Gagging on Political Reform

The Federal Election Commission and its "good government" allies are crushing free speech.

Allison R. Hayward & Steven Hayward from the October 1996 issue

Well before either major political party had held its 1996 convention, they were already accusing each other of violating the election laws in various arcane ways. Bob Dole even warned NBC's Katie Couric during an interview that her line of questions might be against these laws. We can expect more such charges as the major, well-funded contenders attempt to harass one another.

But we can also expect the Federal Election Commission to turn its ever-more- ambitious regulatory attention to grassroots groups and citizens who want to take part in the debate, too--groups far less well-funded and less capable of extricating themselves from the tangle of FEC regulations. Such groups will encounter an FEC that functions more and more as a censor of political expression, especially by issue-oriented, grassroots activists. Regulating political speech was once unthinkable. In a provocative 1973 essay, Nobel laureate economist Ronald Coase disparaged even the possibility. Noting the "large number of false and misleading statements" in newspaper articles and political speeches, Coase wrote: "Government action to control false and misleading advertising is considered highly desirable. Yet a proposal to set up a Federal Press Commission or a Federal Political Commission modeled on the Federal Trade Commission would be dismissed out of hand."

But less than a year later, Congress reacted to the trauma of Watergate by creating the FEC, which has ever since been attempting to assert itself as just such a political power. It wasn't that Coase was shortsighted: Congress did not mean to censor political speech, and the courts have for years attempted to restrain the commission's regulatory reflexes. Rather, the FEC is a case study in the growth and transformation of oversight power. It begins with the reform of political financing, develops into ever more complex regulation of political activities, and finally matures into attempts to control political speech itself. The result is that political expression, which the framers of the First Amendment clearly intended to be the most protected kind of speech, is in fact today the least protected. If the FEC and its good-government--or "goo-goo"--cheerleaders have their way, the attack on the First Amendment will get a lot worse.

Limiting Funds and Limiting Speech

The FEC is supposed to be roughly analogous to the Securities and Exchange Commission, which promotes full disclosure of essential information to investors and seeks to enforce certain fundamental rules to prevent fraud and market manipulation. Indeed, most people probably suppose that the FEC is chiefly in the business of collecting campaign contribution reports from candidates and imposing fines when contribution limits have been exceeded or when presidential campaigns (which operate by their own set of rules) go over spending limits.

But in fact the FEC is increasingly behaving like a combination of the Federal Trade Commission and the Internal Revenue Service. Like FTC enforcement, the FEC's activities frequently seem arbitrary, and its regulatory burden falls disproportionately on the "little guy." And as with the IRS, any political organization that falls into its ever-expanding purview is subject to burdensome and complicated reporting requirements and restrictions. Like the IRS, the FEC has the authority to audit finances and can haul a political committee's hapless treasurer into court for filing reports late or incorrectly.

FEC regulations can hamstring grassroots groups in two principal areas. First, they govern whether political messages that discuss current events constitute "express advocacy" of a candidate's election or defeat. If so, the cost of the spot is credited either as an "independent expenditure" or a "contribution" to the relevant campaign. Second, they determine whether such activity by a corporation, even an incorporated nonprofit, can be construed as a violation of the ban on corporate campaign contributions.

To understand the full story, it is necessary to know the rudiments of these campaign finance regulations and a little of the history behind how they operate today. In the aftermath of the Watergate scandal, Congress in 1974 passed amendments to the Federal Election Campaign Act that set strict contribution limits of $1,000 per donor per candidate per election. The act also set an aggregate contribution cap of $25,000, meaning a wealthy donor could not make $1,000 contributions to more than 25 candidates in an election. Political action committees enjoy higher limits; you can give $5,000 to a PAC, and a PAC can give $5,000 per candidate per election to as many candidates as it wishes. These caps, it is important to note, are not adjusted for inflation. Today the maximum amounts have roughly one-third the value they had when they were enacted.

These relatively low contribution ceilings naturally created intense interest in alternative ways to influence elections (see sidebar page 27). The authors of the 1974 FECA amendments anticipated this effect. So the amendments attempted to ban independent expenditures of more than $1,000 and to limit candidates' spending. But both spending and independent expenditure limits were quickly struck down by the Supreme Court in the landmark 1976 case Buckley v. Valeo. In that case the Court ruled that FECA's spending caps violated the First Amendment's free speech guarantee, but it upheld the contribution limits.

Subsequently, the Court has, in a number of cases, affirmed that corporations as well as real people have First Amendment free speech rights. However, corporate free speech rights can be regulated (or, in the case of federal campaign contributions, prohibited) in the interest of preventing corruption.

A Bright Line in the Sand

The Court also wrestled with the problem of identifying what kind of political speech could be considered an independent expenditure, and it crafted a definition of "express advocacy" that has been at the heart of the FEC controversy ever since. Many organizations--for example, this magazine's parent, the Reason Foundation, or the National Organization for Women--comment on controversial issues and the opinions elected officials may have on those issues. To safeguard such issue-oriented speech from burdensome FEC regulations and the blanket ban on corporate election spending, the Court crafted a bright-line standard.

It stated that a political message must clearly identify a specific candidate and "expressly advocate" the candidate's election or defeat with words such as "vote for," "elect," "defeat," "reject," or "cast your ballot for." In an era when Supreme Court opinions are notorious for their ambiguity and narrow application, the Buckley decision stands out for its clarity and broad application.

But the FEC and the goo-goos have never been satisfied to live within the strictures of Buckley. To the reform mentality, any kind of political speech that escapes FEC regulation represents a "loophole" that ought to be closed, and the Buckley express advocacy standard allows many kinds of political speech to fall outside of campaign regulation. The FEC has proposed a broader standard, encompassing messages which, when "taken as a whole," include "expressions of support for or opposition to a clearly identified candidate." "Taken as a whole" is the key phrase. This guideline is a clear attempt to turn express advocacy into implied advocacy. This is intended to get at such devices as the voter's guides that activist groups distribute around election time, containing information about how various candidates stand on issues of particular concern. They seldom include explicit endorsements, leaving readers to connect the dots for themselves.

The judiciary has repeatedly thumped the FEC on the snout for its attempt to implement a broader express advocacy standard. In a series of cases over the past decade, the Supreme Court and lower courts have said to the FEC, in effect: We really meant what we said in Buckley; stop trying to get around it.