Under attack from all angles, campaign finance legislation is dying a painful death
[Ed. Note: The Supreme Court ruled in Citizens United v. Federal Election Commission on January 21. Read about the decision here.]
On a rather boring Wednesday evening in late October, Senators John McCain and Russell Feingold delivered speeches on the Senate floor. Their remarks were strikingly different than the cookie-cutter remarks on healthcare given by their colleagues. The Arizona Republican and Wisconsin Democrat were there to talk about a September Supreme Court case that has the potential to uproot their landmark campaign finance legislation and deregulate corporate spending in elections.
It didn’t take long for the two senators—champions of campaign finance reform to their supporters, enemies of free speech to their detractors—to flash anger, if not panic. While they didn’t say it outright, their message was clear: We’re under attack; our signature achievement—and by extension we—are being slowly torn apart. McCain took “great exception” to the conservative wing of the Court’s probing during the case’s oral arguments. Justice Antonin Scalia’s pointed questioning, he said, was an “affront to the thousands of good, decent, honorable men and women who have served this nation in these halls for well over 200 years.”
“We are talking about a system where corporate wealth rules in a way that we have never seen in our history!” Feingold fumed. A broad ruling from the Court would have a “calamitous impact on our democracy.”
“Our elections would become like NASCAR races—underwritten by companies!” he went on. “And in this case, the corporate underwriters wouldn’t only be seeking publicity. They would be seeking laws and policies the candidates have the power to provide.”
Watching McCain and Feingold that evening, I couldn’t help but think of two soldiers fighting a losing battle to defend the ideals they hold most dear. In their remarks, McCain and Feingold, who disagree on pretty much everything else, were effusive in their praise of each other. McCain called Feingold his “fellow warrior” and Feingold said there is “no one in this body whom I admire more than John McCain.” From a big picture perspective, their united front makes sense. With the possible exception of McCain’s run for president, McCain and Feingold’s campaign finance law is their life’s work—it is what they will be remembered for. What was unfortunate for them, though, was that, judging from the number of their colleagues in the chamber and the amount of media coverage their remarks received, hardly anyone was listening.
I already know what you’re thinking; this is yet another story about the back-and-forth of campaign finance reform. There have been hundreds of stories that have warned of the major consequences of one court decision or another but, all in all, nothing has really changed.
This time it is different. This is a story about the killing of McCain-Feingold.
While McCain and Feingold—and their many supporters—are still fighting, they have seen the dream dying. Any campaign finance expert will tell you that in the past three years there has been an unmistakable trend in the courts away from defending their legislation to taking it apart piece-by-piece, provision-by-provision.
“The Supreme Court has rather sharply shifted gears and that’s been followed by the lower courts,” says Richard Briffault, a Columbia Law professor whose work has been cited in the opinions of some of these cases. “The Court is basically undoing McCain-Feingold.”
At the core of McCain and Feingold’s Bipartisan Campaign Reform Act of 2002 are two principles. First, the legislation limits parties’ and candidates’ ability to raise soft money, or unregulated sums of cash. Second, it regulates electioneering communications such as advertisements. That is broken down further into two sub groups. The legislation requires disclosure by those permitted to run ads. It also prohibits corporations and unions from using their general treasury funds to pay for ads, restricting their influence to PACs that rely on contributions from individual employees, executives and shareholders.
Each of these areas is under attack and this is all coming to a head in Citizens United v. Federal Election Commission, the case drove McCain and Feingold to the Senate floor. In 2008, Citizens United, an independent group, attempted to use a video-on-demand service to air an opinionated documentary on Hillary Clinton’s presidential bid. The FEC intervened. Citizens United, it said, could not air the documentary because it advocated for the defeat of a political candidate in the 60 days before a general election.
What started as a rather narrow case questioning whether such a group could air such a video on such a service has since ballooned into a case with a much larger scope. After the Court first heard oral arguments in March 2008, it called for rearguments in September—before its session officially opened—apparently to tackle whether it was constitutional for Congress to regulate corporate spending on electioneering expenditures. At the reargument, it was clear to legal observers that a majority of justices appeared ready to overturn campaign finance law and rule that corporate entities and unions have a constitutional right to free speech and, therefore, should be allowed to spend as much as they want airing uncoordinated television and radio ads. Campaign finance observers note that such a ruling would likely cause a steep rise in the number of 527 groups in the upcoming elections, particularly on the Republican side.
In addition to Citizens United, there have also been recent rulings that have struck down individual contribution limits to a candidate as well as to an independent group. The Washington, D.C. Court of Appeals is set to hear another case in late January that could allow a group to pool unlimited amounts of money to air as many ads as they want. On top of all this, there are significant problems among the FEC’s six member Board of Commissioners—campaign finance law’s enforcement body. The board has become so driven by partisan ideology that it deadlocks three to three on nearly every important issue, rendering it essentially toothless.
These developments all boil down to a shift from viewing McCain-Feingold as constitutional regulations that shield our elections from corruption to a belief that many of its provisions violate the right to free speech. “There has been a much greater emphasis on First Amendment concerns and a much reduced concern about the goals of campaign finance regulations, like disclosure, controlling corporate money and anti-circumvention,” says Briffault.
Some say lower courts have been more receptive to proponents of campaign finance regulation. But at the appeals court and Supreme Court level, there is a sense that jurists appear ready and willing to chip away at McCain-Feingold, seemingly section by section, until there is no more. To McCain-Feingold opponents now is the time to strike, and they are pouncing. Says Paul Ryan of the Campaign Legal Center, which typically supports campaign finance regulation: “Those who have for many years been fighting restrictions on money in politics see blood in the water.”
When John McCain talks about campaign finance reform, he sees it in grand historical context. To him, he and Feingold are fighting for principles that date back to the country’s inception. “The concern about corporate influence extends as far back as our founding fathers,” he said on the Senate floor that October evening.
In what amounted to a 45-minute dissertation, McCain mapped out pivotal campaign finance developments from the past. He repeatedly condemned Justice Scalia’s questioning during the Citizens United arguments, saying that “simply put, history has proven Justice Scalia wrong.” Gesturing his hands as he did during the 2008 presidential race to make his points, McCain quoted Thomas Jefferson: “I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.” He ticked off legislation that Congress has enacted to regulate campaign finance, including the Tillman Act of 1907—which prohibited corporate spending in elections—and the Taft-Hartley Act of 1947—which strengthened those regulations. The Supreme Court, McCain went on, has upheld the constitutionality of such legislation on multiple occasions.
Most notably, the court held in 1990 in Austin v. Michigan Chamber of Commerce that corporate expenditures have “distorting and corrosive effects” on elections. And in 2003, the court upheld the law in a facial challenge in McConnell v. FEC.
In his rhetoric, McCain is particularly fond of President Theodore Roosevelt, who sought to ban corporate money from elections and spoke frequently on the topic. On the Senate floor, McCain cited Roosevelt’s 1905 address to Congress: “‘There is no enemy of free government more dangerous, and none so insidious, as the corruption of the electorate,’ he warned. ‘If legislators are extorted by any kind of pressure or promise, express or implied, direct or indirect in the way of favor or immunity, than the giving or receiving becomes not only improper, but criminal. All contributions by corporations to any political committee or for any political purpose should be forbidden by law.’”
Campaign finance observers trace the unraveling of McCain-Feingold to one seminal event: Justice Samuel Alito replacing Justice Sandra Day O’Connor in January of 2006. As she was on many issues, O’Connor represented the swing vote on campaign finance matters, and almost always, she sided with the liberal wing of the Court that upheld campaign finance regulations as constitutional.
Alito, along with Chief Justice John Roberts—who joined the Court in 2005—have brought a complete shift in the Court’s direction. “The Court has moved from a period in the early 2000s where they were the most deferential that we’ve seen them in a generation toward campaign finance regulation, upholding virtually everything,” says Richard Hasen, a law professor at Loyola Law School in Los Angeles and the author of the must-read “Election Law Blog.” “We have moved to the greatest period of skepticism that we’ve ever seen. A complete swing of the pendulum.”
The first important case of the new Court was Randall v. Sorrell in 2006. Neil Randall, a Vermont state legislator, sued the state attorney general over state campaign finance laws. Randall argued that both the state’s expenditure limits—the amount a candidate is permitted to spend over the course of an election—and its contributions limits—the amount an individual can give to a candidate—were unconstitutional. The Court agreed. In a 6-3 decision, the Court said the expenditure limits violated the candidate’s First Amendment rights. Nothing new there. The Court came to the same conclusion in its landmark 1976 Buckley v. Valeo opinion.
The Court also said, though, that the state’s contribution limit—which limited contributions from national and state parties to candidates to $400—was too low. It was the first time the Court even questioned a contribution limit, let alone ruled one is unconstitutional. The case showed the Court was willing to overturn its own precedent on such matters. In 2000—just six years earlier when O’Connor was still on the bench—the Court upheld Missouri’s contribution limit in Nixon v. Shrink Missouri Government PAC. The Randall case opened the door to more challenges, notes Ryan of the Campaign Legal Center. “That was widely seen as settled law—that contribution limits are constitutionally permissible,” he says.
On the topic of expenditures, the Roberts Court’s first important decision came in the 2007 Wisconsin Right to Life v. FEC case. Wisconsin Right to Life, an independent anti-abortion rights group, aired three television ads urging senators to oppose filibusters of judicial nominations. Because the ads were scheduled to run up to Election Day in 2004, the FEC said they violated a McCain-Feingold provision prohibiting corporations from running ads in the 60 days before an election. Wisconsin Right to Life asserted that the law was unconstitutional on free speech grounds. The Supreme Court took the group’s side. In his opinion, Chief Justice Roberts, frustrated by what he saw as infringements on First Amendment rights in campaign law, used strong language, saying “enough is enough.” In a 5-4 decision, the Court ruled that the ads were uncoordinated with any campaign and did not expressly advocate for the election or defeat of a specific candidate.
It also said that Congress can’t ban ads by incorporated entities as long as they are issue based. “In my view,” says Ryan, “the ruling amounted to a near gutting of the ban on corporate spending for electioneering communications.” The ruling opened the door for third party groups of all kinds. “Basically,” says campaign finance lawyer Jason Torchinsky, “you saw the rebirth of issue ads.”
There are two things about the Citizens United case that seem to really irk McCain and Feingold. The first is the Supreme Court broadening the scope of the case during the rearguments to consider the constitutionality of the law. The Court could still rule narrowly in the case and avoid that question. It could say that provisions of McCain-Feingold don’t apply to video-on-demand. It could also say that the law doesn’t apply to a group like Citizens United, which only took small contributions from corporate donors. “Until a few months ago,” Feingold said on the Senate floor, “no one had any idea that the Citizens United case would potentially become the vehicle for such a wholesale uprooting of the principles that have governed the financing of our elections for so long.”
It does not look like the Court is going to rule narrowly. There is a theory among observers that the court held the rearguments in September—a month before its fall session was scheduled to begin—so it could rule in time to influence the 2010 elections. (Although, as the Court’s decision didn’t come down in 2009, some are beginning to wonder how broad the delayed ruling will be and if it will affect the midterm elections at all.)
To McCain and Feingold, this is judicial activism at its worst—albeit from conservative justices who routinely condemn judicial activism. “Activist judges—regardless of whether it is liberal or conservative activism—assume the judiciary is a super legislature of moral philosophers, entitled to support Congress’ policy choices whenever they choose,” McCain said. “I believe this judicial activism is wrong and is contrary to the Constitution.” Feingold went so far as to quote Chief Justice Roberts’ testimony during his confirmation hearings in which he enumerated his fealty to precedent.
That ties into the second thing that bothers McCain and Feingold. In the rearguments for Citizens United, the conservative wing of the bench actively questioned whether members of Congress can fairly legislate election law since they have a stake in the game—namely that they want to be reelected. Justice Scalia said, “I doubt that one can expect a body of incumbents to draw election restrictions that do not favor incumbents.”
To McCain, Scalia’s statement questions his integrity. And it really gets to him. He called Scalia’s remark an “affront.” “It exposed his belief that when it comes to issues relating to campaign finance reform, he is somehow a better arbiter of what is needed to reform the electoral process than the Congress or the American people,” McCain said. In some ways, McCain framed his remarks as a showdown between the legislative and judicial branches. Repeatedly, McCain argued, Congress has acted in the best interest of the people to regulate campaign finance.
“Whatever one thinks of a First Amendment right for corporations,” he said, “it is not appropriate for a nondemocratic branch of government to raise a question of the broadest scope at the last minute when such a question was not raised in the trial court.”
In addition to Citizens United there are two other recent court cases and an FEC advisory opinion that chip away at McCain-Feingold. The first is EMILY’s List v. FEC, which the D.C. Circuit Court of Appeals decided in September.
EMILY’s List is dedicated to backing Democratic women who support abortion rights in federal, state and local elections. Part of their mission, says the group’s founder and president, Ellen Malcolm, is to encourage women to run for office. To accomplish this, EMILY’s List has done mailings and ads that feature prominent women politicians—such as Hillary Clinton when she was a senator and Sen. Debbie Stabenow (D-Mich.)—urging women to launch campaigns. Because they featured federal candidates, the FEC required EMILY’s List to use federal hard dollars—meaning contributions limited to $5,000—on the expenditures. “Obviously, those ads have nothing to do with reelecting Debbie in Michigan,” Malcolm says.
So Malcolm took to the courts. What started as a case on expenditures by third party groups quickly blossomed into one that also covered contributions taken in by such a group. The three-judge panel established three types of independent, non-profit groups: Those that only make expenditures, those that only contribute to candidates and those that do both. The court took the view that as long as the non-profit isn’t contributing to candidates, the FEC can’t limit anything. It cannot regulate spending by or contributions to a non-profit that is only making independent expenditures. In the EMILY’s List case, it means that the arm of their organization dedicated to independent expenditures cannot be regulated. The court went way farther in this ruling than EMILY’s List had asked. “The EMILY’s List decision at least suggests, if not holds, that the $5,000 contribution limit is unconstitutional,” says Hasen, the Loyola Law School professor.
Indeed, in reading Judge Janice Rogers Brown’s dissenting opinion, you get the impression that she is jumping up and down, waving her arms and screaming, “Why are we going this far?!” Quoting former Supreme Court Chief Justice John Marshall, she writes, “‘No questions can be brought before a judicial tribunal of greater delicacy than those which involve the constitutionality of a legislative act. If they become indispensably necessary to the case, the court must meet and decide them,’ but if not, ‘a just respect for the legislature requires, that the obligation of its laws should not be unnecessarily and wantonly assailed.’”
The EMILY’s List ruling flowed right into SpeechNow v. FEC, which the D.C. Circuit Court of Appeals will hear on January 27. David Keating, the executive director of the Club for Growth, started SpeechNow in the fall of 2007. The group modeled itself after the National Rifle Association, only instead of trying to elect people that support gun rights, it wanted to elect people that support free speech rights. SpeechNow isn’t incorporated, nor does it take any money from corporate sources. Nor does it contribute to candidates; it only engages in independent expenditures.
At issue in the case is whether pooling individuals’ money to air ads triggers “political committee” status. Under FEC regulations, an individual can spend as much as he or she wants on independent ads. In late September, in fact, the FEC went even further on that front. In an advisory opinion issued to the Black Rock Group, a conservative media firm, the FEC said individuals may set up limited liability companies for the express purpose of airing political ads. That means that as long as there is no coordination, wealthy individuals can hire consultants and air professional grade ads that advocate the election or defeat of a candidate. Neither the individual nor a consultant who works for more than one of these independent LLC’s—such as Black Rock—would trigger “political committee” status. This type of LLC hasn’t been done before, says William McGinley, Black Rock’s attorney. “The advisory opinion,” he says, “permits individuals to hire vendors that will enable them to deliver more effective messages.”
Once resources from multiple individuals are combined, as in SpeechNow’s case, the group becomes a committee and is subject to FEC regulations—including that pesky $5,000 contribution limit. In practice, SpeechNow believes that regulation limits a group’s ability to run a robust ad campaign and, therefore, infringes on its free speech rights. “There is no reason to regulate that activity,” says Keating. “It’s ridiculous.”
If the Court of Appeals sides with SpeechNow, it could say that independent groups can take in unlimited contributions from individuals. In many ways this is the next logical step to the EMILY’s List decision. The timing of this case is also important. If Citizens United is decided before January 27, it will provide guidance to the circuit court even though the issues in each case are different. “If Citizens United comes out our way,” says Steve Simpson, SpeechNow’s lawyer, “it means that the Supreme Court is favoring free speech. The specific holding isn’t really going to change anything in our case at all, but I don’t think it will be lost on the courts that the Supreme Court is concerned with the growth of campaign finance law.”
Russell Feingold is acutely aware of the glazed look most people—even in Washington—get when campaign finance reform is being discussed. So when he took to the Senate floor for his plea, the senator broke his argument down on apocalyptic levels. Generally, the Supreme Court’s decision would be a “calamitous” one that “should frighten every citizen of this country.” The Court, he said, “is poised to ignite a revolution in campaign financing.” Hypothetically, the Court’s decision could lead to corporations holding members hostage to their interests. “Imagine how much worse things would be in a system where every decision by a member of Congress that contradicts the wishes of a corporation could unleash a tsunami of negative advertising in the next election,” he said. “I frankly wonder how our democracy would function under such a system.”
Feingold was most compelling when he got into specifics. A 2005 IRS estimate found that U.S. corporations had after tax profits of $1 trillion. Fortune 100 companies had profits of $605 billion in 2008. In that same cycle, the total amount of money spent by candidates, parties, and outside groups on elections was $2 billion. “That’s nothing compared to what corporations and unions have in their treasuries,” he said.
In 2008, a winning Senate candidate spent, on average, $8.5 million, Feingold went on. The average winning member of the House doled out just less than $1.4 million. “A single major corporation could spend three or four times those amounts without causing even a smudge on its balance sheet,” he said. “We are talking about a political system where corporate wealth rules in a way that we have never seen in our history.”
So what would the 2010 or 2012 elections look like if the current trend continues and McCain-Feingold is dismembered?
“I’m not so bold as to predict what the Supreme Court is gong to do in Citizens United,” says Ryan of the Campaign Legal Center, “but if the Supreme Court does what [former Solicitor General and Citizens United attorney] Ted Olson is asking it to do, then that could potentially open the floodgates for corporations and unions using their general treasury funds to run ads that say ‘Vote for Candidate X,’ or ‘Vote against Candidate Y.’ These are types of corporate advertising that have been illegal for decades.” The big question is which party this would benefit.
Pointing to statistics on industry spending in elections, some might argue that unions—which tend to support Democrats—have a purchasing power as significant as many corporations—which usually lean toward Republicans. But Sheila Krumholz, the executive director of the Center for Responsive Politics, a campaign finance watchdog, says the advantage is clearly with corporations. “There is far, far more money spent by corporations,” she says. “All told, corporations spend far more than anyone else.”
Most expect that there will be a steep rise in the number of third party—or 527—groups in the coming elections because of the rulings in EMILY’s List and the potential of SpeechNow and Citizens United. Because ads that these groups air tend to be more negative than those run by a campaign, corporations are more likely to give money to outside groups to keep their good name out of the mud. Corporations won’t want to alienate part of their customer base by having their name at the end of an attack ad. For that matter, they also wouldn’t want to alienate the candidate. The role of these groups would become even more noticeable if that $5,000 contribution limit fell. Some campaign finance observers believe that if EMILY’s List didn’t already accomplish that, it isn’t too far off.
All of this means the stage may be set for an influx of Republican 527 groups, especially in the 2012 presidential contest. “Something has to counter the $745 million Obama juggernaut,” says Hasen, the Loyola Law professor. “I think we may look back at the $1.8 billion presidential election of 2008 with fondness for how small it was.”
Jeremy P. Jacobs is the staff writer for Politics magazine.
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