The End of Campaign Finance Regulation
Two related stories that are kind of flying under the radar right now. First, over at TPM, Zack Roth and Pete Martin explain what’s going on at the Federal Election Commission. Or, rather, what’s not going on. Namely, enforcement of election law. Instead, the Republican faction on the committee, made up entirely of people opposed in principle to the idea of regulating campaign finance, has just decided to paralyze the agency.
Meanwhile, several days ago the Supreme Court gave a strong indication that it intends to overturn the precedent set in Au
stin v. Michigan Chamber of Commerce which, as Ian Millhiser explains, will really gut existing campaign finance law:
Nineteen years ago, in Austin v. Michigan Chamber of Commerce, the Court upheld a ban on independent political expenditures–so-called “soft money” contributions–by corporate donors. As the Court explained in Austin, “the unique state-conferred corporate structure that facilitates the amassing of large treasuries warrants the limit on independent expenditures.” Corporations are designed to amass massive amounts of money, and they can use their enormous wealth to drown out individual voices, all while spending only a fraction of their treasuries.
Should the Court toss out Austin, it could be the end of any meaningful restrictions on campaign finance. In most states, all that is necessary to form a new corporation is to file the right paperwork in the appropriate government office. Moreover, nothing prevents one corporation from owning another corporation. Without Austin, even a cap on overall contributions becomes meaningless, because corporate donors can simply create a series of shell-corporations for the purpose of evading such caps.
These are pretty radical shifts in how our political system operates, and they’re taking place with no public debate or public scrutiny. One seriously doubts that many members of congress would want to stand before the voters and openly make the case that unlimited corporate campaign expenditures will advance the public interest or make the world a better place. Instead, conservative elected officials are managing to undermine the existing legal framework through their appointees while avoiding taking responsibility for what’s happening.
50 Responses to “The End of Campaign Finance Regulation”
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July 1st, 2009 at 10:04 am
Finally lobbyists and special interests will have a voice in Washington.
July 1st, 2009 at 10:12 am
Good on the Republicans. Restricting anyone’s speech is a bad thing, contrary to some beliefs on the the left.
July 1st, 2009 at 10:18 am
This isn’t a right/left issue. It’s an Incumbents versus everyone else issue.
July 1st, 2009 at 10:20 am
“Restricting anyone’s speech”
Apparently capitalist propaganda has so infiltrated the weakest minds of the right that they can no longer tell the difference between actual individual humans versus the organizations humans start.
July 1st, 2009 at 10:21 am
“Apparently capitalist propaganda has so infiltrated the weakest minds of the right that they can no longer tell the difference between actual individual humans versus the organizations humans start.”
Not to mention the difference between spending money and speaking your mind.
July 1st, 2009 at 10:22 am
The answer, I think, lies in removing the recognition of corporations as “persons” under the 14th amendment.
July 1st, 2009 at 10:23 am
Why, it would be terrible, just terrible if bureaucrats and activist judges were to overturn established precedent, disregard the democratic process, and impose their will arbitrarily on the American people. It’s an OUTRAGE, I say!
Wait… you say this would increase the influence of corporations and wealthy individuals over the political process? Quick, hand me a new set of talking points!
July 1st, 2009 at 10:36 am
Jesus! That’s the last straw. It’s over. We officially don’t live in a Republic anymore.
July 1st, 2009 at 10:39 am
Good for them.
The left-wing authoritarians currently ruling DC hate the idea of free speech, which is why they try to ban free speech every chance they get.
It’s time that this country allow free speech again, and this is a small step in the right direction. It’s pathetic that the authoritarianism rampant in this country allows us to ban political speech. The founders who wrote the First Amendment must be turning over in their graves.
July 1st, 2009 at 10:40 am
Remind me again how Obama used Federal matching funds during the last election?
July 1st, 2009 at 10:42 am
Apparently capitalist propaganda has so infiltrated the weakest minds of the right that they can no longer tell the difference between actual individual humans versus the organizations humans start.
As always, this is moronic. Corporations (and other entities) are composed of individuals.
Under this way of thinking, we ought to be able to ban speech by the New York Times Company, the Center for American Progress, and TPM Media LLC.
July 1st, 2009 at 10:42 am
Yes — overturning Austin will allow corporate money to swamp the political process. But as Michael Dorf observes, it gets even better. The Court will read the First Amendment to simultaneously (1) invalidate laws restricting corporate contributions and (2) directly prohibit unions from applying nonmember dues to political activity. Finding a neutral principle here is a tough sell.
http://www.dorfonlaw.org/2009/06/scotus-corporations-and-unions.html
July 1st, 2009 at 10:43 am
Al, is that really you? I can’t tell the difference between the real thing and parody at this point…
July 1st, 2009 at 10:45 am
The answer, I think, lies in removing the recognition of corporations as “persons” under the 14th amendment.
Does that include not-for-profit corporations, unions, churches, co-ops, community organization, etc? Or just the ones you don’t like?
July 1st, 2009 at 10:47 am
Well, I should amend that prior statement – it’s not *only* left-wing authoritarians who want to ban free speech. There are, of course, some quisling right wingers, such as John McCain. Indeed, his disrespect for free speech is the reason I refused to vote for him last year.
July 1st, 2009 at 10:49 am
“It’s time that this country allow free speech again, and this is a small step in the right direction. It’s pathetic that the authoritarianism rampant in this country allows us to ban political speech. The founders who wrote the First Amendment must be turning over in their graves.”
Again, apparently capitalist propaganda has so infiltrated the weakest minds of the right that they can no longer tell the difference between actual individual humans versus the organizations humans start.
The founders didn’t, by the way, agree with you Al on the status of the corporation. Juristic persons (corporations and other legal entities) were not considered persons simply. The USSC in Paul v. Virginia in 1869 specifically held that a corporation is not a person.
July 1st, 2009 at 10:49 am
As always, this is moronic. Corporations (and other entities) are composed of individuals.
Under this way of thinking, we ought to be able to ban speech by the New York Times Company, the Center for American Progress, and TPM Media LLC.
I guess my previous question was answered already. Actually, if you think this through, the conclusion is pretty obvious. A public company, as Republicans will remind us constantly, has a fiduciary duty to represent the financial interests of its shareholders. Not the interests of the employees, not the total interests of its shareholders. Just maximize shareholder value. In an ideal world, then, corporate speech does not actually represent the interests or voice of any actual persons, collective or otherwise. Instead, it speaks for an extremely narrow interest- maximizing the market capitalization of the company.
To argue that the first amendment, or it’s underlying principles, mandate the protection of speech for such a contractual meta-entity invented by the state is simply an incomprehensible view.
July 1st, 2009 at 10:51 am
It’s time that this country allow free speech again, and this is a small step in the right direction. It’s pathetic that the authoritarianism rampant in this country allows us to ban political speech. The founders who wrote the First Amendment must be turning over in their graves.
The founders were dreaming of a Free Republic where Exxon and Goldman Sachs could exercise their constitutional right to write the Laws of the Land.
July 1st, 2009 at 10:55 am
Nothing shows how badly we need publicly funded elections in this country, as does the current “health care” debate, in which the welfare of huge corporations is pitted against the public good, and the corporations look like winners because of our legislators’ constant need for re-election cash.
I’m shocked and deeply disappointed (probably shouldn’t have been) at the degree to which Obama’s election has meant absolutely nothing in curbing even the most egregious corporate antics (e.g. financial services industry) or vitiating lobbyists’ influence on our corrupt legislatures.
I see no strong, unified voices opposing the corporate takeover of our country, either, just a bunch of articulate but powerless hippies carping at the margins, as we always have. That’s not enough to reverse this particular trend: corporations and their sycophants have too much money. I’m really sort of stunned at the swiftness and totality of the takeover, though, and it looks as though we’ve passed the tipping point where mere citizens’ voices of protest stand a chance of registering AT ALL with the pundits, editorialists, networks, and legislators who could, potentially, advocate for fairness.
A year or so ago, though, single-payer was completely off the map. Now, at least, it’s getting the vague pretense of a fair hearing in public. I hope publicly funded elections begin to get the same level of advocacy and serious discussion over time, because I see no other way of limiting corporate power in America. Waiting for Obama to become FDR doesn’t seem to be working, does it?
July 1st, 2009 at 11:10 am
If any politician based on his fundraising model could ignore corporate interests, it would be Obama. It’s a big part of why he’s JFK, not FDR. A lot more bark than bite.
July 1st, 2009 at 11:12 am
When will everyone realize that our “representative government” is a poorly crafted illusion?
As for money equalling “free” speech… only the oxymoronic can fathom that stretch.
July 1st, 2009 at 11:15 am
There is no excuse for FEC officials refusing to enforce existing laws. But Austin and McConnell are subject to legitimate debate, and I don’t think it is inappropriate for that debate to be occurring in court and not among the public–in a nutshell, the First Amendment is not about what the public wants.
July 1st, 2009 at 11:16 am
RE: LP @ #14
This whole debate about whether corporations should be considered “persons” under the law reminds me of that day when I was a wee lad, and I filled out all that paperwork so the state could charter me as an individual. It granted me limited liability for my finances and my personal actions, and exclusive use of my name within the jurisdiction. It also established the bylaws for my personal board of directors.
The hardest part was when I had to decide whether I wanted to be a for-profit individual, a non-profit individual, or private individual foundation, to determine which set of legally-defined rights and responsibilities I had within the laws of my state.
July 1st, 2009 at 11:30 am
We already have a similar loophole in Maryland. Rich folks can create numerous LLCs to evade otherwise strict individual overall spending limits ($4K contribution/person/candidate, and $10K contributions/person/all candidates/cycle). And, true to form, they do (Peter Angelos and William Rickman being the most famous examples). More details at http://maryland-politics.blogspot.com/2009/03/campaign-finance-loophole-case-study.html.
July 1st, 2009 at 11:45 am
Even if you suppose that corporations have a right to free speech which extends to the capacity to give money to political campaigns, (which I’m fairly dubious of, but whatever) but on the other hand you accept that the government has a legitimate function in placing a cap on the total donations a person can make, (which is an older precedent) then it seems that regulations to prevent the existence of shell corporations which exist solely to subvert donation limits would still be entirely reasonable, which would prevent corporate donations from being completely insane. Hopefully if the Supreme Court overturned Austin v. Michigan Chamber of Commerce they’d still see some sort of wiggle room there.
July 1st, 2009 at 11:48 am
The bright spot here is that spending sometimes backfires. When I first moved to Colorado, we had a relatively unknown Republican candidate for Congress named Pat Miller. She was running in a heavily Democratic district against a popular incumbent. Nobody gave her any chance at all and she raised very little money. But she still got about 40% of the vote. Next time around, the national party gave her lots of money and she was able to raise a lot herself. She had lots of ads and really got her message out. The result? She got only 25% of the vote. Turns out that the more people knew about her, the less they liked her. When we consider how crazy most Republican candidates really are, it’s likely that more spending by Republicans will only hurt their chances. Think about it, every time Michelle Bachman opens her mouth, does your opinion of her go up or down?
July 1st, 2009 at 11:50 am
There are only two moronic things on this thread:
1. Those who think “money” = “speech” (including judges who have ruled this way). Sorry, but that’s a cop-out by those who think having huge companies decide our nation’s fate is a good idea, or are convinced their side can raise more campaign funds in this manner.
2. Those who think a company giving money to a campaign is doing so on behalf of its employees. Um, no. They are doing it to curry political favors later on, with zero regard to what its employees actually want or believe.
Sorry, but if this is the way it’s going to be, there HAS to be a gigantic push for publicly-funded elections. There’s simply no other way to make sure actual humans are heard over the din of mega-corporations. (Not that they are now, but … ya know, still …)
July 1st, 2009 at 11:55 am
Restrictions on political donations are awesome. Because everybody knows the increasingly strict regulations since Watergate ushered in a progressive nirvana, as opposed to the far less regulated era when we had presidents like Roosevelt, Truman and LBJ.
July 1st, 2009 at 11:57 am
For the money doesn’t equal speech crowd. Should this law be upheld:
No individual can receive any compensation for working as a reporter
July 1st, 2009 at 11:57 am
DougR writes: “I’m shocked and deeply disappointed (probably shouldn’t have been) at the degree to which Obama’s election has meant absolutely nothing in curbing even the most egregious corporate antics (e.g. financial services industry) or vitiating lobbyists’ influence on our corrupt legislatures.”
Look, *both* parties are basically in the service of the oligarchy that *really* runs the country, which is composed of large corporations and the finance industry. It’s simply ludicrous to believe that the Democratic party is any less a mouthpiece of the financial elite than is the Republican party. Yes, on foreign policy the Democrats of late have been more sane (but their status as rhetorical eunuchs, their fear of being portrayed as “weak”, renders their sanity inefficacious) but what is their “agenda”: raising takes to Clinton eras? instituting a weak health-reform bill? tip-toeing around a labor bill that will never pass?
Please.
We live in a decaying, oligarchic empire that masquerades as a democratic republic, and we have done so for quite some time.
July 1st, 2009 at 12:02 pm
Need to amend the constitution, so that spending/donating money is not a form of speech and limit the right of free speech to natural persons.
July 1st, 2009 at 12:05 pm
Without Austin, even a cap on overall contributions becomes meaningless, because corporate donors can simply create a series of shell-corporations for the purpose of evading such caps.
This is false. Corporations have been prohibited by law since the early twentieth century from donating to federal campaigns. The excerpt refers to soft money donations, which parties can use for things like registration drives. They are not allowed to use this money to buys ads for individual campaigns, nor can they transfer these funds to the treasuries of individual candidates. The complete removal of soft money limits would still leave in place the counterproductive and harmful limits on the ability of an individual to donate to the candidate of his choice.
July 1st, 2009 at 12:12 pm
mpowell
“If any politician based on his fundraising model could ignore corporate interests, it would be Obama. It’s a big part of why he’s JFK, not FDR. A lot more bark than bite.”
except he put a stake through the heart of the Republican’s “Southern Strategy”, the Ricci case notwithstanding. Conservatives can argue Obama as Pres means we don’t need affirmative action, but the more salient point is that their main political red herring of race baiting is no longer as effective and everyone knows it. Ultra lefties seem weirdly oblivious or dismissive of this point.
James Robertson
“Remind me again how Obama used Federal matching funds during the last election?”
Fair point, but I don’t begrudge Obama and neither should “win at any cost” Republicans either.
The main issue is that Obama and liberals are trying to do something however imperfectally and in a trial and error manner about a) the health care crisis b) the legacy of racial discrimination and injustice c) the meltdown of the financial industry and d) corruption in politics via campaingn contributions and lobbyists (just to name a few).
The attempted solutions may not be pretty, but at least they’re trying to solve problems whilst Republicans fight on behalf of and in the pay of status quo forces without regards for the wellbeing of society at large.
July 1st, 2009 at 12:17 pm
“They are not allowed to use this money to buys ads for individual campaigns, nor can they transfer these funds to the treasuries of individual candidates.”
Of course they can. Only the FEC can enforce those laws, and the FEC has now made it clear that they will enforce no laws. Without enforcement, laws are just a bunch meaningless words. Which is why the anticipated ruling doesn’t mean anything.
July 1st, 2009 at 12:23 pm
One could fix that by altering incorporation law. Corporations are ‘fake persons’ that the law creates so they can do business, profit or non profit, and enter into contracts and own property and since it was a person, it could also go bankrupt, i.e. limited liability. Nowadays, we have ‘at will’ corporations that can be created by people through a legal process, and these ‘at will’ corporations are allowed to do anything a ‘natural’ person can do except for things like get married, (obvious discrimination, why shouldn’t a corporation be able to get married?), but that wasn’t always the case. Once upon a time, these laws did not exist and every corporation was created by a explicit act of a legislature. In addition, each corporation was explicity endowed with ‘powers’, each one was a custom job that could only do what was allowed in it’s charter. One might create a corporation to be a water utility for example, and such a corporation couldn’t own and operate a fishing boat if it’s charter did not expressly say so. One might say it only had the rights it’s creator endowed it with. The obvious uber example of this in action is the Fed’l govt itself.
It would seem to me that one could rewrite incorporation law to deny a corporation the power to make political contributions and that would be fine. I doubt the Feds could do this unilaterally, but they could say that only such a corporation could have a stock exchange listing, and set up a corporate law that facilitated this, though it would probably be useless since Delaware would change it’s law to conform. This would keep ‘big business’ out of the game, which I think might be desirable.
Having said all that, ‘campaign finance’ is simply non partisan incumbent protection and nothing else. It’s weird though, given the law as it currently is, in some venues the govt cannot regulate the dissemination of pictures of naked girls because the 1st Amendment bars that, but the it doesn’t bar the govt from regulating me in my desire to say Senator So and So is a bum that sorely needs chucking out.
July 1st, 2009 at 12:50 pm
WJ: you said shortly what I said ramblingly, but I agree. I also think it’s irrational to expect our legislators to act against their self-interest, if their self-interest dictates raising obscene amounts of money to get re-elected. They’ll take the path of least resistance there, and I think the only way to make that choice painful for them is to outlaw it.
j mct: Unfortunately, it’s far worse than mere “incumbency protection”–current laws actually make kowtowing to corporations the more attractive choice for legislators than doing the will of the people (or what they would interpret as the will of the people, were they free from corporate cash temptations).
Which makes me wonder who you have in mind when you say “ONE could alter…” I wish that “one” you’re talking about would hurry up and materialize, since we’re literally giving the country’s wealth and future choices away to corporate judgment and self-interest.
Unless….gasp…that “one” you’re referring to is US?!? In which case we need to start getting publicly funded elections ON the map, through active discussion and (I suppose) think-tank research &/or position papers.
July 1st, 2009 at 1:42 pm
[I]t seems that regulations to prevent the existence of shell corporations which exist solely to subvert donation limits would still be entirely reasonable, which would prevent corporate donations from being completely insane. Hopefully if the Supreme Court overturned Austin v. Michigan Chamber of Commerce they’d still see some sort of wiggle room there.
The issue in Citizens United, which in turn might lead to overturning Austin and part of McConnell, actually involves independent expenditures, not campaign donations (Citizens United is a conservative non-profit that wanted to run commercials promoting its critical film Hillary: The Movie during the Democratic primaries).
That is part of what makes this a close issue: the Court has long held that donations are subject to limits in light of concerns about corruption. But it also has held that same concern doesn’t apply to independent expenditures, and so the holding in Austin depending on the idea that the accumulation of wealth in corporations rendered their independent expenditures uniquely subject to limitation.
July 1st, 2009 at 2:08 pm
If they blow out contribution limits, it may backfire in ways conservatives don’t expect. (See: Iraq War) There are many rich liberal corporations in the US. Moreover, there would be nothing to stop China, or Richard Branson, or Deutsche Bank from creating a shell corporation in the US and donating as much as they want to American politicians.
I think the interests of the world are more closely aligned with American Liberals than American Conservatives. So auctioning our government to the highest bidder might very well do wonders for the liberal agenda.
July 1st, 2009 at 2:27 pm
While I do have a problem with the free speech aspects of campaign finance laws, the bigger problem is with the futility of the whole thing. Corporate money simply is going to flow toward the people with the regulatory power, no matter what barriers are put in the way, so the only realistic options are to drastically reduce that power in the first place (no doubt an unpopular choice here), or to acknowledge, document, and harness that flow. I say unlimited donations, strict and instant transparency, and heavy and highly progressive taxes on political giving is the way to go. (Say, nothing on anything up to the current individual limit, 100% on that up to $10,000, and then another 100% tax each order of magnitude or so. And make playing cute games with shell corporations to get around these burdens explicitly regarded as tax fraud.)
July 1st, 2009 at 2:35 pm
Money is NOT speech.
July 1st, 2009 at 5:04 pm
So called campaign finance restrictions are an outrageous abuse of free speech rights. If Congress didn’t try to do all the unconstitutional things it shouldn’t be doing in the first place, no one would be able to petition it for favors and graft. Thanks to you liberals, Congress now has complete economic hegemony over the entire country. Heck, over the entire world. I note that Obama and the Congress bought off a Toledo, Ohio representative with $3.5 billion in favors and graft to get the ACES bill passed. And the solution to this problem is restrictions on free speech during campaigns?
Right.
July 1st, 2009 at 5:58 pm
Dear Bob,
Thanks for sharing with us the expertise on this subject that you gained from a chain email and/or talk radio program.
July 1st, 2009 at 6:07 pm
I say unlimited donations, strict and instant transparency, and heavy and highly progressive taxes on political giving…
Jeff R: I’m with you on unlimited donations and transparency, but I must confess I’d never considered the concept of taxing political contributions. It’s an interesting idea.
July 1st, 2009 at 6:38 pm
I think that slim111 (#29) hit the nail on the head.
July 1st, 2009 at 6:55 pm
To Regressive LaFollette:
Quite a substantive refutation. I’m still shaking.
I was lead counsel attempting to disable the Michigan Campaign Finance Act in 1982, unsuccessful, of course. I did temporarily enjoin some abuses by Republicans selling concert tickets and using the proceeds to get taxpayer supplied two-for-one matching funds. The Democrat attorney general and secretary of state supported the practice. After two years, the judge released the money to the Republicans, then waited three more years to rule that the practice was illegal. The whole point of campaign finance is incumbent protection. Since the incumbents are corrupt to the bone, you love them. You are right, I do love the government.
Just like all the other regressives, no facts, no logic, no fairness, no thought.
July 1st, 2009 at 10:03 pm
Thanks to you liberals, Congress now has complete economic hegemony over the entire country.
Well, there was also this:
Although maybe by “you liberals”, Bob meant to include the framers and ratifiers of the U.S. Constitution.
July 2nd, 2009 at 4:07 am
[...] Matthew Yglesias » The End of Campaign Finance Regulation – [...]
July 2nd, 2009 at 7:32 am
The original understanding of the Congressional power to regulate commerce was limited to a) “commerce” being defined as the transportation and sale of commodities between states; and b) this power being limited, not extending to the internal trade of a State. It was enacted to insure free trade among the states and to prohibit them from burdening commerce from other states, which had been a problem under the Article of Confederation (GIBBONS v. OGDEN, 1824). Such an interpretation would pretty much abolish all the noodle-brained Keynesian stimulus, eh? ACES too, right? The First Amendment already prohibits campaign finance abominations.
July 2nd, 2009 at 10:40 am
My apologies, Bob. Evidently we have been graced by the expertise of the guy who writes the crazy right-wing chain emails.
You say campaign finance laws are an outrageous violation of free speech, yet you make no effort to explain why anyone should believe that the right to free speech entails a right to purchase influence in the government. The Supreme Court has upheld caps on individual donations and restrictions on soft money.
You describe one politician trading support for another’s pet initiative as “graft” yet describe a special interest trading favors for a candidate in exchange for influence as “free speech”. The irony is evidently lost on you.
You say the stimulus amounts to Congress exerting “economic hegemony” over the country. You make no effort to explain why anyone should take this claim seriously, given that the great majority of our GDP is still controlled by the private sector.
You toss out some classic nutty Bircher revisionist history about the Commerce Clause and Gibbons v. Ogden, without acknowledging that a broad interpretation of the Commerce clause has been the controlling precedent for over 70 years, ever since the Wickard decision.
Honestly, I have no idea why you expect anyone who isn’t already a thoroughly brainwashed wingnut to take you seriously. But hey, whatever floats your boat.
July 2nd, 2009 at 2:28 pm
The original understanding of the Congressional power to regulate commerce was limited to a) “commerce” being defined as the transportation and sale of commodities between states; and b) this power being limited, not extending to the internal trade of a State. It was enacted to insure free trade among the states and to prohibit them from burdening commerce from other states, which had been a problem under the Article of Confederation (GIBBONS v. OGDEN, 1824)
Here is what Gibbons actually says:
The basic problem for people like Bob is that very little commerce is actually “completely internal” these days.
Such an interpretation would pretty much abolish all the noodle-brained Keynesian stimulus, eh?
No, because the stimulus is authorized under a different clause, namely the power to spend money in order to provide for the general welfare of the United States.