Austin v. Michigan Chamber of Commerce and the "New Corruption"

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The Supreme Court's lack of consistent doctrinal analysis in its treatment of the constitutionality of campaign finance regulation was dramatically illustrated in Austin v. Michigan Chamber of Commerce (1990). Justice thurgood marshall, writing for the majority, upheld the application to the Michigan chamber of commerce of a ban on corporate political expenditures from treasury funds in candidate elections. The Michigan statute permitted such expenditures only when the funds used came from voluntary contributions to political committees (PACs). Articulating a rationale that Justice antonin scalia in dissent scoffingly dubbed the "new corruption," the majority concluded that Michigan's purpose was compelling and that the statutory means were narrowly tailored.

Beginning with the seminal campaign finance case buckley v. valeo (1976), the only interest the Court had found sufficient to support limits on campaign funding was preventing "corruption" and "improper influence." In subsequent cases the Court interpreted these terms quite narrowly, seemingly limiting their meaning to quid pro quo transactions with candidates. However, in Austin, Marshall explained that the statute prevented "a different type of corruption in the political arena: the corrosive and distorting effect of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas."

A deviation from the Court's narrow definition of corruption had first been seen several years before Austin in Federal Election Commission v. Massachusetts Citizens for Life (MCFL) (1986). In that case the Court had invalidated the application of a federal restriction like that in Austin when applied to a nonprofit, purely ideological corporation, but suggested in dicta that the statute could be constitutionally applied to most other corporations. Quoting from MCFL, in Austin Marshall explained that corporate " 'resources amassed in the economic marketplace' … [permit corporations] to obtain 'an unfair advantage in the political marketplace.' "

The Austin majority emphasized that the act was not an "attempt 'to equalize the relative influence of speakers on elections,' " as Justice anthony m. kennedy charged in his dissent. The equalization rationale had been consistently rejected by the Court as a basis for contribution and expenditure limitations since Buckley. Instead, Marshall explained that the act "ensures that expenditures reflect actual public support for the political ideas espoused by corporations." Such support cannot be assumed when corporate treasury funds rather than voluntary political committee funds are used, unless the corporation is formed purely for ideological purposes. Although the chamber of commerce was in part an ideological corporation, it also performed services for its members. Furthermore, many chamber members were business corporations rather than individuals; thus the chamber could serve as a conduit for corporate expenditures from other corporate treasuries.

By focusing on a lack of actual public support for corporate expression as a necessary element in its determination that the political influence caused by corporate political expenditures is "unfair," the majority in Austin seemingly assumed that unequal contributions or expenditures in political races are fair if they reflect inequality of support, but not if they reflect inequality in resources between supporters of candidates. However, the Court had at least implicitly rejected this assumption in previous cases when it invalidated restrictions on individual expenditures on behalf of candidates, amounts candidates could spend on their own behalf, and limits on contributions in ballot measure elections.

Apparently recognizing that their "unfairness" rationale was not consistent with precedent, the Austin majority added another element to its doctrinal structure. Marshall explained "that the mere fact that corporations may accumulate large amounts of wealth is not the justification… rather [it is] the unique state-conferred corporate structure that facilitates the amassing of large treasuries." He described these advantages as "limited liability, perpetual life, and favorable treatment of the accumulations and distributions of assets."

The Court's attempt to limit the fairness rationale to corporations has been severely criticized. As the dissenting Justices pointed out, wealth accumulated by individuals and by unincorporated associations may also be facilitated by government actions. Furthermore, the Court had ignored the argument that receipt of government benefits justifies restrictions on corporate political expenditures when it invalidated bans on corporate expenditures in ballot measure elections in first national bank of boston v. bellotti (1978). Indeed, the majority and concurring opinions in Austin closely resemble the analyses of the Bellotti dissents.

Because the ban in Bellotti was significantly more restrictive than the requirement of using a political committee for expenditures, Austin is distinguishable. Nevertheless, the general themes of the majorities in both Bellotti and Buckley are strikingly inconsistent with the doctrinal structure created in Austin.

Marlene Arnold Nicholson

(see also: Corporations and the Constitution; Corporate Citizenship; Corporate Power, Free Speech, and Democracy.)


Eule, Julian N. 1990 Promoting Speaker Diversity: Austin and Metro Broadcasting. Supreme Court Review 1990:105–130.

Winkler, Adam 1998 Beyond Bellotti. Loyola of Los Angeles Law Review 32:133–220.

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Austin v. Michigan Chamber of Commerce and the "New Corruption"

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Austin v. Michigan Chamber of Commerce and the "New Corruption"