Myths and Realities About the Bipartisan Campaign Reform Act of 2002

In an outpouring of newspaper columns and motions filed with a three-judge panel of the D.C. district court, critics of the new campaign finance law enacted by Congress and signed by President Bush would have us believe that the law is an egregious affront to our constitutional rights and that all or major parts of it will be thrown out by the Supreme Court. This presumption of unconstitutionality has carried well beyond the usual ideological suspects.

Even such astute observers of American politics as David Broder assume that the major provisions of the law defining and regulating electioneering communications will almost certainly be ruled unconstitutional. And that in turn, according to Broder, will render other parts of the act, especially a soft money ban on political parties, damaging to American democracy.

Before this bandwagon of conventional wisdom gathers further momentum, we believe it is crucial to identify and explode the myths underlying this view, thereby making clear why the new law has an excellent chance of being upheld by the Supreme Court and of achieving its major objectives in the real world of politics.

Myth No. 1: The new law is an unprecedented assault on the rights to free speech and association.

Reality: The law poses no threat to these fundamental rights. It is actually quite modest in its ambitions. The new campaign finance law reinstates the status quo ante of barely a decade ago, before soft money began to be a major component of national party fundraising and before candidate-specific sham “issue ads” were used to undermine the disclosure and contribution limitation provisions of federal election law.

Rather than restricting the rights of citizens, it seeks to regain legitimacy for the rule of law, by removing incentives for political actors to shamelessly and disingenuously evade the clear intentions of the law. The new law accomplishes this objective not by removing speech rights but by updating existing, constitutionally-upheld provisions that limit contributions to political parties and that prohibit corporate and union treasury spending in federal elections to take into account contemporary realities of campaigning.

Myth No. 2: Citizens will lose their ability to speak freely and critically about the government and their elected representatives close to an election.

Reality: Nothing could be further from the truth. No speech is banned by the new law—not a single ad nor any word or combination of words would be muzzled. Individuals and groups retain their full First Amendment rights. The only new requirements relate to the disclosure and sources of funding for television and radio ads close to an election that feature federal candidates. Individuals can spend unlimited funds but must disclose spending on electioneering communications (broadcast ads clearly identifying a federal candidate within 30 days of a primary or 60 days of a general election and targeted to his or her constituency above a threshold amount of $10,000.)

Corporations and unions may not use their treasury funds, directly or indirectly, to finance electioneering communications, just as they are currently prohibited from financing campaign communications, but they can use their PACs to finance this narrow class of broadcast ads. Similarly, advocacy groups receiving corporate or union funds can use PACs to finance such communications. No form of political speech, only the source of funding, is touched by the new law.

Myth No. 3: The new law places restrictions on ideological groups that the Supreme Court has explicitly exempted from regulation.

Reality: The Supreme Court has held that certain small, ideologically based nonprofit corporations that do not accept corporate or union funds (known as MCFL groups) are exempt from the prohibition on independent expenditures by corporations in connection with a federal election. That same MCFL exemption applies to the electioneering communications provisions of the new law.

Myth No. 4: Advocacy groups will be prohibited from using their most potent tools for promoting issues in the heat of election campaigns.

Reality: This charge sounds like a serious constraint but it evaporates under scrutiny. Careful and comprehensive research on television advertising during the 1998 and 2000 election cycles reveals that genuine issue ads designed to shape the policy debate or influence decisions in Congress almost never fall within the law’s narrowly-tailored definition of electioneering communication.

Genuine issue advocacy campaigns are not constrained by the new law. Perhaps that is why the American Civil Liberties Union, a critic of the act, in recent weeks scrambled to craft and air an ad that both has a legislative reference and trips the wire of electioneering communication. But the artificiality of that exercise combined with the simple adjustments that could be made in the ad to remove it from the law’s coverage underscore the reality that no genuine issue advocacy is limited or harmed by the new law. If a non-MCFL advocacy group chooses to promote an issue through a targeted ad close to an election featuring a federal candidate, it can do so. It just has to finance that ad with hard money.

Myth No. 5: The act unconstitutionally flies in the face of the express advocacy or “magic words” standard set by the Supreme Court in Buckley v. Valeo.

Reality: The Court in Buckley established an express advocacy standard required to be met in order for communications by individuals and outside groups to be subject to campaign finance laws. The standard was defined by the Court as communications that “in express terms advocate the election or defeat of a clearly identified candidate for federal office.” It elaborated, in a footnote, examples of express advocacy, including the use of such words as “vote for,” “vote against,” “support” or “oppose.”

The Court conceived the express advocacy test as a way of salvaging disclosure requirements and contribution limitations from the unconstitutionally vague and overbroad language crafted by Congress in the 1974 amendments to the FECA. But the Court did not declare that its standard for express advocacy was rigid and immutable. Indeed the Court has indicated that Congress could take another crack at defining what form of electioneering is properly subject to campaign finance regulation. Chief Justice William Rehnquist said in Massachusetts Citizens For Life, a decision in which the Court expanded express advocacy beyond the specific magic words in its Buckley footnote, “We are obliged to leave the drawing of lines such as this to Congress if those lines are within constitutional bounds.”

Now that we know the Buckley test does not square with the reality of election campaigns—no one (not even candidates) uses express words of advocacy of election or defeat in their communications and the test is brazenly exploited by groups with “sham” issue ads—Congress has both the right and the responsibility to fashion an alternative bright line test that passes constitutional muster. That is precisely what it has done. The act’s definition of electioneering communication is carefully crafted to be neither vague nor overbroad. And its requirement of disclosure for individuals and hard money for corporations and unions is firmly rooted in existing law and Supreme Court rulings.

Myth No. 6: The law requires the FEC to impose onerous new coordination restrictions on groups interacting with parties or candidates; even routine or innocent conversations between group representatives and lawmakers or staff will unconstitutionally subject their issue advocacy spending to contribution limits and a ban on corporate and labor union contributions.

Reality: The act reinstates the coordination theory initially formulated in Buckley as part of its definition of independent expenditures. Under this approach, a campaign expenditure by a person coordinated with a candidate constitutes a contribution to the candidate and is subject to federal contribution limits. The FEC recently adopted a much narrower definition of coordination that in practice excludes most coordinated spending and, therefore, opens the door to widespread evasion of the law. Buckley allows a more encompassing definition, one that prevents contribution limits from being rendered utterly meaningless without in any way constraining routine conversations. Congress has merely instructed the FEC to try again. Nothing unconstitutional about that. If the FEC uses the Supreme Court’s own “prearrangement or coordination” language in Buckley, it will meet Congress’s objective as well as the Court’s constitutional standards.

Myth No. 7: The ban on soft money damages the constitutionally protected right of association of political parties by restricting the sources of its funding for issue advocacy, legislative, and organizational activities and by putting it at a disadvantage relative to other groups.

Reality: Parties are different from interest groups. They exist to win elections and steer policymaking within government. Their most prominent members and actual or de facto leaders are incumbent politicians seeking reelection. Federal law and court rulings have long sanctioned limits on the size and source of contributions to political parties in the interest of preventing corruption or the appearance of corruption.

In Colorado Republican II, the Court upheld limits on party expenditures coordinated with candidates, recognizing that “political parties act as agents for spending on behalf of those who seek to produce obligated officeholders.” And Buckley stated that spending by candidates and political committees (including parties) is “by definition, campaign-related.” This means express advocacy is not required in candidate and political party ads for the financing of such ads to be subject to federal campaign finance laws.

All of these authorities support the new law’s requirement that in order to prevent the circumvention of existing contribution limits to candidates and party committees, national parties raise and spend only federal (hard money) funds.

Myth No. 8: The act’s regulation of state and local parties violates basic principles of federalism.

Reality: The Constitution grants Congress broad authority to regulate the time, place, and manner of federal elections. Numerous court rulings have upheld regulations of federal elections that incidentally effect state and local elections. The evidence is overwhelming that state and local parties are now routinely used to circumvent federal contribution limits. The act is carefully written to regulate state and local money only when it is used for federal election activity. States are free to raise and spend money consistent with state, not federal, law when it is used exclusively in nonfederal election activity.

Myth No. 9: The ban on soft money will weaken political parties and, thereby, American democracy.

Reality: The real myth is that soft money has strengthened parties at all. Instead, it has been used largely to finance thinly disguised television attack ads that rarely even mention a political party. In fact, before the FEC invented soft money in 1978 and well before it became a major source of party funding, the national parties were gaining strength. There is no reason they cannot adapt well to a return to a hard-money world. The national parties raised more than $700 million in hard money in the 2000 cycle, far more than both hard- and soft-money totals in any cycle before 1996.

And the new law does more than just abolish national party soft money. It raises considerably the overall limits on what individuals can give in hard money to parties and separates these limits from those for contributions to candidates. Parties will quickly discover how best to raise and invest those added hard dollars within the new legal framework to advance their electoral interests. This will almost certainly entail some shift in emphasis from television attack ads to grassroots activities, which would actually strengthen parties.

Another provision of the new law allows state and local party organizations to raise contributions in amounts of up to $10,000 under rules set by state law to support certain grassroots political activities that affect both state and federal elections. Together these provisions auger well for political parties—by removing the incentive to lie about the nature of their fundraising and campaigning, reducing their utility to incumbent politicians as money launders, and investing in broader and longer-term strategies to build electoral strength.

Myth No. 10: Under this law, not one penny of the soft money going to parties will go unspent. It will simply be redirected to more narrow, less responsible groups.

Reality: Much of the soft money now contributed to parties is not given eagerly by corporations, unions and individuals because of their zeal to elect particular candidates, or to get what they want out of Congress or the White House. Many that contribute soft money to parties do so only reluctantly, as “access insurance”—out of fear that if they don’t, their more obliging competitors will get privileged access—or to avoid retribution by officeholders. Take away the soft money and much spending on politics from corporate treasuries will end.

Moreover, in an era of close partisan majorities and high-stakes elections, campaign fundraising has been transformed into a giant protection racket, where individual and corporate donors, without the safety afforded by contribution restrictions, are pressured by powerful government officials for more and more money. Elimination of soft money sharply reduces the protection game. While some of these dollars will flow instead to advocacy groups, lawmakers and White House nabobs will be prohibited from shaking down donors on behalf of outside groups, crimping the flow of big money. And most importantly, the nexus between mega-contributors and policymakers will be weakened, thereby reducing the blatant conflicts of interest.

Myth No. 11: The law is an incumbent-protection act that will further damage challengers.

Reality: In 1976 and 1978—the first two elections run under the current hard-money rules and the two just before party soft money was created by the Federal Election Commission—the reelection rate for House incumbents was 95.8 percent and 93.7 percent, respectively;

For Senate incumbents, it was 64 percent and 60 percent. In 1998 and 2000, the most recent elections fought under the soft-money system championed by reform critics, the reelection rate for House incumbents was 98.3 percent and 97.8 percent; for Senate incumbents, it was 89.7 percent and 78.6 percent. So much for the salutary role soft money and sham issue advocacy has played in helping challengers!

In fact, the explosion of television ads by parties and outside groups has both crowded out candidates—messages and sharply increased their broadcast costs. For challengers, getting over the threshold of recognition that all incumbents have is crucial, and higher television costs and greater cacophony make that threshold painfully higher. Reducing ad demand by parties and groups will help challengers by lowering costs and freeing up more of the most potent time slots for candidate ads close to the election. The reform helps challengers as well by doubling the hard-money individual contribution limits—something the Campaign Finance Institute has demonstrated in a recent study will benefit challengers more than incumbents.

Myth No. 12: This most recent effort to regulate the flow of money in politics, like all that have preceded it, will fall prey to the infamous Law of Unintended Consequences, in which the intended purposes of campaign finance reform are inevitably overwhelmed by effects not desired or anticipated.

Reality: Critics of campaign finance reform have misread the historical record and underestimated the care recent reformers have taken to gauge the constitutionality of their proposals as well as to anticipate their consequences. Yes, it is difficult to formulate policies regulating money and politics that are workable and sustainable. First Amendment guarantees properly limit the reach of regulators. Political money is fungible, and legal constraints on its flow will divert some of it to less accountable passageways. Politicians and groups will exploit the weaknesses of the regulatory fabric to advance their interests.

But that doesn’t mean that all efforts to regulate campaign financing are counterproductive. Some well-conceived reforms have achieved their stated objectives for a period of time, but they need ongoing maintenance and repair. That is the fundamental purpose of the new law—to repair egregious tears in the regulatory fabric in order to lift the corrosive cynicism that surrounds the system and to lay the groundwork for additional improvements in the campaign finance system.