Congress Shall Make No Law...

    As campaign season heats up, we are seeing the inevitable uptick in news stories about campaign finance. The hottest topic this election seems to be the increasing number of “Super PACs” that are forming to support or oppose federal candidates.


    super_pacman“Super PAC” is the term that the media has adopted to describe what the Federal Election Commission calls “independent-expenditure-only committees.” As the FEC’s label suggests, these are groups that raise money for the sole purpose of making “independent expenditures,” which is FEC-speak for ads that support or oppose candidates but are not coordinated or prearranged with those candidates in any way. As of this posting, there are more than 100 active Super PACs registered with the FEC.


    Super PACs are a natural outgrowth of the U.S. Supreme Court’s campaign finance decisions. The Supreme Court has held for over 35 years that individuals are allowed to spend unlimited amounts of their own money on political speech, and last year recognized in Citizens United v. FEC that this right also extended to corporations and unions. Shortly thereafter, the Institute for Justice and the Center for Competitive Politics won v. FEC, which held that individuals could pool their money to make independent expenditures. Together, Citizens United and mean that groups of people—both individuals and associations—have a constitutional right to pool their money to make recommendations directly to the public about who they should vote for.


    Unfortunately, given the complexity of campaign finance law, reporters often make mistakes when describing what Super PACs are and what they can do. Here’s a perfect example, from U.S. News & World Report:


    [S]uper PACs can . . . pay unlimited amounts for “independent expenditures,” and collect unlimited cash from corporations, nonprofit groups, and labor unions, which would not otherwise be allowed, under the law, to make direct contributions to a campaign.


    This description is accurate up until the end, when it says that Super PACs can use “unlimited” corporate and union money to make “direct contributions to a campaign.” In fact, Super PACs can’t make any contributions to campaigns of any money, regardless of the source of that money. That’s why the FEC calls them “independent-expenditure-only committees”—they’re only allowed to make independent expenditures.


    “Super PAC” is a convenient shorthand; “independent-expenditure-only committee” is a mouthful. But that shorthand can be misleading. Super PACs are not permitted to do anything that the individuals and groups that give money to them would not be permitted to do if acting alone. Individuals can’t give unlimited amounts of money to candidates, and Super PACs can’t accept unlimited amounts of money to give to candidates. Corporations and unions can’t give money to candidates, and neither can Super PACs.


    Super PACs are a super-great thing for free speech and political debate, but they don’t have super powers. They’re just groups that freely raise and spend money on independent political speech—nothing more, nothing less.

    Friend of IJ Brad Smith, chairman of the Center for Competitive Politics, has written a thoughtful blog post regarding the strange case of W. Spann, LLC, a corporation that formed earlier this year, gave $1 million to a pro-Romney Super PAC, and then promptly dissolved.  The “reform” lobby is in near hysterics over the fact that no one currently knows where the money came from.  But Smith takes a hard look at whether we should really be concerned about this latest “scandal”:


    [T]the donor probably hasn’t done Restore Our Future, let alone good old Mitt Romney, any favors. Restore Our Future appears to have complied with the law, reporting its donors. Romney—well, he has nothing to do with it. The entire concept of a “SuperPAC” such as Restore Our Future is that the candidate has no role in the organization. But you can bet your a-- that Romney is going to take a political hit for this—indeed, he already is. This suggests once again the wisdom of the Supreme Court’s longstanding view that independent expenditures should not be seen as creating a quid pro quo type obligation between spenders and candidates, and indeed that candidates will often be hurt by the actions of independent speakers. Similarly, if the donation by the “shadowy” W. Spann, LLC hurts Romney, as it appears it will, that seems to suggest that the system may be self-policing—take “murky” contributions, and it is likely to hurt your cause. It hardly screams out for a new law.


    Be sure to read the whole thing.

    Dave Weigel of Slate reports on a newly introduced bill by freshman Rep. Rob Woodall (R-Ga.) called the Competitive Elections Act of 2011.  The bill would prohibit candidates from saving contributions they receive in one election for use in a future election.  The goal of the law is help new candidates compete against incumbents by removing the ability of incumbents to amass “war chests.”


    Weigel predicts that the legislation is doomed and we think he’s right about that—incumbent politicians generally aren’t interested in passing laws that eliminate the advantages of incumbency. But the law is also clearly unconstitutional.  First, it imposes a limit on political spending purely for the purpose of leveling the electoral playing field, which the U.S. Supreme Court has repeatedly said is forbidden.  Second, the law has an exemption for candidates who are facing self-funded opponents, just like the Millionaire’s Amendment provision of McCain-Feingold, which the Court held unconstitutional in Davis v. FEC.


    But the Competitive Elections Act of 2011 isn’t just politically infeasible and unconstitutional:  It is yet another example of how every campaign finance regulation eventually becomes a justification for more regulation.  The problem the law attempts to solve—the inability of challengers to unseat entrenched incumbents—is itself a symptom of our country’s dysfunctional campaign finance laws.  Upstart candidates rarely have a broad base of electoral support.  By capping the size of contributions they may receive, federal campaign finance law all but ensures that they will not be able to raise the money necessary to effectively compete against incumbent politicians.


    The straightforward solution to that problem—and the solution that is consistent with the First Amendment—is to remove the caps, not to add another unnecessary, unworkable, and unconstitutional layer of regulation.