America Needs Fewer Campaign-Finance Laws

The problem isn't that there isn't enough regulation -- it's that the laws already on the books aren't adequately enforced.

Mariana Bazo/Reuters

Campaign-finance reform is a bit like the war on drugs: a decades-long exercise in over-regulation that has exacerbated the problems it was designed to solve. 

Limits on contributions to candidate and party committees have facilitated the growth of super-rich super PACs and shadowy independent-expenditure groups. Like zoning laws that displace unwanted activities without diminishing them, campaign-finance restrictions have diverted money from political parties to independent groups.

But these groups also benefit from under-regulation, mainly failure to enforce existing law. The problem of dark money -- large, anonymous contributions to groups with anodyne names that mask their agendas -- is a problem caused largely by blatant violations of existing IRS provisions governing non-partisan public charities, which are entitled not to disclose their members or donors.

Might the courts correct the problems of over- and under-regulation? The Supreme Court has agreed to hear McCutcheon v. FEC, challenging aggregate limits on contributions to parties and candidates. Meanwhile, a challenge to IRS implementation (or non-implementation) of laws governing charities, Gill v. IRS, is pending in the D.C. federal district court. Reformers lament the first case and celebrate the second, but both address underlying causes of our campaign finance fiascos.

First, consider the McCutcheon case, brought by Shaun McCutcheon, an individual donor, and the Republican National Committee. McCutcheon complains that in the two-year period between January 2011 and December 2012, he was limited by law to contributing a total of $46,200 to candidates and $70,800 to other committees. Millions of Americans earn less than the aggregate amounts that donors are permitted to give to candidates and parties. But that is irrelevant to McCutcheon, who wants to give more, and the RNC, which wants to receive more; it's also irrelevant to their arguable First Amendment rights to do so.

It's important to stress that McCutcheon is not challenging limits on individual or base contributions to party committees or individual candidates. (Candidate contribution caps were $2,500 per federal election in 2011-2012; contributions to national party committees were capped at $30,800 per year.) He is challenging aggregate limits on contributions to candidates and parties. In other words, he is not demanding a right to give more than $2,500 to any candidate; he's demanding a right to give as much as $2,500 to more candidates, in excess of the aggregate cap.

Accepting the base limits on contributions is central to his case: With these limits in place, aggregate campaign contributions should be deemed campaign expenditures on McCutcheon's part, as though he were his own independent group, McCutcheon argues. (The Supreme Court has long held that expenditures are entitled to more robust First Amendment protection than contributions.) He adds that with base contributions to individual candidates subject to caps, aggregate contributions cannot be said to prevent corruption or the appearance of it.

The D.C. federal district court disagreed, declining to characterize aggregate contributions as expenditures and accepting the FEC's claim that aggregate limits help prevent circumvention of base limits. The court was not entirely unsympathetic to McCutcheon's complaint but suggested that it raised questions "for the Supreme Court," which has agreed to answer them.

If the 501(c)(4) loophole were closed, would mega-donors, right- and left-wing, find other funding vehicles and avenues of influence? Probably.

This is complicated litigation. I've simplified the facts and arguments involving the complex history of campaign-finance rules, which keep election lawyers busy. (Anyone who thinks campaign finance is generally under-regulated should try reading the documents in McCutcheon.) But while the case is complicated, the consequences for parties could be fairly simple: If the Supreme Court strikes down limits on aggregate contributions to party committees and candidates, it could conceivably strengthen parties at the expense of independent-expenditure groups. If the Court upholds the aggregate limits, these groups will continue to receive money that might otherwise have been channeled directly to candidates and parties.

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Wendy Kaminer is an author, lawyer, and civil libertarian. She is the author of I'm Dysfunctional, You're Dysfunctional.

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