5.11 Campaign Finance

One side argues that large contributions and spending can corrupt officials or create the appearance of corruption, drown out ordinary voters and give wealthy interests outsized influence, so limits are needed. The other side argues that spending money to spread a political message is a form of speech protected by the First Amendment, and that limits restrict debate and protect incumbents. Campaign finance law and court rulings have tried to balance these concerns.

• Federal Election Campaign Act (1971, strengthened in 1974 after Watergate): required disclosure of contributions, limited donations, and created the Federal Election Commission (FEC) to enforce the rules.
• Buckley v. Valeo (1976): the Court upheld limits on contributions to candidates, to prevent corruption, but struck down limits on how much candidates and independent groups could spend, reasoning that spending money on political speech is protected.
• Hard money versus soft money: hard money is regulated, limited contributions to candidates. Soft money was unlimited money given to parties for “party-building” activities, which in practice often funded ads helping candidates.
• Bipartisan Campaign Reform Act (BCRA, 2002), often called McCain-Feingold after its sponsors: banned soft money contributions to national parties, restricted corporate- and union-funded “electioneering communications” (broadcast ads naming a federal candidate shortly before an election), and added the “stand by your ad” rule requiring candidates to state in their ads that they approve the message.

Facts: Citizens United, a nonprofit corporation, made a documentary film sharply critical of a candidate in the 2008 presidential primaries and wanted to air it on demand and advertise it close to the primaries. BCRA banned corporations from paying for electioneering communications in that window, and the FEC said the film was covered.

Holding: In a 5–4 decision, the Court ruled that the government may not ban independent political spending by corporations, and by extension unions, in candidate elections.

Reasoning: Political speech is at the core of the First Amendment, and its value doesn't depend on whether the speaker is an individual or a corporation. Independent spending, not coordinated with a candidate, doesn't create the kind of quid pro quo corruption that justifies a ban. The Court did uphold disclosure and disclaimer requirements, so the public can know who paid for ads.

Significance: Citizens United overturned earlier precedents that had allowed bans on corporate election spending. Together with a lower court ruling later in 2010, it led to super PACs. Supporters see it as protecting free speech; critics argue it lets wealthy interests dominate elections.

Some nonprofit groups organized under the tax code, such as 501(c)(4) “social welfare” organizations, can spend on politics without disclosing their donors, as long as politics isn't their primary purpose. Spending by such groups is often called “dark money.”