Congressional Quarterly - Campaign Finance's Deregulation Option

July 9, 2007
Congressional Quarterly Weekly
By John Cochran, CQ Staff

Illinois' experience provides a glimpse of the pros and cons of a system without 'soft money' restrictions

The Supreme Court's new, more critical view of campaign finance regulation raises the possibility that the United States will return to a system of few, if any, limits on what can be raised and spent on federal elections.

Last month the court, under Chief Justice John G. Roberts Jr., all but wiped out a central element of the 2002 campaign finance law designed to reduce the influence of unregulated "soft money" in campaigns. It said that the law's restrictions on what corporations and labor unions may spend on "issue ads" to influence voters close to an election are unconstitutionally broad -- a ruling that analysts said opens the door to a flood of new ads, financed from corporate and union treasuries.

The decision, wrote Rick Hasen, a professor at Loyola Law School in Los Angeles, "has revealed the Roberts Court, as I have feared, as moving firmly into the deregulationist camp."

Two decades ago, in its landmark Buckley v. Valeo decision, the court upheld limits on campaign contributions but struck down most restrictions on expenditures as a violation of free speech. Now, two justices -- Antonin Scalia and Clarence Thomas -- have said that they believe campaign-contribution limits themselves are unconstitutional, a view that, if more broadly held, would undercut much of what Congress has tried to do over the past three decades. Thomas even objects to laws that require disclosure of contributions.

A third justice, Anthony M. Kennedy, has expressed strong sympathy for the Scalia and Thomas view on contribution limits. He sided with them on the latest decision.

Opponents of government regulation of campaign finance, most of them conservatives and including a few members of Congress, generally combine their proposals for lifting restrictions with a promise of full, fast disclosure of campaign giving. They cast it as a free-market approach to money and politics: Give the voters information about who's giving what to whom so they can make informed decisions, rather than limiting who can say what in a campaign.

"The way to control political campaigns is not to stifle free speech," said Jay Sekulow, chief counsel of the conservative American Center for Law & Justice, who filed a brief on the winning side of last month's Supreme Court ruling.

But the experience of some states that have taken the lid off campaign finance suggests that deregulation is neither a cure for the ills of the current system nor a plague that will make it much worse.

In states such as Iowa, which has few restrictions, and Illinois, which has none at all, political analysts say they have no clear evidence that the lack of limits has led to corruption or fostered more democracy. It has, though, helped to concentrate power in the hands of a few party leaders, who raise large sums of cash and then dole it out to candidates of their choosing who in turn are afraid to buck them.

Just as under a regulated system, money follows power.

"We have the wild, wild West here," said former Illinois state legislator Richard Winkel, a Republican.

Raking It In

Illinois, because it has no limits on political giving, offers a particularly good glimpse into the alternative world that supporters of deregulation favor.

The state has had trouble with corruption, and there's a high-profile investigation under way now of a close associate of Democratic Gov. Rod R. Blagojevich involving alleged attempts to extort campaign contributions. Winkel, who is now a visiting fellow at the Institute of Government and Public Affairs at the University of Illinois, argues that the unregulated campaign finance system there has helped foster such abuses.

A problem with drawing such conclusions, though, is that in politics, it's difficult, even impossible, to separate the effects of the campaign finance system from other factors, such as the local political culture, political scientists say. And no one can say for sure what the agenda might have been under different, hypothetical circumstances.

It is a fact that Illinois, like many places, has few competitive legislative races. That's common, and though the current campaign finance system didn't cause that state of affairs -- partisan gerrymandering was a big part of it -- the lack of limits on giving has helped solidify a centralized system of political power, said Brian Gaines, a political science professor at the University of Illinois Urbana-Champaign. Legislative leaders are free to raise whatever they can from individuals and groups, and then pump that money into targeted races, he said.

Gaines points as an example to the race for Winkel's former state Senate seat last fall, a swing district in Eastern Illinois that includes the campus where Gaines teaches.

The Democratic candidate, Michael Frerichs, who eventually won the seat, took in $1.2 million in cash and in-kind contributions, such as salary for a campaign aide. Of that, $898,563 came from a campaign committee chaired by the Senate's Democratic leader, Emil Jones Jr. -- the Illinois Senate Democratic Fund.

Frerich's Republican opponent, Judith A. Myers, received $1 million in cash and in-kind contributions, and $580,329 of that came from the committee chaired by Senate Republican leader Frank Watson, the Republican State Senate Campaign Committee. She received an additional $15,000 from Watson's personal campaign committee.

Frerichs doesn't dispute the idea that power is centralized in the Illinois legislature, but it's not because of money, he said. It's because the legislature's rules give leaders tremendous power over the agenda, the flow of bills and the legislative calendar.

Others in the state say they doubt contribution limits would really change much. Money will flow to power regardless. There's plenty of evidence of that at the federal level, said Mike Lawrence, a former statehouse reporter and gubernatorial aide who now runs the Paul Simon Public Policy Institute at Southern Illinois University Carbondale.

But Gaines and others say the fact that legislative leaders are such dominant sources of campaign cash, with no limits on what they can raise from outside interests, has helped create an environment where the rank and file in the legislature tend to sit back and wait for leaders to lead the way.

Lawrence is among those who say that information and public scrutiny, not contribution limits, is the way to keep the system clean, but he also says that voters in Illinois are not as engaged as they need to be. Changing that is going to take civic education, beginning with children in the early grades, he said.

At the same time, the lack of limits in the state could itself be having an effect on public perceptions of the political system in the state. "It fuels public perception that we're all bought," Frerichs said.

Hard Sell Nationally

If campaign finance is deregulated at the national level, it is likely to happen gradually in response to court rulings. Such a change isn't on the congressional agenda, and in fact would be a hard sell, if only because politicians fear altering a system that elected them.

Corporations also might worry that lifting the long-standing ban on direct corporate contributions to federal campaigns would lead to politicians demanding larger and larger contributions, said John Samples, director of the libertarian Cato Institute's Center for Representative Government in Washington.

A deregulated federal system could come in a number of different forms. One might keep the current ban on corporate and labor-union contributions but remove limits for everyone else.

If the system were accompanied by disclosure, that would itself call for some regulatory decisions, said Samples. And that fact could lead to questions like the Supreme Court was dealing with last month: What sort of advertisements can be regulated? For what sorts of ads would the government require disclosure?

Some advocates of deregulation see disclosure itself as intrusive, infringing on people's right to speak freely.

Advocates of deregulation aren't dissuaded by stories like those from Illinois. There is at least a good theoretical case to be tested that lifting limits would improve competition, said Bradley Smith, a former chairman of the Federal Election Commission and a supporter of getting rid of current regulations. "I don't see that regulation is improving competition either," Smith said.

Yet, if there's no evidence that states without campaign finance limits are better governed, there's also no evidence that they're worse off, he said. He pointed out that a state without contribution limits, Virginia, was one of only two states to receive a top grade for government management in a 2005 scorecard by Governing magazine, which is owned by Congressional Quarterly. The other was Utah, which also has no contribution limits. Both received grades of A-minus.

The study, as Smith pointed out, made no connection with campaign finance regulation in the states. Illinois was graded a C-plus.

There has been talk in Illinois of putting restrictions on contributions, with the focus on breaking a perceived link between state contracts and campaign contributions. The Illinois House in May passed a bill that would ban businesses and individuals with more than $25,000 in state contracts from contributing to the campaigns of the elected officials who granted them those contracts.

Winkel's advice to anyone else who might consider deregulation: Don't. "It hasn't worked in Illinois, and it certainly wouldn't work in the rest of the country," he said.