Campaign Finance

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

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

5. 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

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

7. 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

8. 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)

9. 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

10. 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

11. 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

12. 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

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

14. 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….

15. 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.

16. 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

17. 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

18. 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

19. 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”

20. 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

21. 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

22. 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)

23. 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

24. 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?

25. 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

26. 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

27. 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

28. 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?

29. 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)

30. 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”

31. Corporations are People, My Friends • Are there no limits on corporate political rights?