Terry Vaughn
School of Information
The University of Texas at Austin
August 11, 2006
1. Introduction
2. Some Historical Background on Campaign Finance Law
3. What's Wrong with the Politics of Campaign Finance Reform
4. Conclusion
On March 27, 2006, a collective sigh of relief could be heard 'round the "blogosphere" after the Federal Election Commission (FEC) voted to approve its final regulations concerning political activity on the Internet. What was at stake? The exercise of our First Amendment right of free speech in its most crucial context: participation in the democratic process.
Ever since the emergence of the political blog genre, a diverse range of commentators – self-styled pundits and professional journalists alike – have been plying their trade with increasing effect. Just to name a few of their successes in the last few years, bloggers have pointed out countless inaccuracies, bias and outright fabrications in the media, highlighted the ever-increasing pork-barrel spending approved by Congress, and exposed a Senator's off-handed endorsement of the 1948 Dixiecrat pro-segregation, anti-civil rights platform. Like wired versions of Revolutionary era political pamphlets (on steroids), blogs have managed to sway public opinion, mobilize voters, and make or break the careers of those who come under their scrutiny.
So when the FEC voted unanimously to extend to bloggers the same broad exemption from federal government regulation that the established print and broadcast media enjoy, the blogosphere resounded with cheers. "Victory for speech online," wrote Mike Krempasky, co-founder of the popular conservative blog, RedState. And on Daily Kos Adam Bonin declared, "The netroots have won." But glee was not just contained within the blogosphere; even FEC Commissioner Ellen Weintraub joined in self-congratulation, declaring "It's a win, win, win" for campaigns, individuals and the "Internet community."
Well, hosanna! The FEC says we can blog 'til our heart's content!
Now wait a minute. Under what authority does the FEC exercise control over my constitutional rights? The First Amendment language, "Congress shall make no law . . . abridging the freedom of speech, or of the press," is unambiguous; for its original architects, its purpose was to protect political speech – particularly in the form of dissent. That government could restrict the speech of some – which is exactly what campaign finance laws do – would have been viewed as unconstitutional tyranny for men like James Madison, who explicitly warned in Federalist 10, political remedies that aim to cure "the mischief of factions" are "worse than the disease" itself.
So just how did we get here? How ever did politicians foster the notion that they could impinge upon our political speech? What legislation brought all this about? What are the consequences? What can be done to reverse this trend? This essay will endeavor to answer these questions. It will first offer some historical background on the movement that has threatened political speech, namely, campaign finance reform. Second, it will address some of the common misperceptions behind and unintended consequences of the legislation that has grown out of this movement. Although it will not delve into the Byzantine legal and regulatory minutia, it will provide the basic aims of the laws that govern campaign finance. Finally, it will explore the erroneous assumptions and unintended consequences of campaign finance reform.
Over the last century, the public has grown increasingly disquieted by concerns that special interest groups, wealthy individuals and corporations exercise disproportionate influence over politicians though large campaign contributions. Political scandals have only reinforced the public's perception that there's "too much money in politics." Out of this angst, the campaign finance reform movement was born.
In 1907, Congress passed the Tillman Act, which banned national banks and corporations from contributing to campaigns for federal office [1]. Over the next six decades, the federal government passed several more laws requiring the disclosure of contributions and the filing of reports, but these laws were largely ineffective and were commonly ignored [2]. Viewed on whole, these laws were designed to lower the cost of campaigning, reduce the influence of special interests in both the legislative and electoral processes, and open up the political system to change [3].
In spite of sustained efforts by Congress to curtail contributions, most campaigns continued to be funded by small groups of donors willing to make large contributions. For example, in 1968, insurance executive Clement Stone contributed $2.8 million to the presidential campaign of Richard Nixon [4]. Out of increasing concern over the corrupting influence of money and the increasing costs of television advertisements, reform advocates pushed for much more heavy-handed legislation. By 1971, Congress consolidated earlier reform legislation in the Federal Election Campaign Act (FECA), eliminating loopholes in previous law, instituting more stringent disclosure requirements for federal candidates, political parties and political action committees, and enacting penalties for noncompliance.
At the time of FECA, the Internet as we know it did not exist. Congress did not forsee that a small network of computers linking universities and government research centers – known as ARPANET – would flourish into the Internet of today. Understandably, the original FECA provisions did not consider their possible application to the decentralized, abundant, and inexpensive nature of the Internet. The laws were designed for traditional broadcast and print media, which are generally centralized, scarce, and expensive.
Alarmed by continued large sum campaign contributions, allegations of serious financial abuses in the 1972 Presidential campaign, and along with the perceived need to "do something" in the wake of the Watergate scandal, Congress passed the 1974 FECA amendments, the toughest and most thorough federal campaign regulation measures ever passed [6]. These amendments set limits on contributions by individuals, political parties and PACs. It also established the Federal Election Commission (FEC) "to disclose campaign finance information, to enforce the provisions of the law such as the limits and prohibitions on contributions, and to oversee the public funding of Presidential elections" [7].
The 1974 amendments were almost immediately challenged in court by diverse groups of plaintiffs. Subsequently in Buckley v. Valeo (1976), the Supreme Court struck down on First Amendment grounds the limits on independent spending, limits on a candidate's spending of personal funds, and mandatory campaign spending ceilings. Thus, the comprehensive scheme envisioned in the 1974 amendments was never fully implemented, but the remaining provisions continue to stand to this day as key elements of today’s campaign finance regulatory system.
Congress made further amendments in 1979 to streamline the disclosure process and expand the role of political parties. The 1979 amendments gave rise to a host of unintended consequences, however, allowing political donors to circumvent contribution limits by donating to a political committee rather than a single candidate. In addition, political committees did not have to disclose from whom they received contributions, as did political parties and candidates. These types of fund-raising and contributions made to committees rather than candidates or parties came to be known as "soft money" [8].
In the last decade, Congress has not relented in exerting increased control over campaign finance operations. Fueled by public perception of a corrupt political process awash in money where candidates are beholden to special interests, Congress passed the next set of major FECA amendments, the Bipartisan Campaign Reform Act of 2002 (BCRA). In addition to banning soft money contributions to national political parties, BCRA prohibited the use of soft money to pay for "issue advertisements" sponsored by noncandidate organizations and individuals in the 60 days prior to a general election, or 30 days prior to a primary election.
Ever since the emergence of the Internet as a viable communications medium, the question has arisen periodically whether it should be subject to federal campaign finance law. In it's shortsightedness, BCRA failed to adequately address activities on the Internet. Initially, the FEC chose to exclude Internet communications from BCRA enforcement, but a U.S. District Court struck down the FEC’s decision in Shays/Meehan v. FEC (2004), sending the issue back to the commission for further rulemaking. The ruling, and the FEC's decision not to appeal it, ignited passions across the Internet and fostered fear among political bloggers. What, for a blogger, counted as a campaign contribution: a blog entry that endorsed or attacked a candidate; a simple hyperlink to a campaign website? Bradley Smith, a campaign finance reform opponent and FEC commissioner, whipped these well-founded worries into a blog frenzy when he ominously warned of an impending crackdown on blogging. Ultimately, after thousands of emails from bloggers and citizen activists and two days of hearings, the commission voted unanimously to exempt independent individual and group Internet activity, except for paid advertising. Further, the commission ruled that bloggers will not have to disclose election-related payments they receive, nor will they have to post disclaimers about such payments [9].
Although the blogs might appear to be saved, the FEC rules affirmatively indicate that the Internet is subject to regulation. Reform-minded members or the House or Senate could also bring suit against the FEC on grounds that front blogs by corporations and party-funded "astroturf" blogs constitute soft money contributions. Considering the abject failure of reform law to curtail campaign spending, legislators may soon feel compelled to further amend FECA. In fact, the co-sponsor of BCRA, Senator Russ Feingold, has indicated that the most recent legislation is just the beginning, stating that he plans "to continue to work to pass even broader reforms." Even more threatening are the authoritarians on the political left, who believe that the current regulation regime is inadequate. They are pushing for the overturn of Buckley v. Valeo in an effort to reinstate publicly funded campaigns – all in the name of "political equality." So as long as the campaign finance reform movement refuses to acknowledge its failures and continues to focus on further regulation aimed at closing "loopholes" in the law, there will be much more history to come.
But there is hope. Representative Jeb Hensarling of Texas has sponsored the Online Freedom of Speech Act, which would amend FECA "to exclude communications over the Internet from the definition of public communication." If signed into law, it would guarantee freedom of speech on the Internet.
The finest opportunity ever given to the world was thrown
away
because the passion of equality made vain the hope for freedom.
~ Lord Acton ~
The conflict over campaign finance reform arises out of two competing democratic values: freedom of expression and equality. The central theme of reformist argumentation is that modern campaigns have been corrupted by "big money" in an unprecedented manner. They insist that candidates can and have been "bought" by "special interests." Further, they argue that those with greater financing have a "louder voice" in the political process than those with lesser means. Consequently, the public is deprived of a greater diversity of political thought. If the government would just "level the playing field" by placing strict limitations on the funding and operation of campaigns, say the reformists, we can finally realize "political equality" where all Americans have an equal say in our political process.
The problem with the reformist argument is that it makes the case for a notioriously ambiguous notion of "political equality" while ignoring one of our most fundamental liberties, freedom to express our thoughts, regardless of how critical they may be of our government. Blind to the centuries of philosophical thought weighing liberty against equality, today's reformers place a premium on the latest equality fad at the expense of free speech. The framers of our Constitution knew all too well that no matter how it was packaged or promoted, the pursuit of social equality is a hopeless ideal; the only true equality man can provide is equal treatment under the law. Or in the words of Friedrich Hayek:
Equality of the general rules of law and conduct, however, is the only kind of equality conducive to liberty and the only equality which we can secure without destroying liberty. Not only has liberty nothing to do with any other sort of equality, but it is even bound to produce inequality in many respects [10].
These inequalities are most evident in the disproportionately large amounts of money spent by "special interest groups." The original supporters of campaign finance reform feared that well-financed political action groups denied the one person, one vote principle. Their agenda was to broaden the diversity of groups that can have an input on the election process and to "return our electoral process to the people" [11]. Current campaign finance reformers share this goal. Before the passage of BCRA, Senator John McCain argued that "the big money people are sitting in the front row with a megaphone and average citizens are sitting back whispering." To combat this injustice, BCRA was expressly designed to “reduce the influence of the special interests." But the effectiveness of special interest groups like Moveon.org and Swift Boat Veterans for Truth in the 2004 presidential election raises serious doubts about the efficacy of such legislation.
Bent on preventing the corruption that stems from the demands of fundraising, election law supporters also argue that large contributors are able to buy influence with legislators. Common Cause, the leading campaign finance reform organization, states that it “represents the unified voice of the people against corruption in government and big money special interests” [12]. Campaign finance reform sponsor Senator Russ Feingold believes that because of loopholes, the problem of undue influence persists today. “Interests with big money to contribute to candidates or spend on ad campaigns have the inside track to access in Congress,” declared the Senator in July of 2000. The author of this essay has but one question for the Senator: who grants those interests such access?
Reformers insist that money is in and of itself evil and inevitably corrupts the system. Legislators are all too willing to accept this premise as it diverts focus and accountability away from their own actions. But money, for better or worse, is a critical form of political currency. Without money, candidates cannot organize a campaign or buy advertisements. If a group lacks sufficient funds, its message stands little chance of being heard above the cacophonous media coverage surrounding our political process. Further, it is increasingly costly to reach out to an ever-growing population. Given these conditions, money is essential for political speech; as such, and particularly within our free market economy, the two are inextricably linked. Every effort to communicate publicly can be traced to some expenditure. This linkage was affirmed in Buckley v. Valeo, in which the Supreme Court found that campaign expenditure limitations imposed "direct and substantial restraints on the quantity of political speech."
Looking beyond the Court's finding, it appears that the complex and voluminous rules that consitute campaign finance law have a chilling effect on the political speech of individuals and grassroots organizations. With its extensive legal ramifications and mandatory reporting requirements, campaign finance legislation has in fact worked in favor of well-funded incumbents and special interests. Within the current legal framework, the costs of compliance are extensive, requiring expert legal counsel and a staff to make filings with the FEC. The Center for Democracy and Technology reports:
An uninitiated speaker wanting to comply with federal law is confronted with: 234 pages of statutes from the U.S. Code; 516 pages of FEC regulations from the Code of Federal Regulations; 702 pages of “explanations and justifications” of the FEC regulations; more than 1300 FEC Advisory Opinions supplementing the regulations; [and] more than 350 federal court decisions concerning the FEC’s regulations.
If the current FEC exemption on Internet speech were to be struck down, it is almost certain that most bloggers might just choose to forego online political speech altogether, rather than risk federal prosecution. Only well-funded campaigns and advocacy groups could afford to comply with the myriad federal regulations. In diametric opposition to one of its central aims, campaign finance law favors the interests of a wealthy few, while providing a compelling incentive for grassroots organizations and individuals not to speak out.
Adhering to a romantic vision of "political equality," the campaign finance reform movement poses a clear and present threat to our liberty. Instead of promoting a more democratic system, reform law defies its own rationale and inhibits greater political participation while further entrenching incumbents, favoring "special interests" and maintaining the status quo. It's no surprise then that Congress has mounted a low intensity assault on political speech for more than a century.
In the last election, the Internet had a new and significant impact on the presidential campaign. An untold number of individuals and groups launched political websites, some supporting candidates and others encouraging voter registration and detailing candidate positions. Bloggers provided a diverse alternative voice to mainstream media, often taking the lead in breaking controversial stories and offering otherwise unheard points of view.
By lowering the financial barriers to entry into national politics and political commentary, the Internet has energized political activists and given rise to new voices and forms of news and commentary. On the one hand, it has served as an organizing and fundraising tool, not only for challengers but also for incumbents, becoming an integral part of the campaign infrastructure. At the same time, it has served as a medium for bloggers and other independent publishers. It clearly demonstrates its extraordinary value as a forum for alternative voices, democratic discourse and independent political speech.
Robust political activity by ordinary citizens on the Internet and the money they raised from small donors in the election process helped to strengthen democracy. Public policy should therefore be supportive of those activities and of the platform which made it possible: the Internet. Although it is largely immune to regulation at this point in time, it is uncertain whether the Internet will continue to provide new opportunities for independent reporting, commentary, and political activism, or whether unconstitutional campaign finance laws will undermine the medium’s power as a First Amendment forum for individual political advocacy.
Many commentators have called for the repeal of BCRA and much of FECA. For this author to make such sweeping proposals would be to go beyond the scope of this essay, but passage of the Online Freedom of Speech Act would be a step in the right direction. A truly democratic campaign system would take power out of Washington and return it to its owners: the American people.