Constitutional Issues Related to Campaign Finance Reform


Mr. Chairman, distinguished members of the committee:

My name is Roger Pilon.1I am vice president for legal affairs at the Cato Institute anddirector of Cato's Center for Constitutional Studies.

I want to thank you Mr. Chairman for inviting me to testifybefore the committee on "Constitutional Issues Related to CampaignFinance Reform," with particular attention to the legislationpresently before the committee, H.R. 417, the so-called "BipartisanCampaign Finance Reform Act of 1999," commonly known asShays-Meehan. I am especially pleased, let me add, that thecommittee is focusing on the constitutional issues that are sooften ignored in the campaign finance debate. In listening to muchof that debate, one almost imagines that we have lost sightaltogether of our legal roots as a nation. Although this hearingdeals in part with the campaign finance issues, it may serve thelarger purpose of helping us to recover those roots.

First Principles

The place to start, then, is with the first principles of thematter. In a free society, individuals and organizations are andought to be free to associate in any way they wish, to speak asthey wish, and to spend their money as they wish, provided onlythat in the process they respect the rights of others to do thesame. The Declaration of Independence implies as much when itspeaks of our unalienable rights to life, liberty, and the pursuitof happiness. And it goes on to say that the purpose of governmentis to protect that liberty by securing those rights.

Unfortunately, over the course of our history, and especiallyover the 20th century, we have too often ignored those principlesas we have asked government to become increasingly involved in oureveryday affairs. The result of our constant quest for government"solutions" to social, economic, and personal problems is themodern redistributive and regulatory state.

In one area, however, we have largely resisted thatpattern--more precisely, the Supreme Court has stood its ground andprotected us from ourselves, so to speak, by protecting certainfreedoms as they were meant to be protected. That area is speech.Citing the First Amendment, especially over the course of thiscentury,2 the Court hascrafted a free speech jurisprudence that is robust and, for themost part, correct. And in doing so, the Court has made it clearthat political speech, especially, was what the Founders had inmind when they wrote the First Amendment.

Yet for some time now we have heard a chorus of calls inCongress3 and in thenation4 for campaign finance"reforms" that would almost certainly compromise political speechand hence the First Amendment. At a general level, I join thatchorus, for there is something fundamentally wrong with the waypolitical campaigns in America today are financed. But the reformsI would advocate would take us in a very different direction thanthat charted by most others in the chorus. Indeed, many of theproblems that most reformers see in our present arrangements arethe products of earlier reforms. Thus, if we are serious aboutaddressing those problems we should look first to those earlierreforms. Far from needing further restrictions on political speech,we need fewer. Deregulation not only would be consistent with theConstitution but would solve the problems regulation brought intobeing. Here, as in so many other areas, the Founders had the betterof it when they set us on a course of freedom rather thanregulation.

What is striking about so much of the recent debate, however, ishow little of it takes that direction--or even notices the manifestconstitutional impediments to more restrictive campaign reforms.Indeed, the idea of such impediments often arises only as anafterthought, if it arises at all. That is a deeply disturbing factabout so much of our political life today. For in a republic suchas ours, where the Constitution not only authorizes but limitsgovernment, one should expect constitutional questions to comefirst. Those questions are: (1) Does Congress have the power to dowhat some among it want done? and (2), If so, can that be doneconsistent with the rights of the American people? Those questionswill guide my analysis here.

Plainly, in Article I, section 4, and Article II, section 1, theConstitution authorizes Congress to regulate federal elections.But, just as plainly, that regulation must conform to restraintsimposed by the First Amendment to the Constitution. And here, theSupreme Court has said repeatedly that, under the First Amendment,campaign contributions and expenditures are protected speech.

More precisely, the Court has said that regulations of politicalcontributions and expenditures will be upheld only if they achievea compelling governmental interest by the least restrictivemeans--the most difficult of constitutional hurdles. Thatjurisprudence was examined recently in two Cato studies--one byProfessor Lillian R. BeVier of the University of Virginia School ofLaw,5 the other co-authoredby attorneys Douglas Johnson of the National Right to LifeCommittee and Mike Beard of the Coalition to Stop GunViolence6--both of whichconcluded that most of the campaign finance reform proposalsrecently before Congress will not pass constitutional muster.Because I find the arguments and conclusions of those studiescompelling, I will simply summarize them here, taking up a fewaspects of Shays-Meehan in the process, then return at the end tothe issue of real reform.


Modern federal election campaign finance regulation stems fromthe Federal Election Campaign Act of 1971 (FECA), as amended in1974.7 Two years later, inthe landmark case of Buckley v. Valeo,8 the Supreme Court struck down many of the1974 revisions as impermissible under the First Amendment.

Since then the Federal Election Commission (FEC) has fought toclose the perceived "loopholes" created by Buckley. Inresponse, the Court has repeatedly held that the First Amendment isnot a loophole.9 In 1996,for example, the Court held 7 to 2 in Colorado RepublicanFederal Campaign Committee v. FEC10 that independent expenditures by politicalparties cannot be limited by Congress. Then in April 1997, as if tounderscore the long series of cases since Buckley, theFourth Circuit took the extraordinary step of ordering the FEC topay the legal fees incurred by the Christian Action Network indefending itself from an FEC lawsuit.11

Yet despite that string of cases, now spanning more than twodecades,12 many inCongress persist in believing that they have the power to restrictwhat the First Amendment plainly protects. It is thus worthexamining, if only in outline, just why the Constitution does notpermit such restrictions.13

The Buckley Framework

As the Court held in Buckley, to be constitutional,campaign finance regulations must not violate basic principles ofpolitical freedom and free political speech recognized andprotected by the First Amendment. The plaintiffs inBuckley had challenged FECA's stringent limitations on theamounts of money individuals could contribute to and spend oncampaigns for federal office, and the act's provisions for publicfunding of presidential candidates who agreed to abide by spendinglimits during their campaigns. The Court sustained the provisionsfor public funding of presidential campaigns and the contributionlimitations. It invalidated the expenditure limitations.

A "major purpose" of the First Amendment, the BuckleyCourt said, was "to protect the free discussion of governmentalaffairs." In that regard, contribution and expenditure limitations"operate in an area of the most fundamental First Amendmentactivities."14 Thus,limitations are subject to strict judicial scrutiny: they mustserve a "compelling state interest" and employ the "leastrestrictive means."

Applying that strict standard of review, the BuckleyCourt distinguished limits on contributionsto campaigns and limits on expenditures bycitizens and candidates. Contribution limits, said the Court,entail "only a marginal restriction on the contributor's ability toengage in free communication"15 because "the transformation of contributionsinto political debate involves speech by someone other than thecontributor."16Expenditure limits, by contrast, "represent substantial rather thanmerely theoretical restraints on the quality and diversity ofpolitical speech."17

Whether that distinction will itself withstand strict scrutinyhas been a matter of no small debate, of course. In the 1996Colorado case, for example, Justice Thomas joined the manycritics who would give contributions the same protectionexpenditures enjoy. And this fall, the Supreme Court will heararguments in Shrink Missouri Government PAC v.Adams,18 its firstcontribution limits case since Buckley. For the moment,however, contributions can be limited if the purpose is thecompelling one of preventing corruption--"the attempt to secure apolitical quid pro quo from current or potentialofficeholders"19--or theappearance of corruption. Five years after Buckley, theCourt reiterated that holding, emphasizing the narrowness of theexception: preventing corruption or the appearance of corruption isthe "single narrow exception to the rule that limits on politicalactivity" are contrary to the First Amendment.20

Applying Buckley to RecentProposals

Since the Buckley Court agreed unanimously thatcampaign finance regulations implicate protected First Amendmentrights, the basic questions in applying Buckley and itsprogeny are whether the interests the government asserts by way ofjustifying a given measure are compelling and, if so, whether theleast restrictive means have been employed to secure thoseinterests. Although applying "strict scrutiny" to the proposalsrecently before Congress is not an exact science, the result ofdoing so should be relatively clear: if Congress enacts suchmeasures, the Court is not likely to uphold them. Let us lookbriefly at those measures, taken generically.

The PAC Ban. Those who advocate banningPolitical Action Committees, or "PACs," ordinarily invoke vagueconcerns about "big money" and "special interests," the implicationbeing that such PACs unduly influence elections in order to advancetheir own narrow ends. Never mind that PACs arose in the firstplace as a result of the 1974 FECA restrictions; never mind alsothat empirical studies show that such contributions rarely buyelections, much less the votes of incumbents once inoffice:21 the rationalesgiven by PAC ban advocates simply do not amount to the preventionof corruption as the Court has strictly defined it--a financialquid pro quo, dollars for political favors. Moreover, even if a PACban could be justified as serving a compelling governmentalinterest along the lines the Court has established, the meansemployed, far from being narrowly tailored, are grosslyoverinclusive. In a word, people and organizations have a right tojoin together to enhance their political voices. Prohibiting suchactivities strikes at the very heart of the First Amendment.

The PAC Ban Fallback. Assuming that aPAC ban would be found unconstitutional, reformers have advocated anumber of fallback proposals, including lowering the permissibleamount of PAC contributions from $5,000 to $1,000 per election andprohibiting PAC contributions that raise a candidate's PAC receiptsabove 20 percent of campaign expenditure ceilings. Here too,however, the same constitutional infirmities arise. Lowering PACcontributions allegedly serves the same interests as eliminatingthem, yet in neither case are those interests compelling. Moreover,the means are again not narrowly tailored. Indeed, it is difficultto identify any interest--other thanincumbency protection--that is served by making it more rather thanless difficult for candidates to raise money.

It should be noted, however, that the Buckley Court,even as it upheld the particular contribution limits at issue,"cautioned . . . that if the contribution limits were too low, thelimits could be unconstitutional."22 Many have argued that the current $5,000 limit,upheld in 1976, has long been too low to be any longerconstitutional.

Finally, the attempt to redefine "independent expenditure"--and,in particular, to redefine "express advocacy" so as to include anyand all partisan communications--runs flatly counter to theBuckley Court's explicit effort to immunize issue advocacyfrom regulation or restriction: "So long as persons or groupseschew expenditures that in express terms advocatethe election or defeat of a clearly identified candidate,they are free to spend as much as they want to promote thecandidate and his views."23

"Voluntary" Spending Limits. Becausemandatory spending limits face an impenetrable constitutional wall,reformers have proposed various "voluntary" limits that a candidatewould abide by in exchange for such benefits as "free" orreduced-rate television time, reduced mailing rates, raisedcontribution or expenditure ceilings, and the like--all in the nameof "leveling" the playing field. The Court has given such proposalsshort shrift. Indeed, the Eighth Circuit recently noted, whenevaluating analogous state provisions, that one is "hard-pressed todiscern how the interests of good government could possibly beserved by campaign expenditure laws that necessarily have theeffect of limiting the quantity of political speech in whichcandidates for public office are allowed to engage."24 Far from leveling the playing field,such limits only enhance the already substantial advantages ofincumbency.

Limits on "Soft Money". The recentdistress of reformers over "soft money"--unregulated money,contributed to political parties for other than candidate-orientedadvertising--is rooted in the belief that such contributions,because they are unlimited, invite a wholesale evasion ofcontribution limits now in place. They do. Indeed, such evasion isexactly what one would expect to find wh

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en people areprohibited from contributing in more direct ways to candidates oftheir choice. The solution to the problem of evasion, however, isnot to ban or limit soft money--which would be patentlyunconstitutional--but to eliminate or at least raise the limits ondirect contributions.

Because soft money, under present arrangements, goes to parties,not candidates, there is little possibility of the kind ofquid-pro-quo corruption that alone justifies limits. Thus, anyattempt to limit such contributions would not pass even thethreshold test the Court has set. Indeed, such limits would strikeat the very core of the First Amendment. People contribute topolitical parties, after all, to advance the ideas for which theparties stand and to encourage and support the political speechthat parties promote. If those efforts were thwarted--not toprevent quid-pro-quo corruption but to eliminate the "appearance"of corruption--the First Amendment would be utterly eviscerated.The "appearance" can be addressed more directly--by eliminating itssource in the present law.

So without constitutional merit is the attack on soft money, infact, that four justices in the recent Colorado case wentso far as to say that, given the practical identity of interestsbetween party and candidate during an election, thecorruption-prevention rationale for sustaining limitations oncontributions did not support any limits onparty spending, whether coordinated with the candidate or not.Although present law makes coordinated spending illegal, JusticeThomas pointedly questioned the rationale for that restraint: "Whatcould it mean for a party to 'corrupt' its candidate or to exercise'coercive' influence over him."25 In sum, soft money is not the problem. Thepresent law is the problem.

Issue Advocacy. Proposals to limitspeech that does not "in express terms advocate the election ordefeat of a clearly identified candidate for federal office" areconstitutionally infirm for the same reason that the soft-money banis infirm: they would regulate--and thus unacceptably chill--corepolitical speech about the merits of policies and the properresolution of public issues without a corruption-preventionrationale for doing so. To the objection that issue advocatesexercise "undue influence," the answers are, that is their right,and we have no measure of just how much influence is "due."

Of late, however, those who would expand current law to coveradvocacy ads that do not expressly urgesupport or defeat of a candidate have sought refuge in a case theNinth Circuit decided in 1987, FEC v. Furgatch. That is adubious shelter, however, for Furgatch26 was, by the circuit's own reading, a "veryclose call."27 Moreover,its holding that a non-candidate's campaign communication canamount to prohibited "express advocacy" for or against a candidatewithout having used the Buckleybuzz words--"vote for," "defeat," etc.--is hardly inconsistent withBuckley. The issue in Furgatch was simplywhether, under its facts, the advocate was engaged in "express"advocacy, even though he did not use the "express" words mentionedin Buckley. To read the case as inconsistent withBuckley--and thus as opening the door to overturningBuckley--is grasping at straws, straws that are not eventhere.

A Word About Shays-Meehan

Given the Buckley framework, and the string of casessince that have only strengthened that holding, it is simplyshocking that so many in Congress believe that they can ignore theCourt and the Constitution and sign on to a bill like Shays-Meehanthat so flagrantly flies in the face of both. It is as if, in thematter of campaign finance, the rule of law, and the rights of thepeople, counted for nothing.

The first thing one notices about Shays-Meehan is its sheercomplexity. It was plainly written not to clarify but to confuse.As such, it is perfect--especially with its draconiancriminal sanctions--for holding over the head, like aDamoclean sword, of anyone who might even think aboutstraying from its strictures. But what are those strictures? Is the"voter guide exception" real, for example, or is it a fraud, overwhich the unwary will trip? And what of "coordination"? Thecomplexity, and vagueness, of the bill makes it impossible to knowfor sure whether what one is doing is or is not illegal. That putsmassive and arbitrary power in the hands of the FEC--to say nothingof the Justice Department. That, precisely, is what we do not meanby the rule of law. And that alone will be sufficient to render thebill unconstitutional. For a law, regulating core political speech,that gives unclear notice about what is and is not legal will, ofnecessity, chill that speech.

But speech would be burdened as well, for who would engage insuch speech without first ensuring, to the extent possible, that hewas in reasonable compliance with the law. Needless to say, thecost of assuring that, under this bill, could be massive. This isnot for the amateur or the grass-roots group--which is doubtlessexactly as intended. If incumbent protection has been the result,to this point, of past campaign finance "reform," that result willbe sealed by this bill. Only those who can afford the compliancecosts will venture on to the playing field. In the eyes of some,that field may be "level," but except for incumbents, it is alsolikely to be barren. Law that so burdens core political speech,like law that chills it, is patently unconstitutional.

But even if those threshold problems were set aside, thesubstantive provisions of Shays-Meehan run directly contrary to along line of Supreme Court decisions. The Court has set forth a"bright-line" test for "express advocacy," for example: "Vote for,""vote against" this candidate. Yet Shays-Meehan expands thatdefinition, inviting subjective determinations about whether agiven statement is "express advocacy" or "issue advocacy." Underthe First Amendment, issue advocacy cannot be regulated. But whatis "issue advocacy" under this bill? What non-profit issue-advocacygroup wants to risk its tax status or incur legal expenses to findout? Once again, the expanded definition chills speech.

I will say nothing about the 60-day "black-out" on radio and TVissue-advertising before a primary or general election other thanthis. That and similar restrictions apply only to citizens andcitizen organizations, of course, not to the media. Those whosupport Shays-Meehan, including those in the media, would not eventhink of applying such restrictions to the media, for they know,beyond any doubt, that such restrictions would immediately be foundunconstitutional. But the media do not have any rights that therest of us do not have. The media get no special First Amendmentprotections not available to every American. Members of the mediaare not in a class by themselves. Why, then, do so many members ofCongress think they can restrict the rest of us in ways they wouldnever think of restricting the media?

Finally, just a word about so-called soft money--which means,again, unregulated money. Perhaps nothing better characterizesShays-Meehan than its effort to bring all contributions andexpenditures under the regulatory maw of the FEC. It is here, ofcourse, that the true colors of the "reformers" come to the fore,that their belief, as columnist Al Hunt recently put it, that"money is the corrupting influence in politics"28 finds expression. And nowhere does thatexpression venture more into unconstitutional waters than in itsredefinition of "contribution," in section 206, to include"coordinated" activities. This is not the place to enter into thatmaze of restrictions. Rather, it is the place to say simply thatthis is what you should expect to find when those who govern takeit upon themselves to regulate matters (including even "backgroundmusic"--section 202!) they should never be regulating in the firstplace.

The Solution: Deregulate Political Speech

As this brief overview of recent "reform" proposals suggests,the Supreme Court is not likely to leave any such measures longstanding. For they fly in the face of the political freedoms ourConstitution was written to protect. There is a measure, however,that will withstand judicial scrutiny, the aptly-named "Doolittlebill," H.R. 1922, the "Citizen Legislature and Political FreedomAct," sponsored by Rep. John Doolittle and 68 original co-sponsors.In essence, that bill would remove the campaign contribution limitsnow in place and require instead that candidates and partiespromptly report their financial transactions to the FederalElection Commission for disclosure to the public. The bill would,in short, deregulate the process and open it up to the public. Itssimplicity is its virtue.

The fear repeatedly heard, again, is that money "corrupts"politics. The congressional response in 1974, as today, was toseverely restrict the amount of money that any one individual orgroup could give to a candidate--limits that have not been changedsince they were imposed back then--which means that candidatessince then have had either to be independently wealthy, to beconstantly raising money in small sums, or to be looking for waysaround the system. Is it any wonder that no one likes thissystem.

But the answer to the problems created by the 1974 limits is notmore limits. It is to revisit the premise on which those limitsrest. Just what is a congressman saying when he complains thatmoney corrupts the process? Is he saying that he would be corrupted by larger contributions? Or thathe would not be corrupted--but hiscolleagues would? Just where is the wrong in receiving $10,000instead of $1,000? We all know it takes money to run for publicoffice--a lot of money. No one knows that better than challengers,who are especially disabled by our present law. Is that why thatlaw is in place?

The time has come to revisit these issues fundamentally. Ifthere is quid-pro-quo corruption, then let the Justice Departmentinvestigate it. All the evidence suggests, however, that money buysaccess, it does not buy votes. Access is crucial--especially forthose whose lives and fortunes are at the mercy of the modernregulatory state, as today is too often the case. It is throughaccess that information is imparted and interests made known, whichis precisely what political speech is about. This is not a time tolimit that speech. It is a time to encourage it--and, in theprocess, to terminate the arcane procedures under which recentelections have been conducted, which themselves corrupt.

As a constitutional matter, however, perhaps no one put itbetter than a supporter of further restrictions, Rep. RichardGephardt. Quoted in 1997 by Time magazine, Mr. Gephardtsaid: "When it comes to freedom of speech and our desire forhealthy campaigns and a healthy democracy, you cannot have both."Mr. Gephardt was wrong in saying that we cannot have both. But hewas right to suggest that further restrictions would compromisefree speech. It is disheartening, however, to see that he wouldchoose those restrictions over freedom. Fortunately, theConstitution remains the supreme law of the land.

1. Pursuant to House Rule XI, clause2(g)(4): in the current and preceding two fiscal years, neither Inor the Cato Institute has received any federal grant, contract, orsubcontract; and a biographical sketch follows this statement.

2. For a useful history of the earlyyears of free speech protection, see David M. Rabban, FreeSpeech in Its Forgotten Years (1997).

3. In addition to H.R. 417 in theHouse, we find S. 26 in the Senate, also styled the "BipartisanCampaign Reform Act of 1999," commonly known asMcCain-Feingold.

4. See, e.g., Campaign Reform:Insights and Evidence, a "Report of the Task Force on CampaignReform," funded by the Pew Charitable Trusts and published by theWoodrow Wilson School of Public and International Affairs,Princeton University, September 1998.

5. Lillian R. BeVier, "CampaignFinance 'Reform' Proposals: A First Amendment Analysis," CatoPolicy Analysis No. 282, Sept. 4, 1997.

6. Douglas Johnson and Mike Beard,"'Campaign Reform': Let's Not Give Politicians the Power to DecideWhat We Can Say about Them," Cato Briefing Paper No. 31, July 4,1997.

7. 2 U.S.C. § 431 etseq. (amended 1974).

8. 424 U.S. 1 (1976).

9. See James Bopp, Jr., and RichardE. Coleson, "The First Amendment Is Not a Loophole: Protecting FreeExpression in the Election Campaign Context," 28 University ofWest Los Angeles Law Review 1 (1997).

10. 116 S. Ct. 2309 (1996).

11. FEC v. Christian ActionNetwork, Inc., 110 F. 3d 1049 (4th Cir. 1997).

12. See, e.g., First NationalBank of Boston v. Bellotti, 435 U.S. 765 (1978);California Medical Association v. FEC, 453 U.S. 182(1981); FEC v. National Right to Work Committee, 459 U.S.197 (1982); FEC v. National Conservative Political ActionCommittee, 470 U.S. 480 (1985); FEC v. MassachusettsCitizens for Life, Inc. 479 U.S. 238 (1986); Austin v.Michigan Chamber of Commerce, 494 U.S. 652 (1990); FEC v.Colorado Republican Federal Campaign Committee, 116 S.Ct. 2309(1996).

13. The analysis that followsdraws heavily upon the study by Professor BeVier, note 5 above.

14. Buckley, at 14(quoting Mills v. Alabama, 384 U.S. 214, 218 (1966).

15. Id. at 20.

16. Id. at 21.

17. Id. at 19.

18. 161 F.3d 519 (8th Cir. 1998),cert. granted sub nom., Nixon v. Shrink Mo. Gov't PAC, 119S. Ct. 901 (1999).

19. Id. at 26.

20. Citizens Against RentControl v. Berkeley, 454 U.S. 290, 296 (1981).

21. See Bradley A. Smith,"Campaign Finance Regulation: Faulty Assumptions and UndemocraticConsequences," Cato Policy Analysis No. 238, pp. 8-11,Sept. 13, 1995, and the citations therein.

22. Carver v. Nixon, 72F.3d 633, 637 (1995) (citing Buckley at 30).

23. BeVier, note 5 above, at 12(citing Buckley at 45).

24. Shrink Missouri GovernmentPAC v. Maupin, 71 F.3d 1422, 1426 (8th Cir. 1995).

25. Colorado at2330-31.

26. 807 F.2d 857 (9th Cir.1987).

27. Id. at 861.

28. Al Hunt, "The Lessons of the1996 Scandals: Do It Again, and More," Wall StreetJournal, June 3, 1999, at A27.

Roger Pilon

Committee on House Administration
United States House of Representatives