The Last Rites of Public Campaign Financing?

• Publication year: 2021

92 Nebraska L. Rev. 349. The Last Rites of Public Campaign Financing?

The Last Rites of Public Campaign Financing?

James Sample(fn*)

TABLE OF CONTENTS

I. Introduction .......................................... 350

II. Public Financing As Public Square .................... 355
A. Adapting the Public Square: The Three Key Theories .......................................... 359
B. The Development of Campaign Finance Reform in the United States ................................. 363

III. Public Financing in America: Dreams Meet Constraints ........................................... 368
A. FECA Public Financing: Teddy Roosevelt's Idea Sixty Years Later ................................. 368
B. The Presidential System in Operation ............. 371
1. Primaries ..................................... 371
2. General Election ............................... 372
C. Declining Viability of the Presidential Campaign Financing System ................................. 372
1. Checkoff Lag and Misconceptions .............. 374
2. Funding Shortfalls ............................. 375
3. Campaign Demands ........................... 376
4. Beware the Ides of the Millionaire's Amendment ................................... 381
D. The Supreme Court Pulls the Trigger on Trigger-Matching Funds ................................... 384

IV. Public Financing After Free Enterprise and Citizens United? ............................................... 389
A. Non-Presidential Campaign Economics ............. 389
B. Outside Spending and the Infamous Super PAC. . . . 391
C. The Third Way of Public Campaign Finance: Small-Donor Matching ................................... 394

V. Conclusion ............................................ 403

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What if the absolutely debilitating corruption that we face is a corruption caused by decent souls, not crooks? Could America rally to respond then? Can we get angry enough about small but systemic distortions that block the ability of democracy to work if those distortions are the product of good people working in a corrupted system? I am unsure. - Lawrence Lessig(fn1)

I. INTRODUCTION

The setting: Capitol Hill, Washington, D.C. The time: the last hours of 2012 and the first hours of 2013. The rhetoric on all sides: economic responsibility, albeit differently defined. The view: peering over the edge of the so-called fiscal cliff-the expiration of broad tax cuts and the scheduled onset of draconian spending cuts.(fn2) The American people: finding no room at the K Street Inn and certainly no seats-much less on both sides of the aisle-akin to those occupied by a biotech company that, just two weeks earlier, pleaded guilty in a major federal fraud case.(fn3) The company's key noncriminal credentials: a "small army of 74 lobbyists in the capital;"(fn4) its "employees and political action committee have distributed nearly $5 million in contributions to political candidates and committees since 2007, including $67,750 to [Senator Max] Baucus, the Finance Committee chairman, and $59,000 to [Senator Orrin] Hatch, the committee's ranking Republican;"(fn5) and, in a nod to the constitutional requirements of bipartisan passage and presentment, the company's lobbyists "show[ed] up more than a dozen times since 2009 on logs of visits to the White House" and "gave an additional $73,000 to [Senator Mitch] McConnell, some of it at a fundraising event for him that [the company] helped sponsor in December while the debate over the fiscal legislation was under way."(fn6)

The tragically ironic result: buried in Section 632 of the crisisaverting, fiscally necessitated law is a paragraph postponing the implementation of a long-scheduled set of Medicare price restraints on

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the company's lucrative pill for dialysis patients for two years-a delay "projected to cost Medicare up to $500 million over that period."(fn7)

The denouement: champagne corks pop at company headquarters; bonus season on K Street; Democratic and Republican leaders expand already burgeoning treasure chests; and, not incidentally the American people-of all political stripes-will pick up the $500 million tab. The people need a lobby. The question is whether public campaign financing remains a robust option.

If public campaign financing is on its deathbed, the eventual autopsy will reveal not a fatal blow, but rather a thousand cuts. The patient's wounds have been exacerbated by a neglect born of a dynamic in which even episodically broad support for investing in the democratic process has been routinely thwarted by a shortness of attention span and a shallowness of political will to push such investment through.

Less patently, but no less significantly, decades of emphasis on what this article terms the "negatives" or "limits" of campaign finance as opposed to innovations on the campaign finance "affirmatives"-i.e. the steps that directly fund and facilitate idea-based rather than dollar-based campaigns-while by definition cheap, have come at a tremendously substantial cost to deliberative democracy.

The prior decade of campaign finance cases eliminates or circumscribes many of the key "negatives" that limited certain types of spending and are thus responsible for dramatically increasing campaign expenditures. At the same time, the Supreme Court's 5-4 decision in Arizona Free Enterprise v. Bennett(fn8) eliminated the single "affirmative" mechanism-trigger-matching funds-that made public financing politically and fiscally viable.

This Article asserts the current predicament of public campaign financing is this: options that are still on the table under the Court's First Amendment jurisprudence are, with only rare and idiosyncratic exceptions, fiscal and political non-starters. Conversely, options that would be, and indeed previously had been, fiscally and politically viable, are now, even after years of their routine practice in varied jurisdictions, no longer constitutional. It is, in short, simultaneously a legal and practical dilemma. Short of highly unlikely swings of the

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Supreme Court pendulum, and absent an even more unlikely constitutional amendment, cities, states, and federal government actors, who might otherwise consider allowing candidates for office to opt for voluntary public financing, now find themselves between a legal rock and a fiscal hard place: unless a jurisdiction adopts, via extraordinarily high initial lump sum funding that grossly overspends the people's money to the point of fiscal ruin, any candidate opting in is effectively volunteering only to play the role of a sitting duck. On the more promising side, this Article asserts that systems that operate based on offering funding as a multiple for small-donor donations offer one potential solution to the dilemma. However, the Article ultimately contends that such systems are particularly vulnerable in jurisdictions with small populations insofar as moneyed interest groups from outside the jurisdiction can easily overwhelm, for example, even the multiplied donations of the citizens of largely rural states or jurisdictions.

By recent standards, the Supreme Court's 2011 decision in Free Enterprise(fn9) was a sleeper. Relative to the rare campaign finance blockbuster of Citizens United v. FEC(fn10) or the preceding Term's Caperton v. A.T. Massey Coal Co. ,(fn11) the Court's 5-4 decision in Free Enterprise received relatively little attention outside niche campaign finance circles.(fn12) Free Enterprise struck down the matching-fund component of Arizona's public campaign finance laws.(fn13) The Court struck down the Arizona campaign finance law because it found the law imposed a burden on political speech in violation of the First Amendment.(fn14) Under Arizona's system, voluntarily participating candidates would receive an initial allotment of funds, and then, if the participating candidates were outspent (over various thresholds monitored via ancillary reporting requirements) by nonparticipating, privately financed opponents and the independent expenditure groups supporting those opponents, the participating candidates would receive additional public matching funds.(fn15) Free Enterprise effectively eliminated the key available mechanism to accommodate democratic ends of public financing without making the systems so financially wasteful as to eliminate politically viability.

The force of the holding in Free Enterprise is effectively doubled in the sense that in striking down Arizona's matching-funds provision, the Court simultaneously upholds the concept of public financing as a

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matter of formalism but cripples most actual public financing systems as a practical matter. The Court, by holding that public financing matching-fund systems unduly burden free speech, upheld the principle of public financing while simultaneously striking a major blow to public financing systems by invalidating one of the most effective public financing systems. Free Enterprise's prioritization of formalism was such that, in Justice Kagan's words in dissent, the "suit, in fact, may merit less attention than any challenge to a speech subsidy ever seen in this Court."(fn16) Contending the matching funds at issue expanded rather than contracted political speech, and noting in support of that point that the public campaign funds were offered to "any person running for state office,"(fn17)

Justice Kagan, dissenting in sustained high...