The Campaign Finance Free-For-All: How We Got to This Point
A primer in the four-decade-long unraveling of campaign finance reform
In a forthcoming law review article, Richard Briffault of Columbia Law School argues that the rise of super PACs and unfettered contributions and spending this election cycle are “effectively ending the post-Watergate era of campaign finance laws.”
To help understand what is shaping up as a watershed election cycle, I asked Briffault to explain the path that took the country from stringent post-Watergate contribution limits through Citizens United to today’s multi-billion-dollar free-for-all.
Briffault has written extensively about the history of campaign finance law. He has filed amicus briefs in cases on the side of defending regulation. His article on super PACs will be published in the Minnesota Law Review.
Our conversation has been edited for length and clarity.
Can you explain how the 1976 Buckley v. Valeo case created the foundation of modern campaign finance law?
In the Buckley case the Supreme Court held that the First Amendment applies to campaign finance regulations, but it applies in different ways to different kinds of campaign finance activities. Contributions — that is, giving money to a group, a candidate, or a political party — are less protected. The court said that contributions raise the danger of corruption, that is, that candidates will feel indebted to their large donors, and also that contributions are less pure speech than expenditures.
The court said that an expenditure, which is money being spent on communications to the voters to persuade them how to vote, gets the highest level of protection. The court said that that kind of spending cannot be limited because it comes closer to pure speech and because it raises no danger of corruption.
A particularly difficult question involves what are called independent expenditures. Having reached the limit on the amount of money he is allowed to give a candidate, the donor might then just make an expenditure by taking out his own ads praising the candidate, or condemning the candidate's opponent. In Buckley, the court said that so long as such an expenditure is not formally coordinated with the candidate it will get the full constitutional protection of expenditures.
The first big loophole in the law that politicians exploited became known as “soft money.” The symbol of the soft money era was Democratic donors sleeping in the Lincoln Bedroom under President Clinton. How did that happen?
As a result of some rulings by the Federal Election Commission, the political parties were allowed to accept unlimited donations and corporate and union money so long as the political party used the money not for direct candidate support, but for background activity, like voter registration and get-out-the-vote drives and certain kinds of advertising that avoided express advocacy of the election or defeat of candidates. Because the money did not go for direct support of candidates — although it certainly helped candidates — it was considered “soft money” not subject to the restrictions on the “hard money” used for direct support of candidates.
The parties and their donors started to figure out soft money in the late 80s and it really took off in the 90s, peaking in 2000 and 2002.
So the famous McCain-Feingold law passed in 2002 and was upheld by the Supreme Court in 2003. Explain the system that law created.
McCain-Feingold stopped the parties from collecting and using soft money. Many experts thought the parties would be hit hard by the soft money ban, but in 2004 they actually replaced all the lost soft money by redoubling their efforts to collect more hard money from individual donors.
However, there was an immediate effort to get around the soft money ban through so-called 527 committees, which were named after a section of the tax code and were in effect a kind of political committee. The idea was that they would act independently of candidates, and engage in issue advocacy that helped candidates but did not expressly support them. The theory of the 527 was that they're not working with the candidates and they're not working with the parties, and they're also not engaged in express electioneering. So they claimed that they could take unlimited individual, corporate, and union contributions.
How big a role did corporate money play in funding these 527s?
There wasn't actually very much corporate money in the groups, but you did see large individual donations to organizations like MoveOn and the anti-John Kerry Swift Boat group. For the first time since Watergate, you began to see the first real appearance of million‑dollar donations.
This is the last time the Federal Election Commission actually took any action. It brought enforcement actions against a number of the prominent 527s and several years later obtained significant multi‑hundred thousand dollar penalties from them. The commission said that a number of the 527s had crossed the line into regulated electioneering and should have abided by the rules limiting contributions and disclosing spending.
The super PAC of today in many ways looks like these 527s from 2004 that were cited for breaking the rules. The difference is the super PACs seem to be acting within the rules. So how did we get from the 527 to the super PAC?
Part of the Federal Election Campaign Act of 1974 limited donations to all political committees, which are defined as organizations that give money to candidates or spend money in support of candidates. That law is on the books from 1974 onward and the Supreme Court upheld it. No one had focused on the idea that there might be some committees that only engage in independent spending, and do not give contributions to candidates, too.
But in the late 2000s, even before Citizens United, some independent committees began to argue "All we're going to do is engage in independent spending. If that's all we're going to do, we should not be subject to any restrictions on our donations."
The Citizens United decision is popularly known for allowing corporate spending in elections. But what did it say about this issue of independent spending?
In the course of striking down the ban on corporate and union independent spending, the Court also said that independent spending does not cause corruption and can’t be limited. The solution to independent spending, the court said, is disclosure and the public reaction to candidates who do the bidding of independent spenders.
A D.C. Circuit Court of Appeals case called SpeechNow was moving through the system around the same time as Citizens United and the decision came down a couple months after Citizens United in 2010. The circuit court specifically cited Citizens United and said, in effect, "If there's nothing corrupting about independent spending, then there's nothing corrupting about donations to groups that engage in independent spending, and therefore these donations cannot be limited."
That's how we get the Super PACs.
The argument gets made that, before Citizens United and before SpeechNow, Sheldon Adelson or George Soros could have individually bought $100 million worth of ads. There was nothing stopping them from doing that.
That's right. But in reality it didn’t happen. In theory, George Soros himself could have spent as much money as he wanted as long as it did not involve a committee. The ability to pool money into a super PAC turns out to be very significant.
On the issue of corporate and union expenditures, right now we’re seeing 501(c)(4) and 501(c)(6) groups that don’t disclose their donors spending a lot of money, and there are reports that at least some of that money is coming from corporations. These types of groups were active in previous elections but not to the extent they are now. How were they previously constrained by the law?
The 70s-era law said that corporations couldn’t engage in independent spending in connection with an election. But "independent spending" was defined as express advocacy – that is, saying explicitly who to vote for. The McCain‑Feingold law redefined independent spending for corporations to include any broadcast message that mentions a candidate's name, within 30 days before primaries or 60 days before a general election. That greatly expanded the scope of the ban on corporate and union spending.
There was a 2007 Supreme Court case, Wisconsin Right to Life, that I think did most of the work that is attributed to Citizens United. It freed up groups funded by corporate or union money to do more in elections. Then Citizens United said that corporations and unions could also spend money on express advocacy. These groups can now contribute to 501(c) organizations that engage in electoral advocacy.
In your forthcoming article you argue, “More than a century after Congress enacted the first restrictions on contributions in federal elections, and thirty-eight years after the comprehensive post-Watergate contribution limits were adopted, we appear to be rapidly heading into an era in which those contribution limits have been rendered functionally meaningless.” How did you come to this conclusion?
It will be interesting to see what the total numbers are when this cycle ends. But if it turns out that as much a significant fraction — perhaps one quarter to one third — of the spending promoting a candidate is being spent by outside groups, and funded by a very, very small number of very, very wealthy people, the candidates are going to know who they are.
The purpose of the law was to reduce the dependency of candidates on large donations, and reduce the danger that office holders will feel dependent on that and reduce the effect of those donations on policy and appointments. If a significant fraction of the money that's helping candidates is coming from a very small number of extremely wealthy people, that puts us back to where we were before.
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