Electoral Insight – Persons with Disabilities and Elections
McConnell v. FEC
A New World of Campaign
Finance in the United States?
Charles A. Dana Professor of Government, Colby College
Thomas E. Mann
W. Averell Harriman Chair and Senior Fellow, The Brookings Institution
On December 10, 2003, the U.S. Supreme Court issued its ruling in McConnell v. Federal Election Commission, the court case that challenged the constitutionality of the Bipartisan Campaign Reform Act (BCRA), or, as it is more commonly known, the McCain-Feingold law.Footnote 1 The case was widely viewed as the most important legal battle on campaign finance since the Supreme Court established Congress's authority to regulate campaign funding under the First Amendment in its landmark decision in Buckley v. Valeo,Footnote 2 more than 25 years ago. The central issue before the Court was the question of whether BCRA's new limits on party finances and independent advertising campaigns by parties and interest groups were permissible restrictions on the rights of free speech and association under the First Amendment. In a decision that surprised many observers, given the intense legislative battle over BCRA and a lower court decision that found parts of the law unconstitutional, the Court upheld all the major provisions of the law, although in most instances by a narrow five-to-four majority.Footnote 3
The Court's decision on BCRA ushered in a new era of federal campaign finance regulation in the United States. But how much did it really change? The Court took care to note that its view was grounded firmly in prior court precedents, and cast BCRA, as its defenders had argued, as an incremental step towards restoring longstanding prohibitions on the use of corporate and labour union funds in federal elections and regulations mandating the public disclosure of campaign monies. The majority adhered to the First Amendment doctrine established in Buckley, maintaining the distinction between contributions and expenditures and affirming that Congress had the authority to regulate contributions, but not expenditures. It also followed the now well-established principle that the constitutional interest served by campaign finance laws is to prevent corruption or the appearance of corruption. Indeed, only Justices Scalia and Thomas, in their separate dissenting opinions, argued that core components of Buckley should be overturned, most notably arguing that limits on campaign contributions are unconstitutional.
However, despite the largely conservative approach represented in the majority opinion, the Court did offer new directions for reform by building on prior rulings in important and meaningful ways. The majority advanced an expansive and pragmatic understanding of corruption to include not simply the exchange of cash for votes or direct influence on legislation, but also the sale of access to legislators and the "broader threat" of undue influence that results "from politicians too compliant with the wishes of large contributors." The Court also found that safeguarding the integrity of the electoral process justified efforts to extend the regulatory structure to deal with reasonable and plausible means of circumventing the law, even in certain circumstances when it involved funds spent by parties in ways that would benefit candidates. The decision also approved new and broader standards for defining the types of campaign activity that can be regulated under the First Amendment, especially with respect to political advertising. Finally, the ruling expanded the reach of federal law to encompass the federal-election-related activities of state and local party committees and other political groups.
Key elements of the new law
Republican Senator Mitch McConnell (Kentucky) challenged the constitutionality of the Bipartisan Campaign Reform Act, signed into law by U.S. President George Bush on March 27, 2002.
Congress adopted BCRA primarily to address two contemporary forms of campaign financing, party soft money and issue advocacy advertising, that had created egregious tears in the regulatory fabric established by the 1974 Federal Election Campaign Act (FECA) and rendered utterly meaningless the law's contribution limits and public disclosure requirements. Throughout the 1990s, party committees raised increasingly large sums of soft money – unlimited contributions exempt from federal source prohibitions – from corporations, labour unions and individuals. Although these funds were ostensibly spent for purposes unrelated to federal elections, they could be used to pay for part of the costs of voter registration drives, voter mobilization programs and other "party-building" activities that benefit federal candidates. As the parties became more aggressive in their use of soft money, the amounts of unregulated money spent in connection with federal races soared, rising from $86 million in 1992 to almost $500 million in 2002.Footnote 4
The growth of soft money became especially prominent during the 1996 election, when the parties discovered new ways of spending these funds on broadcast advertisements that supported federal candidates, but were not considered to be campaign ads subject to federal law. This tactic was based on a distinction made by the Supreme Court in Buckley between election-related "express advocacy" communications that could be regulated by campaign finance laws and non-election-related "issue advocacy" communications that could not. "Express advocacy" communication was deemed to consist of messages that used such words as "vote for" or "elect." After many years of inattention, this "magic words" doctrine came to be interpreted to mean that so long as certain words were not included in an ad, that ad could be financed at least in part with unregulated monies, including funds raised from corporations and labour unions. Parties and interest groups quickly exploited this loophole, spending more than $250 million on independently financed television and radio ads in the 2000 election alone, with most of the money coming from sources long prohibited in federal elections.Footnote 5
This explosion of party soft money and issue advocacy advertising, combined with a growing body of evidence concerning the corruptive effects of soft money gifts and the electioneering intent and impact of issue advertising in federal campaigns, convinced Congress that the flow of unregulated money had to be stopped. Accordingly, one of the cornerstones of BCRA was a ban on soft money. The law prohibits federal officeholders and candidates, as well as national party leaders and their agents, from raising or spending any funds that are not subject to federal contribution limits and reporting requirements. In other words, federal politicians and national party personnel, as a general rule, are only allowed to raise and spend "hard money" – money raised under federal regulations, which means no contributions from corporate or labour union treasury funds and no unlimited gifts from wealthy individuals. The ban includes efforts to raise soft money for state or local party committees. Federal candidates may not solicit contributions impermissible under federal law for state organizations.Footnote 6 To ensure that officeholders do not simply shift their soft money solicitations to fundraising for groups that can conduct election-related activities, the law also restricts the fundraising that federal politicians and national party leaders can undertake for non-party and tax-exempt organizations.
The National Rifle Association challenged the constitutionality of the Bipartisan Campaign Reform Act with the claim that Americans had lost "a large measure of their right to exercise collective paid political speech."
BCRA also deals with the circumvention problem through specific rules about the types of state and local party expenses that must be financed with federally regulated funds. The law expands the definition of "federal election activity" to clarify the types of campaign activity that state and local parties have to finance with federal hard money. These activities are defined to include (a) voter registration during the 120 days before an election; (b) voter identification and turnout efforts, and generic campaign activity conducted in connection with an election in which a federal candidate appears on the ballot; (c) public communication that refers to a clearly identified federal candidate and "promotes, attacks, supports or opposes" that candidate; and (d) the services of any state party employee who spends more than 25% of his or her time on federal election activities.
Another cornerstone of BCRA was the creation of a new category of broadcast ads – electioneering communications – that establishes a new standard for election-related speech extending well beyond the "magic words" of express advocacy. As defined by BCRA, an "electioneering communication" is any broadcast, cable or satellite communication that refers to a clearly identified federal candidate, is broadcast within 30 days of a primary election or 60 days of a general election, and is targeted to the electorate of the identified candidate. Any advertisements that fulfill all of these criteria cannot be paid for with money from corporate and labour union treasuries and the sources of funding must be disclosed to the public. The law neither prohibits any independent advertising campaigns nor limits the amounts that can be spent on broadcast communications; it simply requires that any ads qualifying as electioneering communications be financed with funds subject to federal regulation.
The Supreme Court's decision
United States Supreme Court, Washington, D.C.
In upholding the provisions summarized above, the Court in McConnell relied heavily on the evidentiary record that was prepared in the case and showed a notable willingness to defer to Congress's "ability to weigh competing constitutional interests in an area in which it enjoys particular expertise." Congress, in the view of the majority, had "properly relied on the recognition of its authority" as established by the Court and "concluded from the record that soft money's corrupting influence insinuates itself into the political process not only through national party committees, but also through state committees, which function as an alternative avenue for precisely the same corrupting forces." The Court thus upheld the constitutionality of the ban on soft money and the requirements imposed on state and local parties to spend only hard money on federal election activities. In doing so, the Court contended that BCRA simply "restore[s] the efficacy of FECA's longstanding restriction on contributions to state and local committees for the purpose of influencing federal elections," and that the new restraints were justified because they served the "important government interest" in preventing circumvention of the soft money ban.
Certainly the most surprising aspect of the Court's opinion was the apparent ease with which it reached its conclusion to uphold the constitutionality of the "electioneering communications" definition and the accompanying limits on election-related speech by interest groups and other non-party organizations. This was one of the most controversial aspects of the law and a matter of intense legal debate in the months leading up to the Supreme Court ruling, with the District Court panel finding BCRA's primary definition of electioneering communications overly broad and thus unconstitutional.Footnote 7
The Supreme Court first rejected the plaintiffs' argument that the Constitution prohibits Congress from regulating election speech that goes beyond the express advocacy standard. That Buckley standard, the majority ruled, was the product of statutory interpretation rather than a constitutional command. Congress had every right to construct an alternative standard that was neither vague nor overly broad. But the Court devoted little attention to the arguments advanced by plaintiffs that the four-part test (broadcast communication/clearly identified candidate/proximity to election/targeted to electorate) was too vague to withstand constitutional scrutiny and would snare some ads that were not designed to influence an election in the web of federal regulation. The Court found the four components of the new electioneering standard to be "both easily understood and objectively determinable" and thereby swept aside any concerns about the vagueness of the definition. The Court also was comparably abrupt in dismissing concerns about the definition being overly broad, explaining that issues ads broadcast in close proximity to an election are "the functional equivalent of express advocacy." Instead, the Court focused on the purpose of the rule – to uphold the ban on corporate and union treasury funds in federal elections and promote public disclosure of election-related expenditures – and accepted the new rule.
An even greater eight-to-one majority supported the disclosure of electioneering advertisements. The BCRA requires the disclosure of the names of any individuals who contribute $1,000 or more to an individual or group paying for electioneering communications. The Act further requires these advertisers to disclose not only the actual amounts spent on these campaign ads, but also any contracts made for communications that have not yet aired. While the Court did consider the problems that might accompany these disclosure requirements, all of the Justices, except for Justice Thomas, felt that any concerns were outweighed by the public's interest in obtaining full disclosure prior to an election.
What lies ahead
The Web sites of U.S. President George Bush and some of the Democratic challengers have been important tools in soliciting contributions for their 2004 presidential campaigns.
By upholding the major pillars of BCRA, the Court has sanctioned the efforts of Congress to rein in party soft money and electioneering in the guise of issue advocacy, thereby breaking up the nexus among large donors, political parties and elected officials, and reinstating the prohibition on corporate and union contributions and expenditures in federal elections. This presages, not a revolution in campaign finance, but an incremental adjustment to patch gaping holes in the regulatory regime. The new law anticipates no reduction in the amount of money spent on election campaigns nor any diminution of campaign activity by political parties or interest groups.
Political parties will continue to be free to spend unlimited amounts in independent expenditures on behalf of their candidates, as long as the funds used for this purpose are hard dollars – that is, raised in accordance with federal source prohibitions and contribution limits. (The Court in McConnell affirmed that right in overturning a minor provision of BCRA that would have forced parties to choose whether to make limited expenditures in coordination with a candidate or unlimited independent expenditures.) Parties may also invest unlimited sums of hard money in party-building and get-out-the-vote activities. Initial experience under BCRA suggests that parties will have adequate funds. The national parties raised more hard money in the first year of the current presidential election cycle than hard and soft money combined during the comparable period in the previous cycle.
Interest groups and non-party organizations also have many options under BCRA to engage in robust campaign communications. They can spend unlimited amounts in independent expenditures and electioneering communications, using funds raised by their political action committees (PACs) in accordance with federal restrictions. They can also spend without limit and avoid all restrictions on the source of funds by running ads that fail to meet all four criteria of the new bright-line test for electioneering communications, and by funding non-broadcast campaign activities such as mail, phone banks, Internet and voter education programs.
Not surprisingly, political actors have moved quickly and aggressively to test the limits of the new law. Several new organizations have been formed by prominent political figures to receive soft-money contributions (from corporations, unions and wealthy individuals) with the intent of using those funds for partisan voter mobilization programs or for campaign ads that fall outside the window of electioneering communications. The Federal Election Commission (FEC) will rule on whether these organizations must register as federal political committees and comply with the applicable rules, including federal contribution limits. This is only one important illustration of the extent to which BCRA's ultimate impact will depend crucially on administrative rulings by the FEC.
As dramatic and surprising as the passage of the McCain-Feingold bill and the Supreme Court's decision to uphold its major provisions are, it would be a mistake to conclude that the United States has entered a new world of campaign finance. Changes in the law are best viewed as incremental repairs, not new departures. Campaign finance law and jurisprudence continue to heed the free speech imperatives of the First Amendment. Long-standing prohibitions on corporate and union financing of federal election campaigns have been restored after years of leakage, and disclosure regimes have been strengthened. Ample scope remains for political parties and interest groups to engage in unlimited campaign communication.
Perhaps the most interesting question is whether the Court's more expansive reading of Buckley, one more in line with subsequent cases, including Austin, Missouri Shrink PAC, Colorado II, and Beaumont,Footnote 8 portend more constitutionally-sanctioned reforms to limit expenditures. This seems unlikely. The Court's prevailing doctrine on campaign finance retains the crucial distinction between contributions and expenditures. Moreover, four members of the Court were willing to overturn most of the provisions of BCRA and move in a more deregulatory direction. A slight change in its composition could move the Court in a radically different direction on campaign finance.
For the foreseeable future, therefore, reformers are likely to turn their attention to proposals that fit within the current jurisprudence. These include repairing the presidential public financing system, providing free air time to candidates and parties, reinstituting a federal tax credit for small donors, and strengthening or restructuring the Federal Election Commission.
Return to source of Footnote 1 124 S. Ct. 619 (2003). The text of the opinion is available at http://www.supremecourtus.gov/opinions/03pdf/02-1674.pdf. The Bipartisan Campaign Reform Act was signed into law by President Bush on March 27, 2002. Its constitutionality was immediately challenged by Republican Senator Mitch McConnell and the National Rifle Association. Eventually, 11 lawsuits involving 77 plaintiffs, ranging from the Republican National Committee and California Democratic Party to the American Civil Liberties Union and National Association of Manufacturers, were filed against the Act. These cases were consolidated into one case and, in accordance with a provision in BCRA that called for expedited judicial review, the challenge was heard by a three-judge panel in U.S. District Court for the District of Columbia. This district court issued its ruling in May 2003, but stayed its opinion, which found parts of the law unconstitutional, pending Supreme Court review. The decision was appealed immediately to the U.S. Supreme Court, which heard oral arguments on the case in an unusual September 8 session.
Return to source of Footnote 2 424 U.S. 1 (1976).
Return to source of Footnote 3 The Court's decision is unusual in that it contains three separate majority opinions written by four judges on different issues raised in the case. The central issues in the case were those related to the ban on soft money and the new standard of electioneering communications. These were decided in the majority opinion written by Justices Stevens and O'Connor, adopted by a 5-4 vote, with Justices Souter, Ginsburg and Breyer joining to form the majority.
Return to source of Footnote 4 Federal Election Commission, "Party Committees Raise More Than $1 Billion in 2001–2002," press release, March 20, 2003. For background on party soft money financing, see Anthony Corrado, et al., Campaign Finance Reform: A Sourcebook (Washington, D.C.: Brookings Institution Press, 1997), pp. 167–177.
Return to source of Footnote 5 Kenneth M. Goldstein, "Electioneering Communications in Recent Elections: The Case for a New Standard," in Anthony Corrado, Thomas E. Mann and Trevor Potter, eds., Inside the Campaign Finance Battle (Washington, D.C.: Brookings Institution Press, 2003), p. 178.
Return to source of Footnote 6 The law does contain a few provisos. Federal candidates or party leaders may not solicit soft money, but they may appear as speakers or invited guests at state or local party fundraisers where parties are raising money allowable under state law, but not under federal law. A federal officeholder seeking state office (e.g. a member of Congress running for state governor) is exempted from the ban and may raise funds allowed under state law for his or her state campaign committee.
Return to source of Footnote 7 See McConnell v. FEC, 251 F. Supp. 2d 176 (D.D.C. 2003).
Return to source of Footnote 8 Full citations and discussion of these cases and their connection to McConnell v. FEC can be found in a special issue of Election Law Journal Volume 3, Number 2 (2004).
The opinions expressed are those of the authors; they do not necessarily reflect those of the Chief Electoral Officer of Canada.