New Evidence on the Costs of Mandating Disclosure
Over the next few years, most arguments about campaign finance regulation will be about extending mandated disclosure to some of the independent spending freed up by the Citizens United decision.
Writing in the Wall Street Journal, James L. Huffman offers a unique perspective on mandated disclosure: he was a candidate for the U.S. Senate last year. He argues that mandated disclosure means incumbents know who funded the campaigns of their challengers. Incumbents do not have to actually threaten anyone; disclosure plus circumstances means a cautious businessperson will stay clear of electoral participation. Huffman also claims that some people who might have contributed to his campaign heard from associates of his opponent who said contributing to Huffman might be a bad idea.
We have heard such testimony before about the malign effects of disclosure. George Soros said some potential contributors to his efforts to unseat former President George W. Bush stayed on the sidelines because of concerns about publicity (see James V. Grimaldi and Thomas B. Edsall, “Super Rich Step Into Political Vacuum; McCain-Feingold Paved Way for 527s” The Washington Post, October 17, 2004). Now we have a Senate candidate citing “dozens” of examples of a similar chilling of political speech.
Some might think incumbent protection is no longer a problem since 69 House seats changed hands in 2010 (and a similar number in the two previous House elections). If you think that, please recall that the House has 435 seats, all of which could potentially change hands. Yes, the advantages of incumbency have become somewhat smaller in recent years. But those advantages remain significant, and disclosure does increase the risk of contributing to a challenger, especially when the odds are overwhelming that those now in office will win re-election.
What should be done? Huffman notes that many Americans consider mandated disclosure to be all benefits and no costs. We might begin by gaining a more realistic view of the disclosure calculus. That more realistic view should include the costs of disclosure including lower participation and the ways mandated disclosure make public debates more irrational. At a minimum, existing disclosure thresholds should be dramatically raised. Forcing disclosure of the names of those who contribute less than $1,000 serves no public purpose.
We also should not mandate disclosure of the names of those who support speech independently of candidates and the parties. The only justification for such a mandate would be educating the voters. In other words, voters are thought to look for cues about who to vote for by considering who spends money on speech favoring a candidate. Does that seem plausible? If not, forced disclosure of independent spenders would not be constitutional. If Congress nonetheless enacts disclosure for independent spending, the U.S. Supreme Court should rigorously consider both the end served by such laws and the relationship between the means of disclosure to that end. Does disclosure of independent spending really educate any voters? If so, what about the costs to free speech identified by Professor Huffman? Once we set aside conventional pieties, does forcing people to tell government officials about their political activities really offer much to nation? Or does such coercion do little more than indulge those who equate politics with the pleasures of preaching hatred of those they despise?
Last year I wrote a Cato policy analysis of the justifications for disclosure after Citizens United.
Campaign Finance: Don’t Confuse Me with the Evidence
Today POLITICO Arena asks:
Is it worrisome that Americans spend on political advocacy – determining who should make and administer the laws – much less than they spend on potato chips, $7.1 billion a year?
My response:
For decades among modern liberals it has been an article of faith — devoid of evidence — that money corrupts politics and that there is too much money in politics — “unconscionable” amounts, we’ve been told, repeatedly. Thus the crusade to restrict and regulate in exquisite detail every aspect of campaign finance, beginning in earnest with the Federal Election Campaign Act of 1971 and culminating with the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold). Yet after every new restriction along that tortuous course, ever more money has flowed into our political campaigns. But for all that, they’re no more corrupt than they’ve ever been. In fact, the best evidence of the fool’s errand that campaign finance “reform” has been all along is found in comparisons between states with little and states with extensive campaign finance regulations: When it comes to corruption, there’s not a dime’s worth of difference between the regulated and the unregulated states.
But all those regulations have accomplished two things that should give liberals pause. First, by virtue of their sheer complexity and cost, they pose a serious impediment to those who would challenge incumbents, who already have a major leg up on reelection. And second, because we cannot limit private campaign contributions and expenditures altogether, thanks to the First Amendment, the regulations have led to money being diverted away from candidates and parties and into other, often unknown, hands, over which the candidates and parties have no control — by design. As a result, we see candidates today having to disavow messages underwritten by people who would otherwise, but for the regulations, have given directly to the candidate or the party. But that outcome was absolutely predictable – and was predicted. Two good reasons to end this campaign finance regulation folly and let individuals and organizations contribute and spend as they wish. What are we afraid of, freedom?
The Primary Purpose of McCain-Feingold Revealed
Kenneth Vogel offers an unexpected insight into the nature of campaign finance regulation:
“[Wisconsin Senator Russell] Feingold faces an uphill battle against a novice opponent, who, perhaps ironically, has been the beneficiary of hundreds of thousands of dollars in ads attacking Feingold that would have been prohibited had McCain-Feingold remained intact.”
In other words, if Feingold’s campaign finance law had not proven to be contrary to the U.S. Constitution, he might well not be facing “an uphill battle” to serve a fourth term in Washington. The political speech that is causing Feingold problems would have been prohibited in that situation. But the First Amendment favors speech and not the re-election needs of senators.
Oddly, Vogel writes as if the freed political speech (“ads attacking Feingold”) is a bug rather than a feature of current law.
The Principle behind Campaign Finance Regulation
Democratic House leaders apparently have reached a compromise that may bring the DISCLOSE Act to a vote. The National Rifle Association, a group that enjoys some support from House Democrats, objected to the bill’s disclosure provisions. DISCLOSE’s authors have now agreed to exempt “organizations that have more than 1 million members, have been in existence for more than 10 years, have members in all 50 states, and raise 15 percent or less of their funds from corporations.” The National Rifle Association qualifies for the exemption. But you knew that.
I wonder what principle of campaign finance regulation justifies this exemption? Earlier the authors of DISCLOSE said the American people deserve to know who is trying to influence elections. Now it would seem that voters only need information about relatively small, young, geographically-confined organizations that receive more than 15 percent of their money from corporations.
There is no principle at stake here. The NRA had enough support to stop the DISCLOSE Act. House leaders had to compromise by cutting the NRA a deal, a special exemption from the proposed law. The deal does show, if nothing else, that House Democrats are really worried about new money entering the fall campaign. They are willing to go a long way — even as far as helping the NRA — to make sure other speech funded by businesses and groups is not heard.
Finally, imagine you are a member of a group not exempted from DISCLOSE. You have been treated unequally by Congress. The courts have said Congress can treat you unequally if they show that this exemption for the NRA has a rational relationship to an important government purpose. How does exempting older, bigger, more widespread groups with less than fifteen percent corporate funding help Americans cast an informed vote? Put another way, if the NRA deserves an exemption, doesn’t everyone?
RIP Max Palevsky, a Man Whose Vast Wealth Helped Stop a War
“Max Palevsky, a pioneer in the computer industry and a founder of the computer-chip giant Intel who used his fortune to back Democratic presidential candidates and to amass an important collection of American Arts and Crafts furniture, died on Wednesday at his home in Beverly Hills, Calif. He was 85,” reports the New York Times.
Palevsky used his vast wealth to influence politics, especially to oppose the Vietnam War. He was one of the liberal mega-givers who made the Eugene McCarthy campaign possible in 1968, along with such people as Stanley Sheinbaum, Stewart Mott, and Martin Peretz. Describing the McCarthy campaign as “shoestring,” Christopher Hitchens added:
When one says “shoestring,” by the way, one is forced to recall that the whole operation was essentially underwritten by a few ill-sorted but well-off individuals including, notably, Max Palevsky, Blair Clark, and Martin Peretz. Today’s campaign-finance laws—or “reforms” as they are always described—make a similar undertaking extremely difficult, if not impossible.
Hitchens may be a bit misty-eyed in his memory of a “shoestring” campaign. Time reported that “In 1968 Clean Gene led the list of preconvention spenders with an $11 million outlay.” But he’s right about the campaign finance laws. An outsider candidate with a mission, like McCarthy in 1968 or George McGovern in 1972 (to whom Palevsky is said to have given $320,000), is not allowed to jump-start his campaign with a few big contributions from donors who share his vision.
Ironically, Palevsky later donated $1 million to a California initiative that would have limited campaign contributions. It is not recorded whether Palevsky specifically wished that he and his friends had been forbidden to make the McCarthy and McGovern campaigns possible. But he did make them happen, and the restrictions on such outsider campaigns are one of the big costs of our current campaign finance laws.
Cross-posted at Politico Arena.
Poll Suggests Caution on Citizens United Response
The Center for Competitive Politics has just published a new poll measuring public views about the recent Citizens United decision. The poll provides a lot of interesting information.
About one in five said they were aware of the decision. Fully 60 percent of respondents said they were not aware of the case, and it is fair to say that almost all of the other 20 percent who responded “don’t know” or refused to answer were also poorly informed about it.
Congress is now trying to write and enact legislation to overcome the strictures imposed on campaign finance regulation by the Citizens United decision. Members cite surveys supporting such legislation as a justification for the new restrictions.
At best, however, public opinion is immature on this issue. Congress should deliberate and give the public some time to foster a more informed view of this decision. Deliberation is all the more necessary since we are talking about First Amendment rights in this case. Congress itself may wish to know more about the likely consequences of intervening in complex matters like corporate governance.
The CCP poll is worth reading in detail. I don’t remember a poll that asks so many objective and interesting questions about First Amendment issues.
The Unrelenting Battle over Campaign Finance
Following on the heels of November’s gubernatorial elections in Virginia and New Jersey, the loss of Ted Kennedy’s Senate seat in Massachusetts two weeks ago was a devastating blow to Democratic Party hopes. But it must have been especially devastating to President Obama, who promised an adoring University of Missouri crowd, just before he was elected, that “We are five days away from fundamentally transforming the United States of America.” Yet it would appear, judging from the unrelenting commentary and from the president’s own behavior last week, that those losses pale in comparison to the government’s loss before the Supreme Court two days after the polls closed in Massachusetts. For 11 days now the wailing over the Court’s Citizens United decision has not ceased. Indeed, campaign finance regulation, intimately connected to incumbency protection, is a bedrock principle of modern liberalism.
Exhibit A is E.J. Dionne’s column today in the Washington Post — his second in a week on the subject. Last week, railing against the “reckless decision by Chief Justice John Roberts’s Supreme Court and the greed of the nation’s financial barons,” he charged the Court with “an astonishing display of judicial arrogance, overreach and unjustified activism” and urged “a new populist-progressive alliance” to demand “legislation to turn back the Supreme Court’s effort to undermine American democracy” — including a bill prohibiting political spending by corporations who hire lobbyists, no less.
Today, however, Dionne has last Wednesday’s unseemly episode of Obama rebuking a silent Supreme Court to work with. And, like the immortal Daniel Schorr on yesterday’s NPR Sunday Morning, he puts all the blame on Justice Samuel Alito for seeming to mouth, silently, “Not true” when Obama, before all assembled and a watching nation, tendentiously misstated the holding in Citizens United. But Dionne doesn’t stop there, of course. No, he thanks Alito. You see, “Alito’s inability to restrain himself” brought a long-ignored truth to the nation: “The Supreme Court is now dominated by a highly politicized conservative majority intent on working its will, even if that means ignoring precedents and the wishes of the elected branches of government.” Likening Obama’s behavior to President Reagan’s writing a 1983 article criticizing Roe v. Wade — I didn’t make that up – Dionne chastises conservatives for their double standard: “Reagan had every right to say what he did. But why do conservatives deny the same right to Obama?” Where does one begin?
Turning finally to “the specifics of Obama’s indictment,” Dionne tries to defend the president’s misstatements, but unfortunately the precision ordinarily expected of such a wordsmith seems to have deserted him. Citing Obama’s claim that the Court had reversed “a century of law” and also opened “the floodgates for special interests — including foreign corporations,” Dionne writes that ”Obama was not simply referring to court precedents but also to the 1907 Tillman Act, which banned corporate money in electoral campaigns.” That’s not what the Tillman Act did: It banned direct corporate contributions to campaigns. Only in 1947 were independent campaign expenditures by corporations (and unions) banned — and more clearly so only in 1990, which is the ban the Court overturned. Moreover, pace Obama, foreign corporations are still specifically banned from contributing anything of value “in connection with a Federal, State or local election.” Thus, in claiming, without more, ”that the ruling opens a loophole for domestic corporations under foreign control to make unlimited campaign expenditures,” Dionne seems simply to be passing along what he’s read or heard from others. Nothing in the Court’s opinion warrants that conclusion.
But it’s Dionne’s larger claim that most demands an answer — that an “activist” Roberts Court, exercising “raw judicial power,” is ”ignoring precedents and the wishes of the elected branches of government.” That’s hardly the definition of “activism.” That’s what the Court should be doing, where it’s warranted by the Constitution, whether the Court is defending the rights of blacks to attend unsegregated schools or of gays to sexual freedom or of corporate owners, the shareholders, to engage in political speech through their corporation consistent with their articles of incorporation and by-laws. The claim that corporations aren’t people is a red herring. Corporate owners are people, and their right to speak can take many forms. Fortunately, we have a First Amendment, which protects not only corporate owners but E.J. himself from all but the error of his ways.
[Cross-posted at Politico Arena]
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