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 Preliminary Draft: Please do not quote without permission.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 6 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 13 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 14 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] 16 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. References Aldrich, John. 1995. Why Parties: The Origin and Transformation of Political Parties in America. Chicago: University of Chicago Press. Boatright, Robert, Michael Malbin, Mark Rozell and Clyde Wilcox. 2006. “Interest Groups and Advocacy Organizations after BCRA.” In Michael J. Malbin, ed., The Election after Reform: Money, Politics and the Bipartisan Campaign Reform Act (Lanham, MD: Rowman and Littlefield, 2006). Briffault, Richard. 2010. “Campaign Finance Disclosure 2.0” Election Law Journal 9:273-303. Buckley v. Valeo. 424 U.S. 1 (1976). Calmes, Jackie and Carl Hulse. 2010. “Obama Assails Republicans on Campaign Finance.” New York Times July 26. Campaign Finance Institute/Vital Statistics on Congress. 2011. “Data” at http://www.cfinst.org/data.aspx (accessed 20 May 2011). Campaign Finance Institute. 2010a. “Election-Related Spending by Political Committees and Non-Profits up 40% in 2010.” News release October 18. Campaign Finance Institute. 2010b. “Non-Party Spending Doubled in 2010 But Did Not Dictate the Results.” News release November 5. Center for Responsive Politics. 2011a. “Union Muscle Eclipsed by High-Profile Conservative Groups During 2010 Election.” News release March 2, at www.opensecrets.org/news/2011/03/, (accessed March 12, 2011). Center for Responsive Politics 2011b. “Citizens United Decision Profoundly Affects Political Landscape.” 7 August 2011 at http://www.opensecrets.org/news/2011/05/citizens-uniteddecision-profoundly-affects-political-landscape.html (accessed 8 August 2011). Center for Responsive Politics. 2011c. “527s: Advocacy Group Spending” at http://www.opensecrets.org/527s/index.php (accessed 7 August 2011). Center for Responsive Politics. 2011d. “Outside Spending” at http://www.opensecrets.org/outsidespending/index.php (accessed 6 August 2011). 33 Citizens United v. Federal Election Commission. 558 U.S. 08-205 (2010). Dworkin, Ronald. 2010. “The Decision that Threatens Democracy. New York Review of Books, May 13, at www.nybooks.com/articles/archives/2010/may/13/decision-threatens-democracy/. Dorf, Michael. 2011. “The Marginality of Citizens United.” Cornell Journal of Law and Public Policy 20:739-752. Dwyre, Diana. 2011. "Old Games, New Tricks: Money in the 2010 Elections." Extensions, Summer 2011. Norman, Oklahoma: Carl Albert Congressional Research and Studies Center. Dwyre, Diana. 2007. “527s: The New Bad Guys of Campaign Finance.” In Allan J. Cigler and Burdett A. Loomis, eds. Interest Group Politics, 7th Ed. (Washington, D.C.: CQ Press). Dwyre, Diana and Robin Kolodny, “The Parties’ Congressional Campaign Committees in 2004.” In Michael J. Malbin, ed., The Election after Reform: Money, Politics and the Bipartisan Campaign Reform Act (Lanham, MD: Rowman and Littlefield, 2006). Eggen, Dan and T.W. Farnam. 2010. “ ‘Super PACs’ Alter Campaign.” The Washington Post, September 28, A1. Federal Election Commission. 2011. “Ongoing Litigation: SpeechNow.org v. FEC” at http://www.fec.gov/law/litigation/speechnow.shtml (accessed 13 August 2011). Federal Election Commission. 2009. "Congressional Candidates Raised $1.42 Billion in 20072008." News release, December 29. Federal Election Commission v. Wisconsin Right to Life. 551 U.S. 449 (2007). Greenhouse, Linda. 2010. “Justice Alito’s Reaction” New York Times January 27. Issacharoff, Samuel. 2010. “The Supreme Court—Comments: On Political Corruption.” Harvard Law Review 124:118-142. Issacharoff, Samuel and Pamela Karlan. 1998-1999. “The Hydraulics of Campaign Finance Reform.” Texas Law Review 77:1705. Kolodny, Robin and Diana Dwyre, “A New Rule Book: Party Money after BCRA.” In David B. Magleby, Anthony Corrado, and Kelly D. Patterson, eds., Financing the 2004 Election (Washington, D.C.: Brookings Institution Press, 2006). La Raja, Raymond. 2008. Small Change: Money, Political Parties, and Campaign Finance Reform. Ann Arbor: The University of Michigan Press. 34 La Raja, Raymond. 2011. “Will Citizens United v. FEC Give More Power to Corporations?” Paper presented at the 2011 Meeting of the Midwest Political Science Association, Chicago, IL, March 31-April 3. Liptak, Adam. 2010. “Courts Take On Campaign Finance Decision.” New York Times. March 26 at http://www.nytimes.com/2010/03/27/us/politics/27campaign.html (accessed 22 May 2011). Manne, Geoffrey. 2007. “The Hydraulic Theory of Disclosure Regulation and Other Costs of Disclosure.” Alabama Law Review 58:473-511. McConnell, Mitch. 2010. “’Completely wrong’ on Citizens United.” News release from U.S. Senator Mitch McConnell, January 28 at http://mcconnell.senate.gov/public/index.cfm?p=PressReleases. McConnell v. Federal Election Commission. 540 U.S. 93 (2003) McKenna Long and Aldrich. 2010. “Two Important Rulings, SpeechNow v. FEC and RNC v. FEC, Clarify Practical Applications of Citizens United Supreme Court Decision.” March 29 at http://www.mckennalong.com/news-advisories-2279.html (accessed 22 May 2011). Note. 2011. “Restoring Electoral Equilibrium in the Wake of Constitutionalized Campaign Finance.” Harvard Law Review 124:1528-1549. OMB Watch . 2010. “SpeechNow.org Decision May Expand the Role of Independent Groups.” April 6 at http://www.ombwatch.org/node/10894 (accessed 22 May 2011). Ranney, Austin. 1975. Curing the Mischiefs of Faction: Party Reform in America. Berkeley: University of California Press. Republican National Committee v. Federal Election Commission. 698 F. Supp. 2d 150 (D.D.C.), aff’d, 130 S. Ct. 3544 (2010). 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 View publication stats