SuperPACs: Canada, the United States, Campaign Finance, and the Cross-Border Learning Curve

By Keith Edmund White

Will Canadian dollars soon be controlling the U.S. political process?  Unlikely—but with the advent of SuperPACs, Canadian businesses are being given a new way to influence U.S. politics.  And, with this new tool, comes a natural question:  Will Canada follow America’s lead on campaign finance (de)regulation?

First, as an election law novice, I thought it might be helpful to try to figure out the differences between Political Actions Committees (PACs) and SuperPACs (which until now I only knew from the Colbert Report).  This CNN report provides a readable—if perhaps swallow—explanation of what the campaign finance impact of SuperPACs on U.S. politics:

In 1907, Congress banned corporate contributions to federal candidates in the wake of the robber baron-era scandals. In 1947, the ban was formally applied to corporate expenditures and extended to cover labor unions.

In 1974, Congress enacted limits on individual contributions to federal candidates and political committees in the wake of the Watergate scandal.

In 2010, the U.S. Supreme Court in the Citizens United case declared the corporate expenditure ban unconstitutional, holding that independent expenditures could not be constitutionally limited in federal elections, and implicitly that corporations could give unlimited amounts to other groups to spend, as long as the expenditures were made independently from the supported candidate. Subsequently, the U.S. Court of Appeals for the D.C. Circuit in the SpeechNow case held that the limits on individual contributions to groups that made independent expenditures were unconstitutional.

Thus was born the super PAC.

Now, the huge impact of this shift to SuperPACs is a bit overstated.  As 527 groups could raise unlimited amounts of funds, the key difference being they couldn’t directly advocate for individual candidates.  But just ask John Kerry about the Swift Boat ads to see how meaningful that restriction was in the 2004 presidential election.

            Now, one interesting aspect of the advent of the SuperPAC is that Canadian owned U.S. subsidiaries can now have their U.S. employees ‘voluntarily’ fund SuperPACs that will push the agenda of foreign owned companies.  And, not surprisingly, Canadian companies have taken advantage of this new way to get their voices heard in D.C.  From The Canadian Press:

Political action committees affiliated with companies based in the United States but owned by Canadian corporations are pouring money into this year's U.S. House and Senate races.

Fundraising data provided by the website OpenSecrets.org show American subsidiaries of Canadian companies have formed political action committees that so far have given US$163,500 to candidates running in the Congressional elections.

Donations to Republicans were US$89,250, compared with US$74,250 for Democrats.

Political donations from foreigners are banned in the United States. But there is nothing to stop businesses based in the States but owned by foreign companies from forming entities called political action committees, or PACs, which are then funded by donations from their American employees.

These PACS are set up and run by corporations, labour unions, membership organizations or trade associations. They can only solicit contributions from people associated with the connected or sponsoring organization.

U.S. subsidiaries of some of Canada's biggest companies have already formed PACs ahead of the November Congressional vote.

The Canadian parent companies say U.S. employees at their American subsidiaries made contributions of their own volition, with no direction or influence from north of the border.

And with Canadian companies now shifting their money into the U.S. political arena, how long will it be before Canada allows SuperPACs in their political landscape?  One very vocal opponent of such a shift is Mount Allison University professor, and head of the school’s Canadian Studies Program, Andrew Nurse:

Superpacs are American. We don't have them in Canada but they could be related to changes that are almost certainly going to be made to the Elections Act in Canada pertaining to political financing. Superpacs deserve attention for two reasons. First, because they stand to subvert democracy; second, because the rationale used to defend them against electoral reform measures illustrates the differences between Canada and the US.

…

So far, I've said that I don't find the arguments for superpacs compelling. Free speech does not require superpacs and no one appears to suffered from censorship before Superpacs emerged on the scene. The argument that superpacs spending is benign is problematic because the people running superpacs don't intend it to be benign. They intend it to have an effect.  It also opens up the troubling line of argumentation that constitutionally and legally sets up two sets of campaign contribution rules based on social class.  Now, to be clear. I am not arguing for Soviet Communism. What I am suggesting, however, is that Canadians pay some attention to what is going on in the US before we change our electoral financing laws. Our laws are not perfect. But, they have served Canada rather well to this point. There is room for reform but that reform s[h]ould move forward … and into a situation where money supplants democracy, silly arguments that have nothing to do with free speech are mobilized (and accepted) in support of political manipulation, and equal benefit of the law falls by the wayside.