Amdt1.2.10.1.1 Campaign Finance and Electoral Process

First Amendment:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Government has increasingly regulated the electoral system by which candidates are nominated and elected, requiring disclosure of contributions and certain expenditures, limiting contributions and expenditures, and imposing other regulations. ¹ These regulations can restrict freedom of expression and association, which include the rights to join together for political purposes, to promote candidates and issues, and to participate in the political process. ² The Court is divided with respect to the constitutionality of many of these federal and state restrictions, but it has been consistent in not permitting the government to bar or penalize political speech directly. Thus, it held that the Minnesota Supreme Court could not prohibit candidates for judicial election from announcing their views on disputed legal and political issues. ³ The Supreme Court also struck down a Minnesota law banning all political apparel at polling places as unreasonable, even while recognizing the state's general interest in regulating polling places. ⁴ And, when Kentucky attempted to void an election on the ground that the winner’s campaign promise to serve at a lower salary than that affixed to the office violated a law prohibiting candidates from offering material benefits to voters in consideration for their votes, the Court ruled unanimously that the state’s action violated the First Amendment. ⁵

Similarly, California could not prohibit official governing bodies of political parties from endorsing or opposing candidates in primary elections. ⁶ Minnesota, however, could prohibit a candidate from appearing on the ballot as the candidate of more than one party. ⁷ The Court wrote that election [r]egulations imposing severe burdens on plaintiffs’ [associational] rights must be narrowly tailored and advance a compelling state interest. Lesser burdens, however, trigger less exacting review, and a State’s important regulatory interests will usually be enough to justify reasonable nondiscriminatory restrictions. ⁸ Minnesota’s ban on fusion candidates was not severe, as a party that could not place another party’s candidate on the ballot was free to communicate its preference for that candidate by other means, and the ban served valid state interests in ballot integrity and political stability. ⁹

In the Federal Election Campaign Act of 1971, as amended in 1974, Congress imposed new and stringent regulation of and limitations on contributions to and expenditures by political campaigns, as well as disclosure of most contributions and expenditures, setting the stage for the landmark case of Buckley v. Valeo. ¹⁰ Acting in basic unanimity, the Court sustained the contribution and disclosure sections of the statute (although several Justices felt that the sustained provisions trenched on protected expression), but voided the limitations on expenditures. ¹¹ Although contribution and expenditure limitations both implicate fundamental First Amendment interests, the Court found, expenditure ceilings impose significantly more severe restrictions on protected freedoms of political expression and association than do . . . limitations on financial contributions. ¹²

As to contribution limitations, the Court in Buckley recognized that political contributions serve[ ] to affiliate a person with a candidate and enable[ ] like-minded persons to pool their resources in furtherance of common political goals. Contribution ceilings, therefore, limit one important means of associating with a candidate or committee. . . . ¹³ Yet [e]ven a significant interference with protected rights of political association may be sustained if the State demonstrates a sufficiently important interest and employs means closely drawn to avoid unnecessary abridgment of associational freedoms. ¹⁴

As to expenditure limitations, the Court wrote, [a] restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. ¹⁵ The expenditure of money in political campaigns may involve speech alone, conduct alone, or mixed speech-conduct, the Court noted, but all forms of it involve communication, and when governmental regulation is aimed directly at suppressing communication it does not matter how that communication is defined. As such, the regulation must be subjected to close scrutiny and justified by compelling governmental interests.

Applying this strict scrutiny standard, the contribution limitations, with some construed exceptions, survived, but the expenditure limitation did not. The contribution limitation was seen as imposing only a marginal restriction upon the contributor’s ability to engage in free communication, inasmuch as the contribution shows merely a generalized expression of support for a candidate without communicating reasons for the support; the size of the contribution provides a very rough index of the intensity of the contributors’ support for the candidate. ¹⁶ The political expression really occurs when the funds are spent by a candidate; only if the restrictions were set so low as to impede this communication would there arise a constitutional infringement. This incidental restraint upon expression may therefore be justified by Congress’s purpose to limit the actuality and appearance of corruption resulting from large individual financial contributions. ¹⁷

Of considerable importance to the contributions analysis, the Court voided a section restricting the aggregate expenditure anyone could make to advocate the election or defeat of a clearly identified candidate to $1,000 a year. Though the Court treated the restricted spending as purely an expenditure, the activity seems to partake equally of the nature of a contribution spent on behalf of a candidate (although not given to him or her directly). However,[a]dvocacy of the election or defeat of candidates for federal office is no less entitled to protection under the First Amendment than the discussion of political policy generally or advocacy of the passage or defeat of legislation. ¹⁸ The Court found that none of the justifications offered in support of a restriction on such expression was adequate; independent expenditures did not appear to pose the dangers of corruption that contributions did, and it was an impermissible purpose to attempt to equalize the ability of some individuals and groups to express themselves by restricting the speech of other individuals and groups. ¹⁹

Similarly, limitations upon the amount of funds a candidate could spend out of his own resources or those of his immediate family were voided. A candidate, no less than any other person, has a First Amendment right to advocate. ²⁰ The limitations upon total expenditures by candidates seeking nomination or election to federal office could not be justified: the evil associated with dependence on large contributions was met by limitations on contributions, the purpose of equalizing candidate financial resources was impermissible, and the First Amendment did not permit government to determine that expenditures for advocacy were excessive or wasteful. ²¹

The government not only may not limit the amount that a candidate may spend out of his own resources, but, if a candidate spends more than a particular amount, the government may not penalize the candidate by authorizing the candidate's opponent to receive individual contributions at higher than the normal limit. In Davis v. Federal Election Commission, the Court struck down, as lacking a compelling governmental interest, a federal statute that provided that, if a self-financing candidate for the House of Representatives spends more than a specified amount, then his opponent may accept more individual contributions than otherwise permitted. The statute, the Court wrote, imposed a special and potentially significant burden on a candidate who robustly exercises [his] First Amendment right. ²² Citing Buckley, the Court stated that a burden on the expenditure of personal funds is not justified by any governmental interest in eliminating corruption or the perception of corruption. This is because reliance on personal funds reduces the threat of corruption, and therefore . . . discouraging use of personal funds[ ] disserves the anticorruption interest. ²³ Citing Buckley again, the Court added that the governmental interest in equalizing the financial resources of candidates does not provide a justification for restricting expenditures, and, in fact, to restrict expenditures has ominous implications because it would permit Congress to arrogate the voters' authority to evaluate the strengths of candidates competing for office. . . . Different candidates have different strengths. Some are wealthy; others have wealthy supporters who are willing to make large contributions. Some are celebrities; some have the benefit of a well-known family name. Leveling electoral opportunities means making and implementing judgments about which strengths should be permitted to the outcome of an election. ²⁴

A related question is whether the government violates the First Amendment rights of a candidate running a privately funded campaign when it provides public equalization funds to opposition candidates. In Arizona Free Enterprise Club's Freedom Club PAC v. Bennett, ²⁵ the Court considered an Arizona voluntary public financing system which granted an initial allotment to the campaigns of candidates for state office who agreed to certain requirements and limitations. ²⁶ In addition, matching funds were made available to the campaign if the expenditures of a privately financed opposing candidate, combined with the expenditures of any independent groups supporting that opposing candidacy, exceeded the campaign's initial allotment. Citing Davis, the Court found the scheme unconstitutional because it forced the privately financed candidate to shoulder a special and potentially significant burden in choosing to exercise his First Amendment right to spend funds on behalf of his candidacy. ²⁷ Although the dissent argued that the provision of benefits to one speaker had not previously been considered by the Court as a significant burden to another, ²⁸ the majority distinguished those cases as not having involved the provision of subsidies to directly counter the triggering speech. ²⁹

It was mentioned above that the Court in Buckley upheld the disclosure requirements of the Federal Election Campaign Act. The Court found that, although compelled disclosure cannot be justified by a mere showing of some legitimate governmental interest, the governmental interests in the disclosure that the statute in Buckley mandated were sufficiently important to outweigh the possibility of infringement of the First Amendment. ³⁰ Disclosure, the Court found, provides the electorate with information 'as to where political campaign money comes from and how it is spent by the candidate'; it deters actual corruption and the appearance of corruption; and it is an essential means of gathering the data necessary to detect violations of the contribution limitations that the statute imposed. ³¹

The Court indicated, however that, under some circumstances, the First Amendment might require exemption for minor parties that were able to show a reasonable probability that the compelled disclosure of a party’s contributors’ names will subject them to threats, harassment, or reprisals from either Government officials or private parties. ³² This standard was applied both to disclosure of contributors’ names and to disclosure of recipients of campaign expenditures in Brown v. Socialist Workers ’74 Campaign Committee, ³³ in which the Court held that the minor party had established the requisite showing of likely reprisals through proof of past governmental and private hostility and harassment. Disclosure of recipients of campaign expenditures, the Court reasoned, could not only dissuade supporters and workers who might receive reimbursement for expenses, but could also dissuade various entities from performing routine commercial services for the party and thereby cripple a minor party’s ability to operate effectively. ³⁴

The Court has apparently extended the reasoning of these cases to include not just disclosure related to political contributions, but also to disclosure related to legally qualifying a measure for the ballot. In Doe v. Reed, ³⁵ the Court found that signing a petition to initiate a referendum was a protected form of political expression, ³⁶ and that a state requirement to disclose the names and addresses on those petitions to the public would be subjected to exacting scrutiny. ³⁷ The Court upheld the disclosure requirement on its face, finding that it furthered the state's interest in detecting fraud and mistake in the petitioning process, while also providing for transparency and accountability. The case was remanded, however, to ascertain whether in this particular instance (a referendum to overturn a law conferring rights to gay couples) there was a reasonable probability that the compelled disclosures would subject the signatories to threats, harassment, or reprisals from either Government officials or private parties. ³⁸

In Nixon v. Shrink Missouri Government PAC, ³⁹ the Court held that Buckley v. Valeo is authority for state limits on contributions to state political candidates, but state limits need not be pegged to Buckley’s dollars. ⁴⁰ The Court in Nixon justified the limits on contributions on the same grounds that it had in Buckley: preventing corruption and the appearance of it that flows from munificent campaign contributions. ⁴¹ Further, Nixon did not present a close call requiring further definition of whatever the State’s evidentiary obligation may be to justify the contribution limits, as there is little reason to doubt that sometimes large contributions will work actual corruption of our political system, and no reason to question the existence of a corresponding suspicion among voters. ⁴² As for the amount of the contribution limits, Missouri’s fluctuated in accordance with the consumer price index, and, when suit was filed, ranged from $275 to $1,075, depending on the state office or size of constituency. The Court upheld these limits, writing that, in Buckley, it had rejected the contention that $1,000, or any other amount, was a constitutional minimum below which legislatures could not regulate. ⁴³ The relevant inquiry, rather, was whether the contribution limitation was so radical in effect as to render political association ineffective, drive the sound of a candidate’s voice below the level of notice, and render contributions pointless. ⁴⁴

In McCutcheon v. FEC, ⁴⁵ however, a plurality of the Court ⁴⁶ appeared to signal an intent to scrutinize limits on contributions more closely to ensure a fit between governmental objective and the means utilized. ⁴⁷ Considering aggregate limits on individual contributions—that is, the limits on the amount an individual can give in one campaign cycle ⁴⁸—the plurality opinion distinguished between the government interest in avoiding even the appearance of quid pro quo corruption and the government interest in avoiding potential 'influence over or access to' elected officials of political parties as the result of large contributions; only the interest in preventing actual or apparent quid pro quo corruption constituted a legitimate objective sufficient to satisfy the First Amendment. ⁴⁹ Given the more narrow interest of the government, the McCutcheon Court struck down the limits on aggregate contributions by an individual donor. The plurality opinion viewed the provision in question as impermissibly restricting an individual's participation in the political process by limiting the number of candidates and organizations to which the individual could contribute (once that individual had reached the aggregate limit). ⁵⁰ Moreover, the plurality opinion held that the aggregate limits on individual contributions were not narrowly tailored to prevent quid pro quo corruption, as the limits prevent any contributions (regardless of size) to any individual or organization once the limits are reached. ⁵¹The plurality likewise rejected the argument that the restriction prevented circumvention of a separate restriction on base contributions to individual candidates, as such circumvention was either illegal (because of various anti-circumvention rules) or simply improbable. ⁵²Collectively, the Court concluded that the aggregate limits violate the First Amendment because of the poor fit between the interests proffered by the government and the means by which the limits attempt to serve those interests. ⁵³

Outside the context of contributions to candidates, however, the Court has not been convinced of the justifications for limiting such uses of money for political purposes. Thus, a municipal ordinance regulating the maximum amount that could be contributed to or accepted by an association formed to take part in a city referendum was invalidated. ⁵⁴ Although Buckley had sustained limits on contributions as a prophylactic measure to prevent corruption or its appearance, no risk of corruption was found in giving or receiving funds in connection with a referendum. Similarly, the Court invalidated a criminal prohibition on payment of persons to circulate petitions for a ballot initiative. ⁵⁵

Venturing into the area of the constitutional validity of governmental limits upon political activities by corporations, a closely divided Court struck down a state law that prohibited corporations from expending funds to influence referendum votes on any measure save proposals that materially affected corporate business, property, or assets. In First National Bank of Boston v. Bellotti, the Court held that the free discussion of governmental affairs is the type of speech indispensable to decisionmaking in a democracy, and that this is no less true because the speech comes from a corporation rather than an individual. ⁵⁶ The Court held that it is the nature of the speech, not the status of the speaker, that is relevant for First Amendment analysis, thus allowing it to pass by the question of the rights a corporate person may have. The materially affecting requirement was found to be an impermissible proscription of speech based on the content of the speech and the identity of the interests that the speaker represented. The exacting scrutiny that restrictions on speech must pass was not satisfied by any of the justifications offered and the Court in any event found some of them impermissible.

Bellotti called into some question the constitutionality of the federal law that makes it unlawful for any corporation or labor union to make a contribution or expenditure in connection with any election for federal office or in connection with any primary election or political convention or caucus held to select candidates for such office. ⁵⁷ The Court had previously passed on several opportunities to assess this restriction, ⁵⁸ and one of the dissents in Bellotti noted the potential conflict. ⁵⁹ While the dissent's concerns were ultimately realized in Citizens United v. FEC, ⁶⁰ it was only after many years of the Court either distinguishing Bellotti or applying it narrowly.

During that interim, the Court first considered challenges to different aspects of the federal statute and to related state statutes, upholding some restrictions on corporate electoral activities, but limiting others. In FEC v. National Right to Work Committee, ⁶¹ the Court considered the operation of separate segregated funds (in common parlance, a Political Action Committee or PAC), through which, according to federal law, corporations can engage in specified political activities. The Court unanimously upheld a prohibition on a corporation soliciting money from other corporations for a PAC in order to make contributions or expenditures in relation to federal elections. Relying on Bellotti for the proposition that the government may act to prevent both actual corruption and the appearance of corruption of elected representatives, the Court saw no reason that Congress could not, in its legislative judgment, treat unions, corporations, and similar organizations differently from individuals. ⁶²

However, an exception to this general principle was recognized by a divided Court in FEC v. Massachusetts Citizens for Life, Inc., ⁶³ holding the section’s requirement that independent expenditures be financed by voluntary contributions to a PAC unconstitutional as applied to a corporation organized to promote political ideas, having no stockholders, and not serving as a front for a business corporation or union. The Court found that one of the rationales for the special rules on corporate participation in elections – elimination of the potential for unfair deployment of [corporate] wealth for political purposes – had no applicability to a corporation formed to disseminate political ideas, not to amass capital. ⁶⁴ The other principal rationale – protection of corporate shareholders and other contributors from having their money used to support political candidates to whom they may be opposed – was also deemed inapplicable. The Court distinguished National Right to Work Committee because restrictions on contributions require less compelling justification than restrictions on independent spending, and also explained that, given a contributor’s awareness of the political activity of [MCFL], as well as the readily available remedy of refusing further donations, the interest protecting contributors is simply insufficient to support § 441b’s restriction on . . . independent spending. ⁶⁵ What the Court did not address directly was whether the same analysis could have led to a different result in National Right to Work Committee. ⁶⁶

Clarification of Massachusetts Citizens for Life was provided by Austin v. Michigan State Chamber of Commerce, ⁶⁷ in which the Court upheld application to a nonprofit corporation of Michigan’s restrictions on independent expenditures by corporations. The Michigan law, like federal law, prohibited such expenditures from corporate treasury funds, but allowed them to be made from a corporation's PAC funds. This arrangement, the Court decided, serves the state’s compelling interest in ensuring that expenditure of corporate wealth, accumulated with the help of special advantages conferred by state law, does not distort the election process. ⁶⁸ The law was sufficiently narrowly tailored because it permits corporations to make independent political expenditures through segregated funds that accurately reflect contributors’ support for the corporation’s political views. ⁶⁹ Also, the Court concluded that the Chamber of Commerce was unlike the MCFL in each of the three distinguishing features that had justified an exemption from operation of the federal law. Unlike MCFL, the Chamber was not organized solely to promote political ideas; although it had no stockholders, the Chamber’s members had similar disincentives to forgo benefits of membership in order to protest the Chamber’s political expression; and, by accepting corporate contributions, the Chamber could serve as a conduit for corporations to circumvent prohibitions on direct corporate contributions and expenditures. ⁷⁰

In FEC v. Beaumont, ⁷¹ the Court held that the federal law that bars corporations from contributing directly to candidates for federal office, but allows contributions though PACs, may constitutionally be applied to nonprofit advocacy corporations. The Court in Beaumont wrote that, in National Right to Work, it had specifically rejected the argument . . . that deference to congressional judgments about proper limits on corporate contributions turns on details of corporate form or the affluence of particular corporations. ⁷² Though nonprofit advocacy corporations, the Court held in Massachusetts Citizens for Life, have a First Amendment right to make independent expenditures, the same is not true for direct contributions to candidates.

In McConnell v. FEC, ⁷³ the Court upheld against facial constitutional challenges key provisions of the Bipartisan Campaign Reform Act of 2002 (BCRA). A majority opinion coauthored by Justices Stevens and O’Connor upheld two major provisions of BCRA: (1) the prohibition on national party committees and their agents from soliciting, receiving, directing, or spending any soft money, ⁷⁴ which is money donated for the purpose of influencing state or local elections, or money for mixed-purpose activities – including get-out-the-vote drives and generic party advertising, ⁷⁵ and (2) the prohibition on corporations and labor unions' using funds in their treasuries to finance electioneering communications, ⁷⁶ which BCRA defines as any broadcast, cable, or satellite communication that refers to a clearly identified candidate for Federal Office, made within 60 days before a general election or 30 days before a primary election. Electioneering communications thus include both express advocacy and so-called issue advocacy. ⁷⁷

As for the soft-money prohibition on national party committees, the Court applied the less rigorous scrutiny applicable to contribution limits ⁷⁸ and found it closely drawn to match a sufficiently important interest. ⁷⁹ The Court’s decision to use less rigorous scrutiny, it wrote, reflects more than the limited burdens they [i.e., the contribution restrictions] impose on First Amendment freedoms. It also reflects the importance of the interests that underlie contribution limits – interests in preventing ‘both the actual corruption threatened by large financial contributions and the eroding of public confidence in the electoral process through the appearance of corruption.’ ⁸⁰

As for the prohibition on corporations and labor unions' using their general treasury funds to finance electioneering communications, the Court applied strict scrutiny, but found a compelling governmental interest in preventing the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideals. ⁸¹ These corrosive and distorting effects result both from express advocacy and from so-called issue advocacy. The Court also noted that, because corporations and unions remain free to organize and administer segregated funds, or PACs, for electioneering communications, the provision was not a complete ban on expression. ⁸² In response to the argument that the justifications for a ban on express advocacy did not apply to issue advocacy, the Court found that the argument fails to the extent that the issue ads broadcast during the 30- and 60-day periods preceding federal primary and general elections are the functional equivalent of express advocacy. ⁸³

The limitations on electioneering communication, however, soon faced renewed examination by the Court. In Wisconsin Right to Life, Inc. v. Federal Election Comm’n (WRTL I), ⁸⁴ the Court vacated a lower court decision that had denied plaintiffs the opportunity to bring an as-applied challenge to BCRA's regulation of electioneering communications. Subsequently, in Federal Election Commission v. Wisconsin Right to Life (WRTL II), ⁸⁵ the Court considered what standard should be used for such a challenge. Chief Justice Roberts, in the controlling opinion, ⁸⁶ rejected the suggestion that an issue ad broadcast during the specified periods before elections should be considered the functional equivalent of express advocacy if the intent and effect of the ad was to influence the voter's decision in an election. ⁸⁷ Rather, Chief Justice Roberts' opinion held that an issue ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate. ⁸⁸

Then came the case of Citizens United v. FEC, ⁸⁹ which significantly altered the Supreme Court's jurisprudence on corporations and election law. In Citizens United, a non-profit corporation released a film critical of then-Senator Hillary Clinton, a candidate in the Democratic Party’s 2008 Presidential primary elections, and sought to make it available to cable television subscribers within 30 days of that primary. The case began as another as-applied challenge to BCRA, but the Court asked for reargument, and, in a 5-4 decision, not only struck down the limitations on electioneering communication on its face (overruling McConnell) but also rejected the use of the antidistortion rationale (overruling Austin).

In Citizens United, the Court argued that there was a tension between the right of corporations to engage in political speech, as articulated in Bellotti and its progeny, and the limitations on such speech allowed in Austin to avoid the disproportionate economic power of corporations. Reasoning that the Court had rejected similar attempts to level the playing field among differing voices with disparate economic resources, ⁹⁰ the Court held that the premise that the First Amendment generally prohibits the suppression of political speech based on the speaker’s identity of necessity prevents distinctions based on wealth. ⁹¹ In particular, the Court noted that media corporations, although statutorily exempted from these restrictions, do not receive special constitutional protection under the First Amendment, ⁹²and thus would be constitutionally vulnerable under an antidistortion rationale.

The Court also held that the ability of a corporation to form a PAC neither allowed that corporation to speak directly, nor did it provide a sufficient alternative method of speech. The Court, found that PACs are burdensome alternatives that are expensive to administer and are subject to extensive regulation. ⁹³ The Court noted that the difficulty in establishing a PAC might explain why fewer than 2,000 of the millions of corporations in the country have PACs. Further, the Court argued that even if a corporation did want to establish a PAC to speak to an urgent issue, that such corporation might not be able to establish one in time to address issues in a current campaign.

While the holding of Citizens United would appear to diminish the need for corporations to create PACs in order to engage in political speech, it is not clear what level of regulation will now be allowed over speech made directly by a corporation. ⁹⁴ The Court did uphold the requirements under BCRA that electioneering communications funded by anyone other than a candidate must include a disclaimer regarding who is responsible for the content of the communication, and that the person making the expenditure must disclose to the FEC the amount of the expenditure and the names of certain contributors. The Court held that these requirements could be justified based on a governmental interest in provid[ing] the electorate with information about the sources of election-related spending, helping citizens make informed choices in the political marketplace, and facilitate the ability of shareholders to hold corporations accountable for such political speech. ⁹⁵

In Randall v. Sorrell, a plurality of the Court struck down a Vermont campaign finance statute's limitations on both expenditures and contributions. ⁹⁶ As for the statute's expenditure limitations, the plurality found Buckley to control and saw no reason to overrule it and no adequate basis upon which to distinguish it. As for the statute's contribution limitations, the plurality, following Buckley, considered whether the contribution limits prevent candidates from 'amassing the resources necessary for effective [campaign] advocacy'; whether they magnify the advantages of incumbency to the point where they put challengers to a significant disadvantage; in a word, whether they are too low and too strict to survive First Amendment scrutiny. ⁹⁷ The plurality found that they were. ⁹⁸ Vermont's limit of $200 per gubernatorial election (with significantly lower limits for contributions to candidates for State Senate and House of Representatives) . . . are well below the limits this Court upheld in Buckley, and are the lowest in the Nation. ⁹⁹ But the plurality struck down Vermont's contribution limits based not merely on the low dollar amounts of the limits themselves, but also on the statute's effect on political parties and on volunteer activity in Vermont elections. ¹⁰⁰