by David Schultz

Jul 9, 2015, 2:00 PM

Getting the Money Out of Politics: Two Essays

On July 8, I had two different essays published which address the role of money in politics.  One essay takes us along the history of how our campaign finance laws broke down, the other describes four fixes the president can take to act.  Here are reprints of both essays.

“The Supreme Court, Public Opinion, and Money and Politics,” DEMOS Policy Shop, July 8, 2015

“A Federal Court Just Threatened Citizens United,” Talking Points Memorandum, July 8, 2015

The Supreme Court, Public Opinion, and Money and Politics, DEMOS Policy Shop, July 8, 2015

Is it a problem when the Supreme Court is out of step with public opinion? While in many cases the answer is no, when it comes to the question of money and politics and the financing of campaigns and elections, its counter-majoritarianism is a threat to democracy.

Contrary to the belief of many, American politics is not simply a majority rule, winner-takes-all system. As designed by the Framers in 1787 and modified by the Bill of Rights, America’s constitutional democracy is one of majority rule tempered by minority rights. James Madison’s famous Federalist Paper number 10 discusses the dangers of majority faction, describing how the complex machinery of checks and balances and separation of powers is meant to restrain majority faction. Majorities generally get their way on most issues, but when it comes to the right to free speech for example, no majority gets the right to tell a minority what they get to say or think.

The American constitutional system contains numerous anti-majoritarian institutions to protect minority rights. The Supreme Court serves an important role in protecting minority rights, often at the expense of being majoritarian. But that counter-majoritarianism facilitates America’s constitutional democracy, protecting minority rights and preventing a majority from using its numbers to entrench its power.

Yet the Supreme Court’s counter-majoritarianism does not always enable democracy—sometimes it can inhibit it. Consider the issue of the role of money in politics. A June 2, 2015 New York Times survey found that 84% of the American public believes money has too much of a role in American politics and that majorities (or near majority with Republicans) do not believe that money given to candidates is a form of protected speech. The Supreme Court, especially under Chief Justice Roberts, in giving increased First Amendment protection to the use of money for political purposes in cases such as Citizens United v. F.E.C. and McCutcheon v. F.E.C., is out of step with public opinion.

Yes, critics may argue that polls such as this are meaningless or that the Court is doing no more than protecting unpopular speech. But what is going on here is not about regulating content or viewpoint expression or suppressing unpopular groups or oppressing discrete and insular minorities. What we see here instead is the public describing how they think the American politics process should operate, and such views do deserve significant deference. Once I had the pleasure of meeting with former Watergate special prosecutor Archibald Cox who stated that election laws were the “rules that determined the rules of game.” By that he meant that the rules of election law, including how money could be spent for political purposes, determined how the game of politics and democracy would be played. Decide these prior rules and they determine the latter. His point is simple—there are important values that a democracy must articulate and enable. Our Constitution sets the ground rules for ordinary politics, including how campaigns and elections are to be run and funded.

What the public is saying is something simple—the First Amendment has not enshrined money as a constitutional value defining how political power should be allocated. In his famous 1905 dissent in Lochner v. New York, Justice Holmes was famous for declaring the Constitution does not “embody a particular economic theory.” There he rejected the idea that laissez faire capitalism was a constitutional theory. Here, the public is making a similar point that neither the
Supreme Court nor critics of campaign finance reform understand. There is an important difference between the use of money as a constitutional value and its use as a market tool. Money may be an appropriate medium for financial exchange to buy consumer goods, but it is not an appropriate constitutional value to distribute political power, influence, and authority. American politics is “one person, one vote,” not “one dollar, one vote.”

There is a profound difference between politics and markets. Each has its own logic and values, and operates by different mechanisms. American politics is about equality, respect for minority rights, public accountability, and transparency. The ability to expend unlimited amounts of money is not one of the constitutional values that define how American politics should operate. But even if it is, it must be viewed and balanced in context of all the other competing values.

This is what the American public is saying in the New York Times survey. They better understand than the Supreme Court right now that money is not a legitimate tool that should be the final word driving how decisions are made in American politics. Money cannot be both a political means and end or value in politics. Campaign finance laws not only protect money from drowning out minority voices, but also prevent the entrenched few from using their resources to thwart majority rule. Viewing money and campaign finance laws this way shows how out of touch the Supreme Court is here in terms of both public opinion and in facilitating
democracy.

“A Federal Court Just Threatened Citizens United,” Talking Points Memorandum, July 8, 2015

Yesterday, the U.S. Court of Appeals in Washington ruled 11-0 that a ban on federal campaign contributions by individuals who contract with the government is constitutional. After a wave of controversial decisions by Supreme Court that have unleashed a flood of big money into politics, this appeals court decision sends a clear message: Sometimes, more money in politics can be a very bad thing.

Americans agree. According to a poll from the New York Times, some 85 percent of the American people believe that the way political campaigns are funded needs either “fundamental changes” (39 percent) or “a complete rebuild” (46 percent).

Money has become central to American politics. Spending in the 2016 presidential election alone could top $4 billion, with the winning candidate having to raise $1.5 billion.

How did we get into this mess? In 1974, after the Watergate scandal brought down Nixon, Congress established limits on how much people could give and how much politicians could spend on their campaigns, and mandated disclosure to ensure that regular citizens could “follow the money.”

Unfortunately the Supreme Court blew a hole in the 1974 law right away. In Buckley v. Valeo, the Court eliminated campaign spending limits. With no limits, a fundraising arms race began which continues to this day.

Building on Buckley, John Roberts’ Supreme Court has largely gutted most of the post-Watergate reforms. In Citizens United v. FEC the Court not only struck down a law regulating independent expenditures but it also freed up corporations to spend unlimited money directly to influence elections. In McCutcheon v. FEC it voided aggregate contribution limits to federal candidates, ruling that the $123,000 cap on how much one individual could contribute violated the First Amendment. Both decisions were done under the belief that the use of money for political purposes is protected speech.

The Supreme Court has not acted alone. Candidates and special interest groups have exploited legal ambiguities and used tax-exempt non-profit legal shells for political purposes to escape contribution limits and disclosure rules. Groups are challenging other laws, anticipating that the Roberts Court will eventually strike them down, too.

The result is twofold. First, groups and candidates are flouting any remaining regulations, leading to a dramatic growth in unregulated and undisclosed spending, especially since Citizens United.

Second, special interest money has pushed the Democrats to the left and Republicans to the right, preventing bipartisan problem-solving on issues across the board. [Absolutely dead, spot on. ed.]

So can anything be done?

Actually, yes. All hope is not lost. And yesterday’s court decision is a step in the right direction. America need not wait for Congress or the Supreme Court to come around. The president and various federal agencies have the power to make several small but important reforms. Here are four:

1) The president could issue an executive order to require federal contractors to disclose all political contributions they make and to bar contractors from bidding on federal contracts for two years if they spend too much to influence a federal race or a member of Congress. Yesterday’s ruling upholds a ban on individual “pay to play” contributions to prevent conflicts of interest or undue influence. A new order could build on that ruling.

2) The Securities and Exchange Commission could make a rule requiring publicly traded companies to disclose all expenditures of money for political purposes and to obtain shareholder assent to use money for these purposes.

3) To reduce candidates’ need for costly commercials, the Federal Communications Commission could issue require that broadcasters to provide reasonable free air time to all House, Senate, and Presidential candidates. The public owns the airwaves, so there is nothing to stop the FCC from doing this.

4) The IRS could require that non-profits whose major purpose is political advocacy register with the FEC and disclose their donors and expenditures.

These reforms are not enough, but they show that something can be done now—and they would give us the tools we need to better understand the money flooding our political system. That knowledge is a critical first step that will build the case for overturning Buckley and Citizens, and, ultimately, healing our democracy.

Postscript:  Two additional points.  The first is that if I had to make one change in the TPM essay it would be to say that big money has moved Democrats less to the left or to the right and has simply entrenched their positions and made it impossible for the party to respond to the left.  Second, back in 2010, Senator Al Franken’s legal counsel contacted me after Citizens United was decided.  I was asked to offer suggestions on what could be done.  I related a variation of the above four ideas to counsel.  A few weeks later I called back to ask what happened.  I was told that the Senator liked my suggestions and communicated them to President Obama, who simply decided not to do anything.

Crossposted at: Schultz’s Take