by Marcia Coyle
In the Supreme Court’s landmark Buckley v. Valeo campaign finance ruling in 1976, the justices said the ban on spending general treasury funds applied only to “express advocacy” by corporations and unions, for example, activities using the magic words “vote for” or “vote against” a particular candidate. But in the 1990s, so-called issue ads began appearing during campaigns. Some were genuine issue ads addressing topics of public concern. Others were sham issue ads clearly designed to influence an election, but they went unregulated because they avoided using the magic words. For example, the ad would express a viewpoint on a political issue and then urge voters to contact Senator X and tell him “what you think of his vote,” a vote that opposed the ad’s viewpoint. There were no limits on how those advertisements were financed and no disclosure was required. As a result, millions of dollars from corporate and union treasury funds financed campaign advertising through the sham issue ad loophole.
The McCain-Feingold Act tackled that loophole and others. The act contained a provision (Section 203) barring corporations and labor unions from using their general treasury funds to pay for “electioneering communications” during specific periods leading up to primary and general elections. The ban applied to broadcast, cable, or satellite communications that featured a candidate for federal office and could reach 50,000 people thirty days before a primary and sixty days before a general election.
The act also contained two provisions intended to reveal who and how much was behind the funding for electioneering communications. Under the disclosure requirement, any corporation or union that spent more than $10,000 to produce or air these communications had to report to the FEC the names and addresses of those contributing $1,000 or more. And under the disclaimer requirement, the broadcast had to say who was responsible for the content. Corporations and unions could still take the alternative funding route—using their political action committees to pay for these electioneering communications.
In 2003, the Rehnquist Court upheld the constitutionality of key parts of the act, including the electioneering provision, by a 5–4 vote in McConnell v. Federal Election Commission (Kentucky GOP senator Mitch McConnell challenged the act). That decision also reaffirmed a 1990 ruling in another case—Austin v. Michigan Chamber of Commerce—which had upheld a state ban on independent campaign expenditures by corporations. Justice Sandra Day O’Connor was key to the outcome in the McConnell decision. Both the electioneering provision and the 1990 Austin decision would play key roles in the ultimate fate of Citizens United’s challenge in the Supreme Court.
But that challenge was still four years away as Bossie and Boos examined the 2004 schedule for the airing of Moore’s ads for Fahrenheit 9/11. When they found that some were listed for the law’s blackout periods, they complained to the Federal Election Commission. They charged that the ads would violate the law’s prohibition against the broadcast of corporate communications mentioning candidates’ names in the sixty days preceding a general election. The movie’s distributors responded that ads airing after July 30—thirty days before the Republican National Convention in New York City—and sixty days before Election Day, November 3, would exclude clearly identified presidential or vice-presidential candidates. Instead, the ads would focus primarily on audience and critical reaction to the film.
The FEC rejected Citizens United’s complaint, saying it was based on “mere speculation.” There was “no reason to believe [Moore] violated the Act because the film, associated trailers and website represented bona fide commercial activity, not ‘contributions’ or ‘expenditures’ as defined by the Federal Election Campaign Act.”
Bossie, however, viewed the result as a victory because the movie’s distributors had decided, in response to the complaint, not to show any presidential or vice-presidential candidates in the ads. “I think they did it because the lawyers at Lionsgate and the Weinsteins—huge, enormous Hollywood entities—they didn’t know how to deal with the Federal Election Commission,” speculated Bossie. “That tells you what the fear of the federal government can do to even Hollywood powerhouses. What kind of violation is it? Is it a criminal violation or a civil violation? What are the fines? If you’re going to spend $10 million on an ad buy, it could be a $10 million fine.”
Bossie and Boos reveled in their “victory.” At the same time, they were planning to make their first movie.
Citizens United was preparing a book about Democratic presidential candidate John Kerry and wanted to do a movie on the candidate as well. Bossie and Boos approached the FEC for an advisory opinion on whether they could advertise the movie and the book if the content referred to Kerry or Bush. The commission said no because the film and ads for both the film and the book would be “electioneering communications.” It also said that Citizens United could not claim any of the law’s exemptions, including a media exemption, because this was its first movie and it did not produce movies in its ordinary course of business, according to Boos.
“So we went out and started making movies,” said Boos.4
They installed production equipment in the basement of their row house and dipped into the organization’s fund for costs. They responded to Fahrenheit 9/11 with Celsius 41.11: The Temperature at Which the Brain Begins to Die. Next came Broken Promises, on the United Nations. And they targeted the American Civil Liberties Union in ACLU: At War with America and illegal immigration in Border War.
By the time the next presidential election cycle began, Citizens United had made at least four films and had created its own distribution system. It was ready to go back to the FEC, this time for its biggest and most controversial movie.
“By 2007, everybody in America—to quote John McLaughlin with metaphysical certitude—knew Hillary Clinton would be the nominee for president,” said Bossie. “The bottom line is we started to put into production a very big, very expensive, long-term investment in a film on and about Hillary Clinton. We did it to go back to the FEC and say, ‘You said a couple of years ago why we can’t do this. Now why not?’ ”
Bossie had to raise a substantial amount of money to fund the movie and the advertisements that would promote it. He viewed as an obstacle the law’s requirement that he disclose the sources of and the amounts of funds contributed to the project.
“We wanted to do ads,” recalled Bossie. “That was the whole premise. As far as Moore’s documentary was concerned, yes, the movie was seen by a lot of people, but tens of millions more people saw his ads, and through his ads, the movie entered the popular culture and was used to educate people. Forget the film was full of lies and deceit.”
Hillary: The Movie was a brutal takedown of Hillary Clinton as a potential president. Bossie planned to distribute it through theaters, video-on-demand broadcasts, and DVD sales in all of the early presidential primary states. He also had produced three television ads for the movie.
Bossie wanted to use the organization’s general treasury funds to pay $1.2 million to a cable television consortium to make his movie available for free download to “on demand” subscribers. He could have used funds contributed to Citizens United’s political action committee and avoided problems with the corporate electioneering provision, although he still would have to disclose the sources of those contributions. Instead, he chose to use the organization’s general treasury monies, which included some corporate funding. He and Boos feared that the film would violate the law’s ban on corporate-funded electioneering communications and that they would be subject to civil and criminal penalties.
The two men decided to file a federal lawsuit arguing that the ban on corporate electioneering communications and the law’s disclosure and disclaimer requirements were unconstitutional as applied to the Hillary movie and its three ads. But first they needed to find a lawyer willing to take on the challenge. In 2007, as they worked through their strategy, Bossie recalled, not many lawyers were willing to challenge the federal law which the Supreme Court had upheld just four years earlier. He interviewed several la
wyers in his office, he said, including Republican superstar litigator Theodore Olson of Bush v. Gore fame.
“I told them my theory and I don’t know if they were underwhelmed, but nobody showed a passion,” said Bossie. “When you’re dealing with a cause-oriented outcome, you want whoever you hire to be passionate about it. When I’m interviewing these people, what I’m looking for is who is going to go hammer and tong for us, who is going to fight every step, every half step, who is going to be forward-leaning, not wishy-washy.”
And above all, they wanted to get to the Supreme Court. “That was definitely part of the strategic thinking,” he emphasized. “We felt we had a unique twist: the law’s application to a movie. This case would have to be decided by the Supreme Court whether on an appeal by us or an appeal by the FEC.”
And when the case did get to the Supreme Court, the justices would not be examining or writing on the nearly clean slate that confronted them in the Second Amendment gun case.
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The first federal campaign finance law was enacted in 1867, but it was a very narrow law that simply barred federal officials from soliciting contributions from Navy Yard workers. The modern era of campaign finance legislation really began with the Tillman Act of 1907.5 The law barred direct contributions by corporations and national banks to federal campaigns. The Tillman Act was the point of reference used by President Barack Obama in his 2010 State of the Union address when he criticized the Roberts Court for reversing a “century of law” and opening the “floodgates” to corporate spending in elections because of the justices’ ultimate decision in Citizens United.
The Tillman Act was sponsored by Senator Benjamin (“Pitchfork Ben”) Tillman, a white supremacist and Democrat from South Carolina. His motives were far from pure in proposing the 1907 law. Tillman wanted to punish the Republican Party for imposing Reconstruction on the South. At the same time, however, public support for reform had been growing since the 1896 presidential campaign between Republican William McKinley—the recipient of allegedly unethical corporate contributions—and William Jennings Bryan. There were rumors and charges of bribery in that election. Although a Republican and a beneficiary of corporate contributions, Theodore Roosevelt in 1904 ran for president on a clean government platform. After his election, Roosevelt, with support from the progressive National Publicity Law Association and other grassroots groups, pushed for campaign finance reform, and the result was the Tillman Act.
(In a 2010 speech shortly after the Roberts Court ruling in Citizens United, Justice Clarence Thomas defended the ruling by pointing to Tillman’s motives. Thomas told a law school audience, “Go back and read why Tillman introduced that legislation. Tillman was from South Carolina, and as I hear the story, he was concerned that the corporations, Republican corporations, were favorable toward blacks and he felt that there was a need to regulate them.” Given that history, he added, it is a mistake to consider the regulation of corporate speech as “some sort of beatific action.”6 Of course, Tillman was not the only member of Congress who supported the legislation, and members of Congress often have different motives for the votes they cast. Regardless, as Thomas himself often argues, it is the text of the law that matters.)
As is true of most of the history of campaign finance regulation, loopholes in the Tillman Act were discovered and plumbed. Corporations gave “bonuses” to their employees, who were told that the money was to go to the corporation’s chosen candidate. The Tillman Act ban was largely ignored. In 1910 and 1911, Congress also passed campaign disclosure legislation and spending limits for all congressional candidates.
Congress’s next attempt at comprehensive reform did not come until 1947. In that year, the Taft-Hartley Act became law and prohibited certain labor union practices. Congress included unions in the ban on direct campaign contributions by corporations and interstate banks, and prohibited all of them from making expenditures to influence federal elections. Nothing much happened on the reform front for the next two decades until the Federal Election Campaign Act of 1971 and its 1974 amendments enacted in the wake of the Nixon-Watergate scandal.
The act and its amendments created the Federal Election Commission to enforce the Federal Election Campaign Act, imposed limits on campaign contributions and spending, and required disclosure of those funds. They also permitted corporations and unions to use treasury funds to establish a separate segregated fund, known as a political action committee, and to solicit voluntary contributions to the PAC. Those funds, whose sources had to be disclosed, could then be used to contribute to federal campaigns.
Despite the ambitious reform attempt, Republican senator James Buckley of New York and Democratic senator Eugene McCarthy of Minnesota almost immediately challenged the constitutionality of key parts of the 1974 amendments. The result of their lawsuit was the 1976 landmark Buckley v. Valeo, an unsigned decision of the Supreme Court headed by Chief Justice Warren Burger.
Richard Hasen of the University of California at Irvine—one of the top election law experts in the country—has called Buckley “the fountainhead of modern U.S. campaign finance jurisprudence.”7 In Buckley, the Court drew a line between campaign contributions and campaign expenditures. It ruled that limits on contributions did not violate the First Amendment, but limits on spending did.
Contribution limits, according to the Court, did appear to restrict a type of political speech, but the limits helped to prevent corruption or the appearance of corruption. The limits “serve[d] the basic governmental interest in safeguarding the integrity of the electoral process without directly impinging upon the rights of individual citizens and candidates to engage in political debate and discussion.” Contributions to a candidate posed a greater danger of quid pro quo corruption or the appearance of buying the candidate.
Limits on campaign spending, on the other hand, imposed “direct and substantial restraints” on the amount of political speech, said the Court. The decision rejected arguments that spending limits served the public interest by equalizing the financial resources of candidates and that large independent expenditures posed the same threat of corruption or its appearance. Independent expenditures were not prearranged or coordinated with a candidate, explained the Court, and that alleviated the danger of quid pro quo commitments from candidates.
The battle in Buckley, which continues to this day on the Roberts Court, was over how to view money in elections. The Buckley majority viewed the spending of money as a form of “speech” because in today’s society, money is essential for effective communication in campaigns. However, as Justice Byron White, dissenting in part, wrote: “As an initial matter, the argument that money is speech and that limiting the flow of money to the speaker violates the First Amendment proves entirely too much.” Money is not always equivalent to speech or even used for speech in campaigns, he wrote, and Congress, in order to prevent corruption, had as much justification for limiting expenditures as it did for restricting contributions.
After the 1974 amendments to the Federal Election Campaign Act and the Supreme Court’s Buckley decision, campaign finance reform languished until Senators McCain and Feingold won a five-year-long battle for passage of their Bipartisan Campaign Reform Act of 2002, which the Rehnquist Court largely upheld as constitutional by a 5–4 vote in McConnell v. FEC in 2003.
Since the Buckley decision in 1976, according to Hasen, the Supreme Court’s campaign finance rulings have “swung as a pendulum toward and away from deference” to congressional and legislative regulation as members of the Court changed.8 With the arrival of Roberts and Alito, who replaced Chief Justice William Rehnquist and Justice Sandra Day O’Connor, the pendulum abruptly swung away from regulation of money in campaigns, he said.
And evidence quickly mounted of another sharp and enduring divide on the Roberts Court, this one over the First Amendment and its relation to campaign finance regulation.
• • •
The Roberts Court’s experience with campaign finance law be
gan in its first term—the 2005–06 term—when the justices took up a Vermont case in which a state legislative candidate and others challenged Vermont’s limits on campaign contributions and spending. In a fractured decision, the Court struck down both limits. The Court’s majority found that Vermont’s campaign spending limits ran afoul of the landmark Buckley decision, which held that expenditure limits violated the First Amendment. And, although Buckley had upheld limits on contributions because contributions presented the greater risk of quid pro quo corruption, Vermont’s contribution limits violated the First Amendment, wrote Breyer, because the limits were so low that they restricted the ability of candidates to raise funds necessary to run competitive campaigns and the ability of political parties to help their candidates.
Justices Breyer, Roberts, and Alito rejected Vermont’s call to revisit Buckley’s holding that spending limits violate the First Amendment. Although agreeing with the judgment, or outcome, of the case, two justices—Scalia and Thomas—said they would have overruled Buckley entirely in order to end all restrictions on campaign financing. Kennedy agreed only with the outcome and voiced skepticism about the entire field of campaign finance regulation.
Stevens, Souter, and Ginsburg dissented. Stevens, saying money does not equal speech, would have overruled Buckley’s rejection of limits on expenditures and upheld all of Vermont’s restrictions. Souter and Ginsburg said it was premature to reject Vermont’s spending limits and a lower court should study whether the limits were narrowly tailored and justified. As for Vermont’s contribution limits, they said, those “are not remarkable departures either from those previously upheld by this Court or from those lately adopted by other States.”
The following term offered a clearer picture of where the Roberts Court was headed, as well as the possible fate of Citizens United’s case.
Federal Election Commission v. Wisconsin Right to Life (FEC v. WRTL) was actually the second time that the Roberts Court had examined the Wisconsin anti-abortion group’s complaint. In 2006, the Court, in an unsigned ruling, held that the group could pursue a lawsuit challenging the McCain-Feingold Act’s ban on corporate funding of electioneering communications as it applied to what the group argued was its “grassroots lobbying” ads. The justices, with Justice O’Connor on the bench, did not rule on the merits of the group’s complaint, but sent the case back to a lower court for a hearing on whether the group’s ads fell within the financing ban.
