Campaign Finance Reform Propsals and the First Amendment


Thank you Mr. Chairman and Members of the Committee for invitingme to testify before you today. By way of introduction, I am anAssociate Professor of Law at Capital University Law School inColumbus, Ohio, where I teach, among other subjects, Election Law.Though I appear today on my own behalf, I am also an AdjunctScholar of the Cato Institute. I have researched and writtenextensively, in both academic and popular journals, on the subjectof campaign finance.

First, let me say that I appreciate the decision of thisCommittee to hold hearings on campaign finance reform. BeforeCongress now are bills to reform campaign finance by placing newlimits on speech - the so called "McCain-Feingold" bill in theSenate (S25) and "Shays-Meehan" bill in the House (H493). Numerouslending constitutional scholars and campaign finance experts havecalled these bills unconstitutional. Yet one of the name sponsorsof the bill on the Senate side just this month derided theseconcerns on national radio, saying "When [my opponent] startsrelying on those Constitutional arguments, I know he doesn't havemuch else in his arsenal." On another occasion, on nationaltelevision, this senator stated cavalierly that his opponents "maybe right that that particular provision [of the bill] isunconstitutional. And that's why we have a back-up provision."

Meanwhile, the minority leader here in the House was quoted in anational news magazine earlier this month, saying that "freedom ofspeech" and "a healthy democracy" are "in direct conflict."

When a member of Congress so casually treats his oath to upholdthe constitution; and when the House minority leader suggests thatthe First Amendment must itself be amended because free speech "isin direct conflict" with democracy, it is both timely andappropriate for this committee to hold hearings.

Before congress attempts to solve the problems of campaignfinance with more regulations burdening free speech rights, weshould take stock of the fact that the current regulatory system isresponsible for many of the evils we see in campaign finance. We donot need to plug "loopholes" in the system. Rather, we should scrapmost all of the present system of campaign finance regulation,remembering the admonition of the First Amendment to theConstitution, that Congress shall make no law abridging the rightsof free speech.

Before discussing the details of campaign finance, I think it isimportant to briefly remind ourselves that, for most of thiscountry's history, the funding of political campaigns has beentotally or largely unregulated. During our nation's first century,the era which produced as presidents Abraham Lincoln, GeorgeWashington, Thomas Jefferson, Grover Cleveland, James Knox Polk,and Andrew Jackson, and which saw giants such as Daniel Webster,Henry Clay, John Quincy Adams, and John C. Calhoun serve inCongress, there were literally no laws regulating campaign finance.And today, we often look back on that century as a golden age ofpolitics -- one in which memorable debates over such monumentalissues as slavery and western expansion were discussed in seriouscampaigns, one in which people talked and debated these issues, onein which politics was marked by mass rallies and torchlightparades, and one in which voter turnout was considerably higherthan it is today.

The federal government did not become involved in campaignfinance until this century. If we look back, we find that thearguments made in favor of regulation a century ago were the samethat we hear today: that the American people believed Congress tobe made up of the "instrumentalities and agents of corporations;"that "corruption" was the norm; that new advertising techniques andtechnologies-in those days mass newspapers, recordings, traintravel-had created an insatiable demand for political spending thatcould only be curbed by spending limits; and that we faced a"crisis" of democracy. In response to such complaints, the federalgovernment passed its first campaign finance law in 1907, banningdirect corporate contributions to candidates. In 1943, this ban wasextended to labor unions. Additionally, congress passed greaterdisclosure requirements in 1925. However, these disclosure measureswere so toothless as to be meaningless. For example, from itsenactment in 1925 until its repeal in 1971, there was not a singleprosecution under the Federal Corrupt Practices Act. Yet democracysurvived, and this period of minimal regulation gave us PresidentsTheodore and Franklin Roosevelt, Calvin Coolidge, Harry Truman, andDwight Eisenhower, Congressional leaders such as Robert Taft,Hubert Humphrey, and Everett Dirksen, and serious debates over suchissues as civil rights. For nearly two centuries, our democracyflourished despite, or perhaps even because of, the absence of anymeaningful campaign finance regulation.

Not until the 1974 Amendments to the Federal Elections CampaignAct (FECA) did the federal government pass a campaign finance lawwith any serious enforcement mechanism. And it was also this lawwhich, for the first time, gave us both contribution limits and, asa necessary accessory to those limits, the strange doctrines ofindependent expenditures and express advocacy. The 1974 Amendmentsthrew of web of regulation, with an accompanying enforcementbureaucracy, the FEC, over American politics.

The stated goals of the 1974 FECA Amendments were to lower thecost of campaigning, reduce the influence of so-called "specialinterests," open up the political system to change, and "restoreconfidence in government." So what has actually happened in thetwenty years since the 1974 Amendments took effect? Well, campaignspending has increased by more than 350 percent; PAC contributionshave increased by more than 800 percent; House incumbents, who hadpreviously outspent challengers by approximately 1.5 to 1, nowoutspend challengers by nearly 4 to 1; incumbent reelection rateshave risen to record high levels, spurring the demand for termlimits; and public confidence in government has fallen to recordlows. Clearly, the 1974 FECA Amendments have been a dismal failure.Yet the response of the reformers -- notably Common Cause, theinterest group most responsible for the 1974 Amendments, and todaythe number one cheerleader behind the Shays-Meehan bill -- is toargue that we need more regulation, more limits, and morebureaucracy. Indeed, some now claim that because earlier regulationhas failed, we not only need still more regulation, but we need toamend the First Amendment to allow government to regulate politicalspeech and activity in ways the Founders never dreamed of. I wouldsuggest, however, that when an approach has failed so clearly, sodismally, with such negative consequences, over a period of twentyyears, it is time to consider a whole new approach. It is time notfor more regulation, nor for more efforts at "loophole" plugging,which is the approach taken by Shays-Meehan. Rather, it is time toderegulate American politics.

In my opinion large parts of Shays-Meehan and its Senatecounterpart, McCain-Feingold, are unconstitutional. The so-called"voluntary" spending limits of the bills are in fact punitive andcoercive, and amount to an unconstitutional condition leveled onthe Constitutional right to free speech. That portion ofMcCain-Feingold abolishing PACs is unconstitutional, as even itssupporters seem to recognize. If one person can spend $1000 onbumper stickers, it is inconceivable that two people cannot jointogether to spend $1,000 on bumper stickers.

The Senate bill's limitations on out-of-district contributionsare probably unconstitutional. There is no reason why anout-of-district contribution is more "corrupting" than anin-district contribution. Thus, there is no compelling governmentinterest to justify the ban on speech.

Overall, Shays-Meehan and McCain-Feingold mark the most seriouslegislative assault on free speech in over two decades-since the1974 Amendments to FECA. Many of those 1974 reforms were eventuallyheld unconstitutional. The others have stifled free speech andcontributed to the current problems. We should not go down thatroad again.

But where Shays-Meehan and McCain-Feingold are most at odds withthe Constitution and sound policy is in their efforts to silencepolitical groups engaged in issue advocacy. Indeed, this questionof "issue advocacy" versus "express advocacy," which has arousedthe ire of those who would regulate political speech, is a primeexample of the danger of the FECA's attempt to regulate politics toproduce a desired result. Congressional Quarterly has noted that inrecent years, litigation has become a major campaign tactic. Thuswe have Republicans filing complaints against the AFL-CIO, and theDemocrats filing complaints against the Christian Coalition, U.S.Term Limits, Americans for Tax Reform, and the Christian ActionNetwork, to name just a few recent complaints. In each case, thecomplaints amount to a blatant effort to silence political advocacyby these groups. In each of these incidents, the groups involvedwere not engaged in any nefarious activities such as vote fraud orbribery. Rather, their alleged infractions amounted to what mightbe called the crime of "committing politics." That is to say, thegroups involved were trying to persuade the American people thateither their positions were right, or someone else's were wrong. Itis true that incumbent officeholders do not like being attacked fortheir stands on issues; particularly when they view those attacksas shameless demogogery. However, the robust discussion of issuesis wholly in line with both the First Amendment and the Americantradition of political participation. That opposing politicalinterests can invoke the powers of a government bureaucracy in aneffort to silence these voices is, I suggest, a much more seriousblight on our system than the alleged effects of campaigncontributions.

The reasons that these complaints are even treated seriously isbecause of the doctrine of "express advocacy." This doctrine itselfa bizarre outgrowth of efforts by supporters of campaign finance"reform" to limit campaign contributions. These "reformers" seek toprevent individuals and groups from participating in politicsthrough contributions of money. However, under the Supreme Court'sruling in Buckley v. Valeo, Congress may not,constitutionally, restrict individual or group expenditures that donot "include explicit words of advocacy of election or defeat of acandidate...." Thus, political speech is free from FEC regulationif it does not expressly advocate the defeat or election of aclearly identified candidate, but is subject to FEC regulation ifit crosses that line.

The response of Shays-Meehan to this type of political activity,is to define "express advocacy" more broadly, by looking at suchfactors as timing and context. In fact, however, it is hard to seehow these factors make any serious difference. For example, wouldlast year's AFL-CIO ads have been any more or any less "expressadvocacy" if aired three months or fifteen months before anelection? Would it really matter if the group sponsoring the adshad public positions on some of the issues addressed? Clearly not.The ads would be no more nor less aimed at shaping public opinion,regardless of the added factors that Shays-Meehan seeks toconsider. Thus, the long and short of an expanded definition of"express advocacy" would be a sharp reduction in political speech,which is precisely what the Supreme Court's decision inBuckley, protecting issue advocacy, is intended to guardagainst.

Of course, the FEC's concern over "express advocacy" andindependent expenditures is all part of a larger effort to plug"loopholes" in the disastrous system of contribution and spendinglimits enacted in 1974. The only reason anyone cares about "expressadvocacy" is the fear that, absent such a regulation, groups willspend money to try to affect federal elections, and in doing sowill exceed the contribution limits of the FECA. I have written andcommented at length on the undemocratic and deleterious effectsthat these limits have had on American politics. See e.g.Bradley A. Smith, Faulty Assumptions and UndemocraticConsequences of Campaign Finance Reform, 105 Yale Law Journal1049 (1996); Bradley A. Smith, Testimony before Committee on Rulesand Administration, United States Senate, February 1, 1996; BradleyA. Smith, Campaign Finance -- Deformed, Wall StreetJournal, Oct. 6, 1995 (copy attached). In short, these limits haveentrenched incumbents; burdened grassroots political activity;limited the number and type of candidates; had the perverse effectof increasing the incentives both for campaign contributors to seekinfluence, rather than electoral success, and for office holders toreward financial patrons; and increased the power of unelectedelites, most notably the media. The efforts to drive money frompolitics have grotesquely distorted our political system. Thereason is simple and obvious: efforts to limit politicalparticipation not only run afoul of the Constitution, but they arelike efforts to stop the flow of a river -- one way or another, thewater will pass, diverting course as necessary to do so. So long asthe federal government spends over $1 trillion each year andregulates virtually every phase of the economy, not to mention manynon-economic activities, the American people will seek to persuadeAmericans to elect their favored candidates. In modern society,this political communication and participation requires theexpenditure of money.

Fortunately, past efforts to limit political discourse haveconsistently been struck down by the courts as unconstitutional.Nevertheless, these attempts to stop this legitimate politicaladvocacy by placing a heavy bureaucracy over political campaignshave had, as I mentioned, a variety of negative consequences. Notthe least of these is the way in which such regulation stifles truegrassroots democracy.

For example, a 1991 study by the Los Angeles Times found thatamong the most common violators of FECA were "elderly persons...with little grasp of the federal campaign laws." Even well-fundedand well-organized groups can find their efforts at grassrootsadvocacy smothered. In one ill-founded effort to prevent politicaladvocacy in violation of campaign finance laws, the FEC passed arule that would have prevented the United States Chamber ofCommerce from communicating political endorsements to more than220,000 of its dues paying members, mainly small businesses whoseowners and managers have little time to follow politics and rely onthe Chamber of Commerce precisely for such information. Similarly,the regulation in question would have made more than two-thirds ofthe National Rifle Association's members ineligible to receive thegroup's endorsements, as well as over 44,000 dues paying members ofthe American Medical Association. This regulation was, fortunately,found unconstitutional by the U.S. Court of Appeals for the D.C.Circuit, but only after these groups had had their speech chilledin the 1994 election. Chamber of Commerce v. FEC, 1995 U.S. App.LEXIS 31925 (D.C. Cir. Nov. 14, 1995).

Another recent FEC rule attempted to prevent corporations andother groups from actively engaging in issue-oriented advertisingduring a campaign, on the theory that such advertising wouldimplicate federal elections. Again, this effort to limit the flowof political information had to be struck down by a federal court.Maine Right to Life Committee, Inc. v. FEC (D. Me., Feb. 13, 1996).Simply putting similar measures into a statute will not make themconstitutional.

Limitations on "express advocacy" call for precisely the type ofjudgments that benefit large organizations with the ability to hirea battery of lawyers to advise them through the regulatory process.Efforts to broaden the concept to include advocacy beyond suchexpress words as "elect" or "defeat" would truly burden freespeech, especially for smaller, local groups. Politicalparticipation, by definition, seeks to influence voter preferenceson both issues and candidacies. Any broadening of the term wouldlead to a murky standard that would significantly burden most allpolitical speech.

Nevertheless, in addition to the unconstitutional provisions ofShays-Meehan, we now find offered up a Constitutional Amendmentwhich would authorize Congress to adopt "reasonable regulations,"so long as they do not "interfere with the right of the people tofully debate issues." This is classic double speak. Our FoundingFathers recognized that government could not be trusted to makesuch distinctions: The incentives to crush the opposition would betoo great. Thus they wisely passed the First Amendment.

Historically, debates on the First Amendment have concerned theextent to which it covers pornography, or hate speech, orcommercial speech, or "fighting words," or treasonous speech. Whathas always been accepted, across the political spectrum, is that itcovers political speech. So let's be honest about it: what theAmenders really seek is a clause reading "the First Amendment tothis Constitution is hereby repealed."

Efforts to limit "express advocacy," like, indeed, the rest ofthe FECA regulatory scheme, are based on the belief that Americansought not participate in politics. However, it is not a bad thingfor Americans to participate in politics -- it is a good thing. Itis constitutionally protected. And the fact of the matter is that,more than ever in American society, communicating in the politicalrealm requires the expenditure of money. Money is not an evil inpolitics -- it is a source of information to voters. Efforts toregulate the flow of money in politics over the past 20 years havedone much more than money ever did to distort the political systemand create a public distrust of government. It is now time to try anew approach -- that is, it is time to deregulate politics. Thereis simply no a priori method to say what is fair or notfair -- how much groups should be able to spend, or what kind ofadvocacy they can spend it on. The bureaucracy that has beenestablished to regulate politics is stifling grassroots advocacyand political communication.

After twenty years of campaign finance regulation, it should bynow be clear that independent electoral advocacy by citizen groupslies at the core of the First Amendment, and that such advocacyought to be beyond the permissible scope of government regulation.Political battles should be fought out in forums of publicpersuasion. It is poor policy to divert such debates to federalcourtrooms, with each side attempting to silence its opponentsthrough such arcane concepts as "express advocacy" and"coordinated" or "uncoordinated" expenditures.

Deregulation of campaign finance, not added regulation, is theproper course of action. The FECA $1000 limit on individualcampaign contributions should be abolished entirely, or at leastraised to a realistic figure, in order to reduce the need forcandidates to rely on independent expenditures. (The $1000 limit,in existence since 1974, has never been adjusted for inflation. Hadit been, it would be approximately $3500 today. This is the minimumto which the contribution limit should be raised: $5000, $10,000,or complete removal of the cap would be preferable.) All caps onpolitical party giving should be removed. Donations from a party toits own candidates are not "corrupting." Moreover, since lastyear's Supreme Court decision in Colorado Republican FederalCampaign Committee v. Federal Election Commission, 1996 WL 345766(U.S. 1996), parties may spend unlimited amounts in support oftheir candidates, but only independently of the candidate'scampaign. Driving a wedge between parties and candidates is poorpublic policy. Disclosure of political expenditures meets anypublic need to know the source of financing. However, even here Imust counsel caution. Disclosure rules can have a chilling effecton speech and may be constitutionally limited. McIntyre v. OhioBoard of Elections, 1995 WL 227810 (U.S.)(1995). Disclosure rulesgoverning independent expenditures should be limited, therefore, togroups which engage in substantial activity, spending over $50,000in an election cycle. Electronic filing and mandatory FEC postingof reports on the Internet would help to insure an informed public.These are the type of sensible, constitutional reforms congressshould consider-not the unconstitutional Shays-Meehan bill or thefoolish drive to repeal the First Amendment.

In recent years, it has become increasingly difficult to discussmeaningful campaign finance reform. This is because both public andcongressional opinion has become trapped in a box. This box is theconscious creation of groups such as Common Cause, which for 25years have worked tirelessly to convince the American public thatthe members of this Committee, and indeed all of Congress, arecorrupt bribe-takers, and that the public itself consists ofinnocent dupes incapable of making intelligent voting decisionsbased on the information presented to them. By constantly drawingsimplistic correlations to financial support and voting records,and through the conflation of the issue of campaign finance reformwith other issues of voter concern, such as lobby reform, negativecampaigning, and legislative gridlock, these groups have purposelyattempted to create a climate of public opinion in which certaincore assumptions are not to be challenged. These core assumptionsare that political advocacy must be heavily regulated; politicalcontributions and, ultimately, political spending limited; and allpossible "loopholes" plugged. However, the heavy regulatory regimewhich these "reformers" have placed over campaign activity is, infact, a major contributing factor to the very problems that havecreated such public disgust with the campaign finance system and,indeed, Congress in general.

Now is the time to get out of the box. We must not plunge ahead,sacrificing our First Amendment Freedoms. Congress must realizethat Shays-Meehan style "reforms," based, as they are, on theerroneous assumption that Americans should not spend money onpolitical affairs, cut off grassroots involvement and decrease theflow of information to voters. The regulatory approach enacted in1974 has had unintended, negative consequences that have onlyincreased voter cynicism. The House should reject simplisticproposals such as Shays-Meehan, or efforts to amend theConstitution to destroy the right to free political speech, andmove generally to deregulate political speech. It ought not be acrime to "commit politics" in America.

Thank you.

Bradley A. Smith

Committee on the Judiciary
Subcommittee on the Constitution
United State House of Representatives