F. Senate Campaign Finance Bill Puts Limits on Independent Speech

    The First Amendment tension between campaign money and political speech grew even more uneasy in 2001 as proponents of campaign finance reform sought to impose far-reaching restrictions on political advertising. 

     On April 2, 2001, the U.S. Senate passed the long-awaited McCain-Feingold bill, S. 27, which was touted as a measure to stop the influx of “soft” money into federal campaigns.  The House version of the bill, Shays-Meehan, H.R. 380, was effectively killed during the first session of Congress after the parties failed to agree on the terms of floor debate for a slew of proposed last-minute amendments -- but the measure would rise again in early 2002.  

     Meanwhile, the U.S. Supreme Court struck down a constitutional challenge by Colorado Republicans to a provision of the Federal Election Campaign Act of 1971 (FECA), which limits the amount of money political parties may spend to support their candidates.  All in all, 2001 marked a noticeable shift in the campaign finance reform debate toward an almost certain future of more stringent regulation.

     In response to widespread evidence of corruption during the 1972 elections, Congress amended FECA in 1974.  The amendments limited the amount of money that individuals and groups could spend toward the election of candidates, both as contributions and as expenditures made in coordination with candidates.  Among other provisions, the FECA amendments limited candidate expenditures and established various reporting and disclosure requirements. 

     In Buckley v. Valeo, 424 U.S. 1 (1976), the Supreme Court struck down FECA’s limits on campaign expenditures and independent expenditures on First Amendment grounds, while at the same time upholding contribution limits.  In differentiating between contributions and expenditures, the Buckley Court noted that expenditure limits implicate “core” First Amendment values of political expression.  Conversely, a limit on contributions “entails only a marginal restriction upon the contributor’s ability to engage in free communication.”  Id. at 21. 

     Still, the Court upheld disclosure and reporting requirements for those independent expenditures that “expressly advocate” the election or defeat of a candidate.  On the other hand, the Court held that “issue ads” were completely off-limits to government regulators because they posed little or no chance of corrupting the political landscape. 

     Since Buckley, this “contribution / expenditure” dichotomy has been the foundation for the Court’s analysis of campaign finance regulations.  Within this framework, most legal disagreement has arisen over two issues.  First, the “express advocacy” standard, which divides fully protected issue ads from communications subject to regulation, has been interpreted by numerous federal circuit courts of appeal to require regulated political communications to use explicit words such as “vote for” or “defeat” when referencing a candidate.  Id. at 45 n.52.  By contrast, one federal circuit court of appeals and many lower courts would decide whether ads constitute “express advocacy” on a case-by-case basis, subjectively viewing the message to decide whether or not it is subject to government regulation. 

     Another sharp judicial disagreement has centered on the degree to which political communications must be “coordinated” between their source and candidates or political parties before they are considered contributions subject to limitation.  Current law caps the coordinated expenditures that political parties may make on behalf of their candidates.  See 2 U.S.C. Sec. 441a(d)(3). 

     The practical side of the legal disagreement over the “express advocacy” and “coordinated” expenditure standards is evidenced by the issue of soft money.  Soft money refers to those funds raised by political parties for use in “party building” activities, such as get-out-the-vote and voter registration drives. 

     Various campaign finance reform groups and the media have accused political parties of skirting the letter of the law by using soft money to directly support candidates, thereby evading contribution limits.  Most often, this occurs through the use of advertisements disguised as issue advocacy that strongly hint, but do not expressly advocate, the election or defeat of a candidate.  Reformers have grasped for innovative ways to limit soft money.

     Passed by the Senate in April 2001, McCain-Feingold is a complex bill designed to close the much-maligned soft money “loophole.”  McCain-Feingold attempts to combat this loophole by revolutionizing FECA in four ways.  First, the bill prohibits labor unions and corporations -- even ideological organizations like the National Rifle Association -- from running any political ad that makes reference to a clearly identifiable candidate within 60 days of a general election or 30 days of a primary election. 

    In so doing, McCain-Feingold undoubtedly runs afoul of Buckley’s “express advocacy” standard by prohibiting ads mentioning, but not necessarily advocating the election or defeat of, a candidate.  The result is a blanket disarmament of the First Amendment right of special interest groups and others to run issue ads linked to politicians during the time when such communications matter the most. 

     Although claiming to prevent special interest groups from disguising direct contributions as unregulated issue ads, this provision instead dismantles the ability of special interest groups to criticize the records of incumbents.  For example, under McCain-Feingold, an opposing special interest group would be prohibited from mentioning “McCain-Feingold” within 60 days of the 2004 election when Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) are up for reelection.     

     Curiously, the 60-day ban on “reference” communications would not apply to the broadcast media, despite the fact that many U.S. media outlets are owned and operated by corporations that would not be allowed such an exemption.  Overall, the gutting of the “express advocacy” standard, and the prohibition of particular political communications disfavored by entrenched incumbents, comports neither with Buckley nor with basic First Amendment principles of free speech and association.

     The second way in which McCain-Feingold attempts to close the soft money loophole is by making it significantly easier for the Federal Election Commission (FEC) to find that “coordination” has occurred between the source of an ad and a candidate or political party.  In the interest of protecting the right to make unlimited independent expenditures, Buckley and current law require some prior “arrangement” to have taken place before an expenditure may be deemed to have been “coordinated.”  Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604, 613-14 (1996) (Colorado I). 

     McCain-Feingold gives the FEC broad discretion in deciding when “coordination” has taken place, allowing even a “general understanding” between an ad source and candidate to qualify.  The bill states that “collaboration” need not consist of an “explicit” agreement.

     Third, for those individuals and PACs not subject to the 60-day “reference” prohibition, McCain-Feingold subjects them to onerous reporting and disclosure requirements.  Specifically, it requires all who spend in excess of $10,000 per year on political communications to disclose spending within 24 hours of deciding to run an ad, and to make public a list of all donors. 

     This requirement infringes upon individuals’ rights of anonymity.  In addition, it puts other candidates on notice before an ad “referencing” them is run.  This provision allows candidates -- particularly well-funded incumbents -- to try to quash the ad or to launch a preemptive strike.  Either way, the ironic result would almost surely be more attack ads.

     For incumbents, perhaps the most self-serving measure was an amendment by Sen. Robert G. Torricelli (D-N.J.), which would compel a broadcaster to sell time to political candidates at the lowest price the broadcaster had charged for that time in the previous 365 days. In addition to offering this “lowest unit charge” (LUC), broadcasters would also have to provide candidates with the most desirable class of time.  S. 27, 107th Cong. Sec. 305 (2001).  Existing law required only that broadcasters charge political candidates the lowest unit charge for the class of time sought at then-current rates.  The amendment would also bar stations from preempting any political spot, and would extend the benefits of the LUC to political parties.

     The Torricelli Amendment would dramatically expand the class of advertisements over which broadcasters are unable to exercise editorial discretion.  By allowing candidates to purchase prime time slots at below-market prices, and by barring stations from preempting any political spot, the amendment would keep broadcasters from exercising their traditional editorial judgment in ad placement.  

     Despite Senate passage, the House struggled with its own version of campaign finance reform: the Shays-Meehan bill, introduced by Rep. Christopher Shays (R-Conn.) and Rep. Martin T. Meehan (D-Mass.).  The House eventually reached a stalemate over the rules of debate that ended all hope of campaign finance legislation reaching President Bush’s desk in 2001.  Although it contained many provisions similar to McCain-Feingold, Shays-Meehan sought to place a dollar limit on soft money available to political parties.  This issue, more than others, led to a host of last-minute amendments by Democrats attempting to save Shays-Meehan from a competing bill that lacked the significant constitutional infirmities of McCain-Feingold.

     In early 2002, however, campaign finance reform legislation got a shot in the arm from the Enron debacle, as its specter of widespread (and potentially embarrassing) campaign contributions energized Congress to take action.  On Feb. 14, 2002, the House passed Shays-Meehan by a vote of 240 to 189, paving the way for a Senate vote on companion legislation.  On March 21 the Senate passed its version of Shays-Meehan by unanimous consent.  With little fanfare, President Bush signed the measure into law on March 27, 2002.  The new law did not include the Torricelli Amendment but did pose the same First Amendment threat to issue advertising found in McCain-Feingold.  

     In June 2001, the Supreme Court handed down a decision over a challenge to the federal law placing limitations on the amount that parties may spend in “coordination” with candidates.  FEC v. Colorado Republican Federal Campaign Committee, 533 U.S. 431 (2001) (Colorado II). 

     Colorado I had established that the FEC could not presume that all expenditures made by a party in support of its candidate were necessarily “coordinated” with that candidate.  Instead, the Court ruled that the FEC should examine whether or not there was an actual “arrangement” between the party and the candidate.  The issue of whether coordinated party expenditure limits were by themselves unconstitutional was left open, clearing the way for Colorado II.

     In Colorado II, the state party argued that any limitation on party-coordinated expenditures was facially unconstitutional because of the high improbability of political parties -- which, it asserted, are designed for the sole purpose of electing candidates -- “corrupting” their own candidates.  Without this government interest, the state party argued, there was no justification for constraining parties’ political expression. 

     The Court disagreed in a 5-to-4 decision, holding that a party’s coordinated expenditures could be restricted to minimize circumvention of FECA’s contribution limits.  In an opinion marked more by its theoretical assertions than by evidence, the Court placed the speech of political parties on the same plane as speech by individuals and interest groups, finding that donors gave to parties with the tacit understanding that favored candidates would benefit. 

     In dissent, Justice Clarence Thomas characterized the Court’s decision as an infringement upon the rights of independent political expression by parties.  He noted that corruption is highly unlikely between a party and its candidates because the two are “inextricably intertwined.” 

     Colorado II illustrates the Court’s new-found willingness to allow abstract assertions to justify restraints upon political communications.  By ignoring extensive evidence that political parties do not corrupt their own candidates, the Court set a dangerous precedent concerning the requisite evidence for sustaining campaign finance regulations.

-- Kristina Osterhaus