Citizens Divided

It was only about two months after I was old enough to legally vote that I was solicited for my very first contribution to a political campaign. Because I turned eighteen in a presidential election year, I was expecting to receive this request from an impersonal advertisement sent by a candidate running for a major office. Surprisingly, it was actually a text from my cousin who was running for State Representative in Missouri, and she only asked for a small amount to help pay for her yard signs. After this, I became very intrigued in how political candidates raise money for their campaigns, and I was very interested in how there could be such a disconnect between the small amount I gave and the $2.6 billion that was raised in 2012 for the presidential election alone, according to the independent campaign finance watchdog OpenSecrets (Choma). The sheer size of how much capital is needed to run national campaigns lends itself to unscrupulous fundraising practices, which, according to a Pew Research poll (Jones), in turn reduces the legitimacy of elections in the eyes of most Americans. Some of the most recent research involving campaign finance focuses on how to regain the trust of the public and increase the diversity in the political system. This issue is extremely significant because of how unrepresentative the donor class is from the broader population. To remedy this, the political parties need to put an emphasis on running minorities for office because research from political scientists at the University of California-Berkeley shows that a much more diverse demographic donates to a minority candidate (Grumbach and Sahn), which increases political participation across the electorate leading to a more legitimate government in the eyes of the people.

In our current state of campaign finance, the laws and regulations place no limits on the amount of money that corporations, unions, and wealthy individuals can contribute to outside groups—called Super Political Action Committees (PACs)—that focus on getting candidates elected. Diana Dwyre, a fellow at the American Political Science Association, noted that, although these Super PACs cannot work directly with candidates or parties, they can still campaign on their behalf to the public. This forces candidates to cater their political positions to the whims of these Super PACs, because they desperately need the funds they provide. In turn, candidates focus less and less of their attention on their average constituent. According to a 2015 New York Times poll, this gave the majority of Americans with the feelings of being unheard and underrepresented at best, and unrepresented at worst (Confessore and Thee-Brenan). This system of reliance on Super PACs arrived after the Supreme Court’s Decision in Citizens United v. Federal Election Commission. Citizens United opened the proverbial floodgates for vast amounts of money to be spent on elections. If, instead, candidates were reliant on small donations from more of their constituents, their actions in office would become more transparent because they would have to put these priorities first. Political researcher Keith Hamm also found that it would lessen the grip that party allegiance has over office holders, which creates a more diverse and freer political climate (Hamm).

In my research, I will first look at the modern history of campaign finance to grasp how and why the campaign funding system has changed over the years. I will pay particular attention to the Supreme Court cases that have changed the precedent concerning campaign finance, particularly the cases Buckley v. Valeo and Citizens United v. Federal Election Commission. I will then shift to how the current system operates and how candidates fundraise for their office and how this influences their political positions. This will be accomplished by looking at two case studies: the 2012 election cycle and the presidential campaign of Bernie Sanders in 2016. Finally, I will examine how changing our finance laws could make politics more equitable and how it would strengthen our political system. My conclusion will offer suggestions and solutions to fix our current system. If we want change, and polls show most Americans do (Confessore and Thee-Brenan), we must push Congress to strengthen regulations concerning fundraising and add a more viable public option, which will encourage political diversity and participation.

To better understand the current laws and regulations concerning campaign finance, I will first examine the modern history of the campaign finance system. Since fundraising for political campaigns has always existed in the history of the United States, there is a rich legal background on which campaign finance exists. Starting in 1907 with the Tillman Act, which banned corporate donations in federal elections, the early twentieth century largely moved to restrict campaign donations. Later in the same century, these prohibitions were relaxed by rulings from the Supreme Court, which allowed large sums of money to enter into the political system. Entering the twenty-first century, a similar pattern occurred where bipartisan legislation was passed restricting contributions and requiring disclosures, but was later repealed by the Supreme Court. In this section, I will investigate why the laws were changed to favor fewer restrictions, which will lay the groundwork for my subsequent research and helps shape my hypothesis and conclusion.

After the Watergate Scandal seriously shook the public’s trust in government, Congress set about trying to regain legitimacy by instituting new campaign finance regulations. Candice Nelson, a moderate liberal and expert on American elections, noted that in 1974, Congress passed amendments to the Federal Election Campaign Act (FECA) of 1971 that created donation limits for individuals, PACs, and the parties themselves, as well as strict disclosure laws for candidates to report where they received their donations. In effect, this removed wealthy individuals and corporations from having an unreasonable influence in the political process. Robert Post, a Constitutional Law professor at Yale, observed that these new amendments also created a public funding component that matched funds for candidates that they could use throughout the nomination and election process (Post). This allowed minor candidates and third parties to become more recognizable to voters, increasing political diversity in the midst of the two-party system. A perfect example of this is Jimmy Carter’s 1976 presidential campaign. Carter entered the race as an unfamiliar candidate from Georgia but was able to build a campaign organization from the public funds available to him, allowing him win the Democratic nomination and eventually the Presidency (Nelson). The 1974 amendments to FECA also created the Federal Election Commission, a federal agency entrusted with regulating and monitoring obedience to the law. Robert Mutch, a political scientist at Indiana University, remarked that the FEC’s regulatory authority, combined with the mandatory disclosure laws, forced candidates and officeholders to solicit smaller donations from their constituents and rewarded transparency. However, only two years after these amendments took effect, the Supreme Court ruled in Buckley v. Valeo 1976 that FECA’s banning on expenditures from corporations, unions, and individuals was in violation of the Constitution (Buckley). This is because the court ruled that spending money to promote a candidate was a form of free speech and consequently, was protected under the First Amendment. This was the first, but not the last time money would be equated with speech in the eyes of the court (Post). This ruling encouraged the development of PACs and began the reliance of soft money in political campaigns. Buckley did keep intact a version of the FEC and the donation limit directly to campaigns. In all, the FECA laws successfully curbed inordinate campaign spending, but their effectiveness was handicapped by the Buckley ruling which paved the way for massive spending through PACs.

In the years following the Buckley decision, the soft money contributions to political parties greatly increased. For instance, from the 1996 election season to the 2000 election season, the Democratic Party doubled their soft funds, and the Republican party increased their soft funds by 73% (Nelson). The Baldwin Professor Emeritus of Law at Yale, Peter Schuck, found that as a result of this increased spending, there was widespread support for more campaign finance restrictions, as there had not been any since the FECA laws of the 1970s (Schuck). To get any support in a gridlocked congress, the new campaign finance laws needed to be bipartisan. Senators John McCain and Russ Feingold, a Republican and Democrat respectively, took up the challenge of sponsoring the bill, and, in 2002, they were able to get the Bipartisan Campaign Reform Act (BCRA) passed into law. The BCRA’s main change was the restrictions it placed on political parties from receiving any soft money contributions (Nelson). This provision prevented corporations or unions from directly sponsoring candidates through the parties. The BCRA also added more stringent policy on issue advertisements before elections. These advertisements did not directly advocate for or against a particular candidate, but they did “praise or criticize an issue position or record of someone that happened to be a candidate” (Dwyre). The new restrictions under the communications provisions banned these types of ads thirty days before a primary and sixty days before the general election, forcing any type of advertisement to be paid for with funds subject to contribution limits that must be fully disclosed (Dwyre). Ray La Raja, Professor of Political Science at the University of Massachusetts Amherst, said of the BCRA, “it weakened the capacity of parties to organize elections and gave greater influence to candidates” (La Raja). This undoubtedly fostered political diversity as candidates were much more independent and could stray from their party norms, leading to more attention on constituents and less on donors.

Although the BCRA provided a fairer and more equitable framework for campaign finance reform, the Supreme Court again ruled to deregulate campaign finance. In 2008, the nonprofit group Citizens United sought to promote Hillary: The Movie, a documentary disparaging Hillary Clinton, who was running for President at the time. However, under the BCRA’s electioneering communications provisions, Citizens United was unable to show the movie within thirty days of the Democratic Primary (Dwyre). After making its way through the Federal Courts system, Citizens United v. Federal Elections Commission ultimately landed on the Supreme Court’s docket. The Court ruled that the BCRA’s prohibition on individual expenditures by corporations, unions, and individuals violated the free speech clause guaranteed in the Constitution’s First Amendment (Dwyre). Now, so long as donors do not organize directly with candidates or parties, they can spend unlimited amounts of money influencing elections including running political issue advertisements. In essence, the court extended the First Amendment rights of free speech to corporations, and it considerably limited the view of corruption, writing in the majority opinion that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption” (Citizens United). The Citizens United case gave rise to Super PACs which are allowed to spend all of their treasury funds on elections independent of parties or candidates. However, the highest spending Super PACs are led by ideological members from a party and work in tandem with that party to get their candidates elected (Dwyre). This allowed massive amounts of money to suddenly enter into the political sphere, with the highest spending Super PAC spending $142 million in 2012 alone (Dwyre). Citizens United also created a new category of political actors called 501(c) organizations that are categorized as tax exempt nonprofit corporations. 501(c)s act like Super PACs but are not required to disclose their donors and do not have to report all their spending, lessening political transparency (Dwyre). Thus, Citizens United represents a clear departure from regulated campaign finance in favor of deregulation and more spending.

Now that I have examined the legal history of campaign finance laws in the United States, I will look at how the current laws are implemented by the candidates and parties. This section will consider how presidential and congressional campaigns are financed in the aftermath of the Citizens United decision. To do this, I will use two case studies that are good examples of how campaign finance is currently being applied. The first will be the 2012 presidential and congressional election cycle, which was the first presidential election since the Citizens United decision, in order to show the massive amounts of money that was spent. The second will be the 2016 presidential campaign of Bernie Sanders, which will show how departing from the usual fundraising strategies can be beneficial for both the public and the candidate.

In 2015, the independent campaign finance watchdog OpenSecrets reported that nearly $2.6 billion was spent on the 2012 presidential election (Choma). 2012 was also the first presidential election in which both major candidates declined the federal public option, allowing them to bypass the extra regulations and the related spending cap (Nelson). Instead, they both focused heavily on raising private donations. On the Democratic side, Barack Obama’s campaign spent roughly $737 million, compared to the Republican Mitt Romney’s campaign, which spent approximately $624 million (Nelson). Romney did get much more support from his party’s National Committee, which spent $339 million in comparison to the Democratic National Committee’s $197 million in favor of Obama (Nelson). So far, campaign spending appears to be about equal, with both candidates raising just under $1 billion. However, the addition of Super PACs into the political atmosphere heavily favored Romney. Super PACs, 501(c)s, and other groups collectively spent $454 million in favor of Romney, whereas Obama only got $124.5 million from these groups (Nelson). This may seem like a huge political advantage for Romney, but because the Super PACs could not work directly with his campaign, their effectiveness was heavily tampered. A Romney Campaign pollster at the time characterized the situation thusly: the Super PACs are “not always on the same message with where the campaign want to go; they don’t necessarily anticipate the strategic direction the campaign’s headed in” (qtd. in Nelson). Super PACs also had to pay higher rates for advertising because candidates are given the lowest unit rate in political advertising, giving the edge to Obama because he had more from his own fundraising to spend than Romney (Nelson). Jim Margolis, an Obama campaign media consultant, described the situation as the Obama campaign spending “half—even a third—of what the Super PACs were paying for the same advertising” (Nelson). On top of this, the Obama campaign invested heavily in a data analytics department to target their spending and advertising on the most persuadable voters in a coordinated effort (Nelson). Thus, it can be deduced that the disproportionate influence that the Super PACs had on Romney's 2012 campaign efforts actually came back to haunt him, because they had no systematic organization or coordinated message. However, as Charles Spies, a campaign finance lawyer and observer, noted, Super PACs are “essential […]. If you don’t have one, you’re basically defenseless” (qtd. in Nelson). In all, the 2012 election offered the first study of how Citizens United would impact presidential elections. Over $500 million extra dollars were spent by outside groups trying to legally influence the election. Furthermore, the absence of the public spending option forced candidates to spend more of their time and attention on fundraising, a necessary evil that, I argue, should be limited as much as possible.

Like the presidential election of the same year, the 2012 congressional elections saw an explosion of outside spending legalized under Citizens United. In 2012, political challengers to incumbents faced hurdles that were far greater than those of past years. The first of these was redistricting. Because of the 2010 Census, congressional boundaries had to be realigned with the moving demographics of each state. Benjamin Ginsberg, chair of the Johns Hopkins Center for Advanced Governmental Studies, found that this redistricting is highly partisan and favors the incumbent in nearly every case (Ginsburg). Secondly, incumbents had greater access to the funds of Super PACs because of their political status as lawmakers that can grant political favors, as researched by political scientist Keith Hamm (Hamm). The political scientist Paul Henderson found that, like most years, the candidates in 2012 received their largest source of campaign donations from individuals, which accounted for roughly $880 million in spending in races for both houses (Henderson). The political parties themselves also offer huge financial support for their respective candidates, the majority of which is directed to incumbents, which greatly reduces diversity in political thought (Hamm). The biggest change in 2012 was the inclusion of Super PACs for campaign spending. Super PACs spent nearly $250 million in 2012 in efforts to elect candidates that agree with their causes politically (Nelson). Because most of these Super PACs are composed of a few wealthy backers, they only contribute and spend in favor of candidates with whom they agree. This forces would-be candidates and challengers to cater their political preferences to the Super PACs, because they desperately need their funds if they have any hope of winning. Keith Hamm found that “more restrictive campaign finance laws increase the likelihood of challenger emergence” from within their party for the primary and from the opposing party in the general election (Hamm). They also found that minor party and independent challengers are more frequent when campaign finance laws are more restrictive (Hamm). Thus, the new rules under Citizens United gave more power to the political parties and Super PACs, because they are now able to collect and spend virtually unlimited sums of money for their incumbent candidates. This reduces political diversity and weakens the public’s trust in their government, because representatives are less responsive to the people (Nelson).

In direct opposition to campaigns focused on large donations and Super PAC support, Senator Bernie Sanders’s 2016 campaign for the presidency fixated on garnering support from all economic classes through small donations. Political Strategist and Sanders 2016 campaign manager, Jeff Weaver, found that Sanders started off as a little-known Senator from Vermont with 40% of democratic voters not knowing enough about him to even form an opinion on him (Weaver). Despite this, his campaign gained momentum and came very close to upsetting former Secretary of State Hillary Clinton for the Democratic nomination. The political scientist John Green found that, impressively, more than 44% of all donations to Sanders’s campaign were $200 or less, totaling $100 million, and only 4% were the maximum of $2,700, totaling only $8 million (Green). His campaign also famously averaged a donation of only $27, which became an organizing focal point to get more individuals to donate by showing that every dollar counts.

Building on the innovations of the Obama’s 2012 campaign, Sanders’s fundraising strategy relied heavily on one-click donors online, meaning donors that had already given their credit card information online could give to the campaign with only one click. According to Sanders campaign official Tim Tagaris, “95 percent of Sanders’s individual donations were raised online” (Green). Senator Sanders also directly opposed the use of Super PACs saying, “I do not have a super PAC, and I do not want a Super PAC” at a rally (Qiu). This gave him great support inside the Democratic Party’s progressive wing and among young voters, as they saw him more responsive to the needs of voters like them and not to corporations or wealthy individuals (Weaver). His popularity among younger voters is especially important because, as a Pew Research poll found, younger people are much less trusting of political institutions than the generations that preceded them (Gramlich). His campaign strategy also gave Sanders the advantage of being portrayed as a political outsider, detached from the Democratic establishment and a figure that could bring real change not only to the Democratic Party but also to the entire country with his policies of socialism (Weaver). Despite his rising notoriety, as the primary season dragged on, Sanders was unable to defeat Democratic heavyweight Hillary Clinton for the party’s nomination. However, his campaign offers a glimpse of what the future of campaign finance could look like without Super PACs and with candidates who were more reliant on small donations. It is clear that candidates seem more trustworthy to the public if they distance themselves from large donations and ask the general public to help them run.

In order to change our current campaign finance system, we must fundamentally change the laws and regulations surrounding our current system. In this next section, I will explore how the public’s opinion shows great support for change, and this support will be vital to achieving that change. It will undoubtedly be tough in such a politically-charged congress, but if we follow the precedent of bipartisanship set by the BCRA in 2002, change can be made. I will then offer my set of suggestions to solve this problem that allows untold amounts of money to be spent influencing our elected officials through campaign contributions. This information will be valuable, because it will show that, if we encourage greater regulations of our campaign finance system, political diversity will flourish and political participation will surely increase.

In 2015, a full five years after the Citizens United decision, the New York Times, in collaboration with CBS News, polled Americans about their thoughts on the current campaign finance situation. The poll showed “deep support among Republicans and Democrats alike for new measures to restrict the influence of wealthy givers […] and force more public disclosure” (Confessore and Thee-Brenan). The findings of the poll also showed that 85% of the public favored either completely rebuilding the campaign finance system or at least making fundamental changes to the system, both because the wealthy are perceived to have more of a chance to influence the elections process over other Americans, and because of the widespread feelings that money plays too large a role in today’s politics (Confessore and Thee-Brenan). Similarly, a Pew Research poll conducted in 2020 revealed that only 37% of Americans feel that their representative could help them with a problem, compared to 63% of those that gave $250 or more to a campaign (Jones). The study also found that 74% respondents say that it is very important to them that “donors do not have more influence than others” (Jones). In essence, the donor class feels like they are better represented than the non-donor class in Congress, an obvious problem. When taking both of these polls in consideration together, it is clear that there is broad, bipartisan support among the public to change campaign finance in favor of stricter campaign finance laws to create a more representative republic. Furthermore, as I previously mentioned, research shows that challengers to incumbents are more likely to run with stricter campaign finance laws, generating more political competition and diversity through options (Hamm).

Through my research, I have found that the root of today’s broken campaign finance system truly is the Supreme Court’s decision in Citizens United. Somehow, we must return at least to the legal equivalent under the BCRA, where a bipartisan resolution was able to be passed and enacted. This would entail another prohibition on soft money from Super PACs influencing our election, more stringent restrictions on advertisements, and greater disclosure laws. Also, I would add a mandatory public option that candidates for both congress and the presidency must take, which would enhance the FEC’s ability to regulate campaign spending and also allow lesser-known candidates and minor parties to gain traction with the public. Research from Benjamin Ginsburg shows that congressmen and women, as well as senators, should be in favor of passing new campaign finance legislation like that which I propose because it will allow them to spend less time fundraising (Ginsburg). It will also give them the freedom to differ from their parties on some key issues that are important to their specific constituency. This would encourage constituents to get more involved because they would have more of a voice without feeling drowned out by Super PACs, and it would encourage representatives to be more involved with local needs (Ginsburg). On the presidential side, lesser-known candidates would be in favor, because the public financing would allow them to compete at an equal level with political elites and party favorites. Even candidates that embrace Super PACs would be inclined to embrace stricter policies, because they would be able to control their own campaign message and spending, and not be hampered by an uncoordinated effort like the Romney Campaign in 2012.

However, one may ask what is stopping the Supreme Court from striking down this new set of laws using the precedent set by Citizens United. This is a valid concern considering the court favors using precedent from past cases instead of overturning their rulings (Kassow). This strand of legal thought is coined by the Latin term stare decisis, meaning “to stand by things decided,” and is very powerful within the Supreme Court. Therefore, a massive political undertaking in this country is necessary in the form of a Constitutional amendment. Since the Supreme Court ruled that money is a form of free speech and limiting it would be unconstitutional, an amendment to the Constitution would circumvent the court’s previous rulings in Buckley and in Citizens United. I propose this amendment, Amendment XXVIII, would simply say that money is not a form of political free speech. This would force any future Supreme Court decisions to disregard their past equivalency with money and free speech, which would let our new restrictions on campaign finance to stand for good. As explained in Article V of the Constitution, this Amendment would first be proposed in either the House or Senate where a two-thirds majority is needed for passage. Then it would be sent to the states, where three-fourths of the states would need to ratify it in their legislators (U.S. Const. art. V). Although this may seem like a political longshot, in reality, it will have support among legislators because of Citizens United’s extraordinary unpopularity with the public (Shuck).

Stricter campaign finance laws would increase government transparency and increase the trustworthiness of officeholders to the public. More regulations would also increase the diversity in political thought and lessen the grip that the two-party system has over our current political system. The research I conducted examining the history of campaign finance was important, because it presented how we got to our current status quo. By knowing the FECA laws and the Supreme Court case of Buckley v. Valeo in the twentieth century, I was able to investigate how the more recent changes in the twenty-first century were important. What I found was that the BCRA moved to take more money from politics by tightening restrictions, but this was reversed by the Supreme Court’s Citizens United v. FEC decision, giving us our current campaign finance laws. Moreover, the case studies of the 2012 election cycle and Bernie Sanders 2016 campaign all helped shape my answer to the question of how we can fix the current system and bring about a more transparent government. What I constructed was a solution that would amend the current Constitution, allowing Congress to write more strict campaign finance laws. My research showed that this has broad support across political divisions across the country. This would increase representative responsiveness to their constituents and launch a new era of political inclusion. However, through this research I found that while there is public support of changing campaign finance laws, the likelihood of this happening is slim, just based on how congested our Congress is and how charged our political climate is. I would have liked to do more research on local level politics and how changes made there can have an impact on the bigger picture of campaign finance. I think that if I had reshaped the question to include more local level politics, presumably where more change could occur, I could have discovered a different solution and innovations. Nonetheless, this research should be very intriguing to almost everyone. Because campaign finance impacts every citizen, I believe everyone should be aware of how their representatives and presidents are currently raising financing their campaigns. Citizens should be aware that their politicians can be and currently are, greatly influenced by large donors. For scholars, understanding the intricacies of the law and the details of individual campaigns like Bernie Sanders offers insight into how the current campaign finance system can be changed for the better.

Author

Peter Herrmann

Peter Herrmann is a proud member of the Class of 2024 studying Finance in the Mendoza College of Business. Originally from St. Louis, Missouri, Peter now calls the fourth floor of O’Neill Family Hall Home. As a part of the Notre Dame Army ROTC detachment, he plans on serving active duty in the Army, hopefully overseas, upon graduation from Notre Dame. His essay, “Citizens Divided,” analyzes the history of campaign finance in the United States and provides suggestions as to how it can be resolved. He wrote this piece in the fall of 2020 before the contentious presidential election to better understand the role of money and how it impacts politics at the federal level. Arguing in support of stricter campaign finance, he notes that empowering the Federal Election Commission would provide greater transparency and accountability to government officials. Peter would like to give a special thank you to his Writing and Rhetoric professor, Dr. Elizabeth Capdevielle, for all her help during the writing process. He would also like to thank his family for always being supportive in his intellectual endeavors.