To appreciate the tortured path of the efforts to control the power of money in American politics from the passage of the Bipartisan Campaign Reform Act in 2002 to January’s Supreme Court ruling in Citizens United v. Federal Election Commission, which reversed much of that law and undermined a few others, we must first understand the problem that reformers were trying to solve. They were not trying to make mortal the eternal problem of “money in politics”, or even “big money in politics.” Rather, they were responding to a specific set of changed circumstances: In the second half of the 1990s, the evolution of political communications and a sharply increased flow of money into elections had led to the failure of the existing regulatory regime.
By the elections of 1996 and 1998, the regulatory structure created in the post-Watergate Federal Election Campaign Act, as modified by the Supreme Court’s 1974 decision in Buckley v. Valeo, had essentially broken down. Contribution limits of $1,000, combined with the escalating cost of campaigns run almost entirely via television advertisements, made elections dreary affairs. Incumbents could build up massive war chests with the help of their parties, lobbyists and outside groups, while most challengers failed, or were simply deterred from trying, for lack of money. After significant turnover in the House of Representatives in both 1992 and the Gingrich Revolution of 1994, re-election rates for congressional incumbents shot back up to 98 percent later in the decade. The Republican challenger to President Clinton in 1996, Bob Dole, never got out of the starting gate thanks in large part to a huge advertising push by the incumbent in late 1995, while Dole was still trying to sew up his party’s nomination.
What made all this possible was the phenomenon of “soft money”—funds raised by political party committees from corporations, labor unions and wealthy individuals. Soft money itself wasn’t new; the innovation was in using the money not to fill party coffers but to run ads supporting or opposing specific candidates. As President Clinton told a room full of donors in 1995, “We realized that we could run these ads through the Democratic Party, which meant that we could raise money in twenty and fifty and hundred thousand dollar lots, and we didn’t have to do it all in thousand dollars.”
With this innovation, the total amount of soft money in campaigns more than tripled, from $86 million in 1992 to $262 million in 1996. So this was no garden-variety loophole, but a huge breach that enabled corporate money and, to a lesser extent, money from unions and wealthy individuals to find its way back into the system, creating all sorts of new possibilities for corruption. It created, in effect, an alternative campaign finance system nearly as large as the regulated system under which candidates raised money. As the constraints in the regulated, “ordinary” system got tighter—inflation made it harder to build a competitive campaign on $1,000 contributions—soft money produced formidable advantages for incumbents and the handful of challengers who the major parties decided to support in targeted congressional races.
The “soft money” era coincided with a period of public detachment from politics. The 1996 presidential election was the only race in U.S. history in which voter participation fell below 50 percent. The campaigns that were financed that year with soft money proceeded on the assumption that non-voters were not worth chasing after. Consultants focused all their resources on swaying “swing voters”—the small percentage of voters, many of them not actively interested in politics, who were likely to vote but whose loyalties were not well defined. (There is a mathematical logic to such campaigns: Switching a vote is twice as valuable as drawing a new voter from the ranks of the disengaged.) Those voters, passively glued to “Wheel of Fortune” or some other electronic anesthetic, could be moved by a drumbeat of ads with dark music and portentous voiceovers accusing a candidate of some nefarious act, like raising taxes, condoning child molestation or, in a popular refrain at the time, being “liberal, liberal, liberal.” If attack ads made voters suspicious of both sides, and thus discouraged them from voting, then that was often to the attacker’s benefit.
Up to that point, mainstream reform efforts, led by the 1970s good-government group Common Cause, had focused on reducing the influence of political action committees (PACs), but that modest loophole was trivial compared to the late 1990s flood of soft money. The legislative solution was easy to devise: Restore limits on political committees like the Republican and Democratic National Committees; prohibit politicians from actively raising money for these soft money accounts; and, most agreed, raise the limits in the hard-money system from $1,000 to enable candidates to raise what they needed without resorting to evasion. With the support of Senators John McCain and Russ Feingold, and momentum from the Enron scandal, legislation along these lines began to move forward in 2001.
All of these alterations to the system could be pursued without raising any constitutional questions, but lesser legal problems arose in profusion. The Federal Election Commission (FEC) formally regulated the major party political committees, but what if money began to move outside the formal system through new and ostensibly independent political committees? Organizations known as 527s, which registered with the Internal Revenue Service as if they were political committees but were not covered by the FEC, could easily assume the role played by the parties in the heyday of soft money, and by 2000 they already had. And any kind of organization, including a for-profit corporation, could run ads if it did not cross the line of “express advocacy”—that is, if the ads did not contain the magic words “vote for” or “elect” or “defeat” so-and-so. While seeming to concern issues and not candidates, these messages left no doubt about their real purpose. Obviously, an ad scheduled to run just before election day that concluded, “Call Congressman Gimcrack and ask him why he raised taxes more than 700 times”, was not actually about taxes, and the action it wished to inspire was not actually a phone call. Indeed, research showed that most voters could not readily distinguish so-called issue ads from standard campaign ads.
With the rise of faux issue ads, soft money prohibitions alone might have simply pushed money further outside the regulated system. To prevent that, members of Congress and outside advocates spent several years devising a solution that became the Snowe-Jeffords Amendment to the Bipartisan Campaign Reform Act of 2002. Under Snowe-Jeffords, ads that mentioned a candidate for Federal office in the weeks before an election, even if they did not expressly advocate a vote for or against a candidate, would be treated as campaign ads and had to be financed with regulated hard money. Most of the subsequent legal drama over campaign finance law has stemmed from this single provision.
President George W. Bush signed the Bipartisan Campaign Reform Act (BCRA) on March 27, 2002. The BCRA stands out as a remarkable legislative achievement: It was the one and only significant piece of legislation to pass into law in the eight-year Bush Administration over the President’s objections and with a majority of Republicans in opposition. And it is the only one of John McCain’s reputation-making “maverick” positions to result in actual legislation. But the moment the BCRA passed marked not the triumph of the loophole-closing approach to controlling money in politics; thanks to the Supreme Court, it was instead the beginning of its desultory end.
The Court seemed to approve the law in 2003 with McConnell v. FEC, but that ruling actually kicked off the process of erosion that culminated in the Citizens United decision. Triggered by a movie attacking Hillary Clinton, Citizens United gave the Court’s new majority an opportunity to reject even the BCRA’s provisions on express advocacy (vote for or against) by corporations. The film should never even have been subject to the law, but rather than ruling on statutory grounds in favor of the organization that made it, the Court took the opportunity to throw out not only what remained of the BCRA’s provisions on independent spending but also those of an earlier ruling, Austin v. Michigan (1990), that allowed states to bar independent spending by corporations. And by defining “corruption”—the only basis on which the Court has permitted the regulation of money in politics—as narrowly as possible to mean just quid pro quo exchanges of votes for contributions, the Court raised the possibility that it might even reject limits on direct corporate contributions to candidates.
Meanwhile, back in 2003, the BCRA’s soft-money ban gained credibility in Congress and in the editorial pages of the Washington Post and the New York Times as the only plausible response to the soft-money fad of the late 1990s. As it did, however, other approaches based on entirely different assumptions took hold among activists and were tested in the states. Some were based on limits: Groups affiliated with the Nader-founded Public Interest Research Group supported $100 limits on campaign contributions, which, when put to the test in Portland, Oregon, had the effect of really driving money outside the regulated system. Some academics were interested in pushing the Supreme Court to reverse its decision in Buckley v. Valeo and to allow government to limit total spending on campaigns, as well as on individual contributions. If it was the squeeze between arms-race spending and low contribution limits that discouraged most candidates and pushed others to evasion, then it seemed logical that one way to deal with the problem was to end the arms race, if necessary by legal fiat.
When the contribution-limit approach proved futile and the campaign-limit approach ran up against the Court’s reading of the First Amendment, the approaches that took off were those based on replacing private money with full public financing of campaigns, or using public money to boost the value of small contributions. While mainstream reformers scoffed that public financing would never attract political support, Maine enacted full public financing (sometimes called “Clean Money” or “Clean Elections”) by referendum in 1996, Arizona followed, and Connecticut put a similar system into place, by an act of the legislature, in 2004. North Carolina enacted the system for its judicial elections. Meanwhile, New York City, which in the late 1980s had adopted a system using public funds to match small contributions, expanded its program to provide a four-dollar match on every dollar contributed in amounts under $250—an enormous shift in incentives to seek small donors—and in 2001 and subsequent citywide elections, almost all candidates participated. Minnesota improved its own matching system, which couples a tax credit for small contributions with a match, essentially creating a voucher system similar to the “Patriot Dollars” advocated by Yale law professor Bruce Ackerman, in which every voter is given a fixed amount of money to contribute to candidates.
With the exception of Massachusetts (where a referendum passed in 1998 but the legislature refused to fund it and eventually forced its repeal), every one of these systems has proved popular and politically resilient. While all are voluntary (in line with Buckley’s holding that voluntary spending limits in exchange for public financing are constitutional), in all of these states and localities, a majority of qualified candidates participate. Outside money—independent ads and similar interventions—are still a problem for these states as well as others, but they have not overwhelmed these systems. With enough money to spend, candidates have less incentive to seek outside help. More women, minorities and candidates from non-traditional backgrounds have been elected, and more races have been contested. A decade of experience in a wide range of settings and political cultures proves that public financing is no longer an experiment—it’s an approach that’s been put to the test and shown to work.
As all of this was happening, the elaborate compromises of BCRA were being slowly eviscerated, first by the FEC and then by the courts. The conditions to which the law was responding had shifted further as well. Driven by the passions of the Bush era, the Democratic Party sloughed off the assumption that it had no source of funds other than wealthy lobbyists and built a heavy-duty grassroots operation that both raised funds and mobilized voters. Young activists, many inspired by the successes of Howard Dean’s 2004 online campaign for the presidential nomination, built new tools, such as ActBlue, which allowed small groups to organize in support of progressive congressional candidates. This completely changed the calculation for potential challengers, who in the past would have had little hope of raising money unless embraced by the party establishment. Barack Obama capitalized on these tools to build a presidential campaign that not only raised and spent record sums, but raised it from three million donors, an extraordinary achievement. Campaigns in both parties shifted their focus from swing voters to new voters, realizing—as Bush’s political strategist Karl Rove had understood years earlier—that in a more polarized electorate, expanding the party’s base was more advantageous than chasing after the shrinking number of flipable voters.
With the combination of efforts to expand the base and the possibilities created by new technology, forms of political communication other than television became relevant. Face-to-face campaigning and various forms of engagement on the Internet have created a climate in which campaigning, and especially the work of getting known at the beginning of a campaign, can be much less expensive. These forms of engagement are also much less passive than television ads, and many voters are actively seeking political information, even if it only takes the form of clicking through to a viral video or joining a Facebook group devoted to a candidate or cause.
Technology has also transformed the business of asking for money. Previously, asking a potential donor for a mere $20 was considered unwise, because the donor might be able to give much more, and asking for a second, third or fourth contribution would cost just as much as asking for the first. But the Dean campaign discovered that once a campaign has an e-mail address for a donor, it can ask again and again at very low cost and at the same time create an ongoing engagement with the contributor (or volunteer, or even just friend of the campaign). Low-transaction costs present the possibility of a politics that is far more engaging, rewarding and, ultimately, freer of dependence on big money than in the late 1990s, even as the reforms of that era are reversed.
That prospect helped motivate a group of moderate political scientists who were closely involved in the design of BCRA and the Snowe-Jeffords provisions to make a decisive break with mainstream reformist efforts. In a report entitled “Reform in the Age of Networked Campaigns”, Norman Ornstein, Thomas Mann, Anthony Corrado and Michael Malbin called for less focus on limits, and more focus on erecting systems that enhance the contributions of small donors. (Malbin speaks for himself below.) The Court’s ruling in Citizens United will have some effect on this trend. Corporate and other funds moving through large outside organizations might end up swamping small contributions, especially among Democrats, as the enthusiasm and intensity of the 2008 election gives way to the grim realities of governing. Among Republicans, distrust of the Republican National Committee and its chair, Michael Steele, is leading to the creation of several shadow-party organizations to support candidates, and Republican operatives are encouraging corporate donors to believe that Citizens United both opens new doors and obligates them to fund these organizations if they want to maintain influence in Washington. Much of what they will fund could have been funded before Citizens United, but the widespread assumption that the decision “changed everything” about campaign finance regulation may well be self-reinforcing.
Even so, the big story in campaign finance is not Citizens United. It is the rise of “networked campaigns”, the success—political and practical—of public financing and the emergence of small donors as a realistic force in American politics. Those three changes, harnessed together, have the potential to do far more good for American democracy than the limits-based approach of the late 1990s, even if it had not been rejected by the Court.
The purpose of campaign finance reform can now be harmonized with the highest calling of democracy itself. The goal is not just to fix this year’s problems or close some new loophole. The goal should be to prevent the inequalities of the economic system from being replicated and reinforced in the political system. That doesn’t require total leveling or limits—just ways to make sure that small donors have some influence too and that candidates of diverse views can be heard. Several years ago, I heard Janet Napolitano, then Governor of Arizona, describe the benefits of the public-financing system under which she was elected. Previously, she said, she would go to one set of people to ask for their votes, but to another set of people, in law-firm board rooms or fancy houses, to ask for their money. Now, with Arizona’s $10 seed-money contributions that trigger public financing, she could go to the same people—on Indian reservations or in the poor neighborhoods of Phoenix—and ask for both their votes and their money. That’s the way it should be in a democracy. That’s the way the ideal of one-man, one-vote can be realized. It’s a reasonable goal. It doesn’t end the influence of money in politics altogether, but it puts practical, pragmatic parameters around it. It shows that the regulation of money in politics is not a futile enterprise, and that it need not conflict with the values of free expression or the free exercise of political views.