On Campaign Finance

Corporations as Citizens, Free Political Speech, and the Purpose of the State in Financial Regulation
Daniel James Lordan April 10, 2014

Introduction
The cost of winning a seat in the United States House of Representatives in 2010 was $1.43 mi ion.1 !n 2010 do ars" this is dou# e what it cost in 1$%&" ess than 2' (ears #efore.1 The cost of e ections is incredi# e in this da( and age when (ou compare campaign finance to other parts of our countries pu# ic and private sector. To put it in comparison the atest census puts the povert( eve at 1') and the amount of mone( it wou d ta*e to pu ever( fami ( to the povert( ine hovers around $1+2 #i ion. 2 ,hi e this might seem i*e a ot" the -./ reports that 0#ama and Romne( com#ined to raise over $200 #i ion to fund the 2012 presidentia e ection a one.3

!t1s no secret that mone( #u(s power. !n a 200% report #( the 2mericans for

/ampaign Reform that ana (3ed campaign finances for House from incum#ents 1$$24 200&" and a

cha engers

5competitive spending thresho d #e ow which previous ( un*nown candidates are una# e to effective ( compete6 was

esta# ished around $+00"000.4 7ess than one percent of cha engers spending under this amount won seats compared to more than 4') spending a#ove. -igures 1 and 2 show the effect of mone( on share of genera e ection votes over this same time period"

sp it #etween cha engers and open seat candidates.4

There is a cei ing to this f oor" however. The report continues on to discuss the point of diminishing margina returns" which the( mar* at $1.' mi ion for the House. There was a statistica ( insignificant change in percentage of winners a#ove $1.' mi ion compared to those who #ro*e the $+00"000 mar*.4

The imp ications of this are straight forward (et somehow impossi# e for candidates running for office to accept8 po iticians don1t need the mone( the( are co ecting to run for office. The average House seat in 200& cost $1.3 mi ion. 1 This means that the thresho d eve had #een a most dou# ed" which has no effectiveness on the e ection resu ts according to the 2/R.4 This issue #rief wi focus on the current and possi# e future state of finance reform and the reasoning #ehind this race to the #ottom of spending.

The Bi-Partisan Campaign Reform Act

The 9i4:artisan /ampaign Reform 2ct of 2002" more common ( referred to as the ;c/ain4-eingo d 2ct was designed to reduce the ro e of soft mone( in e ections and he p regu ate contri#ution imits.' 5Soft6 mone( here refers to mone( that is outside the scope of the federa regu ations #ecause of its supposed distance from actua campaigning. & Soft mone( can go towards part( finances or mo#i i3ing voters #ut can1t actua ( #e used for an( specific candidate" according to a Supreme /ourt ru ing in 1$$4. & Unfortunate ( the

am#iguit( of this ru ing #eget its downfa as the creative wa(s parties used this mone( a #ut counteracted the aw. 0ne campaign add for 9o# <o e that used soft mone(

featured <o e for '& of the &0 seconds and added a four second R=/ message at the end. ' This is what >ohn ;c/ain and Russ -eingo d wor*ed to put an end to.

The specifics of the #i inc uded contri#ution imits for individua s" the prohi#ition of nationa parties from spending nonfedera funds" and reinforced the effects of the 1$+' -edera . ections /ampaign 2ct.'"% The #i was immediate ( attac*ed and ta*en to court" with the most important of these cases resu ting in the Supreme /ourt /ase of Citizens United vs. Federal Election Commission.

Citizens United

!n a '44 decision the Supreme /ourt struc* down parts of the 9/R2 that dea t with corporations.% Stemming from a awsuit invo ving the group /iti3ens United and their attempt to advertise a short documentar( casting Hi ar( / inton in a #ad ight direct ( prior to the 200% e ections" the Supreme /ourt ru ed that the government has no right to regu ate po itica speech ?here meaning mone( f ow@.%"$ The maAorit( decision was accompanied #( >ustice 2nthon( Benned(1s opinion" which read 5if the first amendment has an( force it prohi#its /ongress from fining or Aai ing citi3ens" or associations of citi3ens" for simp ( engaging in po itica speech.6% >ustice >ohn :au Stevens1 dissent condemned the court for eCuating compan( mone( with free speech.% This idea of 5po itica speech6 has #een the #asis for a #ev( of cases #rea*ing down different parts of

the 9/R2" inc uding a case this wee* that cut down the restriction on individua contri#utions. There have a so #een wa(s of getting around arge parts of the act" i*e the deve opment of '2+s ?so named #ecause of the taD code under which the eDemptions to the 9/R2 are fi ed@. 9etween the ega wea*ening of the 9/R2 and the oopho es that have #een created" the ;c/ain4-eingo d act is in the process of #eing utter ( destro(ed.10

The Problems

2s seen #( ever( attempt at campaign finance regu ation since the dawn of our nation ?dating a the wa( #ac* to ,ashington in 1+'+ spending $1$' on hard cider for his friends@ there is no wa( to comp ete ( restrict the f ow of mone( to candidates. 11 There wi a wa(s #e wa(s to funne mone( to candidates no matter how a#stract or rounda#out. There is a so" unfortunate (" no wa( of legally reversing the progression towards more and more mone(. Un ess candidates imit themse ves" there wi #e a constant race to the #ottom in this never ending game of spend4or4#e4outspent.

This #att e #egins and ends with the supreme court. The idea of eCuating corporate mone( to free speech in the e(es of the -irst 2mendment is not Aust wrong #ut insu ting to the 2merican peop e. ,hat now defines an entit( as a citi3en with a voiceE There are mora di emmas invo ved with individua s giving un imited funds to campaigns #ut eCuating peop e and #usinesses is egregious. 2s >ustice >ohn :au Stevens wrote in his dissent" 52 though the( ma*e enormous contri#utions to our societ(" corporations are not

actua ( mem#ers of it. The( cannot vote or run for officeFGtHhe financia resources" ega structure" and instrumenta orientation of corporations raise egitimate concerns a#out their ro e in the e ectora process.612 <ue to these issues" there are on ( a few feasi# e things that the /ourts" /ongress" and citi3ens can do a#out the drowning out of citi3ens #( mi ions of do ars of campaign funds.

The Solutions

Supreme Court: The Supreme /ourt needs to define po itica speech and the effect of the -irst 2mendment on said actions. The de#ate over the ega it( of restricting campaign finance is determined #( the actua definition of po itica speech. !f the Supreme /ourt #e ieves that corporations are peop e and deserve the same rights of the citi3ens in the United States then there needs to #e a c ear definition of to what eDtent the( are citi3ens. !t seems that the /ourts are now providing them with more power over e ections than the average 2merican.

7ega de#ate notwithstanding there are some maAor ethica pro# ems invo ved in ta*ing power out the citi3ens hands. Therefore the /ourts need to approach this not on ( from a free speech standpoint #ut a so from an eCua opportunit( case. This is a democratic repu# ic. ,hat separates us from a dictatorship is the idea that the se ectorate is the maAorit( and the winning coa ition is not Aust a few. The idea that a president or a

congressman shou d have to cater to the whims of a coup e as opposed to the needs of man( is reinforced when we a ow the average citi3en to #e drowned out. Therefore S/0TUS needs to oo* at the effects of the mone( on po ic( and the disconnect #etween pu# ic opinion and po ic(.

Congress: 2s discussed previous (" there is no wa( to comp ete ( cut off finances. There wi a wa(s #e oopho es and the( wi a wa(s #e found. /ompounding this" the Supreme /ourt refuses to ta*e a hard enough stance which means that an( #i s regarding restrictions wi not ho d up. ,ith this ega #oD restricting /ongress1 power" it wou d #e #etter to instead attempt document a funds coming in so that the( wou d #e tracea# e. !n this wa( the pu# ic wou d #e a# e to access and understand a funds and their effects" which cou d prompt serious socia change and pressure on the candidates to spend ess.

This paper proposes an act that" instead of imiting campaign funds #( individua s" :2/s" and companies" wou d dictate the ru es regarding the records of a funding. 0#vious ( there wi sti #e those that s ip mone( in #ac* poc*ets and mi ions wi pro#a# ( go undocumented #ut the focus shou d #e on finding and reporting a financia transactions invo ving #oth the candidates and their parties.

To oversee this act" a =onpartisan /ampaign -inancia Record 9oard" separate from the /ampaign -inance !nstitute" shou d #e set up. This #oard wi #e set up #( the -9!" awa( from the pressures of /ongressiona oversight. !t sha set up pena ties for the fa sification

of financia records that wou d pena i3e #oth the candidate and the part(.

This s(stem wou d a so a ow for the pu# ication of financia records. ,hi e man( statistics are out there regarding donors and :2/s there is ots of funne ing through sma er organi3ations. The Boch #rothers and Ieorge Soros are some of the #iggest names in mone( channe ing #ut there are p ent( of arge corporations and individua s who use sma er non4profit organi3ations to get their mone( in. This wa(" the =/-R9 can #e in charge of tracing and reporting ever( do ar the( can find.

=ote" this is not in contrast to the section a#out the Supreme /ourt. ,hi e corporations shou d not #e comp ete ( cut off from donating to candidates" the( shou d not #e considered peop e with the rights and protections guaranteed thereof. The( are sti entities and the effects of this act shou d #e added to the sanctions uphe d #( the /ourts. This act wor*s in a different wa( than a Supreme /ourt ru ing that cou d overturn /iti3ens United in that it wou d put pressure on candidates to admit their main #enefactors and ma*e it eas( to see trends in increased financia support and po ic(.

The People: ;one( #u(s votes" #ut it doesn1t have to. Jour vote is the ast defense the average 2merican has against mu ti4#i ionaires and their corporations. !n this sic* game of <avid vs. Io iath that has #een #ui t on the shou ders of the Supreme /ourt" the s ingshot that the( eave (ou is the po s. Use this to send a message. ;a(#e <avid doesn1t win against Io iath" #ut mi ions of <avids can ma*e a difference. Te (our /ongressman or

/ongresswoman what is important to (ou. >ust i*e the state is dependent on capita it is a so #rought to its *nees #( e ections. <etermine what is important to (ou and vote in num#ers. 2 the tea in /hina can1t win an e ection if the voters want coffee. .Dtended ana ogies aside the mone( served does nothing #ut attempt to c oud Audgment or overse candidates. !f (ou do (our research on po itics and show up to the po s ma(#e soon this terri# e socio4economic trend might s ow down. ;a(#e we might see an increase in focus on issues and not on attac* adds and #uttons. ;a(#e a #usiness c ass seat might #e worth it for a Senator once in a whi e" and ma(#e" Aust ma(#e" (ou the citi3en wi ta*e #ac* the power.

Conclusion
,ith a of these o#Aectives #eing pursued simu taneous ( there is hope to see #oth a reversa of this mone( dependent s(stem and a new accounta#i it( for finances. !n a perfect wor d ever(one wou d to stop spending and the wor d wou d #e a much happier p ace. !nstead" striving for these goa s can see the countr( into a #etter tomorrow4 one in which saving those in povert( is a higher priorit( than a new suit and tie.

References8

1. KThe /ost of ,inning a House and Senate Seat" 1$%&4 2012.K Vital Statistics on Congress. The /ampaign -inance !nstitute" n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.cfinst.orgMdataMNita Stats.aspDO. 2.9ruenig" ;att. KHow ;uch ;one( ,ou d !t Ta*e to . iminate U.S. :overt(EK Demos. :o ic(shop" 2% Sept. 2013. ,e#. 10 2pr. 2014. Lhttp8MMwww.demos.orgM# ogM$M23M13Mhow4much4mone(4wou d4it4ta*e4e iminate4us4povert(O. 3. 2sh*enas" >erem(. KThe 2012 ;one( Race8 /ompare the /andidates.K New York Times Politics. =ew Jor* Times" n.d. ,e#. 10 2pr. 2014. Lhttp8MMe ections.n(times.comM2012Mcampaign4financeO. 4. K<oes ;one( 9u( . ectionsEK Does oney !"y Elections# 2mericans -or /ampaign Reform" n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.acrreform.orgMresearchMdoes4mone(4#u(4e ectionsMO. '. K/ampaign -inance 7aw Puic* Reference for Reporters.K Federal Election Commission. -./" n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.fec.govMpressM#*gndM#craQoverview.shtm RSoft)20;one(O. &. K/ourt 7ets :o itica :arties Spend -ree (.K $llPolitics. /==" n.d. ,e#. 10 2pr. 2014. Lhttp8MMcgi.cnn.comM277:07!T!/SM1$$&MnewsM$&0&M2&MspendMO. +. K-./2.K U.S. De%artment o& 'a(or. <07" n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.do .govMowcpMregsMcomp ianceMcaQfeca.htmO. %. 7ipta*" 2dam. K>ustices" '44" ReAect /orporate Spending 7imit.K New York Times Politics. =ew Jor* Times" 21 >an. 2010. ,e#. 10 2pr. 2014. Lhttp8MMwww.n(times.comM2010M01M22MusMpo iticsM22scotus.htm EpagewantedSa O. $. KHi ar( / inton8 The T/iti3ens UnitedT /andidate.K Center &or P"(lic )ntegrity. =.p." 03 >an. 2012. ,e#. 10 2pr. 2014. Lhttp8MMwww.pu# icintegrit(.orgM2014M01M21M14140Mhi ar(4c inton4citi3ens4united4candidateO. 10. KThe Boch 9rothers 2nd Ieorge Soros U ,hich Shou d ,e -earEK *estern +o"rnalism. =.p." n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.westernAourna ism.comM*och4#rothers4george4soros4fearMO. 11. -u er" >amie. K-rom Ieorge ,ashington to Shaun ;c/utcheon8 2 9rief4ish Histor( of /ampaign -inance Reform.K T,e Fi-. The ,ashington :ost" 3 2pr. 2014. ,e#. 10 2pr. 2014. Lhttp8MMwww.washingtonpost.comM# ogsMthe4fiDMwpM2014M04M03Ma4histor(4of4 campaign4finance4reform4from4george4washington4to4shaun4mccutcheonMO. 12.K/iti3ens United 4 Stevens <issent Summar(.K Patriots &or C,ange. Economic Social +"stice Ed"cation Comm"nity $ction. =.p." n.d. ,e#. 10 2pr. 2014. Lhttp8MMwww.patriotsforchange.netMa#out4usMciti3ens4united444stevens4dissent4summar(O.

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