Chairman Feinstein, Ranking Member Bennett, and Members of theCommittee:
It is a pleasure to speak with you today. I am director ofCenter for Representative Government at the Cato Institute, anon-profit research institute dedicated to preserving thetraditional American principles of limited government, individualliberty, free markets, and peace. I have studied and written widelyabout campaign finance regulation including my recent book, TheFallacy of Campaign Finance Reform (University of ChicagoPress, 2006).
I would like to offer an assessment of the "CampaignAccountability Act of 2007" (S. 1091). This bill seeks to removeparty coordinated expenditure limits now enforced under UnitedStates Code, sec. 441a(d). My evaluation of this bill begins withthe history of that limit and its justifications.
The Federal Election Campaign Act of 1971 (FECA) imposed limitson direct and indirect contributions by persons and multicandidatepolitical committees. These latter limits on their face would haveconstrained party coordinated expenditures were it not for the factthat FECA also exempted political parties from these constraintsthrough what Justice Breyer would later call the "Party ExpenditureProvision." That part of FECA imposed a limitation on partyexpenditures that takes account of both state populations andinflation.1 S. 1091 concernsthis restriction on party coordinated spending.
FECA imposed among other things limitations on contributions andexpenditures by individuals and institutions. In Buckley v.Valeo, the Supreme Court validated the contribution limits andstruck down some of the expenditures constraints. The contributionlimits were justified as means to the compelling state interests inpreventing corruption and the appearance of corruption. Thespending limits were struck down as direct restrictions on freespeech and thus invalid under the strictures of the FirstAmendment. Finally, the Buckley Court also decided thattruly independent electoral spending - outlays made without thecooperation or consent of a candidate or at their request orsuggestion - could not be limited. Such spending did not implicatethe candidates and thus did share the corruption rationaleunderlying contribution limits.
Buckley did not leave federal election law a coherentwhole. The "Party Expenditures Provision" appeared to be alimitation on expenditures. As Justice Breyer later noted, FECAitself mentioned "expenditures" in regard to theprovision.2 Justices Kennedyand Thomas would press the point harder. It would hardly have beensurprising if FECA contained a spending limit on the parties; thelaw generally favored spending limits as a policy tool. To be sure,as Justice Kennedy would later note, the Court "had no occasion inBuckley to consider possible First Amendment objections tolimitations on spending by parties."3 The restrictions on coordinated expenditures thussurvived Buckley at a price to doctrinal coherence.
The most important developments after Buckley in thisargument came in the Supreme Court's decisions in Colorado I andColorado II. In Colorado I, the Court decided that partycoordination spending limits should not be applied to spending ofparty resources that was nonetheless independent of theparty.4 In Colorado II, abare majority of the Court upheld the limits on coordinated partyspending.5 Justice Souter sawcoordinated party spending as a contribution not from the party butfrom interested donors who used the party form to circumventexisting restrictions on individual or donor contributions in order(in Justice Souter's words) "to produce obligated officeholders."The Court thus presumed to reconcile the Party ExpendituresProvision with the traditional "corruption and appearance ofcorruption" rationale for restrictions on campaign finance. Theidea of circumvention built a bridge between Buckley andColorado II. Party spending was just a way chosen by relentless andcorrupting "interested" donors to run around existing election law.In dissent, Justice Thomas noted the lack of evidence for themajority's assertion that donors would use parties to circumventthe law if the Court invalidated limits on coordinated partyspending.
Prior to 2002, the parties engaged direct spending for acandidate and in two kinds of coordinated spending on behalf ofcandidates. They expressly advocated the election of theircandidates up to the party coordination limits. Beyond that, theparties supported issue ads that did not expressly advocate theelection of a candidate. These latter communications were notconstrained by party coordination limits. After Congress passed theBipartisan Campaign Reform Act in 2002, the Federal ElectionCommission made it clear that the coordination limits "would applyto party committee spending for advertising that does not containexpress advocacy."6 Partiesresponded to this rulemaking by creating entities that could spendindependently on behalf of their candidates.
Not surprisingly, given that the party coordination limits arefar less than what is needed to win an election, the parties beganspending independently of their candidates. In 2000, the two majorparties spent $3.8 million in independent expenditures; in 2004,they laid out $264.5 million. In the mid-term election of 2002, theparties spent $3.8 million. In 2006, they spent $223.7million.7 These sums werefour to six times the sums spent by the parties in coordinationwith their candidates.
Like much of campaign finance law, the limitation on partycoordinated spending seems to be a narrow and rather technicalaspect of the law. But it engages larger themes in our politicallife, themes that bear explication and analysis: political partiesin democracy, accountability and elections, and the value ofpolitical speech and spending. I would like to examine S. 1091 inlight of these larger themes.
Campaign finance regulation reflects the political theory ofProgressivism. This philosophy posits that the public interestexists apart from political struggle; for Progressives the publicinterest must often be imposed on politics which tends towardself-interest and corruption. Progressives distrust politicalparties because they reflect narrow interests rather than thepublic interest or common good.8 Limiting the activities of the political partiesthus constrains agents of private interests and corruption. ButProgressives did not object only to contributions by the parties.They objected to the "private interest" activities of the partiesin general, not least their spending on behalf of candidates. TheFECA limits on coordinated expenditures reflect this Progressivedistaste for political parties. To limit parties in general andtheir use of money in particular was to constrain an agent ofcorruption. FECA fits well into the intellectual background ofcampaign finance regulation. Once the Court invalidatedexpenditures limits, the Progressive vision did not cohere with thereality of regulation. Colorado II resolved that by making theparties willing accomplices of the "true" agents of corruption,donors who wished to give more than the government allowed. Fromthe age of the urban machine to Colorado II, Progressives have seenpolitical parties as enemies of the public interest and agents ofcorruption.
In light of traditional categories of analysis, the corruptioncomplaint against the parties is not persuasive. Contributionlimits are the main instrument to prevent corruption, and theyapply to individuals, candidates, and organizations. Coordinatedspending between a party and a candidate must begin as hard money.If the contribution limits are actually limits on the corruptinginfluence of money in politics, the hard money contributions to theparties cannot be corrupt. Colorado II implicitly sought a wayaround this problem by assuming an objectionable motive on the partof a significant number of donors. These donors intend to violatethe limits on contributions to candidates by giving legal donationsto the parties. The Colorado II majority provided no evidence ofthis intent on the part of donors. FECA had already proscribeddirecting contributions to candidates by way of a partycontribution.9 Indeed, ifintent is the standard of corruption, it is difficult to discernwhy we have objective limits on donations.
We should not accept the assumption that political partiescorrupt representative democracy. Our Constitution and politicaltradition do not assume that private interests necessarily corruptpolitics or that the job of the government should be to suppressprivate interests in pursuit of a common good known prior topolitical struggle. In general, the Constitution seeks to harnessprivate interests to engage in a struggle that precludes tyranny ofa majority. Yet, American government also has legitimate thoughlimited powers and control over that power implies representationand elections. Political parties mediate between individuals (orindividuals joined together in groups) and government. Theyencompass a coalition of interests that from electoral necessitysupport a larger agenda for governing.
Building coalitions and fighting elections create ideologicaland policy reputations for the political parties. These reputationsprovide cues for voting by citizens. Such cues are essential;voters have few incentives to acquire detailed knowledge aboutpolitics and policies. The reputations of parties connect the voterin some measure to the actions of government. Parties and theiractivities including spending thus transcend the rationalself-interest and ignorance of voters and foster a workable, ifimperfect representative democracy.
The limits on coordinated party spending complicate thisfunction of parties in our representative democracy. The speechsupported by independent spending will not be controlled bycandidates. In some cases, national party leaders will not be ableto control this spending since these officials must remain alooffrom the entities doing the spending to preserve their legalindependence. The information about a candidate contained in theparty label becomes more obscure for the voter thereby complicatingthe link between voter, party, and governance.
We should take care to untangle the case against partyindependent spending from arguments directed against the content ofsome speech funded by these independent entities. Some see thisindependent speech as "unduly negative." For some time, critics ofour politics and campaign finance system have decried "negativeadvertising" during election campaigns. They argue such speechleads to declining trust in government, among other ills of thebody politic. Under the First Amendment, however, the content ofspeech should not be a reason to regulate it or the fundingnecessary to support the speech. In fact, negative advertising andspeech - that is, speech critical of an opponent in an election -offers many advantages to our republic. Such speech informs andmobilizes voters while fomenting few of the harms long asserted bycritics.10 Of course,speech criticizing an opponent can turn wild and vicious. Thattactic runs its own risks if voters do not favor such speech, andthey can link a campaign to what they do not like. In that case,wild attacks on an opponent produce fewer rather than more votesfor the speaker. However, if the wild attacks are independent of acandidate (and perhaps a party), voters cannot be sure of thesource of their unhappiness and cannot punish the guilty. Ofcourse, the voter might assume the candidate is responsible for thedisfavored speech even though it was undertaken independent of hiscampaign. Insofar as the voter acts on that mistaken account ofresponsibility, the candidate suffers an injustice and electionsare distorted.
The restrictions on party coordinated spending reflect alongstanding animus in parts of our political culture towardelectoral spending. That animus informed FECA which imposedspending restraints on many kinds of political activities.Buckley did well by noticing that restricting spendingwould necessarily restrict speech. That remains true today. Giventhe fundamental commitments of the First Amendment, the animustoward spending must count as an animus toward our liberalConstitution. Of course, if political parties are assumed to beagents of corruption, then more spending by parties (rather thanless under limits) would foster more corruption.
These commonplace prejudices have little support in thescholarly literature on elections and campaign finance. Forexample, John Coleman, a political scientist at the University ofWisconsin - Madison, has found that increases in spending incongressional elections leads to better informedvoters.11 More spendingalso helps those who are "information poor" more than those who arealready well-informed about an election campaign.12 Coleman also found that the usualcomplaints about increases in electoral spending (for example, apurported decline in trust in government) were not accurate. Ifremoving limits on party coordinated spending leads to morespending on elections, voters will be better-informed than they arenow. Because information fosters competition, limits onexpenditures should restrict electoral competition for incumbents.The political scientist Gary Jacobson has confirmed thisconjecture.13 Finally, itis always important to keep our relative spending on elections inmind. Once liberalized, the parties will no doubt spend hundreds ofmillions of dollars to win the power to guide a governmentthat spends hundreds of billions of dollars in itsdiscretionary budget.
Changes in campaign finance regulations can always restrictpolitical freedom; indeed, such regulations are often used to alterthe political battlefield to favor a political party or incumbentmembers of Congress. Here we should be concerned that the two majorpolitical parties might eliminate the party coordination limits asway to hobble other parties, individuals or groups. This change,however, does not complicate or prohibit independent spending byanyone other than the political parties. This bill will no doubtreduce the sums spent by the parties independently of theircandidates. That spending, however, resulted from the limits onparty coordinate spending rather than a genuine desire to spendmoney independently on behalf of a candidate. The bill couldincrease the already large differences in spending between themajor parties and minor parties. It is far from certain that theparties will spend a great deal more money all things being equalif the party coordination limits are removed: it is possible thatgreater control over spending will lead to more efficient outlaysand thus about the same or even less party spending.14 Even if the parties spend more, theharm done to minor parties will likely be small and should bebalanced against the considerable gains for accountability andvoter competence likely to follow the liberalization of partycoordinated spending.
Federal limits on party coordinated spending have not had ahappy history. They were intended to restrict party spending, anunconstitutional goal. The limits were then brought under theanti-corruption rationale by a bare majority of the U.S. SupremeCourt in a singularly unpersuasive argument. Parties now spend mostof their campaign money apart from, and sometimes in opposition to,their candidates, a result that serves neither the theory nor thepractice of representative democracy.
1 Justice Breyer offers agood review of this history in his opinion in Colorado RepublicanFederal Campaign Committee v. Federal Election Committee 518 U.S.604 (1996).
3 Colorado I.
5Federal ElectionComm'n v. Colorado Republican Federal Campaign Comm., 533 U.S. 431, 441 (2001).
6Stephen Hoersting andPaul Sherman, "A Constitutional Solution to the Problems of Controland Accountability in Party Independent Expenditures," Center forCompetitive Politics, n.d., p. 3.
7R. Sam Garrett and L.Paige Whitaker, "Coordinated Party Expenditures in FederalElections: An Overview," Congressional Research Service Report toCongress, April 13, 2007, p. 5.
8John Samples, TheFallacy of Campaign Finance Reform (Chicago: University ofChicago Press, 2006), p. 46.
9Garrett and Whitaker, p.6.
10Richard Lau, LeeSigelman, Caroline Heldman and Paul Babbit, "The Effects ofNegative Political Advertisements: A Meta-Analytic Assessment,"American Political Science Review, 93(December1999):856-8.
11John J. Coleman andPaul F. Manna, "Congressional Campaign Spending and the Quality ofDemocracy." Journal of Politics 62, 3(2000): 757-89.
12John J. Coleman, "TheDistribution of Campaign Spending Benefits Across Groups."Journal of Politics 63, 3 (2001): 916-34.
13Gary C. Jacobson,"Enough is Too Much: Money and Competition in House Elections," inElections in America, ed. Kay Lehman Schlozman (Boston:Allen & Unwin, 1987), p. 76.
14The parties will spendmore money will spend more money independently and in coordinationwith candidates with the passage of time. The question should bewhether elimination of coordination limits would lead to morespending than that baseline.