On the last day of the Supreme Court’s recently completed Term, the Justices handed down their decision in a campaign finance case, Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett. An ideologically divided 5-4 Court invalidated Arizona’s system of public finance for elections.
The ruling in the Arizona case takes away what had looked like one of the few promising tools available to legislators seeking to rein in an increasingly corrupt electoral system. Perhaps even more importantly, as I shall explain in this column, the ruling entrenches a very narrow view as to what the legitimate goals of campaign finance regulation may be.
The Arizona Law, and the Court’s Ruling
In response to rampant corruption in the Arizona state legislature, in 1998, the state’s voters approved a referendum establishing a system of public campaign finance for state offices. Under that system, primary and general election candidates who choose to accept public funding and the limits that come with it, receive a base public grant once they exceed a threshold of support. A publicly funded candidate then receives additional public funds if one or more of her privately funded opponents for office raises more in private donations than the publicly funded candidate’s initial allotment. More specifically, subject to a cap of three times the base public grant, a publicly funded candidate receives ninety-four cents for every dollar her opponent raises.
The Arizona law also counts a privately funded candidate’s own contributions and independent expenditures on his campaign’s behalf as part of the figure that triggers matching funds for his publicly funded opponent or opponents.
The law was challenged in federal court by past and future candidates for Arizona office who argued that it penalized them for raising and spending money, in violation of the First Amendment. The trial judge agreed; the U.S. Court of Appeals for the Ninth Circuit disagreed; and then last week, the U.S. Supreme Court in turn reversed the appeals court, ruling the law unconstitutional.
The “Millionaire’s Exception”
The Court majority placed principal reliance on a 2008 precedent, Davis v. Federal Election Commission, which invalidated the so-called “millionaire’s exception.” What is the millionaire’s exception? To answer that question, one must go back to basics. And, in the field of campaign finance, that means going back to the Court’s landmark 1976 decision in Buckley v. Valeo.
Buckley held that the First Amendment permits the imposition by government of reasonable limits on campaign contributions, which, according to the Court, are an indirect form of speech; however, the case invalidated limits on campaign expenditures, on the ground that spending money—on such things as television advertising—is, in the Court’s view, tantamount to speech itself. As a consequence of the Court’s decision in Buckley, individual contributors faced caps on how much money they could give to candidates’ campaigns, but once a campaign raised whatever money it raised, it could spend that money more or less at will.
The Court’s differing treatment of campaign contributions and expenditures left a loophole for very wealthy candidates. Suppose, for instance, that a Ross Perot or Mike Bloomberg provides millions of his own dollars to fund his campaign. If he were, instead, supporting somebody else’s run for office, then he could be subject to the contribution limits. Yet because he is funding his own campaign, he does not first need to “contribute” money to his campaign before he spends it. Thus, as applied to a self-funded candidate, a contribution limit is a forbidden expenditure limit. As a consequence, under the Court’s precedents, the First Amendment entitles a wealthy candidate to spend as much of his own money as he wants in support of his election.
Does that sound unfair? Sure. But the Supreme Court has also said—and it repeated in the Arizona case handed down last week—that campaign-finance regulation cannot be justified as an effort to fight such unfairness. The only legitimate ground for campaign finance regulation, according to the Court, is to combat corruption. And because a millionaire or billionaire who funds his own campaign will not be beholden to campaign contributors, the “loophole,” in the Court’s eyes, is actually desirable as a corruption-fighting device.
Accordingly, the Court did not look favorably on Congress’s attempt to close the millionaire loophole with the millionaire’s exception. As part of the Bipartisan Campaign Reform Act (more commonly known as “McCain-Feingold” for its Senate sponsors), Congress had loosened the contribution limits on donors to candidates who were opposed by candidates who spent more than $350,000 of their own money. In the Davis case, the Supreme Court struck down the millionaire’s amendment as imposing an impermissible penalty on the free speech of self-funded candidates.
A Narrow Disagreement
In last week’s Arizona case, the majority opinion—written by Chief Justice Roberts and joined by Justices Scalia, Kennedy, Thomas, and Alito—characterized the Arizona law as functionally equivalent to the invalid millionaire’s exception. The dissent—authored by Justice Kagan and joined by Justices Ginsburg, Breyer, and Sotomayor—thought that there were important distinctions between the Arizona law and the millionaire’s exception. In the view of the dissenters, the Arizona system was a permissible method for the state to encourage candidates to accept public funding, and thus to combat corruption.
Though the case created a familiar ideological split, the actual disagreement among the Justices in the Arizona case was quite narrow. The majority thought that the law was not closely tailored to combat quid pro quo corruption. The dissenters thought that it was. The majority thought that the law was an impermissible attempt to “level the playing field.” The dissenters thought that, in light of the law’s corruption-fighting purpose and effects, there was nothing impermissible about any incidental leveling, because the Arizona law leveled up, rather than leveling down. In other words, the law brought poorer candidates and campaigns up to the level of wealthier ones, rather than restricting the fundraising or spending of wealthier candidates and campaigns to put them on a par with their poorer competitors.
Both the majority and the dissent in the Arizona case accepted the following proposition from the Buckley case: “the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.” The dissenting Justices emphasized that the Arizona law did not, in fact, restrict the speech of anyone. On the contrary, they said, the law allowed privately funded candidates and their independent backers to spend as much as they want on campaign speech, while ensuring that there would be still more speech as a result of the public-funding scheme.
The majority Justices acknowledged that the Arizona law did not formally restrict privately funded campaign speech, but they thought that was its effect, and arguably its purpose too: Knowing that spending above the triggering threshold would result in funding for their opponents, privately funded candidates would logically hesitate to raise and spend money for campaign speech. Thus, for the majority, the case involved de facto leveling down.
What’s Wrong With Leveling the Playing Field?
Lost in this narrow disagreement was an alternative vision of campaign finance regulation that, I suspect, many ordinary Americans hold. According to that alternative vision, combating corruption in the narrow sense of a quid pro quo is only one goal of campaign finance regulation. A second, and arguably more important, goal, is preserving democracy as a domain in which each citizen has an equal voice.
Following a metaphor that can be traced to Justice Oliver Wendell Holmes, Jr. in his famous dissent in Abrams v. United States, the Supreme Court has sometimes described the First Amendment’s protection for freedom of speech as preserving a free “marketplace of ideas.” The metaphor is useful, in the way that metaphors are, but unfortunately, the Court’s modern campaign-finance jurisprudence takes it literally, allowing inequalities in the distribution of financial resources to translate themselves into gross inequalities in political power.
If, as the Court said in Buckley, the idea of leveling down “is wholly foreign to the First Amendment,” that is not an inevitable result of the Amendment’s text. Money is not literally speech, and even if one is inclined to treat campaign expenditures as tantamount to speech, the Court’s free-speech doctrine allows that speech may be restricted if doing so is necessary to promote a compelling interest. It is hard to imagine an interest more compelling than the interest in preserving democracy as a domain of political equality—and yet the Supreme Court has exhibited a striking poverty of the imagination on just this question.
Unfortunately, the current Supreme Court appears unlikely to change its mind about leveling down. Although the dissenters in the Arizona case disagreed with the majority about the purpose and effect of the Arizona law, they too accepted the proposition that leveling down to preserve political equality is not a compelling interest.
Nonetheless, history shows that the Supreme Court’s interpretation of the Constitution can change, sometimes radically and within a short period of time, when the People demand change. In this instance, the very doctrines that are at issue make it difficult for the People to express their desire for significant campaign-finance regulation effectively, because those doctrines give the rich and powerful a disproportionate influence over elections.
Difficult, but not impossible. There is a limit to the political influence that money can buy, if the People are sufficiently exercised. As Lincoln might have said, you can’t buy all of the elections all of the time.
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