Appearance Is Everything: Why Imposing Expenditure Limits on Hybrid PACs Without Functional Separation Is Essential to Democracy

• Author: Nicholas G. Bushelle
• Position: J.D. Candidate, The University of Iowa College of Law, 2020; B.S., The University of Illinois at Urbana-Champaign, 2016
• Pages: 341-367

341

Appearance Is Everything:

Why Imposing Expenditure Limits

on Hybrid PACs Without Functional

Separation Is Essential to Democracy

Nicholas G. Bushelle*

ABSTRACT: Navigating campaign finance law is crucial to successful

political campaigns. Political candidates and donors have incentives to

engage in quid pro quo corruption and will get as close to corruption as

possible under the law. Therefore, it is important that the law discourages

such corruption. Even where there is no actual corruption, the appearance of

corruption alone can have devastating effects on the democratic system.

Hybrid PACs have an arm that makes contributions and an arm that makes

expenditures. The sharing of staff, resources, and information between the

arms can make hybrid PACs suspect to the average person by potentially

creating an appearance of corruption. There is a circuit split about how

separate the arms of a hybrid PAC must be to prevent the application of limits

to the expenditure arm of a hybrid PAC. This Note argues that judges should

resolve the circuit split by requiring hybrid PACs to be separate under a totality

of the circumstances test that focuses on the appearance of corruption to avoid

the application of contribution limits to their expenditures. Under this

standard, courts would analyze the appearance of corruption factor assessing

how corrupt a hybrid PAC appears to an objective reasonable person. Courts

should look to surveys, testimony, and their own in tuition to apply the

reasonable person test. The proposed test will reduce the appearance of

corruption in American elections and preserve the democratic process by

maintaining faith in democracy, maintaining de mocratic participation,

slowing political fractionalization, and preventing authoritarian policies.

I. INTRODUCTION ............................................................................. 342

II. BACKGROUND ............................................................................... 344

A.DEFINITIONS OF PAC, SUPER PAC, AND HYBRID PAC ............... 345

*

J.D. Candidate, The University of Iowa College of Law, 2020; B.S., The University of

Illinois at Urbana-Champaign, 2016.

342 IOWA LAW REVIEW [Vol. 105:341

B.THE EARLY HISTORY OF UNITED STATES CAMPAIGN

FINANCE LAW .......................................................................... 345

C.BASIC FIRST AMENDMENT SPEECH DOCTRINE AND

RATIONALES ........................................................................... 347

D.FRAMEWORK FOR JUDICIAL REVIEW OF CAMPAIGN FINANCE

LAWS LIMITING SPENDING ....................................................... 348

E.THE RISE OF HYBRID PACS ...................................................... 351

F.JURISDICTION ONLY REQUIRING SEPARATE BANK ACCOUNTS ..... 352

G.JURISDICTIONS REQUIRING MORE SUBSTANTIAL SAFEGUARDS .... 353

III. THE IMPLICATIONS OF THE APPEARANCE OF CORRUPTION IN

HYBRID PACS ................................................................................ 354

A.THE PROBLEMS WITH BOTH CIRCUIT SPLIT APPROACHES ......... 355

B.HYBRID PACS WITHOUT SUFFICIENT SEPARATION GIVE THE

APPEARANCE OF CORRUPTION AND DECREASE PUBLIC FAITH

IN DEMOCRACY ....................................................................... 356

C.THE APPEARANCE OF CORRUPTION AND DECREASED PUBLIC

FAITH IN DEMOCRACY DECREASES DEMOCRATIC

PARTICIPATION ....................................................................... 357

D.DECREASED DEMOCRATIC PARTICIPATION LEADS TO

POLITICAL FRACTIONALIZATION AND POLARIZATION ................ 359

E.POLITICAL EXTREMISM LEADS TO MORE AUTHORITARIAN

POLICIES AND LESS FREEDOM ................................................... 359

IV.COURTS SHOULD REQUIRE MORE SUBSTANTIAL SAFEGUARDS

THAN SEPARATE BANK ACCOUNTS AND DOCUMENTATION

WITH EMPHASIS ON THE APPEARANCE OF CORRUPTION

FACTOR ......................................................................................... 363

A.HOW COURTS SHOULD ANALYZE WHETHER HYBRID PAC

ARMS ARE SEPARATE ENOUGH TO AVOID APPLICATION OF

CONTRIBUTION LIMITS TO EXPENDITURE ARMS ........................ 364

B.THE SECOND CIRCUIT’S APPROACH WITH AN EMPHASIS ON

APPEARANCE OF CORRUPTION WOULD HAVE AN

INCONSEQUENTIAL SPEECH RESTRICTION, DECREASE THE

APPEARANCE OF CORRUPTION, AND HELP PRESERVE

DEMOCRACY ........................................................................... 365

V.CONCLUSION ................................................................................ 366

I. INTRODUCTION

Campaign finance law shapes which candidates have a chance of getting

elected and has significant influence on public policy that affects the lives of