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?

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 total 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 ($5K)• Given ability to contribute via PAC• NOT$ 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 +• OK for groups to spend unlimited $$ if independent of

candidate– You could give MoveOn, Swift Boat Vets $10m+

• NOT OK for unions & corporations

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

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

But…Still ban on corporate/union $

• 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 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 not trashed?

Citizens United, 2010

• Plaintiffs asked for “as applied” challenge to FEC ruling on Hillary The Movie trailer.

• Issues: – Citizens United a non-profit– The trailer was not something Congress imagined

when crafting BCRA

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– 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)– 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”

Corporations are People, My Friends

• Are there no limits on corporate political rights?