League of Women Voters | Rochester Metropolitan Area, Rochester, NY
Untitled Document

Money in Politics

Remember when thinking about your answers to the Consensus questions, we should respond "without regard for the Supreme Court's current views on the First Amendment," or its current narrow definition of corruption.

The Role of the Supreme Court in Interpreting the Constitution

When the Supreme Court issues an opinion, it is binding on the litigants, is enforced by the U.S. government, and serves as precedent for future cases.  It is the “law of the land.” 

However, many Supreme Court decisions have been actively opposed by significant segments of the population over long periods of time.  Sometimes the decisions have been explicitly or implicitly reversed.  For example:  Brown v. Board of Education (1954) reversed Plessy v. Ferguson (1896) which had allowed state sanctioned racial segregation. More often, the Court has nibbled around the edges of a precedent to limit it until the core holding is unrecognizable, which appears to be happening with regard to abortion rights.

There are two fundamental ways that Supreme Court decisions can, and have been, directly overturned:  1) by changes in the membership and/or philosophical outlook of the Court itself, and 2) by direct constitutional amendment.  Indirectly, Supreme Court decisions may also be implicitly overturned by contesting new cases at the margins in order to bend the implementation and interpretation of the original decision.

Click here for more information about the role of the Supreme Court in interpreting the Constitution.

Shifts in Supreme Court 0pinion about Money in Politics

Before 1970, campaign finance regulation was weak and ineffective, and the Supreme Court infrequently heard cases on it. The Federal Corrupt Practices Act of 1925 was the campaign finance reform act in effect when Congress enacted the Federal Election Campaign Act of 1971 (FECA), but it was easily evaded and rarely enforced.

Campaign finance reform was under consideration in Congress for many years. FECA was enacted in 1971, and its limitations became obvious during the 1972 presidential campaign. Consequently, the act was amended so extensively in 1974 that FECA as amended is generally considered the beginning of the modern campaign finance regime. FECA as amended in 1974 limited contributions and expenditures, imposed spending caps, created the Federal Elections Commission, and established the Presidential Public Financing System. Supreme Court decisions on FECA disclosed inconsistent rationales and shifting majorities.

Money and Speech

Enactment of FECA corresponded with a conservative resurgence, and in 1971 the American Enterprise Institute published a pamphlet by Yale law professor Ralph K. Winter that challenged campaign finance regulation as an infringement of free speech. Immediately after enactment of the 1974 amendments, Winter filed an expedited action seeking a declaratory judgment that most parts of FECA unconstitutionally infringed free speech rights guaranteed by the First Amendment. In addition to conservative Republican senator William Buckley, plaintiffs included the American Civil Liberties Union (ACLU) and liberal Democratic senator Eugene McCarthy.

First Amendment analysis typically asks three questions: is there a compelling governmental interest that justifies some limitation; is the limitation the least restrictive means of protecting that governmental interest; and does the limitation apply too broadly, to situations where the governmental interest is not in play?

In 1976, the Supreme Court on appeal upheld FECA’s limitations on contributions, public financing, and disclosure provisions in Buckley v. Valeo. The contributions limitations were sustained on the grounds that preventing "corruption or the appearance of corruption" is a fundamental governmental interest that justifies some limitations on First Amendment freedoms. However, the Court struck down limitations on self-funding, finding no link between the spending of money by candidates themselves and “quid pro quo” corruption. It also struck down the regulation of uncoordinated independent expenditures because there is no “gift” to the candidate and therefore no “quid pro quo,” which effectively made independent expenditures constitutionally protected as a matter of law. The Court’s majority said: “Some forms of communication made possible by the giving and spending of money involve speech alone, some involve conduct primarily, and some involve a combination of the two. Yet this Court has never suggested that the dependence of a communication on the expenditure of money operates itself to introduce a non-speech element or to reduce the exacting scrutiny required by the First Amendment” The decision has come to stand for the notion that “money is speech.”

Corporations and the First Amendment

FECA continued the ban on campaign contributions by corporations and labor unions, including “express advocacy” expenditures, but contained an exception for media corporations. News stories, commentaries, and editorials made in the regular course of a media corporation’s business are not express advocacy under FECA.

The Supreme Court undermined prohibitions against corporate spending in political campaigns in 1978 by overturning a Massachusetts statute that prohibited corporate spending in referenda elections not “materially affecting any of the property, business, or assets of the corporation.” The Court expressly refrained from deciding whether for-profit corporations had a right to participate in the election of a candidate to public office.

In 1986, the Supreme Court created another exception for expenditures by nonprofit, non-stock corporations created for the purpose of political advocacy that do not engage in business activities. The Court noted that the justification for limiting corporate campaign contributions to separate PACS—concern over the “corrosive influence of concentrated corporate wealth” on the “marketplace of political ideas”— did not apply to this type of corporation. Chief Justice Rehnquist and Justices White, Blackmun, and Stevens dissented, agreeing with precedents holding that the special benefits of the corporate structure compelled special regulation of corporations in the campaign finance area.

“Corruption” Justifying the Regulation of Speech

In 1990, the Supreme Court upheld a Michigan ban on corporate campaign expenditures by arguing that for-profit corporate campaign expenditures created a “different type of corruption in the political arena: the corrosive and distorting effect of immense aggregations of wealth that are accumulated with the help of the corporate form that have little or no correlation to the public's support for the corporation's political ideas…They reflect instead the economically motivated decisions of investors and customers." The unfairness inherent in corporate campaign expenditures is compounded because business corporations receive significant economic benefits that other kinds of associations do not, “such as limited liability, perpetual life, and favorable treatment of the accumulation and distribution of assets – that enhance their ability to attract capital and deploy their resources in ways that maximize the return on their shareholders investments.” The Court found that the prohibition on corporate expenditures was narrowly tailored to further the government’s compelling state interest in preventing corruption because business corporations’ political speech was not banned but merely channeled into PACs.

In 2002 Congress passed a new, more comprehensive Bipartisan Campaign Reform Act (BCRA), also known as McCain-Feingold. The act regulated contributions to and the sources of expenditures by political parties for purposes other than the election of candidates to national office (soft money) and barred independent “electioneering communications” made shortly before elections.The Supreme Court upheld the key provisions of the BCRA in strong language, recognizing “the Government’s interest in combating the appearance or perception of corruption engendered by large campaign contributions.” Furthermore, they said: “‘[i]n speaking of ‘improper influence’ and ‘opportunities for abuse’ in addition to ‘quid pro quo arrangements,’ we [have] recognized a concern not confined to bribery of public officials, but extending to the broader threat from politicians too compliant with the wishes of large contributors,’” and “[t]ake away Congress’ authority to regulate the appearance of undue influence and ‘the cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in democratic governance.”

In 2007, the Court found in a 5-4 opinion that the BCRA was unconstitutional to the extent that it prohibited as “electioneering communications” issue ads by a 501(c)(4) corporation that named candidates and were broadcast during the relevant period prior to an election.

In Citizens United v. FEC (2010), the same 5-4 majority found that corporate funded express advocacy was also protected speech under the First Amendment. Acknowledging that the government has a compelling interest in preventing corruption or the appearance of corruption, the majority stated that corruption could be found only in the case of a quid pro quo exchange and that cannot occur with an independent expenditure because there is no gift to the candidate. Furthermore, the Court specifically held that the government may only regulate the political speech of corporations by disclosure and disclaimer requirements; “it may not suppress that speech altogether…First Amendment protection extends to corporations.”

In McCutcheon v. FEC (2014), the same 5-4 majority of the Court struck down the aggregate contribution limitations of BRCA so long as a donor kept contributions to individual candidates within the act’s limits. Reaffirming its view that the only permissible ground for limiting speech in the form of campaign contributions is quid pro quo corruption, the majority expressed confidence that limits on individual contributions were sufficient to protect against the danger of bribing an individual candidate or appearing to do so.

The current 5-4 conservative majority on the Supreme Court has also rejected any argument that Congress may regulate campaign finance in order to ensure a level playing field for candidates and political interests. They struck down the so-called Millionaire’s Amendment to BRCA, which raised contributions for candidates who faced self-funded opponents if the opponents’ self-funding exceeded a certain limit, on the grounds that it burdened the self-funded candidate’s speech.They reaffirmed the constitutionality of public funding of political campaigns, but struck down an Arizona program that gave publicly funded candidates additional funds if expenditures by their privately funded opponent and independent expenditures on behalf of that opponent exceeded a certain level.

Click here for more information about Supreme Court decisions.

All information on the Money in Politics pages has been taken from materials provided by LWVUS.

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