[EL] Fortune 500 election-related contributions (or "You Can't Go Home Again")

Mon Jul 9 14:32:11 PDT 2012

Having done more than a few focus groups, I would lay odds that the focus group members would not even notice the disclaimer....

From: Rick Hasen [mailto:rhasen at law.uci.edu]
Sent: Monday, July 09, 2012 05:13 PM
To: Kelner, Robert
Cc: 'lederman.marty at gmail.com' <lederman.marty at gmail.com>; 'law-election at uci.edu' <law-election at uci.edu>
Subject: Re: [EL] Fortune 500 election-related contributions (or "You Can't Go Home Again")

Still, I wonder how voters would react to ads that say "Paid for by Sheldon Adelson" rather than "Paid for by Restore Our Future."
It would be an interesting question for focus groups.

On 7/9/2012 2:09 PM, Kelner, Robert wrote:
Though I had promised to desist, and let the academics have at it, there is one point in Rick's post below that I can't resist highlighting. Rick correctly notes that even before CU, wealthy individuals could spend unlimited funds to air express advocacy ads for or against a candidate. What stopped them from doing so was not the campaign finance laws but either (a) ignorance that they could do so lawfully, or (b) the FCC's requirement that the ad say "Paid for By (insert name of the wealthy individual)."

The one thing that I think CU did change fundamentally and forever, however, is the cultural norm around wealthy individuals publicly putting their money where their mouths are. I strongly suspect that if CU were overturned (on any grounds that left Buckley intact), we would still see Sheldon Adelson and others like him buying campaign ads supporting their favored candidates, regardless of the Paid for By tag line. The post-CU blossoming of political speech showed that individuals can publicly spend large sums on political speech and live to tell about it -- without the stigma or consequences some major donors once feared would ensue. That cultural shift in the campaign finance system is here to stay, with or without CU. You can't go home again.

From: Rick Hasen [mailto:rhasen at law.uci.edu]
Sent: Monday, July 09, 2012 03:07 PM
To: Marty Lederman <lederman.marty at gmail.com><mailto:lederman.marty at gmail.com>
Cc: Kelner, Robert; law-election at uci.edu<mailto:law-election at uci.edu> <law-election at uci.edu><mailto:law-election at uci.edu>
Subject: Re: [EL] Fortune 500 election-related contributions

If a corporation gave money to a c4, and that c4 (or 527) had the major purpose of influencing federal elections (and therefore should have registered as a political committee), then the contribution to the c4 (or 527) would be an illegal corporate contribution to a PAC.  So it was fraught with legal uncertainty.

As I point out here<http://www.slate.com/articles/news_and_politics/politics/2012/03/the_supreme_court_s_citizens_united_decision_has_led_to_an_explosion_of_campaign_spending_.html>, the same was true of individual contributions above $5,000 to 527s before the CU blessing:

It is true that before Citizens United people could spend unlimited sums on independent advertising directly supporting or opposing candidates. But that money had to be spent by the individual directly. It could not be given to a political action committee, which had an individual contribution cap of $5,000 and could not take corporate or union funding. In many cases, wealthy individuals did not want to spend their own money on advertising, which would say “Paid for by Sheldon Adelson” or “Paid for by George Soros,” so fewer of these ads were made. The only way to avoid having your name plastered across every ad was to give to the 527s, which claimed they could take unlimited money from individuals (including, sometimes, corporate and labor union money) on grounds that they were not PACs under the FEC’s definition of PACs. These organizations were somewhat successful, but a legal cloud always hung over them. During the 2008 Democratic primary season, Bob Bauer, candidate Obama’s lawyer, barged in on a pro-Hillary Clinton conference call<http://electionlawblog.org/archives/010292.html> to say that people giving to 527s to support Clinton could face criminal liability.

After Citizens United, the courts (most importantly in Speechnow.org v. FEC<http://scholar.google.com/scholar_case?case=7706190082269594272&hl=en&as_sdt=2&as_vis=1&oi=scholarr>) and the FEC provided a green light for super PACs to collect unlimited sums from individuals, labor unions, and corporations for unlimited independent spending. The theory was that, per Citizens United, if independent spending cannot corrupt, then contributions to fund independent spending cannot corrupt either. (I am quite critical<http://www.cnn.com/2012/01/09/opinion/hasen-super-pacs/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%20rss%2Fcnn_topstories%20%28RSS%3A%20Top%20Stories%29> of this theory about corruption<http://www.slate.com/articles/news_and_politics/politics/2012/02/justice_ruth_bader_ginsburg_is_ready_to_speak_out_on_the_danger_of_super_pacs_.html>, but that’s besides the point here.) So what was once of questionable legality before the court’s decision was fully blessed after Citizens United.

On 7/9/2012 12:01 PM, Marty Lederman wrote:
I see.  I think.  Is this right?:  Because WRtL was nominally only a statutory construction decision, then in the period between WRtL and CU, if a corporation wanted to spend treasury funds for non-express advocacy -- the only kind of advocacy anyone actually wants to use these days -- it could freely do so in its own name, or by funding a (c)(4) not registered with the FEC.  But it could not, pre-CU, achieve the same thing by funding an FEC-registered committee (which it might prefer to do . . . why?  less disclosure than w/r/t committees that are not FEC-registered?).

If this is correct -- and please forgive me if I still have it wrong -- then the "floodgate" CU opened, over and above what was permitted by WRTL, was to allow treasury funds to be used to fund FEC-registered PACs.  And this, in turn, dramatically increased the amount of such funds that were expended -- presumably because corporations were reluctant to fund ads when only the first two options were available post-WRtL.  If that's the case, why was the addition of this third option such a sea-change?

On Mon, Jul 9, 2012 at 2:49 PM, Rick Hasen <rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>> wrote:
If I understand correctly, everything done by a Super PAC (and other political committees registered with the FEC) counts as an IE.  When done by a c4 and other outside groups not registered with the FEC, it is not an IE without express advocacy.

On 7/9/2012 11:46 AM, Marty Lederman wrote:
Whoa!  If I'm reading those charts correctly (and I might not be), the vast majority of such spending has been on independent expenditures, not electioneering communications!  And yet in all this time, I don't think I've seen a single ad that uses the magic words, i.e., that could not have been characterized as an electioneering communication subject to WRtL.  Is this simply a matter of self-chosen nomenclature, i.e., calling ECs "independent expenditures" (perhaps for disclosure reasons)?  Or have I simply missed a huge outpouring of "magic words" ads that corporations and unions were just chomping at the bit to subsidize with treasury funds, even post-WRtL, that have now been unleashed by virtue of CU?

On Mon, Jul 9, 2012 at 2:14 PM, Rick Hasen <rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>> wrote:
There was an uptick even before the change in the disclosure rules from van Hollen.  Here's a chart from CRP data of outside spending on IEs over time:

[cid:part8.00000209.04040406 at law.uci.edu]

Now here's the same chart, adding ECs on top of the IEs in the translucent color---very little additional:

[cid:part9.00020308.06030101 at law.uci.edu]

On 7/9/2012 11:09 AM, Marty Lederman wrote:
Thanks, Rick.  My assumption, however, is that all or virtually all of the spending in question has not been used for advertising in the form of "magic words."  Accordingly, that spending could have been used after WRtL, even if CU had come out the other way, right?  And if I understand your post correctly, to the extent there has been an uptick in "magic words" independent expenditures, it might well be because they are subject to lesser disclosure rules than ECs, and not to CU.

Is this correct?

On Mon, Jul 9, 2012 at 1:59 PM, Rick Hasen <rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>> wrote:
I think the answer to this is complicated by the fact that there is now a fuller disclosure regime for electioneering communications than for independent expenditures (an ironic result of the van Hollen decision).  But given the close timing of the two cases I don't think there's any way to tease out what kind of spending WRTL II would have unleashed without CU.  You can see from the chart I sent around earlier that ECs were way up in 2008 compared to 2004 (that is, in the period between WRTL and CU) but that ECs/IEs are way up over 2008 as well.

On 7/9/2012 10:55 AM, Marty Lederman wrote:
If I may repeat a question I've asked before (to which I have yet to see any answer -- perhaps I'm the only one who's interested!):

To the extent spending has materially increased or changed in nature in these past two or so election cycles, how much of the change can be chalked up to Wisconsin Right to Life rather than to CU?

That is to say:  Is an appreciable amount of the spending about which you're all debating being expended for "magic words" advertising, or could all or almost all of it have been spent after WRtL, even if CU had come out the other way?

Thanks in advance.

--
Rick Hasen
Chancellor's Professor of Law and Political Science
UC Irvine School of Law
401 E. Peltason Dr., Suite 1000
Irvine, CA 92697-8000
949.824.3072<tel:949.824.3072> - office
949.824.0495<tel:949.824.0495> - fax
rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
http://law.uci.edu/faculty/page1_r_hasen.html
http://electionlawblog.org
Pre-order The Voting Wars: http://amzn.to/y22ZTv
www.thevotingwars.com<http://www.thevotingwars.com>

--
Rick Hasen
Chancellor's Professor of Law and Political Science
UC Irvine School of Law
401 E. Peltason Dr., Suite 1000
Irvine, CA 92697-8000
949.824.3072 - office
949.824.0495 - fax
rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
http://law.uci.edu/faculty/page1_r_hasen.html
http://electionlawblog.org
Pre-order The Voting Wars: http://amzn.to/y22ZTv
www.thevotingwars.com<http://www.thevotingwars.com>

--
Rick Hasen
Chancellor's Professor of Law and Political Science
UC Irvine School of Law
401 E. Peltason Dr., Suite 1000
Irvine, CA 92697-8000
949.824.3072 - office
949.824.0495 - fax
rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
http://law.uci.edu/faculty/page1_r_hasen.html
http://electionlawblog.org
Pre-order The Voting Wars: http://amzn.to/y22ZTv
www.thevotingwars.com<http://www.thevotingwars.com>

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