Moderator: Welcome to today's Law Week Viewpoint discussion with Bobby Burchfield. Bobby, thank you for joining us. Please get us started by explaining in general terms what the McCain-Feingold statute does.

Bobby Burchfield: The Bipartisan Campaign Reform Act of 2002, commonly known as the McCain-Feingold statute, is the most ambitious campaign and election law legislation passed by Congress in a quarter century. Generally speaking, it prohibits national political parties from soliciting, receiving, or spending any money not regulated by the federal government; it imposes numerous restrictions on the fundraising and spending activities of state and local parties; it restricts the fundraising activities of federal candidates and officeholders; it regulates what are known as "issue advertisements" by corporations, unions, and other groups during election season; and it imposes several important but less significant regulations on campaign activity.

Washington, D.C.: Can people be criminally prosecuted for unknowing violations of McCain-Feingold?

Bobby Burchfield: No. To be prosecuted criminally, the actions must be knowing and willing. But the Act also increases civil penalties, which can be significant depending on the type of violation.

Alexandria, Va.: What are your reasons for challenging this law?

Bobby Burchfield: We and our clients believe the Act will cause a major reordering of the American political process. It interjects federal regulation into purely state and local political activity. It interferes with the ability of local, state, and national political parties to exercise their protected associational rights by interfering (and in some instances prohibiting) their ability to work together during election campaigns. And it puts political parties at a severe disadvantage in relation to special interest groups, which are already beginning to solicit and receive the same so-called "soft money" that political parties used to receive. The difference is that special interest groups have far fewer disclosure and reporting obligations.

Moderator: What do the terms "soft money" and "hard money" mean?

Bobby Burchfield: These are colloquial terms that have somewhat imprecise meanings. "Hard money" is money that is fully regulated by federal law under the Federal Election Campaign Act. It is money contributed by individuals (U.S. citizens and permanent legal residents) up to certain contribution limits. "Soft money" is money not regulated by the Federal Election Campaign Act. In most instances, this term refers to political donations by corporations and unions (which the Federal Election Campaign Act prohibits from contributing) or from individuals in excess of the federal contribution limits. By the way, most political party "soft money" is regulated by state law in the states where it is spent. Interest group "soft money" is largely unregulated and undisclosed.

Washington, D.C.: Which party do you see this benefiting?

Bobby Burchfield: My personal view is that the new law doesn't benefit one of the major parties over the other in any significant way. It's principal effect is to place parties at a disadvantage in relation to special interest groups. The Act may have a severe effect on minor parties in relation to the major parties.

New York, N.Y.: You said, "it puts political parties at a severe disadvantage in relation to special interest groups, which are already beginning to solicit and receive the same so-called "soft money" that political parties used to receive. The difference is that special interest groups have far fewer disclosure and reporting obligations." Does that mean you would support the disclosure requirements for interest groups sponsoring election-related advertising?

Bobby Burchfield: As you know, the First Amendment has been construed by the United States Supreme Court for almost a century to protect groups against disclosure of certain basic information, such as contributors. My personal view is that the widest, unrestricted, no holds barred debate is in the interest of the public and American democracy. If disclosure by interest groups impedes that debate by discouraging them from entering the debate, I would, again personally, oppose it. But the Act does quite a bit more than require disclosure by interest groups.

Los Angeles, Calif.: Outside the Beltway, no matter what you call it, whether "campaign contribution" or something else, it's a bribe. I pay you, you vote or support something I'm interested in. The influence of money has corrupted our political system to such an extent that one's vote is an afterthought in the political process. Until all campaign contributions are removed from our political system our democracy will be controlled by corporations and highly-financed special interest groups. I'm only 33, so hopefully by the time my kids can vote the American public will have put this corruption to an end. If not, one can only imagine what a shell of its former self our Republic will have become.

Bobby Burchfield: As a historical matter, there is less corruption in the United States among federal officeholders than ever before in history, and less here than in any other democracy (including those that use public financing) according to esteemed historian Morton Keller. Taxpayer financing schemes in this country have been largely unsuccessful; presidential campaigns in this country have been financed with taxpayer dollars for almost 30 years, but this did not prevent the White House coffees and Lincoln Bedroom sleepovers. In addition, taxpayer participation in the "taxpayer checkoff" that funds the presidential campaigns has fallen every single year since 1976, even though it costs nothing to check the box. This does not evidence great public support for taxpayer funding. And the recent fiasco in Massachusetts in which a court ordered the legislature to either budget tax dollars or sell its furniture to pay for the campaign fund is another stark example of the problems with taxpayer financing.
Private contributions are a vital part of public participation in the political process. Even if there were no First Amendment or other constitutional protections, it is not realistic to think that private money will ever be purged from politics, nor should it be. Private citizens need to have the ability to speak (which in this age requires money) and to support candidates that speak for them.

Moderator: What is the effect of McCain-Feingold on corporations and trade associations without PACs?

Bobby Burchfield: Corporations and trade associations without PACs will no longer be able to contribute to national political party committees. Contributions to state political parties in states that allow corporate contributions are still permissible; however, the use to which those contributions can be put is severely limited by BCRA. Without a PAC it will be very difficult for most corporations to engage in issue advocacy because the new law prohibits so-called electioneering communications to be run in the 60 days before a general election or the 30 days before a primary election unless such ads are paid for with federal ("hard") money. A corporation without a PAC will not have any federal money to pay for such ads.

Moderator: In what ways can corporations and trade associations still use "soft money" to make political contributions, even under McCain-Feingold?

Bobby Burchfield: There are a variety of ways for corporations and trade associations to continue making "soft money" contributions. First, they can still make political contributions to state political parties in those states that allow corporate contributions. Up to $10,000 of such contributions can be used by the state or local party for federal election activities. Second, corporations and trade associations can make contributions to state and local candidates in amounts consistent with state law. Third, corporations and trade associations can use soft money for (or donate soft money to other groups for use in) political activities such as get-out-the-vote drives, voter registration efforts, and unregulated issue advocacy, so long as those activities do not contain express advocacy.

Moderator: How does McCain-Feingold change the rules for "hard money" political contributions by corporate executives and other individuals?

Bobby Burchfield: McCain-Feingold increases the amount individuals can contribute to candidates from $1000 to $2000 per election and increases the amount individuals can contribute to national political party committees from $20,000 per year to $25,000 per year. Total individual political contributions have also been increased to allow for total contributions of $57,500 in a two year period to both candidates and political parties combined. Of that amount no more than $37,500 can be direct candidate contributions. In contrast to these increases, McCain-Feingold bans all contributions from persons 17 years old or younger.

Moderator: How does McCain-Feingold affect the fundraising and political activities of tax-exempt, non-profit organizations?

Bobby Burchfield: The rules for tax-exempt, non-profit organizations such as 501(c)(4)’s and 527’s have changed under BCRA primarily in the area of issue advertising. Before BCRA, non-profit organizations could pay for issue advertisements up to and including the day of a federal election with 100 percent non-federally regulated funds. Now those groups will have to pay for issue advertisements that refer to a clearly identified candidate for federal office (i.e. that use a candidate’s name, nickname, photograph, or drawing) with "hard money." Thus nonprofit organizations will have to form PACs if they wish to engage in issue advertisements that are considered electioneering communications in the 60 days before a general election or the 30 days before a primary election.

The statute also imposes certain limits on fundraising by federal officeholders and candidates for 501(c) and 527 organizations.

Harrisburg, Pa.: For at least the second election in a row, both parties have been fined for improperly transferring money between the party national and state committees. If they were fined before, aren't they aware they are breaking the law again the second time? Or, do parties need the money so much in the heat of campaigns that they deliberately break the law knowing they will just pay the fines after the elections?

Bobby Burchfield: I'm pretty sure the parties have not been fined for transferring money between the national and state parties. To begin with, it has been legal (until the McCain-Feingold Act became effective) for national and state parties to transfer money to each other. In fact, the national parties provide over half of the funding for the state parties. Although McCain-Feingold restricts or prohibits these transfers, it was not effective until after the just-completed election.
Moreover, the FEC could not have acted on any complaints arising out of the 2002 election so quickly. There are statutory periods for allowing any entity charged with a campaign law violation to respond to the allegations.
So I think the premise of your question is incorrect. More generally, I believe the political parties do not deliberately break the law. The law in this area is complex, obtuse, and often counter-intuitive, but I know that both parties have many very capable lawyers advising them on compliance. Quite apart from the legal penalties, there is always a high political price to pay for violating the law.

Washington, D.C.: Do you believe that when a corporation gives $1 million to a political party, they are doing it because they expect something in return?

Bobby Burchfield: This is a common argument made by our friends in the pro-regulation community. To begin with, there are not that many $1 million corporate contributions. During the 2000 cycle, at then-Governor Bush's request, the RNC limited donations to $250,000. The numbers put out by the Center for Responsive Politics, Democracy 21, and other pro-regulation groups--to the extent I understand them -- often (i) group all contributions by the corporation and all its employees (ii) to all political committees (local, state, and federal) of the same party (and sometimes both parties), and (iii) sometimes to all candidates. We discovered during the campaign finance case that the largest contributor to the RNC during the 2000 cycle (according to information compiled by the Center for Responsive Politics) was the Republican Party of Florida! As noted earlier, political parties like the Republican Party of Florida could legally transfer money to their affilated parties -- that's political association protected by the First Amendment. The transfers by the Florida Party were of course composed of many, many contributions from many different contributors. So be wary of these numbers.

And, regardless of what the contrbutor thinks it may be buying, even the rare $1 million contribution is less than a quarter of 1 percent of what each of the parties raises each election cycle.

Silver Spring, Md.: In response to another question, you said, "The Act may have a severe effect on minor parties in relation to the major parties." What effects do you think the Act may have on minor parties?

Bobby Burchfield: Minor parties often participate in elections to send a message or to highlight an issue rather than because of any realistic expectation of winning. Because they often represent unpopular views, they have trouble raising money from a multitude of contributors. They rely on "seed money" from a few contributors even to begin raising money. Since the Act requires them to fund not just their campaign activities but also their overhead and other expenses within the strict federal limits, they are likely to have fewer resources to engage in the debate. Also, some of the minor parties depend even more heavily on their national parties for financial support than do the major national parties. As indicated earlier, the Act makes it much more difficult for national parties to provide financial support to their state affiliates.

Harrisburg, Pa.: I asked the question earlier about the transfers between national and state party committees. I should have stated the parties were fined for both the 1996 and 2000 elections, with the 2000 fines happening in 2002. It was a very small news item, yet if you research it you will discover that parties have been improperly transferring the funds. What I am trying to understand is: if the parties knew from the 1996 elections they were doing it wrong, why did they continue doing it the wrong way in 2000? Of course, perhaps this is not something that you can not answer since it involves others.

Bobby Burchfield: News reports in this area are often confusing because the area is complex and there are a good many urban legends that just aren't true. You may be referring to the recent Federal Election Commission audit findings concerning the major party presidential candidates. As a condition of receiving taxpayer funding, the candidates have to agree to a post-election audit. The audit determines whether they have spent the public money in authorized ways. The allowed uses of the money are among the most arcane and difficult in this area of the law. Every presidential campaign except one has been required to make a repayment. The only campaign that was not required to make a repayment was former President Bush's 1992 campaign. Did I mention that I was the lawyer for that campaign?

Moderator: What are the prospects for some or all of the restrictions on "issue advertising" to be struck down by the courts?

Bobby Burchfield: Challengers to those provisions of McCain-Feingold dealing with issue ads made a strong case that the new restrictions imposed by this law are at odds with existing Supreme Court precedent. We think there is a good chance those provisions will be struck down or limited in some way.

Moderator: What are the prospects for some or all of the provisions of the "soft money" ban to be struck down by the courts?

Bobby Burchfield: As attorneys for the Republican National Committee, we are guardedly optimistic that the “soft money” ban will be found unconstitutional. We believe the District Court has before it a strong record on how the "soft money" ban impermissibly interferes with the state regulation of state and local election activity and with associational rights of political parties and their members. We also presented the Court with strong evidence that the ban, which applies only to national political parties, is at odds with the concept of equal protection because special interest groups can continue raising and spending "soft money" on election activities such as voter mobilization and voter registration which political parties must pay for with "hard money." We are keeping our fingers crossed.

Richmond, Va.: This newspaper, the New York Times, and other well-recognized media organizations have consistently taken the position through their editorial pages that campaign finance laws -- no matter how sweeping and intrusive -- do not infringe on First Amendment rights, though at the same time, these organizations trumpet their own free press rights. Can you comment? Does the media just have its head in the sand?

Bobby Burchfield: Our friends in the media have, with all due respect, a somewhat xenophobic view of the First Amendment. Of course, the federal campaign finance laws all contain statutory exceptions for the media. Nevertheless, even in view of the very important First Amendment protections accorded to the press, the case law is clear that the New York Times, The Washington Post, NBC, and other media have no greater First Amendment protection than anyone else. In short, without the statutory exception granted as a matter of legislative grace, the media could be subjected to the same requirements as political parties. They are, in effect, betting on the continued good will of Congress. If that exceptioin were ever removed -- and I don't advocate that; it would be terrible -- they might finally see things the right (our) way.

Bobby Burchfield: Thanks to every one who participated in the program today. These are very important issues for American democracy, and a vigorous debate on these issues is very important.

For more information about our firm, please visit our Web site at www.Cov.com. To contact me, email me at bburchfield@cov.com.

Everyone have a wonderful Holiday Season and a prosperous, safe, and successful 2003.

Moderator: Our thanks to Bobby Burchfield, Covington & Burling and all who participated.