The public's right to know versus compelled speech: what does social science research tell us about the benefits and costs of campaign finance disclosure in non-candidate elections?

• Author: Carpenter, Dick

Introduction I. Disclosure Regulations in the States A. Ballot Measure Elections B. Grassroots Issue Advocacy II. Why Disclosure? A. The Transparency Rationale for Disclosure Laws III. Lessons from the Social Science Literature A. Re-Examining the Value of Cues B. Re-Considering the Benefits of Disclosure C. Re-Considering the Costs of Compelled Disclosure IV. Discussion INTRODUCTION

The National Conference of State Legislatures has called campaign finance disclosure the most basic form of campaign finance regulation and further notes that "[a]ll states require some level of disclosure from candidates, committees, and political parties of the amount and source of contributions and expenditures." (1) One function of campaign finance disclosure is to prevent corruption in candidate elections. (2) The manner in which disclosure may deter corruption is not difficult to imagine. For example, disclosure reports may be examined by investigative journalists and opposition researchers looking for evidence of unsavory relationships between contributors and candidates. Further, disclosure of contributions to candidates may facilitate the enforcement of contribution limits in candidate elections. After all, it would be difficult to know whether a contribution limit has been violated without some accounting of how much contributors have given to candidates.

In this Article, we question neither the desirability of creating transparency in the ties between candidates and their contributors, nor the efficacy of disclosure regulations in affecting this end. This is despite the fact that several recent studies cast doubt on the extent to which state campaign finance laws reduce either corruption or the appearance of corruption. (3) Rather, we focus on compelled disclosure of political finances in non-candidate contexts, such as ballot measure elections and grassroots issue advocacy. Grassroots issue advocacy is "any effort to organize, coordinate or implore others to contact public officials in order to affect public policy." (4) We argue that the extension of disclosure regulations to political activities unrelated to candidate elections cannot be justified in a similar way as a means to prevent corruption. In non-candidate contests, there can be no revelation of an unsavory relationship between a contributor and a candidate because, simply, there is no candidate. Similarly, because contribution limits do not exist outside of candidate elections, disclosure cannot facilitate the enforcement of non-existent contribution limits in non-candidate contexts.

Another argument for disclosure regulations in non-candidate elections is that compelled disclosure of the finances of groups engaged in non-candidate political activities provides voters with vital information while at the same time imposing no real costs on those groups. (5) In our experience, this argument is a fairly conventional view among advocates for increased disclosure, so for ease of exposition, we will dub it "the conventional view" of disclosure. However, we take issue with both elements of this view: first, that disclosure provides vital information to the general public and, second, that disclosure regulations impose little cost on political speakers and groups.

We identify several challenges to the conventional view of disclosure requirements. In short, there is little support from the social scientific literature for the notion that compelled disclosure generates important public benefits by augmenting voters' knowledge. However, there is evidence that disclosure regulations may impose significant costs on political activity. This does not necessarily weigh against disclosure laws in candidate-centered elections, as there still remains the anti-corruption rationale for such regulations. Nevertheless, our findings do call into question the rationale for extending compelled disclosure to other political contexts.

The potential over-regulation of non-candidate political activities is of serious concern. Ballot initiatives are an important tool for the public to circumvent and discipline non-responsive elected officials, as well as a means for increasing the public's participation in politics, knowledge of pertinent issues, and trust in government. (6) Furthermore, "[g]rassroots lobbying is therefore not just the exercise of free speech and association, but the very process by which likeminded people coordinate their efforts and petition government for the redress of grievances." (7) Together, these non-candidate political activities are the means by which many ordinary citizens become actively engaged in politics and the route by which new political entrepreneurs enter politics. (8)

In the next Part, we describe existing state disclosure laws in two prominent non-candidate contexts: ballot measure elections and grassroots issue advocacy. We then review the legal arguments for compelled disclosure in these contexts, followed by the social science literature as it pertains to the benefits and costs of compelled disclosure. We conclude with a discussion of the lessons from the social science literature and implications for practical reforms to state disclosure regulations.

1. DISCLOSURE REGULATIONS IN THE STATES

   Campaign finance disclosure laws are ubiquitous in candidate elections in the states.9 Some states make it quite easy for interested persons to search disclosure reports online. (10) The National Institute on Money in State Politics, a non-profit group located in Montana, collects data from state disclosure reports and also maintains a searchable database online. (11) Given this archive, an Internet connection, and a few clicks of a mouse, it is a trivial exercise to discover that a Mr. Roy Bash, a lawyer residing in Mission Hills, Kansas, contributed $500 to the re-election campaign of the incumbent Governor of Missouri, Jeremiah Nixon, on June 30, 2011. (12) Using the online searchable disclosure database created by the Missouri Ethics Commission, it is also quite easy to verify this information and even obtain such personal information as Mr. Bash's home street address and the identity of his employer. (13) As we noted at the start, it is beyond the scope of this Article to examine the benefits and costs of such readily available information about contributors to candidates. However, as we show below, several states also apply similar disclosure requirements to activities not directly connected to candidates.

   1. Ballot Measure Elections

      Every state and most localities permit some form of direct legislation through popular vote, from constitutional amendments to non-binding advisory measures. (14) The most commonly employed of these ballot-measure procedures are initiatives, or proposals for new laws or constitutional amendments placed on the ballot via popular petition. (15) Twenty-four states use initiatives, including many of the largest states by population: Arizona, California, Colorado, Florida, Illinois, Missouri, Massachusetts, Michigan, Ohio, Oregon, and Washington. (16)

      In two recent reports, Jeff Milyo examines state disclosure requirements in ballot measure elections. (17) In general, states apply very similar disclosure rules to candidate elections and ballot measure elections. In Table 1, infra, we reproduce selected disclosure requirements and the minimum dollar thresholds that trigger these reporting requirements in all twenty-four of the initiative states. (18) In other words, individuals and groups that advocate for or against a ballot measure must register as a political committee if they collect or spend in excess of a minimum dollar threshold. (19) Registration also involves naming a treasurer who will be subject to punishment for violations of reporting requirements. (20) As indicated in Table 1, in most such states, the thresholds of activity that trigger registration requirements are $500 or less. The states with higher triggers for registration are: California ($1000), Illinois ($3000), Maine ($5000), Nebraska ($5000), and Nevada ($10,000). (21) However, several states require registration for any amount of activity; these are: Massachusetts, Montana, North Dakota, Ohio, Oregon, Washington, and Wyoming. (22)

      In every state, contributor names and addresses must be reported for aggregate contributions over a minimum threshold that ranges from $0 to $1000, with more than half of the states setting this disclosure threshold at $50 or less. (23) In addition, all but seven initiative states also require employer/occupation information from contributors. (24) The states that do not require employer information are: Arkansas, Idaho, Nebraska, Nevada, North Dakota, South Dakota, and Wyoming. (25) Finally, among the initiative states, only South Dakota does not require itemization of expenditures; most states set the threshold for itemizing expenditures at $100 or less. (26) However, Alaska, Arizona, Montana, and Wyoming require all expenditures to be itemized, regardless of amount. (27)

      Political committees that fail to comply with these extensive disclosure requirements may be subject to fines and even criminal penalties. (28) Further, because disclosure reports are filed multiple times throughout the year, the failure to correct a past oversight can lead to the accumulation of large fines. (29) For example, in just this way, one ballot measure committee in California racked up over $800,000 in fines despite the fact that the maximum penalty per violation was only $2,000 and the committee had only raised and spent just over $100,000. (30)

   2. Grassroots Issue Advocacy

      Grassroots issue advocacy is the act of political organizing through communications to the general public. (31) This activity may entail exhortations for members of the public to contact their elected officials in regard to some policy concern. (32) Regardless of the presence of such exhortations, though, grassroots issue advocacy is often described as "grassroots...