A Failed Campaign Finance System: Neither Congress nor the Supreme Court Intended the Mess We Have

CLC Staff
Dec 9, 2011

Last week, Campaign Legal Center President Trevor Potter sat down with Ross Ramsey of The Texas Tribune to discuss the state of play in campaign finance.  Potter describes system “in huge flux” that bears almost no resemblance to the system of full disclosure imagined by Justice Kennedy in his majority opinion inCitizens United v. FEC.

An edited version of the interview follows; the full audio can be heard by clicking here.

Texas Tribune:  What's the state of play in campaign finance? An extraordinary amount of change has taken place in the last three years.

Trevor Potter: We're in huge flux, and I think even the understanding of experts in the field has not caught up with the change. Certainly, the Federal Election Commission hasn't caught up with the change.

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We're still figuring out how [the Citizens United case, which freed corporations and labor unions from some restrictions on political speech and advertising] plays out two years later. This is a very confusing time.

The FEC met [last week] to consider a request from American Crossroads, one of the big Super PACs, and it split, 3-3, and will send the PAC a letter saying, "Dear PAC, we are very sorry, but we are unable to advise you because we don't have four votes for any position." Which means the PAC won't know what the law is.

This whole area is very difficult, certainly for lawyers to counsel clients, but for the public to know what the rules are.

TT:  Can I get a reasonable understanding, as a voter, as a citizen, about who's supporting which cause or which candidate, for how much, what's behind each message?

Potter: There's no guarantee of that. That's the problem. One of the things the Supreme Court got wrong in the Citizens United case is it said, "We're going to allow corporate spending, but there will now be full disclosure of that spending and shareholders will know where their corporate money is going, and voters will know where the advertising is coming from and who is actually behind the message." It's just not true. It may happen.

But if you are a clever spender or a determined spender with a good lawyer, you can prevent people from knowing how you are spending your money. And you can run advertising where the voters will not know who is paying for it. It depends on how you structure your ad, and that shouldn't be the case. I think legally that is not what the law says, but it's how the system is currently being run.

If you wanted to, or don't mind full public disclosure, you give the money in your name to one of these new Super PACs and it's disclosed. For the voter, they hear it's something called American Crossroads. They may not know what that is, but they could if they chose to, go to the American Crossroads website and see who the major donors are. They can also go online and find that American Crossroads has as its chief strategist Karl Rove, and so they will have a sense — for a group that well-known and that public — of the perspective and where they're coming from.

On the other hand, they may also see an ad from a group called Americans for a Better Country — that is a real group out there — and have no idea where that money is coming from because it's in a different box in the legal scheme. It chose to be a 501(c)(4) or (c)(6), which are tax-exempt groups that don't disclose their donors. It is claiming that no one person paid for that particular advertisement, which is one of the loopholes in the current disclosure law as the FEC reads it. They could end up running those ads, and you'd know nothing about them.

If you're someone with a lot of money and you want to affect the election, you get to choose whether you're going to do so secretly, or whether you're going to do so with public disclosure.

TT:  Are things less transparent than they were before, or are they opaque in a new way? It seems like there's always a way to hide the money, at least while the decision's being made.

Potter: This has been an ongoing battle, and there have been times during the last 15 years when we effectively had full disclosure. We've lost some of that now, but that's because there's this pull and push between spenders who are trying to influence elections without disclosing their identities, and the enforcement side — the law, the FEC and so forth. At the moment, we're at a kind of low ebb in the strength of the enforcement side.

TT:  It appears that you can run a significantly sized campaign with no candidate. You could actually run a presidential campaign, outside of a presidential campaign.

Potter: Not only do you get to run a campaign without all the baggage of a candidate, but you get to invent a campaign where you are both the boss and the employee. You get to pay yourself whatever you think you're worth, and there is really no adult supervision of this. You get to pay yourself your media commissions, your consulting fees, whatever. The key there is you have to find people who trust you enough to pay the bills. You have to find donors.

But you can end up in a situation where someone decides they're going to elect a particular candidate; they create an independent political organization to do it. They hire their own pollsters, their own media people, their own consultants. As long as they've got someone willing to foot the bill, they can go right ahead and do that without any interference or real involvement with a candidate.

What we've seen in this cycle is that only works when you are trusted enough by the donors. One way is that you actually are pretty close to the candidate. Say, hypothetically, that you're the candidate's former chief of staff, or a close friend of the campaign manager or a relative — whatever it is. In those situations, the donors assume you know what you're doing, you know what the candidate wants, and the candidate thinks this is a good idea. The FEC has made that last part easier, because they have said the candidates can go ahead and promote and endorse the activities of these committees. They can appear at fundraisers for them and say, "This is doing a great job," which makes a mockery of this notion that these are independent expenditures.

The Supreme Court thought that an independent expenditure was what it called "totally independent" of the candidate. And we've ended up with these groups that are definitely not totally independent of the candidate.

TT:  Are there one or two or three things that you could change?

Potter: At the federal level, you could easily clean up this disclosure problem. As I say, I think the laws require disclosure. I think the FEC is not interpreting them that way. We need either a better FEC that is going to read the laws the way they're written, or we need some court cases ordering the FEC to do that.

The coordination problem that we've been talking about is doable. You just have to define coordination the way the Supreme Court did, so that if it's not totally independent of the candidate, you can't do it, and you could come up with a list of factors there.

The other area here over time is going to be to get the court to rethink the idea that these independent expenditures of millions of dollars have no potential for corrupting a candidate or an officeholder. The court decided many years ago that if it was independent of the candidate, it couldn't be corrupting, and if it's not corrupting, you can't regulate it as a government. That just, to me, flies in the face of common sense. You can give somebody $2,500 or you can go out and spend $25 million to elect them to office. Why is more than $2,500 corrupting and the $25 million never is?

What happens when you threaten an officeholder and say, "If you don't vote my way, then I will run an independent expenditure campaign and ensure that you're never re-elected? That seems to be corrupting the legislative process. The court never really thought that through. They've never been presented with evidence of that kind of corruption, and that's something, over time, that we need to focus on.

TT:  Where do you think the donor community is in its understanding of this?

Potter: I'm laughing, because generally, what I have heard from donors is, "You're kidding. That's legal? It's can't be."

They're all still thinking through the last campaign cycle where they could only give $2,500 to a candidate, or they could bundle money, but it had to be individual contributions of $2,500. So when a fundraiser comes in and says, "Actually, no. This time, you can take out your corporate checkbook and write an unlimited amount to this committee, which will support the candidate." They just think this doesn't sound right — possible or right.

You phrased your question in terms of what can I get away with, how much can I do? In my experience, that is not the usual donor question. The usual donor question is, "How much do I have to do?" It's nice to have a limit.

When fundraisers are saying, "No, no, no, it doesn't have to be personal money. It can be corporate money to these Super PACs," there's no limit. That's a very threatening thing to say to donors, because everybody has a limit. People do not want to be in a situation where they can always give more and where they can always be asked for more and pressured for more. 

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