The Citizens United era of money in politics, explained

from Vox.com

The Citizens United decision reshaped campaign finance law in the United States

On January 21, 2010, the Supreme Court’s Citizens United v. FEC ruling set the stage for larger and larger sums of money to pour into our electoral system. In the ruling, a majority of justices made clear that they viewed outside spending on election ads as free speech that didn’t present any serious danger of corruption.

The specifics of the case at issue, involving a film an outside group made about Hillary Clinton, are less important than its broader implications. Essentially, the justices cemented a distinction between donations to candidates and parties — which can be capped — and money spent independently by outside entities (individuals, nonprofits, unions, and corporations) — which can’t.

For decades, Supreme Court majorities have viewed spending on elections as a form of free speech. But they’ve also argued that certain restrictions on such spending were acceptable because the government has an interest in preventing corruption or the appearance of corruption. So, limits of how much money any one donor could give to any one politician’s campaign were allowed to stand, because, the justices argued, big payoffs from a donor to a politician could be, or look, corrupt.

Yet the logic of the Citizens United majority holds that as long as a huge donation isn’t given directly to the politician or party, but is merely spent independently on their behalf, there’s no danger of corruption serious enough to justify restricting that exercise of speech. “Independent expenditures,” Justice Anthony Kennedy wrote for the majority, “do not give rise to corruption or the appearance of corruption.”

Kennedy made clear that spending by these outside groups on elections can be regulated — for instance, through disclosure requirements. But he argues that such spending can’t be capped or limited, because that would be muzzling speech.

Justice John Paul Stevens and the court’s three other three liberals objected in a strongly-worded dissent, saying the decision “threatens to undermine the integrity of elected institutions across the nation.” Stevens made the following arguments:

  • That the majority had defined “corruption” too narrowly, and that outside spending could be corrupt too.
  • That, in the electoral context, unlimited speech (ad spending) from some people could drown out the speech of others, and effectively trample on their own First Amendment rights.
  • That corporations are legal entities and shouldn’t receive the same constitutional rights as people.

These arguments, however, didn’t persuade a majority on the court. And soon after the decision, outside spending — already trending upward — exploded, as Super PACs and dark money began to play a greater and greater role in U.S. elections.

Citizens United had two main consequences — Super PACs and more dark money

The results of the Supreme Court’s Citizens United decision, which made clear that outside spending on elections couldn’t be capped, were predictable. That outside spending, which had already been trending upward before the decision, skyrocketed:

Outside spending chart

But despite the hype over the decision treating corporations as people, the increased spending that ensued wasn’t generally from corporations directly. Instead, it was concentrated in two major forms.

First, a subsequent lower court ruling applying the Supreme Court’s logic led to the creation of Super PACs, which are technically called “independent expenditure-only committees.” These new outside groups could accept unlimited contributions from individuals and corporations, so long as they did not give any money directly to candidates. These groups, which have to disclose their donors to the FEC, have spent hundreds of millions on elections since they were created in 2010.

Second, there was a surge in spending from nonprofits that don’t disclose their donors — popularly nicknamed “dark money.” Groups like this, registered under a part of the tax code for “social welfare” or “business league” organizations, had spent some money in campaigns before the decision — but this spending existed in a sort of legal fog. Citizens United cleared up much of the fog, and gave the green light for these groups to ramp up their spending.

Super PACs can spend unlimited amounts on elections, but must disclose their donors

Since Citizens United, Super PACs have become a fixture of the US campaign finance system. First created in 2010, they’ve spent more than $1 billion over the past three election cycles, according to the Center for Responsive Politics.

Super PAC chart

Super PAC spending was highest in 2012 because it was a presidential election year.

Super PACs can raise unlimited amounts of money for spending on federal elections — so long as they don’t hand any of their money over to candidates or party organizations, or coordinate with them. In contrast to dark money groups, Super PACs must disclose their funders to the FEC.

Instead of donating, Super PACs spend heavily on their own independently-produced ads promoting their preferred candidates or attacking their opponents. That’s why the official term for a Super PAC is an “independent-expenditure only committee.”

In contrast, candidates and regular PACs (political action committees) are only permitted to accept a few thousand dollars from each individual donor. So these days, practically every serious presidential contender is expected to have a Super PAC supporting him or her. And, frequently, a hugely disproportionate amount of the funds raised by a Super PAC come from a few wealthy donors — sometimes even just one.

Some Super PACs are founded specifically to back one particular candidate. Mitt RomneyBarack ObamaNewt Gingrich, and Rick Santorumall had heavily-funded Super PACs during the 2012 presidential campaign. These Super PACs, however, were not permitted to coordinate their activities with the candidate or the official campaign team. Usually, though, they’re run by trusted former aides to the candidates who know what their ex-bosses want them to do.

Other Super PACs support a variety of candidates or causes, or are a vehicle for a particular funder’s preferences. The Karl Rove-tied American Crossroadsbacks Republicans generally. Wealthy financier Tom Steyer’s NextGen Climate Action backs environmentalist Democrats. Freedom Partners Action Fund is run by the Koch brothers’ political operation, and backs Republicans. Independence USA is run by former New York City Mayor Michael Bloomberg, and supports moderates.

So far, Super PACs have spent most of their money on advertisements — usually on television. But there are already signs this year that some presidential candidates will delegate more and more campaign functions to the Super PACs supporting them, to better take advantage of the unlimited money those groups can raise.

Dark money groups let anonymous donors spend on politics

Many wealthy individuals who want to spend lots of money on politics still see one big problem with Super PACs: donations to them have to be made public. So “dark money” groups — nonprofits that keep their donors secret — have proved an increasingly popular way for wealthy donors to spend on politics in recent years, particularly after the 2010 Citizens United decision:

Dark money spending

Theoretically, any group with the primary purpose of spending on elections must register as a PAC or Super PAC and disclose donor identities.

But nonprofits that advocate on policy issues — for instance, environmental groups or gun rights groups — are allowed to spend some of their money on campaign ads. They can do so by registering as “social welfare” groups under section 501(c)(4) of the tax code, and they don’t have to publicly disclose their donors. Spending of this sort from issue advocacy groups has been common for decades.

Recently, however, groups have used this “social welfare” section of the tax code to spend increasingly large sums of money on elections, or on ads attacking candidates of one party. Other, similar groups have been formed as “business leagues,” under section 501(c)(6) of the tax code. But both have the benefit of evading disclosure requirements, to better keep the identities of donors secret.

Now, Justice Anthony Kennedy’s ruling in Citizens United v. FEC found disclosure requirements to be constitutional. He praised them for creating “transparency” that “enables the electorate to make informed decisions and give proper weight to different speakers and different messages.”

But a combination of gridlock and polarization in Congress, partisan paralysis at the FEC, and lack of action from the IRS have allowed even the more questionable of these nonprofits — many of which were seemingly formed entirely to let donors spend anonymously on politics — to run rampant.

Overall, groups that don’t disclose their donors have spent well over $600 million in federal elections since 2010, according to the Center for Responsive Politics. This is a lowball estimate, because unlike Super PACs, these nonprofits don’t have to disclose all of their activity to the FEC. Any ads that run close to the election and mention a candidate for federal office must be reported. But nonprofits don’t have to report ads harshly criticizing candidates so long as (A) the ads run 60 days or more before an election, and (B) the ads don’t explicitly advocate a vote for or against the politician.

The $600 million from non-disclosing groups that is documented is overwhelmingly from conservative groups, who spent over $500 million of it. These include the Karl Rove-tied Crossroads GPS, the Koch brothers-tied Americans for Prosperity, and even sketchier groups with unclear funding sources like the American Future Fund and Americans for Job Security. The biggest non-disclosing liberal spenders in federal elections include the union-funded Patriot Majority USA and environmental groups like the League of Conservation Voters.

The old campaign finance restrictions seem more and more obsolete

With attempts to restrict election spending in tatters, and unlimited donations now permitted to flow into  Super PACs and other outside groups, the old restrictions on candidate and committee fundraising, though still technically in effect, look increasingly quaint.

For the 2015-16 cycle, candidates for federal office are only permitted to accept up to $2,700 from any individual donor, and $5,000 from any PAC, per primary or general election. The traditional way to get around these caps on individual donations was to rely on “bundlers” — star fundraisers who would convince many of their rich friends and contacts to cough up several thousand bucks each.

But Super PACs that can raise unlimited sums have changed the math. Just one billionaire can now, legally, fund a full multimillion dollar ad campaign promoting a candidate or savaging his opponent. Comparatively, the traditional campaign fundraising from individuals and bundlers yields much less of a return.

Unsurprisingly, campaigns and their associates are increasingly spending their time wooing the absolute richest of the rich. In March 2015, the Washington Post’s Matea Gold and Tom Hamburger reported that former bundlers who were merely rich, not mega-rich, were feeling neglected. “We just don’t count anymore,” one executive complained to a bundler from his yacht.

Indeed, there are signs that more and more of the functions traditionally handled by campaigns or parties are being moved over to Super PACs or outside groups. National party committees like the Democratic National Committee or the National Republican Congressional Committee can each only raise $33,400 from any one individual each year. Meanwhile, outside organizations like those in the Koch network can raise unlimited funds to spend on their own polling, data collection, outreach, and voter turnout operations.

The McCutcheon v. FEC ruling struck down yet another limit on election spending

Before April 2014, a rich donor could hand out several thousand dollars each to a bunch of different candidates for federal office — but once he gave out $48,600, he’d have to stop. Campaign finance law capped the amount that could be given to federal candidates by any one person in each election cycle. (Overall contributions to PACs and party committees were similarly capped.)

Businessman Shaun McCutcheon wasn’t happy about that. He had given money to several Congressional candidates during the 2012 elections, and he wanted to give to several more — but he was limited by that $48,600 cap. So he filed suit and argued that the cap violated his freedom of speech.

The court’s five conservative justices were persuaded, and the McCutcheon v. FEC ruling of April 2014 struck down all those caps. “The Government may no more restrict how many candidates or causes a donor may support than it may tell a newspaper how many candidates it may endorse,” wrote Chief Justice John Roberts for the majority.

Because of the importance of protecting free speech, Roberts continued, limitations on campaign spending must “target what we have called ‘quid pro quo’ corruption or its appearance … a direct exchange of an official act for money.” In other words, little short of a direct bribe really counts.

The restrictions on how much could be given to any one candidate still remained. But, Roberts argued, “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.”

As is now common in campaign finance rulings, the four liberal justices dissented. In their thinking, restrictions on campaign finance spending actuallystrengthen the First Amendment, by preventing ordinary people’s voices from being drowned out. “Where enough money calls the tune, the general public will not be heard,” Justice Stephen Breyer wrote in his dissent.

But they didn’t carry the day, and now, a wealthy donor can give to as many federal candidates as he or she wants. Click here for a fuller explanation of the implications of the McCutcheon decision.

Campaign finance has become an intensely polarizing issue at the national level

In 2002, a major campaign finance reform bill was backed by politicians in both parties, including future GOP presidential nominee John McCain, and signed into law by President George W. Bush. While Democrats provided most of the votes in Congress to pass the bill, and Bush signed it reluctantly, the issue wasn’t so fraught that no Republican could support it.

Those days seem long gone. Now, the issue of campaign finance intensely polarizes the two parties — with Democrats overwhelmingly supporting more disclosure and more restrictions on election spending, and Republicans opposing these measures. This polarization reaches from Congress, to presidential contenders, to the two parties’ FEC appointees, to the Supreme Court.

After the Citizens United decision, Democrats quickly united around one legislative proposal that would seem to pass the Supreme Court’s muster — the DISCLOSE Act, which would have required greater identification of the sources of election spending. But Republicans in Congress, while frequently claiming to support disclosure in the abstract, overwhelmingly opposed the bill. Just two House Republicans supported it in 2010, and zero GOP senators did — leading to the bill’s death by filibuster in that upper chamber. A 2014 proposal for a constitutional amendment to allow greater regulation of campaign finance similarly failed in the Senate, with every Democrat voting for it and every Republican voting against it.

GOP objections to further regulations were frequently framed in terms of principled support of free speech. For instance, some argued, what if conservative donors were demonized for their political spending? However, it’s certainly worth noting that by the Center for Responsive Politics’ tally, out of at least $600 million spent on federal elections by non-disclosing groups since 2010, over $500 million was in support of Republicans.

The Federal Election Commission, which is supposed to enforce election laws, has been hopelessly deadlocked along partisan lines for years. By law, the six-member body can’t have more than three commissioners of any one party. In practice, that means that three Republican and three Democrat commissioners frequently vote in opposition to each other — blocking action on most controversial matters. In May 2015, the (Democrat-appointed) FEC chair Ann Ravel even went public to the New York Timessaying that “the likelihood of the laws being enforced is slim” due to partisan dysfunction.

Supreme Court justices are polarized in similar ways — major campaign finance decisions have repeatedly been decided by slim five vote majorities of the nine-member body. And 2016 presidential contenders from the two parties have staked out diametrically opposed positions on the issue, with Hillary Clintonreportedly telling donors that she’d only appoint Supreme Court justices who’d reverse Citizens United, and Marco Rubio arguing that “spending money on campaigns is a form of political speech that is protected under the Constitution.”

Major reforms would require changing the Constitution or a different Supreme Court

As energized as reformers have become around campaign finance, they face a very difficult road ahead. Even if the issue wasn’t so intensely polarized, it’s really the Supreme Court rulings — Citizens United, but also other cases going back to the 1970s — that limit which reforms can make it through Congress without later being struck down.

And, consistently, a majority of the court has concluded that any hard limits on overall spending — from candidates, parties, or donors — are unconstitutional restrictions of free speech. That means that even if, say, an opt-in public financing system was created for congressional campaigns, candidates who accept public funds could still be swamped by a torrent of outside cash.

So some who want serious campaign finance reform have proposed going over the justices’ heads by amending the US Constitution — either through the regular amendment process, or by calling a constitutional convention.

National Democrats have mostly lined up in support of a constitutional amendment on campaign finance. Their suggested amendment would clarify that “Congress and the States may regulate and set reasonable limits on the raising and spending of money by candidates and others to influence elections.” It would also clarify that Congress and the states don’t have to treat “corporations or other artificial entities” as people when it comes to election spending, and clarifies that they could be prohibited from engaging in that activity. Meanwhile, Vermont and California have called for a constitutional convention to limit money in politics.

But however a constitutional amendment is proposed, it would need approval from 38 states eventually to go into effect — a very heavy lift, particularly given sweeping Republican victories in most states in recent years. Only one constitutional amendment has been ratified in the past four decades. So it’s not going to happen any time soon.

The only conceivable way for quick change on the issue would be a change in the composition of the Supreme Court. Contentious campaign finance cases of the past decade have, very frequently, been decided by a bare five-vote majority of conservatives:

SCOTUS campaign finance cases

So if the seat of one conservative justice opens up, and a liberal is appointed to fill it, it’s quite possible that Citizens United and other recent rulings would be reversed. Indeed, Hillary Clinton reportedly said in May 2015 that she’d only appoint a Supreme Court justice who’d reverse Citizens United.

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