Campaign Finance 450

To discuss What are the rights of corporations in the electoral process? Do they differ from rights of human citizens? Does it matter if ‘for profit’; non-profit? Does money corrupt elected officials, or cause the appearance of corruption?

And How can campaign finance be regulated? Should it be unregulated?

Campaign Finance What can be regulated? Contributions – Individuals, Parties, PACs, Corporations, Unions Expenditures – Individuals, Parties, PACs, Corporations, Unions

Campaign Finance Regs. What goals? – Avoid corruption – Public confidence in elections – Transparency – ‘Level playing field’ – Enhance flow of information – Protect free speech

History in US 100+ years of trying, then capitulation in 2010 Tillman Act 1907 – Context – McKinley’s 1896 campaign – Illegal for banks and corporations to contribute in federal elections Fairly easy to evade, but constitutional

History in US Publicity Act 1910 & 1911 – Require disclosure of contributions and expenditures in congressional elections Accepted as constitutional

History in US Federal Corrupt Practices Act, 1925 – Additional disclosure requirements, federal races – Prohibitions on direct corporate contributions to candidates Weak rules about standards for disclosure Funding committees limited to one state exempt – Constitutional

History in US Hatch Act, 1940 – Limit individual contributions to committee to $5K – Annual limits on contributions to candidates and party committees – Limits on total amounts of $ raised by committee ($3 million)

History in US Taft Hartley Act – Ban contributions of labor unions (to candidates) in federal elections – Unions, like corporations, seen as having un- rivaled power to accumulate $$ for campaigns

History in US Public Financing, 1971 – Revenue Act Income tax form voluntary check-off Generate public funds for presidential campaigns (General) If candidate accepts public $, no need to fundraise Must accept spending limits

Modern Regulatory Era Federal Election Campaign Act 1971 – PACs – Political Action Committee Process for corporations & unions to contribute to federal candidates Corporation / union direct voluntary payments to their PACs Limits on contributions to PAC ($5K) Unions, Corps. given ability to contribute via PAC NOT $ to PACs via general funds

Modern Regulatory Era Nixon, CREEP & FECA of 1974 – Ceiling on total candidate spending – Ceiling on PAC spending – Limits on what individuals give to candidates – Limits on spending by “independent” agents – Limits on candidate personal wealth spending

Modern Regulatory Era Nixon, CREEP & FECA of 1974 – Established Federal Election Commission (FEC) – Public funds for presidential nomination contests – Match first $250 raised

Modern Regulatory Era FEC and Courts – Courts rule on what is permissible – FEC left with some discretion in interpreting laws and court decisions – Congress also changes laws…. – By 1990s regulatory system in tatters….

Buckley v. Valeo 1976 At issue, FECA 1974 – Court: regulations justified to combat corruption or ‘appearance of corruption’ – Distinction between expenditures and contributions Appearance of corruption (quid pro quo) matters with giving to candidate, not spending on ads.

Buckley v. Valeo 1976 At issue, FECA 1974 – Court: reject limits on total expenditures & self- financed campaigns Can’t limits candidate total spending Can’t limits individuals’ non-candidate spending – Court: upheld limits on contributions to PACs & candidates Implicit – Unions & corporations can speak via PACs

1980s, 1990s Congress & Courts – Modified FECA so OK to give unlimited $ to political parties – You could give party $10m + (soft money) OK for groups to spend unlimited $$ if independent of candidate – You could give MoveOn, Swift Boat Vets $10m+ NOT OK for unions & corporations to spend unlimited $$ from general treasuries

Modern Regulatory Era Soft Money – 1980s – Unlimited contributions to party committees – Party committees (DNC, RNC, etc.) spend independent of candidate “Issue” spending (527s) – Interest groups, unions, etc. Raise / spend unlimited amounts independent of candidate

By early 2000s 80% think “politicians do special favors for people / groups who give them $” (CBS 2002) 77% say system “corrupt” or “unethical” (CNN 2001) 73% say “officials make policy as direct result of money they receive from major contributors”

But…Still ban on corporate/union $ Despite all this, still limits on what unions and corporations can spend directly from their general funds – Buckley v. Valeo (1976) – National Right to Work Committee v US (1982) This “reflect a permissible assessment of the dangers posed by those entities to the electoral process” – 9 - 0

Austin v. Michigan Chamber of Commerce 1990 Michigan Campaign Finance Act prohibited corporations from using treasury $ for independent expenditures “The unique legal and economic characteristics of corporations necessitate regulation of their political expenditures to avoid corruption or the appearance of corruption” – USSC upheld, 6-3

Enduring ban on corporate/union $ Austin (1990) McConnell v FEC (2003) FEC v Beaumont (2003) FEC v. MA Citizens for Life, Inc. (1986) CA Medical Assoc. v. FEC (1981)

BCRA, 2002 Signed into law by GW Bush Upheld (mostly) by USSC in FEC v McConnell (2003) Targeted un-regulated contributions to federal political parties Targeted “issue ads” appearing 60/90 days before elections

Courts and Regulations 2007 – FEC v. Wisconsin Right to Life PAC – Money is property, not speech – Ltd on ads may be unconstitutional if “susceptible of a reasonable interpretation other than as an appeal to vote for or against a specific candidate.” What has Citizens United trashed?

Citizens United, 2010 Plaintiffs asked for “as applied” challenge to FEC ruling on Hillary The Movie trailer. Issues: – How should BCRA be applied here? – Citizens United a non-profit – The trailer was not something Congress imagined when crafting BCRA – Is it election communication?

Citizens United v. FEC One of USSC’s most radical reversal of modern precedent – Court made up a facial challenge – Court ignored the majority’s preference for ‘deciding less, not more’ – Court overturned recent and past precedent with little justification

Citizens United v. FEC One of USSC’s most radical reversal of modern precedent – On Austin – ‘we don’t like that reasoning’ and declare it null No ltds on corporate / union spending – On disclosure – still needed, sort of… – Stevens, in dissent: unprecedented abandonment of 3 judicial principles

Citizens United v. FEC An ‘as applied’ ruling vs. facial ruling – Most of BCRA could have been salvaged, as had been done by Court previously – So what changed? Court members?

Court members 2003 FEC v WRTL (5 pro regulation votes) – Stevens, O’Connor, Souter, Ginsberg, Breyer (5) – Rehnquist, O’Connor, Souter, Scalia, Kennedy (5) – Breyer, Souter, Ginsburg, Stevens, O’Connor (5) 2010 Citizens United – Kennedy, Scalia, Thomas, Alito, Roberts (5) vs – Stevens, Ginsberg, Breyer, Sotomayor (4)

Effect on Politics Hard to say… Do corporations want to spend share-holder $$ in campaigns? Will unions be more active? SuperPACs vs. Independent spending – No immediate disclosure for “issue-ad” PACs that spend also on “education”