Yesterday, in my first post of this series on my forthcoming article The End of Campaign Finance Law, 98 Va. L. Rev. (2012), I argued that Citizens United’s importance rests less on its direct impact on corporate electioneering than on its larger implications for the general de-regulation of independent expenditures. Today, I explain what this de-regulation of independent expenditures meant for the practice of campaign finance in time for the 2010 elections and beyond.
The 2010 midterm elections provided a glimpse of what the de-regulation of independent expenditures promises. The 2010 elections were by far the most expensive in history. Roughly $4 billion were spent on federal races in 2010, compared to $2.6 billion spent on the last midterm elections in 2006. Also notable is that corporate money, as far as we can tell, accounted for only a small percentage of federal campaign spending in 2010. Few companies reported independent expenditures of their own, and a study by Public Citizen reported last October that total contributions by all companies accounted for less than $13 million.
The biggest change in campaign finance in 2010 was the involvement of outside groups formally unconnected to parties and candidates. Spending by these outside groups increased 168 percent over 2008 in House races and 44 percent in Senate races. Seventy-two super-PACs formed in the short time between July 2010 and the fall midterm elections and still spent more than $80 million. An estimated $138 million came from groups that did not disclose their contributors. In other words, the first post-Citizens United elections did not feature the avalanche of corporate spending that many feared following the decision, but the elections featured clear increases in spending by outside groups and particularly those groups that do not disclose their contributors.
What has occurred since Citizens United can be described as “reverse hydraulics.” As Citizens United rolled back campaign finance law as it stood for decades, political money has rushed back to newly de-regulated channels like water finding its own level through the newly opened, more direct channels.
This is not the usual story of strategic adaptation to regulation; this is reversion in response to the removal of regulation. Reverse hydraulics mean that when existing regulation is removed, money then may flow through the more direct paths that are opened up. In practical terms, the de-regulation of independent expenditures mean a shift of money to independent expenditures by outside groups that now are almost completely free of restriction, and marginally away from contributions to candidates and parties that remain subject to the full array of federal campaign finance regulation.
This reverse hydraulic shift of the marginal dollar away from parties and candidates, I argue, is normatively unfortunate on balance. Assessing the post-Citizens United world of campaign finance requires looking beyond the prevention of corruption as crudely defined by the Court for constitutional purposes. The Court may be correct in a general sense that contributions to candidates and parties pose a greater risk for quid pro quo corruption than independent expenditures by outside groups and individuals. Contributions to candidates and parties provide a direct connection between the donor and those potentially in position to reciprocate the benefit. However, when we assess the normative impact of reverse hydraulics following Citizens United, there are many important democratic values implicated by campaign finance that are left unconsidered by exclusive focus on the prevention of corruption as the Court defines it.
For one thing, the reverse hydraulic flow of money to outside groups, away from candidates and parties, is unfortunate in terms of accountability and representation. Only candidates and their political parties appear on the ballot. Candidates and parties ought to be the best spokespeople (or at least have the best incentives to enlist the best spokespeople) for their candidacies, and when money flows away from candidates and parties to outside groups, money flows away from those whose views are most relevant and best speak for their own candidacies.
Furthermore, the de-regulation of independent expenditures by outside groups now encourages what is essentially more anonymous speech funded by undisclosed sponsors. As I described yesterday, many outside groups that engage in outright campaigning do not comply with the FEC disclosure requirements applicable to political committees and all parties and candidates. The frustration of disclosure multiplies now that the FEC requires BCRA disclosure of a donation that funds an electioneering communication only when the donation is earmarked for a specific advertisement—a requirement that completely undermines meaningful disclosure as a practical matter.
Finally, the de-regulation of independent expenditures and the resulting reverse hydraulics of campaign finance law are likely to discourage broader participation in campaign finance donation. What the political science finds, and which tends to get overlooked, is that grassroots participation depends heavily on political elites to mobilize the public. With opportunities for unlimited independent expenditures by outside groups, we are likely to see political elites trending away from grass-roots mobilization, back to a heavy focus on a relatively small group of ultra-wealthy donors who give huge amounts.
What is more, Citizens United leaves little room for legislative adaptation of campaign finance regulation to respond to these changing dynamics of campaign finance. Re-channeling campaign finance in favored directions through legislative adaptation would require not only lowering regulation of favored channels for money, but raising the costs of disfavored channels. The latter move is effectively barred by the Court; new regulation of independent expenditures by outside groups would be constitutionally problematic under Citizens United.
Of course, a slightly different approach to un-doing the reverse hydraulics of Citizens United would be to make favored channels more attractive, without making disfavored channels less attractive. De-regulation of contributions to candidates and parties might make them relatively more attractive to political sponsors, who thus might so contribute rather than underwrite independent expenditures by outside groups. The relaxation of the surviving BCRA prohibition on party soft money, for example, would permit larger donations to candidates and parties and shift money that otherwise might have been spent on independent expenditures back in their direction.
Under this modified approach of all carrots and no sticks, more money will flow to parties and candidates, but when it is politically advantageous at all to channel money through outside groups, campaign money will still flow to them. Indeed, campaign money is most likely to flow to outside groups when the normative concerns about independent expenditures by outside groups are most acute. When, for instance, nondisclosure of the donor is a priority, or when inflammatory advertising is particularly desired, campaign money will still run through outside groups even if contribution limits on candidates and parties were similarly removed.
As a result, with further de-regulation, there would be much of whatever harms there are from outside group spending and only some part of the benefits of money going to parties and candidates. De-regulating candidates and parties even further means only that more channels for money are open and frees political actors to use the channel best suited for the situation, regardless of the normative consequences. It allows political actors to have even more cake and still eat it too.