Responding To Reich, Part 4: The Case Against Campaign Finance Laws – OpEd

By Patrick Carroll

The fourth myth in Robert Reich’s “10 Economic Myths” video series is “Political Donations are Free Speech.” How this counts as an “economic” myth is a bit beyond me, but we may as well take this opportunity to delve into the dizzying world of campaign finance law.

Reich’s main contention in this video is that political donations shouldn’t fall under free speech protections because they basically amount to bribery. He presents his argument as follows:

Here’s a bare-faced lie: “Corporate political donations are free speech.” Rubbish! That’s not free speech; that’s bribery. In 1971, Lewis Powellurgedthe leaders of American corporations to devote a portion of their profits to politics. Since then, America has witnessed the largest and most entrenched system of legalized bribery in its history. Big corporations and the super wealthy have rigged the free market for their own benefit.

Throughout the 1980s, corporate PAC spending on congressional races increased nearly fivefold. Labor union PAC spending rose only about half as fast. By the 2016 campaign cycle, corporations and Wall Street contributed $34 for every $1 contributed by labor unions and all public-interest organizations combined. In 1980 the richest 0.01% of Americans provided 10% of all donations to federal elections. By 2012 they provided 40%.

Both political parties have become giant fundraising machines, fueled by money from the top. What’s the result of all this bribery? Politicians use the money to get elected and re-elected, and then lawmakers do what corporations and wealthy individuals want. It’s legalized bribery.

To formalize the argument, Reich seems to be saying that political donations from corporations and wealthy individuals are bribery, bribery should be illegal, and therefore these political donations should be illegal.

Now, an interesting line of response would be to contest the idea that bribery should always be illegal. For instance, Murray Rothbard has a thought-provoking discussion inPower & Marketabout the difference betweeninvasive bribes(bribing a politician to use coercion) anddefensive bribes(bribing a politician to refrain from using coercion). George Leef makes a similar point in a2004 FEE article, drawing on Franz Oppenheimer’s distinction between “the economic means” and “the political means” of getting what you want.

Interesting as that line of discussion may be, the more compelling response is probably to accept for the sake of argument that bribery is wrong and should be illegal, and instead push back on the first claim: that political donations from corporations and wealthy individuals necessarily constitute bribes.

What Makes for a Bribe?

Merriam Webster defines abribeas “money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust.” The concept is simple enough. If I go to a politician and say, “Hey, I’ll give you this fancy car if you pass a law that helps my business,” that’s a serious problem, because politicians are supposed to be publicly minded when making laws, not helping out their friends in exchange for money and perks. If a politician agrees to such a deal, he is said to be “corrupt” because he is no longer using his power in the interest of the people he claims to represent.

But what if instead of giving a car I gave the politician a large contribution to his campaign? Is that also a bribe? This is where things start to get tricky.

In the famous 1976 campaign finance caseBuckley v. Valeo, the Supreme Court made an important comment that helps distinguish honest campaign contributions from bribes. “To the extent that large contributions are given to secure a political quid pro quo from current and potential office holders,” the Courtwrote, “the integrity of our system of representative democracy is undermined.”

The key here is the phrase “quid pro quo.” Part of the essence of a bribe is that there is an exchange of favors; something is given specifically with the idea of receiving something in return. If I make it clear to the politician that my donation comes with strings attached, and that I expect him to pass laws that help my business in exchange for my support, then that is a quid pro quo, and thus a bribe. On the other hand, if I’m genuinely saying “I like your policies” and nothing more, then that is clearlynota bribe, because there’s no quid pro quo there.

Opportunities for Abuse

So, we’ve established that campaign contributionscouldconstitute bribesifthey are used to influence politicians through a quid pro quo, but we’ve also seen that they aren’tnecessarilybribes. Thus, Reich is wrong to simply equate political donations with bribery.

But while he is technically wrong in the claim he makes, his underlying concerns are worth elaborating on, because they reveal another important layer of this issue.

The problem is that it’s really difficult for a third party to discern whether any given contribution was or was not a bribe. Say I make a large contribution, and then 6 months later the politician passes a law that, among other things, helps out my business. Is that corruption? Did I give him a bribe? The answer is, it’s really hard to tell. The politician will of course argue that the law was purely in the public interest and was free from any corrupting influence. I will insist my contribution had no strings attached. But it’s all too easy for us to be lying.

To make matters worse, bribes don’t exactly come in the form of a written letter saying: “I hereby agree to corruptly make such and such a law in exchange for such and such a contribution.” They are necessarily clandestine, and thus their creation is discreet, and often simply tacit. A simple wink as I hand over the money could be enough to communicate that I expect something in return. And since all the players know exactly how this game works, even a wink is often unnecessary.

So, which contributions are bribes and which aren’t? Maybeeverycontribution from a wealthy individual or corporation is just understood in our day to come with an unstated expectation for preferential treatment. “You wouldn’t want this money to dry up now, would you?”

Even if the actual amount of corruption is minimal, Reich raises a fair point that every campaign contribution is at least suspect.

And that brings us to campaign finance law.

A Brief Introduction to Campaign Finance Law

Congress has been concerned about the issue of corruption for decades. In addition to apprehensions about outright bribery taking place by means of campaign contributions, they have also been concerned about the reputation of the democratic system: if it evenlookslike rich people are influencing politicians with campaign contributions, then that will seriously undermine people’s trust in the system. “Of almost equal concern as the danger of actual quid pro quo arrangements is the impact of the appearance of corruption stemming from public awareness of the opportunities for abuse inherent in a regime of large individual financial contributions,” wrote the Supreme Court inBuckley.

To address these concerns, Congress has passed various laws placing limits on campaign contributions and expenditures. These laws limit, for example, how much any individual can donate to a particular campaign. The thinking is that if people are only allowed to donate, say, $1,000 to any given campaign, then we don’t have to worry as much about corruption or the appearance of corruption. Politicians won’t have the incentive to become corrupt if the amount of money that their rich would-be co-conspirators can offer them is minimal.

Though the legal history is rather complicated (seehereandhereto learn more), the important thing to know is that the Supreme Court has essentially upheld the government’s right to impose these kinds of restrictions. Yes, it has struck down certain regulations over the years—such as in the famousCitizens Unitedcase—but the most basic restrictions have always been upheld. InBuckley, for instance, the Court upheld contribution limits that had been established in a 1974 amendment to the Federal Election Campaign Act of 1971, citing the need to mitigate corruption and the appearance of corruption.

Though this is the primary reason cited for campaign finance regulations, people also point to other beneficial impacts, such as limiting rent-seeking and curtailing the outsized influence of “money in politics.” “The cause of campaign finance ‘reform’ attracts a strange mélange of civic puritans, who decry corruption, and traditional egalitarians, who attack the ‘undue influence’ of the affluent,”writesBradley Smith. Reich, it would seem, falls into both of these camps.

So what has been the argument against these laws?

In the history of this debate, the primary pushback has been on First Amendment grounds. Opponents of these laws—or at least of the more restrictive ones—argue that campaign finance restrictions violate free speech. “Of course, money is not speech,” they say, “but surely restricting the means of speech is no different from restricting speech itself?”

“Money is the operational equivalent of resources,”writesMichael Cummins, “and to regulate the expenditure of resources for political expression is to regulate the expression itself.”

InBuckley, the Supreme Court affirmed that spending money on speech falls within the scope of the First Amendment, stating, “A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached.”

We can now see why Reich titled his myth “Political Donations are Free Speech.” He’s pushing back on this argument that the First Amendment protects various kinds of political spending.

But you might be wondering, if the Court agrees this is a First Amendment issue, how could it still uphold any of these laws? Doesn’t the First Amendment clearly state: “Congress shall make no law…abridging the freedom of speech?” Well, according to legal precedent, the Court will allow the government to violate a fundamental constitutional right if the government can demonstrate that the law in question “furthers a compelling interest and is narrowly tailored to achieve that interest.” This is known as thestrict scrutinystandard of judicial review.

The debates over campaign finance cases likeBuckleyandCitizens Unitedthus essentially come down to the questions of 1) where to draw the line on what constitutes a “compelling government interest” and 2) whether a given law is “narrowly tailored” to achieve that interest. InCitizens United, the Court ruled that bans on “independent expenditures” by corporations and other associations didn’t further a sufficiently compelling government interest, and thus such bans were struck down as violating the First Amendment. “No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations,” theywrote.

But the more basic restrictions, such as limits on campaign contributions by individuals, remain in effect, because the Court has recognized the “preventing corruption and the appearance of corruption” argument as a compelling interest in those cases. As the Court wrote inBuckley:

And while disclosure requirements serve the many salutary purposes discussed elsewhere in this opinion, Congress was surely entitled to conclude that disclosure was only a partial measure, and that contribution ceilings were a necessary legislative concomitant to deal with the reality or appearance of corruption inherent in a system permitting unlimited financial contributions, even when the identities of the contributors and the amounts of their contributions are fully disclosed.

…We find that, under the rigorous standard of review established by our prior decisions [strict scrutiny], the weighty interests served by restricting the size of financial contributions to political candidates are sufficient to justify the limited effect upon First Amendment freedoms caused by the $1,000 contribution ceiling.

In short, every major player in this debate agrees that campaign finance laws are a First Amendment issue. But whether they technically “violate” the First Amendment depends on whether the government interest behind any given law is properly considered “compelling,” and whether the law is “narrowly tailored” to achieve that interest.Thatis what’s really being litigated.

Why Campaign Finance Laws Should Be Abolished

We’ve established that Reich is wrong to say that political donations are necessarily bribes, but what about the title of the myth:Political Donations are Free Speech? Is it true that political donations fall under the purview of free speech, as most detractors of campaign finance regulations maintain and even the Supreme Court admits? Maybe, but I can see how it looks like a bit of a stretch.

More to the point, this is the wrong question to be focusing on.

The whole debate around whether a donation constitutes free speech is really alegalquestion. It’s debating what the lawis, and specifically what the First Amendment means. But far more important is thephilosophicalquestion of what the lawshould be.

Critically, the best philosophical argument against campaign finance laws does not rest on the vague concept of free speech, but on the rigorous concept of property rights. The principle of property rights is very simple: you are free to do whatever you want with your property, provided that you do not infringe on the equal rights of others to do whatever they want with theirs (if only theFourteenth AmendmenthadenactedHerbert Spencer’sSocial Statics!). Following from this, the better philosophical argument against campaign finance laws would be to say that donating money to a political campaign does not infringe on the property rights of others, and therefore it is fair game in a free society and should be allowed. Period.

That would normally be the end of the matter from the libertarian perspective, but in this case we do actually need a few caveats. Specifically, the fact that these arepoliticaldonations adds a curious wrinkle to the typical libertarian approach.

The problem is that politicians have a bad habit of passing coercive legislation, that is, legislation that infringes on people’s property rights. In the libertarian view, this is acrime, and should be treated as such. If we take this view seriously, one could make the intriguing argument that donating to a coercive politician is an act ofaiding and abetting. This would be especially true for invasive bribes, where the “donor” is essentially purchasing an invasion of property rights, much like someone might hire a thug to set their competitor’s business on fire, except in this case there would be far less pyrotechnics and far more paperwork.

To be sure, this does not mean campaign finance laws as they currently exist would be justified under this view. Instead, you’d have to make donations to coercion-supporting politicians completely illegal, but completely legalize donations to anti-coercion politicians.

It’s a libertarian pipe dream, I know, but I think it’s worth considering, if only to wrestle with the full implications of the theory.

That being said, the aiding and abetting argument for regular donations is honestly debatable, even among libertarians (does a campaign donationreallyconstitute aiding and abetting?). As for invasive bribes, those are already illegal under existing bribery laws, and those laws would remain in place even if campaign finance laws were completely scrapped. So saying we should eliminate campaign finance laws is not saying we should legalize invasive bribes—it’s just saying you can’t preemptively banalllarge donations simply because some of themmighthave strings attached.

In light of these considerations, it’s probably best to stick to the prima facie view that campaign finance laws should be abolished because they violate property rights. This may not be a pipe dream—there were no campaign finance laws for much of American history, after all—but it’s still a fairly radical position by today’s standards.

According to this view,Citizens Uniteddidn’t go nearly far enough.Allcampaign finance laws should be struck down, not just specific laws concerning independent expenditures.

Now, obviously this raises huge concerns about bribery, which are totally valid. But the way to address these concerns is not by placing limits on campaign contributions, but by placing limits on thegovernment.

“It hasn’t occurred to the reformers that if politicians had nothing to sell, no one would be buying,”writesSheldon Richman. The truth is, bribery is only a concern because there are things to bribe for. Politicians have a lot of power to favor special interest groups, such as with tax exemptions, subsidies, regulatory arrangements, and so on, and it is that power that is the source of the problem. Since every tax and regulation favors some people and hurts others, every tax and regulation that’s on the table creates an incentive to buy political privilege.

But if the government were strictly limited, if politicians had no power to interfere with the market to benefit special interests, then there would be no use bribing them, and the whole problem would quickly disappear. “If government is scaled down to, at most, constitutional dimensions, the campaign finance issue will vanish,” Richman writes. Public trust would also be considerably boosted under this approach, since the “appearance of corruption” concern stems directly from the government’s power to intervene in the economy.

Reich’s Ultimate Goal

Given Reich’s complaint that “big corporations and the super wealthy have rigged the free market for their own benefit,” one might think that he would welcome strict limits on government power as a means of addressing the corruption issue. But as we all know, Reich would never accept this.

Why not? Because Reich doesn’t actually want to stop the government from handing out special privileges. What he wants is favors forhispreferred special interest groups, such as unions. He’s not actually against a rigged market. He’s just against it when it’s rigged in favor of his political enemies!

The only people in this debate who consistently oppose special privileges are those who champion a free market and a strictly limited government. So if you like the idea of a level playing field, if you don’t want the government picking winners and losers in the market, then Reich is not your guy, and taxes and regulations are not your friend.

• About the author: Patrick Carroll is the Managing Editor at the Foundation for Economic Education.
• Source: This article was published by FEE