Video: Supreme Court upends campaign finance law

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    >>> back now with news of a big change in american politics , one you will almost certainly see on your tv. the u.s. supreme court today overturned laws on the books for nearly a century and ruled that corporations can spend freely now on political campaigns . those who like this decision say it's a victory for free speech . those who don't, say campaigns will now be drowning in corporate cash and influence. our story from our justice correspondent pete williams .

    >> reporter: the landmark ruling on money and politics means tv viewers will likely see more of this.

    >> barack obama isn't the kind of change we need.

    >> on november 4th , defend freedom. defeat obama.

    >> reporter: the court struck down laws that prevented corporations from spending as much of their own money they wanted to buy ads supporting or opposing candidates. justice kennedy said the first amendment prohibits congress from fining citizens or associations of citizens for simply engaging in political speech. without today's ruling, he said congress could ban corporations from publishing political books or posting their political views on youtube, facebook or twitter.

    >> i think the supreme court decisions today are a big win for the first amendment, and a step in the right direction.

    >> reporter: the ruling is a victory for the backers of a documentary called "hillary the movie."

    >> is she ruthless? cunning, dishonest? willing to do anything for power?

    >> reporter: the government blocked it from tv last year because it was made with corporate money, but the court today said if it could be banned, so could a movie like "mr. smith goes to washington," also made by a corporation.

    >> because i wouldn't give you two cents for all your fancy rules.

    >> reporter: today's ruling applies equally to political spending by nonprofit groups from the sierra club to the national rifle association . the fiore dissenters predicted corporate money will drown out the voice of the little guy.

    >> the supreme court has just predetermined the winners of next november's elections. it won't be republicans, it won't be democrats, it will be corporate america .

    >> reporter: president obama directed his staff to start working on changes to the law to undermine the decision, calling it a victory for big oil , wall street banks and health insurance companies. today's ruling likely means unions will be able to spend as much as they want on political ads, too, but corporations and unions still cannot contribute money directly to candidates. pete williams , nbc news at the supreme court .

    >>> another big recall from toyota

NBC News and news services
updated 1/21/2010 1:43:59 PM ET 2010-01-21T18:43:59

In a landmark ruling, the U.S. Supreme Court on Thursday struck down laws that banned corporations from using their own money to support or oppose candidates for public office.

By 5-4 vote, the court overturned federal laws, in effect for decades, that prevented corporations from using their profits to buy political campaign ads. The decision, which almost certainly will also allow labor unions to participate more freely in campaigns, threatens similar limits imposed by 24 states.

It leaves in place a ban prohibiting corporations and unions from directly contributing funds to candidates for any use.

In a statement, President Barack Obama said that the decision gives 'a green light to a new stampede of special interest money in our politics.' The president pledged to work with Congress to 'develop a forceful response' to the court's ruling.

Critics of the stricter limits have argued that they amount to an unconstitutional restraint of free speech, and the court majority agreed.

"The censorship we now confront is vast in its reach," Justice Anthony Kennedy said in his majority opinion, joined by his four more conservative colleagues.

Strongly disagreeing, Justice John Paul Stevens said in his dissent, "The court's ruling threatens to undermine the integrity of elected institutions around the nation."

Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined Stevens' dissent, parts of which he read aloud in the courtroom.

The justices also struck down part of the landmark McCain-Feingold campaign finance bill that barred union- and corporate-paid issue ads in the closing days of election campaigns.

Advocates of strong campaign finance regulations have predicted that a court ruling against the limits would lead to a flood of corporate and union money in federal campaigns as early as November's congressional elections.

The decision removes limits on independent expenditures that are not coordinated with candidates' campaigns.

The case does not affect political action committees, which mushroomed after post-Watergate laws set the first limits on contributions by individuals to candidates. Corporations, unions and others may create PACs to contribute directly to candidates, but they must be funded with voluntary contributions from employees, members and other individuals, not by corporate or union treasuries.

Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia and Clarence Thomas joined Kennedy to form the majority in the main part of the case.

Image: Bossie
Evan Vucci  /  AP
David Bossie, leader of Citizens United and producer of "Hillary: The Movie", is seen in his office in Washington.
Roberts, in a separate opinion, said that upholding the limits would have restrained "the vibrant public discourse that is at the foundation of our democracy."

Stevens complained that those justices overreached by throwing out earlier Supreme Court decisions that had not been at issue when this case first came to the court.

"Essentially, five justices were unhappy with the limited nature of the case before us, so they changed the case to give themselves an opportunity to change the law," Stevens said.

The case began when a conservative group, Citizens United, made a 90-minute movie that was very critical of Hillary Rodham Clinton as she sought the Democratic presidential nomination. Citizens United wanted to air ads for the anti-Clinton movie and distribute it through video-on-demand services on local cable systems during the 2008 Democratic primary campaign.

But federal courts said the movie looked and sounded like a long campaign ad, and therefore should be regulated like one.

Video: Breaking News The movie was advertised on the Internet, sold on DVD and shown in a few theaters. Campaign regulations do not apply to DVDs, theaters or the Internet.

The court first heard arguments in March, then asked for another round of arguments about whether corporations and unions should be treated differently from individuals when it comes to campaign spending.

The justices convened in a special argument session in September, Sotomayor's first. The conservative justices gave every indication then that they were prepared to take the steps they did on Thursday.

The justices, with only Thomas in dissent, did uphold McCain-Feingold requirements that anyone spending money on political ads must disclose the names of contributors.

NBC's Pete Williams contributed to this report.

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