(Bloomberg Opinion) -- More than three-quarters of Americans believe there should be tighter limits on political campaign donations. This has been the case for decades.
The Supreme Court, meanwhile, has been chipping away for decades at legislative limits on political contributions and spending, and it seems headed toward banning them altogether. Nominee Brett Kavanaugh, whose confirmation hearings began in the Senate this week, certainly seems like he would be on board with that.
This makes for an interesting contrast between mass and elite opinion!
Part of this disconnect probably comes about because sentiment in favor of restricting campaign spending is, while widespread, not deeply informed or strongly felt, with only a small minority telling pollsters that it's a top priority. But mainly I think it’s that a majority on the Supreme Court has become committed to the proposition that “money is speech,” as dissenting Justice Byron White derisively put it in 1976, while most people just don’t think about it that way.
That is, ever since its ruling in Buckley v. Valeo in 1976, the court has held that the regulation of campaign spending is constrained by the First Amendment's instruction that "Congress shall make no law … abridging the freedom of speech." The court wasn't absolutist in 1976 about the "no law" part, allowing campaign contribution limits to stand because they could be construed as directly combating corruption, but it has been tending in that direction since, especially over the past decade.
This isn't the only topic on which the Supreme Court's understanding of First Amendment protections differ from those of the general public (think flag burning), and I certainly wouldn't presume that the court has it wrong on campaign spending. But I was curious how it got to this point. So here’s a little history.
In the wake of the Watergate scandal, Congress passed and President Gerald Ford signed into law a sweeping set of campaign reforms known as the Federal Election Campaign Act Amendments of 1974. As the name indicates, this wasn't Congress's first foray into campaign spending regulation. It had started out by banning campaign donations by some federal workers in 1867 and by some corporations in 1907, then imposed the first campaign disclosure requirements in 1910 and the first campaign spending limits in 1911. The Supreme Court had partially invalidated these limits by declaring in 1921 that Congress had no authority to regulate primary elections but reversed itself in 1941. As of 1971, there were federal ceilings on both campaign contributions and spending, but they were (1) easy to evade legally and (2) never enforced, even when the law was broken.
Then Congress passed and President Richard Nixon (the beneficiary of some huge individual contributions in his 1968 campaign) reluctantly signed the Federal Election Campaign Act of 1971, which consolidated existing election rules, introduced the first public subsidy of presidential campaigns, and sharply tightened disclosure requirements. Thanks to this improved disclosure, Duke University School of Law professor Joel L. Fleishman wrote in 1975, "resourceful journalists and governmental investigators were able to discover a variety of illegal contributions to the 1972 presidential campaign chests' and to trace Republican campaign payments to the participants in the Watergate break-in." Those revelations, in turn, led to the 1974 campaign-law amendments, which among other things:
- Limited overall campaign spending. A House candidate, for example, was allowed to spend no more than $70,000 in the primary and $70,000 in the general election (with some exceptions and complications that I'm not going to get into).
- Limited individual campaign contributions to $1,000 per candidate per election, and $25,000 per calendar year.
- Expanded the public subsidies available to presidential candidates and political parties.
- Created the Federal Election Commission to enforce the law and sharply increased the penalties for violating it.
Agreeing on these points took many months of wrangling, but final passage of the bill was overwhelming, with the House voting 365-24 in favor and the Senate 60-16. As soon as the amendments became law in January 1975, though, U.S. Senator James Buckley of New York challenged them in U.S. District Court, and it was his lawsuit that the Supreme Court later ruled on in Buckley v. Valeo (Valeo was Francis R. Valeo, the secretary of the Senate and an ex officio member of the Federal Election Commission).
Buckley is the older brother of the late William F. Buckley Jr., and he had been elected to the Senate in 1970 on the Conservative Party line. He felt his upstart, third-party candidacy wouldn't have been possible without support from a few big donors, and that limiting donations would entrench incumbents. Former Democratic U.S. Senator Eugene McCarthy, whose upstart 1968 presidential campaign had been similarly jump-started by a major donor and who was planning a third-party presidential run in 1976, joined in the suit, saying that the law "makes it almost impossible to have an effective challenge to the two established parties.” Other co-plaintiffs included donors, conservative groups and the New York chapter of the American Civil Liberties Union.
The plaintiffs surely had a point. But in 1976, the Supreme Court let stand the part of the bill that arguably did the most to entrench incumbents — the limit on contributions — while declaring the spending limits to be unconstitutional restrictions on speech (it also upheld the public subsidies and, subject to some tweaks, the establishment of the FEC). The court's reasoning was that while large individual contributions to candidates could be seen as attempts to “secure a political quid pro quo from current and potential office holders," spending by candidates themselves or by independent groups did not appear to pose the same danger, while restricting it "heavily burdens core First Amendment expression."
This marked the first time that the Supreme Court had ruled that campaign spending was entitled to First Amendment protection. To be fair, the practice of ruling that anything was entitled to First Amendment protection was relatively new, having begun in reaction to speech restrictions enacted during World War I and gaining steam in subsequent decades with decisions in favor of newspaper owners targeted by Louisiana Governor Huey Long in the 1930s, members of the National Association for the Advancement of Colored People targeted by the state of Alabama in the 1950s, and the New York Times after the police commissioner of Montgomery, Alabama, sued it for libel in the 1960s. By the early 1970s, several legal scholars were arguing that the First Amendment applied to campaign activities, too. As one of them, Yale Law School professor and later federal appeals court judge Ralph K. Winter, wrote in 1973 (with help from his student John Bolton!):
If we are to have "free trade in ideas" in the political sphere, individual citizens must be free to express whatever ideas they choose in whatever form they believe appropriate, whether or not it costs them money. There is no room for price controls in the marketplace of ideas.
The Supreme Court, as we’ve seen, didn’t fully agree. Take that “free trade in ideas” metaphor far enough, and it justifies the buying and selling of political decisions. But the court didn’t fully disagree, either. Its opinion was per curiam — a group effort not attributed to a single judge — and as University of California at Irvine law professor Richard Hasen described in a 2002 reconstruction of the drafting process, it was a rushed, muddled effort, with Justices William Brennan, Lewis Powell and Potter Stewart all writing parts of the opinion and a majority of the justices dissatisfied with the final result. Five wrote separate opinions in which they dissented with parts of the ruling, with the extremes occupied by White, who thought the entire campaign law should have been upheld, and Chief Justice Warren Burger, who thought it all should have been thrown out.
And that, followed by Supreme Court rulings undoing the restrictions on corporate political activity and invalidating the individual aggregate contribution limit, among other things, has left us with the strange campaign finance system we have today, in which contributions to individual candidates are restricted but just about anything else goes. It’s hard to disagree with Kavanaugh’s assertion, made in a 2002 memo that was released last week, that this “creates problems for candidates when they are hampered by contribution limits and outside groups are not.” Less likely to meet with universal acclaim is his assertion that “the way to fix this ... is to eliminate contribution limits, not to regulate the groups.”
Still, to a certain extent, that would be the logical outcome of Supreme Court decision-making on campaign finance since Buckley v. Valeo. Would it be the right outcome? There’s a line of libertarian thinking, present in the work of Winter and others in the 1970s but expressed more strongly in subsequent analyses such as Capital University Law School professor Bradley A. Smith’s “Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform” in 1996, that holds that all attempts to regulate campaign spending only make things worse. But all we actually know is that, within the constraints imposed by the Supreme Court in 1976 and subsequently, it’s almost impossible to craft effective campaign regulation.
To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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