By JESS BRAVIN
WASHINGTON—A divided Supreme Court struck down limits on corporate political spending, overturning two precedents in a ruling likely to affect campaigning in the 2010 elections.
President Barack Obama called the decision a victory for big oil, Wall Street and other interests, and said he would work with lawmakers to craft a "forceful response."
The ruling underscored the impact of former President George W. Bush's two appointments to the court. Chief Justice John Roberts and Justice Samuel Alito joined the five-justice majority in ruling that a central provision of the 2002 McCain-Feingold campaign-finance act violated the First Amendment by restricting corporations from funding political messages in the run-up to elections.
"The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether," Justice Anthony Kennedy wrote for the majority in a 57-page opinion.
The McCain-Feingold law aimed to rein in independent campaign spending by corporations and unions—that is, advertisements that the corporations or unions buy on their own to advocate for or against a candidate.
McCain-Feingold required that they channel their campaign spending by creating a special fund, known as a political action committee, which can accept donations from employees, shareholders and other affiliates. Advocates argued that the law was a valid way to prevent special-interest funds from distorting elections.
But Justice Kennedy wrote that the effort to divide corporate political spending into legal and illegal forms chilled political speech. "When government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought," he wrote. "This is unlawful."
Federal law has long barred corporations from contributing directly to federal political candidates, and Thursday's ruling keeps that restriction in place.
The decision voids a key provision of the signature legislative achievement of Sen. John McCain, the 2008 Republican presidential nominee who worked with Democratic Sen. Russ Feingold of Wisconsin to draft the Bipartisan Campaign Reform Act of 2002 that informally carries their names.
Justice John Paul Stevens—part of the majority in the two opinions that were overruled—led the court's four liberals in a dissent that stretched to 90 pages.
He called the majority opinion "a rejection of the common sense of the American people, who have…fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt." Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined the dissent.
Mr. Obama, in a statement Thursday, said: "The Supreme Court has given a green light to a new stampede of special interest money in our politics. This ruling gives the special interests and their lobbyists even more power in Washington, while undermining the influence of average Americans who make small contributions to support their preferred candidates."
The case before the court, Citizens United v. Federal Election Commission, originated in a 2008 feature-length movie critical of then-presidential candidate Hillary Clinton. Citizens United, a conservative advocacy group, wanted to promote the film, but the election commission called it an "electioneering communication" subject to McCain-Feingold restrictions.
While nonprofits can be exempt from campaign-finance regulations if they limit their fund-raising to donations from individuals, Citizens United fell under McCain-Feingold because it accepted business contributions. Many nonprofit advocacy groups that have corporate form are also affected by Thursday's ruling, as well as labor unions and for-profit corporations.
A lawyer for Citizens United, Theodore Olson, said, "The vast majority of corporations are either nonprofit advocacy groups--like Citizens United--or small businesses." The ruling, he said, "enables individuals of limited means to band together to counterbalance the political speech of the super-rich."
In 2003, the Supreme Court upheld the provision that was struck down Thursday, in a 5-4 decision that, in turn, relied on a 6-3 opinion written in 1990 by Justice Thurgood Marshall upholding a similar state campaign law.
Justice Kennedy dissented from the 1990 decision, and his opinion Thursday overruling it vindicated the position he took then. Justice Sandra Day O'Connor, who also dissented in 1990, had changed her view by 2003 and joined the majority to uphold the McCain-Feingold provision. Her successor was Justice Alito, who provided the fifth conservative vote to make Thursday's majority.
On Capitol Hill, Democrats called for legislation to reinstate the ban on direct campaign spending by corporations, or at least to modify it in a way that would better withstand a constitutional challenge.
"This will allow the biggest corporations in the United States to engage in the buying and selling of elections," said Rep. Chris Van Hollen (D., Md.), who is in charge of the party's efforts to get Democrats elected in the House.
"This is poisonous to our democracy," said Sen. Charles Schumer (D., N.Y.). Mr. Schumer said the Senate Rules Committee, of which he is chairman, will hold hearings in the next several weeks aimed at crafting legislation to respond to the ruling. He said he hoped to have a law in place in time for congressional elections this November.
Although the Supreme Court broke along familiar philosophical lines, the case itself scrambled the ideological deck. The U.S. Chamber of Commerce and the AFL-CIO both urged the court to strike down the provision, as did the American Civil Liberties Union and the National Rifle Association. Sen. McCain and the Democratic National Committee both argued for the law's constitutionality.
The ruling not only strikes down the federal requirement, it also calls into question similar provisions enacted by nearly half the states. Montana, which adopted restrictions on corporate electioneering a century ago, filed a brief on behalf of more than two dozen states seeking to protect their own power to regulate campaign finance.
The court reached broad agreement on one lesser point, finding that the McCain-Feingold provision requiring political messages to disclose their funder was constitutional. Only Justice Clarence Thomas dissented from that holding. He cited reports that backers of a 2008 California measure abolishing same-sex marriage, Proposition 8, were harassed by their opponents.—Martin Vaughan and Henry J. Pulizzi contributed to this article.
Write to Jess Bravin at email@example.com