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Basic Principles of Campaign Finance Regulation

The strengths and weaknesses of the current campaign finance system cannot be analyzed, nor can potential reforms be evaluated, without a clear understanding of the values that ought to go into the design of a campaign finance structure. We cannot know how well the system is working or whether or how it can be improved until we have a definition of what good working order would mean. Thus, early in its deliberations the Commission on Campaign Finance Reform articulated a set of fundamental principles intended to focus its examination of the present system and guide its consideration of new reforms. These principles grow out of past and present legislation, judicial opinions, and our own sense of the relationship between campaign finance and democratic government.

Some of these principles may, at times, be in tension with other principles. It may not be possible to satisfy completely all of the values implicated by the financing of elections in a democratic political system. Nevertheless, these values must be given a central place in the assessment of the system and in the consideration of its reform. We believe that we as a society can make progress in advancing those campaign finance principles that currently receive inadequate attention without jeopardizing the other, equally important, values at issue.

The principles we believe ought to be central to the design of our campaign finance system, and which inform the recommendations that we present in chapter 4, are

  • Political Participation

  • Voter Information

  • Voter Equality

  • Competitive Elections

  • Prevention of the Undue Influence of Campaign Financing on Governance

  • Amelioration of the Burdens of Fundraising

  • Effective Administration and Enforcement

A. Political Participation

As the Supreme Court has reminded us, campaign spending involves speech and associational activity protected by the First Amendment. This is not simply an arid legal formality. Elections are our central form of collective political decision-making, and thus, they are our most important mechanism for securing democratically accountable government. The very legitimacy of our system of elections requires that candidates, political parties, and others with an interest in the election be able to participate in the process and make their cases to the voters. A free election assumes that candidates  are free not simply to place their names on the ballot but to contest the election vigorously. A vigorous contest includes the freedom to communicate with the voters to persuade them to cast their ballots for a particular candidate.

Election campaigns require campaign spending. Money per se is not speech, but in our large and heterogeneous society it takes a considerable amount of money for anyone interested in an election to communicate with the voters. Campaign finances are a critical part of the election campaign. Money, in particular, is a unique campaign resource. "It buys goods, and it also buys human energy, skills, and services. . . . [I]t is the common denominator in the shaping of many of the factors comprising political power because it buys what is not or cannot be volunteered."189 Money buys all the things crucial for a modern election campaign--broadcast and radio air time; the printing and mailing of campaign literature; transportation costs; the services of campaign professionals for crafting the campaign message, conducting polls, and producing campaign advertisements; the salaries of campaign workers; the rent for campaign offices; the costs of data-processing equipment and computer time; even the expenses incurred in raising the funds necessary to pay for the other campaign expenditures. These services are unlikely to be provided by volunteers. They require money.

There is little controversy about the importance of respecting the value of political participation in the design of a campaign finance system. As a constitutional matter, the Supreme Court has determined that government regulation of campaign money must be subject to "the exacting scrutiny applicable to limitations on core First Amendment rights of political expression."190 Indeed, protection of campaign spending has been central to the Supreme Court's approach to campaign finance regulation. Certainly, we should be wary of any approaches to reform that would attempt to curtail the ability of candidates, parties, and politically active groups to participate vigorously in the electoral process.

On the other hand, respect for the value of political participation does not necessarily call for a laissez-faire approach to campaign finance. Robust campaign activity can be curtailed not only by spending limits but by inadequate funding. Government regulation can promote political participation and increase the ability of candidates to speak to the voters by helping candidates obtain new campaign resources. The provision of new campaign resources may be particularly likely to open up the process to more participation by women and minority candidates.

Moreover, some restrictions on campaign money may promote popular participation. Currently, most campaign funds come from wealthy individuals and special-interest organizations, and a large and growing portion of funding comes from sources and in amounts that appear to flout existing requirements. Candidates and officeholders effectively make large donations a key to access, and personal wealth has become a factor in determining who can be a viable candidate. As a result, political participation may be depressed by the public perception that big money dominates the political process and shapes electoral outcomes. In Buckley v. Valeo, the Supreme Court emphasized that government could regulate campaign financing to address the politically debilitating consequences of the appearance of corruption, as well as corruption itself. The Court recently reiterated this concern in Nixon v. Shrink Missouri Government PAC, when it observed: "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."191 An important goal for campaign finance reform ought to be to win public confidence and thereby promote popular political participation.

B. Voter Information

The legitimacy of decision-making by election turns on the ability of voters to receive the information they need in order to cast informed votes. This is not simply a matter of enabling each voter to make a choice more consistent with his or her interests or beliefs. Citizens as voters are making choices that bind the polity as a whole and set the course of government policy for the next political term. There is, thus, a collective interest in increasing the amount of relevant information available to the voters in the hope of improving the quality of voter decision-making.

The goal of voter information is served by the protection of campaign speech. Although the news media provide information concerning candidates and election issues, media coverage is often wanting, particularly for lower-level elections. To a significant degree, the voters depend on candidates, parties, and other election participants to provide them with the information they need in order to cast informed votes.

But government regulation could also advance the goal of voter information. Providing candidates with funds, sponsoring debates, producing ballot pamphlets, or enabling candidates to mail campaign literature at reduced cost all facilitate voter information.

So, too, laws that require candidates, parties, and politically active committees to disclose the identities of their donors play a central role in providing voters with politically important information. As Buckley put it:

[D]isclosure provides the electorate with information "as to where political campaign money comes from and how it is spent by the candidate" in order to aid the voters in evaluating those who seek . . . office. It allows voters to place each candidate in the political spectrum more precisely than is often possible solely on the basis of party labels and campaign speeches. The sources of a candidate's financial support also alert the voter to the interests to which a candidate is most likely to be responsive and thus facilitate predictions of future performance in office.192

Disclosure of campaign contributions has been a centerpiece of federal campaign finance law since 1910, although federal disclosure really became effective only with the enactment of FECA and the creation of the FEC to enforce its requirements. Moreover, the principle of voter information is advanced by the application of disclosure requirements to all campaign spending, not just spending by candidates. Buckley upheld FECA's provisions requiring disclosure of the names and addresses of people who make independent expenditures or who contribute to organizations that make such expenditures. The Court sustained these rules although it had already concluded that independent spending did not present a danger of corruption. The Court's rationale was that such disclosure "increases the fund of information concerning those who support the candidates." This informational interest in the sources of independent spending can be as strong as the interest in the sources of candidates' funds because disclosure by independent committees "helps voters to define more of the candidates' constituencies."193 One of the troubling features about the rise of so-called issue advocacy advertising is that the organizations that sponsor issue ads are not subject to requirements that they disclose the sources of their funding, thereby depriving the voters of information that could help them evaluate such ads when they make their election choices.194

C. Voter Equality

Voter equality is a central premise of our democratic system. Over the course of our history, the electorate has been expanded to include all adult citizens. Recent developments like the one-person, one-vote doctrine195 and the vote-dilution doctrine196 have sought to ensure not simply that each adult citizen has a right to vote but that each voter has an equally weighted vote and, thus, an equal opportunity to affect the outcome of the election. Our laws most emphatically deny a special place for wealth in voting. Most states long ago scrapped wealth or tax-payment requirements for voting, and the Supreme Court has made the elimination of wealth and tax-payment tests a constitutional mandate. Wealth may not be a criterion for the right to cast a vote197 or be a candidate,198 nor may the wealth of the voter be a factor in determining how much weight a particular vote will be given.199

The role of voter equality in our electoral system has implications beyond the actual casting and counting of ballots. For the election to serve as a mechanism of democratic decision-making there must be a considerable amount of election-related activity before balloting can occur. Candidates, parties, interest groups, and interested individuals need to be able to attempt to persuade voters how to cast their ballots. The election campaign is an integral part of the process of structured choice and democratic deliberation that constitutes an election.200

The Supreme Court has acknowledged that voter equality is a factor in appraising the campaign finance system. To be sure, Buckley v. Valeo emphatically and famously rejected the idea that equality can justify limitations on campaign communications201--a conclusion sharply challenged by Justice Breyer, in an opinion joined by Justice Ginsburg, in the recent Shrink Missouri Government PAC case, who pointed out that "the Constitution often permits restrictions on the speech of some in order to prevent the few from drowning out the many, and that the Constitution tolerates numerous restrictions . . . to make effective the political rights of the entire electorate."202 But the Court has relied on the voter-equality concern in validating federal and state restrictions on campaign expenditures by corporations. As Austin v. Michigan State Chamber of Commerce explained, corporate campaign spending can "unfairly influence elections" because a corporation's campaign funds "have little or no correlation to the public's support for [its] ideas."203 Prohibiting corporations from using their treasury funds to finance campaign expenditures "ensures that expenditures reflect actual public support for the political ideas espoused by corporations."204 In other words, spending that reflects the corporate spender's wealth rather than the extent of popular support for its message gives the corporate spender an undue influence on the electoral outcome. That is the voter equality point in a nutshell.205

To be sure, participation in and influence over an election campaign are not the same as voting. It is relatively easy to measure votes and to ensure that no person casts more votes than any other. Participation and influence take many different forms, vary widely in intensity, and are difficult to measure. It is virtually impossible to quantify the impact of a particular dollar in a particular race, nor would it be possible to quantify other modes of participation and influence--the "free media" value of a celebrity endorsement, the intensity of commitment of volunteers, the superior organization of a particular interest group--that can affect a campaign. It is not possible to truly equalize influence over elections. Indeed, given the values of robust and uninhibited political participation, and the extensive regulation it would take to ensure total equality, ensuring absolutely equal influence over elections is not even desirable. Nevertheless, when extreme inequalities of wealth bear directly on campaign financing and spending, as they do in our current privately funded campaign finance system, the norm of voter equality is undermined.

Large individual donors and large PAC contributions dominate our current campaign finance system. In 1995-96, 235,000 people, or one-tenth of 1 percent of the total population provided approximately one-third of individual donations.206 Large donors are not a politically or demographically representative sample of the general population. A recent study of large donors--defined as those who gave at least $200 to one or more congressional candidates--found the affluent, men, whites, and people engaged in high-status occupations make up a far higher portion of the large donor group than of society as a whole.207 Through their contributions, these large donors can have a greater impact on the outcome of the election than small donors and nondonors.

One important goal for the campaign finance system should be to reduce the tension between the goal of equal voter influence over election outcomes and the unequal influence enjoyed by wealthy individuals and interest groups capable of making large donations.

D. Competitive Elections

Elections are about giving voters choices. If one candidate is well-funded, but her or his opponents lack resources, the first candidate will have an advantage in campaigning and getting her or his message to the voters. This can affect campaign outcomes. Moreover, the legitimacy of the election may be undermined in the eyes of the voters if the better-funded candidate is perceived as enjoying an advantage.

The concern about fair competition is particularly focused on the willingness and ability of challengers to take on incumbents. The opportunity to deny reelection to incumbents, and the possibility that in any given election the people may exercise their authority to vote out current officeholders, is the ultimate security of popular control over government. The value of fair electoral competition is, therefore, especially significant when the incumbent is seeking reelection. The incumbent typically starts with many built-in advantages, ranging from the free media attention he or she gets while in office, to the opportunity to use the office to provide constituency service, to the fact that the incumbent was popular enough to win the last election. These advantages contribute to, and are typically reinforced by, the incumbent's superior ability to raise campaign money. An important goal for a campaign finance system should be to make it easier for challengers to mount effective campaigns against incumbent officeholders. This will make it more likely that incumbents will actually be challenged, and that the incumbent-challenger election will be a real contest.

Absolute funding parity is not essential for fair elections, and a challenger can do well when he or she musters a critical mass of funds even if the incumbent spends more. Nor is it necessary for challengers actually to defeat incumbents, or for there to be frequent turnovers in office. Rather, voters need to know they have a real alternative to the incumbent, and incumbents need to know there is a real possibility they may lose. This requires credible challengers, and credible challengers require adequate financing.

A central weakness of our current privately funded campaign finance system for congressional elections, as described in chapter 2 of this Report, is its failure to provide challengers with adequate funding. An incumbent can carry forward excess funds from his or her last election208 and is well-positioned to collect funds while in office. The statistical likelihood that the incumbent will be reelected increases his or her ability to collect funds from donors who want to have "access" to the winner. Thus, incumbents usually start out well ahead in the financial arms race. In contrast, the challenger usually starts out less well-known and with less campaign money. Saddled with the presumption of incumbent reelection, the challenger is likely to experience greater difficulty raising funds as the PACs and wealthy individual donors who dominate campaign financing give their money primarily to secure and maintain access to elected officials and, thus, tend to favor incumbents over challengers.

An important goal of campaign finance reform should be to address the imbalance of candidate resources and, especially, the advantages of incumbency and to make it easier for serious candidates to undertake financially competitive campaigns.

E. Prevention of the Undue Influence of Campaign Financing on Governance

Campaign finance practices can affect not just the fairness of the election but the behavior of government after--or more accurately, between--elections. When candidates are dependent on private donations, large donors and prospective donors may obtain special access to officeholders, and their views may carry extra weight. They will, therefore, be particularly well positioned to affect government decision-making. This is rarely a matter of outright vote buying, or of donors using a large donation, or the threat to withhold a future donation, to get a member of Congress to change her or his position on an issue. Instead, large-donor influence is typically more subtle. It is often a matter of an extra opportunity to make one's case, to be heard during negotiations while a bill is in committee, to influence a member of Congress to make one bill rather than another an agenda priority, or to affect the precise wording of a bill or amendment. Without changing votes, campaign contributions can affect what bills become law.

Concern about the undue influence of large donors and prospective donors on the operations of government has been a driving force in campaign finance regulation since the beginning of the 20th century. Congress first limited campaign contributions to curtail donor influence in 1907, and some restrictions on donations have been on the books ever since. The impact of the campaign finance system on the operations of government has been a central concern of the Supreme Court as well, which has held that the prevention of corruption and the appearance of corruption provide a constitutional basis for campaign finance regulations. To be sure, not all campaign contributions are intended to corrupt or have a corrupting influence. Many donors make contributions not to influence or gain access to officeholders but to advance the electoral prospects of candidates whose issue positions they support. Nevertheless, one of the principal concerns of campaign finance reform is controlling the disproportionate influence the sources of campaign funds can have on public decision-making.

Corruption is also implicated when officeholders who command the powers of government are able to pressure people, businesses, and organizations affected by government actions to make campaign contributions. "Every request from an elected official who influences legislation or regulatory activity is an implicit demand. The contributor fears the consequences of failing to respond. He fears that his competitors may gain an advantage if they are more generous than he." Indeed, political contributions may be not a means of engaging in political speech but simply a "cost of doing business." Under these circumstances, "[e]xtortion, or practices that differ only in being more genteel, are the Janus face of undue influence by contributors."209

F. Ameliorating the Burdens of Fundraising

The current campaign finance system places most of the burden of raising campaign funds on officeholders and candidates. A major impetus for campaign finance reform is the frustration politicians now feel concerning how much time they must devote to courting potential donors, often by methods borrowed from the marketplace that can only be described as demeaning.210 Professor Vincent Blasi has cogently argued that our campaign finance system undermines the quality of political representation, as elected officeholders are distracted from constituent service or policy-making by the grim business of soliciting donations. Our burdensome fundraising system can skew campaign activity, too, forcing candidates to meet with potential contributors rather than formulate positions or speak with voters.

There is considerable anecdotal evidence that the rigors of fundraising have contributed to the decisions of some officials to decline to seek reelection and of potential candidates not to challenge incumbents. The burdensome fundraising process, thus, can affect the quality of governance, the extent and quality of electoral communication, political participation, and the competitiveness of elections.211

The burdens of fundraising do not apply to all candidates evenly. Incumbents and candidates who are personally wealthy do not have to worry as much about fundraising as do challengers and candidates who are less financially well-endowed. The fundraising system, thus, tends to reinforce the advantages of incumbency and contributes to the growing role of self-financed campaigns. The burdens of fundraising also play a part in the growing influence of campaign intermediaries who collect contributions from their associates, supporters, or members, bundle them together, and pass them on to candidates.

Consistent with the other principles of campaign finance law--particularly the values of political participation, voter equality, and minimizing the impact of the campaign finance system on governance--a well-designed campaign finance system should seek to minimize the burdens of fundraising. That could increase the willingness of some potential candidates to actually compete, free candidates for meeting with voters, and enable elected officials to devote more time to the responsibilities they were elected to undertake.

G. Effective Administration and Enforcement

Campaign finance reform will not work unless campaign finance laws are capable of effective, nonpartisan administration and enforcement.212 This requires laws that are straightforward so that candidates, parties, organizations, and potential donors and spenders can determine whether their activities comply with legal constraints. The laws ought to be internally consistent, so that one set of restrictions or limitations are not effectively undermined and discredited by other loopholes and evasions. The laws should be congruent with legitimate campaign practices and respect the needs of candidates to raise money sufficient for their campaigns. Most importantly, there must be an administrative structure capable of detecting and punishing violations, including violations by major candidates and officeholders and by the major parties, in "real time," that is, during the election campaign that the questionable campaign finance activity seeks to affect.

Campaign finance rules will control campaign finance behavior only if they are effective and enforced and are seen as such by candidates, political committees, and contributors. Effective enforcement is also necessary to promote public faith in the integrity of the campaign finance process.

189 Herbert E. Alexander, Financing Politics: Money, Elections, and Political Reform, 3 (3d ed. 1984).

190 Buckley v. Valeo, 424 U.S. 1, 44 (1976).

191 Shrink Missouri Government PAC, 120 S. Ct. at 906.

192 Buckley, supra, 424 U.S. at 66-67.

193 Id. at 80-81.

194 See "From the Ground Up," supra, 27 Fordham Urb. L. J. at 112-14.

195 See, for example, Reynolds v. Sims, 377 U.S. 533 (1964) (state legislatures required to be apportioned on one-person, one-vote basis); Wesberry v. Sanders, 376 U.S. 1 (1964) (congressional districts required to be apportioned on one-person, one-vote basis).

196 See, for example, Rogers v. Lodge, 458 U.S. 613 (1982) (finding that at-large voting systems may be used to dilute the voting strength of minorities); White v. Regester, 412 U.S. 755 (1973) (finding that multimember districts can be used to dilute the voting strength of minority groups).

197 Harper v. Virginia Bd. of Elections, 383 U.S. 663 (1966) (invalidating poll tax on grounds that wealth is not germane to the right to vote); City of Phoenix v. Kolodziejski, 399 U.S. 204 (1970) (invalidating law limiting franchise in bond issue election to taxpayers).

198 Bullock v. Carter, 405 U.S. 134 (1972) (invalidating law that candidate must pay filing fee in order to have name placed on ballot); Lubin v. Panish, 415 U.S. 709 (1974) (same).

199 Hill v. Stone, 421 U.S. 289 (1975) (invalidating law requiring that bond issue obtain approval of concurrent majorities of all voters and of tax-paying voters).

200 As a matter of legal doctrine, the Supreme Court has often defined an election broadly to include pre-Election Day activities, or has deferred to statutes that regulate pre-Election Day activities as part of the electoral process. In Terry v. Adams, 345 U.S. 461 (1953), for example, the Court treated private political activity that preceded an election, and informally but effectively supplanted that election, as a part of the election. Id. at 466. The Court has indicated that Congress can treat party nominating convention procedures as part of an election: Morse v. Republican Party of Va., 517 U.S. 186, 218 n.31 (1996); and that Congress can use the notion of a pre-election campaign season to define the obligations of broadcasters: CBS, Inc. v. FCC, 453 U.S. 367, 368-88, 397-97 (1981).

201  Buckley v. Valeo, 424 U.S. 1, 48-49 (1976) ("the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment").

202 Nixon v. Shrink Missouri Government PAC, supra, Breyer, J., 120 S. Ct. at 912.

203 494 U.S. 652, 660 (1990).

204 Id. at 660.

205 The Court has sought to hold together its inconsistent views about the connection between voter equality and campaign finance regulation by asserting that corporations pose special problems because they enjoy a "unique state-conferred corporate structure" that is said to give them special advantages in amassing funds. Id. at 659-60. It is hard to see why this is relevant, or even that it is right. As Justice Scalia pointed out in his Austin dissent, corporations are not alone in receiving special advantages from the state. Id. at 680 (noting that other organizations receive government support through contracts or tax subsidies).

206 See Center for Responsive Politics, "The Big Picture: Where the Money Came From in the 1996 Elections," http://www.crp.org/crpdocs/bigpicture/overview/bpoverview.htm

207 John Green, Paul Herrnson, Lynda Powell, and Clyde Wilcox, "Individual Congressional Campaign Contributors: Wealthy, Conservative and Reform-Minded," http://www.crp.org/pubc/donors/donors.htm. The "reform-minded" in the title of the study refers to the contributors' views on campaign finance regulation.

208 When the 106th Congress convened in Jan. 1999, members of the House of Representatives were already banking more than $100 million for their next re-election campaigns. More than half the members of the House--269 members to be precise--had at least $100,000 on hand for the 2000 campaign; 167 members had at least $200,000. See "Carryover Funds: 106th Congress Convenes With Over $100 Million in the Bank for 2000 Campaigns," Political Finance and Lobby Reporter (Jan. 13, 1999).

209 David W. Adamany and George E. Agree, Political Money: A Strategy for Campaign Financing in America, 11 (1975).

210 Vincent Blasi, "Free Speech and the Widening Gyre of Fund-Raising: Why Campaign Spending Limits May Not Violate the First Amendment After All," 94 Colum. L. Rev. 1281 (1994).

211 See "From the Ground Up," supra, 27 Fordham Urb. L. J. at 63-64.

212 See generally Nicole A. Gordon, "The New York City Model: Essentials for Effective Campaign Finance Regulation," 6 J. L. & Pol. 79 (1997).

 

 

Recommendations

A. The Path to Reform

With the campaign finance system produced by Congress in the Watergate Era swamped by evasion and on the verge of collapse, what direction should campaign finance regulation take? One school of thought, championed by Justices Thomas and Scalia,213 some members of Congress,214 and some legal scholars,215 would say, "Go back," that is, deregulate. Deregulation would scrap FECA's prohibitions, restrictions, and contribution limitations and preserve only some reporting and disclosure requirements. Deregulation would certainly have some benefits. It would eliminate the evasions and the fine legal distinctions that make a mockery of the current campaign finance laws. By enabling candidates to obtain large contributions directly from wealthy individuals and businesses, deregulation would also ameliorate the burdens of the fundraising process, if only for those candidates favored by wealthy donors. Deregulation would certainly eliminate many of the costs of administration, too.

But deregulation, even with disclosure, would do nothing to promote competitive election contests; it would preserve, if not expand, the influence of large donors on election campaigns; and it would effectively ratify the influence of large donations over the political process. It is unlikely that disclosure alone would be sufficient to check the influence of private wealth over politics: "Full disclosure produces mountains of political finance information that must be exhaustively analyzed to reveal significant patterns of giving and spending; time also is needed to publicize these patterns, to allow debate and discussion about them, and finally to permit voters to ponder them and to calculate what weight political financing shall have in their ballot choices."216

Even voters for whom campaign finance practices are an election priority may be unable to use their votes to punish or reward particular candidates. Competing candidates and party committees may receive donations from the same PACs or wealthy individuals, or they may receive donations from different sources, but voters might find both sets of sources--or both candidates' fundraising practices--offensive. Moreover, campaign finance practices are rarely the dispositive issue in an election. A voter may be disturbed by a candidate's fundraising activities but may still believe that the candidate has a stronger record than her or his opponent on national security, healthcare, tax policy, the environment, or other issues of importance to the voter. A voter has only one vote and is likely to use it on issues the voter considers more important than campaign finance, even if she or he would vote against a candidate if campaign finance were the only issue.

Finally, regulation limited to disclosure is inadequate because it fails to provide enough money from disinterested sources, because it fails to ameliorate the burdens of fundraising, and because it fails to ensure that campaign money is distributed so as to make possible vigorous competition in all elections.

Although "deregulate and disclose" is an inadequate foundation for reform, it does suggest two steps reform might take. First, unnecessary regulations should be eliminated and unduly burdensome restrictions ameliorated. Certainly, limitations, such as the dollar limits on donations, that are more rigid than necessary to prevent undue influence should be relaxed. Second, disclosure ought to be complete. Although disclosure alone cannot carry the full burden of campaign finance reform, disclosure provides the public with critical information for evaluating candidates, campaign messages, and the post-election activities of elected officials. To be effective, however, disclosure must be comprehensive. The recent explosion of issue advocacy advertising places a growing share of campaign advertising outside the range of FECA's disclosure requirements. One goal for campaign finance reform is to bring all campaign-related expenditures within the ambit of disclosure.

A second approach to reform, epitomized by the Shays-Meehan Bipartisan Campaign Reform Bill, which has passed the House of Representatives in each of the last two Congresses, would attempt to renew FECA by using the traditional techniques of contribution restrictions and disclosure to plug the holes created by soft money and so-called issue advocacy advertising. Such a reform would have the desirable benefits of checking special-interest influence, enhancing disclosure, and addressing the demoralizing effects that these blatant evasions have on public confidence in our campaign finance laws. Soft money and issue advocacy must be addressed, but capping soft money and regulating issue advocacy, without further action, would do nothing to provide underfinanced candidates with the resources they need to conduct competitive campaigns. Indeed, this approach, if unaccompanied by additional measures to inject new resources into the system, might very well exacerbate the burdens of fundraising and the difficulties experienced by challengers in trying to finance their races.

A third general approach is to go forward, build on the presidential public funding law and the growing experience with public funding in many states and localities, and create a system in which public funds are available for candidates for all federal offices. Public funding would do a better job than purely private funding in promoting competitive elections, mitigating the impact of inequalities of wealth on the electoral process, reducing the influence of large campaign contributors on the operations of government, and ameliorating the burdens of fundraising. Better than reforms that are based solely on restricting campaign spending, public funding provides new resources for election activity and, thus, actually promotes First Amendment values.

Public funding is not a panacea for our campaign finance system. As candidates may not be constitutionally compelled to take public funding, any public funding system would have to coexist with at least some private funding, so reconsideration of the rules limiting private contributions would still be appropriate. As the developments in the presidential public funding system in the 1990s demonstrated, unless some controls are placed on soft money, unregulated private money can swamp the public funding system. Moreover, adoption of a public funding system would make securing effective administration and enforcement of campaign finance laws an even more urgent issue.

Nevertheless, we believe that public funding must be the centerpiece for any serious program of campaign finance reform.217 (See table 5.)  

Table 5: Basic Principles and Recommended Reforms


Political Participation

     • Public Funding to facilitate candidates' participation

     • Public Funding, Contribution Limits, Soft Money Reform to address public's loss of confidence

Voter Information

     • Issue Advocacy Reform to increase disclosure

Voter Equity

     • Public Funding

     • Soft Money Reform

Competitive Elections

     • Public Funding

     • Raising Limits on Party Support for Candidates

Prevention of Undue Influence

     • Public Funding

     • Soft Money Reform

     • Issue Advocacy Reform

Ameliorating Burdens of Fundraising

     • Public Funding

     • Raising Contribution Limits

Effective Administration and Enforcement

     • FEC Reforms

B. Public Funding

(1) History and Present Use

Public funding has been on the federal campaign finance agenda since the start of the 20th century. In the aftermath of reports about large corporate contributions in the 1904 elections, a public funding bill was introduced in Congress, and in 1907 President Theodore Roosevelt also called on Congress to enact public funding of campaigns.218 In 1966 Congress enacted Senator Russell Long's proposal for the creation of an income-tax checkoff that would be used to provide public funding of presidential campaigns. The Long legislation was repealed in 1967, but in 1971 Congress again adopted presidential public funding, to be financed via a checkoff, although it deferred the effective date of the checkoff to 1973, and the onset of public funding until 1976. In the aftermath of the Watergate scandal, Congress revisited and strengthened the presidential public funding law. At one point during the 1973-74 debates over campaign finance reform, the Senate passed a congressional public funding measure as well, but the House refused to accept it, and congressional public funding died in conference.219

Public funding has provided a significant percentage of the funds available to candidates in every presidential election between 1976 and 1996. From 1976 to 1996 public funding provided presidential candidates with $891 million, including $37 million to minor party and independent candidates. From 1976 through 1996 every major and minor party general election candidate accepted public funding in the general election.220 From 1976 through 1992 public funding provided between 31 percent and 36 percent of candidate's primary receipts. In 1996 the public funding share of primary receipts dropped to 23 percent, due largely to the decision of Malcolm S. Forbes, Jr., to opt out of public funding and spend $42.6 million in private funds (including $37.3 million of his own money). Of some 65 serious presidential candidates between 1976 and 1996, only three (John Connally in 1980, Ross Perot in 1992, and Forbes in 1996) chose not to participate in the public funding program.221 In the 2000 primary elections, however, two significant Republican contenders--Forbes and George W. Bush--declined to participate in presidential public funding.

Twenty-two states and a number of local governments--including New York City and Los Angeles--also have some form of public funding program. In addition, in the 1996 and 1998 elections, referendum voters in Arizona, Maine, and Massachusetts approved ballot propositions that would make most elections in those states substantially financed by publicly provided dollars. None of these laws has come into effect yet.

Of the states with older public funding systems, 10 states provide funds to political parties but not candidates; eight states provide funds to candidates but not parties; four states provide funds to both parties and candidates. The party-only programs provide only modest sums of money to the parties; several of these states rely on tax add-ons, that is, taxpayers' actions to increase their tax liabilities by one or two dollars. Generally, fewer than 1 percent of taxpayers are willing to increase their tax liabilities to pay for contributions to parties or campaigns, so these programs are quite small and have a limited impact.222

The 12 state programs that provide some funds to candidates are more complex. All are funded by income tax checkoffs. All of them try to encourage small contributions from individuals, either through eligibility requirements or matching-fund formulas. All of them require candidates to abide by spending limits if they accept public funding, although some lift the spending ban if the opponent does not accept spending limits. Four of these states make public funds available for legislative races as well as elections for statewide office; in two states--Minnesota and Wisconsin--a significant number of legislative candidates participate in the public funding program. The Minnesota program has been particularly successful. More than 90 percent of the candidates for state legislative office in the past decade have participated in the program.

Most of the state public funding programs are aimed at statewide, particularly gubernatorial, elections. Between 1993 and 1996, 15 of the 22 major party general-election candidates for governor in states with public funding accepted public funds. All these state programs had spending limits, and the rate of candidate participation tended to correlate with the sufficiency of the limits.223 In New Jersey, in 1997 the maximum public grant per candidate in the general election was $4.6 million, or two-thirds of the $6.9 million spending limit. All major party candidates for governor in New Jersey have participated in public funding since its inception in 1977.224

A number of local governments have public funding systems, including Los Angeles and New York City. The New York City program is particularly well-regarded. New York provides public funds to candidates for citywide office, borough president, and the city council in both primary and general elections. In 1993 all candidates for citywide office and two-thirds of the candidates for city council participated in the system.225

(2) Why Public Funding?

More than any other reform, public funding has the potential to ensure that our campaign finance system promotes the basic values of democratic elections: that our elections be open, fair, informed, and vigorously contested; that all adult citizens have an equal opportunity to influence the electoral process; that all serious candidates can obtain the resources they need to bring their message to the voters; that officeholders and candidates not be unnecessarily distracted from governing and campaigning by the rigors of fundraising; and that the financing of campaigns not unduly influence government decision-making.

Public funding promotes electoral competitiveness. Challengers and political newcomers in open-seat races are simply much better able to mount campaigns when their privately raised funds are supplemented by public funds. Indeed, public funding makes it much more likely that there will be challengers in the first place and, thus, that incumbents will be forced to defend their records and engage in a public dialogue over their votes and policy preferences.226 Presidential public funding substantially contributed to the presidential campaigns of Jimmy Carter in 1976, George Bush in 1980, Gary Hart in 1984, Jesse Jackson in 1984 and 1988, and Pat Buchanan, Jerry Brown, and Bill Clinton in 1992.227 Public funding provided opportunities to challengers, political newcomers, and outsider candidates in the primaries and offset the built-in edge of incumbents in the general election. Indeed, in three of the five presidential elections conducted with public funding that involved challenger-incumbent contests, the challenger defeated the incumbent.

In New York City, which has run its last three mayoral elections under public funding, challengers twice defeated incumbents. In Minnesota, the only state that provides ample public funding for legislative elections (and the only state with a high level of candidate participation in the program), public funds have made legislative elections more competitive.228 Indeed, Minnesota is the rare state in which virtually all incumbents actually had real challengers and, thus, conducted state legislative elections that were real elections. In many states that do not use public funding, half or more of all incumbents run unopposed.229 Minnesota is also the home of perhaps the most famous beneficiary of public funding, Governor Jesse Ventura. Although he was outspent by his major party opponents, public funding provided him with the money necessary for his television ads and, thus, was critical to his success.

Public funding is necessary to bring our campaign finance system more in line with our core principle of voter equality. In privately funded systems, donors and independent spenders can have a bigger impact on the election than those who neither contribute nor spend; and big donors and spenders can have a bigger impact that smaller financial participants. Contribution and expenditure caps could ameliorate this, but they may cut into the ability of candidates to campaign effectively and may reinforce the advantages of incumbents. Public funding can break the tie between private wealth and electoral influence while simultaneously supplementing campaign resources and reducing the burdens of fundraising. Money from the public fisc comes from everyone and, thus, from no one in particular. No one gains influence over the election through public funding. The more the funds for election campaigns come from the public treasury, the more evenly is financial influence over election outcomes spread across the populace.

Moreover, public funding promotes voter equality without limiting political participation. Resistance to treating voter equality as a campaign finance norm has been sharpest when voter equality is used to justify the imposition of limits on private campaign spending. Public funding, however, increases voter equality while providing new funds for campaign communications. Even where public funding is accompanied by spending limits, public funding is unlikely to curtail electoral communications. A candidate's acceptance of public funding and a spending limit must be voluntary. Thus, each candidate has the opportunity to decide whether, on balance, public funding with limits would help or hinder her or his campaign and may opt in or out accordingly. Further, the availability of public funding for candidates has no effect on the ability of other organizations to raise and spend money in connection with the election independently of the candidates.230 This limits the ability of public funding to promote voter equality, but it ensures that even with spending limits, public funding is unlikely to reduce campaign communications.

By reducing the role of large private donors in funding elections, public funding also reduces the leverage of large donors over government. The more campaign funds come from the public fisc, the less elected officials need to be sensitive to the views of large private donors, and the more they can act on their view of what the public interest requires. So, too, by reducing the time burdens of fundraising, public funding would free officeholders to devote more time to governing and enable candidates to spend more time on campaigning.

It has been suggested that public funding would inappropriately involve government in the electoral process, but the conduct and consequences of an election campaign are matters of great public concern. It is as appropriate to use public funds to cover some of the costs of an election campaign as it is to use tax dollars to pay the costs of preparing and producing ballots and of collecting and tabulating the results. The Supreme Court acknowledged this in Buckley when it vindicated the use of public funding of presidential elections. Public funding, said the Court, is an effort "to use public money to facilitate and enlarge public discussion and participation in the electoral process, goals vital to a self-governing people."231

(3) The Design of a Public Funding System

The public funding system we propose for congressional elections would have the following major elements: (a) it would be partial, (b) provided to candidates who raise a threshold amount of money in private funds, (c) with public funds allotted on a generous matching-funds basis; (d) it would apply to primary and general elections and to minor party and independent candidates as well as major party nominees; (e) it would require participating candidates to accept a spending limit, (f) although that limit would be lifted if the candidate's opponent spends above the spending limit, and (g) it would be funded out of regular appropriations rather than a checkoff.

(a) Partial     Under current constitutional doctrine, there probably cannot be any system that is fully publicly funded. A candidate cannot be prohibited from using private funds. Thus, all public funding systems are voluntary as well as partial, and it would be quite possible for a publicly funded candidate to have a privately funded opponent. Even if all candidates in a particular race do accept public funds, noncandidates--such as individuals, political committees, or others interested in the outcome of the election--are free to use private funds for election-related spending. Even candidates who receive public funds are unlikely to be fully publicly funded. As noted, most public funding systems require candidates to raise a threshold amount of private funds to begin with, and then use matching formulas to link the amount of public money a candidate receives to his or her ability to raise private funds.

By recommending partial public funding, the Special Commission is in effect stating that candidates still ought to raise some portion of their total campaign funds from private donors. This enables potential donors to participate politically by giving support to their preferred candidates directly instead of giving them an incentive to contribute to so-called independent committees. Moreover, we believe there is a value in requiring candidates to demonstrate some private support as both a condition for receiving funds and in determining the size of the public grant. The dangers inherent in private funding--of voter inequality, undue donor influence, pro-incumbent and pro-wealthy candidate bias--can be checked by limiting the matchable portion of any contribution, providing a generous public match, and requiring candidates to agree to limits on the use of their personal funds as a condition of public funding eligibility.

(b) Qualifying Threshold     We believe that in order to receive public funds, a candidate must raise a threshold amount of money with only relatively small contributions counting toward that threshold. Specifically, we recommend that in order to qualify for public funds, a candidate for the House of Representatives would have to collect at least $25,000 in private donations, with no more than $250 from any one donor counting toward the threshold. We believe that the $25,000 minimum is high enough to screen out frivolous candidates without creating a barrier to serious candidates. Given the real costs in time and effort that a congressional campaign necessarily entails, we do not think the $25,000 threshold amounts to a wealth test. The provision limiting to $250 the amount of any individual contribution that counts toward the threshold ensures that backing by a small number of very wealthy individuals, or a wealthy candidate's own funds, would not be enough by itself to qualify for public funds. With these requirements, the candidate would have to obtain support from at least 100 private individuals to qualify for public funding.

In addition, we would count only those contributions from individuals who are residents of the state in which the candidate is seeking office to count toward the threshold. This would tie qualification for public funding to support within the candidate's voting constituency. The tie would be stronger if only contributions from within the district could count, but with decennial redistricting, district borders in many states will change, and in the election after the decennial census there could be uncertainty as to which individuals reside in the district going into the election year. Limiting qualification to contributions from within the state advances the value of linking eligibility to local support without creating unnecessary administrative complications.

For a Senate candidate to qualify for public funds, he or she would also have to attract a certain amount of private contributions, with only the first $250 of any individual's contribution--and only contributions from individuals who reside within the state--counting. The qualification level would vary to some extent with the population of the state. For a state with just one congressional district, the qualifying level would be $25,000--the same level as in the House. Thereafter, an additional $10,000 would be required for each additional congressional district in the state, but in no state would the qualifying level be more than $75,000.

(c) Matching Funds     Qualifying candidates for both the House and Senate would receive public funds on a matching-funds basis, that is, the amount of the public grant would be based on the amount of qualifying individual contributions a candidate receives. Only the first $250 in contributions from individuals would be matched. A candidate could accept larger donations from individuals--up to the statutory contribution ceiling--as well as contributions from PACs and parties, but only the first $250 from any individual's total donation would be matched. We would, however, match otherwise-qualifying contributions from out-of-state donors.

Most importantly, we would provide matching funds on a 2:1 basis, that is, for each $1 in qualifying private contributions, a candidate would receive $2 in public funds. Thus, a $250 contribution would yield an additional $500 in public matching funds. A candidate who received all of her or his private support in small individual contributions would be two-thirds publicly funded, although given that many candidates will obtain nonmatchable donations from PACs and parties, and large individual contributions, it is likely that in many campaigns, the public share will be closer to 50 percent, or even less than that. But we believe the 2:1 match for smaller individual donations, and the possibility of two-thirds public funding, would dramatically level the playing field among candidates, significantly reduce the role of large donors, and greatly alleviate the burdens of fundraising.

Matching funds would be paid out as qualifying private funds come in, until the sum of private funds and matching public funds equaled the spending cap that a candidate agrees to accept as a condition for public funding.

(d) Primary and General Elections; Major party, Minor party, and Independent Candidates     Public funding would be available for both primary and general elections. A candidate who qualifies for public funding before a primary would remain qualified for the general election, provided he or she is running in the general election. Public funding would be available for any candidate, regardless of party affiliation, or the absence of party affiliation, provided he or she satisfies the threshold requirement, accepts the spending limit, and complies with the rules of the public funding program.

(e) Spending Limits     As a condition of eligibility for public funding, a candidate would be required to accept two spending limits. First, a candidate would have to agree not to spend more than $50,000 of his or her personal or family money on the campaign.232 Second, the candidate would have to agree to limit total campaign spending.

Spending limits can serve a useful role in promoting more equal contests, curbing the influence of private donors, and controlling the arms-race mentality that currently prevails in our campaign finance system. Without some spending limit, public funding on a matching-funds basis could simply inflate the advantages enjoyed by incumbents or by those candidates receiving a disproportionate share of large, but qualifying, private contributions. Similarly, without a spending limit, candidates would still be under pressure to engage in extensive fundraising, if only to protect themselves against the war chests their opponents might be raising.

To be sure, spending limits also pose dangers. They can have the undesirable effect of limiting the amount of campaign communication. If set too low, they can discriminate against challengers.233 Incumbents typically go into an election better known than their opponents. They benefit from greater name recognition, years of constituent service, mailings sent out under the legislative frank, "free media" coverage, and the lingering effects of their spending in prior campaigns. Challengers need to spend a critical mass of funds just to become known within the district. A spending limit set too low could prevent a challenger from ever getting his or her candidacy off the ground.

Thus, a spending limit must be set high enough to avoid the danger that it will favor incumbents or unduly burden speech. In 1996 the average House incumbent spent $750,000 on his or her campaign,234 so any House spending limit would have to be at least that. More importantly, our data analysis determined that in 1996 and 1998 winning House challengers spent on average approximately $1 million. (See tables 6 and 7.) We, thus, recommend that the provision of public funding be tied to a House candidate's agreement to a $1 million spending limit. This figure, along with all other dollar figures in our public funding program, would be indexed for inflation.  

Table 6: House of Representatives: 1996 Candidate Spending


Number of Candidates TotalSpending Average

Winners

Losers*

(Major parties only)**

Winning Incumbents

Winning Challengers

Winning Open Seats

Losing Incumbents

Losing Challengers*

Losing Open Seats*

All Incumbents

All Challengers

All Open Seats

 

435

424

 

361

21

53

21

350

53

382

371

106

 

295,705,241

124,443,086

 

232,278,629

22,678,435

40,748,177

23,129,152

72,889,478

28,424,456

255,407,781

95,567,913

69,172,633

 

679,782

321,558

 

643,431

1,079,925

768,834

1,101,388

232,132

546,624

668,607

285,277

658,787

 

Source: FEC, "1996 House Campaigns Summaries.--Candidates Listed by State and District," http://www.fec.gov/finance/states.htm. Data include spending for the entire election cycle (primary + general election) for all candidates who appeared on the general election ballot. It does not include data for those candidates who lost in the primary and did not appear on the general election ballot.

*Financial information was unavailable for 36 losing challengers and one losing open-seat candidate; the general average for these groups of candidates was calculated accordingly.

**Candidates of major parties are defined as those who got 5% or more of the vote in the general election.

In most districts, the spending limit would be well above recent spending levels, so that the limit would not curtail campaign speech at all. Nor would it drive up the costs of fundraising, since public funds could in theory provide as much as two-thirds of this sum, enabling candidates to raise as little as $333,000 while financing a far more extensive campaign. We believe the limit could have significant benefits in the most hotly contested districts, where it would promote spending parity, give candidates and potential candidates greater confidence that they would not be overwhelmed by a well-financed incumbent or personally wealthy candidate, and reduce the rigors of fundraising.  

Table 7: House of Representatives: 1998 Candidate Spending


Number of Candidates TotalSpending Average

Winners

Losers*

(Major parties only)**

Winning Incumbents

Winning Challengers

Winning Open Seats

Losing Incumbents

Losing Challengers*

Losing Open Seats*

All Incumbents

All Challengers

All Open Seats

 

435

308

 

394

8

33

7

271

30

401

279

63

 

294,465,378

98,136,836

 

253,322,999

7,825,744

33,316,635

7,724,930

73,703,806

16,708,100

261,047,929

81,529,550

50,024,735

 

676,932

320,709 

 

642,952

987,218

1,009,595

1,103,56

273,992

556,937

650,992

294,331

794,043

 

Source: FEC, "1998 House Campaigns Summaries.--Candidates Listed by State and District," http://www.fec.gov/finance/state97.htm. Data include spending for the entire election cycle (primary + general election) for all candidates who appeared on the general election ballot. It does not include data for those candidates who lost in the primary and did not appear on the general election ballot.

*Financial information was unavailable for two losing challengers; the general average for this group of candidates was calculated accordingly.


The low number of losers relative to winners reflects both (i) elections in which the incumbent ran unopposed, and (ii) elections in which the loser raised less than $5000 and therefore was not required by law to submit a financial report before the FEC.

**Candidates of major parties are defined as those who got 5% or more of the vote in the general election.

The same concerns go into the determination of the spending limit in Senate races. Setting Senate spending limits is a difficult task, due not simply to the differences in population across the states but to the differences in spending relative to population in very populous as opposed to less populous states. We have found that although spending in Senate races rises along with state population, spending per voting-age person (VAP) is much higher in less populous states than in more populous states. In the 1996 and 1998 Senate races, for example, the South Dakota winning challenger spent $5.61 per VAP, while in larger states like North Carolina, Illinois, and New York, the winning challengers spent between $1.23 and $1.69 per VAP, for an overall average of $1.42 per VAP. (See tables 8, 9 and 10.)  

Table 8: Senate: 1996 Candidate Spending


Number 

Total Spending 

Average Spending

Average
by Population

Spending
by VAP

Winners
Losers
(Major parties only)*
Winning Incumbents
Winning Challengers
Winning Open Seats
Losing Incumbents
Losing Challengers**
Losing Open Seats
All Incumbents
All Challengers**
All Open Seats

34
34

19
1
14
1
19
14
20
20
28

127,073,463
95,674,339

79,876,169
2,990,554
44,206,740
4,468,434
49,965,756
41,240,149
84,344,603
52,956,310
85,446,889

3,737,455
3,086,269

4,204,009
2,990,554
3,157,624
4,468,434
3,122,860 2,945,725
4,217,230
4,115,077
3,051,675

0.91
0.71

0.96
4.06
0.80
6.06
0.60
0.75
1.00
0.63
0.78

1.23
0.96

1.29
5.61
1.09
8.38
0.81
1.01
1.35
0.85
1.05

Source: (1) Spending:  Federal Election Commission, "1996 Senate Campaigns--Candidates Listed by State," http://www.fec.gov/finance/state1.htm. Data include spending for the entire election cycle (primary + general election) for all candidates who appeared on the general election ballot. It does not include data for those candidates who lost in the primary and did not appear on the general election ballot.

(2) Population: U.S. Census Bureau, "State Population Estimates: Annual Time Series. July 1, 1990 to July 1, 1998. (Includes April 1, 1990 Population Counts)," http://www.census.gov/population/estimates/state/st-98-3txt.

(3) Voting-Age Population (VAP): U.S. Census Bureau, "Table 3. Estimates of the Voting Age Population, November 1, 1990 to 1996, and Percent Casting Votes for U.S. Representatives, by State: November 1994 and 1996," http://www.census.gov/prod/3/98pubs/p25-1132.pdf.

*Candidates of major parties are defined as those who got 5% or more of the vote in the general election.

**Financial information unavailable for three losing challengers.


Consequently, we recommend a two-tier system of Senate spending limits. In states with a voting-age population of less than 1 million, candidates would be able to spend $1 million plus $2 per voting-age person. In states with a voting-age population greater than 1 million, candidates would be able to spend $1 million plus $1.50 per voting-age person. As with the House limits, these limits would only rarely cut into recent or current spending levels but would set an outer bound on overall fundraising demands, with public funding available to provide up to two-thirds of the spending under the limit. In addition, to take into account the greater variability in Senate campaign costs, we would provide that in any state in which the average spending of major party candidates over the last three election cycles was more than 50 percent above the spending ceiling that would be produced by our formula, the average of the spending levels by the major party candidates would determine the spending ceiling.  

Table 9: Senate: 1998 Candidate Spending


Number 

Total Spending 

Average Spending

Average
by Population

Spending
by VAP

Winners
Losers
(Major parties only)*
Winning Incumbents
Winning Challengers
Winning Open Seats
Losing Incumbents
Losing Challengers**
Losing Open Seats
All Incumbents
All Challengers**
All Open Seats

34
34

26
3
5
3
26
5
29
29
10

154,464,643
90,461,171

95,578,972
39,781,457
19,104,214
40,763,853
41,731,407
7,965,911
136,342,825
81,512,864
27,070,125

4,543,078
2,826,912

3,676,1141
3,260,486
3,820,843
13,587,951
1,738,809
1,593,182
4,701,477
2,810,788
2,707,013

0.79
0.46

0.71
1.05
0.77
1.08
0.31
0.32
0.79
0.47
0.55

1.06
0.62

0.96
1.42
1.03
1.45
0.42
0.43
1.07
0.64
1.73

Source: (1) Spending:  Federal Election Commission, "1998 Senate Campaigns--Candidates Listed by State," http://www.fec.gov/finance/state198.htm. Data include spending for the entire election cycle (primary + general election) for all candidates who appeared on the general election ballot. It does not include data for those candidates who lost in the primary and did not appear on the general election ballot.

(2) Population: U.S. Census Bureau, "State Population Estimates: Annual Time Series. July 1, 1990 to July 1, 1998. (Includes April 1, 1990 Population Counts)," http://www.census.gov/population/estimates/state/st-98-3txt.

(3) Voting-Age Population (VAP): U.S. Census Bureau, "Table 3. Estimates of the Voting Age Population, November 1, 1990 to 1996, and Percent Casting Votes for U.S. Representatives, by State: November 1994 and 1996," http://www.census.gov/prod/3/98pubs/p25-1132.pdf.

*Candidates of major parties are defined as those who got 5% or more of the vote in the general election.

**Financial information unavailable for three losing challengers.


The spending limits we propose would apply to a candidate's total spending in both primary and general elections together. In a House of Representatives contest, for example, a candidate could spend up to $1 million in the primary and general elections combined. There would be no separate sub-limits for the primary and general elections.

We gave extensive consideration to providing separate limits on primary and general election spending. The question of one overall limit on election-cycle spending as opposed to separate primary and general election limits under the total spending umbrella is a close one, but we concluded that given the enormous variations in political circumstances across districts and states, primary and general election sub-limits would be unwise. In some states or districts in some years, the principal vote will be the primary, while in other states or districts or years it will be the general election. In some places and at some times, there will be contested primaries and general elections. We would leave to the candidates the determination of how to allocate their funds and, thereby, avoid the rigidities of a uniform national rule.  

Table 10: Senate: Winning Challengers and Losing Incumbents, 1990-98


Winning Challengers                            

Losing Incumbents

Year

State
Party % vote Spending Spending by

Pop.   

 

VAP

Party % vote Spending Spending by

Pop.

 

VAR


1990

Minnesota

1992

Georgia

North Carolina

Wisconsin

1994

Pennsylvania

Tennessee

1996

South Dakota

1998

Illinois

New York

North Carolina

 

 

D

 

R

R

D

 

R

R

 

D

 

R

D

D

 

51

 

50

50

52

 

49

56

 

51

 

51

54

51

 

1,380,560

 

3,187,621

2,950,673

1,979,488

 

6,732,849

7,017,424

 

2,990,554

 

14,778,198

16,671,877

8,331,382

 

0.31

 

0.47

0.43

0.40

 

0.56

1.36

 

4.06

 

1.23

0.92

1.10

 

0.43

 

0.66

0.58

0.54

 

0.73

1.80

 

5.61

 

1.69

1.23

1.47

 

R

 

D

D

R

 

D

D

 

R

 

D

R

R

 

48

 

49

46

46

 

46

41

 

49

 

47

44

46

 

 6,222,333

 

 4,894,620

 2,486,380

 5,427,163

 

 6,300,560

 4,717,147

 

 4,468,434

 

 7,200,895

 24,195,287

 9,367,671

 

1.42

 

0.72

0.36

1.08

 

0.52

0.91

 

6.06

 

0.60

1.33

1.24

 

1.93

 

1.02

0.49

1.47

 

0.69

1.21

 

8.35

 

0.82

1.78

1.65


Source: (1) Federal Election Commission, "Senate Campaigns--Candidates Listed by State," for the corresponding years. Data include spending for the entire election cycle (primary + general election) for all candidates who appeared on the general election ballot. This table in particular reflects only those elections in which a challenger defeated an incumbent in the general election. It does not include elections in which a challenger defeated an incumbent in a primary.

(2) Population: U.S.-Census Bureau, "State Population Estimates: Annual Time Series. July 1, 1990 to July 1, 1998. (Includes April 1, 1990 Population Counts)," http://www.census.gov/population/estimates/state/st-98-3txt.

(3) Voting-Age Population (VAP): US Census Bureau, "Table 3. Estimates of the Voting Age Population, November 1, 1990 to 1996, and Percent Casting Votes for U.S. Representatives, by State: November 1994 and 1996," http://www.census/gov/prod/3/98pubs/p25-1132.pdf.


The experience with the state-specific spending limits in the presidential primary public funding system is instructive. The presidential primary public funding program imposes not simply a limit on total spending in the prenomination phase of the presidential election, but also a limit on the amount that can be spent in each state, basing those limits on state population. The state-specific limits, however, completely miss the distinctive role of states like Iowa and New Hampshire, whose caucuses and primaries are of a political importance wildly out of proportion to their populations. Consequently, candidates regularly seek to evade these limits (such as by staying in hotels in Massachusetts while campaigning in New Hampshire), or violate them outright, and the FEC has regularly called for elimination of these unnecessarily restrictive limits.

Certainly, there may be difficult issues for a candidate who faces a primary and then a general election test with a major party opponent who had no primary. But that situation arises under the private funding system as well. Moreover, even if a candidate has no primary opponent, he or she still may have to go through the formalities of running in the primary and so could spend money during the primary season if the candidate so chose. Rather than trying to decide how candidates ought to split their funds between the primary and the general election, or trying to calculate how candidates faced with distinct primary and general election sub-limits would try to "game" the system through maneuvers to get more money into the election that is more vital for them, we believe that the candidates are the best judges of how to allocate their funds between a primary and a general election, and leave that question up to them.

(f) Spending Limits and the Unlimited Opponent     The decision to participate in the public funding program, with the concomitant spending limits, is entirely up to the candidates. Indeed, under Buckley v. Valeo the voluntariness of the candidate's choice is a sine qua non for the constitutionality of the limits. It is, thus, quite possible that one candidate could opt into the program and accept limits, while her or his major party opponent stays out and is free to spend without limit. This could pose a major challenge to the viability of the public funding program, since candidates faced with the prospect of an opponent capable of spending well above the spending limit might consider accepting public funding with a spending limit as a form of unilateral disarmament and decline to opt in.

We recommend that when a candidate who participates in the public funding program and accepts a spending limit is faced with an opponent who is not participating in the program, then the spending limit for the publicly funded candidate should be raised to 150 percent of the normal limit as soon as the privately funded opponent has received contributions equal to 80 percent of the spending limit. Moreover, if the nonpublicly funded candidate obtains contributions equal to 120 percent of the spending limit, we would free the publicly funded candidate entirely of the spending limit. At that point, the value of the spending limit in curtailing the campaign money chase or in reducing the role of private contributions would already be substantially eroded, and we would not want the spending limit to interfere with the campaign. (See table 11.)  

Table 11: Proposed Public Funding Spending Limits for House Candidates


    Opponent Status                         House Candidates Who Accept Public Funding 


Publicly Funded Opponent                                                         $1 million
Privately Funded Opponent Who Reports 
<$800,000 in Contributions                                                       $1 million

Privately Funded Opponent Who Reports 
Between $800,000 and $1.2 million in 
Contributions                                                                             $1.5 million  

Privately Funded Opponent Who Reports 
>$1.2 million in Contributions                                                     No limit


We would not provide the publicly funded candidate with additional public funds. We believe that the public funding limit does permit candidates to mount effective campaigns even if faced with opponents who spend more. But we believe that the public funding program needs to respond to the concern of candidates that they will be outspent by their unlimited opponents. We note that several courts have upheld state public funding programs that release candidates from spending limits when it appears that a privately funded opponent is about to outspend the publicly funded candidate.235

(g) Funding Public Funding     We recommend that the public funding system be funded by ordinary appropriations rather than the income tax checkoff. The checkoff has provided a shaky basis for the presidential public funding system. The percentage of tax filers who check the federal and state checkoffs has declined since 1980, apparently reflecting the growing disenchantment of many Americans with the political process. Changes in the tax laws that raised the threshold for tax liability reduced the number of people who actually file income-tax returns, so the percentage of Americans eligible to participate in the program has dropped. Many low-income people, in particular, have no tax liability and, thus, may not participate in the public funding program. Even if the number or percentage of tax filers checking off the public funding box were to hold steady, the funds thereby made available would not keep pace with the rate of inflation. The federal checkoff had to be increased from $1 to $3 in 1993 to ensure full funding for the 1996 presidential election. It may very well have to be increased again soon.

Campaign finance is the only significant public program in which Congress has provided that the size of the appropriation would be determined not by the needs of the program to be financed "but by what amounts to an annual referendum on the program."236 The public finance system should be financed by ordinary appropriations. New York City relies on ordinary appropriations,237 as does public funding for the gubernatorial election in New Jersey. This is consistent with the notion that funding campaigns is a vital public function, much like the funding of the election day operations of maintaining polling places and counting ballots.

More important than the source of public funding is the amount of money in the program. Public funding will work only if it is adequately funded. Presidential public funding is in trouble with major primary contenders like George W. Bush and Steve Forbes opting out of prenomination public funding, and the major party nominees padding their funds with soft money--in part because public funding is provided at inadequate levels. The presidential public funding law pegged the grant to major party nominees at $20 million in 1974 dollars, but in the presidential election immediately before the adoption of the law, the losing major party nominee, George McGovern, had actually spent $30 million, while the winner, Richard Nixon, had spent $60 million. Indeed, only in 1996 did the public grant to the major party nominees reach the same level, in nominal dollars, that Richard Nixon spent on his reelection campaign a quarter century earlier. The combination of public funds and soft money in 1996 basically provided the major party presidential candidates with the equivalent in inflation-adjusted dollars of what their predecessors had in 1972. The benefit of soft money and the allure of private funding grow as the public grant becomes increasingly inadequate to fund an effective campaign. Public funding can induce candidates to opt in, reduce the role of private wealth in funding campaigns, promote more competitive elections, ameliorate the burdens of fundraising, and hold down incentives to evade the system's limits only if funding levels are based on the costs of competitive contemporary election campaigns.

(4) Other Public Assistance for Candidates

Public funding is the centerpiece of our program for increasing campaign communications, reducing the influence of wealthy donors on elections and government, making elections more competitive, and alleviating the burdens of fundraising. But we recommend several other, admittedly more modest, steps as well. We recommend that all ballot-qualified candidates for federal office be given a postal frank that would cover the equivalent of one mailing to each eligible voter in the constituency. We also recommend that the federal government provide all ballot-qualified candidates for federal office with a free website for the duration of the election campaign. These two steps would enable all candidates to have at least one opportunity to bring their messages to the attention of the community without regard to their ability to raise money.

C. Adjusting Existing Contribution Limits

The Special Commission's principal recommendation is to create a system of generous public funding for existing candidates. We believe that this could significantly increase resources for campaign activities, alleviate the burdens of fundraising, reduce the role of private wealth in elections, and reduce the influence of large donors and potential donors on government policy-makers. Nevertheless, we recognize that a private funding system is likely to coexist with public funding. Some candidates may choose not to participate in public funding, the political parties will continue to rely on privately provided funds, and individuals will continue to want to make donations to candidates, political committees, and parties. Moreover, public funding must be a voluntary choice for candidates, and unless private funding remains a viable option, the voluntariness of the choice of public funding will be subject to challenge.

Consequently, we recommend certain changes in the current limitations on contributions to candidates, contributions to and by political action committees, and contributions to and by parties. These would tend to loosen the existing limits, in light of changes in the cost of living as well as the experience of the last 25 years. These recommendations for loosening current statutory restraints are also tightly linked to the next two sets of recommendations concerning soft money and issue advocacy, which shut down current loopholes and place all federal election-related activity under FECA.

(1) Limit on Individual Contributions to Candidates

FECA's $1000 limit on individual contributions to candidates was adopted in 1974 and has not been changed since.238 This $1000 has clearly been eroded by inflation. A current dollar has less than one-third the purchasing power of one 1974 dollar. Put more precisely, $1000 in 1974 dollars would be worth $3422 in January 2000.

With the cost of campaigns rising rapidly, these fixed-dollar limits greatly increase the burdens of fundraising. These fixed limits also provide the opportunity for PACs, bundlers, and other intermediaries to prove their value to candidates by ameliorating the burden of direct fundraising from individuals. The steadily declining real-dollar value of the limit also provides an incentive to candidates and potential donors alike for developing new mechanisms, such as soft money and issue advocacy, for contributing outside of FECA. These stratagems make the dollar limits increasingly meaningless to the donors, but they have the perverse effect of giving candidates less control over their own campaigns and of magnifying the role of political committees that may be exempt from reporting and disclosure requirements and that are accountable neither to the candidates nor to the public as a whole.

Raising the contribution limits to take account of inflation would make it easier for candidates to raise funds, increase candidates' resources for campaign activity, enable potential challengers to gather the seed money necessary to launch their campaigns, and encourage large donors to participate under FECA (with its attendant reporting and disclosure requirements) rather than to provide funds outside the Act. Moreover, we believe that the corruptive potential of contributions in excess of the current $1000 limit has been diluted with the dramatic rise in campaign costs over the last quarter century and the concomitant increase in the size of candidates' campaign treasuries.

We are concerned that raising the contribution limit would exacerbate the tension between private funding and voter equality, since the size of large contributions would rise sharply, and the fraction of private funds attributable to large donors would probably rise with it. But we believe that the gains in terms of increased opportunities for political activity, voter information, electoral competitiveness, alleviation of the burdens of fundraising, and reduction in the incentive to contribute outside the system would be worth the price.

In raising the contribution limit to account for inflation, we also recommend one other change. Currently, federal election law imposes a $1000 limit on individual contributions per election, but federal law defines the primary election as a separate election--with a separate contribution limit--from the general election. Most major party candidates who appear on the general election ballot have also been through a primary election, even if they ran unopposed in the primary. Consequently, for most candidates and most donors, the real current limit is $2000 per candidate per election cycle, rather than $1000 per election.

We believe the contribution limits should be revised so as to be defined in terms of the election cycle rather than the election. This would reduce the regulatory burden of having to maintain separate accounting records for the primary and the general elections. It would also promote voter information by making the current system more transparent. If the real limit on contributions to candidates is the election cycle, not the particular balloting within that cycle, then the voters should know that, and the law should reflect that.

Consequently, in light of changes in the cost of living, we recommend that the limit on individual contributions to candidates be raised from the current $2000 per election cycle to $6000 per election cycle,239 and that the limit thereafter be indexed for changes in the cost of living, with a new limit put in place every two years.240

(2) Limits on Contributions to and by PACs

FECA limits the amount of money an individual can donate to a PAC to $5000 per calendar year, and it limits the amount of money a PAC can donate to a candidate to $5000 per election. These limits are five times the limits on individual donations to candidates.

We do not see any justification for the strong preference for PACs found in current law. There is no apparent reason why PACs ought to be able to make significantly larger contributions than individuals, or why individuals should be able to contribute far more to PACs than to candidates. Moreover, given the tendency of PACs to prefer incumbents over challengers, the value of competitive elections might be better served if there were greater parity in PAC and individual contribution limits. To be sure, like the limits on individual donations to candidates, the limits on contributions to and by PACs have not been indexed for inflation and thus are worth less than one-third of their value in 1974 dollars. Nevertheless, the relative differential between PAC and individual contribution limits has not been changed.

We have already proposed trebling the contribution limit for individuals. That would have the effect of significantly narrowing the PAC-individual gap. Completely closing that gap would require lowering the current limits on PACs. In light of the value of political participation, which includes contributions to and by PACs, and of avoiding any actions that would contribute to the burdens of fundraising, as well as the fact that the limits on PACs have already been eroded by inflation, we are disinclined to reduce the limits relating to PACs. Instead, we would leave all existing limits relating to PACs in place and provide that in the future, upon the enactment of comprehensive campaign finance reform legislation, the PAC limits should be adjusted biennially for inflation as well.

As with the limits on individual contributions to candidates, we would revise the current limits on PAC contributions to combine the formally separate limits on contributions for the primary and general elections into a single election-cycle limit. Consequently, the limit on a PAC's contribution to a candidate would be $10,000 per election cycle. The limit on individual donations to a PAC, which is based on the calendar year, would be unchanged.

(3) Aggregate Limit on Individual Contributions

Currently, FECA provides that an individual may not contribute more than $25,000 per calendar year in the aggregate to all candidates for federal office and to PACs and political party activity in support of or opposition to candidates for federal office. This number also has not been adjusted for inflation since 1974 and so is now worth about $8000 in 1974 dollars.

The aggregate limit on individual contributions also ought to be adjusted. If it were not, many of the reasons for increasing the limit on contributions to candidates would be frustrated since large donors could quickly hit the aggregate contribution ceiling after making the maximum contribution to just a few candidates. Consequently, like the adjustment in the limit on individual contributions to candidates, we recommend that the aggregate limit on individual contributions for federal election-related purposes be trebled to $75,000 and thereafter be adjusted for inflation. We recognize this is a very high number, that only a very tiny number of Americans have the resources to give at the level of the limit, that raising the limit so high will reinforce the tension between the inequality of wealth and the norm of voter equality, and that it may contribute to public concern about the corrupting effects of big contributions on the system.

Nevertheless, the proposed $75,000 aggregate contribution level is actually slightly less than the figure adopted by Congress in 1974, adjusted for inflation. Moreover, we make this recommendation only as part of a package that would both provide substantial public funding--thus, reducing the role of private wealth in the system overall--and eliminate soft money contributions, many of which are greatly in excess of the $75,000 figure.

(4) Limits on Individual and PAC Donations to National Party Committees

Currently, FECA provides that an individual may donate up to $20,000 to the national committee of a political party in any calendar year, with any contribution to a national party committee counting against the annual aggregate ceiling of $25,000. A PAC can donate $15,000 to a national party committee per calendar year.

As we will explain more fully in our next set of recommendations concerning political parties and soft money, we believe that the parties can and do play an important role in our system. Parties register and mobilize voters, distribute grassroots campaign materials and information, provide a shared policy platform for officeholders across the different branches of government and the federal system, and link voters and activists with candidates who share their views. Parties need to raise funds sufficient to enable them to carry out these many functions. Along with the limit on individual contributions to candidates, the limit on individual donations to the parties has also been eroded by inflation. This has contributed to the rise of soft money.

Consequently, we recommend that the limit on donations to the national party committees be raised. Indeed, in light of the important role of the parties, which transcends providing direct assistance to candidate, we would do more than simply adjust for inflation. We would remove any specific limit on individual donations to parties under the aggregate cap on individual contributions per calendar year. As a result, an individual could contribute up to $75,000 per calendar year to the national party committees--although any contribution to the parties would reduce the ability of an individual to contribute to candidates or PACs. Moreover, as the aggregate limit on individual contributions per calendar year is adjusted for inflation, the limit on individual donations to the parties would rise as well. Consistent with our approach to PACs, we would not at present raise the limit of $15,000 per calendar year on PAC donations to parties, but we would allow that limit to rise in the future to adjust for inflation, as part of the adoption of a comprehensive campaign finance reform package. (For a comparison of our proposed contribution limits for individuals and PACs, see table 12.)

Table 12:  Contribution Limits:  Current Law and Proposals


Curren Law

Proposals

Individual to Candidates

$1000 per election (primary and general are treated as separate elections)

$6000 per election cycle

Individual to PAC

$5000 per calendar year

$5000 per calendar year

PAC to Candidates

$5000 per election (primary and general ate treated as separate elections)

$10,000 for primary and general election together  

$10,000 per election cycle

All adusted for  inflation in the future                        

PAC to national Party committees

$15,000 per calendar  

$15,000 per calendar  

Individual to National Party Commttees

$20,000 per calendar year

No limit-only limit is aggregate annual limit on individual contributions

Aggregate Limit on Individual Contributions to Candidates,PACs, and Parties.

$25,000 per calendar year

$75,000 per calendar year Adjusted for inflation in the future


 

D. Soft Money and the Political Parties

Soft money, that is, money that does not comply with the dollar limitations or source prohibitions of FECA, has become a major factor in the financing of the national political parties. In the last two election cycles, soft money amounted to about a third of total party receipts. In 1995-96 national party soft money donations were $263.5 million and accounted for 30 percent of total national party income. In 1997-98 the soft money share of national party income rose to 33 percent, although actual party soft money receipts declined to $224.4 million with the cyclical drop in fundraising from a presidential to a nonpresidential election.241 National party soft money receipts in 1997-98, however, were nearly five times the $45 million in soft money receipts and treble the 10 percent soft money share of party receipts in 1993-94, the prior nonpresidential election.242 The 1997-98 election marked the first time in which soft money played a critical role in congressional elections; in prior years, the primary use of soft money had been to enable presidential candidates participating in the public funding system to evade the spending limits that are a condition for the provision of public funds. Preliminary figures for the 1999-2000 election cycle indicate the dollar volume of soft money is continuing to grow.243

As described in chapter 2 of this Report, there is now a substantial number of donors of very large soft money contributions. In 1997-98 there were 390 individuals or organizations--including business corporations, labor unions, American Indian tribes, and ideological groups--that gave $100,000 or more to the soft money accounts of the national political parties. Twenty-six donors gave $500,000 or more; the top four donors gave more than $1 million each. Corporate contributions prohibited by FECA dominated the soft money growth, with 218 corporations giving more than $100,000 in 1997-98 and 16 corporations giving more than $500,000 in that period. In the prior nonpresidential election cycle, only 96 corporations broke the $100,000 mark, and only four gave more than $250,000. Thirty-five trade associations also broke the $100,000 mark in 1997-98. Wealthy individuals or couples provided most of the other large soft money donations, with 114 individuals or husband-and-wife pairs giving $100,000 or more, 26 individuals or couples giving $250,000 or more, and four giving $500,000 or more.244

To be sure, not all soft money donations are so large. But very large donations dominate the rise of soft money. The FEC requires political committees to provide itemized data concerning only those donors who contribute $200 or more. In 1997-98 there were almost 25,000 donors who gave $200 or more to the national parties' soft money accounts.245 Their contributions came to $176 million, or about 80 percent of total party soft money. Of these, just 700 donors (or 3 percent of those giving $200 or more) provided 40 percent of the aggregate amount provided by the $200+ donors, averaging about $97,000 each. FECA, of course, currently prohibits individuals from contributing more than $20,000 in a calendar year--or $40,000 in a two-year election cycle--to the national party and prohibits corporations from making any contributions at all. When all donations from a particular sector or industry are aggregated, the sums in question can be enormous.246

Soft money directly challenges many of the basic values of our campaign finance system. Soft money exemplifies the danger that large private contributions can have an undue influence on the operations of government. Soft money donations are part of a network of relationships in which potential large donors are linked up to federal officeholders. Both major parties regularly arrange dinners, weekend outings, and cash-for-access policy forums that enable donors of very large sums to meet with federal officials on an intimate basis.247 Large soft money donations are tightly connected to opportunities for special access to federal officials. The DNC alone raised $27 million from the 350 people invited to attend the celebrated White House coffees with President Clinton; $3.1 million came from people who made their contributions within a week of attending the coffee.248

The rise of soft money mocks campaign finance law and fuels public cynicism about the political process. The current administratively created exemption for soft money is based on the theory that soft money is used for nonfederal purposes, but over the last two decades soft money has been spent largely to influence federal elections. In 1996 roughly one-quarter of all national party soft money expenditures was undertaken by the four party congressional campaign committees.249 These are organizations composed of members of Congress whose sole raison d'ętre is the election of federal candidates. How is it possible for any of that money to be considered nonfederal in any meaningful sense? The remainder of the national party soft money spending was undertaken by the Democratic and Republican National Committees. The DNC in 1995-96, as is typically the case for the national committee of the party that holds the presidency, was effectively the alter ego of the President and completely subservient to him.250 Only the national committee of the party that does not hold the presidency presents any possibility of spending money for nonfederal purposes, and once the party's presidential nominee has become apparent, even that committee also operates primarily in service to the presidential candidate. Soft money spending by state parties, in turn, is also usually controlled by the national committees that are the sources of state party soft money funds.251

We recommend that soft money be sharply curtailed and, to the extent possible, eliminated. To achieve this goal we recommend the following steps:

(1) Soft Money Fundraising by Federal Officials and Candidates

The national symbol of soft money is President Clinton's use of the White House coffees to raise funds for the Democratic National Committee--funds that would be used to aid his reelection campaign. We recommend that federal officeholders and candidates for federal office, and their employees, agents, and campaign staffs, be barred from soliciting, receiving, directing, transferring, or spending any funds for their own campaigns, for any national party committee, or for any state or local party committee, with respect to any activity that is related to an election for federal office (including activities that relate to elections to both federal and state office at the same time), unless those funds comply with the limitations, prohibitions, and reporting requirements of FECA. This would bar federal officials and candidates for federal office from having anything to do with money that comes from sources--such as corporate and union treasuries, and foreign nationals who are not residents of the United States--that are forbidden to make federal campaign contributions, or that is in amounts larger than the maximum contributions permitted by FECA.252

(2) National Party Committees

Similarly, the national party committees--this would include the congressional campaign committees as well as the national committees--and their officials and agents would be barred from soliciting, receiving, or directing to another person any contribution or from making any expenditure that does not comply with the limitations, prohibitions, and reporting and disclosure requirements of FECA. All national party receipts and expenditures, including moneys the national parties simply pass on to state and local parties and to nonparty organizations, would have to be in "hard" dollars.

(3) State and Local Party Committees

The most knotty issue in regulating soft money is how to deal with state and local party committees. Cracking down on soft money contributions to the national parties could simply encourage soft money donors to send their contributions to the state and local party committees, which would then use the funds for activities that influence federal elections. As the Federal Election Commission has observed, "[t]he national party committees might assist their state and local affiliates by employing a type of directed donor strategy, in which the national committee solicits soft money contributions and instructs contributors to send their contributions directly to the state or local committee. Thus, instead of reducing the amount of soft money activity," restricting national parties without restricting state and local parties "may merely redirect that activity to the state and local level, where reporting may be less complete than at the federal level."253

Any comprehensive approach to soft money must deal with state and local parties, too. Certainly, any state and local party spending program that is aimed exclusively at federal elections must be funded entirely out of hard money. More difficult are state and local party activities--such as generic party advertising, voter registration and get-out-the-vote drives, campaign literature that mentions both federal and state candidates, and even administrative overhead expenses in federal election years--that can have an impact on both federal and state elections. Failure to impose limits on the use of soft money for such mixed federal-nonfederal activities is likely to result in an enormous loophole and the continued flow of soft money into federal elections.

On the other hand, we are wary of any rule that would impose federal election law on state campaigns. Although there are no clear Supreme Court precedents on this issue, we believe that as a matter of federalism, the states should be able to regulate their own campaigns. Where Congress and the states have adopted different campaign finance rules, requiring all state and local party mixed activities to comply with federal law could result either in displacing state law with federal law with respect to state and local elections or in forcing the state parties to sharply distinguish their campaign activities for federal candidates from their activities for nonfederal candidates. But there may be benefits, in terms of building bridges across the federal system and sharpening voter understanding of what the different parties stand for, in enabling federal and state candidates to campaign together. Moreover, forcing state parties to fund their federal and state campaigns separately--or accept federal requirements for state elections--could be financially burdensome for the parties.

For now, we would recommend that Congress amend FECA to adopt a modified version of the FEC's current practice. The FEC currently requires the national and state parties, when they engage in activities that support federal and state candidates simultaneously, to allocate the costs between hard- and soft-money accounts. The national parties are required to allocate mixed activities 65 percent to hard money and 35 percent to soft money in presidential election years, and 60 percent to hard money and 40 percent to soft money in nonpresidential election years. The allocation methods available to state parties generally permit a greater use of soft money for shared activities. The most significant allocation method for the state parties is the ballot-composition formula, in which the share of mixed activities to be funded by hard money is based on the percentage of the total number of candidates on the ballot who are running for federal office.

We believe that for state and local parties, an allocation formula is the right approach to the funding of shared federal-nonfederal activities (all national party spending even for mixed federal-nonfederal activities would have to be hard-money funded), but that the current formula is weighted much too heavily in favor of soft money. In most states, the size of the state legislature, for example, is much greater than the state's federal congressional delegation. We believe that something like the 60/40 and 65/35 hard/soft money allocations would make more sense, and certainly there ought to be a greater hard money allocation in presidential election years.

We would not rule out eventually requiring that all state and local party mixed activities be funded out of hard money if it turns out that our proposal permitting some continued use of soft money is abused. But for now, given our concern not to have federal law impose unduly on state elections or to force an undesirable separation of federal and state campaigns, we would recommend adoption of an allocation system, albeit one that requires that a greater percentage of state and local parties' mixed activities be funded by hard money than is currently the law. (For a summary of the Special Commission's proposals concerning soft money, see table 13.)

Constitutionality of Soft Money RestrictionsRestrictions on soft money contributions are constitutional. The Supreme Court has held that contributions to political committees, as well as contributions directly to candidates, can be prohibited to "protect the integrity of the contribution limits" on donations to candidates.254 Donors can and do contribute to party committees in order to provide support to particular candidates. This can establish the same kind of quid pro quo relations that result from direct contributions to candidates. Soft money functions as a conduit for donations to candidates that would otherwise be forbidden because of their large size or because they come from proscribed sources. As a result, it undermines the system created by FECA and sustained by the Supreme Court in Buckley. As Justice Breyer observed in Nixon v. Shrink Missouri Government PAC, "Buckley's holding seems to leave the political branches broad authority to enact laws regulating contributions that take the form of `soft money."'255

Soft money, like hard money, is used to affect federal elections. To be sure, some soft money is used to fund activities, such as voter registration and partisan voter mobilization drives, that truly benefit both federal and nonfederal candidates. Even then the nonfederal component also benefits federal candidates, since allowing any soft money to be used for such activities frees up hard money that would otherwise have been used to fund those activities and allows the parties to spend more on direct contributions to candidates or coordinated expenditures involving express advocacy that legally must be hard money financed. Moreover, soft money fundraising creates a web of relationships between large donors and federal candidates and officials that clearly raises the potential for quid pro quos and the appearance of undue influence. The size of many soft money contributions is so much larger than the current hard money limits that some restriction on soft money is required if the hard money limits are to have any meaning.256 Given the widespread use of soft money by corporations to get money to the parties, restrictions on soft money are necessary if the longstanding--and previously validated--bans on corporate hard money contributions are to continue to make any sense at all.257

Party spending funded by soft money can have some benefits. Some soft money-funded spending is used to support voter registration and mobilization, grassroots activities, and the strengthening of state and local parties. We believe that many of the benefits of soft money spending can be preserved through the increases in hard money spending we proposed in our second set of recommendations. But soft money also poses great dangers. It raises the specter of large donors, including corporations and unions, obtaining undue influence over government and over the parties themselves.

Cracking down on soft money is also consistent with the judgment of Congress in 1979 when it voted to permit unlimited party spending on certain grassroots activities but required that such activities be funded by contributions that comply with FECA's dollar and source restrictions. Restricting soft money would be consistent with the basic structure of campaign finance law and, especially, with the central concern about undue influence over the political process that drives campaign finance regulation.

(4) Party Support for Candidates

At present, each national party committee, party congressional campaign committee, and state party committee can contribute $5000 per election to a candidate for Congress.258 The national party committees can together give up to $17,500 per election cycle to a Senate candidate; state party committee contributions to Senate candidates are limited to $5000 per election.259 Parties are also allowed to undertake coordinated expenditures on behalf of candidates. The national committees (a single combined limit applies to the National Committee and the House and Senate campaign committees) can spend up to $10,000 in 1974 dollars in coordination with the general election campaign of candidates for the House of Representatives, except that in a state with just one representative, the national committees can spend $20,000 in 1974 dollars. The state party committee can also spend the same amount in coordinated expenditures. The national and state party committees can also each spend $20,000 in 1974 dollars, or two cents (in 1974 prices) times the voting-age population of the state, whichever is greater, in connection with the general election campaigns of candidates for the Senate. Moreover, a state party committee may designate a national party committee as its agent for coordinated spending. In 1998 the limits on combined national-state party coordinated expenditures came to between $130,200 (Alaska) and $3,035,874 (California) for candidates for Senate, and $65,100 for House candidates ($130,200 in single-district states).260

We would enhance the opportunity for parties to work with their candidates. Parties are more likely than PACs or individual donors to use their funds to support challengers. Thus, strengthening the party role would promote electoral competitiveness. Moreover, parties may present less of a "corrupting" danger than either PACs or large individual donors. Certainly, party money derives from private donors, so there is a need to cap the size and control the sources of contributions to the parties. But by aggregating large numbers of private contributions and deploying them according to the strategic concerns of the parties, party committees to some extent dilute the potentially corruptive effect of large donations.

We would also simplify the existing system by combining the contribution and coordinated expenditure restrictions and then raising the aggregate amount. In House races in states with two or more districts, national and state party committees can each currently contribute $5000 and, as of 1998, can engage in $32,550 in coordinated expenditures. Combining and doubling those amounts, we would permit state parties to contribute to and/or coordinate $75,000 with congressional candidates; we would permit the national parties in the aggregate to contribute or coordinate the same amount. Total party committee spending for House candidates would then be $150,000 and would be adjusted for inflation. We would provide that the national and state committees could spend $150,000 apiece (or $300,000 together) in House races in single-district states and on Senate races in the smallest states, and double the current coordinated contribution limit in the larger states. (For a comparison of the Special Commission's proposals concerning limits on party support for privately funded candidates with current law, see table 14.)

In addition, we would provide that for any candidate who participates in the public funding system and accepts a spending limit, that candidate could accept party contributions and coordinated expenditures up to the public funding spending limit applicable to that candidate's race. Party contributions and coordinated expenditures would not be eligible for matching public funds.

(5) Party Independent Spending

For the first 20 years that FECA applied to federal elections, it was universally assumed that party spending expressly supporting or opposing federal candidates would be coordinated with the campaigns of the party's own candidates and, thus, subject to FECA's coordinated expenditure limits.261 In 1996, however, in Colorado Republican Federal Campaign Committee v. Federal Election Commission,262 a Supreme Court plurality determined that party spending may be independent of the party's candidate and that such spending is entitled to the same constitutional protection from limitation that extends to PAC independent spending. Colorado Republican said little about the criteria for determining whether party spending is considered independent or coordinated. The spending in Colorado Republican took place months before either party had selected its nominee, but it is not clear from that case whether an expenditure made after a candidate has been nominated may be treated as presumptively coordinated. Indeed, a federal district court recently invalidated a state law that defined state party spending in support of a nominated candidate as coordinated.263

In the months following Colorado Republican, the national Republican Party put together a $10 million independent expenditure program for 1996, primarily supporting the party's Senate candidates.264 The Democrats lagged with a more modest $1.5 million program. In 1998 the importance of party independent spending subsided. The Democrats again committed $1.5 million (or about 7 percent of their combined total of contributions to and spending in support of candidates) to independent expenditures, but Republican Party spending declined to under $300,000.265 The parties' apparent lack of interest in independent spending is due to the major development in party campaign finance practices in recent years--the explosion in the use of party soft money to finance so-called "issue advocacy."266

Colorado Republican's holding has serious implications for both the proposed public funding program and for the limits on party support for candidates generally. There will typically be preexisting ties between the party organization and the candidate who holds the party's nomination, between the party staff and the campaign staff, or between the consultants retained by the party and by the candidate. Party committees frequently aid candidates in hiring campaign managers, consultants, media specialists and pollsters, so that parties and their committees often engage the services of the same political professionals. Party committees provide their candidates with issue and opposition research and poll and focus group data, and they assist candidates with their fundraising.267 Party committees and candidates share pollsters, campaign strategists, and media consultants, and campaign professionals shuttle back and forth among party committees, candidate committees, and consulting firms. Even when they do not sit down to discuss the placement or content of a specific ad, parties and their candidates are structurally integrated, not independent.268 Given the history of party involvement with candidates seeking office, party spending is likely to be quite valuable to the candidate even without formal coordination with the candidate.

The possibilities for parties to work closely with their candidates yet still engage in independent spending are nicely illustrated by the recent decision of the federal district court in Republican Party of Minnesota v. Pauly.269 The Minnesota Republican Party staff provided candidates with "`meaningful and helpful' service and `direct support"'; kept in "`close contact' with `elected officials and statewide campaigns,"' "`work[ed] directly with Republican candidates on issue research,' `develop[ed] campaign plans,' and `manage[d] the scheduling of candidate and party activity."' On "numerous occasions," candidates who had been endorsed by the party attended party fundraisers, and the party encouraged its candidates to attend biweekly "coordinating meetings" at party headquarters. The party also made direct contributions to its candidates.270 But when the party took out its own broadcast and print advertising in support of its candidates who--unlike the case in Colorado Republican--had already been nominated, the party officials responsible for the ads avoided direct contact with the candidates' campaigns. As a result, the party's ads were deemed independent expenditures, not subject to limitation. Although the district court found the "record in this case is replete with examples of cooperation," there was no evidence of "actual coordination" of the particular expenditures in question with candidates.271

Party Independent Spending and Publicly Funded CandidatesIndependent party expenditures could upset the spending limits that are central to our public funding proposal. Given the possibilities for cooperation short of activity that would technically constitute coordination, independent spending by a party whose candidate has opted to participate in the public funding program could quickly render public funding's spending limits meaningless.

We recommend that if a candidate has opted into the public funding program, all spending by that candidate's party that expressly advocates the election or defeat of a clearly identified candidate (that is, either the election of the publicly funded candidate or the defeat of his or her opponent) ought to be counted against the spending limit of the party's candidate. Given the constitutional protection for independent spending, the best way to do this would be to require the candidate to agree as a precondition to the provision of public funds that the FEC could count party independent spending on behalf of that candidate, or against the candidate's opponent, against the statutory spending ceiling.

Party Independent Spending and Privately Funded CandidatesParty independent spending is also a problem in elections in which the candidate benefiting from the spending is privately funded. That candidate may have a publicly funded opponent, so party spending has implications for whether the publicly funded candidate may be released from the spending limit. Even if both candidates are privately funded, party independent spending threatens to undermine the limits on party support for candidates and, thus, to undercut the constraints those limits place on the ability of large private donors to use the parties as conduits for channeling large donations to candidates.

As the Federal Election Commission has noted, "party committees are in regular contact with their candidates, help develop candidate messages and campaign strategy, and routinely share overlapping consultants, pollsters, fundraisers, and other campaign agents. . . . These consultations, discussions, and arrangements involve face-to-face meetings, telephone conversations, and exchanges of paper and electronic mail on a regular basis, sometimes daily, and take place at both the staff level and higher levels."272

Under these circumstances, it will be difficult to police candidate-party contacts to see whether they meet very detailed factual criteria concerning coordination. There need to be bright-line rules that would limit the ability of parties to use independent spending to avoid the limits on party donations to candidates. We recommend two such rules:

First, FECA should be amended to provide that once a party committee has made a direct contribution to, or a coordinated expenditure with, a candidate, all subsequent expenditures by that committee--and by all committees of that party--are to be treated as coordinated with the candidate and are to be subject to the contribution/coordinated expenditure limitation.

Second, FECA should be amended to provide that once a party has nominated a candidate, all party expenditures supporting that candidate are to be treated as coordinated and, thus, subject to limits.

Together, these two proposals would mean that once a party has established a formal connection with a candidate, either by giving her money or nominating her, the party has allied itself with that candidate for purposes of the campaign finance laws. This would reconcile the Supreme Court's constitutional point that a party can act independently of a candidate affiliated with that party, with the real-world facts that parties normally work closely with their nominees and that once a party has established some formal connection with a candidate, it is exceedingly difficult to police the distinction between coordinated spending and independent spending.

E. Express Advocacy: The Definition of Electioneering Speech

The explosive rise of so-called issue advocacy advertising threatens several important values of our campaign finance system. First, electioneering ads that do not fall within the current narrow definition of express advocacy are not subject to the Act's reporting and disclosure requirements. As a result, voters may be unable to gather important information that would help them to assess the truth and persuasiveness of arguments and assertions concerning election candidates. Second, electioneering ads that do not fall within the current narrow definition of express advocacy are not subject to the Act's contribution limitations and restrictions. Consequently, such ads may be funded by corporate and union treasuries and by very large donations by individuals. This is in sharp tension with the voter equality norm and the concern about undue influence that are central concerns about campaign spending. Third, electioneering ads that do not fall within the current narrow definition of express advocacy can increase the burdens of fundraising, since candidates may feel required to respond not simply to the ads of their opponents but also to such so-called issue ads. Finally, electioneering ads that do not fall within the current narrow definition of express advocacy may be used to evade the spending limits that are part of the presidential public funding system and would be part of congressional public funding. The financing of these ads could be a means for bringing substantial amounts of private-interest money back into the system. Moreover, the possibility of electioneering ads that do not fall within the current narrow definition of express advocacy could also discourage candidates from opting into public funding for fear that the public funding spending limit would leave them unable to respond to such "issue ads."

The definition of electioneering is a more difficult problem for the campaign finance system to address than soft money, however, because protection for at least some issue advertising is rooted in the Constitution. Limiting campaign finance regulation to electioneering speech reflects the constitutional imperative of preventing campaign finance rules from impinging on non-election-related discussion of political issues and ideas. Some line between election-related speech and other political communications must be drawn, even though elections and politics are necessarily intertwined. Buckley was certainly right in requiring that the definition of election-related speech be precise and objective. Given the lack of experience with campaigning under FECA, Buckley's suggestive reference to the "magic words" of express advocacy may have been reasonable when the case was decided in 1976. Recent campaigns, which are increasingly marked by ads sponsored by political parties and independent organizations that are virtually indistinguishable from candidate ads except for the omission of the "magic words" of express advocacy,273 demonstrate that the "magic words" approach no longer makes sense.

We recommend that Congress take a series of steps to expand the definition of election-related speech to include much of what is now labeled issue advocacy. We believe that these steps would curtail the worst abuses under the current system while protecting speech that is truly about issues, policy, and politics not directly related to elections. We believe that these steps are consistent with the spirit of Buckley in ensuring that electoral advocacy is subject to campaign finance reporting and disclosure requirements, contribution limits and restrictions, and, in the public funding context, candidate spending limits. Where we depart from Buckley is in our belief that, in light of recent campaign developments and current campaign techniques, the notion of express advocacy needs to be redefined away from the "magic words" approach. This can be accomplished--and vague and subjective tests still avoided--by greater attention to the relations between ad sponsors and candidates, the source of the ads, and the timing of the ads.

(1) Advocacy That Is Coordinated with a Candidate

Certainly, when the production or dissemination of an ad is coordinated with a candidate's campaign, the advertisement ought to be considered both express advocacy and a contribution to that candidate's campaign. Surprisingly, there is currently some uncertainty about whether an advertisement that is coordinated with a candidate but that refrains from the magic words of express advocacy may be treated as express advocacy.

In reports released in the fall of 1998, FEC auditors found that the Democratic National Committee and the Clinton-Gore '96 campaign had worked together on the production and placement of television ads paid for by the DNC, and that the DNC and the Clinton-Gore primary campaign committee shared a standard-form memorandum for authorization of production and purchase of air time for media advertising: "One section of this memorandum states `The cost will be allocated [lh.5,p6]% for the DNC and [lh.5,p6]% for Clinton-Gore '96.' The next line states `attorneys to determine."'274 The FEC General Counsel found that it was "difficult to distinguish between the activities of the DNC and the [Clinton] Primary Committee with respect to the creation and publication of the media advertisements at issue."275 FEC auditors also found that the Republican National Committee paid more than $18 million directly and through Republican state committees on behalf of the Dole campaign for ads that were aired between April and August 1996, a period in which the Dole campaign was bumping up against the spending ceiling it had accepted as a condition for prenomination public funding.276 Yet in December 1998 the FEC rejected the conclusions of its auditors that the party issue advocacy spending on behalf of the Clinton-Gore '96 and Dole campaigns caused those campaigns to violate the spending limits they had accepted as a condition for public funding. The FEC did not issue a formal opinion, and some members may have been unpersuaded by the evidence of coordination, but other members suggested that issue advocacy, even if coordinated with a candidate, is protected from any restriction.277

Such a position is clearly mistaken. It is the coordination of the expenditure with the candidate, not the content of the advertising it finances, that counts. A contribution to a candidate's campaign is subject to FECA whether or not the check to the candidate is accompanied by a cover letter containing words of express advocacy. Just as a cash or in-kind contribution to a candidate need not include the express words "Vote for Jane Doe" to be subject to regulation and limits, a coordinated expenditure--which is legally the equivalent of a contribution--need not use the magic words of advocacy in order to be subject to regulation. To remove any uncertainty, FECA should be amended to provide that any expenditure for campaign communications that is coordinated with a campaign is express advocacy subject to regulation, regardless of its content.

(2) Advocacy by Political Party Committees

A significant development in the last two election cycles is the growing use of issue advocacy by the major political parties. This has been fueled by the rise of soft money. By the same token, the opportunity to use soft money to pay for issue ads has stimulated party soft money fundraising. Eliminating soft money, as we have proposed, could significantly curtail party issue ads since parties would no longer be receiving the large corporate and union contributions that cannot be used for candidate-related activities and, thus, are targeted for issue advocacy. Nonetheless, even with the elimination of soft money, party issue advocacy poses challenges to campaign finance law. Under a public funding system, party issue ads would not be considered part of the party's support for its publicly funded candidate. Consequently, parties could use issue ads to evade spending limits. Similarly, with respect to privately funded candidates, issue ads could be used to evade the limits on party contributions and coordinated expenditures.

Moreover, major parties are unlike other political advocacy organizations. For nonparty political groups, the purpose of political activity is to advance or block certain policies or approaches to government. For them, electing candidates is a means to that end but not the end itself. When these organizations engage in speech that combines references to candidates and political issues, a relatively narrow definition of election-related speech is necessary to ensure that election law does not interfere with their ability to advocate for their policy goals. In contrast, the overarching purpose of party committee spending is the election of party candidates to office and thereby holding or winning power. To be sure, the major parties have an interest in ideology and the same right as other organizations to discuss issues. Certainly, party spending that is exclusively about issues is entitled to the same constitutional protection that applies to spending on politics by other groups or individuals. But most party spending, particularly party messages that couple issue discussions with references to candidates, is focused on winning elections. Given the overwhelming candidate-election focus of party activities, we believe that express advocacy can and should be defined more broadly for speech undertaken by the major parties than for speech by other organizations. The danger of regulating speech that is truly about issues is much diminished when party communications are involved; conversely, the danger that parties will use the issue advocacy loophole to avoid the legitimate goals of election finance regulation is much greater.

Consequently, we recommend that FECA be amended to provide that any communication by a political party committee that mentions by name or includes the likeness of a clearly identified candidate for federal office be defined as express advocacy. At the point when a party communication clearly refers to a federal candidate, it can be safely assumed that the party is working to elect or defeat that candidate. Once it has mentioned a candidate, a party has crossed the line from discussion of political issues generally into participation in the election.

We recognize that, unlike our proposal concerning coordinated advocacy, this proposal departs significantly from the current judicial approach to the definition of election-related speech.278 Nevertheless, we believe that it is consistent with the Supreme Court's concern about the prevention of corruption and the appearance of corruption and that it reflects the reality of party-candidate relations.

(3) The Temporal Context

As Justice Holmes once observed, "The character of every act depends upon the circumstances in which it is done."279 The meaning of speech is inevitably affected by the context in which it is broadcast or published. Words can be understood to convey a message that goes beyond their literal terms, with the meaning of those words determined by the context in which they are uttered. This is particularly true of modern advertising, which rarely uses literal words of advocacy but can be quite effective in persuading people to buy things. As Justice Ann Walsh Bradley of the Wisconsin Supreme Court recently observed,

Few advertisements will directly say "Buy Nike rather than Reebok" or "Drink Maxwell House coffee." Be they in the print or electronic media, advertisements normally do not include a call for action or use "magic words" to relay their message. Yet every reader, listener, or viewer knows that "Less filling, tastes great" is an unambiguous exhortation to purchase a particular type of Miller beer. And "They're Gr-r-reat" is Tony the Tiger's unambiguous appeal to buy a box of sugar-coated corn flakes.280

This is as true of campaign ads as of ads intended to sell beer or cornflakes. Few campaign ads, whether aired by candidates or independent groups, use literal words of advocacy. But when heard and understood in context, they can be powerful forms of advocacy.

The most important part of a political ad's context is its timing. The timing of a political message is quite likely to affect its meaning. An election-eve message that combines references to candidates and to issues is far more likely to affect voter thinking about the election than about political issues in general precisely because the message is mailed, published, or broadcast on the eve of the election. A denunciation of President Clinton's healthcare policies will mean one thing and can have one effect when those policies are being debated by Congress more than a year before the election and will have another meaning and a different effect a few weeks before an election, when Congress is in recess and the President and members of Congress are campaigning for reelection.

The Annenberg Center study showed that issue ads aired in the immediate pre-election period differ from issue ads broadcast at other times. The study, which examined 423 ads, found that issue ads released in the immediate pre-election period were far more likely to refer to candidates or officeholders by name, far less likely to discuss legislation, and far more likely to be attack ads than those aired in the preceding 20 months. In 1997-98 only 35 percent of the ads released before September 1, 1998, mentioned a candidate; but 80 percent of ads aired after that date named a candidate.281 Conversely, 81 percent of issue ads aired before September 1 mentioned pending legislation, while only 21.6 percent of ads disseminated after September 1 mentioned pending legislation.282

The pre-election period is the high point of the election campaign, when the voters are most likely to be considering their Election Day decisions. It is unlikely that communications referring to candidates that are disseminated in this period will have an impact on political activity other than the election itself even if the communications refer to issues or ideas as well as to candidates. Typically, in the days and weeks before Election Day, politics focuses on the election. Legislative bodies whose members are up for election generally go out of session. Executive branch officials who are up for election devote themselves to their campaigns. In this period, political activity involving clearly identified candidates is likely to be election-related activity. As a result, presuming that election-eve, candidate-identifying speech is election-related speech will place little burden on other political speech.

We recommend that Congress provide by law that any communication broadcast, printed, mailed, or distributed within 30 days before a primary or general election that includes the name or likeness of any clearly identified candidate for federal office shall be presumed to be express advocacy, but that such presumption may be rebutted on a showing that, based on the content and context of the speech, viewers, listeners, or readers are unlikely to treat it as an election-related communication. A one-month pre-election period is the period in which voters are most focused on the upcoming elections and political actors are least likely to be engaged in political activity unrelated to the election.

Like our proposal concerning party issue advocacy, a 30-day or similar temporal rule would depart from existing judicial approaches to the definition of express advocacy and is certainly likely to be subject to constitutional attack.283 It is arguably both underinclusive--in the 1995-96 campaign, the Democratic Party engaged in issue advocacy more than a year before the 1996 general election--and overinclusive.

The underinclusive aspect of the definition will be supplemented by the more inclusive rules concerning coordinated and party advocacy. Moreover, like the Buckley Court, we would rather err on the side of protecting the speech of independent organizations and individuals who have genuine political goals other than the election or defeat of candidates.

A temporal test would be overinclusive when it applies to advertisements that mention an elected official but are aimed at influencing the elected official's exercise of his or her official powers, as when an ad calls upon a candidate who is also a member of Congress to vote a particular way on a matter up for a legislative vote during the pre-election period. To deal with the danger of overinclusiveness, Congress should provide that the presumption that a communication that mentions the name or includes the picture of a clearly identified candidate within the pre-election period is election-related may be rebutted on a showing by the speaker that based on the content and context of the speech, viewers, listeners, or readers are unlikely to treat it as an election-related communication. The opportunity to rebut the definition of express electoral advocacy would raise some question of vagueness or uncertainty, but whatever uncertainty results would be due to the law's desire to give some extra opportunity to exempt true issue advocacy from regulation.

The exact determination of the pre-election period is bound to be somewhat arbitrary. But like the number of petition signatures needed to place a candidate on the ballot,284 the number of feet from the polling place in which a state may bar electioneering,285 or, more pertinently, the dollar thresholds for FECA's reporting and disclosure requirements and contribution limits, this seems like an issue in which the courts ought to give Congress some leeway. Just as there are no magic words, there are no magic days. But election-eve communications that mention clearly identified candidates are more likely to affect readers', viewers', or listeners' views about their election choices than their views about political issues unanchored to candidates. Regulating such communications is not likely to interfere with a robust issues debate because most political debate on the eve of the election is about the election itself. A bright-line test, with an opportunity to rebut the definition of express advocacy on a showing that the speech concerned actual government action--or potential government action under active consideration--during the pre-election period is constitutionally desirable even if no particular bright line is empirically decisive.We believe that in light of Nixon v. Shrink Missouri Government PAC's reiteration of deference to the political branches concerning the precise level of the contribution limit necessary to prevent the danger of corruption, any reasonable period selected by Congress would be entitled to receive judicial deference.

(For a summary of the Commission's proposals concerning the redefinition of express advocacy, see table 15.)

F. The Federal Election Commission

Effective enforcement of campaign finance law is essential if the principles of campaign finance regulation are to be attained and public confidence in the system restored. Effective enforcement, in turn, requires a vigorous and nonpartisan FEC with the legal authority and resources to determine in a timely fashion that candidates, contributors, and other participants in the process are abiding by the rules and to seek appropriate penalties when they are not. The FEC's current organization and powers fall short of these goals. The Commission is too often bipartisan, rather than nonpartisan, winking at violations by the major parties and major party candidates and focusing instead on lesser actors. Its cumbersome enforcement process guarantees delays, and its limited investigative powers fail to deter. Its resources have failed to keep pace over time with the growth in campaign activity.

Many of the FEC's problems may be beyond statutory solution. The Commission is charged with the thankless task of regulating the very elected officials who have the authority to appoint and confirm its members, control its budget, and determine its legal powers. Vigorous exercise of its responsibilities can result in a loss of authority and cuts in its budget. Moreover, the elected officials--the President and members of the Senate--responsible for selecting and approving commissioners have too often prized partisanship and close ties to the politicians to be regulated over nonpartisanship and a commitment to appropriate enforcement. The partisan culture that has often resulted produces deadlock and failure to enforce the law.

We believe that the recommendations that follow have the potential to strengthen the FEC and improve enforcement, but we also recognize that the ultimate success of enforcement and of the election laws themselves will require that the President nominate and the Senate confirm qualified, independent men and women who have experience with politics but are not tied to any political figures or parties, and who are committed to working together to enforce the law.

(1) Commission Membership

The FEC consists of six members--three Democrats and three Republicans--who serve for six-year terms. The FEC needs the affirmative votes of four of the six members. There is no presidentially appointed chair; rather, the position of chair rotates annually among the members.

Of all federal administrative agencies, only the FEC and the International Trade Commission consist of an even number of commissioners--and the ITC is empowered to act on the affirmative vote of three out of six commissioners, whereas four votes are required for FEC action. The even number of members compounded by the partisanship of the commissioners can lead to deadlock when decisions have partisan implications. Although the vast majority of FEC decisions are taken without closely divided votes and "three-three splits occur in a very, very small number of cases,"286 the three-three splits, particularly the partisan three-three splits, "tend to be on very important questions of law."287

We recommend that the FEC be expanded to seven members to reduce the likelihood of deadlock. To avoid the danger of narrow partisan majorities, we also recommend that the Commission be required to have one member not affiliated, either at the time of appointment or in the three preceding years, with any political party.288 We also believe that the FEC would benefit from a strong chair who can give direction, set enforcement and policy priorities, and raise the public profile of campaign finance enforcement. We recommend that the President be authorized to designate a member to serve as chair for a two-year term. To reduce the dangers of partisanship, we recommend that if a chair is affiliated with a particular political party, his or her successor may not be affiliated with that party.

We also urge the President and the leaders of Congress to consider the creation of a nonpartisan advisory panel that would be authorized to recommend qualified, vigorous, independent candidates for nomination to the FEC. The constitutional doctrine of separation of powers precludes any requirement that the President be limited to nominating only persons recommended by such an advisory panel. Yet we note the paradox that although the President in theory must enjoy unfettered power to make nominations to the FEC--subject to the advice and consent of the Senate--in practice the congressional leadership, operating on a partisan basis, has a decisive role in determining who will be nominated to the Commission. We acknowledge that the appointment process is ultimately political, but we hope that the President and Congress will look for ways to make it less partisan.

(2) The Civil Enforcement Process

Civil enforcement is hampered by a cumbersome multistep enforcement process, with a four-member majority of the FEC required to approve advancing a case from one step to the next. The General Counsel may not initiate enforcement action without an affirmative vote of four members of the Commission--based on a preliminary investigation and papers submitted by the General Counsel--that there is "reason to believe" (RTB) a violation has occurred. Only at that point is an investigation officially opened. If after the investigation the General Counsel is persuaded that the respondent violated the Act, he or she must return to the FEC to secure four affirmative votes that there is "probable cause to believe" (PCTB) a violation has occurred. Before getting to the PCTB step, the General Counsel and the respondent must attempt a pre-probable cause conciliation. Even after the Commission votes PCTB, nothing actually happens to the respondent. The General Counsel and the respondent must again try conciliation; under the statute the conciliation effort must last at least 30 and as many as 90 days.289 In practice, the conciliation period may run much longer than 90 days because many respondents are skilled at protracting the process. If conciliation fails, then, if four commissioners approve, the FEC may institute a judicial proceeding against the respondent. That proceeding is a de novo action. The burden is on the FEC to prove its case. Its finding of PCTB is not entitled to judicial deference.

Note that the failure to get four votes for any action--the finding of RTB, which is necessary to begin a full investigation; the finding of PCTB; the decision to file a civil action--effectively terminates a matter.290 Moreover, the General Counsel may have to return to the full FEC at several points during the investigation because the affirmative votes of four commissioners are necessary for the General Counsel to obtain subpoenas to compel production of documents, attendance at depositions, and responses to interrogatories.

This process is cumbersome and protracted, provides respondents with opportunities for delay, and produces few decisive results. We recommend that Congress eliminate the requirement that the FEC must vote that there is reason to believe a violation exists before formally opening an investigation. There is no reason for this step. The RTB has no direct impact on a respondent; any penalty must await later action by the Commission. Yet the requirement of a formal submission to and vote by the FEC slows down the investigative process. In a few cases, the failure through partisan or other deadlock to obtain four affirmative votes has cut off an investigation before it is fully under way. By the same token, the person under investigation has no opportunity to participate in the pre-RTB phase of the case, so requiring an RTB vote burdens the respondent's procedural interests, too. Eliminating this step would expedite the process.291 It would also make sense to couple the elimination of the RTB step with some requirement that the General Counsel resolve a matter under investigation by either closing it or formally finding a reason to investigate after a certain period.

We also recommend elimination of the multiple conciliation requirements. There is evidence that the conciliation process is subject to abuse by respondents, who, relying in part on the FEC's limited staff, are able to extend the process in order to delay the finding of violation and reduce the negotiated penalty. We believe that under appropriate circumstances conciliation may be preferable to a formal administrative determination, but we believe the decision whether to seek conciliation should be left to administrative flexibility and not formal mandate. This is especially true since, even if the conciliation fails, the FEC lacks the power to impose penalties and must go to court to enforce its determinations.

A significant number of FEC cases involve relatively minor violations, such as late or incomplete filings. The FEC must gear up its full enforcement process--RTB, investigation, conciliation, PCTB, with full commission votes at each stage--to go after these violations. Otherwise, as is increasingly the case under the current enforcement priority system, these matters remain inactive for a time and are then dismissed. By legislation enacted in September 1999 and effective for a two-year period starting January 1, 2000, Congress authorized the FEC to create a so-called "traffic ticket" system under which the Commission could adopt a schedule of fines for violations of FECA's reporting requirements and could impose those fines directly, without having to go through a full hearing, conciliation, or a de novo civil action in federal court. The schedule of fines would be required to take into account the amount of the violation involved, the existence of previous violations by the person, and such other factors as the FEC considers appropriate. Respondents would be entitled to written notice and an opportunity to be heard before the Commission and would be permitted to seek judicial review of the fines.292

We applaud this experiment. In our deliberations, we gave serious consideration to changing the basic structure of the FEC's enforcement process by authorizing the FEC to impose penalties directly on a finding of a violation. We recognize that increasing the FEC's power would also require greater formal procedural protection for respondents within the FEC's internal processes. We believe that the newly authorized system of FEC-imposed penalties for reporting violations can provide an excellent test of this alternative approach to campaign finance law enforcement. Consequently, we defer any recommendation now on whether the FEC's enforcement process should be changed further, in addition to the elimination of the RTB and mandatory conciliation steps, until there is more information on how well the new system of FEC-imposed penalties works.

(3) Detecting Violations: The Need for Random Audits

The FEC's enforcement process may be triggered either by an external complaint or by an internal referral--the latter typically from the FEC's audit staff. As a result of legislation adopted in 1979, the FEC is banned from undertaking random audits. The Commission initially had random-audit authority, and following the 1976 election it undertook random audits of 10 percent of House and Senate candidates. Those audits turned up minor but embarrassing inaccuracies in the reports of many incumbents.293 Congress then stripped the FEC of the authority to conduct random audits. As a result, it is unlikely that contribution, expenditure, or disclosure violations of campaign committees that know enough to submit a formally correct report will ever be detected.

We recommend that Congress restore the FEC's power to undertake random audits of political committees within its jurisdiction. The authority to undertake random audits needs to be restored if there is to be any possibility of catching, punishing, or deterring FECA violations. Indeed, the FEC ought to be required to undertake random audits as part of its enforcement responsibilities.

(4) Expedited Relief

All FEC determinations concerning FECA violations and penalties occur long after the violation in question occurred and long after the election that was the subject of the contribution or expenditure in question. The FEC has no authority to seek expedited relief, such as a temporary restraining order, against campaign finance law violations occurring during the election period. We recommend that the FEC be given the authority to seek expedited injunctive relief during the election period when there is evidence that a serious violation has occurred or is unfolding.

We recognize that this creates the potential for direct government agency intervention into an election. But without the authority to seek expedited relief in appropriate cases, key provisions of federal election law may never be enforced. Too often, parties and candidates who are focused on winning elections are willing to risk a finding that their actions violate the law, knowing that the penalty, if any, will be a relatively small fine imposed long after the election is over.294

We would limit expedited relief to cases involving serious violations, such as spending above the public funding limit or contributions that violate the Act's source prohibitions or dollar limitations. We also note that we would give the FEC the authority only to seek expedited injunctive relief. The decision whether to grant such relief would have to be made by a court, which would hear from, and assess the arguments of, the parties opposed to such relief.

(5) Resources

In the years FECA has been in place, the FEC's budget has failed to keep pace with the increased magnitude and complexity of federal campaign finance activity. As the recent audit by the Commission authorized by Congress and undertaken by PricewaterhouseCoopers LLP put it, "the current election process has evolved into a high-velocity system of complex transactions and litigious recourse, punctuated by the actions of a few participants engaging in behavior designed to push the limits of the traditional campaign finance system."295 Yet the FEC lacks the resources for field investigators--one study found it has only two field investigators--audit analysts, and lawyers.

The resource problem will be compounded if public funding is adopted. Although the FEC's handling of the presidential public funding program has been praised, presidential public funding involves at most two dozen candidates every four years. With congressional public funding, there could very well be more than 1000 publicly funded candidates in every election cycle.296 Public funding will involve review of a huge number of private contributions to see if they satisfy the criteria for qualifying a candidate for public funding and/or for matching the private contributions with public funds, and policing the expenditures of the candidates to see if they comply with the spending ceiling.

It is difficult to determine what resources the FEC needs to carry out its current duties and to administer a congressional public funding law. Resources for the FEC, relative to its statutory responsibilities, declined from the mid-1970s to the mid-1990s. In 1976 the appropriation for the agency was $6 million; it had a staff of 197; and federal election campaigns cost about $300 million. By 1995-96 the budget was $26.5 million (up about 350 percent); the FEC's staff had increased by about 50 percent (to around 300); but federal election spending subject to FECA regulation had increased by well over 600 percent. The ratio of campaign finance activity subject to regulation to the FEC's budget went from about $48:$1 in 1976 to $86:$1 in 1996.297 In recent years, the agency's budget has grown. The FY 1998 budget was $31.7 million, and the budget for FY 2000 was $38.2 million.298

Certainly, the effectiveness of the FEC is as much related to how efficiently it uses its resources as to the level of resources. While more money would be needed to implement public funding--as well as to secure more timely compliance with disclosure requirements and enforcement of contribution restrictions--it is likely that the amount needed would be modest relative to overall campaign costs. We could speculate that the FEC's budget might have to rise to $100 million by the time public funding is fully effective. Although that would be nearly a 200 percent increase over the current budget level, the increase is small relative to the overall cost of elections. In 1996 the total cost of federal election campaigns came to about $2.2 billion.

We have considered whether there are ways to ensure that the FEC's budget is adequate to its tasks and to protect the budget from congressional retaliation, but short of a constitutional amendment comparable to the provisions of the California constitution or the New York City charter offering special protections for campaign finance agency budgets, there is no statutory mechanism for taking the FEC's budget out of the political process. Some commentators have proposed that Congress adopt a two-year rather than a one-year budget authorization for the agency,299 or that the budget be indexed for inflation. Such steps would certainly add desirable predictability concerning the agency's level of funding but could not ensure the budget's adequacy. In the end, the sufficiency of resources for enforcement must turn on the commitment of the President and Congress, and on the role of public opinion in reminding our elected officials of the importance of campaign finance law enforcement to our democratic system and to public confidence in government.

(6) Improving Disclosure

Observers have generally praised the FEC's handling of the disclosure of campaign finance reports, but there is consensus among those who have studied the Commission's work that the process could be expedited, administrative costs reduced, and public benefits increased if the FEC could require committees that handle more than a threshold level of contributions to file electronically according to a standard form prescribed by the Commission. A comprehensive mandatory electronic data filing system is one of the principal recommendations of the 1999 PricewaterhouseCoopers audit. According to the audit, "Electronic filing offers the most cost-efficient and effective method to capture campaign finance transactions."300 Disclosure information submitted electronically is on the public record well within 24 hours of receipt. Filing electronically would reduce errors and substantially reduce the resources necessary to process reports.301 PricewaterhouseCoopers states that the move from paper-based to electronic filing would "eventually allow the FEC to shift some resources from its disclosure activities to its compliance programs."302

In September 1999 Congress finally gave the FEC the necessary authority to mandate electronic filing--starting after the 1999-2000 election cycle.303 We regret that Congress chose to defer computerized disclosure for one more election cycle, although we applaud the decision to couple the electronic filing requirement with the requirement that the FEC make any report filed in electronic form accessible to the public via the Internet within 24 hours of receipt.

(For a summary of the Commission on Campaign Finance Reform's proposals concerning the FEC, see table 16.)

213 See Nixon v. Shrink Missouri Government PAC, dissenting opinion, 120 S. Ct. 916-27. See also Colorado Republican, supra, 518 U.S. at 635-44 (opinion of Justice Thomas).

214 See H.R. 965 (the "Citizen Legislature and Political Freedom Act") introduced by Rep. John Doolittle (R-CA).

215 See, for example, Bradley A. Smith, "Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform," 105 Yale L. J. 1049 (1996); Kathleen M. Sullivan, "Against Campaign Finance Reform," 1998 Utah L. Rev. 311 (1998).

216 Adamany and Agree, supra, at 103.

217 The Association of the Bar of the City of New York has previously endorsed public financing of campaigns for state and federal office. See Committee on Election Law, "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 The Record 660 (Oct. 1997); (New York state elections); Committee on State Legislation, "Campaign Finance Legislation," 41 The Record 746 (Oct. 1986) (same); Committee on Federal Legislation, "Federal Campaign Finance Reform," unpublished report, May 1990 (approving public financing of congressional campaigns), see 52 The Record, supra, at 664-65.

218 See Mutch, supra, at 35-36.

219 Id. at 118-31.

220 Ross Perot did not accept public funds in 1992, but in that election he was a new party nominee and not eligible for public funds until after the election. In 1996, when Perot's Reform Party was eligible for pre-election funding as a qualified minor party, he accepted public funding with limits.

221 See Anthony Corrado, Paying for Presidents: Public Financing in National Elections, 41 (1993); Joseph E. Cantor, "The Presidential Election Campaign Fund and Tax Checkoff: Background and Current Issues" (Mar. 18, 1997).

222 See Michael J. Malbin and Thomas L. Gais, The Day After Reform: Sobering Campaign Finance Lessons from the American States, 53-54, 66-67 (1998).

223 Id. at 62.

224 New Jersey Election Law Enforcement Commission, "Gubernatorial Public Financing Overview."

225 New York City Campaign Finance Board, "On the Road to Reform: Campaign Finance in the 1993 New York City Elections," 4 (1994).

226 See, for example, "From the Ground Up," supra, 27 Fordham Urb. L. J. at 46-47.

227 Corrado, Paying for Presidents, supra, at 39-45.

228 See Patrick D. Donnay and Graham P. Ramsden, "Public Financing of Legislative Elections: Lessons from Minnesota," 20 Leg. Stud. Q. 351 (1995).

229 See Malbin and Gais, supra, at 137.

230 See FEC v. National Conservative Political Action Comm., 470 U.S. 480 (1984) (holding unconstitutional provision of presidential public funding law that would have limited the expenditures of independent committees with respect to the campaign of a presidential candidate who has accepted public funding and spending limits).

231 Buckley, supra, 424 U.S. at 92-93.

232 We would use the same definition of "family" as is currently employed in the presidential public funding law. That would include the candidate's spouse, children, parents, grandparents, siblings, half-siblings, and the spouses of any of these persons. See 26 U.S.C. § 9035 (b).

233 See, for example, "From the Ground Up," supra, 27 Fordham Urb. L. J. at 38.

234 Herrnson in Green, supra, at 119.

235 See Gable v. Patton, 142 F.3d 940 (6th Cir. 1998); Rosenstiel v. Rodriguez, 101 F.3d 1544 (8th Cir. 1996); Wilkinson v. Jones, 876 F. Supp. 916 (W. D.Ky 1995).

236 Mutch, supra, at 137.

237 The New York City Charter provides special protections for the city's public funding program.

238 Former Mayor Edward I. Koch, who, as a member of Congress, sat on the House Administration Subcommittee that approved the $1000 limit, recently acknowledged, "[T]the mistake we made--and it never came up, it boggles the mind--was that we failed to provide for inflation." See "From the Ground Up," supra, 27 Fordham Urb. L. J. at 91.

239 When a candidate must also participate in a run-off election, an individual should be allowed to make an additional contribution to that candidate above the election cycle limit. FECA currently treats a run-off as an election separate from both the primary and the general elections and with its own $1000 limit. We do not intend to deny candidates or donors the opportunity to obtain or make additional contributions in the event of a run-off.

240 The biannual readjustment works best for House races. The election cycle for presidential and Senate races is, of course, more than two years. Congress could provide that for these offices the contribution limit would be whatever limit is in place at the start of the election cycle for a particular office. Alternatively, the limit could continue to rise at two-year intervals even for these offices, so that a person who gives an amount equivalent to the limit at the start of the election cycle would be able to give a small amount more--equal to the inflation adjustment--after the limit has been raised; a person who gives in the last two years of the cycle could be subject to the final, higher limit.

241 FEC, "FEC Reports on Political Party Activity for 1997-98," Apr. 9, 1999, http://www.fec.gov/press/ptyye98.htm (visited 10/25/99).

242 The data on party hard money receipts in 1993-94 comes from "FEC Reports on Political Party Activity for 1997-98," supra. The data on soft money for that year is from FEC Info/Public Disclosure, Inc., "Soft Money Summary" (issued 12/28/98), http://www.tray.com/fecinfo/smrpt.htm (visited 11/17/99).

243 FEC, "FEC Releases Fundraising Figures of Major Political Parties--Large Gain in `Soft Money' Contributions," Sept. 22, 1999 (Republicans raised 42 percent more in soft money during the first six months of 1999, compared with the first six months of 1997, and Democrats raised 93 percent more in the first half of 1999, compared with the first half of 1997. By contrast, party hard money receipts were up only 16 percent compared with 1997).

244 FEC Info/Public Disclosure, Inc., "Soft Money Summary" (issued 12/28/98), http://www.tray.com/fecinfo/smrpt.htm (visited 11/17/99).

245 See FEC Info/Public Disclosure, Inc., "Soft Money Summary" (issued 12/28/98), http://www.tray.com/fecinfo/smrpt.htm (visited 11/17/99). The parties are required to itemize by name of donor and size of donation only those donations at or above $200.

246 See Jeffrey Taylor, "GOP to Get Soft Money Tobacco Aid," Wall Street Journal (Jan. 7, 2000):A16 (tobacco company executives say industry will donate "at least $7 million" toward the 2000 elections "mostly in unregulated `soft money' contributions to Republican Party committee").

247 See, for example, Phil Kuntz, "Cash-for-Access Policy Forums on Bills are Common, Controversial in Senate," Wall Street Journal (Jan. 25, 2000):A20.

248 See Daniel M. Yarmish, "The Constitutional Basis for a Ban on Soft Money," 67 Fordham L. Rev. 1257, 1281n.217 (1998).

249 See Biersack and Haskell, "Spitting on the Umpire," in Green, supra, at 172.

250 See Crotty, "Political Parties," in Maisel, supra, at 212. (In 1996 the DNC worked interchangeably with the White House as an extension of the President's campaign.)

251 See, for example, Bibby, "State Party Organizations," in Maisel, supra, at 43-44.

252 We would not apply this proscription to a federal officeholder who is a candidate for state or local office and is raising or soliciting funds in connection with that campaign.

253 FEC, Proposed Rules, "Prohibited and Excessive Contributions: `Soft Money,"' 63 Fed. Reg. 37722, 37730, July 13, 1998.

254 California Med. Ass'n v. FEC, 453 U.S. 182, 197-98 (1981) (plurality opinion), 202-04 (concurring opinion of Justice Blackmun).

255 Shrink Missouri Government PAC, supra, 120 S. Ct. at 913.

256 Cf. Wesley Joe and Clyde Wilcox, "Financing the 1996 Presidential Nominations: The Last Regulated Campaign?" in Green, supra, at 62 ("When individuals give $1000 to a presidential candidate they cannot expect much in return, but a contribution of $500,000 or an industrywide contribution of $4 million is perhaps a different matter.").

257Cf. Phil Kuntz, "Judge's Doubts on Corporate-Contribution Ban Pose Latest Test for Weakened Campaign Laws," Wall Street Journal (Jan. 13, 2000):A24 (federal district court judge suggests that ban on corporate contributions is unconstitutional because unregulated soft money donations by corporations to parties has "`essentially rendered the contributions and spending limits . . . meaningless"').

258 2 U.S.C. § 441a(a)(2). The limits on party donations to House candidates derive from the limits on PACs.

259 2 U.S.C. § 441a(h).

260 FEC, "FEC Announces 1998 Party Spending Limits: Amounts Range from $130,200 to $3 Million," http://www.fec.gov/press/441ad.htm, Mar. 6, 1998.

261 Kirk J. Nahra, "Political Parties and the Campaign Finance Laws: Dilemmas, Concerns and Opportunities," 56 Fordham L. Rev. 53, 97 (1987); David Adamany, "Political Parties in the 1980s," 72-73, in Michael J. Malbin, ed., Money and Politics in the United States: Financing Elections in the 1980s (1984); F. Christopher Arterton, "Political Money and Party Strength," 116 in Joel L. Fleishman, ed., The Future of American Political Parties: The Challenge of Governance (1982). Accord, FEC v. Democratic Sen. Camp. Comm., 454 U.S. 27, 28 n.1 (1981) ("Party committees are considered incapable of making `independent' expenditures in connection with the campaigns of their party's candidates").

262 518 U.S. 604 (1996).

263Republican Party of Minnesota v. Pauly, 63 F. Supp.2d 1008 (D. Minn. 1999).

264 This compares with $34.7 million in Republican Party contributions to and coordinated expenditures with candidates in 1996. "FEC Reports on Political Party Activity for 1997-98."

265 Id.

266 See also Paul S. Herrnson and Diana Dwyre, "Party Issue Advocacy in Congressional Election Campaigns," 90, in John C. Green and Daniel M. Shea, The State of the Parties: The Changing Role of Contemporary American Parties (3d ed. 1999) (Party House campaign committees declined to invest in independent spending in part because "committee officials believed that issue advocacy provided them with a better alternative").

267 See, for example, Herrnson, "Financing 1996 Congressional Elections" in Green, supra, at 100.

268 See Jonathan Bernstein and Raymond J. LaRaja, "Independent Expenditures and Partisanship in House Elections" (paper prepared for delivery at 1999 Annual Meeting of the American Political Science Association, Sept. 2-5, 1999).

269 63 F. Supp.2d 1008 (D. Minn. 1999).

270 Id. at 1012.

271 Id. at 1017.

272 FEC, Proposed Rules, "Independent Expenditures and Party Committee Expenditure Limitations," 62 Fed. Reg. 24367, 24369-70 (May 5, 1997).

273 See Paul S. Herrnson and Diana Dwyre, "Party Issue Advocacy in Congressional Election Campaigns," in John C. Green and Daniel M. Shea, The State of the Parties: The Changing Role of Contemporary American Political Parties, 94-99 (3d ed. 1999).

274 See FEC, Report of the Audit Division on Clinton-Gore '96 Primary Committee, Inc., 24 (1998).

275 Id. at 108.

276 See FEC, Report of the Audit Division on the Dole for President Committee, Inc. (Primary), 16, 34-36, 46 (1998).

277See Jill Abramson, "Election Panel Refuses to Order Repayments by Clinton and Dole," The New York Times (Dec. 11, 1998):A1.

278 Current judicial treatment of the definition of electioneering speech is considered at pp. 51-57 of this Report.

279 Schenck v. United States, 249 U.S. 47, 52 (1919).

280 Elections Board of Wisconsin v. Wisconsin Manufacturers & Commerce, 597 N.W.2d 721, 742-43 (Wis. S. Ct. 1999).

281 "Issue Advocacy Advertising," supra, at 4.

282 Id.

283 Thus far, courts have rejected the use of the temporal pre-election period to define express advocacy. See West Virginians for Life, Inc. v. Smith, 960 F. Supp. 1036, 1039 (S.D. W. Va. 1996) (invalidating a West Virginia law providing that voter guides distributed within 60 days of an election are presumed to be election-related for purposes of a state law requiring reporting and disclosure of election expenditures); Right to Life of Michigan, Inc. v. Miller, 23 F.Supp.2d 766 (W.D. Mich. 1998) (holding unconstitutional a Michigan administrative rule that prohibited corporations and other entities from using treasury funds to pay for communications, made within 45 days prior to an election, that contained the name or likeness of a candidate).

284 See, for example, Jenness v. Fortson, 403 U.S. 453 (1971) (affirming a Georgia law requiring 5 percent of eligible voters to sign a candidate petition to gain ballot access if that candidate's party received less than 20 percent of the state vote at the most recent presidential or gubernatorial election).

285 See Burson v. Freeman, 504 U.S. 191 (1992) (upholding a Tennessee law prohibiting campaigning within 100 feet of a polling station on Election Day).

286 FEC General Counsel Lawrence Noble in "Federal Election Commission Panel Discussion: Problems and Possibilities," 8 Ad. L. J. 223, 252 (1994). According to a 1998 FEC Press Release, only 22 out of 1587 votes in open session resulted in 3-3 deadlocks.

287 Elizabeth Hedlund of the Center for Responsive Politics in id. at 252-53. Until 1997 the dangers of partisan deadlock were reinforced by the fact that commissioners were eligible for reappointment. A FEC member might fear to vote in such a way as to anger his or her party and, as a result, be denied reappointment. In 1997, however, Congress provided that henceforward newly appointed commissioners would be limited to one term (and currently serving commissioners would be eligible for reappointment for just one more term).

288 Cf. "From the Ground Up," supra, 27 Fordham Urb. L. J. at 152-53 (comments of FEC General Counsel Lawrence M. Noble supporting the current six-member FEC with a requirement of four votes for action because it provides the courts some assurance that an enforcement action is supported by more than one partisan faction on the Commission).

289 2 U.S.C. § 437g(a)(4).

290 See Lawrence M. Noble, "Federal Election Commission Enforcement," 1019 PLI/Corp 599, 607 (1997).

291 If this proposal is adopted, it would make sense to rename the "reason to believe" step something like "reason to investigate" to dispel any implication that RTB implies guilt.

292 Treasury and General Government Appropriations Act, 2000; Sec. 640, Pub. L. No. 106-58.

293 Brooks Jackson, Broken Promise, supra, at 12.

294 See, for example, "Federal Election Commission Panel Discussion: Problems and Possibilities," supra, 8 Ad. L. J. at 232.

295 PricewaterhouseCoopers LLP, "Technology and Performance Audit and Management Review of the Federal Election Commission," vol. 1 Final Report, Jan. 29, 1999, at ES-2.

296 This assumes 435 House races, 33 Senate races, two major party nominees in each race--for a total of 936 candidates--plus some primary candidates and independent candidates who qualify for public funding in the general election. If there is at least one losing primary candidate in each race, the total number of candidates would be approximately fourteen hundred.

297The 1996 figures were actually a small improvement over the previous presidential elections in which the activity/agency appropriation ratios were $99:$1 (1984); $96:$1 (1988); and $95:$1 (1992).

298 FEC, "FEC Submits FY2001 Budget Request," http://www.fec.gov/press/budg01.htm (Dec. 9, 1999). In FY 2000, the Commission had a staff of 356 authorized personnel.

299 ABA Standing Committee on Election Law.

300 PricewaterhouseCoopers Audit at 5-2.

301 Id. at 4-30 to 4-36.

302 Id. at 5-1.

303 Treasury and Government Appropriations Act, 2000, Sec. 639, Pub. L. No. 106-58.

Conclusion

Free and fair elections are at the heart of American democracy. Campaign money, in turn, is essential for free and fair elections. But the methods by which campaign money is collected and spent have a critical impact on elections and on the democratic process.

We believe that the recommendations presented in this Report can improve the way our elections are financed and, ultimately, how well our democracy works. Public funding, together with an increase in the limits on individual and party donations, the curtailment of soft money, an expanded and more realistic definition of election-related speech, and reforms in the organization and operation of the FEC can make our political process more open and competitive, promote the norm of voter equality, assure that the voters are better informed, reduce the burdens of fundraising, improve administration of the campaign finance laws, and ameliorate the dangers of undue influence that are endemic to any system that relies heavily on large private contributions to cover the costs of election campaigns.

We would like to stress three points. First, that this is an integrated package of reforms. The proposals are intertwined and are intended to reinforce one another. Adoption of just one category of recommendations, such as those for adjusting contribution limits, would do little to achieve many of the goals of campaign finance reform and might very well make the system worse overall.

Second, although our proposals are intended to be comprehensive, this Report is not all-inclusive. We have focused on what we consider to be the most critical issues in federal, particularly congressional, campaign finance. There are many other important issues, which, due to time and resource constraints, we have been unable to address. These include such questions as the funding, eligibility criteria, and spending limits of the presidential public funding system; an improvement in the disclosure of the fundraising activities of intermediaries who collect contributions from donors for transmission to candidates' campaigns;304 and incumbents' use of public resources for campaign purposes. We believe that these matters deserve careful scrutiny by Congress, by bar associations, and by the public.305

Third, we do not think our Report or these proposals or any one set of proposals can be the final word on campaign finance reform. Campaign finance regulation must be a dynamic process. It is impossible to know in advance how a particular legal change will work in practice. Candidates, parties, and donors may develop new campaign finance techniques unanticipated by existing laws. Campaign technologies may change in ways that challenge legal structures. Legal changes that affect other aspects of the campaign process--the rules governing the timing and openness of primaries, or voter registration requirements--can also have an impact on campaign finance. A central problem with the current federal campaign finance laws is that they have scarcely changed despite significant changes in the political process over the last two decades. Campaign finance reform is not a one-time event. It is an ongoing process that requires careful monitoring of campaign practices and revision of the law in light of future developments.

Our proposals will not produce the perfect campaign finance system. Given the different, and often competing, values that ought to go into the design of a campaign system, there is no perfect campaign finance system. But we believe our proposals, if adopted together, would constitute a significant improvement over the status quo and over the likely future of campaign finance law in the absence of meaningful reform. Indeed, they would constitute a significant step toward a campaign finance system that embodies the principles of our democratic system.

304 These intermediaries are known colloquially as "bundlers."

305 We note that the Bar, and particularly this Association, has been actively engaged in considering the special questions of professional ethics posed by the contributions by lawyers to officeholders and candidates who are in position to determine the selection of counsel in government legal matters. In February, 2000, the American Bar Association House of Delegates passed an ethical rule addressing this issue.

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------. "FEC Reports on Political Party Activity for 1997-98." April 9, 1999: http://www.fec.gov/press/ptye98.htm

------. "FEC Reports on Congressional Fundraising for 1997-98." April 28, 1999: http://www.fec/gov/press/canye98.htm

------. "Both Major Parties to Receive Public Funding for 2000 Conventions." June 28, 1999: http://www.fec.gov/press/conv00.htm

------. "If the Presidential Election Were Held in 1999." July 7, 1999: http://www.fec.gov/press/spend99.htm

------. "FEC Releases Fundraising Figures of Major Political Parties--Large Gain in `Soft Money' Contributions." September 22, 1999: http://www.fec.gov/press/ptymy99.htm

------. "Reform Party to Receive Public Funding for 2000 Convention." November 22, 1999: http://www.fec.gov/press/refconv.htm

------. "FEC Submits FY2001 Budget Request." December 9, 1999: http://www.fec.gov/press/budg01.htm

------. "FEC Issues Semi-Annual PAC Count." January 14, 2000: http://www.fec.gov/press/paccnt12000.htm

FEC Info/Public Disclosure, Inc. "Soft Money Summary." (issued 12/28/98): http://www.tray.com/fecinfo/smrpt.htm

Feigenbaum, Edward D., and Palmer, James A. Campaign Finance Law 98: A Summary of State Campaign Finance Laws With Quick Reference Charts. 1998.

"From the Ground Up: Local Lessons for National Reform." 27 Fordham Urb. L. J. 5 (1999).

Gierzynski, Anthony. Legislative Party Campaign Committees in the American States. Univ. of Kentucky Press, 1992.

Gordon, Nicole A. "The New York City Model: Essentials for Effective Campaign Finance Regulation." 6 J. L. and Pol. 79 (1997).

Green, John, Paul Herrnson, Lynda Powell, and Clyde Wilcox. "Individual Congressional Campaign Contributors: Wealthy, Conservative and Reform-Minded." http://www.crp.org/pubc/donors/donors.htm

Gross, Kenneth A. "The Enforcement of Campaign Finance Rules: A System in Search of Reform." 9 Yale L. and Pol. Rev. 279 (1991).

Herrnson, Paul S. "National Party Organizations at the Century's End." In The Parties Respond: Changes in American Parties and Campaigns, 3d ed., by L. Sandy Maisel. Westview Press, 1998.

------. "Financing the 1996 Congressional Elections." In Financing the 1996 Election, edited by John C. Green. M. E. Sharpe, 1999.

Herrnson, Paul S., and Diana Dwyre. "Party Issue Advocacy in Congressional Election Campaigns." In The State of the Parties: The Changing Role of the Contemporary American Parties, 3d ed., by John C. Green and Daniel M. Shea. Rowman and Littlefield Pub., 1999.

Jackson, Brooks. Broken Promise: Why the Federal Election Commission Failed. Twentieth Century Fund, 1990.

Jacobson, Gary C. Money in Congressional Elections. Yale Univ. Press, 1980.

Joe, Wesley, and Clyde Wilcox. "Financing the 1996 Presidential Nominations: The Last Regulated Campaign." In Financing the 1996 Election, edited by John C. Green. M. E. Sharpe, 1999.

Kuntz, Phil. "Judge's Doubts on Corporate-Contribution Ban Pose Latest Test for Weakened Campaign Laws," Wall Street Journal (Jan. 13, 2000):A24.

------. "Cash-for-Access Policy Forum On Bills Are Common, Controversial in Senate." Wall Street Journal (January 25, 2000).

Malbin, Michael J., and Thomas L. Gais. The Day After Reform: Sobering Campaign Finance Lessons from the American States. The Rockefeller Institute Press, 1998.

Mann, Thomas E. "The Campaign Finance System Under Strain." http://www.brookings.edu/views/Articles/Mann/SNP.htm

Mitchell, Alison. "The Making of a Money Machine: How Clinton Built His War Chest." The New York Times (December 27, 1996).

Mutch, Robert E. Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law. Praeger, 1988.

Nahra, Kirk J. "Political Parties and the Campaign Finance Laws: Dilemmas, Concerns and Opportunities." 56 Fordham L. Rev. 53 (1987).

New Jersey Election Law Enforcement Commission. "Gubernatorial Public Financing Overview." http://www.elec.state.nj.us/gubpub.htm

New York City Campaign Finance Board. "On the Road to Reform: Campaign Finance in the 1993 New York City Elections." (1994).

Noble, Lawrence M. "Federal Election Commission Enforcement." 1019 PLI/Corp 599 (1997).

Note. "The Toothless Tiger--Structural, Political and Legal Barriers to Effective FEC Enforcement: An Overview and Recommendations." 10 Admin L. J. 351 (1996).

PricewaterhouseCoopers LLP. "Technology and Performance Audit and Management Review of the Federal Election Commission." January 29, 1999.

Seelye, Katherine Q. "GOP's Reward for Top Donors: 3 Days With Party Leaders." The New York Times (February 20, 1997).

Smith, Bradley A. "Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform." 105 Yale L. J. 1049 (1996).

Sorauf, Frank J. Inside Campaign Finance: Myths and Realities. Yale Univ. Press, 1992.

------. "What Buckley Wrought." In If Buckley Fell: A First Amendment Blueprint for Regulating Money in Politics, edited by E. Joshua Rosenkranz. 1999.

Sullivan, Kathleen M. "Against Campaign Finance Reform." 1998 Utah L. Rev. 311.

Taylor, Jeffrey. "GOP to Get `Soft Money" Tobacco Aid." Wall Street Journal (January 7, 2000).

Yarmish, Daniel M. "The Constitutional Basis for a Ban on Soft Money." 67 Fordham L. Rev. 1257 (1998).

A SEPARATE STATEMENT

Mark Alcott, Andrea Berger, Richard Briffault, Marilyn Friedman, Nicole A. Gordon, Lance Liebman

It is in the nature of committees that their work is based on compromise. Few members are likely to endorse every conclusion adopted by the entire group. Nevertheless, commitment to the common enterprise and support for the overall thrust of a set of recommendations ordinarily counsel acquiescence in the views of the majority even over particular points with which one disagrees. These general observations apply to this Report. There are several specific items on which we disagree with the group as a whole, but they are not important enough to prompt a separate opinion. With respect to two recommendations, our disagreements are more profound. Given that critical support for those two points was provided by members of the Commission on Campaign Finance Reform who disagree with both the overall thrust and many of the specific decisions of our compromise package, we feel compelled to record our disagreement.

We believe that the Commission's decisions (i) to raise the aggregate individual contribution limit to $75,000 per calendar year, and (ii) to permit political party committees to make contributions to or coordinated expenditures with a publicly funded candidate up to the publicly funded candidate's total spending limit are seriously mistaken. The unfortunate consequences of these two decisions are interrelated and compound each other.

(1) Aggregate Contribution Limit

The factors that counsel raising the limits on individual donations to candidates per election cycle simply do not apply to the same degree with respect to the annual aggregate contribution limit. The individual donation limit cuts directly into a candidate's ability to raise funds and thereby compete effectively. The aggregate limit has a more attenuated effect on candidate fundraising since it does not limit how much any individual donor may give to any individual candidate. Instead, the limit operates to restrict the influence of very wealthy individual donors on the political process as a whole.

Some adjustment in the aggregate limit is certainly necessary to make the increase in donations to individual candidates workable, but trebling the limit is unwarranted: $75,000 per calendar year--effectively $150,000 per election cycle--is an extraordinarily high limit. Only a few hundred Americans currently make soft money contributions at that very high level. Indeed, with such a high annual limit--and with our elimination of any other cap on individual donations to parties--the Report comes perilously close to legalizing individual soft money donations, not eliminating them.

(2) Party Support for Publicly Funded Candidates

The dangers of undue influence posed by the very high aggregate limit on individual contributions are compounded by the decision to eliminate all limits on party support for candidates who opt into the public-funding program other than the limit on the publicly funded candidate's total spending. Eliminating all limits on party support for publicly funded candidates could be easily manipulated to permit the channeling of very large private donations to ostensibly publicly funded candidates. A candidate could nominally participate in the public-funding program by obtaining the threshold amount of small matchable private funds, but then once certified for public funding, the candidate could rely entirely on private funds collected by the parties. In House of Representatives elections, the Commission has recommended that publicly funded candidates be permitted to spend up to $1 million per election cycle. If, as the Commission also proposes, the aggregate ceiling on individual donations is raised to $75,000 per calendar year/$150,000 per two-year election cycle, then a mere handful of very large donors could finance virtually the entire costs of a nominally publicly funded House candidate's campaign.

Elsewhere in the Report, the Commission recommends that the limit on party hard money support for privately funded candidates be roughly doubled from current levels. That would enable the national and state parties together to give up to $300,000 for a candidate in a House election. The same limit should apply to party support for publicly funded candidates. This would give the parties ample opportunity to aid their publicly funded candidates. But it would also mean that publicly funded candidates would have to look to small, matchable private donations, and, especially, to public matching funds, to cover their campaign costs. This would be far more consistent with the goals of the public funding program than a rule that would enable an ostensibly publicly funded candidate to rely entirely on private funds--and on private funds potentially composed of very large donations at that.

By applying the private funding limit to the public funding setting, a House candidate who raises as little as $235,000 in matchable private contributions would receive $470,000 in public funding and could finance the rest of her or his expenses up to the public funding $1 million limit for House elections with party funds. Such a balance of small private donations, public funds, and party money would be a far better means of advancing our goals of voter equality, promoting competitive elections, and reducing the potential for wealthy private donors to obtain undue influence by channeling money through the parties than the proposal for unlimited party support (up to the $1 million spending limit in House elections and the various state limits in Senate elections) in the Report.

STATEMENT OF DISSENTING VIEWS

Joel Gora, Constantine Sidamon-Eristoff, Peter J. Wallison, Michael S. Weinstock, Paul Windels III

The Commission on Campaign Finance Reform's Report is an impressive document. It is the result of a careful, thoughtful, two-year study of the seemingly intractable campaign finance dilemma. Accordingly, we are pleased to associate ourselves with many of its principal elements. The Commission's chairs, Robert Kaufman, John Feerick, and Cyrus Vance, deserve great praise for their leadership and the spirit of fairness and objectivity with which they approached this task. Professor Richard Briffault and his assistant Miriam Jimenez did a truly extraordinary job of outlining in writing and in briefings the principal arguments for and against each issue to be decided by the Commission, and the report they drafted for the Commission will surely become a classic of its kind. Not only does it clearly and succinctly outline the current law, but its explication of the decisions of the Commission is exemplary for its clarity and the logic of its presentation. We are all proud to have been part of this process.

I. Introduction

The Commission began its work by deciding, with the invaluable assistance of Professor Briffault, on a set of goals for campaign finance reform summarized in chapter 1 of the Report. It is probably true that no campaign finance proposal could meet all these goals with equal success, and indeed some are in conflict with others. For example, the goal of informing the public--which is undoubtedly a function of the amount of spending by candidates--conflicts with the goal of reducing the appearance of corruption or excessive influence by limiting large contributions. Limiting the size of contributions in turn conflicts with the goal of easing the fundraising burden on candidates. In part, the Commission's task was to choose the most important goals, and structure its proposal to meet these objectives, without slighting the less important goals or other objectives and values that are important in our free and democratic constitutional system.

To a large extent, our dissent from many of the Commission's principal recommendations rests on our disagreement with the priorities and weights it placed on particular goals. For example, a majority of the Commission seemed uncritically to accept the proposition that large individual contributions to candidates or to parties create undue influence or even have a corrupting effect on lawmakers. Indeed, if there is one organizing principle around which the Report seems to be organized, it is the Commission's effort to mitigate the supposed corrupting effect of hard money contributions to candidates and soft money contributions to political parties. As a result, in too many areas, the Commission's recommendations place limits on contributions to candidates and parties that we regard as unnecessary and unwarranted.

While we do not doubt that contributions can, to some extent, influence the decisions of lawmakers, or contribute to an appearance of such influence, we doubt that this effect is so significant and pervasive that it should be used to justify a system of public finance for political campaigns, or the restrictive rules adopted by the Commission on the total amount that an individual can contribute to all candidates or to the party of his or her choice. Nor do we think that the danger of undue influence or corruption is sufficient to justify the severe restrictions that the Commission's majority proposes to place on soft money contributions to parties or the independent activities of groups.

Supporters of campaign finance reform often assume that contributions to political campaigns are intended to purchase influence. It is the power of this assumption that often drives reform proposals. Indeed, the majority's report echoes this widely held belief: "Campaign finance practices can affect not just the fairness of the election but the behavior of government after, or, more accurately, between elections. When candidates are dependent on private donations, large donors and prospective donors may obtain special access to officeholders and their views may carry extra weight. They will, therefore, be particularly well positioned to affect government decision-making."1

Regrettably, it is this fear of quid pro quo corruption that frequently dominates the campaign finance reform debate. If we allow this easy assumption to determine the course of campaign finance reform, we will pay a steep price in the deprivation of our liberties and the loss of vigor in our contests for political office. The real focus of campaign finance reform should be maintaining a system in which challengers can mount an effective campaign against officeholders while all interested individuals and groups can express their First Amendment rights. The false assumption of undue influence should not be allowed to determine the direction of reform.

Although the notion that campaign contributions result in undue influence has the patina of common sense,2 a substantial majority of those who have studied voting patterns on a systematic basis agree that campaign contributions affect very few votes in the legislature.3 The factors that truly play a role in determining a legislator's votes, these studies conclude, are party affiliation, ideology, and constituent views and needs.4 When contributions and voting patterns meet, it is a result of contributors donating money to candidates they support, not the other way around.5 There are, of course, dissenters from these views,6 but the fact that the underlying reasons for a legislator's vote are difficult to disentangle should warn us against distorting our vigorous democratic system in pursuit of a debatable goal.

A congressman from North Carolina, for example, would probably be a strong proponent of the tobacco industry and, accordingly, would likely favor a bill that is being pushed heavily by the tobacco lobby. To suggest that he voted in such a way because he may have received a contribution from Philip Morris would be erroneous. It would be equally inaccurate to suggest that a congressman from New York City was voting against the bill simply because he never received such a contribution. Both members of Congress would likely take into consideration their party's reaction, their personal feelings about the bill, as well as the reaction of their constituents, long before they thought about any PAC money that might be changing hands. Legislators clearly will not accept a campaign contribution in exchange for a vote that would anger their voters.

When considering the possible effect that contributions have upon votes, it is also important to remember that people who are drawn to public office usually have clear and established views on most major issues. Contributions are not going to convince an elected official to sacrifice those core beliefs.

If campaign contributions are truly to have a sinister effect upon votes, such activity would be directed toward specialized issues that do not normally arouse much public interest.7 On these narrow issues, prior contributions may indeed provide the donor with access to legislators or their staffs. But such instances are not commonplace, and before we distort our democratic system we should consider whether they can be addressed through meaningful disclosure requirements as well as legitimate enforcement mechanisms.

Rather than elevating the elimination of undue influence by contributors to the highest level of concern, we believe the Commission should have given greater weight to some of its other goals--particularly political participation, voter information, competitive elections, ameliorating the burdens of fundraising, and effective enforcement and administration. In addition, the Commission should have given greater weight to values outside its explicit goals, including the values of free expression and the preservation of a vigorous political-party system.

Political participation. Despite all the discussion in the media about soft money and individual maxing out, the parties and candidates still raise most of their funds in small contributions from individuals, and these contributions represent an important form of political participation and commitment. We are concerned, as we discuss below, that this aspect of political participation will be stifled by the availability of public financing dollars.

Voter information. The amount of information available to voters is a direct function of the amount of money available to candidates and parties, and for this reason we are reluctant to set limits on campaign expenditures. Such a limit is an inherent element of a public campaign finance system and is included in the system adopted by the majority of the Commission. As discussed more fully below, we believe that a limit on campaign expenditures under a public finance system will reduce the amount of information available to voters and ultimately benefit incumbents.

Competitive elections. Thus, despite the Commission majority's belief that a public finance system will promote competitive elections, we are concerned that it will diminish competitiveness by enabling incumbents to manipulate the system, by enabling the majority parties to freeze out minority parties, by limiting the funds available to challengers, and by imposing an overall limit on expenditure to inform and engage the public.

Reducing the burdens of fundraising. Although a public financing system clearly reduces the burdens of fundraising, as we suggest above its cost is very high in terms of the Commission's other goals of political participation, voter information, and competitive elections. As we discuss below, there are other ways to reduce the burdens of fundraising for candidates and officeholders without creating a system of direct government support for campaigns.

Enforcement and administration. The Commission paid relatively little attention to the problems of enforcement of the campaign finance laws that were thrown into sharp relief by the depredations of the 1996 campaign. We do not believe that limitations on soft money and the establishment of a publicly funded campaign finance system--coupled with the Commission majority's proposed changes in the Federal Election Commission (FEC)--are sufficient to address this problem. In the most general sense, the country's leaders--those charged with enforcement of the laws--manipulated the system and justified their actions as necessary to secure their re-election. This is a very dangerous precedent, especially when--under the Commission's proposal--the entire campaign finance system could one day be in the hands of similarly unscrupulous officeholders. We have proposed what we believe is a better way to ensure enforcement of the campaign finance laws.

Having said all this, there are elements of this Report that we fully support, particularly its recommendations for (i) an increase in the permissible amount of individual contributions to candidates; (ii) an increase in the amount individuals may contribute to the political parties; (iii) the adjustment of these limits for inflation; (iv) the increase in permissible party contributions to candidates; and (v) in the context of the increase in permissible contributions to parties, the regulation of soft money contributions to political parties.

The Report also provides certain public benefits, such as one free mailing to all eligible voters by all ballot-qualified candidates, a simple and equitable reform that will help expand political participation and opportunity. Indeed, recommending more than one free mailing would have been even better.

These recommendations will, we believe, advance the goals of making adequate funds available for political campaigns--thereby contributing to a more informed electorate--and reducing the fundraising burden on lawmakers. It also enhances the likelihood that challengers--either directly or through contributions from their political parties--will be able to raise the necessary funds to overcome the inherent advantages of incumbents, thus contributing to more competitive races.

However, we have a rather long list of objections to the recommendations in the Report. Some of these refer to matters or recommendations to which we believe the Commission did not give sufficient attention or consideration; others refer to limitations the Commission placed on recommendations with which we, on the whole, agree. Our concerns about public financing of campaigns, the Commission's efforts to control independent expenditures by groups or issue advertising by parties, and the enforcement mechanism the Commission ultimately devised are treated separately and more extensively below.

II. General Concerns

Immediate and Full Disclosure

The Commission did not seriously consider the advantages of a system of immediate disclosure as a way of addressing the supposed problem of corruption arising from hard money contributions by individuals or political action committees (PACs). As noted above, we believe the Commission's concern about corruption or the appearance of corruption was somewhat exaggerated, and that in large part accounts for its apparent view that immediate disclosure would be an insufficient reform. However, we believe that--especially in the age of the Internet--immediate and full disclosure of contributions and contributor affiliations will allow the question of excessive influence or corruption to be settled in the most appropriate forum--the voting booth.

Tax Deductions and Credits

The Commission's most controversial recommendation is a public financing system for congressional and Senate campaigns. It should be controversial, for the reasons outlined in our extended discussion below. However, there was an alternative to public financing that the Commission did not fully consider--a system of tax deductions and credits that would encourage large and small individual contributions to political campaigns. In both cases, the public would be paying for election campaigns, but a system of tax deductions and credits would mean that these contributions would be in an important sense voluntary.

To be sure, the Commission considered and ultimately rejected the idea of a system of tax deductions and credits, but for very small contributions. This, we believe, was a mistake. In the Internet era, as Senator McCain has demonstrated, it could be relatively easy for candidates to raise large amounts of campaign funding over the Internet, through large numbers of small contributions. The Report shows no awareness of this possibility. Encouraging small contributions through tax deductions and credits would have been a major step forward in campaign finance reform; it would encourage political participation in a significant way and substantially ameliorate the fundraising burden for candidates.

But the Commission also made a mistake in not considering a system of tax deductions and credits for contributions--of at least the size the Commission has now authorized for individuals--in lieu of its public financing proposal.

Many taxpayers will be seriously distressed by the sight of the government contributing to--indeed supporting--the political campaigns of candidates they abhor. Ultimately, as we discuss more fully below, that distress will be translated into restrictions that will impair the financing of minority views. This result will not be so likely if campaigns were to be supported by individual contributions for which the contributors get a full or partial tax deduction or credit.

Such a system would also be superior to the Commission's public-finance proposal in the following ways: (i) it will continue the voluntary and individual-based contribution system we have today, promoting commitment and political involvement by individuals; (ii) it will provide some degree of public support for campaign finance without the unfortunate need to impose a ceiling on expenditures or put the government in a position to control the flow of campaign funds; and (iii) it will significantly reduce the effort that candidates would have to make in order to obtain financing for their campaigns.

The Role of Parties

The Commission has proposed a significant expansion of the amount that an individual can contribute to a political party, and the amount that a party can in turn contribute to its candidates. In exchange, the Commission has proposed the elimination of soft money contributions to the political parties. As outlined below, we do not agree with the Commission's effort to restrict soft money contributions to parties insofar as these contributions are to be used solely for issue advertising or party building. Nor do we agree with the Commission's restriction on the amount of their hard money contributions that political parties could contribute to their candidates.

The Commission had an opportunity in this Report to structure its recommendations so that more campaign finance would be funneled through parties. The benefits of this would be considerable in our political system. For most of the last century, political scientists have remarked the decline of the two political parties in the United States. The consequences of this decline are visible all around us today--particularly the voting public's difficulty in determining what a candidate stands for, or in holding anyone or any group accountable when promises are not kept or policies fail.

The phenomenon of legislative gridlock--so frequently noted in the media--should not be surprising when the ability of the parties to mediate differences among contending groups in order to gain or retain power has been largely eviscerated. A likely reason for the decline of the parties is the structure of the current campaign finance laws, which emphasize contributions to individual candidates and limit the intermediation of parties. As a result, candidates--although they bear party labels--are independent of the parties, in elections as well as in their official actions. Without having to consider the broader interests of their respective parties, lawmakers have a strong incentive to hold to a position that will advance their own re-election prospects rather than vote for a compromise that will produce necessary legislation. This is the very definition of gridlock.

Although the Commission expanded the amount that individuals may contribute to political parties--a step that we approve--it maintained limitations (although higher ones) on contributions by the parties to the campaigns of their candidates. There is no obvious policy basis for this restriction. Even within the terms of the Commission's own objectives--to limit the likelihood of corruption or excessive influence--allowing parties to contribute as much as they can to the campaigns of their candidates would have made sense. At the very least, contributions to parties tend to attenuate the supposed undue influence of large individual or PAC contributions.

But permitting unlimited contributions by parties to their candidates would have significant additional benefits, some of which were among the stated objectives of the Commission: (i) it would ameliorate the burdens of fundraising by candidates and officeholders; the parties would do this for them, much more efficiently, with permanent staffs, and from a far broader base of contributors; (ii) parties would use their funds efficiently, funneling money to campaigns where the party's candidates have the best chance of winning, thus enhancing the competitiveness of campaigns (another goal of the Commission) and solving the problem of incumbents having a surfeit of campaign money while challengers are starving for funds; and (iii) it would permit political parties to intermediate among interest groups and regional interests, reducing the gridlock that has made it so difficult over the last quarter century to achieve necessary reforms through legislation.

III. The Commission's Public Financing Proposal

We cannot support the Commission's public financing proposal, or indeed any public financing proposal in which the Treasury is the sole source of funds and the government itself is the only paymaster.

Our opposition is based on concern about what a public financing system might become, combined with a view that it is not necessary to achieve the purposes for which it was proposed. We have already noted our skepticism about the need for public financing as a mechanism for addressing the undue influence or corruption that is alleged to arise from the current system of individual contributions. Indeed, the Commission majority itself must believe that a private financing system can be structured in such a way as to avoid undue influence, since the Commission has proposed just such a private financing system for candidates who do not accept public financing of their campaigns.

Moreover, even if undue influence were the result of a private system of campaign finance, there is no reason to believe that it would be eliminated by a system of public finance. Under the Commission's public finance system, and indeed under any conceivable public finance system, there must be a limit on the amount that can be spent on a publicly financed campaign. This means that influence by individual donors and PACs could be replaced by the influence of groups that have large amounts of money to spend for and against candidates--including labor unions, business groups, and single issue advocacy organizations. In addition, the voice of the media will be significantly enhanced, since candidates will not have the funds to contradict false reports in the news and editorial pages. This is also undue influence, since it will affect the election prospects of candidates, and hence their voting behavior.

Finally, we do not believe that a public financing system will achieve the Commission's stated goal of reducing the influence of money on the political process. Funds used in political campaigns are only part of the moneys raised and spent under the auspices of political figures. Many officeholders, for example, have created their own political action committees or even Section 501(c)(3) nonprofit corporations that study and debate public policy, for which they actively raise funds and which play an active role in the political process.

If the Commission believes that lawmakers can be influenced by campaign contributions to give access or political favors to campaign contributors, then donations to lawmakers' controlled PACs or favored charities or community groups should also be restricted. The point here is that a public finance system--for all the problems it creates for our political system--can accomplish very little of what the Commission majority hopes to achieve.

In other words, the mere fact that wealthy individuals and PACs are no longer contributing to campaigns obviously does not mean that only the voters will be exerting influence on candidates and lawmakers. In fact, a system of public finance may effectively disarm candidates in their efforts to overcome or correct inaccurate information about them. So public financing might not achieve, indeed we believe is unlikely to achieve, the very purpose for which it has been advanced by the Commission--the curbing of undue influence on candidates and lawmakers.

Moreover, by structuring a private system of campaign finance that will not, in its view, give rise to undue influence or alleged corruption, the Commission majority has further reduced the policy reasons for using public funds to finance campaigns. If a system of private finance is possible, the burden on the Commission majority to demonstrate why a public financing system is necessary is correspondingly greater. We do not think this burden can be met by any system of public finance, and was not met by the Commission in this Report, for the following reasons:

1. Manipulation by and for incumbents. One serious flaw of any system of public campaign finance administered by the government is its susceptibility to manipulation by and for incumbents. There is probably no way to prevent this, and the Commission makes no substantial effort to do so. Manipulation by and for incumbents can occur in two ways: (i) by enhancing the natural advantages of incumbents without a corresponding increase in the funding available to challengers, and (ii) by making it difficult for challengers to obtain the funding to which they should be entitled.

That incumbents have natural advantages is clear. Incumbent members of Congress have staffs paid for by the federal government, many of whom "moonlight" on their employer's campaigns8 or can transfer to the campaign payroll at the moment most convenient for the incumbent. A challenger must find campaign staff where he or she can, frequently employing them before they are necessary so as to assure their availability when the campaign begins.

Members of Congress receive full salaries for the time they spend campaigning, while nonincumbents are required to take unpaid leaves of absence from their jobs or campaign part-time, a huge disadvantage to anyone who is not independently wealthy or already an elected official.

Incumbents mail newsletters to their constituents that strongly resemble campaign literature and can schedule official engagements (for which they travel at the expense of the federal government) to parallel campaign events.9

More fundamentally, however, incumbents have an advantage in creating news simply by virtue of holding office. We believe that if any ceiling is to be placed on expenditures it should be accompanied by measures that deflate the advantages of incumbency.

A system of public finance does nothing to overcome these advantages. To be sure, it increases the likelihood that challengers will have sufficient funds--if they can gain access to them--to put on a credible campaign, but there is no way to prevent incumbents from increasing their own inherent advantages without correspondingly increasing the funds available to challengers. Larger appropriations for staff, in Washington and in district or state offices, and larger budgets for constituent service and communication are two likely vehicles for this purpose.

2. Misuse by the government. Another and more troubling aspect of a public funding system's susceptibility to manipulation is the possibility that it will be misused by an administration in power to perpetuate itself and its supporters in office. In the 1996 campaign, by common agreement, the administration in power stretched the existing campaign finance laws to their very limits--if not beyond--and justified its actions by citing the superior fundraising success of the opposition. It is not far from this position to manipulating a government financing system in order to keep the opposition from gaining power.

The fact that the Justice Department has done little to prosecute offenses in this scandal, despite scores of participants fleeing the country or taking the Fifth Amendment, reminds us that there are worse and more dangerous forms of corruption than the undue influence that may accompany campaign contributions from wealthy individuals. The 1996 experience leaves us with deep skepticism that the government can be trusted to administer a system of public funding of campaigns without manipulating it for its own purposes.

3. Freezing out minority parties. The only real check on an effort by the administration in power to manipulate the campaign financing system for its own benefit is the existence of a large party that is currently out of power. However, both political parties have incentives to prevent the success of new minority parties, and in that case it is unlikely that any significant force will be brought to bear to prevent the stifling of minority-party growth through manipulation of the public financing system.

This process will, regrettably, be aided by the fact that many minority parties will be unpopular with the majority population, and acting to deprive them of campaign funds--it will be taxpayers' money, after all--will be politically popular. The standards established in such a case will be available in later cases to deprive the candidates of less offensive minority parties of the campaign funds that could give them a voice in the political process.

4. Withering of the private campaign finance system. Proponents of the Commission's approach will no doubt argue that the continued existence of a private campaign finance system--as proposed and enhanced in the Commission's Report--will always permit minority parties and challengers to incumbents to obtain the necessary financing for campaigns, even if the public system is manipulated to the benefit of the two parties, the administration in power, or incumbents generally.

However, this is not necessarily the case. A private campaign finance system cannot be established at will, whenever necessary. Like any other system, it is a network of participants, many--perhaps most--of whom participate because they know that (i) it is their duty as citizens, or (ii) there is no other source of campaign funds for the candidates they prefer or with which to defeat the candidates they oppose.

The tone of most fundraising letters reflects this. They are frequently based not on the qualities of the candidate for whom support is solicited but on the dangers of allowing the opposition candidate to gain power. Once it becomes clear that public financing is available from the government--both for the primary and the general election--the incentives to contribute funds to candidates will decline. Where an incumbent is accepting public funds for his or her campaign, a challenger will have a difficult time explaining why he or she needs private support. The incumbent will be limited in the amount he or she can spend, so the challenger can't argue that a large war chest is essential. The parties will not be able to raise funds for support of their candidates, since the public will be aware that there is government money available for the parties' candidates.

Once the private financing system falls into general disuse, it will be difficult to reconstruct. The names of regular contributors will not be current, the skills and contacts of fund solicitors will be lost. We will be forced back to wealthy individuals using their own money in support of their campaigns as the only way to keep a public finance system honest.

5. Limits on expenditure. The public financing system proposed by the Commission entails expenditure limits for both House and Senate races. The Commission believes these limits are at levels that will permit strong races by both incumbents and challengers. However, any spending limits are by their nature limits on the amount of information the public receives. In some cases, the ceilings will be adequate to inform the public, in others they will not be. Every district and state is different, as is every contest for office, and we are reluctant to establish any level as adequate for all contests.

Moreover, there is a sense in which the Commission majority believes that campaigns are too expensive, and that a public financing system will have the salutary result of placing a reasonable lid on the constant growth of campaign costs. We do not favor this constant growth, and we can agree that in some cases campaign spending has grown beyond the bounds of what most people would consider reasonable. However, we believe that there is greater danger in limiting campaign spending than in allowing it to continue to grow to its natural limits, whatever they are.

For one thing, limits on spending favor incumbents, for the reasons outlined above; for another, they almost inevitably mean that in some cases--perhaps many cases--the public will not be adequately informed or drawn into the process by the spending of the candidates. Finally, and perhaps equally important, limitations on spending by the candidates themselves will foster independent spending by interest groups. While this may have the salutary effect of educating the public in the issues, the fact that this spending is not under the control of the candidates will make it very difficult for the public to separate truth from fiction or to place blame for false statements. Outside, independent spending will also benefit incumbents, who are in the best position to obtain this kind of voluntary, independent support from organized groups.

While the $1 million figure for House races seems adequate, and is slightly below the level of spending by winning challengers in recent House elections, it can and probably will be dwarfed by independent spending that is clearly constitutionally protected. The AFL-CIO, for example, has recently pledged to spend $40 million to defeat (presumably mostly Republican) candidates in 70 key House races--an average of almost $600,000 per race.10 Candidates who are subject to a limit on their spending because they have elected to receive public funds will be swamped by independent expenditures of this kind, yet there is no question that these expenditures are constitutionally protected.

In such a situation, an approach involving floors without ceilings, one that would provide widely available public benefits without overall ceilings, would help the challenger much more than a limit that ties the challenger to the incumbent and provides no way to counter a vigorous interest group or media attacks.

The Report recognizes this problem, providing that the limits are lifted if a publicly funded candidate is running against a privately funded candidate who will be spending more than the limit. But how to determine whether this is happening will be fruitful grounds for dispute and even litigation (the Report suggests that the ceiling be raised or eliminated when a privately financed opponent has raised substantial percentages of the ceiling), and it is doubtful that a challenger--or perhaps even an incumbent--would be able to raise significant private funding on short notice in the middle of a campaign.

6. The effect on parties. The limits-driven public funding scheme proposed by the Commission also compels it to propose unprecedented and unfortunate limits on party activity and issue advocacy in order to try to shore up its candidate campaign limits. The publicly funded candidate would have to agree that any supportive independent party spending, which again is constitutionally protected, could nonetheless be counted against the candidate's limit. Not only does this presume, contrary to law and fact, that parties and their candidates always have an identity of interests, but it requires candidates to cede their speech rights to others in exchange for public funding.

Efforts to deem one person's advocacy to be on another person's behalf have been consistently invalidated.11 Even parties should not be allowed to put words in the mouths of their candidates. Likewise, the Supreme Court has rejected the idea that protecting public funding ceilings can justify restraining independent advocacy beneficial to a publicly funded candidate.12

Public Funding Issues Not Addressed by the Commission

A system of public financing can itself be manipulated, and the Commission's report leaves a number of loopholes. Because the entire theory of public financing for political campaigns is to provide campaigns with the funds necessary for the contest at hand, any publicly financed campaign that has a surplus at the end of the election cycle should return that surplus to the government. There is no reason to permit the use of public financing to accumulate war chests for future campaigns (including campaigns for higher office or campaigns that do not participate in the public-financing process), and that result would again provide additional advantages to incumbent officeholders.

By the same reasoning, publicly financed campaigns should not be permitted to make contributions to other political committees or campaigns. Absent such a restriction, one campaign that did not face a competitive challenge could accept public financing and channel it to other campaigns, in disregard of the basic premise that the purpose of public funding is to support the campaigns that receive it.

In "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 Record 660 (Oct. 1997), the Association recommended a public campaign financing system in New York State using block grants in amounts designed to offer campaigns an opportunity to become competitive, which would then be refundable after a participating campaign had raised enough funds to wage a competitive campaign.

This approach is preferable to the matching-funds approach followed by the Commission for two reasons. First, it does not place a premium on the services of "bundlers" of campaign contributions, whose services would, under the Commission's public funding proposal, be matched two for one up to the first $250 of each contribution "bundled." If there is undue influence under the current system, the "bundler" may have it more effectively than the contributor, and the Commission's proposal would only enhance that influence.13 Second, a system of block grants as proposed in "Towards a Level Playing Field" would not continue to subsidize campaigns that do not need help.

IV. Free Speech and Political Campaigns

One of the remarkable things about many of the proposals for campaign finance reform is their limited regard for the First Amendment value of free speech. One would suppose that in a democracy--especially a successful constitutional democracy such as our own, where free expression is guaranteed by the Constitution and valued by the public--the proponents of reform would pay somewhat more attention to the free speech values their proposals would impair.

This should be especially true in the context of elections. If individuals and corporations have the right to publish salacious material on the Internet for their own profit and the titillation of children of all ages, one would suppose that anyone should have the unrestricted right to communicate with the American people about how to exercise their votes. It should be obvious that the core value of free speech is its contribution to a public's understanding of what is at stake in an election. Regrettably, we believe that the Commission majority has also succumbed--apparently in the interest of achieving a reduction in the purported influence of money on political candidates--to a slighting of this basic element of our democracy.

Thus, in order properly to assess the Commission's recommendations, it is appropriate to outline the first principles that are pertinent to any proposal for government regulation of campaign finance. In the leading case of Buckley v. Valeo,14 the Supreme Court reminded us of why any campaign funding restrictions must be subject to the closest examination: "[c]ontribution and expenditure limitations operate in an area of the most fundamental First Amendment activities. Discussion of public issues and debate on the qualifications of candidates are integral to the system of government established by our Constitution."15

Restrictions on the funding of such discussion and debate constitute direct and gross restraints on that liberty. As the Court put it: "[a] restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration and the size of the audience reached."16 Or, more pointedly, "[b]eing free to engage in unlimited political expression subject to a ceiling on expenditures is like being free to drive an automobile as far and as often as one desires on a single tank of gas."17 For these reasons, the principles and the public policies embodied in the First Amendment require that all proposals to restrict the funding of core political speech and association be given the most rigorous scrutiny.

In this respect, we find the Report's recommendations deficient. They would, in our view, impose unprecedented restraints on the political funding and advocacy of candidates, parties, and issue groups. The proposals, we fear, would weaken political parties and undermine issue advocacy organizations. Implementation of those proposals would require the kind of command-and-control bureaucratic mechanism that would be fundamentally antithetical to the system of freedom of speech and association in the political realm.

1. Contribution Limits

The Report offers hard money fundraising benefits to candidates and parties that are certainly more generous than many reformers would advocate. We support these increases but feel compelled to point out that they do no more than keep pace with the inflation that has occurred since the original limits were enacted a quarter century ago. And the price of this rectification for parties is a total abolition of soft money to fund a wide variety of laudable party-building activities far removed from corruption of federal elections. The Report also reduces the relative role of PACs, which can be important sources of group advocacy and political support across the political and economic spectrum. While we support the raising of the hard money limits to facilitate campaign and party fundraising, we oppose the relative downgrading of the advocacy and political participation of PACs, and we dissent from the proposal to outlaw all soft money political party activities.

2. Independent Party Spending

We are concerned by the Commission's proposal that would automatically deem all party spending in support of a party's candidate as coordinated with the candidate. For the government-funded candidate, it would have the limiting consequence described in our discussion of the Commission's public finance proposal above. For the privately funded candidate, the rule seems both unnecessary and unconstitutional. It is unnecessary because, with soft money gone, and parties allowed to spend only hard money, there seems no reason not to let a party spend as much as it wants independently in support of a privately funded candidate.

The automatic presumption of coordination between a party and its candidate in order to limit the party's honestly independent expenditure is inconsistent with Colorado Republican, where the plurality opinion stated: "[s]imply calling an independent expenditure a coordinated expenditure cannot (for constitutional purposes) make it one."18 Even independent party expenditures made after a candidate has become the party's nominee and made in consultation with the party cannot be conclusively presumed to be coordinated without violating the First Amendment.19 Nor can express advocacy expenditures made by independent groups be presumed to be coordinated with the candidate supported if they are not disavowed within 72 hours.20

3. Soft Money

To try to protect limits-driven public funding, and to safeguard against claimed corruption, the Report recommends a total ban on all fundraising by national political parties that does not conform to the rigid contribution and source limitations and requirements of FECA. To be sure, the Report sweetens the deal by raising the limits on individual hard money contributions to parties up to $75,000. But that barely keeps up with the inflation since the enactment of FECA in 1974, and the soft money ban will still appear to be a poison pill to those political leaders who view party soft money funding as essential to the strength and vitality of political parties.

The health of our parties should be a major concern of any campaign finance reform. Yet the Report, in its concern with 1996 campaign excesses in the soft money area, would prescribe a cure that is far worse than the malady and, indeed, is overkill.

It must be remembered that soft money activities by political parties are those that do not involve direct and express electoral support for federal political candidates, even though the activities may exert an influence on the outcome of an election in the broadest sense of that term. Parties are surely advocates for their candidate's electoral success, but they are also issue organizations that influence the public debate. Get-out-the-vote drives, voter-registration drives, issue advocacy, policy discussion, grassroots development, and the like are all activities fundamentally protected by the First Amendment and engaged in by a wide variety of individuals and organizations. An issue ad by the ACLU is as much an example of soft money activity as an editorial in The New York Times. We need more of such activity during an election season, not less, from parties and from all others as well.

The right of individuals and organizations, corporate and otherwise, to engage in such issue advocacy traces back to the holding of Buckley v. Valeo that the only kind of independent political expenditures that could validly be subject to federal control were those that expressly advocated the election or defeat of identified federal political candidates. All other expenditures were totally beyond governmental control: "[s]o long as persons and groups eschew expenditures that in express terms advocate the election or defeat of a clearly identified candidate, they are free to spend as much as they want to promote the candidate and his views."21 That is why such activity like issue advocacy and voter mobilization can be funded from sources that would be restricted in making federal political contributions and expenditures.

Twenty years later, in the Colorado Republican case, the Supreme Court recognized the legitimacy of soft money funding of political parties:

[w]e also recognize that FECA permits unregulated "soft money" contributions to a party for certain activities, such as electing candidates for state office . . . or for voter registration and get out the vote drives. . . . But the opportunity for corruption posed by these greater opportunities for contributions is, at best, attenuated. Unregulated "soft money" contributions may not be used to influence a federal campaign, except when used in the limited, party-building activities specifically designated by statute.22

And even in its recent regrettable decision upholding a $1075 limit on contributions made directly to candidates, the Court's opinion was silent on the whether soft money could be similarly regulated, although individual justices discussed whether Congress had the power to do so.23

To be sure, to the extent soft money funds issue advocacy and political activities by political parties, it becomes something of a hybrid: it supports protected and unregulatable issue speech and activities, but by party organizations closely tied to candidates and officeholders. Despite the fact that there is an attenuated relationship linking party contributors through the party committees to the party candidates, the structural relationship between political parties and political officials might permit greater regulatory flexibility than would be true with respect to issue advocacy and activity of other organizations.

Thus, for example, disclosure of soft money contributions to political parties, as is currently required, might be acceptable, even though it would be impermissible if imposed on nonparty issue organizations. A limitation on the amount of soft money parties could receive might be prudent. A restriction on coordination of soft money-funded issue advertisements between the party and its candidates or officeholders might be permissible as well. But the Report's approach of a total ban on all soft money activity by political parties is a substantially overbroad response to whatever legitimate concerns of corruption may be posed by large soft money contributions to major parties.

Lastly, there is also an Equal Protection issue in the Report's recommended ban on the raising or spending of soft money by parties. As proposed by the Commission, anyone else--corporations, foundations, media organizations, labor unions, bar associations, wealthy individuals--could use their resources without limit to attack a party and its programs and even its candidates, but the party would unable to respond except by using limited hard money dollars. A regulatory regime that lets one side of a debate speak while silencing the other poses both First Amendment and Equal Protection problems.

In our view, reasonable regulation, rather than flat prohibition, of soft money funding by political parties is the more appropriate and measured response to the current situation.

4. Issue Advocacy

The Report's partial and flawed answer to the equality issue is to broaden the Act's coverage to regulate and restrict issue groups as well. It is here that the Commission's recommendations stray furthest from constitutional acceptability or sound policy.

The Report proposes to outlaw the use of soft money by political parties and to mandate that the funding of issue advocacy by other organizations be done wholly under the rigors and restrictions of FECA--in effect, federalizing political speech. Those stringent FECA restrictions on the funding of political speech would apply to all persons, groups, and organizations--except for the organized news media (whatever that is)--that engage in the new and dramatically expanded definition of express advocacy. The FECA regime would impose the following restrictions on the funding of issue advocacy:

(1) It can only be subsidized by hard money.

(2) It cannot be pursued by any corporation (except, perhaps, a purely ideological and ad hoc one), labor union, foundation, or charitable or educational institution.

(3) It cannot be supported by funds from any corporation, labor union, foundation, charitable institution, or educational institution.

(4) It must be fully disclosed to the Federal Election Commission.

(5) The organizational PAC-creating strictures of FECA must be complied with.

(6) No one person can contribute more than the relevant hard money contribution limits to supporting that activity.

The Report would apply all of those restraints to three situations that are not subject to such controls under the current law.

First, the Report would declare that any issue advocacy coordinated with a campaign, ipso facto, is express advocacy subject to regulation, regardless of its content. This Alice-in-Wonderland fiat ignores the fact that coordination can span a spectrum from President Clinton's apparent editing of the text of DNC anti-Republican television ads to the ACLU's determining a candidate's stand on abortion in order to prepare a voter's guide. Courts have indicated that just because an issue organization discusses matters with a candidate does not by alchemy transmute the subsequent speech of the issue group into either express advocacy or a coordinated expenditure.24

Like the Report's proposed total ban on all party soft money, the presumption here is not carefully tailored as restrictions in the First Amendment area must be. And it could wreak havoc on issue organizations that communicate with candidates and campaigns in order better to engage in public discussion of issues of concern to them.

Second, the Report would treat as express advocacy any party communication that "mentions by name or includes the likeness of a clearly identified" federal candidate. Since we believe that even "express advocacy" by parties, in the form of independent party expenditures, should be permitted if they are in fact independent, the case of party issue discussions is even easier and the case for blanket automatic regulation even harder to sustain.

Finally, the Report mandates treating as express advocacy, and therefore subject to all of the FECA controls outlined above, "any communication that is broadcast, printed, mailed, or distributed within thirty days before a primary or general election that includes the name or likeness of any clearly identified candidate for federal office." This is an unprecedented redefinition of the established constitutional concept of express advocacy. By expanding and shifting the boundary line, it would subject to regulation precisely the kind of issue advocacy that the courts have consistently held immune from government regulation.

In addition, although the redefinition has a "temporal" limitation of 30 days before a general or primary election, it has no monetary floor or threshold, which means that, literally, it applies to the first dollar spent on any covered communication that "includes the name or likeness" of any federal candidate. Read literally, the language would subject to FECA control every high school civics class project for which the students prepare reports on the positions of the opposing presidential candidates and the teacher uses personal or school funds to distribute them to the rest of the class.

At a more serious level, the proposal would subject to FECA controls all organized group discussion or communication of any political or policy issue that mentions the name of a candidate. If the NYCLU wants to run an ad criticizing New York Mayor Rudolph Giuliani on the issue of police conduct in October, when he's running for the U.S. Senate, it would either have to form a PAC, subject to all the relevant controls and restrictions--which its charter prohibits--or be silent. If an issue organization in corporate form, such as Planned Parenthood, were to send a mailing to its members urging them to write to a named senator, the organization would be committing a crime if that senator happened to be up for re-election; under the Commission's proposal, corporations would be banned from engaging in such redefined "express advocacy."

Since almost every organized issue-advocacy group in America is a corporation, all would effectively be silenced in the month before any primary or general election from making any covered communication. During the presidential primary season, that cone of silence barring even mentioning a presidential candidate could cover a six-month period.

Thus, for example, if the NAACP wants to mail out a press release condemning Governor George W. Bush's visit to Bob Jones University, it could do so only if it first formed a PAC, which its nonpartisan and nonprofit status might preclude, and be prepared to publicly disclose the names of its contributors. Likewise, if the Christian Coalition wanted to run an advertisement in The New York Times urging the Senate to reject the McCain-Feingold campaign finance bill, that could be considered an illegal corporate expenditure for express advocacy under the Report's proposal if Senator McCain were the Republican nominee for President.

The concern with the asserted increase in the use of so-called or "phony" or "sham" issue ads, which are claimed to be campaign ads in disguise, does not justify the kind of severe impact this proposal would have on suppressing issue advocacy during an election season.

For more than 25 years, the courts have made it clear that issue advocacy that mentions, criticizes, praises, or condemns public officials who happen to be up for election or re-election, even during an election season, cannot for that reason be subject to campaign finance controls. From the Second Circuit's earliest ruling in 1972 in the National Committee for Impeachment25 case, to the recent Virginia District Court's decision granting a nationwide injunction against the FEC's expanded and flawed redefinition of "express advocacy,"26 the courts have spoken with almost one voice in holding that campaign finance controls cannot regulate issue advocacy and can only regulate express advocacy, defined in terms of the explicit content of the communication.

The Supreme Court fashioned the constitutional standard in Buckley by defining "express advocacy" as "communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office. . . ."27 We believe the Court defined express advocacy so carefully precisely to avoid the kind of proposal that the Report puts forward, one that would effectively silence issue discussion during an election season: "Discussion of issues and debate on the qualifications of candidates are integral to the operation of the system of government established by our Constitution."28 "The distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application. Candidates, especially incumbents, are intimately tied to public issues involving legislative proposals and governmental actions. Not only do candidates campaign on the basis of their positions on various public issues, but campaigns themselves generate issues of public interest."29 Accordingly, the Court reasoned, any rule that controlled all discussion "relative to" a federal candidate would impermissibly and sweepingly control a wide range of vital issue discussion.

The Court was well aware that the express advocacy standard could be manipulated by speakers to skirt controls: "It would naively underestimate the ingenuity and resourcefulness of persons and groups desiring to buy influence to believe that they would have much difficulty devising expenditures that skirted the restriction on express advocacy of election or defeat but nevertheless benefitted the candidate's campaign."30 Nonetheless, the Court concluded that maintaining the secure express advocacy standard to protect public discussion of issues was more important than guarding against the risk of such manipulation. Courts have followed suit ever since.31

We cannot support a proposal that would restrain citizens and organizations and individuals from discussing candidates and issues they stand for during the 30 days preceding any election, the very time when the need for such public discussion is at its zenith. That would effectively leave the organized press (an ill-defined concept in any event) as the only unrestrained voice on issues and candidates during that critical period. All other speakers would be forced into the regulatory straitjacket of FECA. Such a regime raises severe First Amendment problems since it would regulate the very issue advocacy that, for more than a quarter of a century, has been held categorically immune from government control.

5. Disclosure

We are also concerned that the Report does not address the problem of the extremely broad disclosure of the names of people who donate even relatively modest amounts to a federal candidate, campaign, or organization. Under current law, all contributors of more than $200 must be publicly disclosed to the FEC and the public. We believe that these extremely low disclosure thresholds cut too deeply into the established rights of political anonymity and freedom of association.32

Whatever valid information such disclosure might afford in terms of bundling of multiple contributions from the same company or firm, there has been no showing that this is a serious problem at the $200 level. Moreover, since we are recommending a threefold increase in the contribution ceilings, to compensate for inflation, we should recommend a comparable increase in the contribution disclosure floor as well. We would include in the Report a recommendation that the threshold for public disclosure of campaign contributions be raised to those in excess of $500.

V. Enforcement

The Commission's proposal does not directly address the conduct that has led to the call for campaign finance reform, which includes allegations of laundered campaign contributions (including contributions from donors who are otherwise barred from making such contributions) and alleged receipt of political favors or "access" to public officials in return for contributions. Most of that conduct violates existing laws, which have simply not been enforced adequately, or in which attempts at enforcement have failed. We believe that any reform of the campaign finance system must address these failures under the existing system head-on and propose the following.

1. Money Laundering. The entire system of campaign finance law (both present and under the modifications proposed by the Commission) is predicated on full and accurate disclosure of campaign contributions. The lack of such disclosure--or alternatively the toleration of false or misleading disclosure--nullifies that system. As but one example, a contribution limit is meaningless if a contributor can simply reimburse others for making contributions to a candidate to whom that contributor has already made the maximum contribution.33 Moreover, the reports filed by the candidate who receives laundered funds would fail to disclose the true amount of the contribution actually made--and thus its true significance.

The difficulties that have been encountered in prosecuting such violations of the current law (such as the successful defense at trial that a contributor did not realize that his concealed donation would mislead the Federal Election Commission),34 suggest that the existing law should be modified to place contributors and campaigns on notice that contributions as reported must disclose the true donor and amount of the contribution.

Accordingly, we would have the Commission recommend that candidates and campaign treasurers state--under penalty of criminal liability and significant personal civil fines--on every financial report filed with the Federal Election Commission, a statement that (i) they are not aware of any contribution (direct or indirect) required to be disclosed other than as listed on the report; (ii) they are not aware of any contribution listed on the report for which the contributor has or will receive reimbursement from another source; and (iii) they have taken reasonable steps to discover whether any illegal contribution has been made.

The purpose of these certifications is to create a strong incentive for candidates and campaign treasurers to inquire into the sources of the funds they receive. It is not unlike the severe penalties placed on directors and officers of banks and S&Ls if they knowingly file a false report with a bank or S&L regulator.

2. Law Enforcement. We doubt that the problems of enforcing the present law or any reform package will be solved simply by reformulating the FEC, as proposed by the Commission. In the first place, even as reformulated, the FEC could be subject to political pressure. In 1994, for example, Trevor Potter, then chairman of the FEC, charged that Congress had cut the federal election fines levied against the campaigns of congressmembers.35 Whether this was true or not, the possibility of such retaliation can seriously diminish the ardor with which a regulatory commission such as the FEC pursues its responsibilities.

In order to create a majority on the FEC that could take action against a major party or one of its candidates, the Commission has recommended that a seventh member be added to the FEC as its chair, and that this member be unaffiliated with either major party. This is a sensible recommendation as far as it goes but does not address those instances in which neither party wants its circumventions of the law to be interfered with. A better enforcement mechanism is necessary, perhaps arming local U.S. Attorneys with post-election civil as well as criminal prosecution authority to enforce the law--and the FEC's regulations--before the courts.

3. The Federal Election Commission. The Report makes a series of recommendations for improving the enforcement capability of the FEC. We have no position on most of those suggestions. However, there are three issues with respect to the FEC that should be noted.

First, the Commission's Report, if enacted into law, would dramatically increase the workload of the FEC. The FEC would have an enormously wider range of new--and, we think, ill-advised--regulatory controls to enforce against candidates, campaigns, political parties, and, now, issue organizations as well. And it would have to administer perhaps a billion dollars worth of public funding involving thousands of federal candidates in primary and general elections. Since almost every action of the FEC has a First Amendment consequence, this enormous expansion of authority must be accompanied by a comparable degree of public scrutiny.

Second, because of the dramatic increase in FEC workload, we are particularly concerned about the Commission's recommendation that the FEC be given the power to go to court during the height of an election season and seek injunctive and enforcement relief against candidates, campaigns, parties, and now issue organizations for alleged violations of FECA. The power to seek such injunctive relief, tantamount to a prior restraint, poses severe First Amendment concerns. Since the FEC is subject to political appointment and congressional oversight by a Congress full of incumbents, and with an enormously expanded workload, we worry about the dangers of selective enforcement in the FEC's determining against which candidates, parties, or organizations to seek pre-election enforcement in court. Will the FEC prosecute suits against incumbent politicians or the major political parties, or will it instead bring politically popular proceedings against troublesome issue organizations, as it has often done in the past? These concerns reaffirm our belief that the granting of pre-election enforcement power to the FEC is fraught with the potential for abuse, and we would oppose it.

Finally, the Report fails to note that there are serious grounds for concern about the pattern of excessive enforcement by the FEC against protected issue advocacy. Over a span of two decades the FEC has been faulted by courts for excessive zeal in enforcing the Act against issue organizations. From the Second Circuit's 1980 ruling in Federal Election Commission v. Central Long Island Tax Reform Immediately Committee,36 through the Fourth Circuit's decision in Federal Election Commission v. Christian Action Network, Inc.,37 to the recent ruling granting a nationwide injunction against the FEC's expanded unconstitutional definition of express advocacy,38 the courts have had to step in and protect issue organizations from FEC harassment. The chilling effect of such a pattern on protected issue speech is clear. Our Report should note that pattern and recommend steps to see that it is not repeated for another twenty years.

VI. Conclusion

There is much to be applauded in the Commission's Report. But there is much cause for concern. In our view, there are three essential measures that should be the essence of any campaign reforms. First, we should raise the limits on contributions to candidates and parties to enable them to fund their campaigns and get their messages out. Second, we should improve disclosure of the kinds of large contributions to candidates and campaigns that the public should know about when it decides how to cast its votes. Finally, to the extent that any form of public assistance is extended to campaigns, this assistance should not involve government determinations on who should receive it, should not be manipulable to the advantage of incumbents, and should not entail government limitations or controls on expenditure.

To the extent the Commission's Report goes in other directions, we must respectfully dissent.

COMMENT OF JEROME S. FORTINSKY

I support the report issued by the Commission on Campaign Finance Reform (the Report). I write separately to highlight three areas where I disagree with the views expressed by the majority.

Political Action Committees

The Report makes a persuasive case that the contribution limits established by the Federal Election Campaign Act (FECA) nearly 30 years ago are now hopelessly outdated. But the Commission has declined to endorse an increase in the limit on contributions to candidates by political action committees (PACs), even as it has recommended tripling the current limit on contributions to candidates by individuals. I think the Commission, because of its legitimate concern about the uses of fundraising as a means of purchasing political access, has lost sight of the essential role organized groups have historically played, and continue to play, in the American political system. If, as is widely acknowledged, it is time to raise contribution limits generally, then it is also appropriate to raise the limits on contributions by PACs. Although the original ratio between the limits on individuals contributions and the limits on PAC contributions need not be regarded as immutable, the limits should be raised at least approximately in tandem.

Under the system that the Commission would establish, individuals would be able to donate $6000 to each candidate per "election cycle" (that is, in each two-year period, including both the primary and the general election), up from the current limit of $1000 in each of the primary and the general elections. By contrast, PACs would remain subject to the current contribution limit of $5000 to each candidate per election (which permits contributions totaling $10,000 when donations are made for both the primary and general elections). As a result, the Commission is recommending a system in which PACs, which are intended to represent large groups of people acting together on matters of shared concern, would be able to donate less to each candidate than a husband and wife.

Underlying the Commission's recommendation to freeze the ceiling on contributions to PACs at its current level (pending future adjustments for inflation) is its concern about the "primacy of access over ideology in patterns of business PAC giving." I share this concern. But this concern applies to contributions by individuals as well. As the Report acknowledges, what it calls "large individual contributions" account for a larger proportion of the funding for congressional elections than donations by PACs.

Moreover, the well-founded suspicion that business PACs (like many large individual donors) are motivated by a desire for access does not justify reducing the role that organized groups play in the system of campaign finance to less than that of a married couple. As the Federalist Papers recognized, and as Alexis de Tocqueville famously observed, organized groups are central to the functioning of American democracy. Organized groups, which in the campaign finance system take the form of PACs (or, as FECA refers to them, "political committees"), are not all nefarious business interests. They are abortion-rights activists and gun owners, supporters of foreign aid and defenders of gay rights, sugar farmers and advocates of public education. To the extent that our system continues to permit non-public sources to play a role in financing our elections, citizens should be able to participate not only in their own name but also by banding together as groups dedicated to their favorite cause.

The Report is filled with language about putting individual and PAC donors on a "more level playing field." But the "playing field" analogy is inapposite. Individuals and PACs are not opposing forces competing against each other, like rival football squads or even like Republicans and Democrats. There is no reason to suppose that individuals, who themselves may donate to PACs, are disadvantaged if PACs are subject to a different contribution limit.

In short, I would have preferred to see the Commission recommend an increase in the contribution limits on PACs that parallels the increase recommended for individuals.

Free Mailings

I enthusiastically endorse the Commission's proposal to give each ballot-qualified candidate for federal office one mailing, at federal expense, to the voters in that candidate's constituency. I regret that the Commission did not recommend more than one such mailing.

Providing free mailings to candidates for public office is an extraordinarily efficient way to promote many of the objectives set forth in the Report (and broadly shared by the American public, including both supporters and opponents of campaign finance reform): disseminating information about the candidates, promoting competitive elections, and reducing the burdens of fundraising. In general, the cost of most forms of public assistance for political candidates is approximately the same as the benefit the candidate receives. For each dollar that the candidate receives from the public campaign finance program, the cost to the public treasury is a dollar. But providing free mailings to candidates for public office--in effect, extending to them a limited version of the franking privilege enjoyed by members of Congress for official business--would enable them to save mailing costs far out of proportion to the incremental cost to the U.S. Postal Service of delivering a few additional pieces of mail per person per election year.

One free mailing for each candidate is a good idea. One or two more such mailings, which would enable candidates to use these mailings to engage one another in political debate, would be even better.

Pre-election Advocacy and Advertising by Non-Candidates

For the reasons set forth in the statement by the dissenting mem-

bers of the Commission, I cannot support the Commission's recommendation to treat as "express advocacy," and thus to subject to the reporting requirements and other restrictions of FECA, any "communication broadcast, printed, mailed, or distributed within 30 days before a primary or general election that includes the name or likeness of any clearly identified candidate for federal office." I write separately to object to one aspect of this recommendation that is particularly disturbing.

Acknowledging that this recommendation is likely to be subject to constitutional attack on the grounds (among others) that it would regulate political speech that was not directly related to the upcoming election, the Commission calls on Congress to provide that communications within the 30-day period preceding an election "shall be presumed to be `express advocacy' but that such presumption may be rebutted on a showing that, based on the content and context of the speech, viewers, listeners, or readers are unlikely to treat it as an election-related communication." As the Report acknowledges, this "rebuttable presumption" would result in considerable uncertainty as to what kinds of communications are permissible during this period. In my view, such uncertainty as to the permissibility of political speech is intolerable, and perhaps unconstitutional. The purpose of law is, in part, to give the public proper notice as to what conduct will be tolerated and what conduct will be punished. The proposed 30-day rule, by itself, is a "bright line" test that does just that; the "rebuttable presumption," however, robs the rule of its clarity and forces the public to guess what types of communication a future decision-maker (whether a regulator or court) might determine, after the fact, to be of the sort that voters would be "unlikely to treat . . . as . . . election-related."

I see the 30-day rule proposed by the Commission as a close call, with good arguments on both sides, although in the final analysis I oppose it. The added wrinkle of a "rebuttable presumption" of election-relatedness, however, weakens the proposal rather than strengthens it.

ADDITIONAL STATEMENT OF JOEL M. GORA

I fully subscribe to the principal Statement of Dissenting Views, as well as the separate statement of Constantine Sidamon-Eristoff. But I wanted to add a few additional words of my own.

There is much in the Report of the Commission on Campaign Finance Reform that is positive and praiseworthy. I appreciate the recommendation for raising the restrictively low hard money contribution limits for federal campaigns, which have made it difficult for many candidacies to gain a foothold. I think that the proposal for one free mailing for all ballot-qualified federal candidates is a welcome suggestion for expanding the range of political opportunity.

The Commission's proposal for public financing of congressional elections is particularly noteworthy. This is a serious and relatively generous public financing proposal, far advanced over the few comprehensive proposals that have gathered any significant support in Congress. It has an admirably low threshold of eligibility. It provides a very expansive two-for-one match for small contributions. Coupled with the provision for a free mailing, it might very well nourish candidacies that might otherwise falter. If one were to support a limits-based, government-supplied public financing scheme, the one the Commission proposes is a good model. It might have been even better had the Commission determined to include the provision for modest tax credits or deductions as an incentive for direct and across-the-board citizen financing of political activity.

At the end of the day, however, to my mind the benefits of the Commission's proposals are overcome by the burdens I fear they would impose on the political freedom that is at the core of the First Amendment and of democracy.

It is not at all clear that the kind of sweeping, limits-based public financing plan the Commission proposes, in an effort to avoid the well-known failures of the presidential public financing scheme, will work. Candidates and parties will be compelled to try to get their messages out in other ways. The alternatives, then, become either to let them, which breeds public cynicism but protects speech, or to restrict them as the Report would seek to do, which, to the extent it does work, will come at the expense of speech. In my view, "floors without ceilings" is the only public financing/subsidy approach that is consonant with the First Amendment. That approach was tried in a handful of states in past years with no obvious untoward consequences. Providing a mix of benefits--free mailings, tax deductions or credits, government-provided matching funds for small contributions--without the comprehensive system of controls the Report proposes, would be a far better First Amendment-friendly approach.

The Report's recommendations would impose unprecedented restraints on the political funding and advocacy of candidates, parties, and issue organizations. Implementation of these proposals would require the kind of command-and-control bureaucratic mechanisms that are fundamentally antithetical to freedom of political speech and association.

For these reasons, I must respectfully dissent from the Commission's Report.

SEPARATE STATEMENT OF NICOLE A. GORDON

I am loath to depart from an excellent report, notwithstanding disagreements any member of a committee must have with a consensus document. There are three items, however, that I must comment on, even before the Commission on Campaign Finance Reform's ideas have had a chance to be tested.

First, the Commission recommends a single spending limit covering both the primary and general elections. I strongly disagree with this. It works a basic unfairness on candidates who are not similarly situated. This unfairness cannot be overcome by the notion that a single limit gives more flexibility to candidates, because the candidates are not getting the same flexibility vis-à-vis the same limits when one has a contested primary and the other does not.

Consider: Candidate A, who has a hotly contested and bruising primary, and is left with half of his overall spending limit as prescribed by the Commission, finds himself at the starting gate in a general election contest against candidate B. Candidate B had no primary and has the full amount to spend for the general election. The general election covers a different period and has a different set of candidates and even a different set of issues, as well as a different population eligible to vote (all registered voters) from the population eligible to vote in the primary (enrolled party members). The result is that candidate A--already perhaps damaged by spending by his opponents during the primary period--will have one-half the spending limit to spend against candidate B, who will have the entire spending limit available. I cannot see how this can be considered fair.

I am not aware of any jurisdiction that has a spending limit covering two separate elections, which suggests that it is generally understood that primaries and general elections are realistically viewed as distinct. I realize that often the contest is "only" in the primary or "only" in the general election, but as long as the expenditure limits are on the high side, and candidates can all spend up to their primary limit during the primary period even if they do not have a contested primary, I think having separate limits is fairer in the end. In addition, given the purpose of spending limits to "even the playing field" and promote competition, we ought to be encouraging and providing for a norm in which both primary and general elections involve meaningful contests.

Second, as indicated by my concurrence in the separate statement of Richard Briffault et al., I think that an aggregate cap on contributions from individuals of $75,000 is extraordinarily high.

Finally, I believe more emphasis is needed on creating a structure to assure the appointment of non-partisan FEC commissioners, and on creating a mechanism for ensuring periodic review and refinement of the operation of the proposed law.

DISSENT OF CONSTANTINE SIDAMON-ERISTOFF

I wish to register my dissent to the overall thrust of our Report.

In doing so, I do not in any way mean to derogate the extraordinarily hard work and many hours of effort put into the Report by Professor Richard Briffault, his staff, and the members of the Commission on Campaign Finance Reform. Given the thrust of the report, it is an excellent job.

I must, however, state that at the beginning of the process, in early 1997, I felt that it was important that the Commission reexamine the fundamental bases upon which the present federal and, to some extent, state and local campaign finance laws have been erected. I do not think that these have been sufficiently explored.

The Present System Is "Broke"

Any "reform" system that is finally adopted must meet certain general, but obvious criteria, including:

1. Access to the political system, by candidates and others, should be broadened, and not limited, by whatever system is adopted.

2. First Amendment freedoms, particularly freedom of speech, must not be infringed in any way.

3. The system must be even handed and not skewed toward incumbent challenges or parties.

4. At least in my opinion, the political parties must be strengthened.

The present thrust toward reform, as stated in the report, stems from a feeling, well stoked, that "soft money," illegal or improper campaign fundraising, and the arms race are sufficiently prevalent and evil to warrant changes or improvements to the current system.

Unfortunately, by building on the present system, the Commission is trying to do the impossible. This system is broken, and adding more restrictions, changing contribution or spending limits, and tinkering with the details of the system will not in any real way improve it.

I believe the current system is not only broken but enormously complicated, impossible for the average person to understand, and it could be perceived to exist primarily for the benefit of lawyers and accountants.

I personally would scrap the whole system, including limits on spending, limits on contributions, and the rest of the present requirements, and in all cases go back to a system based on the essential, vital core of any true campaign finance reform, which is full and immediate disclosure. Internet disclosure will allow voters to know immediately who is supporting whom and for how much. That is all you really need to know.

The Arms Race

Are we spending too much money on politics in this country? Compare the entire amount of money spent on the 1996 federal elections with the advertising budget of one company such as Proctor and Gamble, and see which is greater? It will be the Proctor and Gamble budget. A good case can be made for the fact that we are not spending enough, and that enough different people are not giving enough money to candidates. What the Commission should be doing is encouraging more people to give money, perhaps by allowing a federal deduction from income tax, or a credit, or one of the other suggestions from Commission member Peter Wallison.

In the Report (see page 118) it is noted that the combination of public funds and soft money in 1996 provided the major party presidential candidates with the equivalent in inflation-adjusted dollars of what their predecessors had in 1972. In other words, Richard Nixon, who spent $60 million, would have spent in 1994-inflated dollars approximately what Clinton did. This means that the amount of spending for campaigns, whether it is soft or hard money, has not really increased. As also is pointed out on the same page, when the public grant became insufficient to fund an effective campaign, candidates began to cultivate soft money and to decline public funding. The Report goes on correctly to state that public funding can work by inducing candidates to opt in, and by reducing the role of private wealth in funding campaigns, only if funding levels are based on the costs of competitive contemporary election campaigns.

I would do away with all campaign spending limits and all campaign contribution limits. By raising the effective $2000 limit on contributions for House of Representative campaigns to $6000, some of the imbalance would be redressed, but note again that if the original $1000 plus $1000 was raised from 1974 dollars to 1998 dollars, the amount would be $6636, that is, still greater than the new ceiling.

It is also true, as has been pointed out recently, that with the advent of the Internet, attempts to control spending by wealthy donors will become very, very difficult, particularly since anybody can get to the Internet and do anything they want. The wealthy can simply, as Walter Dellinger of the Duke University School of Law suggests, start new opinion magazines on the Internet or buy radio and T.V. stations instead. Further limiting campaign contributions and campaign spending essentially only increases the overall power of the media. The owner of Time Warner or the New York Post will have increased power, other wealthy persons will lose power. Is this really what we want to accomplish?

As pointed out in the Report, the primary recommendation of the Commission is to recommend public funding for U.S. Senate and House of Representatives campaigns. I might support such public funding, if it is only meant to be a supplement and not used as a way to force spending limits on candidates. But, unfortunately, what has been recommended is that those who qualify for public funding adopt limitations on what they themselves can use of their own personal or family funds, and also adopt spending limits.

It should also be noted that making public money available for campaigns does not lower the cost of campaigns or limit the amount spent on campaigning per voter. Public money can also be perverted, as can be seen by this curious beast called the Reform Party, started with the use of enormous personal funds by Ross Perot and now existing because it is going to get federal money. Does this make any sense?

If the Commission is concerned about the cost of a campaign, it should go to the root of the cause, which is the cost of television and other media. One way or the other, a free television system might work wonders. But just simply increasing the contribution limits and the spending limits does not do the job.

Regrettably, the Supreme Court has not thrown out the contribution limits, which were left in place by the Buckley v. Valeo decision, but essentially made it plain that reasonable limitations on contributions could be left in place to avoid the appearance of corruption. That was a bad decision.

What the Supreme Court did not accomplish, Congress should. All of these limits make for a totally unreasonable, incomprehensible, and unmanageable problem, and they are all based on the assumption that there is too much money in politics, which if it is true, is more easily accomplished by providing free access to means of communication by candidates. The system is totally broken and frankly cannot be fixed.

ADDITIONAL STATEMENT OF PAUL WINDELS III

I salute the Commission on Campaign Finance Reform for its efforts and for a clearly written Report that comprehensively states the case for its proposals. I agree with the Commission that the system as it operates today is unacceptable. I believe, however, that the Commission's Report and proposal focus too much on the regulation and limitation of all campaign contributions and expenditures as opposed to those contributions that actually corrupt the process. At the same time, the Commission has not paid adequate attention to what I believe to be the most promising and fundamental hope for reform--reducing the need for money in politics. With that in mind, I have participated in drafting the joint separate statement of Peter Wallison, Joel Gora, Constantine Sidamon-Eristoff, Michael Weinstock, and myself and join the separate statement of Constantine Sidamon-Eristoff subject to the following.

1. As a matter of black-letter constitutional law, contributions to political campaigns and spending by campaigns have been held as core political speech, subject to the highest protection under the First Amendment. The constitutional standard for any regulation on campaign finance is therefore one of strict scrutiny. To date, the only justification for such regulation that has passed constitutional muster is the prevention of graft and corruption or the avoidance of the appearance of graft and corruption.

I believe that this standard--first set forth in Buckley v. Valeo and adhered to ever since--represents sound constitutional policy that is rooted in the founding of our nation. In our diverse and pluralistic society, speech has little impact unless it is heard. Without the ability to publish, therefore, the freedom of speech carries little meaning. Political campaigns, which after all involve the exercise of our constitutional functions as voters, must be able to get their messages out to the voting public.

2. The elimination of corruption or its appearance is a constitutionally sound goal and indeed one that fulfills the constitutional mandate of a republican government. Less drastic and more focused means are available to serve this goal than the wholesale limitation of political speech of those who are not trying to corrupt the governmental system. This Association has endorsed an across-the-board two-year ban on "pay-to-play" political contributions by persons or entities doing business with New York State in the context of the New York State Election Law as well as restrictions in the context of lawyers engaged in municipal securities practice.39 A similar ban belongs as the centerpiece of federal campaign finance reform. To the extent that the Commission predicates its recommendations here on corruption or the appearance of corruption caused by campaign contributions, that problem can and should be directly addressed by restrictions of "pay-to-play" political contributions not limited solely to the municipal securities business but to government contractors, lobbyists, and other persons or entities who do business with the government (including regulated or licensed industries). These restrictions should include a ban on contributions by persons or entities "doing business" with the government within a certain period of the contribution or business (or further restrictions on the amount of the contribution to a token level) and additional disclosure by the contributor and/or campaign or political party receiving the donation.

Although restrictions must be drawn so as not to infringe on legitimate free-speech rights, there is a fundamental difference between a contribution made by a citizen who supports the political ideology of a candidate and a contribution made for the purpose of self-enrichment. As the Association has noted, "a line [has] to be drawn between contributions and solicitations in furtherance of constitutionally protected expression and such contributions and such solicitations that could be regulated because designed to advance a business purpose--a purpose of corrupting the political process (`pay to play'). . . ."40 Restrictions on "pay-to-play" would also go a long way toward eliminating the use of campaign contributions as a means of gaining access to political figures and at least improve voter morale with respect to campaign financing.

A restriction on "pay-to-play" politics thus strikes at the very contributions that raise the concerns underlying the calls for reform and is consistent with the positions the Association has taken in the context of New York State law and the municipal bond practice. By contrast, under the Commission's proposal, "pay-to-play" contributions would actually be increased from $2000 per election cycle to $6000, subject only to the largely unenforced (or unenforceable) laws against bribery.

3. The Commission's proposal implicitly treats the notion that political campaigns have an infinite and inelastic desire for money as axiomatic. I believe that any reform proposal should be built upon a systematic analysis of why money is needed in political campaigns, how much money campaigns truly need, and whether that need can be addressed through alternate means.41 As the Association has observed in "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 Record 660 (Oct. 1997), political campaigns need money primarily in order to reach voters in today's society. The best means of diluting the effect of money on political activity is, therefore, to augment other means of access between politicians and citizens. Many such improvements have been achieved outside the law, such as the creation of C-SPAN and the use of the Internet, both in the creation of political websites and through the use of e-mail to communicate with large groups of voters.42 More can be done in this sphere, including more coverage of campaigns in the media, free television time for candidates, the public sponsorship of candidate fora, debates, and a public website for all congressional candidates who have filed reports with the Federal Election Commission. The more that is done along these lines and the easier it becomes for candidates to compete with less money, the less impact campaign contributions will have on politicians.

4. Nor do I subscribe to the notion that large contributions or the spending of significant amounts of a candidate's own money is per se a bad influence on politics. It is worth noting that one of the most significant insurgent campaigns in modern American history, that of Senator Eugene McCarthy for President in 1968, was largely funded by a few individuals.43 In addition, the 1996 presidential campaign of Steve Forbes opened the door for reforming New York's ballot-access process (which the Association has strongly supported) by bringing a successful constitutional challenge to that process in federal court, which ultimately resulted in the first statewide Republican presidential primary in the history of New York that includes all of the candidates still in the race.44 Moreover, the frequency of unsuccessful campaigns in which the candidate spent significant amounts of personal wealth--a fact often used against those candidates--refutes the notion that an election can be bought simply by outspending the opposition out of personal assets.45

5. Any reformation of the campaign finance system should attempt to offset the advantages of incumbency through a number of means, including the provision of additional free mailings to challengers against incumbents and the sponsorship of candidate fora and debates in order to afford the opportunity to gain exposure. I also recommend returning to the original Hatch Act ban on congressional staff and civil service employees working on federal campaigns. Finally, some remedial steps should be taken with respect to compensating challengers for their time spent campaigning. Recognizing the potential for abuse, candidates should at a minimum be permitted to continue to receive preexisting health and insurance benefits from their employers while on leave, and those candidates who cannot continue to receive their salaries should also be permitted a salary allowance from their campaigns for the months of September and October equal to the pay of the office they are seeking, which allowance would not be counted against any expenditure ceilings.

6. Enforcement of the election law is not solely the province of the Federal Election Commission but also that of the Justice Department. No structural changes in the administration of the law through the FEC, however well-intentioned, can substitute for a will and ability to enforce the law impartially and thoroughly, which in turn requires accountability to the electorate. Public groups such as the Association and the press can lead by praising officials who enforce the law rigorously and fairly and by not hesitating to criticize in the strongest terms possible those who fail to do so or who seek to intimidate attempts to enforce the law.46

7. A good test of any proposed reform of the law is to measure the burden of compliance by citizens who wish in good faith to follow the law. The Special Commission's proposed system would saddle campaigns and treasurers with a serious potential dilemma by counting independent expenditures made by political parties against the campaign's expenditure limit. Given the multiplicity of party committees, especially at the state and local level,47 and their ability to spend independently of the campaign, a campaign that itself spends the maximum (or close to it) would run the risk of violating the law based on expenditures made by persons or entities beyond its control.48 Moreover, the proposal flouts basic fairness. It is a fact of political life that candidates from time to time have differences of opinion with party leaders. A party committee of some sort, for example, could view one issue as important and run advertisements stressing that issue, while the candidate might want to stress different issues. Can it be fair to impute expenditures to a candidate that the candidate did not make and would prefer not to have been made? Even more troubling, in some instances, party leaders have allegedly opposed candidates of their own party.49 In such a case, the absurdity of permitting party leaders to spend the money of a campaign they were trying to defeat is self-evident. Having served as a campaign treasurer, I would advise any candidate to be extremely chary of opting into a system under which his or her campaign may be held accountable for activities beyond its control.

8. With respect to deterring laundered campaign contributions, I would not only require the candidate and treasurer to certify that they are not aware of any improper contributions, I would also require either (i) that all donors of contributions required to be reported sign a statement on their donor cards50 to the effect that they have not received and will not accept any reimbursement for their contribution from any source and that they understand that such reimbursement would violate federal election law, or (ii) that an officer of the campaign certify that those donors have been advised of that fact in writing contemporaneously with the contribution. This additional certification will send an unambiguous message that no one in the process--candidates, treasurers, or contributors--can safely look the other way with respect to laundered contributions. Placing an affirmative duty on candidates and treasurers to prevent laundered contributions and placing donors on notice of their duty to provide complete and accurate information regarding their contributions will likely deter many illegal contributions (and lighten the burden of prosecuting such offenses), but should have no chilling effect on legitimate donations (since the donor would be certifying to a fact that he or she knew to be true).

9. Finally, while I agree with the proposal to increase the maximum amount an individual may contribute to $6000 per election cycle, I see no reason to increase the maximum that political action committees may contribute above $6000. A citizen has at least the same free-speech rights as a corporation or a political action committee and should, therefore, be permitted to contribute the same amounts to political campaigns.
 

1 Commission Report at 92.

2 Bradley A. Smith, "Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform," 105 Yale L. J. 1049, 1068 (1996): "Experience and human nature tell us that legislators, like most people, are influenced by money, even when it goes into their campaign funds, rather than directly into their pockets."

3 Id. at 1068 (citing data from Stephanie D. Mousalli, "Campaign Finance Reform: The Case for Deregulation," 6 [1990]; Frank Sorauf, "Money in American Elections," 316 [1988]; Janet Grenzke, "PACs and the Congressional Supermarket: The Currency Is Complex," 33 Am. J. Pol. Sci. 1 [1989]; Larry Sabato, "Real and Imagined Corruption in Campaign Financing," in Elections American Style, 159-62 [a. James Reichley ed., 1987]; cf. W. P. Welch, "Campaign Contributions and Legislative Voting: Milk Money and Dairy Price Supports," 35 W. Pol. Q. 478, 479 [1982]). ("The influence of contributions is `small,' at least relative to the influences of constituency, party, and ideology.")

4 Smith, supra note 2, at 1068.

5 Id. at 1068-89.

6 Daniel H. Lowenstein, "On Campaign Finance Reform: The Root of All Evil Is Deeply Rooted," 18 Hofstra L. Rev. 301, 313-22 (1989) (arguing that such studies are deeply flawed).

7 Smith, supra, note 2 at 1070.

8 Prior to 1993, such conduct was illegal under the Hatch Act: The New York Times (July 21, 1993):A8, (Aug. 26, 1993):A20. The potential for abuse is enormous. In a 1996 New York State legislative primary, "more than 100 [public employee volunteers] were bussed from Albany" to assist one of the campaigns: New York Post (Sept. 16, 1996):7.

9 One example, that of the current campaign for the U.S. Senate in New York, demonstrates the extent of this advantage as well as the limitations on the current and proposed laws relating to campaign finance. Throughout the fall of 1999, the mayor of New York City and the First Lady of the United States--neither of whom was a declared candidate--traveled throughout the state and elsewhere ostensibly on official business while engaging in what was universally recognized in the press as campaign activities. For example, The New York Times (Sept. 1, 1999):B5. Although the conduct of both individuals may have been entirely legal, the situation demonstrates the ability of officeholders to take advantage of the present system and the need for any credible public finance system to offset these advantages.

10 Washington Post (Feb. 16, 2000):A14.

11 See Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604 (1996); Republican Party of Minnesota v. Pauly, 63 F.Supp. 2d 1008 (D. Minn. 1999); see also United States v. National Committee for Impeachment, 469 F. 2d 1135 (2d Cir. 1972); American Civil Liberties Union v. Jennings, 366 F. Supp. 1041 (D.D.C. 1973), vacated as moot, sub.nom.; Staats v. American Civil Liberties Union (1975).

12 See FEC v. National Conservative PAC, 470 U.S. 480 (1985).

13 The identity and amount raised by "bundlers" is rarely required to be disclosed under current law, and it would be difficult if not impossible to draft a rigorous disclosure requirement that would not place an impossible burden on campaign treasurers trying to comply with the law.

14 424 U.S. 1 (1976).

15 424 U.S. at 14.

16 Id. at 17.

17 Id. at 19n.18.

18 518 U.S. at 621.

19 See Republican Party of Minnesota v. Pauly, 63 F.Supp. 2d 1008 (D. Minn. 1999).

20 Iowa Right to Life Committee v. Williams, 187 F. 3d 963 (8th Cir. 1999).

21 Buckley, 424 U.S. at 46.

22 Colorado Republican, 518 U.S. at 616.

23 See Nixon v. Shrink Missouri Government PAC, 120 S.Ct. 897 (2000).

24 See FEC v. Christian Coalition, 52 F. Supp. 2d. 45 (D. D.C. 1999); Iowa Right to Life Committee v. Williams, supra.

25 469 F.2d 1135.

26 See Virginia Society for Human Life, Inc. v. Federal Election Commission, 2000 U.S. Dist. LEXIS 643 (D. Va. 2000).

27 424 U.S. at 45.

28 Id. at 14.

29 Id. at 42.

30 Id. at 46.

31 Finally, we would note that the proposed language, regulating any public communication that "includes the name or likeness" of a federal candidate is directly contrary to the unanimous en banc D.C. Circuit decision in the Buckley case declaring unconstitutional a part of FECA that required reporting and disclosure only by any organization that communicates any material "referring to a candidate. . . ." See Buckley v. Valeo, 519 F.2d 821, 843-44 (D.C. Cir. 1975).

32 See McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995).

33 This practice is alarmingly common. See, for example, Wall Street Journal (Mar. 3, 2000):A1, A18; The New York Times (Mar. 6, 2000):B1, B5.

34 The New York Times (July 2, 1999):A14.

35 Wall Street Journal (Aug. 2, 1994):A14. The New York City Campaign Finance Board has also faced heavy political pressure. During 1993, after a mayoral campaign in which the Board had levied a substantial fine against his reelection campaign, the Mayor in effect ousted the chairman, who had recently received praise for an impartial and strong performance overseeing New York City's public finance program. Public outrage ultimately resulted in the resignation of the Mayor's appointee and the reappointment of the original chairman by the incoming Mayor. The New York Times (Oct. 21, 1993):I1, 3; (Jan. 6, 1994):A20.

36 616 F.2d 45 (2nd Cir. 1980) (en banc).

37 110 F.3d 1049 (4th Cir. 1997).

38 See Virginia Society for Human Life, Inc. v. Federal Election Commission, supra.

39 In 1996 the Association offered a resolution before the American Bar Association recommending ethical restrictions on contributions made or solicited by lawyers to municipal officers responsible for awarding municipal bond business received by the firms of those lawyers. That resolution is discussed in "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 Record 660, 686 (Oct. 1997), in which the Association proposed that political contributors to public officeholders having the direct or indirect ability to award state business be barred from receiving such state business within two years of making any contributions to those officeholders.

40 Report of the Association to the American Bar Association in support of the its "pay-to-play" resolution (quoted in "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 Record 660 (Oct. 1997). The Association's Report to the ABA noted the example of bond lawyers who made substantial contributions to both major party candidates for New York State Comptroller in the 1994 campaign. Under Buckley v. Valeo, the prevention of graft or the appearance of graft is a constitutionally valid basis for restricting the amount of a campaign contribution.

41 For example, in most of the congressional races in which incumbent members have been defeated in recent years, the incumbent has actually outspent the successful challenger by a substantial margin. See Malbin, Campaign Finance Reform--Some Lessons from the Data, 1993 Rockefeller Institute Bulletin at 47-49; Ornstein, Mann, and Malbin, Vital Statistics on Congress 1995-1996 (CQ Press 1996), table 3-6 at 88-89. Statistics such as these--and the number of high-spending campaigns that have not proved successful--indicate that the effect of spending money on a political campaign is subject to the law of diminishing returns. As Professor Michael Malbin has summed up: "This confirms that money, or having the ability to communicate, is essential to campaigning in contemporary congressional politics; but that money is not enough by itself to win. Having money means having the ability to be heard; it does not mean that the voters will like what they hear. Incumbents who had worn out their welcome were heard and rejected." Ornstein, Mann, and Malbin, supra, ch. 3 at 76.

42 See "Towards a Level Playing Field--A Pragmatic Approach to Public Campaign Financing," 52 Record 660 (Oct. 1997) for further discussion of this issue.

43 See The New York Times (May 20, 1968):1, 31; (Jan. 7, 1972):14; (Jan. 18, 2000):A21; Wall Street Journal (Oct. 13, 1998):A22. It is unlikely that the McCarthy campaign could have achieved what it did had it been subject to the current law.

44 Rockefeller v. Powers, 917 F. Supp. 155 (E.D.N.Y. 1996), affd, 78 F.3d 44 (2d Cir. 1996); Molinari v. Powers, No. 99 Civ. 8447 (ERK) slip op. (E.D.N.Y. Feb. 10, 2000); "The Petition Process," 41 Record 710 (Oct. 1986).

45 See Ornstein, Mann, and Malbin, supra, ch. 3 at 76.

46 In one recent example, the Wall Street Journal and The New York Times praised the efforts of the U.S. Attorney for the Southern District of New York for the successful prosecution for embezzlement of a union official who caused union funds to be contributed to the Democratic National Committee, which were then contributed in turn to the reelection campaign of the president of the union, and the Times simultaneously criticized the Attorney General of the United States for her lax performance in enforcing campaign finance laws. The New York Times (Nov. 23, 1999):A26; Wall Street Journal (Nov. 22, 1999):A22.

47 In New York, for example, there is a New York State Republican Committee made up of two members elected from each of the assembly districts in the state. In addition, each county has a separate Republican County Committee, and there is at least one separate committee for each assembly district (also elected), not to mention unofficial Republican clubs such as the Women's National Republican Club and the Log Cabin Republican Club.

48 If a party committee expenditure is actually coordinated with the campaign, this does not pose a problem, since the campaign can anticipate the expenditures that will be chargeable against its ceiling.

49 See The New York Times (Nov. 27, 1994):57.

50 Donors of contributions required to be reported (that is, over $100) are typically required to complete a donor card listing their name, address, and employer in order that the campaign may include that information on its reports to the FEC.

 

LIST OF RECOMMENDATIONS

 

I.   Public Campaign Financing

A public financing option for congressional races should be enacted:

(a) Public financing would be partial, (b) provided to candidates who raise a threshold amount of money in private funds, (c) with public funds allotted on a generous matching-funds basis; (d) it would apply to primary and general elections and to minor party and independent candidates as well as major party nominees; (e) it would require participating candidates to accept a spending limit, (f) although that limit would be lifted if the candidate's opponent spends above the spending limit, and (g) it would be funded out of regular appropriations rather than a check-off.

In order to receive public funds, a candidate must raise a threshold amount of money with only relatively small contributions counting toward that threshold. Specifically, we recommend that in order to qualify for public funds, a candidate for the House of Representatives would have to collect at least $25,000 in private donations, with no more than $250 from any one donor counting toward the threshold.

We would count only those contributions from individuals who are residents of the state in which the candidate is seeking office to count toward the threshold.

For a Senate candidate to qualify for public funds, he or she would also have to attract a certain amount of private contributions, with only the first $250 of any individual's contribution--and only contributions from individuals who reside within the state--counting. The qualification level would vary to some extent with the population of the state. For a state with just one congressional district, the qualifying level would be $25,000--the same level as in the House. Thereafter, an additional $10,000 would be required for each additional congressional district in the state, but in no state would the qualifying level be more than $75,000.

Qualifying candidates for both the House and Senate would receive public funds on a matching-funds basis, that is, the amount of the public grant would be based on the amount of qualifying individual contributions a candidate receives.

Only the first $250 in contributions from individuals would be matched.

Most importantly, we would provide matching funds on a 2:1 basis, that is, for each $1 in qualifying private contributions, a candidate would receive $2 in public funds.

Public funding would be available for both primary and general elections.

Public funding would be available for any candidate, regardless of party affiliation, or the absence of party affiliation, provided he or she satisfies the threshold requirement, accepts the spending limit, and complies with the rules of the public funding program.

As a condition of eligibility for public funding, a candidate would be required to accept two spending limits. First, a candidate would have to agree not to spend more than $50,000 of his or her personal or family money on the campaign.232 Second, the candidate would have to agree to limit total campaign spending. 

We, thus, recommend that the provision of public funding be tied to a House candidate's agreement to a $1 million spending limit. This figure, along with all other dollar figures in our public funding program, would be indexed for inflation.

We recommend a two-tier system of Senate spending limits. In states with a voting-age population of less than 1 million, candidates would be able to spend $1 million plus $2 per voting-age person. In states with a voting-age population greater than 1 million, candidates would be able to spend $1 million plus $1.50 per voting-age person.

We recommend that when a candidate who participates in the public funding program and accepts a spending limit is faced with an opponent who is not participating in the program, then the spending limit for the publicly funded candidate should be raised to 150 percent of the normal limit as soon as the privately funded opponent has received contributions equal to 80 percent of the spending limit. Moreover, if the nonpublicly funded candidate obtains contributions equal to 120 percent of the spending limit, we would free the publicly funded candidate entirely of the spending limit.

We recommend that the public funding system be funded by ordinary appropriations rather than the income tax check-off.

II.   Postal Franks and Free Website

We recommend that all ballot-qualified candidates for federal office be given a postal frank that would cover the equivalent of one mailing to each eligible voter in the constituency. We also recommend that the federal government provide all ballot-qualified candidates for federal office with a free website for the duration of the election campaign.

III.   Contribution Limits

In light of changes in the cost of living, we recommend that the limit on individual contributions to candidates be raised from the current $2000 per election cycle to $6000 per election cycle, and that the limit thereafter be indexed for changes in the cost of living, with a new limit put in place every two years.

We would leave all existing limits relating to PACs in place and provide that in the future, upon the enactment of comprehensive campaign finance reform legislation, the PAC limits should be adjusted biennially for inflation as well.

Consequently, like the adjustment in the limit on individual contributions to candidates, we recommend that the aggregate limit on individual contributions for federal election-related purposes be trebled to $75,000 and thereafter be adjusted for inflation.

We recommend that the limit on donations to the national party committees be raised

We would remove any specific limit on individual donations to parties under the aggregate cap on individual contributions per calendar year. As a result, an individual could contribute up to $75,000 per calendar year to the national party committees--although any contribution to the parties would reduce the ability of an individual to contribute to candidates or PACs.  

IV.   Soft Money and Political Parties

We recommend that federal officeholders and candidates for federal office, and their employees, agents, and campaign staffs, be barred from soliciting, receiving, directing, transferring, or spending any funds for their own campaigns, for any national party committee, or for any state or local party committee, with respect to any activity that is related to an election for federal office (including activities that relate to elections to both federal and state office at the same time), unless those funds comply with the limitations, prohibitions, and reporting requirements of FECA.

Similarly, the national party committees--this would include the congressional campaign committees as well as the national committees--and their officials and agents would be barred from soliciting, receiving, or directing to another person any contribution or from making any expenditure that does not comply with the limitations, prohibitions, and reporting and disclosure requirements of FECA. 

We believe that for state and local parties, an allocation formula is the right approach to the funding of shared federal-nonfederal activities (all national party spending even for mixed federal-nonfederal activities would have to be hard-money funded), but that the current formula is weighted much too heavily in favor of soft money.  We believe that something like the 60/40 and 65/35 hard/soft money allocations would make more sense, and certainly there ought to be a greater hard money allocation in presidential election years. 

We would also simplify the existing system by combining the contribution and coordinated expenditure restrictions and then raising the aggregate amount. In House races in states with two or more districts, national and state party committees can each currently contribute $5000 and, as of 1998, can engage in $32,550 in coordinated expenditures. Combining and doubling those amounts, we would permit state parties to contribute to and/or coordinate $75,000 with congressional candidates; we would permit the national parties in the aggregate to contribute or coordinate the same amount. Total party committee spending for House candidates would then be $150,000 and would be adjusted for inflation. We would provide that the national and state committees could spend $150,000 apiece (or $300,000 together) in House races in single-district states and on Senate races in the smallest states, and double the current coordinated contribution limit in the larger states

We recommend that if a candidate has opted into the public funding program, all spending by that candidate's party that expressly advocates the election or defeat of a clearly identified candidate (that is, either the election of the publicly funded candidate or the defeat of his or her opponent) ought to be counted against the spending limit of the party's candidate. Given the constitutional protection for independent spending, the best way to do this would be to require the candidate to agree as a precondition to the provision of public funds that the FEC could count party independent spending on behalf of that candidate, or against the candidate's opponent, against the statutory spending ceiling.

We recommend two such rules: First, FECA should be amended to provide that once a party committee has made a direct contribution to, or a coordinated expenditure with, a candidate, all subsequent expenditures by that committee--and by all committees of that party--are to be treated as coordinated with the candidate and are to be subject to the contribution/coordinated expenditure limitation. Second, FECA should be amended to provide that once a party has nominated a candidate, all party expenditures supporting that candidate are to be treated as coordinated and, thus, subject to limits.

V.   Express Advocacy 

To remove any uncertainty, FECA should be amended to provide that any expenditure for campaign communications that is coordinated with a campaign is express advocacy subject to regulation, regardless of its content.

We recommend that FECA be amended to provide that any communication by a political party committee that mentions by name or includes the likeness of a clearly identified candidate for federal office be defined as express advocacy.

We recommend that Congress provide by law that any communication broadcast, printed, mailed, or distributed within 30 days before a primary or general election that includes the name or likeness of any clearly identified candidate for federal office shall be presumed to be express advocacy, but that such presumption may be rebutted on a showing that, based on the content and context of the speech, viewers, listeners, or readers are unlikely to treat it as an election-related communication.

VI.   Federal Election Commission

We recommend that the FEC be expanded to seven members to reduce the likelihood of deadlock.  To avoid the danger of narrow partisan majorities, the Commission should be required to have one member not affiliated, either at the time of appointment or in the three preceding years, with any political party.  We recommend that the President be authorized to designate a member to serve as chair for a two-year term.

To reduce the dangers of partisanship, we recommend that if a chair is affiliated with a particular political party, his or her successor may not be affiliated with that party. 

We recommend that Congress eliminate the requirement that the FEC must vote that there is reason to believe a violation exists before formally opening an investigation.  We also recommend elimination of the multiple conciliation requirements.

Congress should restore the FEC's power to undertake random audits of political committees within its jurisdiction.  In addition, the FEC should be given the authority to seek expedited injunctive relief during the election period when there is evidence that a serious violation has occurred or is unfolding.