Will the new law really diminish the amount of money spent in elections? Will there be some unintended consequences? What will the courts say in response to the legal challenges filed?

by Angelo Carfagna

About Our

Bruce Larson is an assistant professor of political science. He specializes in the American electoral process and teaches a wide variety of courses including Congress, Political Parties, Campaigns and Elections and Social Science Research Methods. He is co-editor of Dangerous Democracy? The Battle Over Ballot Initiatives in America and co-author of The Party’s Just Begun: Shaping Political Parties for America’s Future, second edition. He also is a survey analyst for Fairleigh Dickinson University’s PublicMind, the University polling institute. He joined FDU in 1999.

Bruce Peabody is assistant professor of political science and coordinates the University’s Prelaw and Legal Studies program. Now in his second year at FDU, his teaching and research interests include American political institutions, constitutional law and criminal justice. He has been published in numerous venues including Presidential Studies Quarterly, the University of Pennsylvania Journal of Constitutional Law, Constitutional Commentary and the Minnesota Law Review.

Together, Larson and Peabody are currently writing a political science textbook that combines standard instructional material about Congress, the presidency, etc., with interviews with members of those institutions to “give students a sense of what it’s actually like to be in Congress or to be a judge.” They plan on publication in 2003.

Beyond Campaign Finance Reform

Hard Times for Soft Money?

Some say it is landmark legislation, heralded as a blow against campaign corruption; others condemn it as an infringement on constitutional rights. Undeniably, this year’s campaign finance bill arouses different reactions and strong emotions. Proponents see positive changes in how politicians and parties fund their campaigns. But critics have appeared on both sides: those who feel this effort curtails liberties and those who believe more radical changes are needed.

So what should we expect as a result of these new laws? Two constitutional and election scholars, assistant professors of political science Bruce Larson and Bruce Peabody, who also coordinates the University’s Prelaw and Legal Studies program, help us examine the impact of this year’s celebrated change in our campaign finance system.

The Devil in the Details

Many people sense a problem when they hear the staggering sums spent on running for political office. The total price of the 2000 congressional and presidential elections was almost $3 billion, up from $2.2 billion in 1996 and $1.8 billion in 1992. Critics are quick to argue that the growing amount of money needed for campaigns — much of it dedicated to television ads and political consultants — is corrupting politics. From that premise arose a national movement to alter the campaign finance system.

The system in place since the 1970s strictly limits contributions from individuals to $1,000 per candidate, per election. Political action committees (PACs) — the fund-raising arms of interest groups, labor unions and corporations — may contribute $5,000 per candidate, per election. Unions and corporations cannot give directly from their treasuries, but they can give through a PAC. The 1970s law also allowed political parties to spend limited amounts on behalf of their candidates.

But the parties and interest groups discovered they could raise unlimited funds — known as “soft money” — from individuals and corporations and use the funds for campaigns, particularly on advertising (so long as the ads didn’t expressly tell people how to vote).

Campaign finance reform attempts to close this loophole. The most prominent bill and ultimately the successful one was the McCain-Feingold bill, named for its primary sponsors, Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.).

McCain-Feingold bans the national party committees from raising so-called “soft money,” restricts individuals and interest groups from using soft money to finance ads during election periods and doubles the amount of money a person can give directly to a candidate to $2,000.

The soft-money prohibition was particularly important to reform advocates. According to Common Cause, a group that supports McCain-Feingold, the parties raised more than $457 million from special interests in 2000, roughly double what they raised in 1996, when soft-money contributions began to soar.

As McCain was quick to point out, “With the stroke of the president’s pen, we will eliminate hundreds of millions of dollars of unregulated soft money that has caused Americans to question the integrity of their elected representatives.”

The television advertising restriction means that special interest groups cannot air advertisements that refer to a federal candidate 60 days before an election (30 days before a primary), unless the ads are paid with hard money (money given under the contribution limit provision). They can still, though, spend money freely before the time window or on ads that don’t refer to specific candidates.

This provision especially is being criticized by those on both the left and right, who see complications with the First Amendment. The leading Senate critic, Sen. Mitch McConnell (R-Ky.), said, “We have allowed a few powerful editorial pages to prod us into infringing the First Amendment rights of everyone but them,” adding that the new laws also will harm the political parties.

The Likely Impact

So what happens now? Well, for starters, the law doesn’t take effect until after the 2002 elections. Then there’s the suspense over the legal challenges facing particular provisions of the bill. But all things considered, say FDU political science professors Peabody and Larson, this effort will not significantly alter the political landscape. “This is not going to change things radically,” Larson says. “It perhaps will shift the channels of money but it’s not going to change who is mobilizing the money.”

“Politics has become so expensive that it takes a lot of money even to be defeated.”
—Will Rogers

He elaborates, “Elections still are going to cost a lot of money. Under the old rules, a party chair could go to a CEO and say, ‘I need a million bucks.’ Well, now you can’t do that, but you still need to raise that million. Who are you going to go to? It’s going to be somebody who knows a lot of people who can afford to contribute. It’s going to be that same CEO.”

So, if not much is changing, why all the fuss? “That’s a good question,” ponders Peabody. “This was made out to be a much bigger issue than it is, partly because of the Enron scandal, but there’s something deeper: an American cultural hunger for reform and a real sense that you can strengthen citizen attachments to governing institutions by cleaning up the election process.”

Despite the fact that many people say they want campaign finance reform, Larson notes that public opinion polls show it isn’t one of the top concerns compared to things like taxes, education or the economy. “This reform effort has overshadowed publicity that should be given to other issues,” he says.

But surely the elimination of soft money and its link to a perception of corruption is a desirable thing. Right? “These large contributions do give people access to legislators,” Larson says, “but I don’t think they necessarily corrupt individual members.” Members must answer to their constituents back home, he notes. He also reminds us that soft money goes to parties, not to individual candidates, so there is a buffer. “I think large contributions give people access but I’m not so sure that they directly influence policy.”

Peabody agrees that the ultimate question is whether the absence of these contributions will lead to different legislative outcomes. He adds another consideration — the integrity of the process, which is supposedly enhanced by this bill. “Reformers believe that the appearance of reform will change public attitudes and strengthen ties between the electorate and public officials. I’m skeptical about that claim as well.”

Larson says, “Regardless of what the actual influence of soft money is, people think it is influential and that in itself is dangerous. But will this bill enhance public support for the U.S. government? It’s unclear that it will.”

While some feel that the new law may not improve anything, others see the possibility of it doing harm. Larson says there is the danger that money used to fund elections might not be as visible as it is now. “The one redeeming factor about soft money is that those who donated it had to report it, and that information was readily available. This is going to drive money underground.”

“Few men have virtue enough to withstand the highest bidder.”
—George Washington

Or, to use a political expression cited by Larson, “Political money is like rushing water, you dam it up one place and it runs somewhere else.”

Advocates of campaign reform complain that legislators have to spend an inordinate amount of time raising funds rather than serving their constituents. As Peabody says, “I always think of the reality that elected officials have to increasingly go out of town for fund raising. What does that time spent fund raising replace?”

But, Larson notes, the time needed to raise funds could increase. Without unlimited soft money available to parties (which spend it on behalf of candidates), candidates need to raise more money under restrictive contribution limits. “On the one hand we want people to raise contributions in small amounts, but on the other hand we don’t want people to spend all their time fund raising. We can’t have it both ways.”

Is Money Speech?

Constitutional issues relating to campaign finance begin with the landmark 1976 Supreme Court decision in Buckley v. Valeo. The court upheld the limits on contributions on the grounds that they are appropriate legislative weapons against improper influence of large contributions. On the other hand, expenditure limits — what a candidate or his/her supporters could shell out — were invalidated as restrictions on political expression and in violation of the First Amendment.

“The critical distinction,” Peabody notes, “is between expenditures by candidates and contributions. Individuals can spend as much of their own or their family’s money because that isn’t viewed as corrupting. But the court said you can limit the kind of contributions individuals can make because that might establish a quid pro quo connection between campaign contributions and elected officials’ behavior.”

In essence, the court ruled and has continued to rule that money is equivalent to speech and therefore can only be regulated under narrow circumstances. (The American Civil Liberties Union is an unlikely ally with McConnell in this fight.) “But you could also argue,” Larson counters, “that money isn’t speech but instead helps produce speech.” Or, as Peabody phrases it, “Money is a loudspeaker.”

Because of the Buckley decision, the stage was set for expenditures to go through the roof, while contribution limits were defined. Larson says, “One person accurately said fund raising in the post-Buckley era is like trying to fill up a swimming pool with a tablespoon.” Without the soft money loophole, it might be akin to filling a small lake.

In an important decision in 2000, the Supreme Court confirmed the distinction made in Buckley and upheld limits on contributions. It also opened the door slightly regarding expenditures, with four justices concluding that “neither Buckley nor the First Amendment should be read as an inflexible bar to spending limits.”

In essence, the court ruled and has continued to rule that money is equivalent to speech and therefore can only be regulated under narrow circum-

Then, in 2001, the Supreme Court ruled that the limitations on what a political party can spend in coordination with its candidates are constitutional. Because of the legal precedents, Larson and Peabody both predict the ban on soft money will be upheld by the courts, however, both are convinced the restrictions on television ads will be struck down.

Larson says, “Over the years, courts have resisted any moves to broaden the definition of an election ad in a way that would allow Congress to regulate it.”

Interestingly, he adds, “that will leave us with a system in which interest groups are free to spend as much money as they want on so-called issue-advocacy ads while the parties are basically sidelined.”

The potential damage caused by this legislation to the political parties is something that concerns both Peabody and Larson, who argue that strong parties are integral to our democratic process. “This bill takes money away from the parties and does little to replace it,” Larson says.

There is still a small loophole left for soft-money contributions to state and local committees but these are capped at $10,000 per election. Proponents argue that these measures will force parties to focus more on grass roots politics and become less reliant on money and direction from Washington.

But there’s also the danger, Peabody says, that the parties will find ways around these rules. For example, says Peabody “some argue that you will see the creeping in of ‘shadow parties’ — interest groups with code names that let you know the party with which they are affiliated.” This might effectively circumvent the soft money ban by allowing millions of dollars to flow into advocacy ads sponsored by these entities.

On the Shelf

Many proponents of campaign finance reform have stated that this is just the beginning and that much more is needed to clean up the process. Larson and Peabody both mention serious issues the bill has failed to address and provisions that could prove more significant to leveling the playing field.

Noting that the high cost of television and radio commercials has contributed greatly to skyrocketing campaign expenses, Larson says, “I absolutely believe we should provide free media time for candidates. The government leases the airwaves to the broadcast outlets, and they should be expected to provide something in return.”

Peabody adds that such a provision could improve the prospects for third parties and candidates outside the mainstream. In their book The Party’s Just Begun, Larson and co-author Larry Sabato call for all television and radio stations to provide one hour of free time to the major political parties. At the very least, he says, stations should be required to charge parties the lowest unit rates.

“There is a lot of money being thrown into judicial elections from corporations who have interests and issues in the court decisions,” says Peabody. “That’s more important than ... legislative and executive positions.”

Larson adds, however, that incumbents are not likely to support such measures because it would threaten their natural advantages and they would have a hard time taking on the broadcast interests.

Peabody says a major issue ignored in most campaign reform discussions is the subject of judicial elections. “You would think we would start with the institution that is supposed to be the least political,” he says. “Nationally, we’re talking about millions of dollars being raised in these campaigns,” he says. Larson agrees, “There is a lot of money being thrown into judicial elections from corporations who have interests and issues in the court decisions. That’s more important than campaign finance reform for legislative and executive positions.”

Peabody and Larson also agree that hard-money limits need to be raised even further. “People have to spend money on campaigns and realistically you need to allow them to raise the kind of money they need in a legal way,” Larson says. “If you don’t they’ll find loopholes.”

On the Horizon?

If McCain-Feingold’s impact is limited and if it raises as many questions as it answers, then is something more radical necessary? Indeed, once again, the biggest advocate for this measure admits elected representatives will still depend on wealthy donors. “People always said, ‘The bill doesn’t go far enough’ and they were right,” Sen. Feingold says. “My ideal system would be public financing.”

Larson is supportive of the idea. “Most Western democracies offer some form of public financing. The problem is that the public likes everything about public financing but the price tag. And it’s too bad because to some extent it addresses many of the problems of financing campaigns.”

While the Supreme Court has said Congress can’t pass laws limiting what candidates can spend on their campaigns, public funds could be allocated to those who agree to curbs on spending. There is a system of public financing in place for presidential elections. Those who accept the public grants must adhere to spending limits.

As Larson summarizes, “Public financing levels the field for incumbents and challengers, eliminates private donations and limits the total dollars spent.” Larson also suggests providing public funding to parties.

But is public financing viable? Unfortunately, says Larson, “every time it comes up, you have politicians talking about welfare for politicians.” But, he notes, “you could argue that we already have public funding for national elections, but only for incumbents.” For example, he says, incumbents can send out mass mailings about all the things they are doing, and the taxpayers pay for it. “There are numerous advantages incumbents have and much of what they do at public expense ends up benefiting their campaigns.”

Several states, including Maine, Vermont, Arizona and Massachu-
setts, have adopted “Clean Money/Clean Election” laws in which public funding is provided for legislative elections.

Several states, including Maine, Vermont, Arizona and Massachusetts, have adopted “Clean Money/Clean Elections” laws in which public funding is provided for legislative elections. Larson says advocates of these plans claim they will: 1) free candidates from having to raise private money, 2) remove private money from the system and 3) help level the playing field for incumbents and challengers.” In a recent study, Larson looked at the first effort in Maine, the 2000 legislative elections. He says that at least regarding the third claim, the results didn’t prove successful. “I found that the elections were actually less competitive than they were in 1996. Now it’s just one election and there was some confusion about how the plan worked, but at least so far it hasn’t done much in terms of leveling the playing field.”

He is quick to point out, however, that even though electoral competition didn’t increase in Maine, “you still had a significant portion of state legislators who didn’t take private money and who didn’t have to spend time raising money, so it did fare well on those counts.”

“I’d love to see public funding but I’m not sure that by itself it would make elections more competitive,” adds Larson. “There are more things than money that drive electoral competition.”

Peabody agrees that further study of the state public-funding programs needs to be done. “Certainly, this is something that works at the presidential level, and it needs to be considered for congressional elections as well.” “I’m all for the states testing this concept,” Larson adds, “but then research needs to be done and Congress has to see if the results are beneficial.” The McCain-Feingold bill actually calls for a study of Clean Elections laws in Arizona and Maine. “It’s encouraging that the legislation includes this type of study,” Peabody says, adding that another issue is raised by such a study. “To what extent is government policy shaped by social science and analytical observations?”

Even if the results are positive, though, incumbents will still have to cast the deciding votes on a system that could diminish their advantage over challengers. Larson reminds us that the ultimate reason McCain-Feingold passed is that “incumbents believe they can win under these rules.” Business as usual? Stay tuned.

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