The Supreme Court's Extraordinary Campaign Finance Reform Oral Argument

Last week the Supreme Court heard oral argument in McConnell v. FEC, a constitutional challenge to the Bipartisan Campaign Reform Act of 2002--also known as "BCRA" or "McCain-Feingold." (Its principal Senate sponsors were John McCain (R-AZ) and Russell Feingold (D-WI)).

The argument was procedurally extraordinary in two respects. First, because they are well aware that campaigns for the 2004 federal election have already begun, the Justices took the highly unusual step of holding the argument a month before the regularly scheduled return from their summer recess. The same time pressure that led to an expedited briefing and oral argument will likely lead to a relatively swift decision, perhaps even within a few weeks.

Second, due to the complexity of the issues presented, the Justices permitted four hours of argument, rather than the usual one hour allotted to nearly every other case. Eight separate lawyers took their turns at the podium, including current Solicitor General Theodore Olson, as well as former Solicitors General Kenneth Starr and Seth Waxman.

The argument thus had something of the feel of the great cases of the early nineteenth century, such as McCulloch v. Maryland. McCulloch was an 1819 constitutional challenge to the Second Bank of the United States. The oral argument in the case--featuring Daniel Webster and other prominent attorneys of the time--lasted six days. Almost immediately thereafter, Chief Justice John Marshall delivered a landmark opinion upholding the bank's constitutionality. In doing so, he adopted a rationale first put forward by Alexander Hamilton in a debate with Thomas Jefferson.

From the perspective of the substantive law, however, McConnell is no McCulloch. In McCulloch the Court sweepingly approved of broad Congressional discretion to use its powers for the national interest as it saw fit. In contrast, McConnell will probably produce not a strong, dramatic holding but rather a muddled compromise.

In this column, I discuss the three principal changes BCRA made to prior law, and consider the constitutionality of each.

The First Change: "Hard Money"

Although BCRA's provisions governing so-called "hard money" were not subject to challenge in McConnell, they form an important part of the statute. BCRA raised the limit on individual donations to candidates for federal elections from $1,000 to $2,000.

Opponents of campaign finance regulation were relatively pleased with the relaxation of the hard money limit. They doubtless would have preferred to have no cap at all, but they certainly weren't going to sue to restore the stricter cap. And longstanding precedent upholds Congressional power to cap campaign contributions. In its first major foray into campaign finance regulation, the 1976 decision in Buckley v. Valeo, the Supreme Court upheld the stricter $1,000 limit against a First Amendment challenge.

If the stricter limit does not violate the Constitution, then certainly Congress was within its rights to relax the regulation.

The Second Change: "Soft Money"

BCRA also tightened restrictions on what may be done with "soft money." What is soft money and why is it considered a problem? To answer these questions, it's important first to understand that the federal hard money donation caps do not apply to donations to state parties and candidates for state office. Spending in campaigns for state elective offices is governed by state, not federal, law.

However, state and national political parties have overlapping memberships and donors, and state and federal elections typically occur simultaneously. Thus, donations to state political parties have been used to fund activities--such as research, campaign headquarters expenses, and get-out-the-vote efforts--that benefit federal as well as state candidates. A wealthy donor could give enormous sums to a state political party with the understanding that this money would be, in effect, laundered to subsidize a federal campaign--thereby circumventing the cap on hard money donations to federal campaigns.

A 1991 ruling of the Federal Election Commission regulated the allocation of money between state and federal candidates, but the parties were quite effective at exploiting that ruling. So BCRA went further. It bars national parties from accepting any soft money from the state parties. Meanwhile, it also prohibits state parties from using soft money to fund various federal election activities, such as voter registration drives within 120 days of a federal election and voter mobilization--even if state candidates as well as federal candidates are on the ballot and thus benefit from these activities.

The plaintiffs in McConnell have challenged the soft-money restrictions on both free speech grounds and states' rights grounds. They contend that the limits on state party contributions to national parties and candidates for federal office infringe the First Amendment right of expressive association of state party members. They further contend that, as a matter of states' rights, Congress lacks the constitutional authority to regulate state party activities insofar as the latter affect state elections.

The Third Change: Issue Advocacy

Since Buckley, federal election law has required that individuals and organizations that expressly advocate the election or defeat of a particular federal candidate comply with federal reporting and disclosure rules. However, speech that only implicitly communicates such a message did not trigger this obligation. This distinction was largely an invitation to evasion.

As anyone who has watched television during a federal election season knows, the regulation was easily circumvented. Corporations, unions and political action committees routinely ran election-eve advertisements decrying some candidate's record on a pivotal issue, and then urged voters to call the candidate to register their dismay. In the 2000 election, almost half a billion dollars was spent on such "issue" ads.

No one was expected actually to call the candidates to discuss the issue; they were expected, of course, simply to vote against them because of their stance. So these issue ads were plainly not really about the issues. (After all, what candidate is going to reverse himself or herself on a major issue on election eve?) Still, because the ads did not expressly advocate the election or defeat of particular candidates, they fell outside the domain of campaign finance regulation.

BCRA responds by expanding the scope of the reporting and disclosure obligations. It defines "electioneering communications" as those ads that refer to a clearly identifiable candidate for federal office, regardless of whether voters are expressly urged to vote for or against the candidate. (It also includes some additional technical requirements.)

Interestingly, anticipating that the Supreme Court might not be pleased with this broad definition, Congress offered an alternative definition in the event the primary definition is struck down: Under this alternative test, issue advocacy would trigger the reporting and disclosure requirements if it is "suggestive of no plausible meaning other than an exhortation to vote for or against a specific candidate."

The Legal Framework

Will BCRA stand? And if so, will the Court validate Congress's original issue ad definition, its alternative, or neither one? To understand the issues, it's necessary to go back to the Court's original campaign finance decision, Buckley.

The linchpin of Buckley is its distinction between expenditures and contributions. The case says that government may limit contributions to political candidates to prevent the appearance and reality of corruption. However, candidates--as well as unaffiliated individuals and organizations--have a First Amendment right to spend money on media access for their campaign speech.

Events since Buckley have eroded the expenditure/contribution distinction, as the issue advocacy brouhaha indicates: Consider a wealthy citizen who, under the old law, was barred, like everyone else, from giving a federal candidate more than $1000. He or she could instead choose to spend tens or hundreds of thousands of dollars directly purchasing issue advertisements that aid that same candidate--and have largely the same influence that a contribution in the same huge amount would have.

Because of the practical difficulties in holding the Buckley line, some Supreme Court Justices have urged abandoning it. Yet these Justices themselves are divided: some would permit government to regulate both expenditures and contributions; others would permit the regulation of neither.

And then, of course, there are those in the middle, who appear unwilling to abandon the Buckley framework, even as they are also uncertain how to apply it to BCRA.

Hints From the Oral Argument: The Justices' Deep Divisions on this Issue

The four-hour oral argument in McConnell indicated, above all, that the Justices remain deeply divided over how to approach campaign finance regulation.

At one end of the spectrum, Justice Scalia repeatedly contended that fundraising is inextricably intertwined with political speech. If that means that the right of free speech has the side effect of fostering the appearance of corruption, Justice Scalia indicated, so be it: Freedoms have costs, and we will simply have to find some other, perhaps less effective, way to combat the effects of money on politics.

Other Justices expressed greater sympathy for the concerns motivating BCRA. These Justices took seriously Congress's worry about the widespread, and arguably accurate, perception that members of Congress are for sale to the highest bidder. In their view, political speech should be protected against government interference. But they also believe that the ultimate point of political speech is to facilitate self-government. So, they conclude, if measures like BCRA are necessary to rescue representative government from the grip of wealthy campaign donors, then the First Amendment should not be interpreted to stand in the way.

It was not clear from the lengthy oral argument which of these views will prevail. Indeed, it was not even clear what legal standard would be used to judge the challenged provisions of BCRA.

The lawyers variously urged legal formulas drawn from a number of different lines of doctrine. The different tests they offered would ask a variety of questions--Is the law "congruent and proportionate" to its aims? Is it "narrowly tailored" to serve a "compelling interest"? Is it "closely drawn"?

To the untrained observer, these tests may sound synonymous, but each formulation invokes its own distinct set of subsidiary principles--and thus outcomes may differ depending on which test is chosen by the Court or even particular Justices.

Strange Bedfellows

As we await the Court's resolution of the case, it is worth noting a final point about ideology and politics.

The Republican Party has a large edge over the Democrats in raising hard money. There are many more Republicans able to donate $2000 to a federal election campaign than there are Democrats. However, Republicans and Democrats are roughly even in their ability to raise soft money--mostly because Democrats have been able to count on the support of labor unions to counter Republican contributions from corporations and wealthy citizens.

By doubling the hard-money cap and tightening the limits on soft money, BCRA worked to the advantage of Republicans, increasing funding where their edge is largest, and decreasing funding where the parties stand on an equal footing. Yet, somewhat oddly, despite that fact, and notwithstanding the title of the Act--the Bipartisan Campaign Reform Act--more of the Act's critics are Republicans than Democrats.

Likewise, in the Supreme Court, the Justices who appeared most skeptical of BCRA are conservatives who would generally be sympathetic to the substantive aims of the Republican Party. Yet should a conservative-dominated majority of the Justices strike down the soft-money limits, they will be strengthening the Democratic Party's ability to compete financially with Republicans.

Conversely, should a liberal/moderate-dominated majority of the Justices vote to uphold BCRA's soft-money provisions, they will be aiding the Republican Party.

Thus, for those who believe politics is no more than self-interest writ large, and that judging is no more than politics, the BCRA debate offers a true conundrum. And for those with a more idealistic view, the conflict between ideology and political leaning with respect to campaign finance reform provides some reassurance that our nation's leaders--in Congress and the judiciary--are, in this instance at least, putting principle, as they perceive it, over politics.

Again, McConnell is unlikely to be a landmark like McCulloch; the issues are too complex and divisive. Fortunately, however, it is also unlikely to be a landmark like Bush v. Gore--the Court's last substantial foray into American politics, which notoriously gave rise to charges of political bias. This time, the Court's divisions will reflect different conceptions of constitutional democracy, not party politics.