The McCutcheon decision could be good news after all

April 3

(Karen Bleier/AFP/Getty Images)

This is a guest post by University of Massachusetts political scientist Ray LaRaja.  He is the author of “Small Change: Money, Political Parties, and Campaign Finance Reform.” He serves on the Academic Advisory Board of the Campaign Finance Institute.  He previously wrote about the McCutcheon case here and here.

The Supreme Court ruled Wednesday in McCutcheon v Federal Election Commission about the constitutionality of setting limits on the total amount of money a donor may give to various political committees in a given election. I wrote earlier here that a decision in favor of McCutcheon to eliminate aggregate contribution limits would not necessarily worsen the campaign finance system, and might even improve it.  At the very least, I do not think the recent decision warrants the sky-is-falling rhetoric found in The New York Times.  Tellingly, as the court opinion points out (see Footnote 7), there is no evidence that donors have systematically exploited campaign finance rules in the 30 states where a McCutcheon world already exists, which means states where donors face a cap on contributions to a single candidate but may contribute the maximum donation to as many candidates as they want.

The impact of McCutcheon v. FEC should not be evaluated by some imaginary gold standard of campaign finance rules, but by the current state of affairs.  The status quo is already far from what political reformers hoped for when they celebrated enactment of the Bipartisan Campaign Reform Act in 2002 (a.k.a “McCain-Feingold”).  Here is a brief summary of where we stand on the day of the McCutcheon decision.

  • Wealthy individuals raise and spend campaign funds without limits through a variety of campaign organizations with names that few Americans have ever heard of.
  • Outside groups closely aligned with candidates get unlimited money from wealthy individuals and groups to help elect these candidates.
  • An estimated $213 million of outside group spending in the 2012 elections could not be traceable to specific contributors (22 percent of all outside spending).
  • The IRS, an entity with little expertise in evaluating political activity, has been accused of engaging in partisan harassment of political groups that are beyond the reach of conventional FEC enforcement.

That’s a partial description of the worst features of the contemporary campaign finance system. I say worst if you believe like I do in the value of contribution limits, transparency, and legitimate enforcement of the law.

Turning to McCutcheon, I reiterate my earlier skepticism that it will be exploited significantly, but I could be wrong.  Politicos confront formidable administrative and legal challenges to circumventing base contribution limits to candidates (currently $2,600 for individual contributors and $5,000 for PACs).  One looming fear is that PACs will metastasize to allow a single contributor to spread $2.3 million to each of the party’s congressional candidates.  And this money will be solicited directly by congressional leaders or even the president. Let us assume that America’s well-paid lawyers and consultants will figure out a workable scheme.  Here is some potential good that may come out of McCutcheon.

1. Parties and party leaders control more money.   Right now Super PACs are gaining an upper hand in the electoral system.  The people running these Super PACs might be former party hacks but Super PACs are still less accountable to the broader party coalition, much less to voters who don’t know the affiliations of these Super PACs.   By allowing a party to raise more money through joint committees and removing the aggregate limits that constrain them, the party leaders have more say in who runs for office.  These party leaders typically support candidates who are not ideologues because they have a better shot at winning.  If you prefer moderation and compromise in your politics, then you should prefer candidates getting their support from the party rather than issue groups.

2. The identity of donors will be more transparent. Donors who want to take advantage of McCutcheon will do so through federally regulated PACs that disclose all donations to the FEC.  Regardless of how many PACs they contribute to, it is possible to connect the dots to see who is supporting whom in the political system.

3. Corporations and trade unions cannot exploit McCutcheon. They are required by law to have just one “connected” PAC and no more.

4.  The FEC role becomes more salient. We have seen what happens when we rely on the IRS to enforce rules of emergent committees that exist outside the traditional regulatory system.  With federally registered PACs the FEC can enforce anti-circumvention and anti-earmarking rules already on the books.  The traceable flow of money should reveal clear patterns of PAC proliferation and earmarking.  To be sure, Supreme Court Justice Stephen Breyer in his dissenting opinion is rightly skeptical the FEC will meet the task, but such skepticism does not mean the government lacks statutory tools to prevent abuses of the campaign finance laws.

While these are potentially positive outcomes, I do have some concerns.  First, shakedowns of donors by politicians become more feasible without aggregate limits.  I have little personal sympathy for lobbyists and wealthy donors, but aggregate limits allow them to say they can give no more.  Now they have no face-saving excuse.

Second, Roberts’s opinion appears to open the door for removing contributions limits altogether because he suggests that such restrictions merit heightened scrutiny.  I think there should be reasonable limits on political contributions.  Not only do they deter shakedowns, but they help establish norms about the appropriate size of contributions.

McCutcheon’s efforts to get around the system is another piece of evidence, like the emergence of Super PACs, that current contributions limits are way too low. Paradoxically, I recommend loosening the campaign finance system as a strategy to attenuate the potential impact of the McCutcheon decision.

This means substantially raising the base contribution limits to candidates and parties. The original PAC limits established four decades ago have never been adjusted for inflation.  So a $5,000 PAC contribution in 1974 should be worth $23,800 today. Instead its value relative to 1974 is just $1,000.

Congress might also take seriously the possibility of providing public financing to supplement private donations so candidates do not have to rely so heavily on wealthy donors.  Public financing seems like a long shot, but the premise of providing floors, not ceilings has widespread support among those, including many political scientists, who observe time and again that big money stays one step ahead of the regulators.

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