WH Defends Obama/Alito flap over Citizens United Case

The White House defended President Obama's blunt criticism of a recent Supreme Court decision on campaign financing, arguing the decision, as the president warned, opens up a potential loophole for foreign corporations to influence federal elections.

"Last week, the Supreme Court reversed a century of law to open the floodgates for special interests - including foreign companies - to spend without limit in our elections," Obama said during his State of the Union address. Obama's remark drew a look of bewilderment from Associate Justice Samuel Alito, who could be seen mouthing the words "not true" from his seat mere feet away from the president in the House chamber.

A senior administration official said Obama's remarks drew inspiration and legal authority from Justice John Paul Stevens' dissent in the case Citizens United v. Federal Election Commission. The 5-4 ruling, authored by Associate Justice Anthony Kennedy, gave First Amendment protections to corporations, unions and non-profits involved in election advocacy. Previously, those protections were limited to individuals. Stevens warned the decision could allow foreign companies to donate money to federal campaigns through their U.S. subsidiaries.

In his 90-page dissent, joined by Justices Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor. Stevens said the majority opinion "threatens to undermine the integrity of elected institutions across the Nation." On Tuesday, former Justice Sandra Day O'Connor warned the ruling may allow corporations to widen their influence in state judicial elections.

"This issue is something that many have serious concerns about," Deputy Press Secretary Bill Burton told reporters aboard Air Force One as Obama flew to Tampa, Fla. "It's something that Justice Ginsburg brought up in her oral arguments. It's something that Justice Stevens wrote about in his dissent. It's an issue that the Court could have specifically addressed in its findings, but they didn't. And the American people deserve the right to know that foreign corporations cannot interfere with American elections."

As to Alito's reaction to Obama's criticism of the court ruling, Burton said:

"One of the great things about our democracy is that powerful members of the government at high levels can disagree in public and in private. This is one of those cases."

But, David Bossie, the plaintiff behind last week's Supreme Court ruling, says he's surprised that someone who claims to be a Constitutional scholar could misinterpret what the Supreme Court did. Of the President, Bossie told Fox News, "Some will call it a lie, others will call it political posturing, but I think it's a fundamental error." Others argue there is a possible loophole that would allow U.S. subsidiaries of foreign entities to contribute. Josh Israel of the Center for Public Integrity says, "It's not inconceivable that you could see the CITGO corporation, which is an American operation but happens to be owned by the government of Venezuela, spending $25 million on [campaign] advertisements."

A senior administration official told Fox the threat of potential foreign involvement in U.S. elections represented a "profound danger" to Democracy and said lawmakers of both parties "are appropriately concerned about it."

The official dismissed the majority's argument that the high court left in place the prohibition of foreign nationals and foreign entities from contributing to political campaigns.

Existing election law (2 U.S.C. 441e) prohibits "a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country" from making a direct or indirect campaign donation or expenditure "in connection with a Federal, State, or local election." It also blocks donations or expenditures of this kind to a political party committee or "for an electioneering communication."

Republican election law experts disagree with the White House interpretation of the Citizens United decision. They point out that Federal Election Commission rules already require that political contribtutions must come from U.S. subsidiaries of foreign entities, thereby blocking potential foreign contributions, and that the those who decide on contributions must be U.S. citizens or green card holders.

The fact-checking website Politifact.com said Obama "was exaggerating the impact of the ruling." It characterized Obama's statement on the Citizens United decision as "Barely True." <http://www.politifact.com/truth-o-meter/statements/2010/jan/26/barack-obama/obama-says-supreme-court-ruling-allows-foreign-com/>

"That doesn't cover American corporations wholly or partially owned by foreign nationals, foreign corporations or by foreign sovereign wealth funds," the senior official said. Sovereign wealth funds are state-owned funds made up of a combination of stocks, bonds, property, precious metals and other financial instruments.

"It opens up an enormous risk," the administration official said, referring to "many loopholes" in the law and potential Federal Election Commission enforcement of potential election-year meddling by foreign governments or corporations.

The official said the White House is moving rapidly to get a bill through Congress that would close the perceived loopholes "immediately."

"We are are actively working through alternatives and solutions. We are working on it with Congress everyday. There is a real urgency here, but we are going to get it right. The goal is to reassure the American public that foreign-owned corporations, multi-national groups and sovereign wealth funds do not influence American elections."

Fox News Correspondent Shannon Bream contributed to this report.