Inside the Campaign Finance Battle: Court Testimony on the New Reforms

Introduction

Introduction Congress last year enacted the Bipartisan Campaign Reform Act of 2002, the first major revision of federal campaign finance law in a generation. The sponsors and supporters of this legislation describe the statute as a long overdue and urgently needed package of reforms designed to restore the system of campaign finance envisioned by Congress when it adopted the Federal Election Campaign Act (FECA) in the 1970s. Its purpose, they argue, is to repair egregious tears in the regulatory fabric that rendered utterly ineffective long-standing prohibitions on corporate and union treasury financing of federal elections and disclosure requirements for federal electioneering. The new law thus represents a necessary response to the changes that have taken place since the FECA was established and seeks to preserve the integrity of the political process by safeguarding it from the corruptive influence of unregulated political contributions. Opponents portray the law as much more ambitious and ominous. In their view, the reform act represents nothing less than a wholesale assault on protected First Amendment speech and rights of political association. They claim that the law’s major restrictions would prohibit or discourage many individuals and organized groups from participating in federal elections , which would reduce the amount of information available to the electorate and serve to further protect incumbents, who are already greatly advantaged in the electoral process. Opponents also claim that the law violates fundamental principles of federalism, since it regulates state party committees, as well as some activities between national, state, and local 1 01 1583-8 intro 3/25/03 12:00 PM Page 1 party committees and thus interferes in the operations and associational efforts of party organizations. In short, they argue, the reform act unconstitutionally limits political speech and participation and thereby undermines the vitality of the political process. Behind these heated arguments, both sides implicitly acknowledge that the campaign finance system has changed dramatically over the past decade. In recent election cycles, national political parties, including the congressional party campaign committees, have become increasingly dependent on the rapidly rising sums of money received in unlimited donations—commonly known as soft money—from corporations, unions, and individuals. Prominent elected officials, including presidents and Senate and House party leaders, have become actively involved in raising these unregulated funds, often soliciting donors who have interests before Congress or federal administrative agencies. State parties have been more involved in activities that affect federal elections, especially activities that channel soft dollars into electioneering efforts designed to influence the outcome of federal races. Moreover, a substantial portion of the soft money raised by national and state party committees is being used to finance the broadcast of “issue advertisements,” which are targeted on the constituencies of specific candidates and crafted to influence voter behavior . Interest groups are also turning to issue advertising as a campaign weapon of choice, since these ads can be financed with unregulated funds and are not subject to public disclosure. This option has provided a diverse array of groups and organizations, including tax-exempt organizations and ad hoc political committees, with a means of becoming more involved in federal elections. As a result, the financial system envisioned by the FECA, which primarily consisted of limited and fully disclosed funds principally controlled by candidates, party committees, and political action committees , has been replaced by a much more extensive and opaque system of funding whose participants and flows of money were not anticipated when the post-Watergate regulatory structure was erected. Proponents and opponents of the reform act took away very different lessons from these developments. Proponents saw the collapse of a regulatory structure designed to limit corruption or the appearance of corruption . They viewed the often unintended consequences of the FECA as a testament to the need for stronger regulations and more effective and vigilant means of enforcement. They also recognized the need to consider possible constitutional challenges and potential opportunities for circumventing regulations when framing reforms. A principal lesson advocates of reform drew from the experience of the FECA was that any new statute 2 introduction 01 1583-8 intro 3/25/03 12:00 PM Page 2 produced by Congress should be less susceptible to the types of subterfuge that had undermined the efficacy of previous regulatory efforts. They did not want to pass a new law only to see it quickly succumb to the fate suffered by the FECA. New regulations were thus needed not only to...