An excerpt from
The Fallacy of Campaign Finance Reform
Money and Speech
On March 20, 2002, the United States Senate, by a vote of 60 to 40, passed the McCain-Feingold Act, otherwise known as the Bipartisan Campaign Reform Act of 2002. Because the House of Representatives had already passed it, the bill needed only President George W. Bush’s signature to become law. Despite his past promises to the contrary and urgent pleas from leaders of his political party, Bush signed the bill into law on March 27. He described the bill as “flawed,” however, and refused to hold a public ceremony for the signing, a typical ritual for major legislation. The law’s chief sponsor, Senator John McCain (R-AZ), learned about the signing from a White House staff member. Afterwards, Bush left for a three-state fundraising trip for Republicans. Later that same day, opponents filed suit in federal court seeking to have the new law declared unconstitutional. After five years of struggle in the legislature, the fate of the new law shifted to the courts. Near the end of 2003, McCain and his allies would also win in that forum. The partisans of the law rejoiced.
In the pages that follow I argue that the victory of McCain-Feingold—indeed, the sheer existence of almost all federal campaign finance law—is reason for lamentation, not rejoicing. For more than three decades the federal government has widened its ambit over the financing of electoral struggle, making everything from small contributions to advertising for political documentaries a matter of government control and oversight. Today no one should exercise his or her First Amendment right to freedom of speech without advice from counsel, preferably one schooled in the intricacies of campaign finance regulation. In the United States, speech is no longer very free in any sense of the word.
How did we reach this point? As always with restrictions on free speech, political ambition and interests tell part of the story. “Freedom of speech for me, but not for thee” expresses an enduring truth about politics and human life. Public opinion also lends less support for First Amendment rights than we might like to think, particularly for protections related to campaign finance. Money, most people seem to think, has little to do with freedom of speech or other rights enunciated in the Constitution.
Most people are wrong.
You are reading these words right now because of money. The University of Chicago Press has spent tens of thousands of dollars producing this book. If the government restricted that spending, my and their right of freedom of speech would be limited, perhaps to the point of silence. Your right to learn about and consider the ideas in this book would similarly be restricted. Those who donate to the Cato Institute supported my work on this book. If the government restricted or prohibited such contributions, this book might well have not been written. The fact that donors give to the institute to support this and other work concerning public affairs commends the value of liberty and libertarian policies to other citizens. Money talks in many ways in elections as well as in writing about public policy.
Many people would rather not listen. Some Americans would have been happier if this book had never been written, and if written, not published, and if published, not read. Most people support campaign finance “reform” because they believe it will apply to people and ideas they do not like. I myself have illiberal feelings from time to time about speech I find uncongenial. Apparently everyone has such feelings now and then. We have the First Amendment to constrain the consequences of those feelings, thereby lending strength to the better, or at least more liberal, angels of our nature. Unlike most of us, members of Congress can and do act on such illiberal feelings. They also have powerful interests at stake in suppressing spending on politics, a conflict of interest that also evinces the wisdom of the First Amendment. In campaign finance matters, the illiberal feelings and political interests of public officials and many citizens are expressed in the language of high ideals and noble public purposes. To be sure, those high ideals also express noble aspirations and genuine concerns about the integrity of our politics. Such are the complexities of life in a mature polity. But we should not be misled into thinking that restrictions on campaign finance primarily seek noble ideals and a pure politics. We might begin to sort out the ideals and interests at stake by exploring the purposes behind McCain-Feingold.
Purposes of the Law
Public Law 107-155 (McCain-Feingold) runs for five titles and about thirty-five pages in the statute book. Setting aside the qualifications and verbiage, the law tried to change the world in three major ways. It prohibited fundraising by the political parties (so-called soft money) that had previously been legal. Henceforth, the parties would have to raise funds strictly within the contribution limits and disclosure requirements set by federal law in 1974. McCain-Feingold also doubled those contribution limits. Finally, the law sought to expand the ambit of federal election law to include fundraising for certain kinds of broadcast advertising that had previously been exempt from the requirements and restrictions of the law. Forgetting the trees to see the forest, one can say that McCain-Feingold expanded government control over the way Americans fight federal elections.
McCain-Feingold says little about its purposes beyond providing “bipartisan campaign reform.” According to the American Heritage Dictionary, the noun reform means “a change for the better; an improvement” and “correction of evils, abuses, and errors.” The law does not explicitly define the “evils, abuses, and errors” it proposes to correct. Its first title does take as its goal “reduction of special interest influence,” but it does not define those interests. One might infer that they are known by what they have done: giving money legally to the political parties that is not captured by the restrictions of federal election law. So defined, the special interests would be no longer once the law went into effect because they would no longer be legally able to donate soft money. But that is just a guess. McCain-Feingold itself is silent about the identity of the special interests that are the targets of its strictures.
If we look beyond the law to the speeches made in the Senate in its defense, we see that its supporters expected that the new law would accomplish many purposes.
Curbing Special Interests
Today's vote . . . is about curbing the influence of special interests. Now is the time to enact real reform and return the power to the people and restore their faith in the Government. (John McCain)
It is a key purpose of the bill to stop the use of soft money as a means of buying influence and access with Federal officeholders and candidates. Thus, we have established a system of prohibitions and limitations on the ability of Federal officeholders and candidates to raise, spend, and control soft money. (John McCain)
Ending the Appearance of Corruption
When the very people who have legislation before you are coming to you with greater and greater amounts of money for your political campaign, that creates a potential conflict of interest that we simply do not need. It does not look good. The American people think, the average Joe on the street thinks, that with that much money being paid to that few people, they are expecting something for it. (Fred Thompson)
Reducing Some Kinds of Political Advertising
It curbs issue ads, those special interest ads that clearly target particular candidates in an attempt to influence the outcome of an election. (Thomas Daschle)
This bill is about slowing the ad war. It is about calling sham issue ads what they really are. It is about slowing political advertising and making sure the flow of negative ads by outside interest groups does not continue to permeate the airwaves. (Maria Cantwell)
If you cut off the soft money, you're going to see a lot less [attack advertising]. Prohibit unions and corporations [from making soft money contributions] and you will see a lot less of that. If you demand full disclosure for those that pay for those ads, you're going to see a lot less of that. (John McCain)
[It will eliminate] huge contributions that distort the democratic process. (Jean Carnahan)
If we look at the rising tide of money in politics, the influence that money buys and the corrosive effect it has on people's faith in government, the answer, then, is clearly no. Ours is a government “of the people, by the people, and for the people.” It is not a government of, by, and for some of the people. With this vote, we stand on the verge of putting the reigns of government back into the hands of all people. (Thomas Daschle)
This bill . . . will make many needed changes to our campaign finance system and reconnect the electorate with their candidates for federal office. (James Jeffords)
Working with our friends in the House, we have drafted a bill that promotes important first amendment values, promotes enhanced citizen participation in our democracy, is workable, and is carefully crafted to steer clear of asserted constitutional pitfalls. (John McCain)
Increasing Political Equality
It will cleanse our politics and make it possible for the voices of ordinary Americans to be heard. (Jean Carnahan)
[It is the first step to] getting big money out of politics. (Paul Wellstone)
Regaining Control of Campaign Finance
We are moving to get control of a system that is out of control. (Barbara Boxer)
No wonder there is a strong sense that campaigns in this country have spiraled out of control. There is a strong sense that elections are no longer in the hands of individual Americans. As the old saying goes, perception becomes nine tenths of reality. (Olympia Snowe)
Realizing the Public Interest
We in the Congress who have supported this effort know we have acted not out of self-interest, and not for the special interests but for the public interest. This bill is for the American people, for our democracy, and for the future of our country. (Russell Feingold)
Restoring Trust in Government
We are making headway to do something that will reduce the cynicism in this country that will help this body, that will help us individually. (Fred Thompson)
With this vote, we are one giant step closer to a new era of campaign finance, a new era of voter confidence in our government, and a new era of better and stronger democracy. . . . We have to restore the system of regulated contributions. If we don't, the cynicism and distrust and lack of engagement that are already so pervasive will continue to spread. Our citizens are increasingly tuned out from our democratic process. (Charles Schumer)
I have supported campaign finance reform for 18 years and I believe that even legislation that takes only a small step forward is necessary to begin to restore the dwindling faith the average American has in our political system. (John Kerry)
Increasing Electoral Competition
[It] will trade increased hard money limits for the reduction of soft money, a tradeoff that will help challengers reach a threshold credibility when they want to challenge us in these races. (Fred Thompson)
Improving Political Discourse
The currency of politics should be ideas, not dollars. It is time for us to start putting the currency back into circulation. (Thomas Daschle)
I am also pleased the bill includes an amendment that Senator Wyden and I offered to raise the level of discourse in campaign ads. (Susan Collins)
But I would ask the proponents of this argument whether what we are seeking in our democracy is electioneering that has no more depth or substance than a snack food commercial. Despite the ever-increasing sums spent on campaigns, we have not seen an improvement in campaign discourse, issue discussion or voter education. More money does not mean more ideas, more substance or more depth. Instead, it means more of what voters complain about most. More 30-second spots, more negativity and an increasingly longer campaign period. Less money might actually improve the quality of discourse, requiring candidates to more cautiously spend their resources. (John Kerry)
Reducing Spending on Elections
This bill forces all of us—candidates, parties, and groups that seek to influence the outcome of elections—to play by the same rules and raise and spend money in lower amounts. (Maria Cantwell)
A more extended reading of the Congressional Record might reveal more purposes for McCain-Feingold.
The Supreme Court has recognized preventing corruption or the appearance of corruption, providing public information, and preventing the circumvention of campaign finance law as legitimate reasons for restricting freedom of speech. We have reason to doubt that senators truly believed that the law addressed corruption: “Both Democratic and Republican members rejected any suggestion that the bill was required to address actually corrupt conduct, because they agreed that they were not responsible for any. . . . Senator Feingold advised his colleagues that they were required to cite corruption, regardless of whether it existed, to satisfy the demands of the Buckley Court. The diversity of views and rationales was such that, after Senator Specter introduced an amendment with a ‘findings’ section, in order ‘to provide a factual basis to uphold the constitutionality of the statute,’ he subsequently was compelled to withdraw it when agreement proved impossible.” Even putting aside such bad faith, almost all the goals of the law mentioned by the senators are not sufficient to justify McCain-Feingold’s core restrictions on political activity.
The statements by the senators reflect a larger set of political ideals that have informed debates about money in politics for more than a century. At one time or another, however, campaign finance restrictions have been proposed as ways to achieve all of the goals noted above. The senators quoted here were simply stating what proponents have always said would be accomplished by reform.
Political Visions and Campaign Finance
Those who demand restrictions on money in politics—the “reform community”—have dominated (and dominate) most public debates about campaign finance. They contend that money corrupts American democracy by perverting representation, undermining democratic political culture, lowering political discourse, fostering inequality, and reducing electoral competition. Democracy must be protected, they say, from the corruption brought by money and its owners.
Do campaign contributions and spending corrupt American democracy? Corruption implies a failure to live up to some ideal, and determining which ideals are relevant and the proper tradeoff among them depends on “the way the world should be,” a conception that in turn comes from a set of political ideals that might be called a political vision. To understand the dispute over campaign finance, we need to understand the implicit visions of politics that are at stake in that debate.
The struggle is not a case of “we the people” against “they the corrupt,” the nation against its enemies. It is a conflict between two political visions that have marked the development of the United States as a nation. The effort to restrict and “reform campaign finance reflects one part of American political culture, the Progressive vision of politics and its trust in government under the control of an ethical and enlightened elite. The Progressive vision, however, did not inform the founding ideals for the United States, which can be read in the Constitution and the Declaration of Independence and make up what might be called the Madisonian vision of politics. Those ideals may be summed up as natural rights, individual liberty, and limited government. The senators who opposed McCain-Feingold did so in defense of freedom of speech. They favored, in other words, limits on the government’s power to regulate political activity, limits enshrined in the First Amendment to the Constitution.
Much of what follows concerns the Progressive vision, the ideals that have animated and informed the long crusade to restrict money in politics. Understanding that vision helps us understand why certain people care so much about this issue. Moreover, insofar as the unfolding logic of an ideal drives the politics of campaign finance regulation, the Progressive vision can tell us the likely future directions of such laws. But Progressivism is a negation as well as an affirmation. It began by rejecting the Madisonian vision. The Progressive critique of money in politics is thus one aspect of a more general rejection of the ideals of the American founding that began in the late nineteenth century and continues today in the editorial pages of the New York Times and the speeches of Senator John McCain. Perhaps that rejection is justified. Progressives have long argued that private money corrupts politics. We shall see whether their vision has much to do with empirical reality.
These visions of the way the world should be also offer answers to the problem of private interest in politics. Consider two examples of this problem. Consumers receive more for their money if international trade remains free of government control. Because most people are consumers, we can say that the nation has a general interest in free trade and the economic competition it fosters. But not everyone has an interest in free trade; the owners, managers, and workers in firms exposed to international trade would have higher incomes if the government protected them from international competition. Their particular interests run counter to the general interest of consumers in free trade. The problem of interest is not limited to economic issues. Voters have an interest in open and free competition for elected offices; it gives them more choices and ultimately more control over their representatives. Elected officials are like the firms exposed to international trade. Incumbents have an interest in retaining their office and thus in less competition for their seat. Their interests run counter to the general interest of voters.
The Madisonian and the Progressive visions frame the debate about campaign finance by identifying the general interest, the particular interests that threaten it, and what is to be done about that particularity. For the past three decades, Progressives have driven this debate. Their vision of politics says that economic elites—variously defined as “Big Money,” “the rich” or “corporate America”—compose a particular interest that corrupts American government, thereby preventing a redistribution of wealth that would realize the Progressive dream of an egalitarian nation. The symbol and means of that corruption is private spending on elections and politics. For Progressives government is both the victim of these private interests and the solution to their dangerous particularity. If government heavily regulates or eliminates private interests (and thus private spending) in politics, the common interest in egalitarian economic outcomes will be vindicated. Progressives see government as a benevolent force that overcomes the threat posed by private interests fostered by the market economy. In later chapters I examine the Progressive assumption that the arrow of corruption runs from the economy to government.
Madisonians think government is the problem. They identify the general interest with liberty and hence with natural rights recognized by an empowered and limited government. The greatest threat to that general interest is a predatory majority bent on abrogating a minority’s right to life, liberty, or property. The founders designed the U.S. Constitution to protect that general interest against that threat. But they did not look to government to impose a substantive notion of the general interest by suppressing particular interests. Instead, Madison and others proposed a political structure that would set interests into conflict, thereby limiting government and preserving liberty. The First Amendment reflects that strategy: particular interests have a right to be heard in the national debate. The Madisonian vision suggests another problematic particular interest: the government itself. Instead of assuming that only economic elites threaten democracy, we might also consider the danger posed by those who have political power.
Campaign finance laws regulate and restrict the use of money in elections and in politics. They therefore affect the outcomes of elections. This suggests that campaign finance laws, like other regulations and government actions, provide private benefits to those who pass the law and to the coalition they represent. But campaign finance laws pose a special problem. They are enacted by members of Congress who participate in elections governed by these laws. They matter much more to members than to the rest of us. In the words of former congressman Guy Vander Jagt (R-MI), “When you are dealing with campaign [finance] reform, you’re talking about one of the most precious things a Congressman deals with. You’re talking about his political life or death.” Members of Congress thus have every reason to pass campaign finance laws that increase the likelihood that they will be reelected and that their party will hold (or continue to hold) a majority in the legislature. Such regulation is more often about politics than about principle, a truth that holds for citizens as well as political activists. Americans are far more likely to support restrictions on campaign finance for groups they do not like than for groups they favor. In fact, such restrictions serve two kinds of interests.
The formal name of McCain-Feingold is the Bipartisan Campaign Reform Act of 2002. The term bipartisan is an interesting choice by the sponsors of the law. It is as if they are responding to an implicit assumption that all laws governing campaign finance seek to advance the electoral interests of one party or the other. By including the term in the title of the law, the sponsors are saying: “You might think all campaign finance laws pursue partisan interests, but this one does not.” Of course, the sponsors of the legislation included two Republicans and two Democrats. Appearances notwithstanding, other evidence indicates that their assertion is not persuasive. Partisanship guided the final votes on BCRA.
About 80 percent of Republicans in the House of Representatives and in the Senate voted against McCain-Feingold. More than 90 percent of Democrats in both chambers voted for the bill. In the Senate, two Democratic senators (of fifty) voted against it. If the vote on McCain-Feingold was not partisan, no roll call in Congress can be called partisan.
In recent history, Republicans have generally raised more money than have Democrats. Republicans have also relied more heavily on money to fight elections. In contrast, Democrats can count on unpaid labor provided by members of their coalition and favorable free coverage by a largely sympathetic national media. Neither volunteers nor the media have been seriously regulated by campaign finance laws. By reducing a Republican advantage while ignoring a Democratic strength, campaign finance law has generally biased elections toward the Democrats. As we shall see, the 1974 Federal Election Campaign Act—the foundation of campaign finance regulation—responded to certain threats to the Democratic majority that then controlled Congress.
That said, we should keep in mind that campaign finance law seeks partisan (and not simply Democratic) purposes. Because the restrictions inhibit electoral challenges to incumbents, we should expect that any party with a majority will be tempted to pass such regulations. As Bradley Smith, a former chair of Federal Election Commission, has said, "One of the problems with campaign finance laws is that they are not nonpartisan, good government. . . . They are tools, partisan weapons to be used to attack the political power on the other side, and we should expect it to happen." It is possible, perhaps even probable, that the future will see Republicans using campaign finance restrictions for their own ends.
Amid all the paeans to democracy and the public interest in the Senate debates about McCain-Feingold, Senator Barbara Boxer offered an odd and revealing endorsement of the law while noting a shortcoming: “We will not be hit by these last-minute ads with unregulated soft money at the end, to which we will be unable to respond. . . . We still have a big problem. One thing got knocked out of the bill, which was ensuring that the lowest rates would be available to us on television.” What did Boxer mean in saying “we” and “us”? The people in question could not be the American people in general. They have not been hit by “these last-minute ads,” nor are they eligible for the lowest advertising rates on television. Very few Americans buy broadcast advertising. Hence, it is not the American people that on March 20, 2001, still had “a big problem.” The people in question—the ones who are hit by last-minute ads, buy ad time, and still have a big problem—were the senators listening to Boxer. Judging by her remark, the party of incumbent senators and, more generally, members of Congress clearly understand that campaign finance law affects their interests in reelection. If Americans can spend money freely on political ads, incumbents may get hit by last-minute attacks on their record or character. Such advertising might even cost an incumbent his or her seat in Congress. As Boxer suggests, incumbents can also control the price of the advertising they need to fight for reelection. No doubt last-minute attack ads and costly advertising are problems for incumbent members of Congress. After all, Boxer confirms the threat, and we have no reason to doubt her expertise. We might well doubt that such ads and relatively higher prices for television time are big problems for most Americans.
In other words, campaign finance laws are like a game in which one participant writes the rules and employs the referees (Congress created and oversees the Federal Election Commission). Like the official story, this alternative focuses on interests and corruption. The interests that threaten the public good, however, are those of public officials, not private actors. Elected officials, not businesses or labor unions, threaten democracy. The arrow of corruption runs from the government to civil society. Chapters 7 and 8 of this book flesh out my alternative story by recounting how the powers that be fashioned campaign finance law to serve their ends.
The conflict of visions in campaign finance struggles pits Progressives against Madisonians. The conflict of interests, on the other hand, set insiders against outsiders. From 1969 to 1994, Progressive ideals and insider interests were largely in accord; anything that helped incumbents win reelection helped preserve Democratic control of Congress, which itself advanced the Progressive cause, at least in light of the alternative. Conversely, restrictions on campaign finance harmed challenges to sitting members of Congress, thereby damaging the Republican minority’s aspiration to take charge. Republicans thus might have learned the importance of limits on government control of money in politics. Since 1994, as we shall see, ideals have become detached from interests: Democrats have become outsiders, the natural targets of state control over speech. Republicans have gained power and, with it, the temptation to use government to protect their position in control of Congress. To be sure, Democrats on the outside have remained committed to “reforms” that may endanger rather than advance their partisan interests. Republicans also have in practice both affirmed and denied the free speech ideals they learned to love in opposition. In the politics of campaign finance, like most politics, interests are fundamental, but ideals shape what individuals find to be in their interest, if only for reasons of coherence and electoral credibility over time. Both parties are less sure now that their ideals accord with their interests in campaign finance struggles. Only incumbents can be sure that increased regulation serves their fundamental interest in electoral survival.
The pages that follow contest what is almost always taken for granted in discussions of campaign finance. Above all, I refuse to write about these issues with the loaded and biased terms that shape and perhaps decide these debates. The proponents of restrictions on campaign finance have manipulated language to advance their political agenda. Campaign finance reform, the most common term used in the debates, means “restricting money in politics,” especially contributions to public officials. As we saw above, reform means “a change for the better; an improvement” and “correction of evils, abuses, and errors.” By getting everyone to talk about campaign finance reform, the reformers win the debates by definition rather than by argument because restrictions on campaign finance are identified with abolishing abuses and errors. Apart from the title, I have tried to avoid the word reform in this book when referring to such restrictions. I believe we should assess existing or proposed restrictions on money in politics on their merits, which is to say, according to their logical coherence or empirical validity. We ought not to bias that investigation and analysis by calling such restrictions reform. In fact, I believe that what we take to be reform in ordinary language is an abuse of political power. Supporting that belief, however, requires evidence and arguments. It is not enough to simply say some magic words—reform, corruption, special interests, Big Money, corporate,—to make a case about public policy. Politics, despite all evidence to the contrary, deserves to be more serious than that.
My doubts about campaign finance reform go beyond the corruption of language. I do not believe that campaign contributions have corrupted representation or American political culture in any significant way. I do not believe that Congress creates campaign finance laws to attain the public interest or the common good. I do not think such regulations are in the interests of most Americans. I do not believe that increased regulation of campaign finance will realize the Progressive vision of politics. I do not believe that Congress has the power to systematically restrict and regulate the funding of political activity. If it had that power, I do not believe that the laws we have governing campaign finance would be good public policy. In a world of true believers in campaign finance restrictions, count me an agnostic on the path to atheism. I do profess what used to be called the liberal faith that the freedom to speak and to struggle supports individual liberty and limited government. The chapters that follow give the reasons for my doubts and for my faith.