Regardless of the court’s decision, wealthy individuals seeking influence will continue to be allowed to donate unlimited sums to outside organizations – groups adept at setting the political agenda and pummeling politicians who dare defy them by engaging in democratic compromise with the other side.
The question in McCutcheon is whether it is unconstitutional to prevent an individual from making a limited contribution (currently set at $2,600) to as many candidates as he or she would like. Currently, individuals can give no more than a total of $48,000 to all candidates, meaning a donor can give the maximum contribution to 18 candidates. See the contribution chart here.
Reformers say a ruling in favor of Shaun McCutcheon, an Alabama resident who would like to contribute more than the current biennial limits permit, opens the door to corruption because it allows a donor to buy off an entire legislature one-by-one (assuming each representative can be bought by a $2,600 contribution). This argument seems tenuous and a majority of Justices during oral arguments did not seem to buy it. Consider that the average cost of winning a seat for Congress is about $1.4 million, which means that a $2,600 contribution is about 0.18 percent of the total.
Given that a base limit ($2,600) is in place to prevent the quid pro quo between a donor and candidate, the conservative Justices seemed skeptical that the government should be allowed under the First Amendment to restrict individuals from donating to as many candidates as they would like.
A more compelling concern is that a favorable ruling will allow donors to give limited amounts of money to an unlimited number of political action committees (“PACs”) who could then channel the donors’ contributions to selected candidates. It is argued that this kind of money laundering would make a charade of contribution limits. Even conservative Chief Justice John Roberts acknowledged this potential problem in his questioning.
While understandable, these fears appear overblown because such a strategy is unlikely to be pursued by donors for many reasons. First, it is highly inefficient to coordinate these donations through so many PACs. Candidates will surely be confused about whom to “thank” unless they keep a cheat sheet that shows the source behind the PAC labyrinth. It is also illegal to earmark donations given to committees for particular candidates without disclosing this arrangement (as noted election law attorney Bob Bauer explains here), which would then count the donation against the contribution limit to that candidate. There are also anti-proliferation laws that would make it difficult to create multiple PACs with ties to the same entities or persons.
But the biggest reason McCutcheon won’t be exploited is that the smart money already has a better alternative. According to the Center for Responsive Politics, only 646 individuals in 2012 hit the maximum overall contribution limit of $117,000. Wealthy donors can currently give unlimited amounts to outside organizations, like Super PACs, which can then spend unlimited amounts to campaign independently for or against a candidate. By giving to outside organizations, megadonors such as the Koch brothers, Michael Bloomberg, and George Soros can set the political agenda and scare politicians from compromising on policies and budget deals — and not a single contribution to a candidate is necessary. (See the recent Koch-funded ad to cut spending here.)
In fact, the flood of money to outside groups actually signals that we need higher, not lower, limits on donations to candidates, PACs, and parties. The failure to peg contribution limits to inflation since the 1974 post-Watergate reforms is a likely cause for so much money flowing to outside organizations. This has resulted in seriously diminished value of a contribution to conventional PACs and political parties. The inflation-adjusted limit for a contribution to a PAC should have risen from a base of $5000 in 1974 to $23,460 in 2012. Its value in 2012 is just over $1000 relative to the 1974 limit put in place after the Watergate scandal. Similarly for political parties. The inflation-adjusted value of a contribution to a party should have risen from a base of $20,000 to $93,460. Instead its actual value relative to 1974 is just $5,328.
Ultimately, the effort to stop McCutcheon’s challenge is a bit like trying to lock your front door against an intruder when the back half of your house has burned down. Consider, for example, that in the 2012 elections, donors to outside groups provided roughly $1.4 billion in financing for federal elections compared to just $93.4 million given by donors reaching the maximum overall donation limit that is being challenged in McCutcheon. Even if McCutcheon loses his case, wealthy donors have plenty of opportunities to give money outside the formal campaign finance system. Given the current situation, it could be argued that McCutcheon winning may actually improve the political system by curtailing the flow of money from wealthy donors to outside groups. Importantly, candidate contributions are all reported to the Federal Election Commission and highly transparent, unlike much of the money going to outside organizations.
This leads to another reason to hope McCutcheon wins, even though it was only briefly alluded to by Justice Scalia during the oral arguments at the Court. The ruling may make party organizations more important in campaigns. Election rules like the McCain-Feingold reforms in 2002 have restricted the parties and created incentives to funnel money to outside organizations. A McCutcheon victory would mean that donors could contribute more to the party organizations at the national, state and local levels. Right now they have to make choices about which ones they will support generously, while Super PACs have no restrictions on giving. Total party fundraising has been declining slightly over the past several election cycles while the amount that other organizations raise has been increasing since McCain-Feingold reforms in 2002 (which eliminated party soft money).
Anyone who dislikes the current stalemate in Washington should want party organizations to control campaign money rather than shadowy outside groups. Unlike the factional extremist groups within each party, members of Congress don’t have to worry about their own party organization attacking them for compromising on legislation. Indeed, a member can typically count on the consistent support of the party organization, even while they remain scared of being “primaried” by extremist groups that want to remake the party in the group’s image.
Rather than continuing to push money outside the regulated system by maintaining excessively low base and aggregate contribution limits, we should consider ways to restore its circulation through accountable and broad-based institutions like political parties or traditional PACs. My guess is that the aggregate limits are going to disappear once the Supreme Court has its say in McCutcheon. I think the court will uphold base contribution limits as constitutionally permissible to avoid class quid pro quo corruption. In that instance, I recommend – somewhat paradoxically – that Congress raise the base limits on parties and PACs to attenuate efforts at circumvention. (Actually, I would recommend this change regardless of the McCutcheon outcome.)
However, should Shaun McCutcheon win his argument before the Supreme Court, history suggests that few donors will exploit the decision. In fact, if McCutcheon is successful the campaign finance system might even become better in terms of transparency and promoting moderation in the nation’s politics.