The Public Policy

Valeo’s Revenge

Congress acts to protect incumbency. We're shocked, shocked!

By 5.7.08

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As Pennsylvania Democrats went to the polls last month in the last big primary before the party's nominating convention, the Supreme Court heard yet another challenge to campaign finance regulation. Whether Barack or Hillary finally wins the Democratic nomination, and no matter who wins the White House in November, the outcome of this case will color the Congress the new president has to work with.

The "Millionaires' Amendment" of the McCain-Feingold law discourages congressional candidates from using their own funds to finance their campaigns. The supposed reason for this blatant restriction on free speech is to prevent people from "buying" a seat in Congress, but its actual effect is to protect officials who've already been elected and who plan to stay that way.

When a candidate decides to run for Congress, he has to file, under penalty of criminal law, a statement of how much he intends to spend out of his own pocket. But if the amount is over $350,000 (less than a quarter of the expected cost of a House race this year), then his opponent -- typically the incumbent -- is allowed not to comply with some of McCain-Feingold's anti-corruption "reforms."

For example, the incumbent enjoys a tripling of the $2,300 individual contribution limit, and a total exemption from the restrictions on coordinating expenditures with the national party.

Moreover, once the "statement of intent" to spend over $350,000 is filed -- or once the limit is reached, if it is reached unexpectedly, which could itself give rise to criminal and civil liability -- then that self-funded candidate has to disclose every expenditure of $10,000 or more to his opponent within 24 hours of spending that money.

This disclosure signals the self-funded candidate's tactics, enabling his opponent to infer and counteract television and radio advertising, leafleting, and the like.

SO NOT ONLY DOES the opponent of a self-funded candidate (again, almost always the incumbent) enjoy relaxed campaign finance restrictions, he gains a strategic advantage over his hapless challenger!

And remember, $350,000 -- a figure set in 2002 and not indexed to inflation -- simply does not go far in competitive races. Especially when you're running against an incumbent who has built up a war chest, which doesn't count for calculating the "gross receipts differential" at the heart of the convoluted formula used to determine the extent to which the opponent can use the relaxed contribution and coordination limits.

Not to mention the other inherent advantages of incumbency: greater name recognition, "franking" privileges to get your message out to constituents without mailing costs, the ability to gain publicity by securing earmarks and otherwise going about your "public service," and, of course, taxpayer-funded travel home.

So instead of "leveling the playing field" between candidates for office, the Millionaires' Amendment further tilts it the incumbents' way. That's the other unfortunate aspect of this mess: Not only is this tremendously complex regulation bad policy, it's also unconstitutional.

FIRST, THE PROVISION burdens the exercise of political campaign speech without serving any compelling governmental interest. By enhancing the political speech of a self-funded candidate's opponent -- through the increased contribution limits and unlimited coordinated party expenditures -- it creates a de facto expenditure limit, in essence restricting speech beyond the $350,000 threshold. The Supreme Court ruled in the famous 1976 case of Buckley v. Valeo that expenditure limits were unconstitutional.

Second, the Millionaires' Amendment does not prevent actual or apparent corruption because there is no threat of a quid pro quo from a candidate spending his own funds. The provision actually undermines the stated interest in combating corruption by preventing candidates from reducing their dependence on outside contributions -- and increasing their opponents' purportedly corrupt contributions and coordinated expenditures.

Finally, the compelled disclosure requirements further penalize candidates for exercising their right to engage in political discourse by imposing significant personal liability on them. The disclosure requirements also infringe on a candidate's First Amendment right not to associate with campaign contributors. And they do so without serving any informational interest the public may have, because the underlying information is already disclosed to the FEC under other McCain-Feingold requirements.

In short, the "Millionaires' Amendment" is nothing more than incumbency protection disguised as a good-faith effort to cleanse our political system, much like most campaign finance "reform."

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About the Author

Ilya Shapiro is senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.