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Campaign Finance Reform: R.I.P?

Kenneth P. Vogel

Sens. McCain and Feingold, former reform advocates, are now struggling to stay in the Senate. (AP Photo)

For four decades, advocates for stricter campaign finance rules have been on a long, slow march to make big money in politics less important and more transparent.

Now, in 2010, they are seeing the results: Never in modern political history has there been so much
secret money gushing into an American election.

By Election Day, independent groups will have aired more than $200
million worth of campaign ads using cash that can’t be traced back to
its original source, predicts
Fred Wertheimer, president of the non-profit group Democracy 21.

“And this is just the beginning,” Wertheimer said. “Unless we get some
changes here to mitigate this problem, I would expect we will see $500
million or more in 2012.”

For Wertheimer, and the other lobbyists, lawyers and academics who push
for tougher campaign cash restrictions and often refer to themselves as
“the reform community,” this year’s election is not merely a

There have been plenty of those in the years since their movement took
off amid the abuses of the Nixon era. But always in the past reformers
have been able to keep faith that, whatever setbacks they faced, their
cause was on a gradual path to victory.

This year feels more like a repudiation of their lives’ work. And it has
raised two basic questions that strike at the very core of the ethos of
the campaign-finance reform effort: Can the flow of money into
elections be limited if the courts have deemed political giving and
spending a First Amendment right? Can any system of rules to make money
more transparent ever keep up with the legal devices that powerful
interests use to keep their influence hidden?

“This is a low point for the campaign finance reform movement – I’ve
never seen it lower,” said Craig Holman, a leading campaign finance
lobbyist for Public Citizen, a non-profit group that has played a role
in most major legal and legislative fights on the issue since the
Watergate scandal of the mid-1970s.

“We’re not faring well today. At this point, we’re looking to monitor
the level of chaos and scandal that is going to happen in the 2010
general election to try to bring life back into the reform movement
going into 2012.”

For their antagonists, conservatives such as columnist George Will who
have long derided campaign finance restrictions as unnecessary meddling
in the political process, it’s a heady time in which their side is
winning the day in the courts, regulatory agencies and even Congress.

“It’s no secret that the reformers are on the run – they’ve gotten
pounded in the courts and also have not been very successful
legislatively,” said
Brad Smith,
chairman of the Center for Competitive Politics, a non-profit that
opposes many campaign regulations and that has had a hand in several
recent important court cases striking down such rules.

Only a decade ago, the campaign finance movement achieved one of its
greatest victories: the 2002 Bipartisan Campaign Reform Act, which
reformers saw as a foundation they would build upon in the years ahead.

The act, which came to be known as McCain-Feingold for its Senate sponsors,
Republican John McCain of Arizona and Democrat Russ Feingold of Wisconsin, was the most sweeping overhaul of campaign finance rules since a suite of reforms enacted after Watergate.

prohibited national party committees from accepting huge so-called soft
money donations, set new rules barring coordination of big-money
advertising campaigns between candidates and outside groups, enacted a
so-called “millionaire’s amendment” granting special fund-raising
privileges to candidates running against self-funders, and barred
corporations and unions from airing hard-hitting issue-based ads known
as electioneering communications in close proximity to Election Day.

The law – and major pieces of the precedent upon which it was based – is
now in shambles, with reformers left clinging to its last remaining
major pillar, the ban on soft money, which was upheld by a lower court
this year but is expected to be the subject of future challenges.

The electioneering communication provision and millionaire’s amendment have been wiped away by a Supreme Court that became reliably skeptical
of campaign finance regulation with former President George W. Bush’s
appointments of John Roberts and Samuel Alito to the court. 

The reconstituted court also struck down some significant older case law
that was the foundation for not only parts of McCain-Feingold, but the
broader campaign finance reform movement.

Meanwhile, the Federal Election Commission, which has been gripped by
partisan deadlock, has – in the opinion of reformers – woefully failed
to enforce the remaining pieces of McCain-Feingold and other campaign
finance laws.

And McCain and Feingold, once hailed as post-partisan saviors of the
political system, have struggled just to stay in the Senate.

Feingold faces an
uphill battle
against a novice opponent, who – perhaps ironically – has been the
beneficiary of hundreds of thousands of dollars in ads attacking
Feingold that would have been prohibited had McCain-Feingold remained

McCain was able to ward of a primary challenger, but only after spending more than
$20 million in the process, and he has largely turned his back on the campaign finance movement.

In fact, what McCain-Feingold may best be remembered for was the way it kick-started
the opposition.

“Our side – the pro-speech side – has had a good run over the last five
or six years and a big part of that was that we got more serious after
McCain-Feingold,” says Smith, a former Republican appointee to the FEC.

Smith formed his group to support legal, legislative and regulatory
challenges to campaign finance rules, while two existing groups – the
Institute for Justice and Indiana attorney James Bopp’s James Madison
Center for Free Speech – stepped up their fights on the issue.

Their basic argument: that some restrictions on political giving and
spending impede the flow of ideas in public debates and
unconstitutionally infringe on free speech rights.

And, though the three groups still have far less cash at their disposal
than their adversaries in the reform community, they have seen their
budgets rise over the last few years as major conservative funders have
gotten behind their movement. They reported a combined $17 million in
grants last year, including backing from the deep-pocketed Lynde and
Henry Bradley Foundation, which gave them $815,000 from 2006 to 2009.

While the Supreme Court’s sweeping January ruling in a case called Citizens United v. Federal Election Commission
has gotten most of the attention in media accounts seeking to explain
the new Wild West-like campaign finance environment, Smith and his
allies have been on the march for years, racking up a series of
lower-profile victories that set the stage for the momentum swing in
their battle with reformers.

In 2007, the Supreme Court – in a
5-4 ruling
in a case won by Bopp on behalf of a Wisconsin non-profit group that
opposes abortion rights – took a chunk out of McCain-Feingold’s
electioneering communications restrictions.

In March of this year, Smith’s group and the Institute for Justice won a
unanimous decision from a federal appeals court striking down limits on
individual contributions to independent groups that want to explicitly
urge a vote for or against a candidate.

The ruling, which fleshed out the impact of the Citizens United decision
and paved the way for a new breed of political group dubbed
Super PACs, was buttressed by a pair of opinions from the FEC, where Smith’s side also has increasingly gotten its way.

But by far their biggest victory – and the most devastating loss for reformers –was the high court’s
5-4 decision
in Citizens United, which overturned as unconstitutional previous
rulings upholding laws prohibiting corporations and, by extension,
unions, from spending their general funds on campaign ads.

The rulings cleared corporations and unions to launch expensive ad
campaigns boosting or attacking candidates. While Democratic-leaning big
labor has adjusted its
election strategy
to take advantage of the new rules, it hasn’t invested substantially
more money in its campaign efforts – certainly not when compared to the
raft of GOP-allied non-profit groups that have rushed to action
post-Citizens United.

Among those groups taking advantage of the new landscape have been
American Crossroads and Crossroads Grassroots Policy Strategies
(Crossroads GPS, for short), linked groups that were conceived in part
by uber-GOP operative
Karl Rove that are set-up as a Super PACs and a non-profit incorporated under Section 501(c)4 of the tax code, respectively.

Reformers and top Democrats have increasingly complained that groups
registered under Section 501(c) – most notably Crossroads GPS and the
U.S. Chamber of Commerce, which is registered under Section 501(C)6 –
either violating the tax code, nefariously hiding their donors or both.

“What’s happening right before our eyes is a blatant attempt by outside
interest groups using secret money to buy a Congress that will serve
their interests at the expense of the American people,” Rep. Chris Van
Hollen (D-Md.) told POLITICO.

Van Hollen sponsored a White House-backed bill intended to blunt the impact of Citizens United, which passed
the House, but failed last month in the Senate. Reformers, who have complained that Obama hasn’t done enough
to salvage the campaign finance regime, are pushing for another try in
the lame duck session, but the bill’s prospects appear dim.

David Magleby, a Brigham Young University political science professor
who has studied independent political ads and efforts to regulate them,
sees this year’s escalated ad war as part of an oft-repeated pattern.

reaction to new rules, new avenues for steering money into politics are
developed, which in turn prompt legal challenges from the industry and
sometimes new rules from Congress and regulators. And the process starts
over again.

Political scandals occasionally punctuate the cycle, prompting more
significant reforms, according to Magleby, who said “it took the
Watergate scandal to kind of get the attention of the public and

In response, Congress in 1974 created the FEC and a system for publicly
financing presidential campaigns, and also enacted strict limits on
campaign contributions and expenditures, the latter of which was quickly
struck down as unconstitutional by the Supreme Court.

McCain-Feingold got boosts from both the Clinton fundraising
controversies of the 1990s and the Enron scandal and accompanying public
scrutiny of corporate relationships with government.

And, most recently, Congress in 2007, motivated partly by the Jack
Abramoff scandal, enacted a suite of lobbying and campaign finance
reforms, including a bundling disclosure provision that Obama has cited
as the
top achievement of his brief Senate career.

Activists like Wertheimer, who worked on the post-Watergate reforms and is considered
the dean
of the reform community, believe it will taken another scandal to once
again change the political climate, given that the FEC and the Supreme
Court seem stacked against their side, and Congress, which hasn’t
demonstrated the political will necessary to tighten campaign finance
laws, could become even less eager to consider reforms if Republicans
retake one or both chambers.

But, Wertheimer added, he has no doubt that “we’re headed into a period
of major national scandal based on a sea change in the way our elections
are being funded and influenced that is going to set the stage for new
battles over reform.”

But even if that happens, according to former FEC chairman Trevor
Potter, who heads a reform group called the Campaign Legal Center,
heightened corporate spending is likely a permanent development in the
campaign landscape.

“This election is showing that (anonymously contributed) money can in
fact be spent and thus it will become the norm,” said Potter, a former
McCain advisor who – along with Wertheimer – helped craft
McCain-Feingold. “People who, going into this cycle, weren’t sure about
it, will now know that they can spend it and will start to raise it
earlier, have higher targets. This is a roadmap to the future.”


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