A divided Supreme Court yesterday upheld strict dollar limits on political contributions, reaffirming its long-standing view that such restrictions do not impinge on free speech and are justifiable efforts to counteract "the cynical assumption that large donors call the tune."

By a 6-3 vote, the justices endorsed a Missouri law barring individuals from giving more than $1,075 to a candidate per election and rejected calls to reconsider the court's 1976 ruling that first upheld the constitutionality of contribution limits. A decision striking down the Missouri law would have threatened a broad array of existing federal and state campaign finance rules and introduced a potentially explosive new factor in the 2000 elections.

Instead, yesterday's ruling gives a boost to advocates seeking more controls on political contributions and provides some legal ammunition for legislative efforts to curtail so-called soft money, the huge contributions to political parties that have escalated in recent years.

Coming at a time when federal courts across the country and the Supreme Court itself had appeared sympathetic to arguments that campaign finance rules impinge on free speech, the decision demonstrates that this court is not hostile to government attempts to control the influence of money in elections and--at least with its current make-up--is not inclined to revisit the fundamental premises of Buckley v. Valeo, its landmark 1976 campaign finance ruling.

In fact, in the high court's first direct review of Buckley, it was plain the justices still believe in the decision's underlying philosophy: That government can protect the integrity of the democratic system by banning large contributions to individual candidates. The majority also clung to the Buckley dichotomy in which caps on contributions are deemed constitutional but spending restrictions are generally considered infringements on free speech.

The narrow issue in yesterday's case, Nixon v. Shrink Missouri PAC, was whether the state's $1,075 contribution limit was constitutional even in light of Buckley, given that the $1,000 cap on donations to federal candidates approved in that case had been eroded by nearly a quarter-century of inflation.

But with spirited rhetoric throughout, the majority and dissenting opinions also offered dueling visions of the theoretical implications and practical fallout from Buckley, in which the court considered the campaign finance laws enacted in the wake of Watergate. "We spoke in Buckley of the perception of corruption inherent in a regime of large individual financial contributions . . . ," Justice David H. Souter wrote for the majority. "Leave the perception of impropriety unanswered, and the cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in democratic governance." He was joined by Chief Justice William H. Rehnquist and Justices John Paul Stevens, Sandra Day O'Connor, Ruth Bader Ginsburg and Stephen G. Breyer.

In his dissent, Justice Anthony M. Kennedy declared the majority's reasoning an affront to the First Amendment and said, "The Court's decision has lasting consequences for political speech in the course of elections, the speech upon which democracy depends."

He said the legacy of Buckley and its distinction between contributions and expenditures was not remedying voters' mistrust of politics but rather a "misshapen system" of "covert contributions" in which "the court has forced a substantial amount of political speech underground, as contributors and candidates devise ever more elaborate methods of avoiding contribution limits."

Also in dissent were Justices Clarence Thomas and Antonin Scalia, who wrote separately to emphasize that contributions to campaigns represent political speech. "By depriving donors of their right to speak through a candidate," Thomas wrote, "contribution limits relegate donors' points of view to less effective modes of communication."

Coming on the same day as the Iowa caucuses, the decision inspired immediate response from politicians. Those who have long argued for changes in the system called it a victory. Those who were rebuffed, such as Sen. Mitch McConnell (R-Ky.), who contends contributions are essentially political speech, sought to minimize the import of the decision.

President Clinton said, "The American people know that our political system needs to be fixed, and today's decision sets the stage for further reform."

Zev David Fredman, a failed candidate for state auditor, and the Shrink Missouri Government PAC, which backed his campaign, had challenged the 1994 Missouri statute as unconstitutionally compromising their ability to mount effective campaigns, particularly against incumbents. The U.S. Court of Appeals for the Eighth Circuit agreed, calling the limit a "heavy-handed restriction of protected speech."

Reversing that decision, the high court yesterday emphasized the evils of money in the system. "Democracy works only if the people have faith in those who govern, and that faith is bound to be shattered when high officials and their appointees engage in activities which arouse suspicions of malfeasance and corruption," Souter wrote.

He rejected arguments that a state that seeks to limit donations must show a threat of harm. Missouri officials had relied heavily on a single affidavit of a state senator who declared that large contributions have "the real potential to buy votes."

The majority observed that, under Buckley, a state need only show that a restriction on campaign contributions furthers a "sufficiently important interest."

"[T]here is little reason to doubt that sometimes large contributions will work actual corruption of our political system," Souter said, "and no reason to question the existence of a corresponding suspicion among voters."

In dissent, Kennedy said the majority position "abandons the rigors of our traditional First Amendment structure" and actually undermines democracy by encouraging the use of so-called soft money contributions to political parties rather than direct donations to candidates.

But proponents of campaign finance reform said yesterday's ruling may aid in efforts to restrict "soft money."

"The argument against the regulation of soft money is that somehow these enormous contributions to political parties are protected speech," said E. Joshua Rosenkranz of the Brennan Center for Justice. "In declaring that legislatures have great latitude in setting contribution limits, the court has taken that argument off the table."

But Sen. McConnell protested, "Contrary to popular spin, this case had absolutely nothing to do with soft money or contributions to political parties."

The American Civil Liberties Union, which argued for striking down the law, called the court's approach "minimalist." Said ACLU attorney Joel M. Gora, "The court today did no harm. No landmark First Amendment ruling was handed down and none was dismantled."

From the Court's Ruling

The Supreme Court reaffirmed states' power to deter corruption by imposing limits on campaign contributions to political candidates.

The Majority

William H. Rehnquist

Sandra Day O'Connor

John Paul Stevens

David H. Souter

Ruth Bader Ginsburg

Stephen G. Breyer

"Leave the perception of impropriety unanswered, and the cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in democratic governance."

The Dissent

Anthony M. Kennedy

Antonin Scalia

Clarence Thomas

"The court has forced a substantial amount of political speech underground as contributors and candidates devise ever more elaborate methods of avoiding contribution limits, limits which take no account of rising campaign costs."