Hysteria Aside, McCutcheon Didn't Gut Campaign-Finance Rules -- Yet

Apr 2 2014, 3:58pm CDT | by

The response from the left and good-government types to the U.S. Supreme Court’s McCutcheon decision was immediate, hyperbolic and predictable.

“Today’s McCutcheon decision is a devastating blow to our democracy,” fretted Public Citizen, which bills itself as “the people’s voice in the nation’s capital.” The New York Times echoed that with the headline: “Another Blow to Democracy.”

But the decision didn’t really change much besides allowing rich individuals to contribute the maximum of $2,600 to as many federal candidates as they want, instead of just 10. The existing limits on individual contributions remain intact, although those same moneybags types now can give the limit of $32,200 to three national party committees instead of two. (Or six, if they want to go bipartisan.)

McCutcheon doesn’t touch the ban on direct corporate contributions to political candidates, nor does it change the $5,000 limit on individual contributions to political action committees. Sure, somebody could give the maximum to all 435 House candidates, 33 Senate candidates and 50 state party committees and blow a total $3.6 million next election, compared with an aggregate limit of $123,200 under the now-invalid law. Hell, they could double that and give the same amount to the opposing party, although that wouldn’t make much sense as a strategy for influencing policy.

But that strikes some campaign-finance pros as unlikely.

“What I don’t think people will do is write a check to every single candidate, because you’re kind of throwing your money away,” said Ronald Jacobs, co-chair of Venable’s Political Law Group in Washington. “Why waste your money on a safe district, when you could fund a 501(c)4 where there’s a contested race?”

Indeed, Chief Justice John Roberts made the same point in his opinion, noting that it made more sense for a rich donor to throw $500,000 toward an independent political organization — now free, under the court’s 2010 Citizens United decision, to spend that kind of money — than to try an orchestrate a scheme of funneling donations through official campaign committees.

Here’s a list of things that are legal and illegal following the McCutcheon decision:

  • Corporate donations: Still illegal. The high court upheld the ban on direct corporate donations to federal candidates in 2006 and McCutcheon didn’t change anything. Except Roberts included language in his latest decision that could put it in danger in the future. “If the CEO of a company can give $2,600 to a candidate without corrupting the system, what’s the problem with the CEO’s company also giving $2,600?” Jacobs asked.
  • Individual donations: Still legal, still subject to strict limits. McCutcheon doesn’t change the limits on contributions to individual campaigns, but allows rich donors to make them to as many candidates as they want. The decision does make it clear that such limits are only for the purposes of preventing quid pro quo corruption, not for broader purposes of controlling political spending or leveling the playing field between rich and poor.
  • Party committees: Still legal, still limited. The decision allows donors to make the maximum donation to all three major-party committees (National, Senate and Congress) and Jacobs thinks it unlikely parties will try to increase the number of committees for logistical reasons. They must operate independently and that could tax the party organization or expose it to regulatory attack.
  • Political Action Committes: Still legal, still subject to limits. Federal law still limits individuals to $5,000 per PAC. As Roberts noted, a rich donor who wanted his contributions to have an impact on a specific candidate would quickly be diluted by other rich donors if he tried to fund a lot of PACs to get the money to the intended target.
  • PAC/Campaign coordination: Still illegal. While PACs frequently feature former campaign officials at their heads, Jacobs says everybody involved must make sure not to discuss strategy on the phone or e-mail, share non-public polling and strategy data, or otherwise coordinate their efforts.
  • Disclosure: Gathering momentum at state level. Roberts, in his opinion, called upon Congress to mandate tougher disclosure rules as a way of informing the electorate about who is trying to buy off their representatives. So far Congress has balked, amid strong Republican opposition, but states like California and Washington have started requiring more disclosure. Jacobs advises his clients to be ready to justify their donations to independent groups if they are forced to disclose, even retroactively. Another strategy: “Make sure you’re even more creative how your money is given,” by using non-profits that aggregate donations and send them along to others.
  • 501(c)4s: Still legal. While the Obama administration has floated the idea of tougher Internal Revenue Service rules on the level of political activity these non-profits can engage in, it has gotten pushback from both ends of the political spectrum. Environmental groups like the Sierra Club engage in politics, too. That’s partly because everybody realized tougher rules would make for  “a sort of mutual assured destruction” as they went after each other for infractions, Jacobs said.

While McCutcheon did no more than eliminate the aggregate-contribution rules, Jacobs said it could signal trouble ahead for campaign-finance reformers. Typically the court will declare its support for precedent by declaring why a previous decision was well-reasoned or deserves to be treated as good law, he said. In today’s decision, Roberts didn’t explictly attack campaign-contribution limits such as the $2,600 cap Congress placed on individual races, “but he also didn’t say why that limit would withstand strict scrutiny,” Jacobs said.

Going forward, this court might well take a case attacking those limits as arbitrary or too strict, while simultaneously advocating tougher rules on disclosure.

“You’ve got this four-member group (plus Thomas) that seems pretty comfortable striking down campaign finance laws but also comfortable with disclosure laws,” he told me.

 
 

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