Learning from Campaign Finance Information

• Publication year: 2021

Learning from Campaign Finance Information

Abby K. Wood

LEARNING FROM CAMPAIGN FINANCE INFORMATION

Abby K. Wood^*

Abstract

In an age of dark money—the anonymous political spending facilitated by gaps in our campaign finance disclosure laws after Citizens United—the Supreme Court's campaign finance disclosure jurisprudence may be on a collision course with campaign finance disclosure laws. It is urgent for the Court to understand the informational benefits of campaign finance disclosure, so it may avoid this collision.

Campaign finance transparency teaches us more than one-dimensional information about the candidate's left- or right-leaning policy preferences. It also helps us learn about candidate type. Social scientists, including myself, have run several studies examining voter learning from campaign finance information. As I explain in this Article, when voters learn about a candidate's position with regard to dark money, they learn and vote differently than if they did not have that information. Experimental and observational research also suggests that voters punish noncompliance and reward overcompliance. In other words, transparency about campaign finance disclosure and compliance informs voters.

These findings point to useful policy innovations for states and cities, while the federal government is unable or unwilling to regulate. The innovations I propose include "disclosure disclaimers," which inform voters about the presence of dark money in a campaign, and campaign finance audits, which inform voters about compliance with campaign finance laws. But more basic loophole-closing can also provide helpful information to voters. I explain implications for the courts, campaigns, and policymakers, as well as limitations on the argument.

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Introduction...........................................................................................1093

I. Incomplete Disclosure of Money in American Political Campaigns.....................................................................................1096

A. "Dark Money," "Gray Money,", and Other "Veiled Political Actors ...................................................................................... 1099

II. Constitutionalized Campaign Finance...................................1101

A. The Informational Benefit ....................................................... 1102

1. Information on the Policy Dimension............................... 1103

a. Studies of How Voters Learn and Use the Information ................................................................ 1106

2. The Ignored Benefit of Campaign Finance Disclosure: Candidate "Valence" Information ................................... 1109

a. Studies of Voter Reactions to Donor Anonymity and Legal Noncompliance ............................................... 1112

III. Toward a Jurisprudence That Values the Full Range of Campaign Finance Disclosure's Informational Benefits ... 1116

A. Disclosure Disclaimers .......................................................... 1117
B. Audits and Compliance Information....................................... 1118
C. Limitations of the Argument ................................................... 1122

1. Scope Conditions.............................................................. 1122
2. The Slippery Slope ............................................................ 1123

IV. Complications..............................................................................1124

A. For Courts .............................................................................. 1125
B. For Campaigns ....................................................................... 1129
C. For Policymakers ................................................................... 1129

1. Campaign Finance Regulatory Choices That Affect Policy Information ....................................................................... 1130

a. Modifying Disclosure Thresholds.............................. 1130
b. Expand the Types of Spenders Subject to Disclosure to Solve the "Dark Money" Problem ............................ 1132
c. Modifying the Type of Donor Information That Is Collected or Disclosed ............................................... 1133

2. Campaign Finance Regulatory Choices That Affect Non-policy Information ............................................................ 1136

a. Adopting Disclosure Disclaimers .............................. 1136
b. Mandatory or Voluntary Audits ................................. 1138

Conclusion...............................................................................................1141

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Introduction

Lev Parnas and Igor Fruman were arrested at Reagan National Airport with one-way tickets to Vienna and indicted for campaign finance violations.¹ Among other charges, they are alleged to have funneled over $300,000 in foreign money through a limited liability corporation (LLC) into political campaigns, including former President Trump's "official" SuperPAC.² The SuperPAC is required to disclose its donors, but the LLC is not, so the public's ability to "follow the money" ends with the LLC's name and not the foreign sources of the money behind the LLC.³ The public is kept in the dark.

Dark money, or anonymous spending in our political campaigns, has accounted for at least $1 billion since Citizens United, a sum that greatly undercounts the actual amount of dark spending because dark money groups have also run thousands of issue ads over that time period.⁴ Expanded disclosure requirements can reduce the amount of undisclosed money in our elections. At the federal level, the Federal Election Commission (FEC) passed an anemic disclosure regulation, and the Senate has blocked other regulatory efforts to shed more light on the money in American politics.⁵

Some states have passed laws demanding more transparency in our elections, but the Supreme Court's disclosure jurisprudence may be on a collision course with these laws. Part of the reason for the pending collision is the Court's limited understanding of the informational benefits of campaign finance disclosure. It is therefore urgent to help the Court right-size its understanding of what we learn from campaign finance disclosures.

The Supreme Court has upheld disclosure regulations that support a combination of governmental interests, namely combatting corruption or its appearance, informing the electorate, and enabling enforcement.⁶ However, its

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definition of corruption is narrow: it only cares about quid pro quo corruption. Moreover, majority opinions striking campaign finance regulations have repeated the legal fiction that some types of spending cannot corrupt—namely independent expenditures by outside groups like SuperPACs, and expenditures in ballot initiative campaigns. According to the Court's rationale, independent expenditures cannot corrupt because of the ban on coordination with campaigns for independent expenditures.⁷ Further, the Court has held that expenditures by state ballot initiative campaigns cannot corrupt because there is no one on the other side of the spending—meaning, no candidate—to receive a quid and perform a quo. These groups receive and spend hundreds of millions of dollars each cycle. As a result, the main rationale for upholding disclosure requirements for independent spending and ballot initiatives rests on the informational benefit.

But the Court's understanding of the informational benefit is incomplete because it is too narrow. The oft-repeated line from Buckley v. Valeo that disclosure "allows voters to place each candidate in the political spectrum" is correct, as far as it goes.⁸ On this one-dimensional understanding of how voters choose a candidate, political scientists have established that, yes, disclosures can help predict how a candidate will vote once in office.

But we learn more from campaign finance transparency. As I explain in this Article, social scientists, including myself, have run several studies examining voter learning from campaign finance information. When survey respondents learn about a candidate's position on or support from dark money groups, they choose different candidates than control group respondents who do not see that information. And when campaign finance compliance information is available to voters, voters reward overcompliance and punish noncompliance.

In other words, disclosure and compliance information help voters to learn about a dimension that the court has not considered: candidate type. For example, studies on dark money have tested questions of candidate trustworthiness and find consistent reactions among survey respondents. And when cued with information about campaign finance noncompliance, voters update their impressions of a candidate's trustworthiness, intelligence, ethics and competence.

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These findings point to useful policy innovations for states and cities while the federal government is unable or unwilling to regulate.⁹ Disclosure disclaimers are only used in one jurisdiction—Montana—and they require a disclaimer that "this communication is funded by anonymous sources" at the end of a video advertisement or on the face of a still or print advertisement.¹⁰ These disclaimers can inform voters about the parties involved in a campaign without threatening donor privacy or chilling speech. Another useful innovation is campaign finance audits conducted either comprehensively or randomly. Audits are still rare in our elections.

Suppose disclosure disclaimers and campaign finance audits are adopted, then challenged. The Court should uphold both innovations. The biggest threat to disclosure disclaimers is that of compelled speech. But stand-by-your-ad requirements were upheld in McConnell v. FEC against a charge of this nature, so the precedents are not in challengers' favor.¹¹ And audits are on even firmer constitutional footing. It would be hard for challengers to make a...