Concepts in Campaign Finance that Defy Common Sense

CLC Staff
Oct 4, 2011
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It is bad enough that a majority of the current Supreme Court made the nonsensical decision in 2010 that, at least when it comes to politics, corporations should be treated the same as individuals.  The Court reasoned that "speech restrictions based on the identity of the speaker" are unconstitutional – at least as to independent campaign-related spending.  So, just as individuals are allowed to pay for attack ads, now corporations can run these ads using their treasury funds.  The highly controversial Citizens United decision overturned a century's worth of law and jurisprudence, and will go down in history as one of the most damaging and dangerous since the pro-slavery Dred Scott decision. 

As Justice Stevens said in his dissent, "In the context of election to public office, the distinction between corporate and human speakers is significant.  Although they make enormous contributions to our society, corporations are not actually members of it.  They cannot vote or run for office.  Because they may be managed and controlled by nonresidents, their interests may conflict in fundamental respects with the interests of eligible voters.  The financial resources, legal structure, and instrumental orientation of corporations raise legitimate concerns about their role in the electoral process.  Our lawmakers have a compelling constitutional basis, if not also a democratic duty, to take measures designed to guard against the potentially deleterious effects of corporate spending in local and national races."

But "corporations as individuals" is not the only concept in current campaign finance law that makes no sense, thanks in part to the Federal Election Commission (FEC) -- the most dysfunctional agency in town -- and in part to three decades of inconsistent and labored Supreme Court jurisprudence that has resulted in a system that is essentially in tatters.

Faulty Concept #1.  Independent Expenditures.  Contributions from individuals and PACs to political candidates can be limited, and contributions from corporations and labor unions to candidates can be prohibited, according to the Supreme Court, due to concerns about corruption and the appearance of corruption.  But independent expenditures by individuals, corporations and unions cannot be limited because they supposedly pose no threat of corruption.  Really??  Giving a candidate more than $2,500 is potentially corrupting, but spending millions of dollars to help elect a candidate is just good old free speech.  Certainly, as an intellectual exercise, one can imagine an individual, corporation or union deciding to spend his or her money without any coordination with a candidate.  But in practice, the vast majority of “independent expenditures” have become a means of evading contribution limits.  They are also intimately tied with the next faulty concept -- coordination.

Faulty Concept #2.  Coordination.  The line in the sand between “coordinated” and “independent” spending is very important because it determines when contribution limits kick in and thus whether or not corporations and unions are allowed to make the expenditure.  Thanks to the FEC, avoiding the line -- and remaining unencumbered by contribution limits or the inconvenience of the corporate/union treasury fund ban -- is child's play.  The current regulations authored by the FEC are concerned only with the independence of a group’s expenditures from a candidate or political party, not the independence of the group’s fundraising, communications or other political activities.   This means political operatives – one working for the campaign, the other for an ‘independent expenditure’ group supporting the same candidate - can work in adjoining cubicles and chat all day as long as they avoid any details about any specific expenditure.

Faulty Concept #3.  Bundling.  An individual is limited to contributing $2,500 to any one federal candidate, again due to concerns about corruption and the appearance of corruption.  However, at the same time, the law allows that individual to collect and deliver an unlimited number of contributions from family, friends and colleagues to that same candidate.  In turn, the bundler gets the recognition and political credit that often results in rewards like ambassadorships to say nothing of getting phone calls returned promptly and sympathetically.

Faulty Concept #4.  Money is Speech.  The Supreme Court never actually made this finding, but that hasn't stopped politicians like current Senate Majority Leader Mitch McConnell (R-KY) from saying it over and over for three decades so that now many in the media believe it accurately reflects what the Court said in the seminal campaign finance case, Buckley v. Valeo.  What that Supreme Court decision said is that the ability to spend money on campaigns has free speech implications, but when it comes to contributions to candidates, restrictions can be placed on amounts because the governmental interest in preventing corruption and the appearance of corruption outweighs the right of an individual to give unlimited financial support to a candidate of their choice.  But spending or contributing money in connection to an election campaign is not the equivalent of simply standing up on a street corner and expressing your opinion in terms of a First Amendment analysis. 

Faulty Concept #5.  Political Committees.  A 501(c)(4) organization like Crossroads GPS is not being required to register as a political committee, and thus is not subject to FEC disclosure requirements – despite that fact that it has done little besides run attack ads against vulnerable Democrats since its inception.  How can this be?  Because only groups who have campaign activity as their “major purpose” are required to register and report as federal political committees.  But Crossroads GPS has carefully manages its resources so it can spend enough after the campaign to balance out the millions it spent in the campaign season to elect or defeat a candidate.  Although even that off-year spending, as the group boasts on its website, funds so-called ‘issue ads’ attacking vulnerable Democrats.

Faulty Concept #6.  Presidential Super PACs.  Super PACs came about because of court decisions that once again relied on the fiction of “independence” (Citizens United, SpeechNow v. FEC) to authorize political committees to accept unlimited individual and corporate contributions to fund “independent expenditures.” .  But, currently, there is a growing crop of candidate-specific Super PACS run by former operatives and supporters of the presidential candidates themselves, further making mockery of the concept of “independence.”

Faulty Concept #7.  Testing the waters.  Presidential candidates are increasingly testing the waters to test the water.  That is to say, potential candidates are collecting money, hiring staff, traveling to Iowa and New Hampshire, using state registered PACs to amass funds, buying voter lists and making piles of contributions to state and local candidates in early primary states.  Yet, the FEC is allowing them to ignore the rules that govern testing the waters for a presidential run, which include abiding by contribution limits and eventual disclosure of contributions.

Faulty Concept #8.  Leadership PACs.  Leadership PACs are, plain and simple, political slush funds. What they are generally used for -- collecting money to buy favor for a leadership race -- is corrupt at its core.  They are also used to underwrite aspirations for higher political office, to pay for a more comfortable personal lifestyle or to wield political power.  They also provide monied interests one more opportunity to give more money to politicians.  Though an individual can give only $2,500 to a candidate’s campaign committee per election, they can give $5,000 per year, or $30,000 per Senate cycle, to the same candidate’s leadership PAC.

Faulty Concept #9.  Separate Segregated Funds.  In order to pass the Federal Election Campaign Act in the 1970s, a political bargain was struck to treat corporate and union PACs the same even though they are very different.  Though both use the PAC form to make contributions to candidates, the basic differences in where the sources of the money (voluntary contributions from executives vs. rank-and-file members) and the size of the donation to the PAC (thousands vs. hundreds) continues to create tension.  Also, the total amount given by corporate PACS vastly outpaces the total given by all union PACs in both number and the amount given to candidates.

Faulty Concept #10.  Money Doesn't Buy Outcomes.  Even if it is almost universally acknowledged that money buys access and influence, some -- including the majority of current Supreme Court justices -- don't see a problem.  For example, Justice Kennedy wrote in Citizens United, "That speakers may have influence over or access to elected officials does not mean that those officials are corrupt.  And the appearance of influence or access will not cause the electorate to lose faith in this democracy."  Really??

The basic notion in our democracy is that when a citizen goes into the voting booth, his or her vote counts the same as Bill Gates or one of the Koch brothers -- one vote, no more or less.  But our current campaign finance system makes a complete and utter mockery of this fundamental democratic concept.  Indeed, many of those who are the big political givers believe they deserve more influence in the political process because they are job- and wealth- creators.  The truth is our politicians are indeed accountable to those who help elect them – unfortunately too often that means the monied interests who fund their political campaigns.  If the returns on the investments of the deep-pocketed interests did not pay off well, they would not be made. 

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