After Citizens United and SpeechNow.org
Considering the Consequences of New Campaign Finance Rules
Diana Dwyre
California State University, Chico
ddwyre@csuchico.edu
Paper prepared for delivery at the 2011 American Political Science Association Meeting,
Seattle, Washington, September 1-4.
Abstract
In this paper, I examine whether there was a flood of corporate money into federal campaigns
after the Citizens United and SpeechNow.org decisions, whether corporate and other contributors
sought out and found ways to spend money that did not require them to reveal their campaign
finance activity to the public, and whether the recent changes to the campaign finance regulatory
regime have fundamentally shifted the balance of power, and therefore the relative ability of
various participants to speak in federal elections.
There is now more corporate money in federal elections. However, the increase in corporate
spending started in 2008 and continued into 2010, and the actual impact of this increase remains
unclear. There was indeed a significant decrease in donor disclosure in 2010, but this too is a
trend that began in 2008, so it is not a direct result of Citizens United and SpeechNow.org. And
the balance of spending by various campaign finance participants has changed in recent election
cycles. In 2010, for example, non-party outside spending eclipsed party spending, as more nonparty (mostly corporate) money entered the system. I discuss how these findings relate to the
current campaign finance regulatory landscape and to the political environment.
Preliminary Draft: Please do not quote without permission.
After Citizens United and SpeechNow.org
Considering the Consequences of New Campaign Finance Rules1
Diana Dwyre
California State University, Chico
In 2010, we saw some major changes to the campaign finance legal and regulatory
landscape in the U.S. The most significant of these changes was the Supreme Court’s January
2010 decision in the Citizens United v. Federal Election Commission case, which ended the ban
on corporate and union spending in federal elections, allowing them to use their treasury funds
for independent expenditures that are not coordinated with candidates or parties (Citizens United
2010).2 Just two months later, in March 2010, the United States Court of Appeals for the District
of Columbia Circuit ruled in SpeechNow.org v. Federal Election Commission that “the
government has no anti-corruption interest in limiting contributions to an independent
expenditure group such as SpeechNow” (SpeechNow.org 2010, 14, emphasis added).3 Now both
contributions to and expenditures by independent groups are unlimited, and corporations and
unions can use their treasury funds to make unlimited contributions to these groups or spend
unlimited amounts on their own from their general treasuries, as long as they do not coordinate
their activities with candidates or political parties.
Some have championed the Citizens United decision as a triumph for free speech. For
instance, Republicans generally praise the decision as a triumph for free speech and welcome
further deregulation of the federal campaign finance system. Senate Minority Leader Mitch
McConnell said on the Senate floor, “In Citizens United the Court ended the suppression of
corporate and union speech . . . Any proponent of free speech should applaud this decision.
Citizens United is and will be a First Amendment triumph of enduring significance” (McConnell
2010).
1
Others, mostly Democrats, reform advocates, and some academics, blasted the Citizens
United decision as a misreading of the First Amendment that would flood the campaign finance
system with corporate money and undermine protections against corruption (see, for example,
Dworkin 2010). Just days after the Court’s 5 to 4 decision, and with Supreme Court justices in
the front row, President Obama said in his 2010 State of the Union address that Citizens United
will “open the floodgates for special interests, including foreign corporations, to spend without
limit in our elections . . . I don’t think elections should be bankrolled by America’s most
powerful interests” (Greenhouse 2010). A few days later, Obama added, “Now imagine the
power this will give special interests over politicians. Corporate lobbyists will be able to tell
members of Congress if they don’t vote the right way, they will face an onslaught of negative ads
in their next campaign” (Calmes and Hulse 2010).
Another consequence predicted by many lawmakers and others, but apparently not by the
Court, was that the Citizens United decision would motivate corporations in particular to seek
ways to spend their money without disclosing that spending to the public now that they are free
to make unlimited independent expenditures and give to other groups from their treasury funds.
The courts had denied both Citizens United’s and SpeechNow’s challenges to the disclosure
requirement and seemed to expect that the various political actors would comply with the letter
and the spirit of their decisions. Eight of the Justices in Citizens United emphasized the
importance and legality of disclosure in their decision. They agreed that disclosure
requirements:
impose no ceiling on campaign-related activities and do not prevent anyone from
speaking . . . The First Amendment protects political speech; and disclosure permits
citizens and shareholders to react to the speech of corporate entities in a proper way.
2
This transparency enables the electorate to make informed decisions and give proper
weight to different speakers and messages (Citizens United 2010, 51, 55).
Yet, the original source of much of the money spent in the 2010 elections was not disclosed, and
most of that money appears to have come from corporations, not a result anticipated by the
Supreme Court.
Citizens United and SpeechNow.org provide an opportunity to ask an important campaign
finance policy question: where does political money go when there are changes to the system?
Although there has been only one election since these decisions, the 2010 midterms provide
some early evidence to address this question. Was there a flood of corporate and union money
into these elections? How did corporations and unions spend their treasury funds once they were
free to do so? Was there a fundamental shift in the balance of financial (and speech) influence in
the system?
After a brief discussion of these recent changes to the campaign finance landscape, I use
available data from the 2010 and previous elections to test three hypotheses about the behavior
of various political actors in the federal campaign finance system:
• There was a significant increase in corporate and union money in the 2010 elections.
This expectation posits that corporations and unions increased their participation in
federal elections because of the Citizens United and SpeechNow decisions, as predicted
by President Obama, reform advocates, and others.
• Based on an hydraulic theory of disclosure rules, corporations will seek ways to spend
money in elections that do not require them to disclose that spending to the public.
• An influx of new money into a campaign finance system will change the balance of
financial (and speech) influence in the system, and in this case the shift is from
candidates and parties to corporations, unions and others.
3
A Changed Campaign Finance Landscape
The campaign finance rules governing the activities of candidates and parties remained
substantially the same in 2010. Yet, the rules for individuals, corporations, unions, PACs and
other groups did change, causing some of them to alter their strategies and activities. This, in
turn, affected the overall campaign finance environment for candidates, parties and others. The
most significant changes were the Supreme Court’s Citizens United v. Federal Election
Commission decision handed down in January 2010, a related decision by a lower court,
SpeechNow.org v. the Federal Election Commission, in March 2010, and some key rulings by
the Federal Election Commission. These changes gave individuals, corporations, unions, PACs
and other non-candidate, non-party groups greater flexibility in how they could raise and spend
money to influence federal elections.
Citizens United v. Federal Election Commission
In the Citizens United case, the Supreme Court rejected the longstanding tenet that
corporations should be barred from spending money directly in federal elections to avoid
corruption or even the appearance of corruption. In the 5 to 4 ruling, the Court’s majority stated
that “government may not suppress speech on the basis of the speaker’s corporate identity,” and
that “independent expenditures, including those made by corporations, do not give rise to
corruption or the appearance of corruption” (Citizens United 2010, 50, 5). The Citizens United
decision presumably extends to unions, and, indeed, labor unions acted as if it did in the 2010
midterm elections. Independent expenditures are expenditures made by individuals, parties,
groups, and now corporations and unions that expressly advocate the election or defeat of a
candidate by, for example, using words such as “vote for” or “defeat,” as long as they do not
coordinate their activities with candidates or parties (i.e., independent expenditures are express
advocacy, ads that advocate the election or defeat of a candidate).
4
With Citizens United, the Supreme Court conferred First Amendment political free
speech rights on corporations, ending over 100 years of prohibitions on corporate electoral
spending. There are state bans on corporate campaign contributions as far back as the 1860s, and
a ban on corporations and banks making contributions in connection with federal elections since
passage of the Tillman Act in 1907. With this decision, the Court also recalibrated its view of
corruption by narrowing the sphere of legitimate state regulation to cover only contributions to
candidates and parties because of their potential for direct quid pro quo corruption. Much of the
outcry against the decision relates to this assertion that big independent spending by corporations
and unions does not create the potential for corruption.
Before Citizens United, corporations and unions could not spend money from their
general treasuries to expressly advocate the election or defeat of a federal candidate, but they
could, since 2007, spend money on electioneering communications. Electioneering
communications were created when the 2002 Bipartisan Campaign Reform Act (BCRA, or the
McCain-Feingold Act) carved out the 30 days before a primary election and 60 days before a
general election as the periods in which ads that mention but do not explicitly urge the viewer to
vote for or against a candidate would be governed by federal campaign finance contribution
limits and reporting requirements. In 2007, the Supreme Court ruled in Federal Election
Commission v. Wisconsin Right to Life that corporations and unions were allowed to use their
treasury funds for electioneering communications (Wisconsin Right to Life 2007).4 Thus
corporations and unions already had one channel for spending their profits and dues during
federal elections prior to the Citizens United decision in 2010, but not for express advocacy.
Since the Federal Election Campaign Act and its amendments were passed in the 1970s,
corporations and unions could raise money from employees, shareholders, members and others
in limited amounts through a political action committee. Contributions to and from traditional
5
PACs are limited, and all fundraising and spending is disclosed to the public by reporting it to
the Federal Election Commission. Corporations and unions are still prohibited from making
contributions directly from their treasuries to candidates or parties, but Wisconsin Right to Life
and Citizens United opened up other avenues for unlimited spending as long as that spending
was not coordinated with a candidate or party. Corporations and unions can now use general
treasury funds to make unlimited independent expenditures, which expressly advocate for the
election or defeat of a candidate, and unlimited electioneering communications, which mention
but do not urge a vote for or against a candidate.
SpeechNow.org v. Federal Election Commission
In SpeechNow.org v. Federal Election Commission, SpeechNow, a non-profit association
organized under section 527 or the Internal Revenue Code formed to make only independent
expenditures expressly advocating the election or defeat of federal candidates, challenged the
constitutionality of the $5,000 contribution limit on contributions from individuals to their group
as well as the political committee registration and disclosure requirements. The D.C. Circuit
Court of Appeals held that limits on contributions made by individuals to independent
expenditure groups such as SpeechNow are indeed unconstitutional in light of the Supreme
Court’s decision in Citizens United, in which the Court held that there is not a governmental anticorruption interest in limiting independent expenditures. The appeals court reasoned that since,
according to Citizens United, independent expenditures do not cause corruption or the
appearance of corruption, then neither do contributions to groups that make those independent
expenditures. The nine-judge panel ruled unanimously that “contributions to groups that make
only independent expenditures cannot corrupt or create the appearance of corruption” and that
limits on individual contributions “violate the First Amendment by preventing plaintiffs from
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donating to SpeechNow in excess of the limits and by prohibiting SpeechNow from accepting
donations in excess of the limits” (SpeechNow.org 2010, 14, 16).
The Federal Election Commission Advisory Opinions
In July 2010, the Federal Election Commission (FEC) issued two advisory opinions to
clarify the implementation of these court decisions. The first opinion confirmed that independent
expenditure-only political committees are not subject to federal contribution limits as a result of
the SpeechNow.org decision. In the second opinion, the FEC went beyond the SpeechNow.org
decision and determined that Citizens United exempted independent expenditure-only
committees from the prohibitions on corporate and union contributions as well as individual
contributions. These FEC rulings thus made it possible for a PAC to raise unlimited amounts
from individuals, corporations and unions and spend unlimited amounts to make express
advocacy independent expenditure appeals close to an election as long as they did not coordinate
with candidates or parties.
Super PACs
The SpeechNow.org and Citizens United decisions and the FEC rulings opened the door
to a new type of campaign organization—the independent expenditure-only political committee
or super PAC. Like traditional PACs, super PACs are still required to register their committees
and disclose their contributions and spending to the FEC, but super PACs cannot make
contributions directly to candidates or parties as traditional PACs do. These new independent
expenditure-only PACs can spend all of their money on elections, and the public can follow their
activities because super PACs must disclose what they raise and spend. Former FEC chairman
Trevor Potter said the new super PACs are “the clearest, easiest way to spend unlimited funds on
an election . . . pretty much the holy grail that people have been looking for” (Eggen and Farnam
2010, A1).
7
Non-Profit, Tax-Exempt 501(c) Organizations
The campaign finance development that caused the most controversy in 2010 was the
surge in the use of non-profit, tax-exempt groups organized under section 501(c) of the Internal
Revenue Code for activities designed to influence the outcome of federal elections. These
organizations are permitted to engage in political campaign activity for candidates, provided that
this is not their primary activity, which generally means that no more than half of their budget
can be spent on election-related activities. While these electorally active 501(c) groups report
some of their spending, they are not required to disclose their donors. This aspect of the law is
not new, but it has attracted a great deal of attention because of the increased use of 501(c)
groups for electoral activity in 2010 and thus the increased level of undisclosed campaign
finance activity overall. Individuals, groups, and now corporations and unions that want to
spend money to influence elections but do not want to publicly disclose they are doing so are
legally permitted to channel now unlimited amounts through these 501(c) organizations.
There are three types of electorally active 501(c) groups. The Internal Revenue Service
describes a 501(c)(4) group as a social welfare organization. Contributions to a 501(c)(4) are not
tax deductible and could be subject to a gift tax, so contributors would have to be motivated to
avoid disclosure if they are willing to pay a tax on their donations (note, however, that the IRS
started but then dropped an inquiry into whether some of these groups’ contributors should have
paid the gift tax in 2010). The biggest spending 501(c)(4) organizations in 2010 were the
American Action Network, Crossroads Grassroots Policy Strategies and American Future Fund,
all conservative groups. The Center for Responsive Politics reports that these three groups alone
spent $76 million on independent expenditures and electioneering communications during the
2010 election.
8
Labor unions can organize under section 501(c)(5), and the most active of these groups in
2010 was the Service Employees International Union, which reported spending $15.8 million on
independent expenditures and communication costs. Union spending overall constituted a far
smaller portion of all spending in 2010 than it had in previous elections. Labor unions were far
outspent by conservative groups. The Center for Responsive Politics (hereafter CRP) analyzed
union and non-union spending in 2010 and found that unions accounted for only 16 percent of all
non-party independent expenditures, electioneering communications and communications costs.
In the 2006 midterm election, when Democrats won control of the House and Senate, union
spending was 31.5 percent of such spending (CRP 2011a). Just the top four conservative
groups—the Chamber of Commerce, American Action Network, American Crossroads and
Crossroads Grassroots Policy Strategies—spent $97.6 million on the 2010 elections, almost
twice as much as the $46.7 million spent by all labor unions (ibid.).
Section 501(c)(6) organizations are trade associations or business leagues. One
501(c)(6), the U.S. Chamber of Commerce, spent $32.9 million on electioneering
communications and was the largest non-party spender in 2010. Much of the corporate money
spent in 2010 appears to have been channeled through the Chamber of Commerce and other
501(c)(4) and 501(c)(6) groups that do not disclose the source of their donations. The most high
profile corporate donation was the $1 million that News Corp., the parent company of Fox News,
gave to the Chamber of Commerce in September 2010.
Note, however, that, as the Campaign Finance Institute reports, 501(c) nonprofit
campaign spending actually surged in 2008, before the Citizens United decision, due to the
Wisconsin Right to Life decision in 2007 (Campaign Finance Institute 2010a, 4). Thus, 501(c)
groups are not a new tool for raising and spending corporate campaign money. What is new is
the increased money flowing into these organizations for campaign activity. In 2004 and 2006,
9
501(c) non-profits spent nothing at all on electioneering communications and independent
expenditures, they spent nearly $79 million on these activities in 2008, after the Wisconsin Right
to Life decision, and spent almost double that, $134 million, in 2010 after Citizens United and
SpeechNow.org (CRP 2011b). The question is whether this is old money shifted from other
types of groups or individual spenders, or is this new corporate and union money seeking
spending outlets for anonymous donations to influence elections?
527 Committees
Just a few years ago, tax-exempt groups that organized under section 527 of the Internal
Revenue Code were seen by many as the biggest problem in the campaign finance world.
Section 527 committees are political organizations that work to influence the selection,
nomination, election or appointment of candidates to federal, state, or local offices. After the
Bipartisan Campaign Reform Act banned soft money contributions to political parties in 2002, it
appeared that much of that unlimited money gravitated to 527 committees, then often referred to
as “stealth PACs” (Dwyre 2007; see also Boatright et al. 2006; and Weissman and Hassan 2006).
Congress has since tightened up disclosure and contribution requirements.
Today, those 527 committees whose primary activity is to nominate or elect one or more
federal candidates and that accept contributions or make expenditures of over $1000 must
register with the FEC and must disclose their donors and expenditures. Other 527s file annually
with the IRS. If a 527 does not disclose a contribution it must pay a tax on that donation.
Moreover, 527 committees are no longer subject to contributions limits and source restrictions
and thus can take unlimited contributions from individuals, corporations and unions.
There are more federally-focused 527 committees than at any time since 2004: currently
336, up from 284 in 2008. They reported spending $211.4 million on federally-focused activities
in 2010, up slightly from the $205.2 million spent in the last midterm election in 2006, down
10
slightly from 2008, when they spent $254.3 million, and way down from the $441.5 million 527s
spent in 2004 (CRP 2011c). These declining expenditures suggest that those individuals,
corporations and others that want to spend money to influence federal elections may be shifting
their funds to other types of organizations such as super PACs or 501(c) groups.
Where Did Political Money Go?
How did the changed campaign finance landscape affect the flow of political money?
Was there a flood of corporate (or union) money into the system? Did corporations seek ways to
influence federal elections that did not reveal their activities? Was there a shift in the balance of
financial, and therefore possibly speech power in the 2010 congressional elections? Analysis of
campaign finance data from the 2010 and prior elections reveal some interesting evidence that
suggests there was indeed an increase in corporate spending and that much of it was not
disclosed publicly. One result of this was a decrease in spending by parties and candidates
relative to the outside spending done by others, including corporations, unions and PACs.
A Flood of Corporate Money?
Various theories about the effects of campaign finance changes predict particular
outcomes depending on the nature of the changes. One theory often advanced by reform
advocates is that the rules and regulations governing campaign finance activities can direct the
flow of money by opening and closing various channels for raising and spending money. La
Raja calls this the “floodgate” theory, whereby, for example, a ban on corporate and union
money in elections turns the “spigot” off, and lifting the ban, as the Citizens United and
SpeechNow.org cases have done, will “flood” campaigns with corporate and union money (La
Raja 2011, 11). This is the prediction President Obama made in his 2010 State of the Union
Address and many reform advocates and media commentators have echoed. Did it happen?
11
It is difficult to answer this question directly because corporations did not generally
engage in political spending themselves. Indeed, corporations spent only $51,098 on
independent expenditures directly from their treasuries in the first year they were permitted to do
so (CRP 2011b).5 Thus Citizens United did not immediately unleash a torrent of direct corporate
spending. Much of the corporate money spent in the 2010 elections was given to intermediary
groups (super PACs, 527s and 501(c) non-profits), and only some of those groups were required
to disclose those corporate contributions (more on this disclosure issue below). So, it will be
difficult to discover exactly how much corporate money was spent.
We can, however, measure reported non-party outside spending by these groups more
generally (spending that does not include contributions to candidates and parties). The primary
methods of non-party outside spending are independent expenditures (advertisements that
directly call for the election or defeat of a candidate) and electioneering communications
(broadcast, cable or satellite communications run close to elections that mention a candidate’s
name but do not expressly advocate for the election or defeat of a candidate). Non-party
spending on independent expenditures and electioneering communications increased
approximately 130% in 2010 from 2008, a presidential election year (Campaign Finance
Institute 2010b), and such spending grew by 338% since the 2006 midterm elections, substantial
growth indeed (CRP 2011b).
Figure 1 shows the reported spending by various types of non-party groups—
corporations, unions, super PACs, 501c non-profits, 527 groups, traditional PACs, and others—
from 1990 to 2010. Figure 1 illustrates the extraordinary increase in outside spending since the
last midterm election in 2006. Presumably some of this money came from corporate sources, but
exactly how much of that is new corporate money unleashed by Citizens United is not clear,
12
because much of the corporate money was channeled through other groups that do not have to
disclose the source of their donations.
[Figure 1 about here]
Figure 1 also highlights the preference among spenders for independent expenditures
over electioneering communications. This preference for independent expenditures is no
surprise since independent expenditures expressly advocate the election or defeat of a candidate,
certainly a clearer and more effective message than merely mentioning a candidate in an
electioneering communication. Indeed, since Citizens United now allows corporations and
unions to use their treasury funds to pay for independent expenditures, and SpeechNow.org and
the recent FEC rulings permit corporations to give unlimited amounts of treasury money to other
groups to make independent expenditures, corporate treasury money may account for most of the
increased spending on independent expenditures. However, exactly how much is not known,
because corporations spent through super PACs, 501(c) groups and 527 committees, and 501(c)
groups and some 527 committees do not disclose the source of their donations. So, the paper
trail is incomplete (more on that later).
We also can look at who spent money and how much they spent to get a more detailed
picture. Figure 2 shows reported non-party outside spending by type of group (PAC, 527, Super
PAC, or 501c organization, as well as corporate and union treasury spending) since 2004.6 Some
patterns are quite clear. For instance, unions and especially corporations did not really take
advantage of their new ability to spend treasury funds directly on independent expenditures in
2010: unions spent $10.9 million and corporations spent only $51,098.
Super PACs are new in 2010, created by Citizens United and SpeechNow.org, and they
are required to disclose their donations and spending. So, we know that corporations gave more
than $15 million to super PACs in 2010 (CRP 2011b). Since corporations could not make
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contributions to groups from their treasuries for independent expenditures prior to 2010 (but
could do so for electioneering communications), much of this super PAC money could be new
corporate money. Yet, super PACs spent $65.1 million in the 2010 elections, and only $15
million (23%) of that came from corporate treasuries (ibid.). So, if corporate money flooded the
system, the super PAC was not the vehicle of choice. Note, however, that much of the money
contributed to super PACs was from executives and managers of corporations. Thus, general
corporate influence may have been much larger than the $15 million directly from corporate
treasuries indicates.
The super PAC with the most spending in 2010 was American Crossroads, run by former
Bush adviser Carl Rove and former RNC Chairman Ed Gillespie. American Crossroads
accounted for a full third of all super PAC spending in 2010, with $21.6 million in independent
expenditures, all of it spent to defeat Democrats, and 78% of that spending on negative ads
against Democrats (CRP 2011d). The next biggest super PAC spender was America Families
First Action Fund, a liberal group that targeted Republican House candidates for defeat with $5.9
million in spending (ibid.).
[Figure 2 about here]
It is also clear from Figure 2 that those who control campaign money did not direct much
of that money to non-party Section 527 committees in 2010. Indeed, 527 committees only spent
big in the immediate wake of the 2002 Bipartisan Campaign Reform Act that banned soft money
contributions to parties. Moreover, spending by traditional PACs went up from the 2006
midterm election, from $37 million to $61.4 million. Yet none of this is corporate money, since
corporations may not give treasury money to traditional PACs. So, no flood of corporate money
there either. Note again, however, that corporate executive and managers still gave quite a lot to
traditional PACs (within the contribution limits), but that some of them may have declined to
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give to PACs in 2010 because their corporations can now give to super PACs, 501(c)s and 527
committees.
As Figure 2 shows, the big outside spenders in 2010, and where we saw the largest
increase in outside spending from 2008, were 501(c) non-profit organizations. These
organizations are not required to disclose the source of their donations. Thus, we cannot know
exactly how much of the 501(c) spending was funded by corporations. We do know that during
the 2008 election, the only outlet for corporate treasury funds was to spend that money on
electioneering communications, either directly themselves or through 501(c) and other groups, as
allowed by the 2007 decision in Wisconsin Right to Life. Before 2007, corporations and unions
were not permitted to spend any money from their treasuries in federal elections. Figure 2 shows
that in 2008 corporations may have taken advantage of their new ability to spend on
electioneering communications, and that they did much of this spending via 501(c) groups
because they spent nothing directly from their treasuries that year (i.e., 2008 is the first time we
see 501(c) outside spending, just after the Wisconsin decision that allowed corporations to use
treasury funds to pay for electioneering communications).
We saw much of the same in 2010, with corporations spending very little directly and not
much via 527s. The unusual increase in 501(c) spending from a presidential to a midterm
election year suggests that Citizens United and SpeechNow.org had something to do with it.
Thus, the increase in 501(c) spending in 2010 most likely represents a jump in corporate
spending. Yet this trend started in 2008. So, if the floodgates are open they began to open with
the Wisconsin decision in 2007 and opened more in 2010 with the Citizens United and
SpeechNow.org decisions.
That there was an increase in corporate money in 2010 seems clear. Whether it was a
flood is less clear. Indeed, the real question to ask is “as compared to what?” After considering
15
what motivated the significant increase in secret money in 2010, I examine corporate and other
outside spending relative to candidate and party spending.
Secret Money: The End of Disclosure?
Disclosure of the source and use of money raised and spent to influence federal elections
has been one of the hallmarks of the U.S. campaign finance system since the modern campaign
finance era began with passage of the Federal Election Campaign Act and its amendments in the
1970s. The ability of corporations and others to anonymously influence the outcome of elections
struck many observers as contrary to the spirit of federal campaign finance laws and drew
headlines such as “Return of the Secret Donors” (New York Times, October 16, 2010), “Voters
Are In the Dark on Campaign Spending” (Washington Post, October 25, 2010), and “Secret
Spending Defines Midterm” (National Journal, October 25, 2010). While full or near-full
disclosure has not always been the norm, the recent spike in anonymous money has caused a
good deal of controversy.
Figure 3 displays the level of disclosure in federal elections since 1990. The percentage
of spending that was disclosed began to decline in 2008, when only about 67% of non-party
spending was fully disclosed. In 2010, only about half, 51.2%, of the non-party spending was
disclosed. This follows the changes in campaign finance rules and subsequent spending patterns
discussed above, whereby as soon as corporations could spend treasury money after the
Wisconsin decision in 2007, they appear to have directed that spending to 501(c) groups, which
allowed corporations to remain anonymous because these groups are not required to disclose the
source of their donations. This sequence of events offers some evidence in support of a variation
of the well-known hydraulic theory of campaign finance—the hydraulic theory of disclosure
regulation.
[Figure 3 about here]
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The hydraulic theory of campaign finance stipulates that if one avenue for fundraising or
spending is blocked or restricted, interested money will find some other channel to try to
influence the outcome of elections. That campaign money, like water, will find its own way
(Issacharoff and Karlan 1998-1999). A variation of the hydraulic theory has been applied to
other regulatory regimes. Geoffrey Manne has written about mandatory disclosure in corporate
governance (Manne 2007). Manne’s hydraulic theory of disclosure regulation holds that “as
disclosure rules impose costs on behavior subject to disclosure, where behavior can be altered at
a lower cost than the cost of disclosure, disclosure rules will induce behavioral changes rather
than increased information flow” (ibid., 485). In other words, if the costs related to disclosure
are perceived as too high, and other, less costly options are available, disclosure rules may
actually lead to unintended and undesirable behavior.
Wert, Gaddie and Bullock consider those costs: “Political action beyond . . . highly
technical policy concerns can actually serve to imperil the primary objective of any firm which is
keeping clients and customers . . . Taking controversial and highly visible political stands can
potentially cost clients and therefore lead to financial costs (Wert, Gaddie and Bullock 2011,
727). And they concur that corporations will seek to avoid this risk by masking their political
spending: “A rise in overt, direct political action by most corporations carries with it risks far
exceeding the political gains that might be achieved by acting through other agents (ibid.).
Indeed, corporations are quite motivated to find ways to influence elections that do not
call attention to their political activities. In 2010, corporate leaders saw Target Corporation
come under attack from some of its customers and shareholders and experience a nationwide
boycott after it contributed $150,000 to MN Forward, a group that supported a Minnesota
gubernatorial candidate who opposed same-sex marriage. The Target experience was a stark
example of the risks involved in the disclosure of corporate political activity. Disclosure clearly
17
affected Target’s bottom line. So, rather than risk inviting the scorn and negative public reaction
of customers, clients and shareholders, corporations that want to spend in federal elections have
found a way to do so anonymously, through 501(c) non-profits.
Manne does not necessarily recommend that disclosure requirements be dropped, but he
notes that the possible consequences of such requirements should be understood by policy
makers:
In the end, none of this means a mandatory disclosure regime is not the best form of
securities regulation from among the set of imperfect alternatives. But weighing the
relative benefits of the alternatives requires a more systematic and thoughtful
consideration of the costs. Behavioral responses to regulation, even via mere disclosure,
can be costly. Firms and managers will endeavor to circumvent costly regulations,
regulations will have unintended consequences, and dynamic market shifts may
undermine much of the regulations’ force. That these effects eradicate the benefits of
mandatory disclosure is not itself inevitable; that they exist, however, is (Manne 2007,
511).
In the case of campaign finance disclosure rules, corporations in particular appear to view
disclosure as too costly, especially since there is a legal and less costly alternative.
Figure 3 shows that the sharp decline in disclosure began in 2008, when corporations
were first permitted to spend on electioneering communications after the Wisconsin decision, and
continued to slide in 2010 in the wake of the Citizens United decision that allowed corporations
to spend unlimited amounts on express advocacy independent expenditures. Thus the decline in
disclosure parallels the changes in the campaign finance system that allowed more corporate
campaign activity.
18
Using 501(c) groups for campaign activities may not appear to be the most efficient
means to influence elections, because 501(c) organizations cannot spend all of their money on
electoral activities. Moreover, contributors to some 501(c) groups may even have to pay a tax on
their donations. Thus corporations and others who contribute to 501(c)s have to be quite
motivated to avoid disclosure if they are willing to have some of their money spent on nonelectoral activities and perhaps pay taxes on it.
Some political spending avoids disclosure as well. The Campaign Finance Institute (CFI)
points out that all organizations must report spending on express advocacy independent
expenditures and on broadcast electioneering communications run 60 days before a general
election or 30 days before a primary. However, they are not required to report electioneering
communications before those time periods (Campaign Finance Institute 2010a, 2-3). Moreover,
groups do not have to report spending on non-broadcast communications, such as mail,
telephone and Internet communications, nor are they required to report issue ads that feature a
candidate but are not legally defined as political speech. Indeed, CFI estimates that only 30% of
all 2008 independent spending and electioneering was reported, and it estimates that 2010
spending may reach $564 million, rather than the $298.5 million in reported spending (ibid.).
Thus, all data reported here and elsewhere capture only some portion of all campaign fund
raising and spending.
In response to the Citizens United decision, some congressional Democrats introduced
legislation to force campaign spenders to reveal the donors that fund their political ads, to require
sponsors to appear in ads as the sponsor, and to enhance restrictions on foreign-owned
companies (the DISCLOSE Act--Democracy Is Strengthened by Casting Light On Spending in
Elections). However, the bill failed in the Senate, unable to get the 60 votes needed to avoid a
GOP filibuster.
19
Indeed, a debate is emerging that considers whether contributing or spending in U.S.
elections is a public or a private act. Richard Briffault explains one side of the debate: “It could
be argued that disclosure of contribution information is a price that donors ought to be prepared
to pay. A campaign contribution, or any expenditure by an independent committee, is by its
nature a public act, not because it will necessarily be made in public but because it is intended to
sway the public” (Briffault 2010, 293).
The other side of the debate is getting traction in important circles. After arguing for
decades that disclosure is the only campaign finance regulation necessary, many conservatives,
including the Republican leader of congressional battles against reforms, Kentucky Senator
Mitch McConnell, and Supreme Court Justice Clarence Thomas, are now pushing to weaken
disclosure requirements, and we see some movement in that direction. For example, both
Citizens United and SpeechNow asked the court to eliminate disclosure requirements. Justice
Thomas wrote a strong dissent arguing for just that in the Citizens United case. And, in 2007,
after the Supreme Court decided in Federal Election Commission v. Wisconsin Right to Life that
corporations and unions can fund electioneering communications, the FEC ruled that groups
running electioneering communications only have to disclose those contributions that were
specifically designated for a particular ad. This made it quite easy for these organizations to
merely designate contributions as “unrestricted donations” or membership dues and thus to avoid
disclosure.
Eight of the nine justices rejected Citizens United’s request to be exempted from
disclosure requirements, and the circuit court said the same in the SpeechNow.org case. Yet,
Justice Thomas dissented from the majority’s disclosure ruling in Citizens United. He argued
that Citizens United (and others) should be granted exemption from disclosure because of the
risk that disclosure would make contributors open to intimidation and retaliation. He pointed to
20
reports around California’s 2008 Proposition 8 to ban gay marriage, where some supporters of
Proposition 8 who contributed to the cause reported that their businesses were boycotted, that
their names and home addresses were shown on a web site that targeted supporters of the ballot
measure, and that some were threatened with physical violence (Briffault 2011, 274-75).
In 2010 Justice Scalia dismissed the argument that disclosure of the names and addresses
of petition signers might chill their motivation to participate in politics: “running a democracy
takes a certain amount of civic courage,” and that “part of the reason” disclosure is important is
“so you can be out there and be responsible for the positions you have taken” (Doe v. Reed 2010,
20, 27-28).7 He also noted that “[r]equiring people to stand up in public for their political acts
fosters civic courage, without which democracy is doomed” (ibid., 24). The Supreme Court’s
support of disclosure has been long and consistent, going at least as far back as Buckley v. Valeo
(1976). Yet, there will continue to be efforts through court cases, FEC rulings and congressional
action to change that view of campaign finance disclosure or to strengthen it with efforts such as
the DISCLOSE Act.
The Balance of Power and Speech
Any time there are changes made to campaign finance rules and regulations (or to any
regulated policy area), the balance of influence or power among the various political actors
involved may shift. In the case of campaign finance policy, the various entities that raise and
spend money in and on elections are actually governed by very different rules. Now that
Wisconsin Right to Life, Citizens United, SpeechNow.org, other cases, congressional action, and
various FEC rulings have made some significant changes to the landscape, it is really only
candidates and parties that are subject to meaningful limits on their fundraising and spending,
because individuals, interest groups, corporations, labor unions and others have various ways to
raise and spend money in unlimited and often anonymous ways. Consequently, the balance of
21
potential influence of each player has shifted away from candidates and parties, giving the other
players a greater ability to inject more speech into campaigns.
Those who applauded the Supreme Court’s judgment in Citizens United might say that
the decision un-gagged speakers who want to add to the information available to voters, and the
more speech the better. Yet, a great concern of those who saw Citizens United as a misreading
of the First Amendment was that there would be a significant increase in corporate money in
U.S. federal elections, drowning out the voices of candidates and parties, and exercising undue
influence over voters and eventually policy.
Candidates, parties and traditional PACs must raise money in limited amounts and only
from non-corporate and non-union sources, while super PACs, 527 committees and 501(c) nonprofits may raise unlimited amounts from any source and make unlimited independent
expenditures and electioneering communications. Candidates may spend all that they can raise
from limited contributions, and they can spend as much of their own money as they want.
Parties and traditional PACs may contribute only limited amounts directly to candidates, and
parties can spend limited amounts on expenditures coordinated with candidates. Parties and
traditional PACs also can make independent expenditures, which cannot be coordinated with
candidates. So, parties, candidates and traditional PACs are limited in their fundraising and
spending, while individuals, corporations, unions, super PACs, 527s and 501(c)s may operate
with few if any limits, and sometimes without disclosure.
The trend of diminishing party influence goes back a long way—see, for example, Ray
LaRaja’s excellent discussion of the reforms that began this shift away from party involvement
in campaign finance with the nineteenth century Mugwumps and Progressives up to the twentyfirst century McCains and Feingolds, and, of course Austin Ranney’s classic Curing the
Mischiefs of Faction (LaRaja 2008, especially chapter 1; Ranney 1975). Parties are so heavily
22
regulated and cut out of much of the financing of campaigns in the U.S., particularly when
compared to other industrialized democracies, that relative to other non-candidate players such
as interest groups, unions and corporations, parties are left with a limited ability to play a
meaningful, and some would argue important role in American elections. And while the loss of
party influence in some instances meant the gain of candidate influence, the resulting rise of
candidate-centered politics has brought a whole host of familiar concerns about accountability
and other issues.
Recent years have been particularly tough for parties. The 2002 Bipartisan Campaign
Reform Act banned unlimited soft-money donations to parties, and the soft money ban was
upheld by the Supreme Court in McConnell v. Federal Election Commission (2003). In
Republican National Committee v. Federal Election Commission (2010),8 the U.S. District Court
for the District of Columbia upheld parts of BCRA that restrict soft money raising and spending
by parties, and the court explained that since the Supreme Court did not address contributions to
parties in Citizens United, it could not go beyond the McConnell decision (Liptak 2010). In his
opinion, Judge Kavaunaugh noted the effect on parties and his court’s inability to address it:
Under current law . . . outside groups — unlike candidates and political parties — may
receive unlimited donations both to advocate in favor of federal candidates and to
sponsor issue ads. We recognize the RNC’s concern about this disparity, which, it argues,
discriminates against the national political parties in political and legislative debates. But
that is an argument for the Supreme Court or Congress. As a lower court, it is not our
place to reassess the constitutionality of limits on contributions to political parties that the
Supreme Court has upheld. And it is not our role to question Congress's policy choice to
limit contributions to political parties (Republican National Committee 2010, 15).
23
Wisconsin Right to Life (2007) and Citizens United (2010) allowed for more corporate and union
money to flow into the system. And SpeechNow.org (2010) and the subsequent FEC rulings
allowed PACs to raise money from any source in unlimited amounts.
It is not just judges and political scientists who noticed how these changes may have
altered the balance of power among parties, candidates and outside groups. A number of
observers active in the policy area noted the effect of these changes as well. For instance, OMB
Watch (a government watchdog group that focuses on transparency in government) noted on its
web site in April 2010:
The result of this patchwork of rulings is that currently, political parties cannot seek
unlimited contributions from donors, but independent groups can. This has created an
environment that favors contributions toward largely unregulated ‘independent’ political
organizations, rather than to candidates or political parties. Some observers worry that
this will have exactly the effect that the Supreme Court and the appeals court denied it
would: an increase in corruption and a decrease in disclosure about the activities of these
groups due to the lack of a 21st-century reporting infrastructure (OMB Watch 2010).
Similarly, one of the nation’s largest and influential law firms, McKenna Long and Aldrich,
commented on the Republican National Committee and SpeechNow.org decisions in a news post
on its web site:
“[t]hese two opinions together are a body-blow to the ability of national party committees
to participate in the political marketplace. The McCain-Feingold law placed unique
restrictions on the ability of national party committees to engage in non-federal election
activity, and now in light of Citizens United and SpeechNow providing other groups the
ability to raise unlimited funds for independent expenditures, national political party
24
committees will find their voices diminished in the marketplace of ideas (McKenna Long
and Aldrich 2010).
While it may be impossible to agree on an optimal balance among the various players, it
is possible to evaluate the system as a whole according to which players are preferred by the
system or not. Many political scientists would argue that parties play a vital linkage role in
American politics that should be reflected in the campaign finance system (e.g., Kay Lawson,
Gary Jacobson, Morris Fiorina, James Sundquist, Ray LaRaja and others).
Law scholars also have noted the shift in the system, and some have called for a
recalibration that would move closer to an equilibrium in which all speakers in elections are
governed by the same regulations (e.g., Note-Harvard Law Review 2011; see also Sullivan
2010). A recent Harvard Law Review Note argued that “the efficacy of a hyper-regulated market
of campaign finance depends on the exclusion of nonsystematic money and that recapturing a
coherent electoral equilibrium is, as a policy matter, critical to the continued functionality of the
campaign finance market” (Note 2011, 1529). Similarly, Samuel Issacharoff points to the
importance of a campaign finance regulatory system that insures electoral competition. He
argues that “the question is how to use campaign finance regulation to enhance a competitive
electoral system and to guard against the corrosive distortion of political decision making as a
means toward incumbent entrenchment” (Issacharoff 2010, 142).
Next, I examine how the recent campaign finance changes have affected the control and
flow of money in federal elections and the balance of influence among the various players. Has
the new regulatory environment produced results that are contrary to the various, and sometimes
different, goals of the many players and observers of campaign finance in the U.S.? If one thinks
that parties should play a significant role in the system, then a relative decline in party campaign
finance activity would be considered a negative development. However, if one thinks that the
25
best system is one that allows for as much speech as possible, an increase in the ability for
anyone to speak would be seen as a good result.
Candidate, Party and Outside Spending: The relative level of spending by all candidates and
all non-candidates did not change dramatically from past midterms, as Figure 4a indicates.
Indeed, the big jump in spending by both candidates and outside spenders started in 2002, well
before Citizens United, and increased spending by each has generally paralleled the other since
then.
[Figure 4a and Figure 4b about here]
In Figure 4b, the outside spending is disaggregated to show a clear change in the relative
level of different sources of outside spending. From 1994 to 2002, parties and outside groups
were spending about the same amounts. Then, in 2006, party outside spending took off. But in
2010, non-party outside spending eclipsed party spending and party spending declined. While it
is not possible to say that this change in relative spending by party and non-party groups is a
direct result of Citizens United, SpeechNow.org, the FEC rulings and other recent campaign
finance changes, this shift in the balance of spending in congressional elections supports the
concern of those who argue that an influx of corporate and union money will drown out the
voices of candidates and parties and shape electoral contests to achieve their policy goals.
However, Figures 4a and 4b clearly show that candidate spending far exceeds both party
and other outside spending. So, why a concern that candidate’s voices will be drowned out by
others’ voices? We have to look more closely at individual congressional races to address this
question. Aggregate spending data for all House and Senate races (as in Figures 4a and 4b) does
not reveal the varied mix of candidate and outside spending in different races. For instance,
highly competitive races that are usually targeted by both parties and many non-party spenders
generally account for the lion’s share of outside spending (as well as much of the total spent by
26
candidates). It is in these types of races where we should expect to find shifts in the source,
distribution and relative level of spending.
Spending in Competitive Races: Figures 5a and 5b display the ten Senate races with the most
outside spending (party and non-party) in 2008 and 2010.9 Figures 5a and 5b show that in both
2008 and 2010 some of the nation’s most competitive Senate races saw candidates outspent by
non-candidate spenders, four contests in each election cycle. There are not any meaningful
differences between the two election cycles, indicating that at least since 2008, some Senate
races have featured more spending by non-candidates than candidates. The data do show that
outside spending went up in these most competitive Senate races in 2010, and since we know
that party spending went down (see Figure 4b above), at least some of this increased spending is
likely from corporate sources. Yet, this does not really appear to be a “flood” of corporate
money. Indeed, the increase in corporate money likely began in 2008 after the Wisconsin Right
to Life decision (I am still putting together the pre-2008 data—a trend may become more clear
when that is completed).
[Figures 5a and 5b about here]
Figures 6a and 6b show the ten House races with the most outside spending in 2008 and
2010. We see more significant differences between the two election cycles in House than in
Senate races. First, outside spending increased dramatically in the most competitive House
contests from 2008 to 2010. In 2008, in most of the races that attracted a lot of outside spending,
candidate spending by both candidates either kept pace or nearly so (and in some cases candidate
spending exceeded outside spending). In 2010, outside spending far exceeded candidate
spending in a number of the contests, particularly in the three most costly races (MI-7, OH-16
and NV-3).
27
The distribution of outside spending also differed from one cycle to the next. In 2008,
outside spenders spent large amounts in all top ten races, while in 2010, outside spenders
concentrated more on the those top three contests. This increased concentration of big money on
only a few targeted races is a trend that has concerned policy makers and scholars for quite some
time. This concern is likely to intensify since we saw even more concentration in 2010, and
because a lot of the outside money spent in these very few races was corporate money.
What was the effect of this outside spending? The Campaign Finance Institute reported
just after the 2010 election that “Non-Party Spending Doubled in 2010 But Did Not Dictate the
Results” (Campaign Finance Institute 2010b). CFI examined the closest House and Senate races
and determined that “party and non-party spending to help competitive Democrats and
Republicans was about equal across the parties. As a result, neither set of expenditures could be
said to have tipped the electoral balance” (ibid.). So, even though most of the outside spending
was done by conservative groups in 2010 (CRP 2011d), liberal spending kept pace in the most
competitive races.
Conclusion
In this paper, I have considered what, if any, campaign finance changes occurred in the
wake of the 2010 Citizens United and SpeechNow.org decisions. Of course, one election cycle is
not enough to truly understand the real impact of these decisions. Moreover, it is also important
to look back to many previous election cycles to detect trends and patterns in fund raising and
spending.
The 2010 and previous elections did provide some evidence to test my three hypotheses,
although not always enough to completely accept or reject them. First, there was indeed an
increase in corporate spending on federal elections in 2010, but this increase really started in
2008 after the Wisconsin Right to Life decision that opened the door for direct corporate
28
spending in federal elections. It is not possible to know exactly how much corporate money
entered the system in either 2008 or 2010, because much of the money donated to non-party and
non-PAC groups was not publicly disclosed. Yet, it is clear that corporations did give money to
these groups once they were permitted to do so, as we can see from the sudden use of 501(c)
non-profit corporations in 2008 and their increased spending in 2010 (see Figure 2).
Additionally, the advent of super PACs, a direct result of the Citizens United and
SpeechNow.org decisions, represents a whole new way of raising and spending money to
influence federal elections. Since super PACs must disclose their activities, we know the source
of their money. While only 23% of the $65.1 million spent by super PACs in 2010 came from
corporate treasuries, corporate executives and managers also gave quite generously to these new
campaign finance vehicles. Overall, super PACs injected a good deal of new spending into the
system, and some of it was from corporations. Yet, even this new way of raising and spending
corporate money does not seem to constitute a flood of new corporate money.
The increase in corporate spending in federal elections certainly started before 2010. In
fact, it may be that, as Michael Dorf argues, “Citizens United is ultimately small potatoes. The
regime of campaign finance regulation pre-Citizens United was so full of loopholes that adding
this additional one did not materially alter it” (Dorf 2011, 740). Boatright also notes that groups
such as Crossroads GPS “likely would have been a major factor in the [2010] election had the
Citizens United decision not been handed down” (Boatright 2011, 12).
My second hypothesis was that if corporations could hide their political activities, they
would. Indeed, there was a great decrease in non-party spending donor disclosure, but, once
again, that trend started in 2008 and grew significantly in 2010 (see Figure 3). As expected by
the hydraulic theory of disclosure regulations, corporations did indeed seek outlets for campaign
spending that did not require them to disclose that spending. This decrease in disclosure
29
certainly has made research in this area more difficult, but the real concern to many is the
potential it presents for hidden avenues of corruption and undue influence over policy.
The emerging debate about whether financial participation in elections is a public or a
private act is likely to continue and to heat up. On this front, there does seem to be some
opportunity to avoid an absolute solution either for or against disclosure. For instance, Richard
Briffault proposes that the disclosure limit be raised so that small contributors, those least able to
defend themselves against any retaliation that might result from their campaign finance
activities, are exempt from the requirement and therefore permitted to maintain their political
privacy (Briffault 2010). If in fact disclosure requirements have made “some individuals . . . less
willing to become politically active,” then, as Briffault notes, “[a]t a time when relatively few
people make campaign contributions, disclosure could actually be counterproductive to reform
by undermining the efforts to raise small donations.” (ibid., 292).
Raising the disclosure threshold also might quiet some of the complaints in recent legal
action that the disclosure system is overly complex and burdensome. Briffault notes that
“disclosure involves a balancing of anti-corruption, public education, and political privacy and
participation concerns, and that “[r]ethinking the benefits of disclosure should proceed in tandem
with a consideration of its costs” (ibid., 299 and 300; see also Manne 2007). Thus, full
disclosure, according to Briffault, “should be limited to major actors, that is, those who
contribute large amounts of money to candidates, parties, and political committees or who spend
large amounts on independent expenditures” (ibid., 300).
It remains to be seen if reformer advocates in Congress and pro-reform groups pushing
for more disclosure (e.g., the Center for Responsive Politics, the League of Women Voters,
Public Citizen, the Brennan Center for Justice, the Sunlight Foundation, etc.) will embrace such
an approach. While the DISLOSE Act proposed by congressional Democrats would have
30
required disclosure of some of the fundraising and spending by groups currently not disclosing,
the proposal did not address the low disclosure threshold that requires disclosure of donors who
give as little as $200. Nevertheless, changes to the system in the near future are more likely to
go in the opposite direction, as a variety of conservative groups and the Republican Party are
challenging various aspects of campaign finance law in the courts, in state legislatures and in
practice (see Rob Boatright’s excellent discussion of what is likely on the horizon in Boatright
2011, 12-13).
My final hypothesis was that the recent changes in campaign finance rules and
regulations have altered the balance of power, and thus the relative ability of various participants
to speak in federal elections. The evidence suggests that this is in fact the case. Although, once
again, the trend began long before 2010. The climb in outside spending started in 2004 and it
continued in 2010, when non-party outside spending eclipsed party outside spending (see Figure
4b). Indeed, various recent court decisions and FEC rulings have resulted in a situation where
candidates, parties and some PACs are the only participants in the federal campaign finance
system subject to fundraising and spending limits. So, it is no surprise that the other participants
are able to out-raise and out-spend candidates and parties.
The effects of this increased outside spending are most evident in competitive House
races (see Figures 6a and 6b), where there was indeed a significant shift from 2008 to 2010 in the
relative level of candidate and non-candidate spending in the very few most competitive races. It
looks like a good deal of any new corporate, union and other money gravitated to these targeted
House contests, where the candidates in 2010’s top three most expensive House races were far
outspent by party and non-party spenders (see Figure 6b).
Whether this shift in the balance of spending (and thus presumably speech) in these few
House races is of concern depends on one’s perspective and whether the trend continues and
31
expands to more contests. If more and more races feature so much outside spending that
candidates’ voices are diluted, certainly many candidates would not approve. Much of the
outside spending is quite negative and candidates often get blamed for the negative tone of the
campaign, even if they are running nothing but positive ads themselves. Many scholars, reform
advocates and some policymakers also would see this as a negative development, particularly if
the trend toward non-party outside spending continues to outpace party outside spending.
Supporters of deregulation might not be concerned, for they are likely to value the liberty
of allowing more speech by more speakers. Yet, some deregulation advocates have tried to
liberate candidates and parties from contribution and spending limits (e.g., Republican National
Committee v. Federal Election Commission 2010). Of course, given the general agreement that
candidates and their parties are the most likely nexus for quid pro quo corruption, any effort to
level the playing field by eliminating or lowering contribution and spending limits for candidates
and parties is not likely to succeed. Indeed, the Supreme Court has signaled that candidate and
party campaign finance activity is the only kind that presents a risk of corruption and thus the
only kind that warrants government regulation. Consequently, if anything is to be done to end
the trend of non-party outside spending outpacing candidate and party spending, it will probably
have to come from Congress, something that is not likely to happen in the near future given the
highly polarized Congress elected in the 2010 elections (Boatright 2011, 12).
Analysis of more election cycles will clarify the effects of recent campaign finance
changes. Moreover, examining additional previous elections for the candidate v. non-candidate
spending analysis (Figures 5a, 5b, 6a and 6b) might reveal if the apparent trend away from the
dominance of candidate spending relative to other spending is the result of the recent changes.
Further analysis of current data will also help. For instance, disaggregating party from non-party
spending in the targeted congressional races will allow a more nuanced analysis that is likely to
32
reveal more about the source of this increased non-candidate spending. So, there are some good
avenues for further research.
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SpeechNow.org v. Federal Election Commission. 599 F.3d 686 (D.C. Cir. 2010).
Sullivan, Kathleen M. 2010. “The Supreme Court, 2009 Term—Comment: Two Concepts of
Freedom of Speech.” Harvard Law Review 124:143-177.
Weissman, Stephen and Ruth Hassan. 2006. “BCRA and the 527 Groups.” In Michael J.
Malbin, ed., The Election after Reform: Money, Politics and the Bipartisan Campaign Reform
Act (Lanham, MD: Rowman and Littlefield, 2006).
Wert, Justin, Ronald Gaddie and Charles Bullock. 2011. “Of Benedick and Beatrice: Citizens
United and the Reign of the Laggard Court.” Cornell Journal of Law and Public Policy 20:719737.
35
Figure 1: Reported NonParty Outside Spending, 19902010
350
300
Millions of Dollars
250
200
Communication
Costs
150
Electioneering
Communications
Independent
Expenditures
100
50
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: Center for Responsive Politics. 2011. "Outside Spending" at
www.opensecrets.org/outsidespending (accessed 12 March 2011).
36
Figure 2: Reported Non-Party Outside Spending by Type of Group,
2004-2010
Millions of Dollars
300
250
Union Treasury
Ind Expends
200
Corp Treasury
Ind Expends
PAC
150
527
100
Super PAC
50
501c
0
2004
2006
2008
2010
Source: Center for Responsive Politics. 2011. "Citizens United Decision Profoundly Affects
Political Landscape," 7 August 2011 at http://www.opensecrets.org/news/2011/05/citizensunited-decision-profoundly-affects-political-landscape.html (accessed 10
37
Figure 3: NonParty Spending Donor Disclosure, 19902010
100%
90%
80%
Full
Disclosure
70%
60%
No
Disclosure
50%
40%
Some
Disclosure
30%
20%
10%
0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: Center for Responsive Politics. 2011. "Outside Spending" at
www.opensecrets.orgoutsidespending (accessed March 13, 2011).
38
Figure 4a: Congressional Candidate and Outside Spending
(parties and groups) in Midterm Elections, 19942010
1,600
Millions of Dollars
1,400
Total
Outside
Spending
1,200
1,000
800
Total
Candidate
Spending
600
400
200
0
1994
1998
2002
2006
2010
Figure 4b: Congressional Candidate and Outside Spending in
Midterms by type of spending, 19942010
1,600
Total Party
Outside
Spending
1,400
Millions of Dollars
1,200
Total Non‐
Party
Outside
Spending
1,000
800
600
Total
Candidate
Spending
400
200
0
1994
1998
2002
2006
2010
Source: House and Senate 1994 - 2006 candidate spending data from Federal Election Commission, "Congressional
Candidates Raised $1.42 Billion in 2007-2008." News release, December 29, 2009; 2010 candidate spending from
Campaign Finance Institute/Vital Statistics on Congress at http://www.cfinst.org/data.aspx. Outside spending data
from Center for Responsive Politics, “Outside Spending” at http://www.opensecrets.org/outsidespending/index.php
(accessed 8 August 2011).
39
Figure 5a: Senate Races with the Most Outside Spending
(party and group), 2008
60
Millions of Dollars
50
Total
Outside
Spending
40
30
Total
Candidate
Speding
20
10
0
OR
NC
NH
MN
CO
GA
MS
KY
LA
AK
Source: Federal Election Commission. 2009. "Congressional Candidates Raised $1.42
Billion in 2007-2008." News release, December 29.
Figure 5b: Senate Races with the Most Outside Spending
(party and group), 2010
60
Millions of Dollars
50
Total
Outside
Spending
40
30
Total
Candidate
Spending
20
10
0
CO
PA
IL
WA
CA
NV
MO
WV
KY
FL
Source: Center for Responsive Politics. 2011. "Outside Spending" at
www.opensecrets.org/outsidespending (accessed 7 August 2011).
40
Figure 6a: House Races with the Most Outside Spending
(party and group), 2008
10
9
Millions of Dollars
8
Total Outside
Spending
7
6
5
Total
Candidate
Spending
4
3
2
1
0
MN‐3 MI‐7 NM‐1 OH‐15 MS‐1 CO‐4
NV‐3
MI‐9
LA‐6
NJ‐7
Source: Federal Election Commission. 2009. "Congressional Candidates Raised $1.42
Billion in 2007-2008." News release, December 29.
Figure 6b: House Races with the Most Outside Spending
(party and group), 2010
10
9
Millions of Dollars
8
Total
Outside
Spending
7
6
5
4
Total
Candidate
Spending
3
2
1
0
MI‐7 OH‐16 NV‐3
VA‐5 MA‐10 NH‐2
AZ‐5
MI‐1
WA‐3 MI‐9
Source: Center for Responsive Politics. 2011. "Outside Spending" at
www.opensecrets.org/outsidespending (accessed 7 August 2011).
41
1
This paper draws from Diana Dwyre, "Old Games, New Tricks: Money in the 2010 Elections,"
Extensions, Summer 2011. Copyright 2011, Carl Albert Congressional Research and Studies
Center, University of Oklahoma, all rights reserved.
2
Citizens United v. Federal Election Commission 558 U.S. ___ (2010), all citations in this paper
refer to the slip opinion 130 S. Ct. 876 (2010) and are hereafter cited as Citizens United 2010.
3
SpeechNow.org v. Federal Election Commission 599 F.3d 686 (D.C. Cir. 2010), hereafter cited
as SpeechNow.org 2010.
4
Federal Election Commission v. Wisconsin Right to Life 551 U.S. 449 (2007), hereafter cited
as Wisconsin Right to Life 2007.
5
Note that unions spent more from their treasuries in 2010: $10.9 million (CRP 2011b).
6
Note that other types of groups spent money as well. For example, qualified non-profit
corporations, which are ideological 501(c)(4) groups such as Planned Parenthood and the
Humane Society, spent $7.5 million on independent expenditures and electioneering
communications in 2010, but they were excluded from this analysis because these groups cannot
take corporate or union funds (CRP 2011b).
7
Doe v. Reed 561 U.S. ____ (2010) all citations in this paper refer to the slip opinion 130 S. Ct.
2811 (2010) and are hereafter cited as Doe v. Reed 2010.
8
Republican National Committee v. Federal Election Commission 698 F. Supp. 2d 150
(D.D.C.), aff’d, 130 S. Ct. 3544 (2010). Citation here is to the D.C. District Court decision.
9
Note that the non-candidate spending includes both party and non-party independent
expenditures, electioneering communications and communications costs. I am still working to
create a data set that disaggregates party from non-party outside spending . . . please stay tuned.
42
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