Constitutional Issues Related to Campaign Finance Reform

July 22, 1999 • Testimony

Mr. Chairman, distinguished members of the committee:

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

I want to thank you Mr. Chairman for inviting me to testify before the committee on “Constitutional Issues Related to Campaign Finance Reform,” with particular attention to the legislation presently before the committee, H.R. 417, the so‐​called “Bipartisan Campaign Finance Reform Act of 1999,” commonly known as Shays‐​Meehan. I am especially pleased, let me add, that the committee is focusing on the constitutional issues that are so often ignored in the campaign finance debate. In listening to much of that debate, one almost imagines that we have lost sight altogether of our legal roots as a nation. Although this hearing deals in part with the campaign finance issues, it may serve the larger purpose of helping us to recover those roots.

First Principles

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

Unfortunately, over the course of our history, and especially over the 20th century, we have too often ignored those principles as we have asked government to become increasingly involved in our everyday affairs. The result of our constant quest for government “solutions” to social, economic, and personal problems is the modern redistributive and regulatory state.

In one area, however, we have largely resisted that pattern–more precisely, the Supreme Court has stood its ground and protected us from ourselves, so to speak, by protecting certain freedoms as they were meant to be protected. That area is speech. Citing the First Amendment, especially over the course of this century,2 the Court has crafted a free speech jurisprudence that is robust and, for the most part, correct. And in doing so, the Court has made it clear that political speech, especially, was what the Founders had in mind when they wrote the First Amendment.

Yet for some time now we have heard a chorus of calls in Congress3 and in the nation4 for campaign finance “reforms” that would almost certainly compromise political speech and hence the First Amendment. At a general level, I join that chorus, for there is something fundamentally wrong with the way political campaigns in America today are financed. But the reforms I would advocate would take us in a very different direction than that charted by most others in the chorus. Indeed, many of the problems that most reformers see in our present arrangements are the products of earlier reforms. Thus, if we are serious about addressing those problems we should look first to those earlier reforms. Far from needing further restrictions on political speech, we need fewer. Deregulation not only would be consistent with the Constitution but would solve the problems regulation brought into being. Here, as in so many other areas, the Founders had the better of it when they set us on a course of freedom rather than regulation.

What is striking about so much of the recent debate, however, is how little of it takes that direction–or even notices the manifest constitutional impediments to more restrictive campaign reforms. Indeed, the idea of such impediments often arises only as an afterthought, if it arises at all. That is a deeply disturbing fact about so much of our political life today. For in a republic such as ours, where the Constitution not only authorizes but limits government, one should expect constitutional questions to come first. Those questions are: (1) Does Congress have the power to do what some among it want done? and (2), If so, can that be done consistent with the rights of the American people? Those questions will guide my analysis here.

Plainly, in Article I, section 4, and Article II, section 1, the Constitution authorizes Congress to regulate federal elections. But, just as plainly, that regulation must conform to restraints imposed by the First Amendment to the Constitution. And here, the Supreme 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 political contributions and expenditures will be upheld only if they achieve a compelling governmental interest by the least restrictive means–the most difficult of constitutional hurdles. That jurisprudence was examined recently in two Cato studies–one by Professor Lillian R. BeVier of the University of Virginia School of Law,5 the other co‐​authored by attorneys Douglas Johnson of the National Right to Life Committee and Mike Beard of the Coalition to Stop Gun Violence6–both of which concluded that most of the campaign finance reform proposals recently before Congress will not pass constitutional muster. Because I find the arguments and conclusions of those studies compelling, I will simply summarize them here, taking up a few aspects of Shays‐​Meehan in the process, then return at the end to the issue of real reform.


Modern federal election campaign finance regulation stems from the Federal Election Campaign Act of 1971 (FECA), as amended in 1974.7 Two years later, in the landmark case of Buckley v. Valeo,8 the Supreme Court struck down many of the 1974 revisions as impermissible under the First Amendment.

Since then the Federal Election Commission (FEC) has fought to close the perceived “loopholes” created by Buckley. In response, the Court has repeatedly held that the First Amendment is not a loophole.9 In 1996, for example, the Court held 7 to 2 in Colorado Republican Federal Campaign Committee v. FEC10 that independent expenditures by political parties cannot be limited by Congress. Then in April 1997, as if to underscore the long series of cases since Buckley, the Fourth Circuit took the extraordinary step of ordering the FEC to pay the legal fees incurred by the Christian Action Network in defending itself from an FEC lawsuit.11

Yet despite that string of cases, now spanning more than two decades,12 many in Congress persist in believing that they have the power to restrict what the First Amendment plainly protects. It is thus worth examining, if only in outline, just why the Constitution does not permit such restrictions.13

The Buckley Framework

As the Court held in Buckley, to be constitutional, campaign finance regulations must not violate basic principles of political freedom and free political speech recognized and protected by the First Amendment. The plaintiffs in Buckley had challenged FECA’s stringent limitations on the amounts of money individuals could contribute to and spend on campaigns for federal office, and the act’s provisions for public funding of presidential candidates who agreed to abide by spending limits during their campaigns. The Court sustained the provisions for public funding of presidential campaigns and the contribution limitations. It invalidated the expenditure limitations.

A “major purpose” of the First Amendment, the Buckley Court said, was “to protect the free discussion of governmental affairs.” In that regard, contribution and expenditure limitations “operate in an area of the most fundamental First Amendment activities.“14 Thus, limitations are subject to strict judicial scrutiny: they must serve a “compelling state interest” and employ the “least restrictive means.”

Applying that strict standard of review, the Buckley Court distinguished limits on contributions to campaigns and limits on expenditures by citizens and candidates. Contribution limits, said the Court, entail “only a marginal restriction on the contributor’s ability to engage in free communication“15 because “the transformation of contributions into political debate involves speech by someone other than the contributor.“16 Expenditure limits, by contrast, “represent substantial rather than merely theoretical restraints on the quality and diversity of political speech.“17

Whether that distinction will itself withstand strict scrutiny has been a matter of no small debate, of course. In the 1996 Colorado case, for example, Justice Thomas joined the many critics who would give contributions the same protection expenditures enjoy. And this fall, the Supreme Court will hear arguments in Shrink Missouri Government PAC v. Adams,18 its first contribution limits case since Buckley. For the moment, however, contributions can be limited if the purpose is the compelling one of preventing corruption–“the attempt to secure a political quid pro quo from current or potential officeholders“19–or the appearance of corruption. Five years after Buckley, the Court reiterated that holding, emphasizing the narrowness of the exception: preventing corruption or the appearance of corruption is the “single narrow exception to the rule that limits on political activity” are contrary to the First Amendment.20

Applying Buckley to Recent Proposals

Since the Buckley Court agreed unanimously that campaign finance regulations implicate protected First Amendment rights, the basic questions in applying Buckley and its progeny are whether the interests the government asserts by way of justifying a given measure are compelling and, if so, whether the least restrictive means have been employed to secure those interests. Although applying “strict scrutiny” to the proposals recently before Congress is not an exact science, the result of doing so should be relatively clear: if Congress enacts such measures, the Court is not likely to uphold them. Let us look briefly at those measures, taken generically.

The PAC Ban. Those who advocate banning Political Action Committees, or “PACs,” ordinarily invoke vague concerns about “big money” and “special interests,” the implication being that such PACs unduly influence elections in order to advance their own narrow ends. Never mind that PACs arose in the first place as a result of the 1974 FECA restrictions; never mind also that empirical studies show that such contributions rarely buy elections, much less the votes of incumbents once in office:21 the rationales given by PAC ban advocates simply do not amount to the prevention of corruption as the Court has strictly defined it–a financial quid pro quo, dollars for political favors. Moreover, even if a PAC ban could be justified as serving a compelling governmental interest along the lines the Court has established, the means employed, far from being narrowly tailored, are grossly overinclusive. In a word, people and organizations have a right to join together to enhance their political voices. Prohibiting such activities strikes at the very heart of the First Amendment.

The PAC Ban Fallback. Assuming that a PAC ban would be found unconstitutional, reformers have advocated a number of fallback proposals, including lowering the permissible amount of PAC contributions from $5,000 to $1,000 per election and prohibiting PAC contributions that raise a candidate’s PAC receipts above 20 percent of campaign expenditure ceilings. Here too, however, the same constitutional infirmities arise. Lowering PAC contributions allegedly serves the same interests as eliminating them, yet in neither case are those interests compelling. Moreover, the means are again not narrowly tailored. Indeed, it is difficult to identify any interest–other than incumbency protection–that is served by making it more rather than less 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, the limits could be unconstitutional.“22 Many have argued that the current $5,000 limit, upheld in 1976, has long been too low to be any longer constitutional.

Finally, the attempt to redefine “independent expenditure”–and, in particular, to redefine “express advocacy” so as to include any and all partisan communications–runs flatly counter to the Buckley Court’s explicit effort to immunize issue advocacy from regulation or restriction: “So long as persons or groups eschew expenditures that in express terms advocate the election or defeat of a clearly identified candidate, they are free to spend as much as they want to promote the candidate and his views.“23

“Voluntary” Spending Limits. Because mandatory spending limits face an impenetrable constitutional wall, reformers have proposed various “voluntary” limits that a candidate would abide by in exchange for such benefits as “free” or reduced‐​rate television time, reduced mailing rates, raised contribution or expenditure ceilings, and the like–all in the name of “leveling” the playing field. The Court has given such proposals short shrift. Indeed, the Eighth Circuit recently noted, when evaluating analogous state provisions, that one is “hard‐​pressed to discern how the interests of good government could possibly be served by campaign expenditure laws that necessarily have the effect of limiting the quantity of political speech in which candidates for public office are allowed to engage.“24 Far from leveling the playing field, such limits only enhance the already substantial advantages of incumbency.

Limits on “Soft Money”. The recent distress of reformers over “soft money”–unregulated money, contributed to political parties for other than candidate‐​oriented advertising–is rooted in the belief that such contributions, because they are unlimited, invite a wholesale evasion of contribution limits now in place. They do. Indeed, such evasion is exactly what one would expect to find when people are prohibited from contributing in more direct ways to candidates of their choice. The solution to the problem of evasion, however, is not to ban or limit soft money–which would be patently unconstitutional–but to eliminate or at least raise the limits on direct contributions.

Because soft money, under present arrangements, goes to parties, not candidates, there is little possibility of the kind of quid‐​pro‐​quo corruption that alone justifies limits. Thus, any attempt to limit such contributions would not pass even the threshold test the Court has set. Indeed, such limits would strike at the very core of the First Amendment. People contribute to political parties, after all, to advance the ideas for which the parties stand and to encourage and support the political speech that parties promote. If those efforts were thwarted–not to prevent 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 its source in the present law.

So without constitutional merit is the attack on soft money, in fact, that four justices in the recent Colorado case went so far as to say that, given the practical identity of interests between party and candidate during an election, the corruption‐​prevention rationale for sustaining limitations on contributions did not support any limits on party spending, whether coordinated with the candidate or not. Although present law makes coordinated spending illegal, Justice Thomas pointedly questioned the rationale for that restraint: “What could 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. The present law is the problem.

Issue Advocacy. Proposals to limit speech that does not “in express terms advocate the election or defeat of a clearly identified candidate for federal office” are constitutionally infirm for the same reason that the soft‐​money ban is infirm: they would regulate–and thus unacceptably chill–core political speech about the merits of policies and the proper resolution of public issues without a corruption‐​prevention rationale for doing so. To the objection that issue advocates exercise “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 cover advocacy ads that do not expressly urge support or defeat of a candidate have sought refuge in a case the Ninth Circuit decided in 1987, FEC v. Furgatch. That is a dubious shelter, however, for Furgatch26 was, by the circuit’s own reading, a “very close call.“27 Moreover, its holding that a non-candidate’s campaign communication can amount to prohibited “express advocacy” for or against a candidate without having used the Buckley buzz words–“vote for,” “defeat,” etc.–is hardly inconsistent with Buckley. The issue in Furgatch was simply whether, under its facts, the advocate was engaged in “express” advocacy, even though he did not use the “express” words mentioned in Buckley. To read the case as inconsistent with Buckley–and thus as opening the door to overturning Buckley–is grasping at straws, straws that are not even there.

A Word About Shays‐​Meehan

Given the Buckley framework, and the string of cases since that have only strengthened that holding, it is simply shocking that so many in Congress believe that they can ignore the Court and the Constitution and sign on to a bill like Shays‐​Meehan that so flagrantly flies in the face of both. It is as if, in the matter of campaign finance, the rule of law, and the rights of the people, counted for nothing.

The first thing one notices about Shays‐​Meehan is its sheer complexity. It was plainly written not to clarify but to confuse. As such, it is perfect–especially with its draconian criminal sanctions–for holding over the head, like a Damoclean sword, of anyone who might even think about straying from its strictures. But what are those strictures? Is the “voter guide exception” real, for example, or is it a fraud, over which the unwary will trip? And what of “coordination”? The complexity, and vagueness, of the bill makes it impossible to know for sure whether what one is doing is or is not illegal. That puts massive and arbitrary power in the hands of the FEC–to say nothing of the Justice Department. That, precisely, is what we do not mean by the rule of law. And that alone will be sufficient to render the bill unconstitutional. For a law, regulating core political speech, that gives unclear notice about what is and is not legal will, of necessity, chill that speech.

But speech would be burdened as well, for who would engage in such speech without first ensuring, to the extent possible, that he was in reasonable compliance with the law. Needless to say, the cost of assuring that, under this bill, could be massive. This is not for the amateur or the grass‐​roots group–which is doubtless exactly as intended. If incumbent protection has been the result, to this point, of past campaign finance “reform,” that result will be sealed by this bill. Only those who can afford the compliance costs will venture on to the playing field. In the eyes of some, that field may be “level,” but except for incumbents, it is also likely 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, the substantive provisions of Shays‐​Meehan run directly contrary to a long 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 that definition, inviting subjective determinations about whether a given statement is “express advocacy” or “issue advocacy.” Under the First Amendment, issue advocacy cannot be regulated. But what is “issue advocacy” under this bill? What non‐​profit issue‐​advocacy group wants to risk its tax status or incur legal expenses to find out? Once again, the expanded definition chills speech.

I will say nothing about the 60‐​day “black‐​out” on radio and TV issue‐​advertising before a primary or general election other than this. That and similar restrictions apply only to citizens and citizen organizations, of course, not to the media. Those who support Shays‐​Meehan, including those in the media, would not even think of applying such restrictions to the media, for they know, beyond any doubt, that such restrictions would immediately be found unconstitutional. But the media do not have any rights that the rest of us do not have. The media get no special First Amendment protections not available to every American. Members of the media are not in a class by themselves. Why, then, do so many members of Congress think they can restrict the rest of us in ways they would never think of restricting the media?

Finally, just a word about so‐​called soft money–which means, again, unregulated money. Perhaps nothing better characterizes Shays‐​Meehan than its effort to bring all contributions and expenditures under the regulatory maw of the FEC. It is here, of course, 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 that expression venture more into unconstitutional waters than in its redefinition of “contribution,” in section 206, to include “coordinated” activities. This is not the place to enter into that maze of restrictions. Rather, it is the place to say simply that this is what you should expect to find when those who govern take it upon themselves to regulate matters (including even “background music”–section 202!) they should never be regulating in the first place.

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 long standing. For they fly in the face of the political freedoms our Constitution was written to protect. There is a measure, however, that will withstand judicial scrutiny, the aptly‐​named “Doolittle bill,” H.R. 1922, the “Citizen Legislature and Political Freedom Act,” sponsored by Rep. John Doolittle and 68 original co‐​sponsors. In essence, that bill would remove the campaign contribution limits now in place and require instead that candidates and parties promptly report their financial transactions to the Federal Election Commission for disclosure to the public. The bill would, in short, deregulate the process and open it up to the public. Its simplicity is its virtue.

The fear repeatedly heard, again, is that money “corrupts” politics. The congressional response in 1974, as today, was to severely restrict the amount of money that any one individual or group could give to a candidate–limits that have not been changed since they were imposed back then–which means that candidates since then have had either to be independently wealthy, to be constantly raising money in small sums, or to be looking for ways around the system. Is it any wonder that no one likes this system.

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

The time has come to revisit these issues fundamentally. If there is quid‐​pro‐​quo corruption, then let the Justice Department investigate it. All the evidence suggests, however, that money buys access, it does not buy votes. Access is crucial–especially for those whose lives and fortunes are at the mercy of the modern regulatory state, as today is too often the case. It is through access that information is imparted and interests made known, which is precisely what political speech is about. This is not a time to limit that speech. It is a time to encourage it–and, in the process, to terminate the arcane procedures under which recent elections have been conducted, which themselves corrupt.

As a constitutional matter, however, perhaps no one put it better than a supporter of further restrictions, Rep. Richard Gephardt. Quoted in 1997 by Time magazine, Mr. Gephardt said: “When it comes to freedom of speech and our desire for healthy campaigns and a healthy democracy, you cannot have both.” Mr. Gephardt was wrong in saying that we cannot have both. But he was right to suggest that further restrictions would compromise free speech. It is disheartening, however, to see that he would choose those restrictions over freedom. Fortunately, the Constitution remains the supreme law of the land.

1. Pursuant to House Rule XI, clause 2(g)(4): in the current and preceding two fiscal years, neither I nor the Cato Institute has received any federal grant, contract, or subcontract; and a biographical sketch follows this statement.

2. For a useful history of the early years of free speech protection, see David M. Rabban, Free Speech in Its Forgotten Years (1997).

3. In addition to H.R. 417 in the House, we find S. 26 in the Senate, also styled the “Bipartisan Campaign Reform Act of 1999,” commonly known as McCain‐​Feingold.

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

5. Lillian R. BeVier, “Campaign Finance ‘Reform’ Proposals: A First Amendment Analysis,” Cato Policy Analysis No. 282, Sept. 4, 1997.

6. Douglas Johnson and Mike Beard, “ ‘Campaign Reform’: Let’s Not Give Politicians the Power to Decide What We Can Say about Them,” Cato Briefing Paper No. 31, July 4, 1997.

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

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

9. See James Bopp, Jr., and Richard E. Coleson, “The First Amendment Is Not a Loophole: Protecting Free Expression in the Election Campaign Context,” 28 University of West Los Angeles Law Review 1 (1997).

10. 116 S. Ct. 2309 (1996).

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

12. See, e.g., First National Bank 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 Action Committee, 470 U.S. 480 (1985); FEC v. Massachusetts Citizens 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 follows draws 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, 119 S. Ct. 901 (1999).

19. Id. at 26.

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

21. See Bradley A. Smith, “Campaign Finance Regulation: Faulty Assumptions and Undemocratic Consequences,” Cato Policy Analysis No. 238, pp. 8–11, Sept. 13, 1995, and the citations therein.

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

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

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

25. Colorado at 2330–31.

26. 807 F.2d 857 (9th Cir. 1987).

27. Id. at 861.

28. Al Hunt, “The Lessons of the 1996 Scandals: Do It Again, and More,” Wall Street Journal, June 3, 1999, at A27.

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