When It Comes to Money in Politics, the Supreme Court Lives in a Different Reality (Reuters)

Trevor Potter
Jan 21, 2015
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The national elections since the U.S. Supreme Court decided Citizens United v. Federal Election Commission — two midterms and one presidential — demonstrate a gaping disconnect between the justices’ reasoning in the opinion and the reality of how campaigns operate.

The decision was based on two big assumptions. First, that the independent expenditures would not be connected to candidates or political parties. Second, that the sources of the unlimited political expenditures would be fully disclosed.

As we have seen in the past five years, both assumptions are incorrect.

The court’s precedent, beginning with Buckley v. Valeo in 1976, defines independent expenditures as “totally,” “truly” or “wholly” independent of candidates. In Buckley, the court described independent expenditures as “totally” independent, reasoning that they therefore do not create the same potential for corruption as expenditures given directly to a candidate or coordinated with a candidate.

The reality is that many “independent” expenditures are far from independent. They are “coordinated” by any reasonable understanding of the word.

Single-candidate Super PACs, established with the sole purpose of supporting one candidate, have been created by close allies of the candidate, publicly blessed by that candidate and are often run by a close associate or former staff member of the candidate. Candidates can even solicit funds on behalf of “their” Super PAC — funds that can be spent to their campaign’s direct benefit.

This hardly meets the Supreme Court’s expectation that independent expenditures are “totally” independent — and therefore that candidates will not be grateful to these donors. The assumption seems to have been that the independent effort might have been a loose cannon, perhaps even unhelpful to the candidate.

In fact, the signals of coordination — the candidate’s blessing, the presence of a candidate’s former high-level staff member and the candidate’s personal involvement — are key to any fund-raising success of these ostensibly “independent” groups. Major donors are more comfortable knowing the Super PAC is actually authorized by the candidate, and that contributions to the group will be just as appreciated by the candidate as direct contributions to the candidate’s own committee. Or more so — because Super PAC contributions may be 1,000 or 10,000 times larger.

The big-dollar Super PAC donors want to give money in a way that most benefits the candidate — and these signals indicate that the Super PAC is essentially just another arm of the candidate’s campaign.

The problem is that single-candidate Super PACs reduce donor contribution limits for candidates to a legal fiction. Wealthy donors — and almost all contributors to Super PACs are the 1 percent of the 1 percent — can contribute the maximum amount to a candidate’s campaign committee and then contribute unlimited amounts to the “candidate’s” Super PAC. This is also true for Super PACs identified with party campaign committees and party leaders, including Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Harry Reid (D-Nev.).

The court’s second assumption in Citizens United was that the sources of all of this new spending would be revealed. This has proved conspicuously untrue.

Beginning with the Buckley ruling, the Supreme Court has consistently upheld campaign-finance disclosure provisions. It repeatedly ruled that disclosure is crucial because it gives voters a means to evaluate candidates and indicates to whom the candidate will likely be responsive once in office.

The court re-emphasized the importance of disclosure in the only part of the Citizens Unitedopinion joined by eight of the nine justices:

“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. . . . This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Contrary to this expectation, however, dark money now plays a major role in U.S. elections. In the wake ofCitizens United, many speculated about whether foreign and corporate money would flow into our elections. In reality, we have no idea how much foreign and corporate money is being spent because of the numerous ways to channel money to avoid disclosure.

Those seeking to influence elections — whoever and wherever they are — essentially have a choice as to whether their contributions will be disclosed. Contributors to Super PACs are publicly disclosed — assuming the money is not funneled through a non-disclosing shell corporation first — while contributors to 501(c)(4)s and (c)(6)s are not. This has produced a dramatic increase in the amount of outside spending funded by groups that do not disclose donors. These groups spent $69 million in 2008. They spent $310 million in 2012.

The impact of the Supreme Court’s two misjudgments in the Citizens United decision is essentially a bifurcated campaign-finance system.

There is the regulated system — made up of candidate campaign committees and the party committees. Then there is the unlimited world of Super PACs and the dark-money world of secret outside spending where the laws on the books are frequently ignored by practitioners and apparent violations overlooked by the Federal Election Commission, which has been locked in partisan gridlock.

The growing influence of the unregulated side of U.S. campaign-finance system increasingly undermines the shrinking regulated side. Outside spending, expected in Citizens United to be independent of candidates and disclosed, has instead emerged as an integral part of candidate strategies and campaigns. It is not enough to be able to raise contributions within the federal limits; now candidates need an industry or a billionaire (or two) to compete effectively.

This is the great legal fiction created by Citizens United – that these two worlds are separate. In reality, they are only separate in the eyes of the Supreme Court.

Trevor Potter is a former chairman of the Federal Election Commission. He in now president of the Campaign Legal Center, a senior adviser to Issue One and head of the political law practice at Caplin & Drysdale.  This piece originally ran in Reuters on January 16, 2015. To read it there, click here

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