Does Money = Political Speech?

1. Does Money = Political Speech? Artemus Ward Dept. of Political Science Northern Illinois University aeward@niu.edu Bill of Rights Institute Kansas City, KS September 17, 2013

2. Introduction • Historically, individuals who wanted to support candidates contributed money directly to the candidates themselves. Yet concerns over bribery and quid-pro-quo arrangements led to government regulation. • Government regulation in turn led to loopholes that could be exploited by clever campaign strategists. • Ultimately, the Supreme Court weighed in: allowing some government regulation but balancing it against the First Amendment interests of candidates and contributors. • How do we resolve the tension between the First Amendment and corruption in politics? • Is money a form of free expression/speech that cannot be abridged by government?

3. 1974 Federal Election Campaign Act (FECA) • Passed, in part, in reaction to the 1972 election and Watergate scandal and over the veto of President Gerald Ford. • It sought to limit both political contributions and campaign spending in hopes of ending the influence of “fat cat” donors and encouraging small donors. • FECA restricted how much individuals and groups could contribute to candidates, parties, and political action committees (PACs) for use in federal elections. It also imposed record-keeping requirements and provided for federal funding of presidential election campaigns. • It also limited independent campaign expenditures and candidate expenditures of personal funds.

4. Buckley v. Valeo (1976) • In Buckley the U.S. Supreme Court upheld these contribution limits and record-keeping provisions but struck down the spending limits. • The Court’s decision rested on an assumption that placing a ceiling on campaign expenditures was equivalent to restricting political speech. • Importantly, the case held that restrictions on campaign contributions and spending, a form of political speech and association, could not be justified by the desire to equalize candidates, writing, “the concept that government may restrict the speech of some [in] order to enhance the relative voice of others is wholly foreign to the First Amendment.” However, the Court did find that the government's compelling interest in preventing "corruption or its appearance" could justify restrictions that went beyond bribery. The Court ruled that because contributions involved the danger of "quid pro quo" exchanges, in which the candidate would agree, if elected, to take or not to take certain actions in exchange for the contribution, limitations on contributions could generally be justified. However, the Court struck down limitations on spending by candidates and spending by others undertaken independently of candidates, on the grounds that spending money did not, by definition, involve such candidate/donor exchanges. • Thus the justices balanced the need to secure the integrity of federal elections against the right to political expression. The Court concluded that reducing electoral corruption was a sufficient interest to limit campaign contributions, but not to restrict campaign expenditures.

5. FECA Loopholes: Soft Money and Issue Ads • In the years following Buckley, political strategists developed creative ways to circumvent the law. • First, campaign contributors were able to exploit a loophole that distinguished money given to a candidate’s political campaign from contributions made to political party organizations for “party building” activities or “get-out-the-vote” drives. FECA clearly regulated and limited the amount of money given to campaign organizations in support of a candidate (“hard money”), but did not regulate general funds given to political parties (“soft money”). Funded by soft money, political parties designed advertising campaigns that supported their candidates without explicit entreaties to voters to cast their ballots for them. The result was an exponential growth of soft money in campaigns and a weakening of FECA. • Second, interest groups and other entities launched “issue campaigns” that promoted certain public policies. These campaigns were unregulated because, at least on their face, they did not advocate voting for any particular candidate. In fact, as long as the advertising avoided certain “trigger words,” such as “Vote for John Smith” or “Defeat Jane Doe,” they were considered issue ads outside the reach of FECA. Often the ads promoted or attacked policies or positions clearly associated with specific candidates and even praised or criticized the candidates themselves, and they appeared during the heat of a political campaign. Again, these activities tended to undermine the policy goals of FECA.

6. Bipartisan Campaign Reform Act (2002) • In response, Congress passed BCRA (popularly known as McCain-Feingold after its chief sponsors Republican Senator John McCain and Democratic Senator Russ Feingold). • Title I deals with soft money. It prohibits the national political parties from raising or spending soft money, bars officeholders and candidates for federal office from soliciting or receiving soft money, and prevents state and local party organizations from spending soft money to promote or attack candidates for federal office. • Title II prohibits corporations and labor unions (including interest groups) from using their general funds to engage in “electioneering communication,” defined as advertising (primarily televised) that clearly refers to a candidate for federal office that appears within 60 days of a general election or 30 days of a primary election and targets the relevant constituency. This provision was intended to stop corporations and unions from funding candidate ads thinly cloaked as issue ads. • The law also requires comprehensive record keeping related to such advertising. • Other sections of the act deal with a broad range of minor issues that Congress believed were in need of reform. • The law also raised the ceiling on hard money contributions. If a candidate was running against a wealth opponent who was financing her/her own campaign, even higher hard money limits were allowed. • A number of individuals and organizations immediately challenged the law in court.

7. McConnell v. FEC (2003) • In a badly fractured 5-4 decision, the Supreme Court majority upheld the principal provisions of the law. • In the majority were the court’s most liberal members: Justices John Paul Stevens, Sandra Day O’Connor, David Souter, Ruth Bader Ginsburg, and Stephen Breyer. • In dissent were the Court’s conservatives: Chief Justice William Rehnquist and Justices Antonin Scalia, Anthony Kennedy, and Clarence Thomas. • In his majority opinion, Justice Stevens applied the rule from Buckley: the government must have a compelling interest in restricting speech and must provide evidence to demonstrate that their interest is compelling. • The Court said: “The question for present purposes is whether large soft-money contributions to national party committees have a corrupting influence or give rise to the appearance of corruption. Both common sense and the ample record in these cases confirm Congress’ belief that they do.” • In dissent, Justice Kennedy said: “Our precedents teach, above all, that Government cannot be trusted to moderate its own rules for suppression of speech….The First Amendment underwrites the freedom to experiment and to create in the realm of thought and speech. Citizens must be free to use new forms, and new forums, for the expression of ideas. The civic discourse belongs to the people and the Government may not prescribe the means used to conduct it.”

8. The Retirement of Justice O’Connor • The unstable nature of the Court’s position on campaign finance reform became even more so in 2006 when Justice Samuel Alito replaced Justice O’Connor. • Over the next 4 years the Court heard 3 important campaign finance cases, and in all 3 Alito voted with the majority to strike down regulations.

9. Randall v. Sorrell (2006) • Just 5 months after Alito took his seat, the Court decided Randall. • The 6-3 decision struck down a Vermont law that placed stringent limits on campaign contributions. • Among the law’s provisions, it limited individual donations to candidates for statewide office to $400 per 2-year election cycle, with lower limits of $200 for some local offices. The law also put strict ceilings on the amount of money candidates could spend. • The Court concluded that the Constitution is violated when contributions and spending limitations, like those imposed by the Vermont law, become so severe as to damage freedom of speech interests. • The justices wrote 6 different opinions with none attracting a majority. • Justices Stevens, Souter, and Ginsburg voted to allow the contribution limits. • Two justices—Scalia and Thomas—called for Buckleyto be overturned. • Justice Kennedy declined to take a definitive position on whether limits of any kind were categorically unconstitutional. But he did indicate his overall dissatisfaction with the Court’s past approach to campaign finance regulation, and seemed inclined to strike down most campaign finance limits. • Justices Breyer and Alito and Chief Justice John Roberts ruled that while contribution limits generally remain permissible under Buckley, Vermont’s contribution limits were too restrictive to survive constitutional scrutiny.

10. Davis v. FEC (2008) • 2 years later in Davis, the justices voted 5-4 to strike down the so-called “millionaire’s amendment” to the BCRA. • This provision dealt with wealthy candidates who in large part finance their campaigns with personal funds. Under the law, once those personal funds exceeded a particular threshold as determined by a complex statistical formula, supporters of the self-financing candidate’s opponent were allowed to donate up to 3-times the regular contribution limits permitted under BCRA. Supporters of the self-financing candidate, however, were required to abide by the normal contribution ceilings. • The law was designed to reduce the advantage of wealthy candidates, but the justices found that it placed an impermissible burden on candidates’ First Amendment rights to use their own personal money for campaign speech. • Writing for the majority (Roberts, Scalia, Kennedy, Thomas, Alito) Justice Alito said that campaign finance limitations must apply equally to all candidates and that a reliance on personal expenditures fundamentally reduces the likelihood of corruption. • The FEC argued that having a level playing field was the government interest at issue but Alito rejected that argument ruling that Buckley did not accept this contention. • In dissent, Justice Stevens said that the two goals of reducing the influence of wealth as a criterion for office and reducing the impression that public office is available only to the highest bidder are important governmental interests.

11. Citizens United v. FEC (2010) • In Jan. 2008, Citizens United, a nonprofit corporation that receives some funding from for-profit organization, released Hillary: The Movie, a documentary film critical of then-Senator Hillary Clinton, a candidate for the Democratic presidential nomination. • The film depicted Clinton as unfit for the presidency. Anticipating that it would make the film available on cable TV through video-on-demand, Citizens United produced TV ads promoting the documentary to run on broadcast and cable TV. • Concerned about possible civil and criminal penalties for violating campaign finance laws, Citizens United initiated legal action against the FEC, arguing that (1) section 203 BCRA, which prohibits corporations and labor unions from using general treasury funds to finance independent electioneering communications, is unconstitutional as applied to Hillary; and (2) BCRA’s disclaimer, disclosure, and reporting requirements (sections 201 and 311) are unconstitutional as applied to Hillary and the ads.

12. Citizens United v. FEC (2010) • At their initial conference vote on the case Chief Justice Roberts framed the question in narrow terms: could the film be shown or not. He ruled that it could and the 4 conservative justices agreed with him (Scalia, Kennedy, Thomas, and Alito). • Instead of a broad ruling on whether Title II of BCRA was unconstitutional, Roberts began crafting a narrow opinion stating that that the law did not apply to the specific communication in question—in this case the film. He finished it and circulated it to his colleaguesfor comments. • Justice Kennedy was not satisfied with Roberts’ narrow, as-applied analysis and Kennedy circulated his own concurrence. Kennedy explained that the Court should have issued a broader ruling, not only declaring McCain-Feingold’s restrictions unconstitutional but also questioning and even overturning prior Supreme Court decisions that allowed restrictions on corporate giving. • Kennedy’s broad concurrence gained adherents and Roberts withdrew his opinion and supported Kennedy’s as the opinion of the Court. • Justice David Souter was outraged and began crafting the dissent which suggested that Roberts had manipulated the Court’s procedures to get his preferred outcome. Roberts did not want Souter’s final dissent (Souter had announced his intention to retire) to be issued as he felt it would damage the Court’s legitimacy. So instead the justices reached a compromise and set the case for re-argument – this time with the broad question of the constitutionality of BCRA’s Title II as opposed to the narrow as-applied question that the first oral argument had focused on. In the end, the justices still divided 5-4 with Kennedy issuing the majority opinion.

13. Citizens United v. FEC (2010)Justice Anthony Kennedy delivered the 5-4 majority opinion. • “Speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people. The right of citizens to inquire, to hear, to speak, and to use information to reach consensus is a precondition to enlightened self-government and a necessary means to protect it…. For these reasons, political speech must prevail against laws that would suppress it, whether by design or inadvertence.” • “Premised on mistrust of governmental power, the First Amendment stands against attempts to disfavor certain subjects or viewpoints. Prohibited, too, are restrictions distinguishing among different speakers, allowing speech by some but not others…. The Government may not…deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each.” • “It is inherent in the nature of the political process that voters must be free to obtain information from diverse sources in order to determine how to cast their votes.”

14. Citizens United v. FEC (2010)Justice Anthony Kennedy delivered the 5-4 majority opinion. • “The Court has recognized that First Amendment protection extends to corporations. This protection has been extended…to the context of political speech…. political speech does not lose First Amendment protection simply because its source is a corporation.” • “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” • If this regulation were allowed, “the Government could prohibit a corporation from expressing political views in media beyond those presented here, such as by printing books….This troubling assertion of brooding governmental power cannot be reconciled with the confidence and stability in civic discourse that the First Amendment must secure.” • “It is irrelevant for purposes of the First Amendment that corporate funds may have little or no correlation to the public’s support for the corporation’s political ideas. All speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech. The First Amendment protects the resulting speech, even if it was enabled by economic transactions with persons or entities who disagree with the speaker’s ideas.”

15. Citizens United v. FEC (2010)Justice Anthony Kennedy delivered the 5-4 majority opinion. • If this regulation were allowed, it “would produce the dangerous, and unacceptable, consequence that Congress could ban political speech of media corporations. Media corporations are now exempt from [the] ban on corporate expenditures. Yet media corporations accumulate wealth with the help of the corporate form, the largest media corporations have immense aggregations of wealth, and the views expressed by media corporations often have little or not correlations to the public’s support for those views. Thus, under the Government’s reasoning, wealthy media corporations could have their voices diminished to put them on par with other media entities. There is no precedent for permitting this under the First Amendment.”

16. Citizens United v. FEC (2010)Justice Stevens dissenting • The dissent argued that the Court’s ruling “threatens to undermine the integrity of elected institutions across the Nation. The path it has taken to reach its outcome will, I fear, do damage to this institution.” He wrote: “A democracy cannot function effectively when its constituent members believe laws are being bought and sold.” • Echoing Souter’s initial proposed dissent and suggesting the reason for re-argument of the case, Stevens noted that the majority “changed the case to give themselves an opportunity to change the law.” • He explained that corporations can be treated differently than individuals for purposes of campaign finance as they do not have the same kinds of speech protections. He said that they have perpetual life, the ability to amass large sums of money, limited liability, no ability to vote, no morality, no purpose outside of profit-making, and no loyalty. • “At bottom, the Court’s opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.

17. Reaction • In his 2010 State of the Union address, President Barack Obama condemned the decision as members of the Supreme Court sat in the front row below him: “Last week, the Supreme Court reversed a century of law to open the floodgates for special interests — including foreign corporations — to spend without limit in our elections. Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities.” • In response, Justice Alito shook his head and said “not true.” • Kennedy’s opinion said: “We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process. Section 441b is not limited to corporations or associations that were created in foreign countries or funded predominately by foreign shareholders. Section 441b therefore would be overbroad even if we assumed, arguendo, that the Government has a compelling interest in limiting foreign influence over our political process.”

18. Aftermath: Super PACs • Citizens United has often been credited for the creation of Super PACs – political action committees which make no contributions to candidates or parties and so can accept unlimited contributions from individuals, corporations and unions. • Because individuals could make unlimited contributions to Super PACs that supported individual candidates, a new (old) phenomenon took hold in 2012: presidential campaigns that were essentially underwritten by single individuals. • For example, Sheldon Adelson, the gambling entrepreneur, gave $15 million to support Newt Gingrich’s Super PAC and Foster Friess, a Wyoming financier, donated almost $2 million to Rick Santorum’s Super PAC. Karl Rove organized Super PACs that spent over $300 million in support of Republicans during the 2012 elections. • Also, Citizens United allowed incorporated 501(c)(4) public advocacy groups (such as the National Rifle Association or Sierra Club, or the group Citizens United itself) and trade associations to make expenditures in political races. Such groups may not, under the tax code, have a primary purpose of engaging in electoral advocacy. These organizations must disclose their expenditures, but unlike super PACs they do not have to include the names of their donors in their FEC filings.

19. Total Fundraising by Presidential Campaigns Note: Totals include direct contributions to candidates, political parties, and Super PACs.