Earlier this month, the Supreme Court struck down an aggregate cap on individual contributions to federal candidates, parties and political committees over a two-year election cycle in McCutcheon v. Federal Election Commission. Certainly, this is an important holding, but this is not Citizens United II. In fact, in as much as Citizens United increased spending opportunities with outside groups, it’s just the opposite. This decision will have a major impact in national political giving by restoring congressional campaigns themselves — as well as the national parties that support them — to renewed importance by which donors of all political persuasions (and particularly wealthy donors) provide support to a slate of preferred candidates. That shift will, in turn, result in a larger portion of political giving by way of transparent, fully disclosed contributions to federal campaign committees and the Members of Congress they support.
Essentially finding that the presence of any cap was arbitrary, and building on its previous free speech analysis in Citizens United v. FEC, Chief Justice John G. Roberts Jr. illustrated the underlying faulty logic of the biennial aggregate limit in operation: “If there is no corruption concern in giving nine candidates up to $5,200 each, it is difficult to understand how a tenth candidate can be regarded as corruptible if given $1,801, and all others corruptible if given a dime.”
Decades of failed reform attempts have led the campaign finance system to where it is today. Despite the constant efforts by “reformers” to prevent campaign cash from finding its way into the system, donors find a way. For instance, congressional reformers hailed the McCain-Feingold Bipartisan Campaign Finance Reform Act of 2002, which banned unlimited “soft money” to political parties. However, rather than continue making fully disclosed contributions to political parties, donors found ways to make less-transparent contributions to other organizations. In the 2004 cycle, IRC Section 527 organizations such as Swift Boat Veterans for Truth provided an appealing method to remain involved in uncapped political giving. Starting in 2010, the Citizens United decision presented significant new options for undisclosed political giving through tax-exempt organizations such as 501(c)(4) organizations, trade associations, and labor unions, as permitted under the tax code, which may all engage in a significant amount of voter mobilization and issue advocacy.
Ironically, the Court’s decision in McCutcheon reverses more than a decade of “reforms” that arguably have only diminished the voices of congressional candidates themselves. The Court’s decision could be a major, healthy step towards accountability for a democracy that relies on the private support of its political process. With no aggregate caps on individual giving, like-minded organizations that must register and report contributions under the Federal Election Commission subject to federal limits (such as party committees and congressional campaigns), can join forces under the umbrella of a joint fundraising committee. In turn, a JFC can accept contributions up to the maximum aggregate amount permitted by each participant committee in the JFC.
Yes, this means that a single donor could write one large check to a single committee. For instance, a JFC comprised of three party committees and 10 congressional campaigns could accept a check of $149,200 ($32,400 for each of the three party committees, and $5,200 for each of the 10 congressional campaigns). That single check exceeds the previous two-year aggregate cap in place until the McCutcheon decision. Without the artificial limit of the biennial cap struck by the Court in McCutcheon, the size of a contribution to a single JFC is limited only by the number of committees within it.
The point is that this method of contributing provides accountability and transparency, whereas that same donation to an outside 501(c)(4) organization might never be disclosed — neither the amount nor the donor. Nor are contributions to a 501(c)(4) organization permitted to boost a congressional candidate’s ability to take his or her message to the public in the way that best represents his or her campaign themes, and in the manner that he or she wishes to present to voters.
Some have argued that the combination of more funding flexibility through the Citizens United and McCutcheon decisions have resulted in a political funding structure that the wealthy are more able to control; but McCutcheon actually works to return to a system controlled by candidates and their campaigns. Recently, the loudest voices in recent election cycles have not belonged to congressional candidates, but rather to outside organizations that supported them. Because these organizations have uncapped contributions, they can spend prolifically. Coupled with the FEC’s strict coordination rules that prevent sharing data, strategy, or staff, the current campaign finance structure has shifted great influence to well-financed organizations under the control of unaccountable political consultants that are effectively isolated from the campaigns they wish to boost.
Efforts by campaign finance reformers to limit the flow of money into the campaign finance system have not just failed, they have instead diverted that flow into unaccountable side streams. Now, true reformers should acknowledge that McCutcheon could well bring a larger percentage of political spending into the sunlight, rather than bemoan it as the latest decision signaling the end of America’s democracy.
Tim Peckinpaugh and Steve Roberts are political law attorneys at K&L Gates LLP.