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Legacy Content / RULES OF THE GAME

A World Without Rules

Opponents Of Campaign Finance Rules Are Moving On Multiple Fronts

October 26, 2009

For years, First Amendment champions have argued that all campaign finance rules tread on free speech and that American elections should be completely deregulated.

It's a sweeping premise that Congress has long rejected in favor of ever-tighter political money limits. But thanks to a sharp right turn in the judiciary, from the Supreme Court on down, those who favor a world without rules may be about to get their wish.

The Supreme Court appears poised to reverse a century-old ban on direct campaign expenditures by corporations large and small. A federal appeals court has rejected Federal Election Commission rules that restrict spending by non-party political groups, such as so-called 527 organizations -- a move that the FEC is prepared to let stand. And two other cases challenging the existing limits on soft (unregulated) money and on independent campaign expenditures are wending their way up to the Supreme Court.


The upshot could be an outpouring of unregulated, often-undisclosed spending by both big corporations and tax-exempt political organizations, election lawyers say. "The trend is toward deregulation," said former FEC general counsel Lawrence H. Norton, who is of counsel at Womble, Carlyle, Sandridge & Rice. The role of outside political groups, he added, can be expected to "expand dramatically as soon as 2010."

Some reform advocates wonder whether disclosure rules will be the only ones eventually left standing.

Little wonder that Congress' chief reform advocates, Sens. Russell Feingold, D-Wis., and John McCain, R-Ariz., recently took to the Senate floor to defend the campaign finance rules they helped write. In a rare public challenge to the Supreme Court, both warned that if the court rejects longstanding corporate spending limits in its pending Citizens United v. FEC case, as many expect it will, the results could be disastrous.

"The implications of this case are very serious, and the Supreme Court's decision could result in the unraveling of over 100 years of congressional action and judicial precedent with respect to corporate spending in political campaigns," said McCain in an impassioned Oct. 21 floor speech.

Feingold likewise warned that knocking out limits on direct corporate spending "could have a truly calamitous impact on our democracy." He pointed to a 2005 IRS estimate that puts the net worth of U.S. corporations at $23.5 trillion, declaring: "That is quite a war chest that may be soon unleashed on our political system."

The high court could rule in Citizens United as early as Nov. 3, the day after its next oral argument. The case initially challenged only certain disclosure requirements in the 2002 McCain-Feingold law. But the high court requested a reargument to consider the broader question of whether it should reverse its landmark 1990 ruling Austin v. Michigan State Chamber of Commerce. That ruling upheld federal restrictions on direct corporate campaign expenditures, some of which date back to the 1907 Tillman Act. Oral arguments on Sept. 9 portrayed a high court skeptical of regulation.

A reversal in Austin could unleash spending not just by big corporations, but for incorporated organizations of all stripes, including tax-exempt 527 and 501(c)4 groups. Such groups, including such controversial 2004 players as the Swift Boat Veterans for Truth and America Coming Together, have already gotten a green light from the U.S. Court of Appeals for the District of Columbia in its EMILY's List v. FEC ruling.

EMILY's List had challenged FEC regulations, written after massive 527 spending in the 2004 presidential race, to limit political committees that operate non-federal accounts. The FEC required such groups to use regulated (hard) money for at least 50 percent of their generic campaign expenditures and to register and report as political committees when they spent money that was raised by trumpeting their plans to influence elections.

The appeals court not only threw out those rules last month, but called into question the constitutionality of 35-year-old limits on contributions to all political committees that make independent campaign expenditures.

Combined with the EMILY's List decision, a deregulatory Citizens United ruling would amount to a one-two punch knocking down restraints on outside, non-party political groups. Such groups could spend more freely should the high court reverse its earlier Austin ruling, and would face few disclosure rules under EMILY's List.

"The effect of both will be that the independent sector could be potentially freed to spend more heavily in elections," said Tara Malloy, associate counsel at the Campaign Legal Center.

Two other pending cases could relax the rules still further. Republican National Committee v. FEC has challenged the constitutionality of both the McCain-Feingold law's soft money ban and the limits on how much parties may spend in coordination with candidates. And v. FEC has challenged the constitutionality of restrictions on independent campaign spending, even when it expressly advocates a candidate's election or defeat. Both are headed to the high court.

All this has left some reform advocates wondering whether disclosure rules will be the only ones eventually left standing.

"There is a systematic effort to dismantle campaign finance [regulations] being launched by opponents of reform," said Monica Y. Youn, counsel and director of the campaign finance reform project at the Brennan Center for Justice at the New York University School of Law. "And they are doing so thinking that they have a window of opportunity in this court."

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