds through voluntary contributions of shareholders, employees and management) spent about 900 thousand dollars in the last election cycle under the restrictions imposed by current laws. But the company made 85 billion dollars net profit last year. If even a fraction of that money could be tapped for political campaigns, the megaphone given to such entities would be huge beyond compare.

What if a candidate was going to take positions Exxon Mobil didn’t like, perhaps strongly advocating alternative energy over oil, emphasizing measures against global warming, or increased taxation on oil companies? Exxon could threaten to drown such a candidate in a deluge of attack ads and unlimited funding for their opponent. Candidates not willing to toe the corporate line could be deterred from running.

Potter argues that by law, vast economic power has been given to corporations – power not available to individuals – but it was never intended for corporations to engage in unregulated, unlimited political speech. A corporation’s sole purpose is to maximize profit. It cannot vote, it is not among the constituents represented by elected officials. The First Amendment protects the free speech of PEOPLE, not of these creatures of statute we call corporations.

Noted First Amendment lawyer Floyd Abrams responded with a broad defense of free speech:

And why are we limiting free speech? If the movie had been funded in a different way, if the funds had come from different sources … then it would be protected. But because the funding came from a corporation. Because of that, we can make it a crime to put the movie out. That I think is an unacceptable articulation of not only what the First Amendment has meant. But what it ought to mean, as well. We should not make technical distinctions about the degree of First Amendment free speech rights, depending on the nature of the entity that engages in the speech.

If a company wants to speak out beyond an issue. If they want to condemn a Senator who is opposing legislation that has an impact on the company’s interest, economic or otherwise to me it’s just anathema to the notion of free speech to say, “Well, you have to understand it’s a company. Their funding is different.” That’s not the way we ought to go about deciding the limits of free speech.

Check the transcript for the entirety of the discussion. I’ll try to link a report on the oral arguments taking place today. I agree with Potter’s argument that corporations aren’t people, and their “speech” should be regulated. They have a huge advantage over individuals in amassing funds – we have given them those preferences in a careful balancing of our societal interests, of which economic prosperity is one part. To suddenly allow corporations to also dominate the political money scene - when their interest is not societal betterment but solely profit maximization – would have a negative long term impact on the people of our nation. 

B

The change to Section 382 of the tax code — a provision that limited a kind of tax shelter arising in corporate mergers — came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company’s losses to offset their gains and avoid paying taxes.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

“Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no,” said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. “They basically repealed a 22-year-old law…”

“It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops,” said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. “I’ve been in tax law for 20 years, and I’ve never seen anything like this.”

More than a dozen tax lawyers interviewed for this story — including several representing banks that stand to reap billions from the change — said the Treasury had no authority to issue the notice.

Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to “carry out the purposes of this section.”

Wait a minute. The purpose of 382 was to minimize abuse of shell companies reducing the taxes of the acquiring firm in a merger? And now Paulson is “carrying out the purposes of the section” by eliminating the limitations on using shell companies to reduce the taxes of the acquiring firm in a merger? What!?

[C]orporate tax lawyers quickly realized the enormous implications … Administration officials had just given American banks a windfall of as much as $140 billion.

That’s $140 billion above and beyond anything discussed pertaining to “The Bailout.” So from what I’ve gathered, billions of taxpayer dollars have been pumped into the banks, with the idea of unfreezing the “credit crisis” (brought on by investment bank failures born of the sub-prime mortgage crisis) by encouraging lending. However, no strings (or the wrong strings) were attached, so big the banks aren’t lending the money — instead they’re just acquiring smaller banks. And with the repeal-by-fiat of a 22-year-old law (!!!), the big banks are receiving a substantial tax windfall on these acquisitions.

Somewhere there is a line between propping up the financial system (for everyone’s benefit) and unjustly enriching major financial entities. Meet that line. Oh wait, it’s back there…

President-Elect Obama has his work cut out for him. This cliche brought to you by my desire to mention President-Elect Obama in this blog. Congratulations!

B

The full panel of the Sixth Circuit had affirmed (by a 9-6 vote) the district court’s decision earlier this month. The Supreme Court (in an extraordinarily rapid move) has today reversed the Sixth Circuit and vacated the TRO placed on the Secretary of State by the district judge. The short per curiam unanimous opinion is here (pdf). Discussion is here: CNN, Scotusblog, New York Times.

Considering that in 2004 George W. Bush won Ohio’s 20 electoral votes over John Kerry by about 118,000 votes, and that a large majority of new registrants are thought to lean Democratic, the number of new registrations at issue here could be pivotal in a close election.

B

Interestingly, among those turned away were a group of Roman Catholic nuns of St. Mary’s Convent in South Bend, Indiana. Their expired passports were not accepted by a fellow nun who served as a polling inspector. These 12 nuns, all elderly and most of whom had been faithful voters during their lifetime, do not drive, and therefore, do not have driver’s licenses. The convent claims that the nuns knew of the photo requirement, and it will ensure that each nun that wishes to vote in the general election in November obtains proper identification. Indiana’s Secretary of State, Todd Rokita was not particularly compassionate towards those who were turned away, including the nuns, when he issued a statement emphasizing that the law is applicable to everyone and that voters over the age of 65 could vote by absentee ballot.

One purpose of the law is to prevent voter fraud, but opponents had argued that it negatively affected certain groups, such as minorities and, as is the case with the nuns, the elderly– two groups that are not as likely to possess such identification. (By the way, Indiana does not have a substantial record of voter fraud as it purportedly has never prosecuted a person for impersonating another voter). The law does allow for a voter without identification to cast a provisional vote and obtain the needed identification within ten days, but whether poll workers conveyed that message to all persons without identification is unclear. While the nuns were told of this option, at least one person, a student at Notre Dame, who presented her school ID and her out-of-state driver’s license, alleges she was not told about the provisional vote. Additionally, the nuns either refused the provisional ballots or were never given them due to the impossibility and impracticality of actually transporting these elderly persons, many of whom are wheelchair or walker-bound, to a motor vehicle branch and back within the allotted ten day period. (FYI: the voting Tuesday took place at the convent itself).

Jonah Goldman, who directs the Lawyers Committee’s Campaign for Fair Elections stated that the nuns and another person who was prevented from voting under the new law are “the face of the Supreme Court case” and many persons across the nation in states with voter identification laws were “being disenfranchised by a perceived, incorrect or illegal restrictive identification requirement” partly due to poll workers demanding more identification than the law requires.

As conveyed by John Borkowski, a lawyer who volunteered for the Lawyers Committee for Civil Rights Under Law, who stated “[h]ere you have a bunch of nuns whose votes can’t be accepted by a bunch of nuns … who live with them in the polling place in their convent because they don’t have an ID,” isn’t this ironic? 

Source: http://www.sacbee.com/111/story/918857.html; http://news.findlaw.com/ap/a/p/1130//05-08-2008/20080508035002_4.html; http://www.msnbc.msn.com/id/24490932/

DS