“Our Campaign Finance Nationalism”

Gene Mazo has posted this draft on SSRN (forthcoming, Pepperdine Law Review). Here is the abstract:

This Article chronicles the history, structure, and contours of our “campaign finance nationalism.” I use this term to describe a system in which the funding of campaigns at the federal, state, and local levels is national in scope, despite the fact that voting is not. It is a system in which everyone is free to donate to a candidate across state lines, although only a resident of the candidate’s district can vote for him.

Part I contrasts our campaign finance nationalism with our voting rights federalism. The law views voting and campaigning as distinct activities, and each is governed by its own body of law. For the most part, voting is governed by state law. Since state law regulates voting differently in each state, the law of voting is emblematic of America’s voting rights federalism. The law of campaigning, by contrast, is national in scope. A major portion of it involves the doctrine of free speech. Since the First Amendment applies equally to all citizens, our campaign finance system largely ignores the federalism of voting. The only participation limits that our campaign finance system sets are based on national citizenship, as “foreign nationals” are precluded from making contributions or expenditures to influence any federal, state, or local election.

In Part II, I chronicle the history of our campaign finance nationalism. Concern with the influence that foreigners had over U.S. policymaking led Congress to enact the Foreign Agent Registration Act (FARA) in 1938. This law prohibited the agents of foreign principals from making contributions to political candidates. However, FARA’s statutory scheme contained loopholes. In 1974, when Congress was debating its amendments to the Foreign Election Campaign Act of 1971 (FECA), it adopted Senator Lloyd Bentsen’s proposal to ban foreign nationals from influencing U.S. electoral campaigns directly. After Citizens United was decided, this prohibition on foreign nationals was challenged in Bluman v. FEC, but the Bluman court upheld the ban on the grounds that foreigners are not members of the American political community.

As Part III explains, our campaign finance nationalism has several consequences. One is that it prevents individual states from restricting nonresident campaign contributions. Over the years, several states have tried to place limits on nonresident contributions, only to have their efforts be struck down. A second consequence is that the system readily encourages political candidates to seek campaign contributions from all across the country. As a result, candidates develop two distinct groups of people to whom they owe allegiance: voters and donors. I marshal evidence to show how, over time, members of Congress have become increasingly dependent on nonresident donors. Many academic authors, including Richard Briffault, Jessica Bulman-Pozen, Anthony Johnstone, Todd Pettys, and John Paul Stevens, have undertaken efforts to understand the effects of nonresident contributions and the justifications for them.

Part IV examines the difficulties of regulating our campaign finance nationalism. The provisions of the law prohibiting foreign spending in American elections have many loopholes, and policing them also turns out to be very hard to do in practice. If Russia’s aggressive actions during the 2016 election taught us anything, it is that our campaign finance system is vulnerable. I conclude by examining various efforts now being undertaken in Congress to prevent foreign influence from infiltrating American electoral campaigns.

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