McCain-Feingold's Devastating Legacy? Let's Take Another Look

CLC Staff
Jul 22, 2014
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Last year was the 10th anniversary of the Supreme Court’s decision in McConnell v. FEC (in large part upholding the Bipartisan Campaign Reform Act of 2002 or McCain-Feingold as it’s commonly known). The Court’s recent decision inMcCutcheon v. FEC (invalidating federal aggregate contribution limits), has brought a wave of commentary evaluating the shortcomings of our campaign finance system, and much of this commentary has blamed the McCain-Feingold law for creating many of these problems. The 10 year anniversary of McConnell, and this year’s McCutcheon decision, certainly provide a good moment to take stock of the legacy of McCain-Feingold, and to evaluate the state of the federal campaign finance system as a whole. However, as we do so, it is important to consider the problems that McCain-Feingold was designed to address and whether it has been successful in those goals, and not to confuse this analysis with the post-McCain-Feingold rulings by the Supreme Court that have so drastically changed the campaign finance landscape.

First and foremost, McCain-Feingold was designed to get federal officeholders, especially the President and congressional leaders, out of the business of soliciting—sometimes extorting—funds from contributors through large soft money solicitations. Soft money refers to funds that do not comply with the source and amount limitations of federal law. Before McCain-Feingold, the national party committees could accept unlimited soft money contributions as long as those funds were used for nominally “non-federal purposes,” like get-out-the-vote activities and generic party ad buys. As time went on and federal regulators failed to draw firm lines, more and more of this money was used directly in federal elections, such as for advertising promoting or opposing federal candidates but just avoiding words like “vote for” or “vote against.”

Of course, fundraising efforts are far more successful when the ask is coming from a prominent legislator (or the President), or when contributors receive special access to such figures as an incentive to give generously. Thus, it was often the President and congressional leaders asking wealthy donors to cut big checks to the parties. In return, these donors received special access, including meetings with law makers who would listen with a sympathetic ear when the contributor had policy issues and, most notoriously, overnights in the White House Lincoln Bedroom. Potential donors, including major corporations with business before Congress or the Executive Branch, felt they could not say no. McCain-Feingold has largely achieved its goal of getting federal office holders out of the business of raising these huge soft money contributions. The law was also designed to enforce the almost 100 year ban on corporate and labor contributions to federal political parties, which was being evaded by calling those contributions “soft money.” It has achieved that goal too.

In addition to stemming the parties’ reliance on unregulated election advertising through soft money, McCain-Feingold sought to prevent the corporate and labor funding of “sham issue ads,” and to require disclosure of the funders of such ads. Corporate and labor funded issue ads that were supposed to be made without any coordination with the candidate proliferated in the elections of the 1990s and 2000. These ads were largely paid for by unregulated soft money, and the only real “issue” in the ad was which candidate deserved a vote. Critics of McCain-Feingold frequently claim that the purpose of the law was to prevent political ads by concerned citizens before elections. But this is not true. In fact, the Supreme Court had already made it clear in its decisions that individuals and non-profit groups funded solely by individuals could run such ads without limit, as long as it was done independently of the candidate.

Instead, the purpose of the Act was two-fold: first, to prevent corporate and labor funding of campaign ads, which was in violation of federal law at the time; and second, to require disclosure of the sources of funding of all such ads, no matter which person or type of organization ran them. The prohibition on corporate and labor funding of these ads was upheld by the Court in McConnell, and then arbitrarily overturned by the Court in Citizens United v. FEC after Justice O’Connor was replaced by Justice Alito. But that fundamental change by the Court only meant that independent political ads could now be paid for by corporations and unions, in addition to individuals, and the Court emphasized that the sources of their funding still had to be disclosed. Unfortunately, even before the Court decided Citizens United, the FEC had already gutted the disclosure requirements for independent expenditures, creating an incentive to funnel money to groups making “outside” expenditures. This problem can be fixed, however; either the FEC can start enforcing the existing disclosure provisions of the McCain-Feingold Act, which require disclosure of all contributors of more than $1,000 to an organization running electioneering communications, or Congress can amend the law to force the FEC to apply the law as intended.

There are those who argue that reforms such as these are “incumbent protection,” or designed to make life easier for members of Congress. I would argue the contrary. These reforms were the result both of widespread public outrage at the fundraising practices of the soft money era and wise actions by legislators to safeguard the integrity of government and the legislative process. Members recognized that their own integrity, and that of the institution of Congress, was at stake.

Critics of McCain-Feingold also argue that the law has hurt party fundraising, and that the parties need more money in order to compete with outside spending. The first part of this argument, that the law has hurt party fundraising, is not supported by the fundraising numbers. Look at the picture of two elections: 2000, the last presidential election before McCain-Feingold; and our most recent presidential election in 2012. In 2000, the two political parties and their presidential candidates raised and spent a total of $1.1 billion ($1.45 adjusted for inflation to 2012 dollars) in hard and soft money combined. In 2012 that number was $2.5 billion—doubled in actual dollars, up 80% in inflation adjusted dollars. It is true that “outside” groups also spent significant sums in 2012, but the national party committees and their candidates were clearly well-resourced—better than before McCain-Feingold.

Funds flowing into state party coffers are reduced from the pre-McCain-Feingold days, but this is partially because state parties no longer serve as soft money washing machines for the national party committees. Before McCain-Feingold, the national committees could fund get-out-the-vote activities and political advertisements with soft money by transferring soft money contributions to state party committees that would pay for such election activities. With McCain-Feingold’s prohibition on soft money, this is no longer an option.

 

In addition to the claim that McCain-Feingold hurt party fundraising, critics of the law argue that the parties now need more money to compete with new well-funded outside interests. This is a development well worth discussing. But the answer surely is not that simply because billionaires, corporations and unions can spend unlimited amounts in elections through “independent expenditures” that we should raise contribution limits so the well-funded interests can give equally huge and potentially corrupting amounts directly to candidates and their political parties. Even the Supreme Court—which has taken the position that outside independent expenditures can never corrupt candidates and their parties—acknowledges that contributing large sums of money directly to candidates can corrupt.

The McCutcheon decision may lead to an increase in party fundraising, but likely not in a way that increases the number of contributors. Instead, party leaders are again able to solicit much larger checks—this time through joint fundraising committees, though still not from corporate or labor funds. Thus, this potential increase in party fundraising is still tied to the large checks of those wealthy individuals who can afford to make such contributions. If we are truly looking to the parties as a stabilizing force within our system of government, we should be looking for ways to increase the number of small donors contributing to parties, rather than reverting to the pre-McCain-Feingold days of parties relying on a small number of wealthy donors, as McCutcheon encourages them to do.

Another way to make the parties more competitive with the new Super PACs and other “outside” groups is to insist that these unlimited outside “independent” expenditures be in fact “wholly” “truly” and “completely” independent of candidates and party committees—as the Supreme Court has said they must be to avoid the danger of corrupting candidates and party committees. Currently, many of these groups are not independent in any commonsense understanding of that word. In fact, the FEC’s outrageously permissive rules on coordination allow these groups to work with candidates to ensure that donors will view their activities as coordinated, even if the FEC regulations do not. Thus, contributors give their dollars to the Super PAC secure in the knowledge that it has been blessed by the candidate, that the candidate will be grateful, and that the PAC—led by individuals close to the candidate and his campaign—will do their best to act as the candidate would like them to. Such close coordination is evidenced by the presence of former staff and friends of the candidates running these “independent” groups. Super PACs run by former White House aides and former Romney campaign staff in 2012 were miles away from the Supreme Court’s definition of “independent.”

All of this is directly contrary to the Courts’ theory that contributions to independent expenditure groups cannot corrupt candidates because those groups are completely independent of political parties and candidates. If they were completely independent, however, they would be a lot less attractive to donors—because there would be no guarantee the groups would do what candidates wanted, and that candidates would be grateful to their Funders—and therefore they would likely present less competition for political parties. Additionally, we need full disclosure of the sources of funding of these independent expenditures—something Chief Justice Roberts again extols in McCutcheon—so that citizens know who is really “calling the tune” when making these campaign expenditures. ​

​Critics of McCain-Feingold would like to point to the ills of the current campaign finance system as proof that the law has been a failure. But that is a faulty conclusion. McCain-Feingold has achieved its goal of getting unregulated and undisclosed soft money out of party coffers, and limiting direct solicitations of large and potentially corrupting contributions by federal officeholders. The law worked well in the 2006 and 2008 elections, after the previous FEC Commissioners enforced the rules to penalize groups that tried to skirt it in 2004. Unfortunately, since then, the Supreme Court has changed its mind and over-ruled the longstanding limitations on corporate and union expenditures in federal elections, allowing an influx of money from previously prohibited sources. That, combined with the FEC’s completely inadequate disclosure and coordination regulations, has resulted in a flood of new spending from undisclosed sources for political ads. Of course we want political parties to be able to compete with well-funded outside spending, but not by simply redirecting wealthy donors’ enormous contributions to the parties and their officeholders. We need to focus instead on making independent expenditures truly independent and fully disclosed, and finding new ways to encourage many more small donors to fund our party committees and candidates.

The blame for the disaster that is our current campaign finance system lays on many shoulders, but the shoulders of Senators McCain and Feingold are not among them.

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