WASHINGTON (AP) — Bitterly divided, the Supreme Court ruled Thursday that big business can spend its millions to directly support or oppose candidates for president and Congress, a decision that sharply reverses a century-long trend to limit the political influence of corporations and labor unions. It remakes the political landscape just as crucial midterm election campaigns are getting under way.
The court, in a 5-4 split, overturned two earlier decisions and threw out parts of a 63-year-old law that said companies and unions can be prohibited from using money from their general treasuries to produce and run their own campaign ads. The decision threatens similar limits imposed by 24 states.
It leaves in place a prohibition on direct contributions to candidates from corporations and unions.
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.
President Barack Obama condemned the decision as a victory for big oil, Wall Street banks, health insurance companies and other powerful interests.
The ruling will lead to a "stampede of special interest money in our politics," Obama said in a statement. He pledged to work with Democrats and Republicans in Congress to come up with a "forceful response" to the high court's action.
But Sen. Mitch McConnell of Kentucky, the Senate Republican leader who filed the first lawsuit challenging the McCain-Feingold law, praised the court for "restoring the First Amendment rights" of corporations and unions. "By previously denying this right, the government was picking winners and losers," McConnell said.
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 this year's congressional elections.
"It's the Super Bowl of bad decisions," said Common Cause president Bob Edgar, a former congressman from Pennsylvania.
The opinion goes to the heart of laws dating back to the Gilded Age when Congress passed the Tillman Act in 1907 banning corporations from donating money directly to federal candidates. Though that prohibition still stands, the same can't be said for much of the century-long effort that followed to separate politics from corporate money.
The decision's most immediate effect is to permit corporate and union-sponsored political ads to run right up to the moment of an election, and to allow them to call for the election or defeat of a candidate. In presidential elections and in highly contested congressional contests, that could mean a dramatic increase in television advertising competing for time and public attention.
In the long term, corporations, their industry associations and labor unions are free to tap their treasuries to assist candidates, although the spending may not be coordinated with the candidates.
"It's going to be the Wild Wild West," said Ben Ginsberg, a Republican attorney who has represented several GOP presidential campaigns. "If corporations and unions can give unlimited amounts ... it means that the public debate is significantly changed with a lot more voices and it means that the loudest voices are going to be corporations and unions."
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.
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."
Kennedy, who dissented from the rulings the court overturned Thursday, said, "No sufficient government interest justifies limits on the political speech of nonprofit or for-profit corporations."
Stevens, in a 90-page opinion that dwarfed Kennedy's, complained that the court majority 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.
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. The justices filed five separate opinions totaling 176 pages.
Associated Press writers Jesse J. Holland and Jim Kuhnhenn contributed to this report.
Copyright 2010 The Associated Press.