Forty Years After Watergate
The Decades-Long Fight Against Political Money
Jul 1, 2012
6 Min read time
This summer, as we mark the 40th anniversary of the Watergate break-in, which precipitated modern efforts to respond to the dangers of unfettered political spending, we should ask why our political system is more awash than ever in secret money.
This summer, as we mark the 40th anniversary of the Watergate break-in, which precipitated modern efforts to respond to the dangers of unfettered political spending, we should ask why our political system is more awash than ever in secret money. Much of the answer lies in the interaction between Supreme Court decisions and post-Watergate reforms.
In the wake of the scandal, the 1974 amendments to the Federal Election Campaign Act (FECA) sought to limit both political contributions and expenditures. But in its foundational decision in Buckley v. Valeo (1976), a challenge to the FECA amendments, the Supreme Court drew a sharp distinction between these two forms of political spending. It upheld stringent limits on contributions to other people’s campaigns, on the theory that these limits mark a reasonable response to the potential for quid pro quo corruption or the appearance of corruption. But it refused to limit political expenditures, on the theory that “the First Amendment denies government the power to determine that spending to promote one’s political views is wasteful, excessive, or unwise.”
In drawing this distinction, the Court created a statute that no sensible legislature would have passed. Buckley accelerated two unhealthy trends in American politics.
First, it gave a decided advantage to rich candidates: they could spend unlimited amounts of their own money while their opponents had to raise it in relatively small increments. The Roberts Court exacerbated this problem with its 2011 decision in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett (a case whose name sounds like nothing so much as a winner at the Westminster Kennel Club’s dog show). There, the Court held that the First Amendment bars states from providing additional funds to equalize the playing field for candidates who agree to forgo private contributions and accept public financing.
Second, because Buckley protected candidates’ right to spend however much they can raise while limiting how they can raise it, the decision forced candidates to devote ever-increasing attention to fundraising at the expense of other activities, such as doing their jobs. In 2010, when the average campaign for a House seat cost $1.16 million, members of Congress had to raise about $66 every hour of every day during their two-year terms. The framers’ idea that frequent elections would make the House responsive to the people was turned on its head: frequent elections now render members of the House particularly dependent on special interest groups that can help them raise large amounts of money.
But Buckley’s long-term effect was even more pernicious. Even as the Court was upholding FECA’s disclosure rules—which require candidates for federal office to identify all individuals who contribute more than $200 in an election cycle—its decision was driving money into new, and less accountable, channels.
Prior to Watergate, political spending typically took the form of contributions to candidates or political parties. The corrosive effects of that money were at least tempered by strong incentives for candidates and parties to build coalitions and to focus on a range of issues.
After Buckley, money flowed away from candidates and political parties and toward political action committees (PACs). PACs originated in a 1940s effort by unions to coordinate individual contributions from their members, and their number and influence exploded thanks to Buckley. PACs present a serious challenge because, in contrast to parties, they frequently focus on only a single issue. They can form and dissolve within single election cycles. They often have names that obscure more than they reveal, so that it is difficult for voters to intelligently assess the signals that PAC spending sends.
The Buckley framework transformed PACs. The original PACs were designed to funnel money to candidates. But because contributions by PACs, like contributions by individuals, could be strictly limited, PACs turned to making “independent expenditures,” which, in Buckley, the Supreme Court refused to limit because it saw no risk of corruption. “Independent,” however, is a somewhat elastic term. Candidates know which PACs support them. And while it is theoretically possible that a PAC’s work on a candidate’s behalf will be so counterproductive that he won’t appreciate it, that is rarely the case.
Money is only one symptom of a deeper political pathology.
The Court itself sometimes confuses the categories of contributions and expenditures and, in so doing, has shown that the distinction it drew is not nearly as clean as it may think. In Caperton v. A.T. Massey Coal Co. (2009), Justice Anthony Kennedy’s opinion for the Court held that an elected state court judge violated due process by sitting on a case involving a corporate executive who had made “extraordinary” and exceptionally large “campaign contributions” to the judge. In fact the executive had contributed a thousand dollars (the statutory maximum) to the judge’s campaign. That hardly seems extraordinary. The problem more likely was his $500,000 independent expenditure supporting the campaign and his roughly $2.5 million donation to the “And For The Sake of the Kids” PAC, which went after the judge’s opponent.
Over the years campaign finance law has become a three-way dance involving the Court, reformers, and political spenders. The Court’s increasingly robust First Amendment doctrine—holding, for example, that corporations enjoy the same right to engage in political speech as individuals—has hemmed in reform efforts. Citizens United v. Federal Election Commission (2010) categorically rejected regulation on the basis of money’s corrosive effect on politics and freed corporations and unions to use general treasury funds for independent expenditures. Arizona Free Enterprise Club made it far less feasible to create workable public financing regimes.
At the same time, sophisticated political actors have responded to every reform by devising new methods for shoveling money into the system. The super PAC is one recent example. Super PACs, unlike earlier PACs, can raise unlimited funds from individuals and corporations. And because the law permits them to report their donors on a quarterly basis, it is possible to shield funders’ identities until an election is over.
Perhaps even more troubling is the apparent movement of large amounts of political money into 501(c) groups, so named because they are organized under section 501(c) of the Internal Revenue Code. These groups are not required to identify their donors at all. According to the Center for Responsive Politics, outside interest groups are now outspending the political parties—by more than $100 million over the past two years—and the portion of that spending attributable to 501(c) groups has risen from 1 percent in 2006 to nearly half today. Most strikingly, the Center concludes, “Seventy-two percent of political advertising spending by outside groups in 2010 came from sources that were prohibited from spending money in 2006.”
The effect on our politics is not just that well-heeled interests enjoy a tremendous advantage, although that’s bad enough in itself. In addition the corrosive effects are seen in the nature of our political discourse. Shadow groups seem particularly prone to generating polarizing and negative sound bites rather than discussing the real issues facing the electorate.
However, money is only one symptom of a deeper political pathology. We hear a flood of stories and arguments about campaign finance, but relatively little serious popular attention is paid to gerrymandering, restrictive registration requirements, and electoral administration. Even less concern is given to the absence of any real civics education in this era of high-stakes testing and underfunded public schools. As Sam Issacharoff and I observed a dozen years ago in an article on the hydraulics of campaign finance reform:
The First Amendment and political spending are only two of the many institutional structures within which our politics take place. These structures, which we often take for granted, powerfully shape our sense of the politically possible and what the baseline for a purer politics should be.
Until concerned citizens address these deep structural problems, we are unlikely to persuade either the wider American public to adopt effective campaign finance regulations or the Supreme Court to uphold them.
July 01, 2012
6 Min read time