The Perverse Effect of Campaign Contribution Limits: Reducing the Allowable Amounts Increases the Likelihood of Corruption in the Federal Legislature

• Date: 01 March 2011
• Author: Philip M. Nichols
• DOI: http://doi.org/10.1111/j.1744-1714.2010.01112.x
• Published date: 01 March 2011

The Perverse Effect of Campaign

Contribution Limits: Reducing

the Allowable Amounts Increases

the Likelihood of Corruption in the

Federal Legislature

Philip M. Nichols

n

INTRODUCTION

The regulation of campaign finance brings together vexing issues of de-

mocracy, corporate political speech, corruption, and the electoral system.

1

Recent jurisprudence has engendered substantial commentary on those

who perceive a ‘‘free corporate speech agenda’’ among the newer appoin-

tees to the United States Supreme Court,

2

with particular attention paid to

r2011 The Author

American Business Law Journal r2011 Academy of Legal Studies in Business

77

American Business Law Journal

Volume 48, Issue 1, 77–118, Spring 2011

n

Bicentennial Class of 1940 Term Chair Associate Professor of Legal Studies and Business

Ethics, The Wharton School of the University of Pennsylvania. The author thanks Nien-he

ˆ

Hsieh, Martin Asher, and especially Jim Sears for valuable criticism. Brian Garbow, Rahul

Parikh, and Connie Sung provided research assistance for this article.

1

See Nathaniel Persily,The Law of Democracy: Foreword, 153 U. PA.L.REV.1,2 (2004) (noting that

recent jurisprudence ‘‘represents what is perhaps the most sweeping treatment of the issues of

political money, corporate political speech, and the rights of parties in the campaign finance sys-

tem.’’); Eric L. Richards, Federal Election Commission v. Colorado Republican Federal Campaign

Committee: Implications for Parties, Corporate PoliticalDialogue, and Campaign Finance,40A

M.BUS.

L.J. 83, 84 (2002) (stating that campaign finance regulation ‘‘indirectly implicates several phe-

nomena that allegedly threaten our democratic form of government: corporate participation in

electoral politics; reliance on soft money to finance candidate elections; and the emergence of

‘covert speech’ in which the true purpose of political ads is disguised in order to avoid campaign

laws.’’).

2

See,e.g., Frances R Hill, Corporate PoliticalSpeech and the Balance of Powers: A New Framework for

Campaign Finance Jurisprudence in Wisconsin Right to Life,27ST.LOUIS U. PUB.L.REV.267,267–

69 (2008) Robert Kerr notes that the term ‘‘corporate speech’’ is a misnomer, as corporations

the distinction drawn between types of speech.

3

Citizens United v. Federal

Election Commission,

4

in which the Supreme Court struck down campaign

finance provisions that regulated corporate speech differently than indi-

vidual speech, has focused even more attention on the constitutional as-

pects of campaign finance.

5

Constitutional questions, while of fundamental importance, do not

constitute the totality of issues encompassed by the regulation of campaign

finance. Many of these issues are critical to business and the business en-

vironment. Citizens United, for example, raises questions about the very

nature and definition of a business organization.

6

Less esoteric but just as

important is the effectiveness of campaign finance regulation in producing

a regulatory environment free of the influences of corruption. Scholarly

review of campaign finance regulation gives virtually no attention to the

actual mechanism used by such regulation: limits on the amount that each

actor can contribute to a particular campaign.

cannot speak, and offers instead the term ‘‘corporate political media spending.’’ Robert L. Kerr,

Considering the Meaning of Wisconsin Right to Life for the Corporate Free-Speech Movement,14C

OMM.

L. & POL’Y105, 109 (2009).

3

Linda Berger summarizes the distinction:

When a corporation participates in the public sphere, its participation often takes the

form of money. Corporate money must be given to someone to bring corporate partic-

ipation into beingFmoney to spend on public relations, advertising, or lobbying, or

money to spend in a political campaign. Though the form is the same, the Supreme

Court has treated these modes of corporate participation very differently. On the one

hand, corporate money is seen as speech when it is the means used for corporations to

sell products or state positions on issues. On the other, a majority of the Rehnquist-

O’Connor Court perceived corporate money spent in election campaigns as the root of

evils threatening the political process.

Linda L. Berger, Of Metaphor, Metonymy, and Corporate Money: Rhetorical Choices in Supreme

Court Decisions on Campaign Finance Regulation,58M

ERCER L. REV.949, 949 (2007).

4

558 U.S. 50 (2010).

5

See Posting of Laurence H. Tribe to SCOTUSblog (Jan. 24, 2010, 22:30 EST), http://www.

scotusblog.com/2010/01/what-should-congress-do-about-citizens-united (stating that the decision

‘‘marks a major upheaval in First Amendment law .. . .’’).

6

See id. (opining that ‘‘[t]alking about a business corporation merely as another way that in-

dividuals might choose to organizetheir association with one another to pursue their common

expressive aims is worse than unrealistic’’).

78 Vol. 48 / American Business Law Journal

A fundamental purpose of campaign finance regulation is to reduce

corruption.

7

Other goals and effects attach themselves to campaign finance

reform, of course, such as correcting structural imbalances in representa-

tion, and these are important aspirations.

8

Nonetheless, the Supreme

Court has singled out the prevention of corruption as the only justifiable

interest identified so far in the federal legislation intended to regulate

campaign finance.

9

It is therefore somewhat surprising that critical analysis of campaign

finance regulation has eschewed analysis of contribution limits. Rigorous

examination of the assumption that, because money corrupts, more money

corrupts more seems to have been subsumed under consideration of finer

constitutional points. The assumption, however, is not unassailable and

must be examined. A pragmatic approach prevalent among practitioners

and many scholars emphasizes weak institutions as a cause of corruption

10

and therefore advocates the strengthening of institutions as a means of

controlling corruption.

11

This approach, however, provides scant rigor

with which to analyze assumptions regarding campaign contributions. A

purely institutional approach does not indicate how one is to choose

among institutions nor does it provide a theory on which to base predic-

tions about how changes to institutions will affect the behaviors of govern-

ment actors.

7

See Meredith A. Johnston, Note, ‘‘Stopping Winks and Nods’’: Limits on Coordinatingas a Means of

Regulating 527 Organizations, 81 N.Y.U. L. REV.1166, 1186 (2006) (stating that the purpose of

current campaign finance reform is to prevent corruption); Jamin Raskin & John Bonifaz, The

Constitutional Imperative and Practical Superiority of Democratically Financed Elections,94C

OLUM.L.

REV. 1160, 1162–63 (1994) (similar).

8

See Raskin & Bonifaz, supra note 7, at 1163 (discussing the remedial purposes of campaign

finance reform with respect to structural bias).

9

See Buckley v. Valeo, 424 U.S. 1, 26–27 (1976).

10

See Saladin Al-Jurf, Changing Conceptions of Development in the 1990s,9TRANSNAT’LL. & CON-

TEMP

.PROBS.193, 199 (1999) (identifying ‘‘weak institutions’’ as a ‘‘key factor[ ] relating to cor-

ruption’’); Bernard S. Black & Anna S. Tarassova, Institutional Reform in Transition:A Case Study

of Russia,10S.CT.ECON.REV. 211, 232 (2002) (noting the phenomenon of ‘‘weak institutions

contributing to corruption and corruption contributing to weak institutions.’’); Edgardo Bus-

caglia & Maria Dakolias, An Analysis of Corruption in the Judiciary,30LAW &POL’YINT’LBUS. 95,

95 (1999) (‘‘It can be said that corruption is the result of weak institutions and human nature.’’).

11

See JEREMY POPE,CONFRONTING CORRUPTION:THE ELEMENTS OF A NATIONAL INTEGRITY SYSTEM

(2000) (discussing methods for strengthening institutions to control corruption).

2011 / The Perverse Effect of Campaign Contribution Limits 79