The Deregulatory Moment?: A Comparative Perspective on Changing Campaign Finance Laws available in Paperback
For those who assume that increased regulation of political spending is inevitable in democratic nations, recent developments in U.S. campaign finance law appear puzzling. Is deregulation, exemplified by the U.S. Supreme Court’s decision in Citizens United v. FEC, a harbinger of things to come elsewhere or further evidence that the United States remains an anomaly?
In this volume, experts on the United States, Canada, Great Britain, Australia, Germany, Sweden, France, and several other European nations explore what deregulation means in the context of political campaigns and demonstrate how such comparisons can inform the study of campaign finance in the U.S. Whereas the contributors do not settle on any single theory of change in campaign finance law or any single perspective on the relationship between changes seen in the U.S. and those in other nations over the past decade, they do concur that the U.S. is rapidly retreating from the types of regulations that defined campaign finance law in most democratic nations during the latter decades of the twentieth century. By tracing and analyzing the recent history of regulation, the contributors shed light on many pressing topics, including the relationship between public opinion and campaign finance law, the role of scandals in inspiring reform, and the changing incentives of political parties, interest groups, and the courts.
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About the Author
Robert G. Boatright is Associate Professor of Political Science at Clark University.
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The Deregulatory Moment?
A Comparative Perspective on Changing Campaign Finance Laws
By Robert G. Boatright
The University of Michigan PressCopyright © 2015 Robert G. Boatright
All rights reserved.
Campaign Finance Deregulation in the United States
What Has Changed and Why Does It Matter?
In recent years, many of the rules and regulations governing the U.S. campaign finance system have been relaxed, lowering or eliminating some of the fundraising and spending barriers for nonparty groups, while restrictions on candidate and party campaign finance activity remain in place. These changes have resulted in a significant increase in nonparty outside spending — money not spent by candidates themselves or their parties. Loosened restrictions have resulted in the emergence of a new type of campaign finance group, an increase in money from undisclosed sources, and a shift in the sources of campaign spending.
The recent actions to deregulate the U.S. campaign finance system cannot be explained by a single theory, because these changes reflect a number of possible causal explanations. For example, the partisan nature of the debate regarding contemporary campaign finance regulation, whereby virtually all Republicans embrace deregulatory changes and virtually all Democrats denounce them, suggests that one party sees some electoral advantage in deregulation (Scarrow 2004, 2006). However, most of the recent deregulatory changes have resulted from activists outside of government challenging campaign finance rules in court and working to shape regulations issued by bureaucratic agencies, not from the passage of laws by Congress. So although one party may favor deregulation and benefit from it electorally, neither party in the elected branches of government has initiated these changes.
Instead, nonelected government officials in the courts and bureaucratic agencies have made decisions that have deregulated parts of the campaign finance system, but the plaintiffs' arguments, the judges' rulings, and the regulators' decisions are not devoid of ideological justification. They generally make libertarian normative arguments that rest on ideas at the core of American political culture, such as freedom of expression, privacy, and the proper role of government. For example, many of these recent court and regulatory decisions rely on a particular view of the First Amendment. This view generally holds that all interested individuals and entities should be afforded the greatest level of freedom to speak about candidates running for office as long as their speech (and the money spent to broadcast or otherwise disseminate that speech) does not result in corruption or the appearance of corruption. Such normative arguments have encouraged deregulation in the name of fundamental rights and the government's responsibility to protect those rights, not overtly to confer electoral advantage on one party.
Of course, these activists and governmental actors may be promoting deregulation in an effort to create an environment that gives electoral advantage to one party — in this case, presumably the Republican Party. Yet as Robert Boatright notes in the introduction to this volume, we know very little about what motivates the courts. Partisan politicians appoint judges and top bureaucrats, so perhaps these nonelected officials are partisans as well. In a recent rigorous analysis of judicial behavior, Epstein, Landes, and Posner have found that "federal judges are not just politicians in robes, though that is part of what they are" (2013, 385). Many of the Supreme Court's recent votes on campaign finance cases have certainly followed ideological lines, with the same five conservative justices outvoting the four more liberal justices.
Another factor is that the Federal Election Commission (FEC), the agency responsible for implementing and enforcing federal campaign finance laws, is designed for partisan deadlock, with three Republican and three Democratic commissioners. Recent Republican appointees are more focused on rolling back what they consider regulatory overreach, leading to tie votes and thus inaction on various attempts to, for example, require disclosure of new campaign finance activities (Rowland 2013). The FEC's inability to act is thus a form of deregulation, resulting in a regulatory system that is out of step with the reality of contemporary politics. Some deregulation is therefore the consequence of "policy drift," whereby the rules and regulations have not kept pace with actual practice, creating opportunities to get around the rules or take advantage of loopholes in those rules (Hacker and Pierson 2010, 170–71). For example, the ability of presidential candidates to raise more money for their campaigns if they do not accept public funding has made the voluntary public finance system in the United States virtually obsolete, a quaint remnant of a bygone era when public funding provided a way to level the playing field between presidential contenders. Sometimes, however, the FEC does issue regulations or make rulings, and many of its recent actions have loosened regulations and thus contributed to further deregulation of the campaign finance system. Indeed, some of its decisions do appear to be made to protect or promote the electoral fortunes of one party or its allied groups.
In this chapter, I discuss many of the recent court and bureaucratic decisions that have deregulated much of the U.S. campaign finance system and evaluate the consequences of these changes in recent elections. I show that much of the spending in U.S. federal elections has shifted to nonparty political groups, thus reducing the financial role of candidates and their parties, a development that, I argue, is detrimental to the overall health of American representative democracy. Recent deregulatory changes also have eroded the long-standing requirement of public disclosure of campaign finance activity, making it impossible in some cases to know who is spending money to influence the outcome of elections. Big spending can certainly influence who sits in Congress and controls the White House and thus the direction of public policy. Without knowing who is spending to influence them, voters have more difficulty acting prospectively to choose candidates and parties closest to their policy preferences. Finally, I consider the fact that the purposeful deregulatory actions have come exclusively from the nonelected branches of government, those whom voters are least able to hold accountable for policy decisions. Indeed, Congress has not responded to either the changed campaign finance environment or the changes made by these nonelected officials.
Deregulation: What Has Happened?
Campaign finance deregulation in the United States did not begin in 2010 with Citizens United v. Federal Election Commission. In fact, one could argue that the Supreme Court began chipping away at legislative actions to regulate electoral finance as early as Buckley v. Valeo (1976), the first major challenge to the expenditure limits on candidates, individuals, and groups imposed by the Federal Election Campaign Act (FECA). Yet the real movement toward deregulation did not begin until after passage of the 2002 Bipartisan Campaign Reform Act (BCRA), when the courts and the bureaucracy began to chip away at it and other campaign finance regulations.
The Bipartisan Campaign Reform Act
BCRA dealt primarily with closing what were considered loopholes in the campaign finance system. The law was in essence an effort to deal with the results of policy drift. For example, it prohibited national political parties, federal candidates, or federal officeholders from soliciting or accepting soft money contributions — unlimited contributions often from otherwise prohibited sources, such as corporations and unions. Parties had collected millions of dollars in soft money from wealthy individuals, corporations, and unions, and prior to BCRA, the law allowed them to spend it on "party-building" activities but not for direct support of candidates (e.g., get-out-the-vote drives and generic party advertising). The parties found creative ways to use soft money to more directly support their candidates, such as paying for so-called issue advocacy advertisements that do not expressly advocate the election or defeat of a candidate but that make it clear that a particular candidate should be elected or defeated. Reformers considered party soft money spending a loophole that allowed donors to get around the limits on contributions to parties and on party contributions to candidates and thus a potential avenue for corruption. Parties were seen as having a special and close relationship with their candidates, making party soft money a particularly effective way for interested actors to influence elected officials.
BCRA also placed restrictions on so-called issue ads run before elections, which had remained outside of FECA regulation because these advertisements do not expressly advocate the election or defeat of a candidate but merely praise or criticize an issue position or record of someone who happened to be a candidate. According to reformers, when these "sham issue ads" were run just before an election, they constituted clear attempts to influence its outcome. The new law's electioneering communications provision stipulated that any ad that featured a clearly identified candidate for federal office run within thirty days of a primary election or sixty days of a general election is indeed electioneering and must be paid for with funds subject to contribution and spending limits and from permitted sources that must be fully disclosed. The new law thus prohibited corporations and unions from using treasury funds to broadcast such ads during the specified election seasons. In addition, the BCRA's "Millionaire's Amendment" increased many contribution limits and allowed congressional candidates who faced self-financed opponents to engage in additional fundraising in an attempt to level the playing field between the competitors.
Although titled the Bipartisan Campaign Reform Act, the law's pedigree is only slightly bipartisan. BCRA passed the House of Representatives on February 14, 2002, by a 240–189 vote, mostly along party lines, with only 41 Republicans voting for it and 13 Democrats and 176 Republicans against it. It passed the Senate by a 60–40 vote, just enough to avoid a filibuster, with 11 Republicans voting for it and only 2 Democrats opposing the bill. While these vote totals may seem to suggest that the Democrats had something to gain from the bill's passage, there was a general sense that the loss of party soft money in particular would do more harm to the Democrats than the Republicans. One journalist called BCRA the "Democratic Party Suicide Bill" (Gitell 2003), and the chair of the Democratic Congressional Campaign Committee, Representative Martin Frost of Texas, opposed BCRA (Farrar-Myers and Dwyre 2008, 142–43). Indeed, the Republican national party committees had long raised more hard money than their Democratic counterparts.
Some political scientists testified for the plaintiffs in the Supreme Court challenge to BCRA that the law would diminish the role and influence of parties relative to nonparty groups. One of these scholars, Ray La Raja (2008, 202), has written extensively about how the more restrictive campaign finance rules for parties than for nonparty groups that resulted from BCRA and other changes have "weakened the capacity of parties to organize elections and gave greater influence to candidates and interest groups." La Raja also argues that BCRA's strongest supporters were "ideological liberals in the Democratic Party who want to dislodge the influence of corporate interests and other groups that favor centrist policies" (206). Thus, passage of BCRA does not really fit the party advantage theory. Instead, La Raja's argument suggests that the left flank of the Democratic Party had normative motivations that led to its passage. He adds that their desire to make the Democratic Party less reliant on corporate money actually resulted in "tilting it toward ideological groups on the left and away from labor unions, minorities, and centrists" (206).
The First Wave of Deregulation: Wisconsin, Davis, and the FEC
The Supreme Court initially upheld most of BCRA's provisions in McConnell v. Federal Election Commission (2003). Eventually, however, the courts and the FEC chipped away at BCRA as well as other, long-standing campaign finance laws and regulations. In a 2007 case, Federal Election Commission v. Wisconsin Right to Life, the Supreme Court narrowed the interpretation of what advertisements were subject to BCRA's source and contribution limitations by ruling that corporations and unions were allowed to use their treasury funds to run legitimate issue ads that feature candidates (BCRA's electioneering communications) close to an election. The majority in the 5–4 vote ruled that BCRA's limits on political advertising close to elections were unconstitutional when applied to genuine issue ads that did not constitute "express advocacy" and that "an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate" (Federal Election Commission v. Wisconsin Right to Life, 470). This decision effectively invalidated BCRA's attempt to limit and regulate "sham issue ads." The Wisconsin decision opened the door for those who wanted to run ads that featured one or more candidates close to an election without having to follow the source restrictions and contribution limits on such activities.
Later that year, the conservative James Madison Center for Free Speech asked the FEC to amend its rules to account for the Wisconsin decision (Potter and Morgan 2013, 446). The commission requested comments on a variety of issues, including how it should modify the electioneering communications disclosure rules now that corporations and unions could engage in this type of spending during elections. A number of large labor unions also asked the FEC to limit requirements so that they would not have to disclose the identities of all of their members now that their union dues could be used to pay for electioneering communications as a result of the Wisconsin decision.
The FEC ruled that corporations and labor unions running electioneering communications need only disclose those contributions that were "specifically designated for electioneering communications" (Federal Election Commission 2007). The rule was adopted over many objections in part because it received the support of one of the Democratic commissioners "due to its ability to reduce the burden of disclosure on unions" (Potter and Morgan 2013, 455). This new rule significantly narrowed disclosure requirements for corporations and unions, making it quite easy for these organizations to avoid disclosure of their donors by merely designating contributions as "unrestricted donations" or "membership dues." The Republican commissioners and one Democratic commissioner appear to have acted to protect some of their parties' most important financial constituencies from having to disclose their donors — corporations for the Republicans and labor unions for the Democrats. This case thus provides some support for the partisan electoral advantage theory as a way of understanding campaign finance deregulation.
In 2008, the Supreme Court further eroded BCRA in Davis v. Federal Election Commission, which reversed a lower court decision and declared the Millionaire's Amendment an unconstitutional burden on the First Amendment rights of self-financed candidates. The majority found that the provision imposes different fundraising limits on candidates running against one another.
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Table of Contents
Introduction: Regulation and Deregulation of Political Finance Robert G. Boatright,
Part I: The Deregulation of U.S. Campaigns,
1 | Campaign Finance Deregulation in the United States: What Has Changed and Why Does It Matter? Diana Dwyre,
2 | U.S. Interest Groups in a Deregulated Campaign Finance System Robert G. Boatright,
Part II: Regulation, Deregulation, and Electoral Advantage,
3 | Shaping the Battlefield: Partisan Self-Interest and Election Finance Reform in Canada, 2003–2014 Lisa Young,
4 | Partisan Interest and Political Finance Reform in Australia Iain McMenamin,
5 | Britain's "Stop-Go" Approach to Party Finance Reform Justin Fisher,
Part III: The End of the "Regulatory Moment" in Europe?,
6 | Slow Convergence or No Change at All? The Development of West European Party Funding Regimes, 2003–2013 Michael Koß,
7 | More, and More Inclusive, Regulation: The Legal Parameters of Public Funding in Europe Daniela R. Piccio and Ingrid van Biezen,
Conclusions: Deregulating Party Finance: Is the United States an Outlier or a Pioneer? Justin Fisher,