Shyama Venkateswar Distinguished Lecturer, Hunter College and Director, Public Policy Program, Roosevelt House

Posted on April 4, 2014 · Posted in Frank Friday

The Supreme Court’s McCutcheon v. Federal Election Commission ruling this week further deregulated campaign finance laws by giving the wealthy few in the country an ability to spend even higher amounts than previously permitted by ‘maxing out’ on every candidate running for political office, along with giving generously to PACs and party committees. Although potential donors would still be restricted from giving more than $5,200 to any one candidate in two consecutive years, the ruling eliminated the cap on the number of candidates towards whom a donor could legally contribute. In theory, a wealthy donor could contribute $3.5 million in total by supporting federal candidates, committees and parties compared to the approximately $123,000 that was previously allowed before the new decision. In his dissent, Justice Breyer pointed to the “grave problems of democratic legitimacy” that the Court’s decision enabled.

In an analysis of who would stand to benefit the most from Supreme Court decisions to weaken campaign finance laws, the Center for Responsive Politics (CRP) and the Sunlight Foundation identified 20 top donors whose contributions were pushing against or surpassed the federal limits as stipulated in the Federal Election Campaign Act. These contributors included high net worth business figures, including the investor Charles Schwab, Steve Bechtel of Bechtel Corporation, billionaire John Childs, and several others in the private equity and global investment finance world. Other characteristics shared by the top donors include 13 contributing solely to Republican candidates and parties and 4 giving strictly to Democrats. Additionally, three of the 20 top donors gave to both parties, 17 made large contributions to super PACS, and 3 were heads of businesses that were currently lobbying the federal government.

In the end, the Supreme Court’s ruling on McCutcheon v. Federal Election Commission was narrowly based on the issue of freedom of speech in voters’ right to participate and elect political leaders. It downplayed the impact of the powerful few winning undue influence in politics by insisting that “contributing money to a candidate is an exercise of an individual’s right to participate in the electoral process through both political ex­pression and political association.” However, the reality is that the ruling made it even easier for top donors to pay for privileged access.

For instance, CRP’s report found a number of prominent business people who figure prominently in the political world of Washington, D.C. The Schwab Corporation spent $2.7 million in the first nine months of 2013 lobbying a wide variety of issues affecting brokerage houses, including the impact of new legislation and the implementation of the Dodd-Frank Act. Kenneth Kies, the former chief of staff of Congress’ Joint Committee on Taxation, represents interests as varied as the American Bankers Association, Anheuser-Busch, and Blue Cross/Blue Shield. Stephen D. Bechtel’s firm lobbies on energy, taxes, the environment and trade, and is also a top winner of federal contracts.

Caps on campaign contributions were first introduced in 1974 in the wake of the Watergate scandal to restrict influence on candidates and parties. However, this legislation has been poorly enforced by the Federal Election Commission, and elections have instead become more and more expensive, with the bulk of funds spent on televised political ads during campaigns. During the 2012 election, President Barack Obama and former Massachusetts Governor Mitt Romney spent close to $1 billion each on their campaigns. The Democratic Super PAC, Priorities USA, spent $75 million, while the Republican Super PAC, Restore Our Future, spent $153 million from campaign contributions. Some estimates have projected Hillary Clinton’s anticipated run for the presidency in 2016 to cost somewhere close to $1.7 billion.

Other key developments in campaign finance laws include the Bipartisan Campaign Reform Act of 2002, which banned ‘soft money’ to party committees and also banned corporations from paying for issue advocacy ads. Additionally, the historic Citizens United decision in 2010 — in which the Supreme Court held that the First Amendment did not give the government any right to limit political independent expenditures by corporations — overruled two precedents: Austin v. Michigan Chamber of Commerce, a 1990 decision that upheld restrictions on corporate spending on political candidates and McConnell v. Federal Election Commission, a 2003 decision that upheld the part of the Bipartisan Campaign Reform Act of 2002 that restricted campaign spending by corporations and unions. Since Citizens United and the resulting creation of super PACs, which could fund-raise and spend unlimited and large sums of money as long as they were not coordinating directly with political parties or candidates, corporations have been freely able to give to outside groups and networks without donor disclosure. Super PAC spending has exceeded $700 million since 2010.

Whether or not additional measures are taken to uphold the First Amendment when it comes to campaign contributions will be seen in the coming months. However, this week’s Supreme Court ruling does little to change the perception of ordinary Americans, that the government is captured by special interests who pay their way to receive special access and unique privileges afforded to only the wealthy few. The 2013 Global Corruption Barometer found that 76 percent of Americans felt that political parties were corrupt or extremely corrupt, 64 percent felt the government was entirely or to a large extent run by a few big entities, and almost 25 percent disagreed or strongly disagreed that ordinary people could make a difference in the fight against corruption.

Transparency International’s annual 2013 report points to the change in status of campaign finance laws in the United States as a major setback in the fight against corruption. They point to several instances of corruption that mar the political landscape due to the heavy influence of money in politics: ethics violationsmoney laundering, and the indictment of public officials in California, the District of ColumbiaNew Jersey, and Illinois.

This week’s Supreme Court ruling was contrary to the prevailing public opinion that there should be limits on campaign donations. If purchase of access is not a variety of corruption, then what is? The Court, in this instance, is clearly out of touch with the majority of Americans, who uphold democratic principles and value free speech, but not as it relates to privilege of a few and special interests.

The writing and opinions expressed herein are those of the authors and do not necessarily reflect the positions of the Roosevelt House Public Policy Institute or Hunter College.