Rick Hasen: Today's Supreme Court Campaign Finance Decision is Bad News for Corporate Spending Limit

Today's Supreme Court opinion in FEC v. Davis nominally deals with a relatively tangential portion of the McCain-Feingold law; but the 5-4 decision has much broader implications, laying the groundwork for striking down limits on spending by corporations and unions. It also could make public financing plans less effecting and less desirable. Here is some initial analysis to explain that point (subject to change as I study the opinion further).

1. The law BCRA section 319 (and related provisions, with parallel provisions in Senate races) sets up special rules for cases involving self-financed candidates. The details are complex and set forth in the majority opinion, but in essence the rule works like this: if a wealthy candidate spends more than $350,000 of personal funds on a campaign, the contribution limits of his opponent get raised from the usual federal limit (currently at $2,300) to triple that amount (currently at $6,900). The wealthy candidate must file periodic reports, and the raised limit is eliminated when there is parity in spending between the two candidates.

2. Competing frameworks for evaluating the constitutionality of the provision The majority and dissent differ in two principal respects on the constitutionality of this provision.

(a) The burden To the majority, this law imposes an "unprecedented penalty" (maj. 12), and a "substantial burden" (maj 14) on the self-financed candidate. To the majority the self financed candidate faces this choice: "abide by a limit on personal expenditures or endure the burden that is placed on that right by the activation of a scheme of discriminatory contribution limits." To the dissent, there is no burden at all. As Justice Stevens states (dissent 5-6), "The Millionaire's Amendment quiets no speech at all. On the contrary, it does no more than assist the opponent of a self-funding candidate in his attempts to make his voice heard; this amplification in no way mutes the voice of the millionaire, who remains able to speak as loud and as long as he likes in support of his campaign." The majority views the law as a burden on spending, triggering strict scrutiny. The dissent sees this as subject to lax scrutiny, because of the lack of a serious burden on the self-financed candidate.

(b) The equality rationale for campaign financing The majority opinion is a resounding reaffirmation of that part of Buckley rejecting the idea of leveling the playing field or achieving some other kind of political equality. The opinion repeatedly (see maj opn 10-18) rejects the idea that Congress has any ability to try to level the playing field, stating that doing so would take the question away from voters. In what is likely to be one of the most quoted parts of the opinion, Justice Alito writes: "Different candidates have different strengths. Some are wealthy; others have wealthy supporters who are willing to make large contributions. Some are celebrities; some have the benefit of a well-known family name. Leveling electoral opportunities means making and implementing judgments about which candidates should be permitted to contribute to the outcome of an election. The Constitution, however, confers upon voters, not Congress, the power to choose the Members of the House of Representatives, and it is dangerous business for Congress to use the election claws to influence the voters' choices." (maj. 16)

Justice Stevens in dissent points to the Court's cases (such as the key Austin v. Michigan Chamber of Commerce case) limiting spending by corporations and unions on grounds that such spending can have distorting and corrosive effects on the outcome of elections and create the appearance that wealth dictates results. (dissent 7) In the portion of his opinion joined by three other Justices, he significantly says that though these cases were cases about corporate spending, "there is no reason that their their logic---specifically, their concerns about the corrosive and distorting effects of wealth on our political process---is not equally applicable in the context of individual wealth.

The majority does not respond directly to this point, other than to cite (maj 16) to Justice Kennedy's Austin dissent: rejecting as "antithetical to the First Amendment" "the notion that the government has a legitimate interest in restricting the quantity of speech to equalize the relative influence of speakers on elections."

3. The Future of Contribution and Spending Limits Even before today's case I have been arguing repeatedly that the Austin line of cases limiting corporate and union spending in federal elections is on borrowed time. We should view this case as a big step in that direction. The logic of Davis allows the Court in the very next case asking for Austin to be overruled to do so, citing Davis, Bellotti, and little else. The corporate and union spending limits are clearly on borrowed time.

4. The Threat to Public Financing systems I am often called for advice on how to set up public financing systems on the state and local level, and the particular concern is how to deal with one-sided spending by independent groups. Until now, the cases (with one exception, the Day v. Holohan case from the eighth circuit) suggested that giving special benefits only to candidates who face spending against them would be constitutional. This, I have argued is an effective way of dealing with one-sided spending. But today's opinion (maj. 13) endorses Day and calls all such provisions in public financing systems into question.

All in all, not a great day for those who believe, as I do, that "there is no good reason to allow disparities in wealth to be translated into disparities in political power. A well-functioning democracy distinguishes between market processes of purchase and sale on the one hand and political processes of voting and reason-giving on the other." (Dissent, quoting Sunstein 94 Colum. L. Rev 1390).

UPDATE: I'll be updating this post throughout the day with links to others' reactions. Here is Bob Bauer. Here is Gerry Hebert. More to come.
http://electionlawblog.org/archives/011095.html