The Trouble with Campaign Finance Regulation

Bradley Smith
Commissioner, Federal Election Commission

Bradley SmithBradley A. Smith was appointed to the Federal Election Commission in May 2000. Prior to that, he was professor of law at Capital University Law School in Columbus, Ohio. His writings on campaign finance and other election issues have appeared in the Yale Law Journal, the University of Pennsylvania Law Review, the Georgetown Law Journal, the Harvard Journal of Legislation, the Cornell Journal of Law and Public Policy, and many other publications. He has testified numerous times before Congress, and is a frequent contributor to USA Today and The Wall Street Journal. In his earlier career, Mr. Smith was a practicing attorney, U.S. Vice Counsel in Ecuador, and general manager of the Small Business Association of Michigan. He received his B.A. from Kalamazoo College and his J.D., cum laude, from Harvard Law School.

The following is abridged from a speech delivered at Hillsdale College on February 5, 2002, at a seminar co-sponsored by the Center for Constructive Alternatives and the Ludwig von Mises Lecture Series.

Back in 1996, I was on The NewsHour with Jim Lehrer with the president of Common Cause, who complained that “major interests that have an outcome in the election and an outcome in policy” are able to give money to campaigns. “They want access to influence in the political process,” she said. “It’s corrupting.” Think about that. What she was saying is that if you have a stake in government policy, it’s corrupt for you to try to influence who gets elected. Far from the motto of the American Revolution—”no taxation without representation”—the motto of campaign finance regulators seems to be “no representation if possible taxation.” If government is looking to tax you or regulate you, they argue, you ought to lose your ability to participate in democracy.

Let me give you an example of this. Former Michigan Senator Spence Abraham lost his bid for re-election in 2000, and I think it is fair to say that he lost, as much as anything else, because of his stand on immigration. The son of immigrants himself, Senator Abraham favored immigration. He had worked hard to keep the Republican Party in favor of it. And his pro-immigration position was supported by various high-tech companies in the U.S., who hire many of the foreign students who come here and train in computers and technology. For that reason, these companies supported Abraham’s campaign. But shortly before the election, supporters of campaign finance regulation began to complain about this support. A representative of the Center for Responsive Politics, for instance, said that it was “unfortunate to see somebody leading on an issue, being supported by the special interest behind it.” Regardless of what one thinks of the substance of Senator Abraham’s position on immigration, one must acknowledge the strangeness of this complaint. Who exactly was supposed to support Senator Abraham, if not the people who agree with him on policy?

“Equal Influence”

Behind the unusual understanding of corruption held by the supporters of campaign finance regulation is the notion that political equality demands something called “equal influence.” I don’t know about you, but one of the reasons that I became involved in politics is because I wanted to have more influence than other people. Indeed, if we all had equal political influence, none of us would have any political influence. In such a case, there would be no politics, because there would be no reason to participate in politics.

America’s Founders, of course, were well aware of the dangers of corruption and were highly dedicated to political equality. James Madison, in the famous tenth Federalist, specifically addressed the idea of factions—or special interest groups—and much of the Constitution is animated by the desire to control the kind of corruption caused by such groups. Most fundamentally, the Founders set up a system of limited government, with enumerated rather than plenary powers. They also divided the national government into three branches as a check on its power, and adopted the principle of federalism to divide power between the national government and the states. Of course, over the years, these checks have been eroded. And it’s no coincidence that most of the people—not all, but most—who strongly favor campaign finance regulation are the same people who have favored this erosion, along with the resultant expansion of federal government power.

The Founders also supported the rights to assemble, speak and vote. These were the ultimate checks on corrupt and overbearing government—the ultimate means by which the people could defend themselves from special interest groups. The Founders’ belief in the principle of political equality is reflected in their provision of what was, at the time, unprecedented suffrage. Based on their principles, suffrage in the U.S. has been expanded over the years until now it is nearly universal. Each person who is of a certain age is entitled to one vote at the ballot box, and the vote of the richest and most powerful citizen is worth no more than the vote of the poorest and simplest. The thing that was very important to the Founders—and here again one can reference Federalist 10—is that in seeking to control the corruption that can flow from special interests, we should not destroy the liberty that is essential to their existence.

The Founders didn’t talk about “equal influence,” and whatever it is that the supporters of campaign finance regulation mean by this, it is clearly a bit Orwellian. You will note, for instance, that this regulation does nothing to limit the influence of academics like myself, who have careers that allow us time to do things like writing briefs in important legal cases. Nor does it do anything to limit the influence of people in the press. As one of the few newspapermen who opposes campaign finance regulation has written, “Under McCain-Feingold there are only going to be a few people left to speak in this country on politics. And it might be me, but it won’t be you.” So, of course, it’s not surprising that the backers of McCain-Feingold are the academics, the press, the people in think tanks, the people in big foundations, and so on. It is understandable that they support a system that increases their political influence, while decreasing the political influence of the people they have chosen not to be—the businessmen, the professionals, and other people out working in the economy.

What We Do at the FEC

What are the real effects of campaign finance regulation? Shortly after I joined the Federal Election Commission, we had a case called MUR 4978. (“MUR” stands for “Matter Under Review,” and we use that term so that we don’t have to think about the people involved.) It concerned a retired U.S. military officer and veterinarian who had served a term on his city council and decided to run for Congress in the Spring of 2000. In a four-way primary, he spent about $40,000, of which about $20,000 was his own money, and he came in fourth with 18 percent of the vote. In the course of this race, his campaign sent out a couple of mailers, one of which solicited donations. It listed the address and telephone number of this candidate’s campaign, but it failed to comply with regulation 2 USC 441, requiring any piece of mail expressly advocating the election of a candidate to have a disclaimer saying exactly who paid for that piece.

Well, sure enough, we had a complaint filed at the FEC. Most of the complaints we receive are filed by political opponents, not by people who are terribly concerned about corruption. I personally thought that we should fine the complainant, on the grounds that she filed the complaint rather than calling the campaign that had sent the mailer and asking if they paid for it. Instead, needless to say, the FEC fined the violator’s campaign. And who’s going to pay that fine? A little-known secret under the Federal Election Campaign Act is that the person who is liable for such violations is the campaign treasurer. I looked at this fine as our little way of saying, “Thank you for participating in American democracy.”

We also had a case where a coffee house chain decided to help get people fired up to vote. So in the days before the 2000 election, you could go there and order your latte in either a Gore mug or a Bush mug. They kept a running tally and customers were encouraged to talk politics. All well and fine, one would think. But the FEC got a complaint from a Ralph Nader backer, claiming that the fact that these coffee shops didn’t have Nader mugs amounted to an illegal corporate contribution to the Gore and Bush campaigns.

I love these stories! This is what we do at the FEC.

Letters From Constituents

I keep a file of letters we get at the Commission, and find them instructive. One is from the treasurer of a campaign committee that was fined $600. “I have no background in election law,” he wrote,

although for 33 years I was a high school teacher and thought I had some comprehension of how to proceed. From 1989 to 1999 I taught government and public issues to seniors in high school. I taught and believed that we have the best government in the world. I encouraged my students to get involved and to vote. I assisted them in filling out voter registration forms to ensure their right to vote. I’ve always believed strongly in free elections and was happy to be part of the process. I made every attempt to comply, and now I am being fined $600 for misunderstanding.

Another letter is from a doctor who ran for public office. “Kindly consider,” he says, “that I’ve never participated in a federal campaign before or held office. I had no political associates from whom I could assemble a staff with federal campaign experience.” He describes his staff as “nice people” who

volunteered to help because they felt strongly that my background in health care, agriculture, veterans affairs and child advocacy would apply directly to public need. They are not people who would commit willful wrongdoing. They cannot afford to, nor would I ask that they pay any part of a penalty. Equally important as a penalty is the adverse publicity that will surely result. These people have great concern for their employment and reputations within the community. I will do everything to prevent them from being hurt and will take full responsibility.

Finally, let me quote from a letter written by a Certified Public Accountant:

I would like to point out that I consider myself to be working as a volunteer. I acted as campaign treasurer because I strongly believed in the candidate and I wanted to participate in the political process. I had no previous experience of campaign finance or campaign filings. As you know, the campaign is in debt. We have no remaining funds. For what it is worth, I will never be acting as treasurer again. It is clear from the complexity of the rules, the quantity of literature sent and expected to be read and understood in its entirety, and the size of the penalties, [that] it could never be intended that anyone other than a specialist act as a treasurer in a campaign.

Campaign finance regulation is driving ordinary Americans out of politics. Jim Buckley says that when he first ran for the U.S. Senate in 1970, he would go into little towns in upstate New York and he would see “Buckley for Senate” headquarters that the campaign hadn’t known existed. This was prior to the enactment of the Federal Election Campaign Act, so citizens felt free to campaign for candidates they supported. They’d print their own literature, hold rallies, and so on. But now to do that, they’d first have to organize a committee and name a treasurer; and if they collect money at a county fair, they risk running afoul of the law. So that kind of grassroots politics is no more.

Socialism or Constitutionalism?

What is all this, really? It’s an effort to socialize political speech. In my lifetime, we’ve been fortunate to see socialism die as an economic theory. Outside of our universities, it’s hard to find people who say that they believe in government ownership of the means of production. But the socialist impulse to control and regulate human activity remains strong, and in the area of political campaigns and elections this impulse is especially dangerous. We know from experience that socialist societies became more corrupt, not less, as power was centralized. The solution to political corruption, then, is to return to the Constitution—not to depart from it even farther than we already have.