FEC Commissioner Blasts Campaign Finance Reform

November 14, 2003
Smith said new federal campaign laws may hurt third parties who are traditionally reliant on a few wealthy donors.

In Muleshoe, Tex., an Al Gore supporter who owned a furniture and appliance store painted an empty box with reasons why residents should vote for Gore. Other men in the town decided to put up their own pro-Bush sign and, supported by many in the community, hired a sign painter to decorate a huge board and parked it across the street. The grass-roots effort came to a grinding halt when one man familiar with election law pointed out that the sign didn't include the required disclaimer about who paid for the sign and whether it followed federal election laws. "Politicking was properly brought to heel," FEC Commissioner Bradley Smith told students at an event sponsored by the Federalist Society Nov. 11. Although the Texans' efforts were subject to laws passed in the 1970s, the McCain-Feingold Act — also called the Bipartisan Campaign Reform Act of 2002 (BCRA) — promises to add to the regulations and headaches of politicians and First Amendment watchdogs nationwide, Smith said.

Smith said federal election laws, in particular BCRA, which put an end to undocumented soft-money contributions to national parties, violate First Amendment rights to the freedom of speech and freedom of association — and won't stop special-interest organizations anyway, since "shadow groups" have emerged to raise money not beholden to the new election laws. Smith advocated eliminating limits on political donations to campaigns and parties and suggested that disclosure laws be loosened as well.

Smith told a story of a friend who met with some local party officials, who mentioned they raised money by selling cotton candy at the county fair. What they were doing was probably banned under BCRA—accepting political donations from children is illegal, a measure lawmakers enacted because they feared parents would try to get around new regulations by donating in their children's names.

Smith also cited New Jersey Congressman Michael Ferguson's controversial campaign as an example of the extreme nature of election laws, even before BCRA. Ferguson's parents had set up a trust fund to trigger distribution of their inheritance to their children based on a set of conditions. When he became eligible to tap the fund, Ferguson promptly loaned money to his campaign. After a three-year legal battle, he agreed to pay a $210,000 fine for his illegal contribution. Federal election law prohibits individuals from contributing more than $25,000 a year to campaigns, capping donations to individual campaigns at $1,000. Smith said the money was "not from some nefarious special interest," as the law was designed to prevent, but from his deceased parents. Smith said he has even heard of law students losing interest in helping campaigns because of FEC regulations. "Who wants to be filing election reports to the Federal Election Commission when you're a student society?"

Smith pointed out that political giving — what he called a form of free speech and the freedom to associate — was more regulated than topless dancing, flag burning, and pornography. "It seems like we're starting from the most protected speech," he said. "For most of our nation's history, up until the late 1890s, there were no laws that governed elections."

The last major campaign reform legislation before BCRA, the Federal Election Campaign Act of 1971 (FECA), was challenged in the 1976 Supreme Court case Buckley v. Valeo. The Supreme Court acknowledged that that the laws infringed on speech and the freedom to associate, but upheld many of FECA's limitations because there was a compelling governmental interest to promote equality. Smith said the idea that government can silence some in order to enhance the speech of others was foreign to the ideals of the Constitution. The government is not allowed to, for example, limit Rush Limbaugh to 15 minutes of airtime per week instead of his usual 15 hours a week so other voices can be heard. "I think you realize that the First Amendment doesn't allow us to silence this guy to ensure the rest of us get enough time," he said.

The second compelling interest the Court identified in Buckley was the need to prevent corruption or the appearance of corruption in elections. The Court determined that some contributions could be limited, but not others. While there are limits on soliciting (since solicitations lead to potential corruption), "the Court said you can't limit the candidate's spending." The Court also ruled that independent contributions were acceptable, since the opportunity for corruption is lost in independent giving. For example, the Court ruled you don't have to disclose who paid for an ad when the ad does not explicitly advocate the election or defeat of a federal candidate.

But since disclosure rules were upheld for direct campaign donations, the federal government basically has a database of citizens' political activity. "If you heard that that memo was floating around the White House, would you feel comfortable?" Smith asked.

As a legacy of the FECA regulations, it now takes longer to run for election and raise money for a campaign — more phone calls, more fundraising dinners, more stump speeches. Smith said politicians did realize they could run "issue ads" not beholden to FECA reporting requirements using soft money — ads like "'Congressman Joe Jones wants to poison your well water … call Congressman Jones and tell him you want him to stop.'" (Smith noted that during the 2000 campaign Bush was accused of putting arsenic in water.)

"Buckley for all its faults did allow a lot of free speech to go on," he said. But BCRA bans all soft-money contributions to national political parties — all contributions from individuals and corporations now have limits and are subject to disclosure requirements. To keep state parties from becoming a loophole, BCRA limits state parties' ability to make ads promoting or advocating the defeat of a federal candidate, and limits state parties' ability to register voters and conduct get-out-the-vote efforts with money not reported according to FECA, Smith said. To prevent interest groups from filling in the gap left by national and state parties, BCRA established regulations requiring special-interest ads running within 60 days of a federal election to follow FECA reporting laws as well.

Kentucky Sen. Mitch McConnell is challenging BCRA in a case now before the Supreme Court, McConnell v. FEC, heard by the Court in September in a special (and lengthy) summer session. "The Court is very likely to uphold all of BRCA," because of the compelling standard of corruption or appearance of corruption, Smith said. He noted that political scientists who have studied the effects of special-interest group donations on legislative voting note that personal interests and constituent desires influence voting far more. He said that even pro-reform groups have given up arguing that actual corruption is a problem and focus entirely on the appearance of corruption, which "no one even knows what this means." He speculated that Americans think politicians are corrupt because of the salesman or deal-making aspects of the job, or because they think politicians employ special-interest money for their own use. "In any case the 'appearance of corruption' is almost a blank check" to regulate elections, because there will always be people who think politicians are corrupt, and there will always be a connection between how politicians vote and who donates money to them because of their common interests, he said.

"The McCain-Feingold Bill is not going to solve the preceding problems," Smith said. "People want to participate in politics." He pointed out problems on the horizon which will probably spur more regulation. The Washington Post has already published editorials demanding to know more about the rolodex-gifted people who raise money for campaigns, since their role is now more important with parties' access to soft money denied. There have also been complaints about shadow groups, such as Moveon.org, which ostensibly promotes democratic and liberal values — but "everybody knows that they want to defeat George Bush."

"Some of these shadow groups are going to take over the functions of parties" because they aren't subject to BCRA regulations concerning soft money, he said. Experienced party politicos are running these groups because of their past connections and fund-raising abilities. "It would be very surprising if some guy came out of nowhere and had the ability to raise millions of dollars.

"Does anybody doubt that once they have that information [about the fundraisers] the drumbeat will beat again?" Because we haven't defined the problem we're trying to solve with election laws, "the march of regulation can just keep going.

"I think instead we need to look at the First Amendment as a considered response to government interests." He cited Madison 's writings on factions in the Federalist Papers.

With current regulations, "we're trying to limit freedom, not create checks on federal government," as Madison suggested. Smith said the more he examines the problem, the more he thinks "really the Framers are smarter than we gave them credit for."

BCRA may hurt third parties, who often rely on a few big donors. He recalled the 1967 campaign of Eugene McCarthy, who ran as an anti-war candidate and was supported by several wealthy families.

Smith urged that we raise the limits on disclosure. Currently, if organizations can prove their members will be harassed if their donations are made public, they do not have to disclose names. He called it "ironic" that the Socialist Party, dedicated to overthrowing the government, doesn't have to disclose its donors. Disclosure laws also "fall hardest on grass-roots activity," because treasurers of local parties are personally liable for errors in their reports, and face substantial fines if they do not correctly account for the names and addresses of people who donate over $250. After a bad experience with FECA or BCRA laws, "people say, 'what I've learned is, I never want to be involved in politics again.'"

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