Report

Juice Worth the Squeeze (Summer 2004 Trust Magazine article)

Former Solicitor General Seth Waxman is unlikely to forget anytime soon where he was on the morning of December 10, 2003--in the U.S. Supreme court chamber--or that he was somewhat distracted as the nine justices of the Supreme Court filed into the chamber to hear the first of two oral arguments on that day's docket.

Waxman's attention was riveted on what he would momentarily present to the Court in a case addressing the scope of the Sixth Amendment right to counsel. At first he did not realize that Chief Justice Rehnquist was announcing a decision in McConnell v. Federal Election Commission, which challenged the constitutionality of the Bipartisan Campaign Reform Act of 2002 (BCRA). And when he did realize it, he refused to listen: After all, he had another case to argue that morning. 

Three months earlier, as lead attorney for the congressional co-sponsors of BCRA, Waxman had brilliantly defended the new law in an almost unprecedented four-hour oral argument against a veritable "Dream Team" of prominent lawyers (including former Independent Counsel Kenneth Starr and First Amendment champion Floyd Abrams) representing Senator Mitch McConnell and scores of allied plaintiffs. Spirited and probing questioning by the justices left most observers uncertain how the Court would rule. 

At the initial stage of the litigation, a three-judge Federal District Court panel, after months of delay, had disgorged a complex and confusing 1,600-page decision that found unconstitutional some of the law's major provisions. Consequently, smart money was on the Supreme Court striking down the section regulating certain types of broadcast "issue ads"--campaign ads financed with funds not subject to federal regulation--as well as restrictions on the "soft-money" funding activities of state and local political parties--that is, what they do with unregulated donations from corporations, unions and wealth individuals. 

Others present in the court the December morning of the decision--many of whom were there to hear the second oral argument on an important partisan gerrymandering case--realized immediately the stunning import of the Chief Justice's words. Largely by a 5-4 majority (with Justice O'Connor decisively joining Justices Breyer, Ginsburg, Souter and Stevens), the Court upheld virtually in their entirety BCRA's twin pillars regulating soft money and issue advocacy. 

Defenders of the new law, myself included, could not have been more pleased by the substance of the decision or by the rationale used by the majority to uphold Congress's handiwork. The Court explicitly recognized the care the bill's authors took to craft constitutional means to achieve a limited set of policy ends. While many BCRA critics see an ambitious and threatening departure in campaign finance regulation and jurisprudence, supporters are comforted that the Court recognized that Congress took measured and considered steps to restore a regime that was undermined in recent years by the rise of party soft money and the explosion of electioneering disguised as issue advocacy. 

The majority opinion is notable for its reliance on the evidentiary record assembled by Congress and BCRA's defendants, its refreshingly pragmatic view of money and politics, its reluctance to entertain departures from the constitutional analysis underlying its previous campaign finance cases--from Buckley v. Valeo (1976) to Federal Election Commission v. Beaumont (2003)--and its deference to Congress. 

To members of the campaign finance reform community, this wonderfully satisfying victory in McConnell v. FEC affirmed critical decisions made years earlier: to refocus the reform agenda on a limited set of pressing problems that emerged in the 1996 election, to frame legislative proposals that could attract bipartisan support in Congress and pass constitutional muster, to build a substantial empirical record documenting how contemporary campaign-finance practices departed from the intentions of existing law and to attract to the reform coalition a broader, more diverse set of groups and interests. 

These decisions transformed what had been a fractious reform community pursuing an ineffectual legislative strategy since the mid-1980s into a more pragmatic, formidable, and ultimately successful force. Looking back on this history, I am struck by the pivotal role played by The Pew Charitable Trusts and allied foundations in nurturing the efforts that made possible the new campaign finance law. 

The 1996 election was a critical juncture in this period. On the advice of his political consultant Dick Morris, President Bill Clinton embraced an "issue advocacy" political advertising strategy in late 1995. Clinton's brazen move, unchallenged by the Federal Election Commission (FEC), pushed the law to its limit and left his reelection campaign unconstrained by Presidential campaign spending limits and financed in substantial part by party soft money. In this new soft money/issue advocacy world of campaign finance, the Republican National Committee soon came to the aid of its Presidential nominee, Bob Dole, and the congressional party committees threw support to candidates for the House and Senate. 

The party committees were joined by outside groups suddenly free to use their treasury funds to broadcast electioneering communications under the guise of issue advocacy. They spent millions of dollars in this fashion, clearly designed to elect or defeat federal candidates. The demand for party soft money intensified (jumping from $80 million in 1992 to $272 million in 1996, and then to $497 million in 2000). The well-chronicled fundraising abuses of that period proceeded apace. And the system of campaign finance regulation enshrined in the Federal Election Campaign Act and the Buckley decision largely collapsed. 

Shortly after the election, Norman Ornstein, Resident Scholar at the American Enterprise Institute, convened a small group of campaign finance experts--including Anthony Corrado, Michael Malbin, Paul Taylor and myself--to assess the wreckage from the 1996 campaign and take a stab at refocusing the reform agenda. 

Previous efforts had tried to reduce the amount of money in politics, primarily by restricting political action committees (PACs) and limiting campaign spending. The reformers' rhetoric--too much money flows into politics, private donations are inherently corrupting, and spending limits are indispensable to a reform agenda--had proven counterproductive. 

Now another reform group was counseling a different approach with a decidedly different rhetoric. Set aside PAC attacks, spending limits and demands for full public financing of all federal elections. Instead, proceed incrementally by first repairing the tears in the existing regulatory fabric. Eliminate party soft money, but make it easier for parties and candidates to raise hard money. Create a constitutionally acceptable alternative to "express advocacy" as an unambiguous bright-line test for identifying electioneering communications that would be subject to disclosure and limits on sources of funding. Restore the longstanding prohibitions on contributions and expenditures from corporate and union treasuries in federal elections. Strengthen the enforcement of campaign finance law. Provide free or subsidized air time for candidates and parties. Use tax credits to encourage small donations. 

Our recommendations were included in the report "Five Ideas for Practical Campaign Reform." 

Despite some lingering opposition within the reform community, the proposed agenda soon caught on. Thanks to the initiative of its president Becky Cain, the League of Women Voters was the first reform group to embrace the new approach, ultimately leading to a national advertising campaign on behalf of "Five Ideas." Others were less enthusiastic. One prominent reformer attacked these alternatives as a Trojan horse in a Capital Hill newspaper column headlined "Beware Geeks Bearing Gifts." 

The key congressional sponsors of earlier campaign finance legislation--Senators John McCain (R-Ariz.) and Russ Feingold (D-Wisc.) and Representatives Chris Shays (R-Conn.) and Martin Meehan (D-Mass.)--redrafted their bills to focus primarily on soft money and issue advocacy electioneering. Later on, Senators Olympia Snowe (R-Maine) and Jim Jeffords (R, I-Vt.) crafted an amendment to more sharply define the electioneering communications that would be subject to regulation. 

The legislative odyssey from this relaunched reform agenda in 1997 to the passage of BCRA in 2002 is a fascinating tale involving daunting obstacles, frequent setbacks and the extraordinary tenacity of its prime congressional sponsors. 

The instability of the campaign finance system after the explosion of soft money and sham issue advocacy in 1996 certainly contributed to the legislation's success. So too did key events along the way--John McCain's 2000 Presidential campaign, Senate elections that same year that increased support for reform, the Enron scandal and the 2001 change in party control of the Senate following Jim Jeffords' defection from the Republican party. 

But also crucial were the shift to a more focused and achievable agenda, a new-found pragmatism and consensus in the reform community, compelling research on soft money and issue-advocacy broadcasting in the 1998 and 2000 elections and the addition of voices from groups not heard in previous reform debates. And in each of these latter cases, support from the Pew Trusts played a critical role, sometimes on their own but often in concert with the Joyce Foundation, the Carnegie Corporation, the Open Society Institute and others. 

The Trusts launched its efforts on campaign finance in 1996 as part of a larger program under the direction of Paul Light to "strengthen democratic life" in the United States. To try to overcome the obstacles that had frustrated past efforts, the Trusts developed a grant-making strategy on money in campaigns designed to encourage an incremental approach to reform based on nonpartisan research and data and to bring new, more varied voices into the debate. 

Its initial grants bore fruit. The Trusts supported the meetings that produced "Five Ideas" and financed the public education and outreach activities of the League of Women Voters to promote the new agenda. Grants to a number of independent policy centers and universities launched the collection of a body of empirical data on the amount, sources, uses and impact of money in campaigns. The Aspen Institute and the Committee for Economic Development helped broaden support for the refocused agenda among current and former policymakers and within the business community. 

Under the leadership of Public Policy Director Michael X. Delli Carpini, the Trusts in 1999 renewed and refined its strategy for supporting efforts to reform the federal campaign-finance system. Trusts-supported research on campaign advertising by Jonathan Krasno at New York University's Brennan Center for Justice and Kenneth Goldstein at the University of Wisconsin provided crucial data both to the public, including members of Congress during their deliberations on BCRA (then known as McCain-Feingold), and to the courts when determining the new law's constitutionality. In fact, the researchers' findings on electioneering communications were so telling that opponents tried--unsuccessfully--to challenge the integrity of the research during the litigation. 

With support from the Trusts, David Magleby of Brigham Young University assembled teams of scholars to monitor how parties and interest groups used soft (nonfederal) money to influence federal elections. Other grants were made to survey public and elite attitudes on money and politics. Together with the Joyce Foundation, Carnegie Corporation and the Smith Richardson Foundation, the Trusts established the Campaign Finance Institute, which has convened bipartisan teams of practitioners and experts to synthesize research and make recommendations on pressing issues of money and politics. 

Under the direction of Anthony Corrado of Colby College, new voices--including those of leaders of various faith traditions, ethnic and minority organizations and environmental groups--entered the debate as a consequence of the Trusts' initiatives. Resources available to journalists covering campaign finance issues, and media coverage more generally, increased markedly as a result of these projects. 

All of these efforts were designed to create an environment that encouraged an open and informed debate on campaign finance reform, a debate that the Trusts believed would eventually produce constructive steps to improve disclosure, strengthen enforcement, ban or curtail soft money and regulate issue ads intended to influence elections. The passage of BCRA clearly justified that belief and the impressive investment that followed. 

Congressional enactment of the new law was as much the beginning of the journey as the end. Even before President Bush signed BCRA into law on March 27, 2002, contending forces were rushing to frame the factual and legal issues implicated by the act for its eventual review--as mandated by the law itself--by the Supreme Court. 

Fortunately, the Trusts and its partner foundations fully anticipated the legal battle that would follow. A new Campaign Legal Center, directed by Trevor Potter, was launched to defend the law in the courts and to represent the public interest before administrative bodies implementing BCRA. The center provided timely public access on its Web site to all of the legal documents in the case, coordinated the submission of an impressive set of amicus briefs in McConnell v. FEC, and facilitated the publication of a volume presenting key testimony by expert and fact witnesses. Both the amicus briefs and expert testimony were cited extensively in the opinions of the District Court panel and Supreme Court. 

The Trusts made additional grants to supplement the legal work being done in defense of BCRA by the Department of Justice and the Federal Elections Commission, on behalf of the government, and by Wilmer Cutler & Pickering, which provided pro bono legal representation for the congressional sponsors by partners Seth Waxman, Roger Witten, Randy Moss and by many other lawyers and assistants. 

While the legal battle was fought primarily in the courts, the debate over the constitutionality and likely consequences of the new law took place very much in the public domain. Dozens of events featuring BCRA supporters and opponents were held in Washington and in many other places around the country. 

Newspaper editorials weighed in for or against the new law. News stories tracked the progress of the litigation and speculated about the likely outcome in the courts. Party officials, election-law attorneys and political consultants warned of the dire consequences that could follow if the Court upheld the law. Some columnists bemoaned the perversity of efforts to restrict the flow of money in politics and the associated damage to our free-speech guarantees. Others more sympathetic to BCRA responded with their own litany of "myths and realities" and provided up-to-date information on the ways participants were adapting to the new rules. 

We never will know whether this public dimension of the campaign-finance battle shaped in any way the thinking of the courts. Those making a principled case for repudiating Buckley and commencing a judicially-imposed march to a deregulated campaign finance system have enlisted only two steadfast allies on the Supreme Court--Justices Scalia and Thomas. For the moment, at least, the constitutional logic propounded by BCRA's defenders has been embraced by five justices. 

But the broader public debate certainly helped set the context for BCRA's implementation and for the consideration of additional reforms. Having lost the argument in Congress and the courts, BCRA's critics are now heralding a parade of "horribles" that will inevitably follow. Monitoring the implementation and impact of the new law is a crucial new stage in the broader efforts to improve the campaign finance system. 

The issues raised in the public debates on BCRA are far from trivial. Will political parties be weakened and interest groups strengthened? Might innocent encounters between politicians and private citizens and groups be criminalized? Will speech be chilled? Have incumbents gained yet another advantage over challengers? 

Initial answers based on more than a year of experience under BCRA are reassuring. Parties appear to be adapting well to a post-soft-money world. The shakedown schemes and access-peddling by officeholders and parties have abated. Campaign speech--by candidates, parties and interest groups--is much in evidence. Small-donor fundraising on the Internet may produce a more competitive and less encumbered politics. Of course, these are first impressions, not final conclusions. Systematic research will provide more definitive answers as we move through this election cycle and into the next. 

The eventual impact of BCRA is, at this moment, unknowable. Some of the Federal Election Commission's initial decisions are already being challenged in the courts. Others are in the offing: for instance, how political committees allocate their voter mobilization expenses between hard- and soft-money contributions; and when "527s"--political organizations set up under Section 527 of the Internal Revenue Code to secure tax-advantaged status--must register with the FEC and abide by federal regulation. How these and yet other issues play out could make a major difference in determining whether the objectives of BCRA are achieved. 

Clearly the struggle to strengthen our electoral system and heighten the legitimacy of American democracy has only just begun. Still to be enacted are other essential campaign finance reforms: repairing the Presidential public financing system, fostering electoral competition through subsidized air time and other modes of communication, constructing more effective enforcement regimes and encouraging small donations. Additional problems and opportunities will surface as money inevitably finds new outlets in campaigns. We steel ourselves for what lies ahead--but now is the time to savor an important victory.