Tag: campaign finance

Democrats and Mansions

Washington Post reporter Bill Turque swallowed the Democrats’ spin hook, line, and sinker. He reports in Friday’s paper:

The Potomac estate of IT entrepreneur and philanthropist Frank Islam seemed more fitting for a Republican soiree than a Democratic fundraiser, some of Maryland’s top elected officials said Wednesday.

But big-time donors, including developers Aris Mardirossian and Fred Ezra, hotel and nursing home magnate Stewart Bainum and auto executive Tammy Darvish, gathered there to raise big bucks for the re-election campaign of Montgomery County Executive Isiah Leggett (D).

“There are not too many people who own homes like this who are great Democrats,” Sen. Benjamin L. Cardin (D-Md.) told the audience of about 400.

I’m not surprised that Senator Cardin would press the line that Republicans are the rich guys with mansions. But why would the Post report it as fact? Consider a few other news articles from the past few days. Here’s the Post’s Zachary Goldfarb reporting from California:

As he toured a series of mansions,…at the home of Walt Disney Studios chief executive Alan Horn… at an event hosted by Marissa Mayer, the chief executive of Yahoo, and Sam Altman, the president of Y Combinator…At the home of Irwin Jacobs, founder of the telecom giant Qualcomm,…Obama put the blame for failing to make progress squarely on the Republicans — “a party that has been captive to an ideology, to a theory of economics, that says those folks, they’re on their own and government doesn’t have an appropriate role to play.”

Later that day, the Associated Press reported,

Obama was to attend a fundraiser hosted by Anne Wojcicki, a biotech entrepreneur who founded the personal-genomics startup 23andMe. The event is advertised as a Tech Roundtable, with 30 guests and tickets set at $32,400 — a nearly $1 million potential haul for the Democratic National Committee.

Even Little Platoons Have First Amendment Rights

Nathan Worley and three friends hold a weekly political discussion group in their hometown of Sarasota, Florida. In 2010, a ballot initiative for a proposed amendment to the Florida constitution prompted the group to pull together $600 and exercise their First Amendment rights. They soon found, however, that doing so wasn’t going to be quite so easy.

Under Florida’s campaign finance law, it’s illegal for two or more people to join together and spend more than $500 supporting or opposing a state ballot issue. Instead, the state forces even small groups like Worley’s to register and speak through a political committee, which is then subject to a vast catalog of vague, inscrutable regulations that are enforced by thousands of dollars in fines. To speak publicly about the ballot issue, Worley’s informal coterie would have to hire a specialized lawyer and accountant and include “disclosures” in their planned radio ads that would take up about 20 percent of the airtime.

Instead of remaining silent like most small groups do when faced with this type of prohibitive regime, the Worley crew joined with the Institute for Justice to challenge Florida’s laws and vindicate their right to free political speech in federal court. Despite the obvious speech-chilling effect of the regulations, however, the lower courts failed to rigorously scrutinize Florida’s laws. The U.S. Court of Appeals for the Eleventh Circuit in particular abdicated its judicial role in two ways.

First, instead of applying “strict scrutiny,” the court chose the more deferential “exacting” scrutiny, based on the notion that so-called “disclosure” requirements like Florida’s don’t prevent people from speaking. Second, the court hardly even applied the “exacting” standard — deciding, on its own, to all but ignore the facts of the case by analyzing it as a challenge to the entire campaign-finance regime rather than simply as-applied to small groups like Worley’s.

In light of the Eleventh Circuit’s refusal to meaningfully scrutinize Florida’s speech-restrictive laws, Worley and IJ have petitioned the Supreme Court to hear their case. Cato and the Center for Competitive Politics have filed a brief supporting that petition because rulings like the lower courts’ here demonstrate a clear need for the Supreme Court to clarify the correct standards to apply when evaluating campaign finance regimes like Florida’s.

Courts shouldn’t be able to get by without judging just because a state calls its speech regulation “disclosure,” or because the courts decide on their own to recharecterize the case as a “facial” challenge. A Supreme Court hearing would put needed pressure on the federal judiciary to actually scrutinize these types of speech regulations and hopefully prevent them from continuing to silence small groups with little funding — because even little platoons of politically interested citizens have First Amendment rights.

The Supreme Court will decide later this fall whether to hear Worley v. Florida Secretary of State.

This blogpost was co-authored by Cato legal associate Julio Colomba.

Federal Contractors Shouldn’t Lose First Amendment Rights

From the Boston Tea Party of 1773 to today’s Tea Party movement, from suffragettes to Occupiers, freedom of political association has always been this country’s hallmark. Importantly, this First Amendment freedom extends to campaign contributions. As the Supreme Court affirmed in the 1976 case Buckley v. Valeo,“the right of association is a basic constitutional freedom that is closely allied to freedom of speech and a right which, like free speech, lies at the foundation of a free society.”

The Buckley ruling has since survived many assaults—including, most notably, Citizens United v. FEC—though Citizens United exposed certain instabilities in Buckley’s frameworkIn any event, challenges continue to arise at the intersection of campaign finance law, political association rights, and the freedom of speech.

An important one comes from three individuals who have business contracts with the federal government. Under the Federal Election Campaign Act’s section 441c(a), “any person who is negotiating for, or performing under, a contract with the federal government is banned from making a contribution to a political party, committee, or candidate for federal officer.” Accordingly, the three plaintiffs are prohibited from making their intended campaign contributions and thus from an important form of political participation. This rule applies even to someone like name plaintiff Professor Wendy E. Wagner, who derives only a fraction of her income from the federal contract.

Together with the Center for Competitive Politics, Cato last week filed an amicus brief with the U.S. Court of Appeals for the D.C. Circuit, arguing that the plaintiffs should be able to exercise their right to political association and speech by contributing to political campaigns. Specifically, we argue that section 441(c) is unique in that it entirely bans contributions by a class of individual citizens. 

In McConnell v. FEC,the only case where the Supreme Court addressed an outright ban on contributions by a class of individuals—the ban on campaign contributions by minors originally in the McCain-Feingold campaign finance “reform,” which McConnell otherwise substantially upheld—the Court struck it down as overly broad and because the government didn’t give sufficient justification. What’s clear from that ruling is that for a ban on political speech and association to be constitutional, the government must show that its targeted class of people is somehow too dangerous to be allowed to participate in the political process, and also that the ban applies only to that set of uniquely dangerous people. Section 441(c) doesn’t meet this test.

If the government wants to ban her from this important form of political participation, then it must give more than bare assertions of the specter of potential corruption.

The D.C. Circuit will hear argument in Wagner v. FEC on September 30.

Campaign Restrictions Lead to Due Process Violations, Even in Local Politics

Most times when I write about campaign finance laws, the context is a presidential race or Supreme Court case.  But these restrictions on political speech – the protection of which is the main purpose of the First Amendment – abound in local politics and state courts even without FEC intervention or presidential finger-wagging.

Here’s a case from California that literally just came across my transom:

Last year, John Mlnarik ran for Santa Clara City Council.  Mlnarik is the sole shareholder of a small business, a law firm with seven employees – a fact revealed in several mandatory campaign disclosures.  Because his money is partly tied up in his business, along with two personal loans to his campaign he also made a third loan (for about $6000) via his business.  He fully disclosed the loan and its source.

More than three months later, after the election, the City of Santa Clara issued a citation against Mlnarik for receiving an excessive loan “from a third-party source.”  Yet the City Code also states:  “For purposes of the contribution limits … [a]n individual and any corporation in which the individual owns a controlling interest, shall be treated as one person … . Nothing … shall prohibit a candidate from making unlimited contributions to his/her own cam­paign.”  And under state law incorporated into the City Code, an individual’s income includes his business’s income; an individual’s real property includes his business’s real property; and an individual’s investments include his business’s investments.

Given this logical overlay, and the fact that his sole ownership and the loan’s source were both fully disclosed, Mlnarik thought he was following the law.  After all, as the Supreme Court reiterated in 2008, “the use of personal funds … reduces the candidate’s dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse to which … contribution limitations are directed.”  (Davis v. FEC, quoting Buckley v. Valeo).

The City, however, cited the following from its Code:  “[U]nless a term is specifically defined in this chapter, or the contrary is stated (or clearly appears from the context), the definitions set forth in [a portion of the State Government Code] shall govern the interpretation of the provisions of this chapter.”   The State Code, in turn, includes a 192-word definition of “candidate,” which – along with many other possible definitions – states that “ ‘Candidate’ means an individual who is listed on the ballot.”  Thus, while Mlnarik was free to make unlimited loans to his campaign, he supposedly violated the law by making a campaign loan via his wholly owned business, which itself wasn’t a “candidate.”

Mlnarik argued that the City law was unconstitutionally vague – after all, how is one to know whether a term’s contrary meaning “clearly appears from the context”?  (If it does, then the State law’s definition of “candidate” must not be used – and there would be no case against Mlnarik.)  As noted above, the “context” was a law that repeatedly makes an equivalence between a person and his or her business; moreover, the law has eight statutory purposes, three of which (Mlnarik argued) were actually advanced by allowing sole business-owners to contribute to their own campaigns via their business, while none of the eight purposes was thwarted.  If that’s not the contrary “clearly appearing,” what is?

Nevertheless, the City refused to drop the case, and the trial judge denied that the phrase “the term[’s] … contrary … clearly appears from the context” was unconstitutionally vague (in a quasi-criminal case!).  Mlnarik is now attempting to appeal further, but he has been warned that state law may not permit an additional appeal – even though his constitutional argument couldn’t be heard by the administrative hearing officer, and thus has been heard only once, and then only by one judge.

So not only is there an underlying First Amendment violation, but there are due process infringements squared or cubed.  And all this because a candidate for office “loaned himself” $6,000 and fully disclosed all aspects of the transaction.

You can’t make this stuff up!

Can You Vague That Up for Me?

As the IRS scandal thickens, targeted groups are coming out to describe their ordeals in dealing with that most-reviled of government agencies. The Ohio Liberty Coalition was one of the groups targeted by the IRS, and Tom Zawistowski of the OLC recently sat down with Cato’s Caleb Brown to discuss the experience.

Among the many lessons we can take from this scandal is to realize how bureaucrats enforcing vague government regulations can chill free speech. Campaign finance laws are filled with vague regulations–such as whether an ad is the “functional equivalent of direct advocacy”–and they are anything but harmless to political speech.

In assessing applications for (c)(4) status, the IRS looked for whether political campaigning was an applicant’s “primary activity.” Due to the vagueness of this term, “rogue” IRS agents were free to harass applicants for the “content of their prayers” and other uncouth requests.

Advocates for campaign finance restrictions often do not understand how political speech can be killed by a thousand cuts as much as it can by one fatal blow. Some FEC regulations clearly prohibit certain types of spending. Others tell would-be speakers to judge whether their ads “in context, can only be interpreted by a reasonable person as advocating a candidate’s election or defeat.” Complying with these regulations ultimately comes down to a silly “magic words” test–that is, a search for words such as “vote for,” “elect,” “support,” etc.

Some campaign finance advocates who understand what Citizens United was actually about–that is, a non-profit corporation prohibited from showing a movie critical of Hillary Clinton on Pay-Per-View–concede that Citizens United should have narrowly won the case. Rather than allowing all corporations to spend independently in elections, as the case turned out, they argue the Court should have carved out an exception for “genuine ideological organizations,” “voluntary media choices” (Pay-Per-View), or some other vague criterion that would ultimately have been enforced by bureaucrats at the FEC. We can now can see how such vague standards are applied and abused. 

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The First Amendment Protects Both Political Donations and Campaign Spending

The First Amendment broadly protects political speech and the use of resources (printing presses, the internet, money) to facilitate that speech. Yet when someone wants to engage in the most obvious kind of political speech — supporting election campaigns — the government is allowed to restrict this important constitutional right. In a new case coming to the Supreme Court, Shaun McCutcheon, a wealthy political donor, and the Republican National Committee contend that the limits on political donations are unconstitutionally low and not supported by a sufficient governmental interest.

Currently, an individual may contribute up to $2,500 per election to federal candidates, up to $30,800 per year to a national party committee, and up to $5,000 per year to any non-party political committee. The Federal Election Campaign Act of 1971, as amended most recently by McCain-Feingold in 2002, also imposes an overall limit on the aggregate amount one may contribute in a two-year period. For 2011-2012, an individual could contribute up to $46,200 to all federal candidates combined, and $70,800 to political action committees and political party committees—a total of $117,000.

Of course, this isn’t the first time that the Supreme Court has dealt with contribution limits. In the seminal 1976 case of Buckley v. Valeo, the Court held that while contribution limits implicate fundamental First Amendment rights, such limits are justified if they’re closely tied to an important governmental interest, such as preventing quid pro quo corruption or the appearance thereof.

But the Court also decided that restrictions on campaign spending put a heavier burden on political expression, one which the government couldn’t justify. One of the plaintiffs’ arguments here is that the biennial contribution limits are simultaneously a limit on expenditures—a position which Cato elaborated in a new amicus brief.

We argue that Buckley’s distinction between contributions and expenditures, with limits on the former but not the latter being constitutional, is problematic. Not only does it allow infringements on the freedom of speech, but it has led to an unbalanced and unworkable campaign finance system.

Various justices over the years, some even in Buckley itself, have questioned the Court’s logic on this point. Justice Thomas in particular has assailed the distinction, pointing out that both contributions and expenditures implicate First Amendment values because they both support political debate. Moreover, candidates must spend an inordinate amount of time fundraising instead of legislating because they face an unlimited demand for campaign funds but a tapered supply. At the same time, money has been pushed away from politically accountable parties and candidates and towards unelected advocacy groups, leading to a warping of and decrease in political competition.

The special three-judge district court that first heard this case was legally bound to the framework the Supreme Court laid out in Buckley and restated that contribution limits are constitutional as such, dismissing the lawsuit. Still, Judge Janice Rogers Brown wrote that “the constitutional line between political speech and political contributions grows increasingly difficult to discern.”

In a truly free society, people should be able to give whatever they want to whomever they choose, including candidates for public office. We urge the Supreme Court to strike down the biennial contribution limits and give those who contribute money to candidates and parties as much freedom as those who spend money independently to promote campaigns and causes.

The Supreme Court will hear argument in McCutcheon v. FEC this fall.

Campaign Finance Proposals That Deter Speech Are Bad

Perhaps the first thing you should know about campaign finance “reform” proposals – at least those coming from the left – is that their ultimate goal is to deter speech about political issues.  Whether it’s limiting campaign donations or spending, restricting the ability of corporations or other groups to publicize their views, or imposing disclosure rules, the goal isn’t to have better-informed voters or a more dynamic political system, but to have less speech.   Those who advocate these things want the government to have the power to control who speaks and how much.

That lesson was repeated to me during two public events I participated in yesterday.  First, at a Senate hearing (which you can watch here; my opening remarks, a longer version of which you can read here, begin at 59:50) several senators seemed incredulous at my suggestion that we need more speech rather than less.  After Sen. Dick Durbin (D-IL) tried to get me to admit that I was a Koch pawn, a particularly laughable charge in a year when the Kochs sued Cato over management issues, Sens. Sheldon Whitehouse (D-RI) and Richard Blumenthal (D-CT) were incredulous that I would want fewer restrictions and less disclosures than them.  If I favor certain disclosure rules for donations to campaigns – which I do, in conjunction with eliminating donation caps, as I wrote yesterday – why am I against the DISCLOSE Act, which would impose certain further reporting requirements on independent political spending (and which failed last week after getting zero Republican votes)?

I should’ve just referred the senators to John Samples’s analysis of an earlier version of the proposed legislation, but in any event, the answer boils down to the idea that the required disclosures (of expenditures – which shouldn’t be confused with donations) are so onerous as to burden and deter speech with negligible impact on voter information.  That is, as former FEC chairman Brad Smith explains in this video, disclosing that a TV commercial was paid for by Americans for Apple Pie, one of whose donors is the local chamber of commerce, one of whose donors is the U.S. Chamber of Commerce, one of whose donors is the national widget manufacturers’ associations, one of whose donors is Acme Widgets … doesn’t tell a voter anything.  What it does do is require 20 seconds of the 30-second ad to be given over to disclosure rather than the actual political speech.  So what’s the purpose of the regulation if not to deter that speech?

Moreover, Super PACs already have to disclose their donors, and if their donors are corporations/associations rather than individuals, you can look up the people leading those entities in their corporate filings.  And if the problem is “millionaires and billionaires” – there was more than one reference to the Kochs during the hearing, and I helpfully suggested that I’m happy to defend Georges Soros and Clooney as well – then no law short of a complete ban on political speech by individuals will do.  Luckily, we have the First Amendment in place to stop self-interested incumbents from trying that.

My second public event was an unlikely appearance on the Rachel Maddow Show, where I joined Harvard law professor Larry Lessig, who also appeared at the earlier Senate hearing, to discuss campaign finance regulation.  I thought it went pretty well, and you can watch for yourself (segment titled “How to take American democracy back from the .000063 percent”).  What’s telling is that guest-host Ezra Klein was more even-handed than the senators at the earlier hearing.

Finally, here’s another nugget from yesterday: As I exited the Senate hearing room, a young “reform” activist said to me, “I think you’re a fascist.”  And here I thought that I did a decent job of getting across the point that we should have less government, not more.

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