Testimony of

Glenn J. Moramarco

Senior Attorney, Brennan Center for Justice

at New York University School of Law
before the

House Committee on the Judiciary,

Constitution Subcommittee

on Constitutional Issues Raised by

Recent Campaign Finance Legislation

June 12, 2001

Mr. Chairman, I am honored to have been invited to testify before the Subcommittee concerning some of the constitutional principles and problems involved in campaign finance reform legislation.

By way of introduction, the Brennan Center for Justice at New York University School of Law is a nonpartisan institution devoted to scholarship, discourse, and action on issues of justice that were central to the jurisprudential legacy of Justice William J. Brennan Jr. We are guided by principles that were important to Justice Brennan -- a willingness to ask the hard questions and to reexamine old doctrine, an insistence on developing constitutional norms that make pragmatic sense, and an ardent insistence on protecting liberty. Justice Brennan did more than any Justice in the history of our nation to protect civil liberties -- and particularly freedom of speech. Given our namesake, we would like to think that we approach all issues, and particularly issues relating to the financing of campaigns, with a special sensitivity to concerns about free speech.

The Senate recently passed, by a wide margin, the McCain-Feingold campaign finance reform bill. The House of Representatives is poised to consider either the Senate Bill or similar legislation sponsored by Congressmen Christopher Shays and Marty Meehan. Both of these bills are responding to the campaign finance excesses we have seen in the last few federal election cycles. The two most prominent problems, and the ones about which there are the most constitutional debate, are: (1) the large and unregulated soft money contributions to political parties, and (2) the rising use of sham "issue ads" that support or oppose specifically identified federal candidates without being subject to federal disclosure, source, and fundraising rules. I believe that the McCain-Feingold Bill, which passed the Senate, and the Shays-Meehan Bill, which has been introduced in the House, contain constitutionally-sound general approaches for dealing with these two vexing problems, and I will center my remarks today around those two issues.

I have appended to my testimony two documents which I believe the Committee will find useful in this inquiry. The first is a letter that was sent to Senators McCain and Feingold and signed by 88 legal and constitutional scholars. The letter, which was prepared by the Brennan Center, affirms the constitutional validity of the key provisions of the original McCain-Feingold Bill and states the reasoning in support of that position. I have taken the liberty of drawing substantially from that letter for my prepared statement before this Committee. The second document is a public statement, dated March 22, 2001, that was also introduced as part of the Senate debate on McCain-Feingold. The statement was signed by every living person to have served as ACLU President, ACLU Executive Director, ACLU Legal Director, or ACLU Legislative Director, with the exception of the then-current leadership. This statement from former ACLU leaders likewise affirms the constitutional validity of the original McCain-Feingold Bill. These two documents, taken together, demonstrate some of the breadth of the academic and legal support for the general approaches taken in the campaign finance reform legislation that will be considered by the House of Representatives.

Distinguishing Electioneering Communications from True Issue Advocacy

In the 2000 federal election cycle, corporations, labor unions, political parties, and advocacy groups spent hundreds of millions of dollars for advertisements that were wholly unregulated by the federal government because, the sponsors of the ads claimed, they were engaged in "issue advocacy" rather than electioneering. However, the vast majority of these so-called "issue ads" were a sham. Rather than educating the public broadly about issues, the typical sham "issue ad" mentioned a single candidate, targeted the segment of the public eligible to vote for that candidate, began to run when an election was imminent, and ended abruptly on Election Day.

The task that was taken up in both the McCain-Feingold and Shays-Meehan Bills was to attempt to draw a reasonable and constitutionally defensible line that distinguishes between regulable electioneering speech and protected "issue advocacy." These bills recognize that we need to protect true "issue advocacy" -- communications that address an issue of national or local political importance. Examples of true "issue advocacy" include the Harry and Louise ads run by the Health Insurance Association of America in opposition to the Clinton national health care reform proposal, or the anti-NAFTA ads run by labor unions in late 1993, while that legislation was pending. However, we cannot permit sham "issue ads," which do nothing beyond advocating the election or defeat of a named candidate, to undermine the valid limitations placed by the law on electioneering activity.

Let me begin with some non-controversial legal principles. Under current law, there is no doubt that it is permissible for Congress to draw some line distinguishing electioneering speech from "issue advocacy." If speech falls on the "electioneering" side of the line, three consequences follow:

1. Disclosure: Congress may require the speaker -- whether a PAC or a corporation or a party or an individual or a candidate -- to disclose the sources of the money and the nature of the expenditures in support of the speech.

2. Source restrictions: Congress may absolutely bar certain speakers from spending money on electioneering; Congress may preclude corporations and unions from spending general treasury funds on electioneering; Congress may limit participation to individuals and PACs; and Congress may prohibit foreigners from electioneering.

3. Fundraising restrictions: Congress may restrict the sources from which speakers can raise their money -- to individuals, for example -- and Congress can limit the size of the contributions to a collective fund.

Do these restrictions infringe on speech and privacy rights? Of course they do. Wherever one draws the electioneering line, there are certain words that corporations and unions are banned from uttering. There are certain messages that can be funded only by individuals or by groups that amass individual contributions in discrete amounts. These regulations necessarily reduce the sheer amount of money that can be spent on certain messages. And these regulations require speakers to reveal certain information such as how much they spent and who supported their message.

Even though these regulations infringe on speech, they are indisputably constitutional. Since 1907, corporations have been barred from electioneering, since 1947 those restrictions have been extended to labor unions, and since 1974, the law has restricted the size of contributions that can be made to speech funded by a group. The Supreme Court has upheld all of these restrictions on electioneering. Of course, a great deal rides on what qualifies as "electioneering." If the government defines the concept too broadly, it could end up restricting speech on issues of public importance that happens to have an influence on elections -- a result that is antithetical to the First Amendment. If the law defines it too narrowly, we may as well not bother having campaign finance laws, because all players could readily find a way to influence elections in a direct way, making a mockery of the law.

That is where we find ourselves today. We are now in a world where everyone has become accustomed to thinking that it is not electioneering unless the speaker utters a "magic word" -- like "vote for," "vote against," "elect," or "defeat." All players -- corporations, unions, foreigners, and parties -- engage in an open strategy of trying to influence elections by running or paying for ads that look, smell, waddle, and quack like campaign ads, but are just missing the magic words. They use money from prohibited sources, they raise it in prohibited amounts, and they close their books to public scrutiny. In many cases, their stated goal is to influence the election. They brag about their success in influencing the election, and yet they claim the First Amendment protects their right to engage in any speech, even with that clearly proscribable motive.

I do not believe that we are struck with a constitutional doctrine that nominally allows us to place restrictions on electioneering, but nevertheless allows individuals and groups to accomplish the same result through naked subterfuge. The federal courts are not so irrational that they will acknowledge the government's power to regulate in an area while simultaneously imposing rules that make all regulation unworkable.

When the Supreme Court first devised the "express advocacy" test in Buckley, it did so in the context of a poorly drafted statute (the Federal Election Campaign Act) whose definition of regulable electioneering contained problems both of vagueness and overbreadth. Under First Amendment "void for vagueness" jurisprudence, the government cannot punish someone without providing a sufficiently precise description of what conduct is legal and what is illegal. A vague or imprecise definition of electioneering might serve to "chill" some political speakers who, although they desire to engage in discussions of political issues, may be afraid that their speech could be construed as electioneering. The Buckley Court found that the regulated conduct, which included expenditures "relative to a clearly identified candidate" and "for the purpose of influencing an election" were not sufficiently precise to provide the certainty necessary for those wishing to engage in political speech.

Similarly, the overbreadth doctrine in First Amendment jurisprudence is concerned with a regulation that, however precise, sweeps too broadly and reaches constitutionally protected speech. The Buckley Court was concerned that the Federal Election Campaign Act's attempt to regulate any expenditure that is done "for the purpose of influencing" a federal election or that is "relative to a clearly identified candidate" could encompass not only direct electioneering, but also protected speech on issues of public importance.

The Court chose to save the Federal Election Campaign Act from invalidation by reading it very narrowly. However, the Court never said that no legislature could ever devise alternate language that would be both sufficiently narrow and sufficiently precise. The decision to narrowly construe a statute to save it from potential vagueness and overbreadth problems does not prevent further legislative refinements that eliminate those problems. The key for Congress is to draw a line that distinguishes between regulable electioneering and protected "issue advocacy" in a way that minimizes the vagueness and overbreadth concerns identified by the Court.

One way for Congress to do this is to follow the model presented in the Snowe-Jeffords Amendment to McCain-Feingold. The Snowe-Jeffords Amendment defines the term "electioneering communication" as radio or television ads that refer to clearly identified candidates and are broadcast within 60 days of a general election or 30 days of a primary and are targeted to the relevant electorate. A group that makes electioneering communications totaling $10,000 or more in a calendar year must disclose its identity, the cost of the communication, and the names and addresses of all its donors of $1,000 or more. If the group has a segregated fund that it uses to pay for electioneering communications, then only donors to that fund must be disclosed. Additionally, corporations and labor unions are barred from using their general treasury funds to pay for electioneering communications. Instead, they must fund electioneering communications through their political action committees.

Snowe-Jeffords presents a definition of electioneering carefully crafted to address the Supreme Court's dual concerns regarding vagueness and overbreadth. Because the test for prohibited electioneering is defined with great clarity, it satisfies the Supreme Court's vagueness concerns. Any sponsor of a broadcast will know, with absolute certainty, whether its ad depicts or names a candidate and how many days before an election it is being broadcast. There is little danger that a sponsor would mistakenly censor its own protected speech out of fear of prosecution under such a clear standard.

The prohibition is also narrow enough to satisfy the Supreme Court's overbreadth concerns. Advertisements that name a political candidate and are aired close to an election almost invariably are electioneering ads intended to encourage voters to support or oppose the named candidate. This conclusion is supported by a comprehensive academic review conducted of television advertisements in the 1998 federal election cycle. See Buying Time: Television Advertising in the 1998 Congressional Elections (Brennan Center for Justice, 2000). This study examined more than 300,000 airings of some 2,100 separate political commercials that appeared in the nation's 75 largest media markets in 1998. The study found that there were a total of 3,100 airings of only two separate commercials that met the Snowe-Jeffords criteria of naming a specific candidate within 60 days of the general election and that were judged by academic researchers to be true issue advocacy. Thus, the Snowe-Jeffords general election criteria were shown to have inaccurately captured only on tiny fraction of the political commercials aired in the 1998 election cycle. A follow-up study of the ads run in the 2000 federal election cycle came up with comparable results. This empirical evidence demonstrates that the Snowe-Jeffords criteria are not "substantially overbroad," which is the constitutional test. The careful crafting of Snowe-Jeffords stands in stark contrast to the clumsy and sweeping prohibition that Congress originally drafted in FECA.

In sum, it is constitutionally permissible for Congress to enact legislation that regulates ads that are intended to influence the electoral outcome of particular candidates, as long as the legislation does not unduly sweep within its reach ads that are intended to discuss issues only. The "magic words" test clearly does not accomplish this permissible objective in an acceptable manner. The Supreme Court does not purposely permit government to regulate in an area while imposing rules that make all attempts at regulation worthless. Congress has the power to pass legislation which remedies the vagueness and overbreadth problems that plagued the Federal Election Campaign Act by providing a better method for differentiating between electioneering and true "issue advocacy."

Closing the Soft Money Loophole

The Federal Election Campaign Act ("FECA") limits an individual's contributions to (1) $1,000 per election to a federal candidate; (2) $20,000 per year to national political party committees; and (3) $5,000 per year to any other political committee, such as a PAC or a state political party committee. Id. § 441a(a)(1). Individuals are also subject to a $25,000 annual limit on the total of all such contributions. Id. § 441a(a)(3). The money raised under these strictures is commonly referred to as "hard money." The McCain-Feingold Bill, as amended in the Senate, would raise these hard money limits substantially, in exchange for eliminating soft money entirely.

Regardless of whether Congress chooses to raise the hard money limits under FECA, it has the power to close the soft money loophole. Soft money, quite simply, is money that is raised by the political parties outside of the FECA requirements. With only certain very limited exceptions, Congress did not intend for political parties to raise money outside of the FECA limitations. The soft money loophole was created not by Congress, but by a Federal Election Commission ("FEC") ruling in 1978 that permitted political parties to receive non-regulated contributions as long as the money was used for grassroots campaign activity, such as registering voters and get-out-the-vote efforts. In the years since the FEC's ruling, this modest opening has turned into an enormous loophole that threatens the integrity of the entire regulatory system.

In the recent presidential election, soft money contributions soared to the unprecedented figure of $487 million, which represented an 85 percent increase over the previous presidential election cycle (1995-96). It is not merely the total amount of soft money contributions that raises concerns, but the size of the contributions as well, with some donors contributing amounts of $100,000, $250,000, or more to gain preferred access to federal officials. This money is not being spent, for the most part, on the types of grassroots campaign activities that led to the original FEC advisory opinion. The largest single component of soft money spending, about 40 cents out of every soft money dollar, goes to media advertising that is intended to influence federal elections, although the ads refrain from using "express" words of advocacy. Only about 8 cents out of every soft money dollar is spent on grassroots activities like voter registration and voter mobilization. Soft money has become an end run around the campaign contribution limits, creating a corrupt system in which monied interests appear to buy access to, and inappropriate influence with, elected officials.

The McCain-Feingold Bill requires that all money spent on "federal election activities" by state or local parties be subject to the limitations, prohibitions, and reporting requirements of FECA. State parties are permitted to spend soft money on voter registration and get out the vote activity that does not mention a federal candidate as long as no single soft money donor gives more than $10,000 per year to the state party for such purposes. The Bill also bars federal officeholders and candidates for such offices from soliciting, receiving, or spending soft money.

These provisions are constitutional. The soft money loophole has raised the specter of corruption stemming from large contributions (and those from prohibited sources) that led Congress to enact the federal contribution limits in the first place. In Buckley v. Valeo, the Supreme Court held that the government has a compelling interest in combating the appearance and reality of corruption, an interest that justifies restricting large campaign contributions in federal elections. See 424 U.S. 1, 23-29 (1976). Significantly, the Court upheld the $25,000 annual limit on an individual's total contributions in connection with federal elections. See id. at 26-29, 38. In later cases, the Court rejected the argument that corporations have a right to use their general treasury funds to influence elections. See, e.g., Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990). Under Buckley and its progeny, Congress clearly possesses power to close the soft money loophole by restricting the source and size of contributions to political parties, just as it does for contributions to candidates, for use in connection with federal elections.

Any suggestion that the Supreme Court's decision in Colorado Republican Federal Campaign Committee v. FEC, 1518 U.S. 604 (1996), casts doubt on the constitutionality of a soft money ban is flatly wrong. Colorado Republican did not address the constitutionality of banning soft money contributions, but rather the expenditures by political parties of hard money, that is, money raised in accordance with FECA's limits. Indeed, the Court noted that it "could understand how Congress, were it to conclude that the potential for evasion of the individual contribution limits was a serious matter, might decide to change the statute's limitations on contributions to political parties." Id. at 617.

In fact, the most relevant Supreme Court decision is not Colorado Republican, but Austin v. Michigan Chamber of Commerce, in which the Supreme Court held that corporations can be walled off from the electoral process by forbidding both contributions and independent expenditures from general corporate treasuries. 494 U.S. at 657-61. Surely, the law cannot be that Congress has the power to prevent corporations from giving money directly to a candidate, or from expending money on behalf of a candidate, but lacks the power to prevent them from pouring unlimited funds into a candidate's political party in order to buy preferred access to him after the election. See also Nixon v. Shrink Missouri Govt. PAC, 120 S. Ct. 897 (2000) (reaffirming Buckley's holding that legislatures may enact limits on large campaign contributions to prevent corruption and the appearance of corruption).

In sum, closing the loophole for soft money contributions is in line with the longstanding and constitutional ban on corporate and union contributions in federal elections and with limits on the size of individuals' contributions to amounts that are not corrupting.