February 13, 2002
In the midst of the controversy over foreign money in the 1996 elections, a pollster asked whether interviewees preferred new campaign finance laws or better enforcement of the laws already on the books. Americans responded quite sensibly that they preferred enforcing the laws we already had.
Today, in the wake of a different financial controversy, Congress appears on the verge of adopting major revisions to our campaign finance laws, curiously despite the fact that no one has even alleged that Enron or anyone associated with Enron violated any existing campaign finance law.
Now one of the long-standing rationales for campaign finance reform is the allegation that the Federal Election Commission has failed to enforce the existing law with sufficient vigor. But before rushing to pass a new law to invigorate enforcement, perhaps we should consider why campaign finance laws have proven difficult to enforce--at the state and national level, and across time--and whether the legislation proposed is likely to improve the situation.
In fact, the Shays-Meehan bill2 would make it more difficult to achieve consistent, fair, and, yes, vigorous enforcement of campaign finance laws--even of laws already on the books--by introducing several brand-new, untested legal standards which would be applied to newly defined groups at differing dollar thresholds and divergent periods of time. Furthermore, certain significant provisions of Shays-Meehan are so complex, so vague, or so broad as to be unworkable or unenforceable. For instance,
Some of these concerns are related to the judicial concepts of vagueness and overbreadth that have been applied to invalidate on constitutional grounds various provisions of campaign finance laws. In fact, I believe that some provisions of Shays-Meehan (the 30/60 day "electioneering" black-out, for instance) are flatly unconstitutional and that other provisions raise significant constitutional difficulties. There are yet other provisions that I personally believe represent poor policy choices. My job, however, is to enforce the law that Congress writes (consistent with the Constitution), so for today's discussion I will put aside my specifically constitutional concerns and my policy preferences to ask whether Shays-Meehan as written can be enforced to achieve the apparently intended results. I conclude that it cannot.
Thus, even if you are willing to leave constitutional issues entirely to the courts, this bill needs to be rewritten to produce a coherent regulatory framework. Even those who fully support the policies sought in Shays-Meehan would be well advised to support a trip to conference to smooth out some obvious flaws, kinks, and gaps in the bill.
First, let me address provisions and features of the bill which make enforcement merely difficult. (Or, as the Marines say, the difficult we can do immediately, the impossible takes a bit longer.) Shays-Meehan has numerous, poorly defined standards which are applied differently to different groups, in different dollar amounts, and at different times creating a complexity that makes voluntary or administrative enforcement quite difficult. In this same category of difficulty, Shays-Meehan would expand the jurisdiction of the Federal Election Commission in diverse and significant ways without adequate attention to how that jurisdiction can be exercised and how these new tasks relate to existing enforcement priorities.
The Federal Election Commission currently regulates expenditures "in connection with" a federal election or "for the purpose of influencing" a federal election. The Supreme Court and the Commission have interpreted these two phrases as functionally equivalent for most purposes, and the Court has limited the reach of these phrases in many instances to "express advocacy of a clearly identified candidate." Thus, today we have functionally a single statutory standard establishing our regulatory authority and one significant judicial interpretation limiting that authority. Shays-Meehan would add to the existing statutory and judicial standards new categories, including:
The Federal Election Campaign Act currently requires reporting by political committees (generally, groups making more than $1,000 in expenditures or contributions), generally with a $200 itemization threshold, and by persons making Independent Expenditures. Shays-Meehan would require new or additional reporting by or for:
This legislation essentially creates a new type of organization, the 501(c)(4) electioneering communication committee and significantly extends the scope of federal regulation of state and local party activity, forcing many local parties to register and comply with FEC regulations for the first time. Several provisions of the bill even address activity by state or local candidates and by private, non-political organizations to the extent that political parties or federal candidates are involved with them.
In summary, Shays-Meehan would expand the FEC's jurisdiction in terms of the scope and type of activities it regulates and the type and number of organizations regulated. It would diversify the regulatory standards imposed, and the thresholds and time periods in which they apply. It would multiply reporting requirements and introduce new thresholds and categories for reporting. Who and what we regulate is greatly expanded by Shays-Meehan, and the standards for regulation diversify greatly. Who reports, what they report, when, and in what increments likewise changes dramatically and becomes more complex. There is no question that monitoring and enforcing these new requirements will require significant new enforcement resources or will spread current resources far more thinly.
Lest anyone think I am merely complaining that my job under Shays-Meehan would just be too hard for my taste, let me remind you that the federal income tax system is voluntary. What is meant by a "voluntary" tax system is not that paying is voluntary, but that each taxpayer keeps his own records and calculates his own taxes, rather than having the IRS do so. Every regulatory and police agency relies on voluntary compliance in this sense. In fact, most political parties, PACs, candidates, corporations, and unions are resigned if nothing else to complying with whatever laws Congress writes and whatever regulations the FEC imposes. As an agency, we spend a significant portion of our budget on publications and seminars aimed simply at informing these groups what the law requires.
Last year the FEC hired a new General Counsel. We interviewed lawyers from top private law firms and attorneys who held senior positions in the Justice Department and in other regulatory agencies. Candidates included former Supreme Court clerks and high-ranked graduates of top-tier law schools. Nearly every one of the applicants commented spontaneously on the complexity of the Federal Election Campaign Act. Shays-Meehan would make it significantly more complex. If you are the chairman of a local political party (and in all likelihood not an attorney of any sort), under Shays-Meehan you would have to figure out whether you can include the names of congressional and Senate candidates in a get-out-the-vote mailing or a sample ballot (the answers would be different), how you could legally pay for it, whether you must report it to the FEC (and what else you need to report along with it). You would have to decide if a particular reference to a federal candidate might be interpreted as "promoting or supporting" the candidate: How would that apply to endorsements of local candidates by a popular incumbent Senator? You might discover that your local Congressman could be a featured guest at a fundraiser as long the funds were used in limited ways, could appear at some other types of fundraisers as long as he did not actually ask for money, and might be prohibited from even showing up at still other local party events. If you were foolish enough to attempt to run a voter registration or get-out-the-vote drive, you would discover that you would need to maintain three separate bank accounts (with three sets of rules as to what could be deposited in each), subject to three different reporting regimes. You might, after all, just give up.
Of course, it would be unjust to penalize a local party for a technical violation of a law that a person of reasonable intelligence would have difficulty deciphering, so the Commission would be reluctant to impose many penalties. And even if the Commission were determined to root out every reporting lapse by every local party in America, we would never have the resources to do it. Some might view the prospect of lax enforcement of an unreasonably complex law as a silver lining, akin to the old saw that "It's a good thing we don't get all the government we pay for." That is far from the truth, however. In the first place, spotty enforcement is a recipe for invidious enforcement: singling out disfavored groups or causes, and even if the regulatory agency is relatively even-handed, the availability of a complaint process subjects regulated entities to harassment by political opponents or disgruntled persons. In the second place, lax enforcement leaves those who are conscientious in attempting to comply with the law at a disadvantage as compared to scofflaws who may be willing to run the small risk of enforcement action.
Even if Congress gives the Commission significant new resources and Commissioners take a hard line on enforcement, some provisions of the law will prove difficult to enforce. The new 501(c)(4) "electioneering committees," for instance, are required to report expenditures in excess of $10,000 and to report donations in excess of $1,000. Now if one of these committees reports spending $1 million, and claims that the funds came from 2,000 donations averaging $500 each, but none over $999, the Commission will simply have no routine way to know whether this account of contributions is accurate or not. Political committees must register with the Commission and must report all contributions, including the name, occupation, and employer of anyone giving more than $200. This detailed periodic reporting makes it difficult to hide improper activity, provides clues to impropriety (such as potential conduit contributions), and the Commission has the authority to audit registered committees for cause. While in one sense the lack of registration and less onerous reporting is commendable, it leaves the Commission with few tools to catch anyone violating the law, whether ignorantly, recklessly, or willfully.
Shays-Meehan includes numerous provisions attempting to prevent political parties and their officers, employees, and agents from soliciting or directing contributions to various other organizations, including in some instances political party committees of their own party. Currently the Commission regulates only solicitations for contributions to political committees, requiring various disclaimers, forms, and explanatory information. Again, political committees are subject to audit, and the Commission can and does check to see whether solicitations comply with legal requirements. It is difficult to imagine how the Commission can effectively regulate solicitations for organizations that are not registered. A candidate or political party official who makes a written solicitation may be at some risk of having a complaint filed, but what of the federal candidate who intimates to a wealthy backer that a county party committee could use some help, or the national party official who lets slip that a particular electioneering committee is supporting a cause a big donor is interested in? Here again, conscientious candidates and officials will be hindered, but anyone intent on circumventing the law runs little risk of detection.
Expanding the Federal Election Commission's jurisdiction to encompass certain activities of state and local campaigns, non-profit groups, and voter registration organizations for the ostensible purposes of closing loopholes and preventing circumvention of the law is simply unlikely to succeed. Shays-Meehan certainly takes a long step toward federalizing all political activity in America. The activities state and local political parties and even individual candidates may undertake with non-federal funds essentially would be exceptions to an everything-is-federal rule. Such efforts may well have unintended consequences. The Levin Amendment, for instance, permits state and local parties to collect state-permissible funds for a share of voter registration and get-out-the-vote activities, subject to a $20,000 per committee cap. Committees must keep those funds in a separate account and report them to the FEC. Now the FEC also has a pre-emption provision (Section 453) that exempts committees from state requirements "with respect to election to Federal office." Since the Levin funds are reported to the FEC as "Federal election activity," those funds are presumably exempt from state reporting requirements, a probably unintended consequence. This amendment puts the FEC in the position of having to determine whether funds are permissible under 50 different state laws in order to know whether they are permissible for "Federal election activity," but if the funds are not reported to state agencies we are likely to get little help in making that determination.
Today the FEC's principal regulatory focus is on fewer than 7,000 active, registered political committees, about 5,000 PACs, 1,000 or so active candidate committees, and a few hundred party committees. Shays-Meehan would expand our jurisdictional focus to thousands of local party committees and to an undeterminable number of voter registration and issue organizations, and it does so absent a comprehensive regulatory framework. The result is not likely to be more vigorous regulation but sporadic and potentially arbitrary enforcement.
I have two children in high school who take perverse delight in asking me for help with multi-variate equations. Here we have eight variables, two of which (Nos. 1 and 8) will change, probably on a daily basis, in the course of a campaign. It will be virtually impossible to figure out on a current basis the applicable limit for a given day and contribution. In order to know whether and when a campaign was actually eligible to receive excessive contributions under this provision, the Commission would have to audit every campaign for which the provision came into play. Currently, the Commission has resources to audit about two Senate campaigns per two-year election cycle. In 2000, at least five Senate candidates spent sufficient amounts in personal funds to make it possible that their opponents may have been eligible for increased contribution limits. At least two of those candidates had serious primary opponents, meaning that the Commission might need to conduct seven or eight audits to determine whether opponents of wealthy candidates properly accepted otherwise excessive contributions.
But auditing is only one of our problems. Most of you will recall that Hillary Clinton engaged in a prominent exploratory "listening tour" before officially declaring as a candidate for the Senate in 1999. One result of postponing her official candidacy was that she did not have to disclose any financial activity until the end of January 2000. There was nothing inappropriate about postponing a final decision on a candidacy, fundraising, and consequent disclosure. However, the example shows that candidates and potential candidates can and do alter their behavior to accommodate or take advantage of various features of election laws.
Due to the complexity of the Millionaire's Amendment there are numerous opportunities for wealthy candidates to game the system. Start with the fact that this provision applies separately to separate elections, and the primary and general elections are separate elections. Wealthy candidates who have little real opposition in a primary could spend limitless amounts attacking a probable general election opponent with no consequence under this provision. Furthermore, candidates are permitted to carry over funds from the primary to the general election. A wealthy candidate might loan or give his primary campaign $5 million, spend $3 million of it, and start the general election with $2 million in the bank. A straightforward reading of the millionaire provision combined with current laws and regulations would lead to the conclusion that the $2 million would not count as "personal funds" to trigger an increased general election limit for the opponent (the Commission might be able to address this by regulation, but that is not certain). Further, a wealthy candidate has no real need to collect funds prior to December 31 of the year before the election; thus, by waiting to declare candidacy and commit funds, a wealthy candidate can essentially benefit from an opponent's early fundraising (which can amount to several million dollars in the case of incumbent Senators).
Thus, by careful timing of expenditures, a wealthy candidate with good legal advice (what other kind is there?) might postpone the triggering effects of this amendment until well into the general election period. In states with late primaries, this might postpone increases in contribution limits until October (three of the four candidates who obviously breached the self-financing formula in 2000 had September primaries). Base limits under the "millionaire" formula (voting age population [VAP] times four cents) range from about $175,000 in Wyoming to $1.15 million in California. Increased contribution limits are not triggered until the wealthy candidate spends twice the base level, less any adjustments for gross receipts. If a wealthy candidate limits spending to this adjusted amount (about $1 million, plus the gross receipts difference, in Illinois or Pennsylvania, for instance) for a month or so after the primary, his opponent gets no relief. Once the limit is finally breached (perhaps not until early October) with a deluge of television ads, an opponent may begin attempting to raise funds under an increased contribution limit. It takes a while, however, to raise several million dollars, even at $6,000 a clip (more likely an additional $4,000 from contributors who have already given $2,000) - about 500 contributors at the maximum level to raise $2 million. Thus, the millionaire's opponent is pulled off the campaign trail precisely when he comes under attack on TV, attempting to raise money to respond some weeks later. In the meantime, the millionaire will likely spend more, probably increasing the contribution limit a second time, forcing his opponent to spend yet more time making a third request of his most generous donors. The opponent is perpetually behind the spending curve and is forced to attempt to raise funds at the worst possible time in the campaign.
The benefits of this too-carefully calibrated provision will come too little, too late and at too high a cost to help most opponents of millionaires. At the same time, as I noted, the compliance costs (for supposedly benefiting campaigns) and the enforcement costs (for the FEC) are ridiculously high. The Commission treats excessive contributions as serious violations, requiring refund or disgorgement of the excessive amount, plus a penalty representing a significant percentage of the violation. Thus, inevitably some candidates would find themselves after the campaign, with the money spent, required to pay back more than they initially received because they accepted excessive contributions a few days too early or too late. This situation is hardly imaginary: just last year the Commission directed Senator Charles Schumer to refund $854,000 in contributions because he had accepted what were apparently intended to be general election contributions in the primary period without the requisite documentation.
Perhaps Congress does not really intend that we enforce this provision as strictly as it is written, perhaps it does not intend to give us enough auditors to review the books adequately but, if so, we have a façade rather than a law. (Perhaps we could call this "Enroning" reform.) And once again, if this is the case, the compliant are at a distinct disadvantage to the scofflaw.
Mark Twain described a camel as a horse designed by a committee. The millionaire provision is a three-hump camel because Senators wanted to preserve contribution limits as much as possible while attempting to level the playing field between wealthy and non-wealthy opponents. Thus, they carefully calibrate for this and that factor and allow a slowly graduated response. (We will continue to ignore the fact that the Supreme Court has said that "leveling the playing field" is not a constitutionally permissible purpose of campaign finance regulation, and we will not ask why $2,500 is corrupting if you are facing an opponent who does not finance his own campaign but $12,000 is just fine if your opponent spends his own money, or why contributions from your own political party threaten corruption in the first situation but not in the second.)
If we look at actual campaign spending, however, it appears that these careful calibrations have an effect only inside Congress but not on the campaign trail. Of the five Senate candidates who may have triggered the millionaire provision in 2000, one, Ed Bernstein in Nevada, spent 4.9 times the threshold amount. We would have to do an audit to know for sure, but given the distinction between primary and general elections and the likely effect of the gross receipts factor, Bernstein's general election opponent, John Ensign, might not have been eligible for increased contributions, and it is almost certain that Bernstein could have managed his spending to avoid that result. The other four self-financed candidates (Mark Dayton, John Corzine, Maria Cantwell, and Herb Kohl) spent between 16 and 150 times the "fair" formula. In the real world, candidates who break the bank break it big. Still, the general election opponents of Dayton, Cantwell, and Kohl probably could not have taken advantage of increased contribution limits until October.
Looking at actual campaign spending, the complex calibrations have only the effect of delaying the ultimate result. We could easily design a workable provision setting a relatively high threshold (say $1 million for a "millionaire") to trigger, immediately, significantly higher contribution limits, on the proposition that once the first million is spent more will follow. Apply spending in the primary to the threshold for the general election, and you have solved the September primary problem. Such a provision would be simple to interpret and enforce, reporting could be less frequent, there would be a single trigger, with the only variable being a limit on "excessive" contributions based on the opponent's aggregate self-financing.
This provision could be drafted to be effective but, as written, it is nearly impossible to comply with to any benefit and difficult and costly to enforce. The Commission would be left choosing between sporadic harsh enforcement and flaccidity, probably alternating between the two, and getting the blame for a poorly crafted compromise between the self-interest of incumbents and the ideological imperative to limit contributions.
Just over a year ago, the FEC rewrote its regulation defining "coordination" between campaigns and outside groups. This was the culmination of a five-year effort required by the Supreme Court's first decision in the Colorado Republican case, and the final rule was based substantially on a district court ruling in the Christian Coalition case. The Commission attempted to interpret the rather vague statutory concept of coordination to protect fundamental rights and to comply with judicial requirements for clarity and evidence.
Campaign finance activists did not like the balance struck in the new regulation and induced the sponsors to add a provision to Shays-Meehan invalidating the new regulation and ordering the Commission to try again. The apparent intent is for the Commission to cast a broader net in defining "coordination." However, when sponsors tried to draft language to do this, they encountered the same difficulties and objections the Commission itself had faced in its own five-year effort. Sponsors shopped around a far-reaching definition, could not get support, and replaced it with proposed statutory language even more vague than the current law. Now in Shays-Meehan there is a retreat essentially to existing statutory language while still overturning the Commission regulation and ordering us to draft a new one.
The problem with this provision is that the instructions directly contradict the plain meaning of the statute. The revised statute defines coordination most relevantly as acting "in cooperation, consultation or concert with" a candidate or party (you cannot do anything starting with "c"). These terms are fairly broad, and a prime judicial and administrative rule is to define such terms in their dictionary meaning.
Webster's defines "concert" as "to arrange or settle by mutual understanding" or "a mutual agreement." "Cooperation" is a "joint effort or operation," and "consultation" an "exchange of views." Not much help.
Shays-Meehan instructs that in redrafting regulations the Commission is not to require "formal collaboration or agreement." Webster's says "collaboration is "to work together" and, more specifically, "to cooperate with an enemy invader."
Thus, we have instructions to interpret a term meaning "joint effort or operation" as not requiring that people actually "work together." We are to define a term meaning a "mutual agreement" as not actually requiring "agreement." I do not see how anyone can follow such instructions.
While I am sure the sponsors could explain exactly what they mean by these internally contradictory instructions, it is not clear that Congress would approve whatever it is that they do mean, and it is, of course, important that Congress avoids passing a facially self-contradicting statute. Reformers need either to get the votes for a more specifically invasive definition of coordination or to drop the charade of issuing unparsable instructions to the FEC and then blaming us when we fail to do whatever it is they prefer.
Lastly, I would like to address briefly some of the various new speech standards proposed. Again, these standards may well be struck down by the courts as too vague or overbroad, but I want to examine them from an administrative standpoint.
At first glance, the "electioneering" standard, addressing broadcast advertising clearly identifying a federal candidate in specified time periods, might appear simple to enforce (if constitutionally permitted). However, the drafters quietly acknowledge that we may not actually want to go so far as to ban corporate or union-funded ads because they merely mention an incumbent candidate. We might, for instance, want to allow a union or corporation to run an ad to "support the Shays Amendment" at a time when significant legislation known by the sponsor's name was under consideration, perhaps on the condition that it not be targeted to the identified Member's district. Thus, the proposed law allows the Commission to issue regulations exempting some communications from the corporate ban as long as they do not promote, support, attack, or oppose the identified federal candidate. This is the same standard used to distinguish federal from non-federal communications for state and local party committees.
In the first step, the bright line "no mention within 60 days" standard is acknowledged to be potentially broader than the sponsors really want. As a second step, we may have a general sense about the meaning of a distinction between "identifying" and "supporting" a candidate. The problem for an administrative agency, or for a committee attempting to comply with the Act, is applying the fairly broad terms "promote," "support," "attack," and "oppose" to actual speech.
Let's go back to the dictionary, this time using American Heritage, which includes lists of synonyms for many words. Support is defined as "to aid the cause, policy or interests of," listing "uphold, back, advocate, champion" as synonyms, and adding that "support is the most general." "Oppose" is "to be in contention or conflict with" and, among the listed synonyms, "oppose has the fewest connotations." The drafters have chosen, apparently deliberately, the broadest terms available.
Evidently, state and local parties (and possibly corporations and unions) are allowed to say something about public officials who also happen to be candidates for re-election, but it is hard to imagine what you would want to say that might not be read as "supporting" or "opposing" the candidate. Thus, the Commission must proceed under the vague statutory language, reviewing individual ads and penalizing committees after the fact, or we could issue a more specific rule and probably be attacked by reform advocates for insufficiently vigorous enforcement. Aside from the fairness question, if we do not issue guidance, the Commission would be in the position of having to review any broadcast that identified a federal candidate in order to determine, on a case-by-case basis, whether it supported or opposed that candidate.
Would an ad criticizing a particular bill and urging constituents to call Senator Jones and exhort him to oppose it constitute "opposing" Senator Jones? Would it make a difference if the ad mentioned that Senator Jones was a sponsor of the bill or would disclosing that additional information be forbidden? Would it make a difference if the organization sponsoring the ad conducted a public opinion poll just before and just after the ad ran asking voters whether they were inclined to vote to re-elect Senator Jones? Would it make a difference if the ad sponsor released the results of the poll showing a dramatic drop in Senators Jones's re-elect numbers? And what if the ad sponsor shopped the poll around Washington, threatening to run similar ads in the home states of other Senators supporting the same bill? (All of this actually happened with a union-sponsored ad criticizing Senator Conrad Burns.) You can see that what starts out as a simple lobbying expenditure might arguably be transformed into a campaign ad based not on the text of the ad but on other actions the sponsor undertakes (though I am uncertain about how viewers of the ad are to know the difference).
Vague standards put the Federal Election Commission in the position of either attempting to police everything said about any Member of Congress or of drawing up specific regulations that reformers will complain might miss something. The former simply cannot be done and, thus, when Congress approves vague standards, it passes unenforceable reform. More often than not since I have been a Member, the Commission has chosen to specify standards rather than to proceed under vague terms. It is certainly the province of Congress to revise the laws we enforce. But Members who are serious about reform ought to support legislation that is administratively enforceable, rather than approving vague standards and hoping that we get the drift.
David M. Mason is Chairman of the Federal Election Commission.
1. These remarks are the individual views of Chairman Mason as one of six Members of the Federal Election Commission. They do not represent a position of the agency as a body, nor do they necessarily reflect the views of any other Member of the Commission.