1. Campaign Finance 450

2. 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?

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

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

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

6. 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

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

8. 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

9. 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)

10. 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

11. 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

12. 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

13. 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

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

15. 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….

16. 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.

17. 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

18. 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

19. Modern Regulatory Era Soft Money – 1980s - 2000 – 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

20. 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”

21. 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

22. 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

23. 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)

24. 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

25. 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?

26. 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?

27. 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

28. 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

29. 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?

30. 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)

31. 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”