Campaign Finance Fiasco: FEC Rules Found to be Illegal

On September 20, 2004, a federal judge struck down 15 campaign finance rules that have guided the 2004 presidential election.

Judge Colleen Kollar-Kotelly’s decision sharply criticizes the Federal Election Commission (FEC), saying that their rules have undermined new campaign finance laws intended to make elections fairer.

The context

Those laws are formally known as the Bipartisan Campaign Reform Act or the McCain-Feingold laws, named after the bill’s authors John McCain (R-AZ) and Russell Feingold (D-WI).

Congress passed the McCain-Feingold bill in 2002. Its laws are long, complex, and took six years to generate, but generally speaking, McCain-Feingold does two things:

1. Re-regulates "soft money," or large, unregulated contributions from corporations, labor unions and wealthy individuals.
2. Bans corporate, union, and special-interest sponsorship of televised campaign ads.

After Congress passed McCain-Feingold, the FEC wrote rules to guide campaigns through the new laws. But Judge Kollar-Kotelly decided that the FEC did not implement the new laws, but rather, changed them.

FEC softens McCain-Feingold

Kollar-Kotelly found that the FEC reinterpreted McCain-Feingold in a way that allows federal candidates to suggest to donors that they contribute, although candidates are still not allowed to directly ask for soft money. Though it may seem to be merely a matter of semantics, Judge Kollar-Kotelly found that the FEC rule enables candidates to solicit soft money.

In addition, Kollar-Kotelly explained that the FEC allowed for cooperation between campaigns and political groups that are able to raise unlimited amounts of money – called 527s. (They are named after the section of the tax code that covers them, section 527.) The FEC rules permit campaigns and 527s to coordinate on television and radio ads, provided that they run at least 120 days before the election. McCain-Feingold intended to ban such collaboration.

527s like Move On and Swift Boat Veterans for Truth have greatly influenced the election, causing both voters and legislators to criticize the FEC and to call for further reform.

Congress keeps trying

There are a couple of measures before Congress that would further modify campaign finance laws.

John McCain and Russell Feingold are at it again, this time with legislation that would force 527s to register as political committees and prevent them from dealing in soft money.

Although this legislation will not affect the 2004 presidential election, it could have a substantial impact on future elections. McCain predicts that the number of 527s will increase exponentially if Congress does not do something to limit their influence on political campaigns. By August 2004, 527s had spent around $248 million on the election, according to the nonpartisan Center for Responsive Politics.

McCain and Feingold’s new bill would subject 527s to the same rules that political parties and candidates must follow. However, 527s that take in less than $25,000 a year would be exempt, as would ads for state elections or appointments of non-elected officials, such as federal judges.

In introducing this legislation, McCain and Feingold have condemned the FEC, promising to reform it. McCain has co-sponsored a bill that would replace the six-member FEC panel with a three-person panel, and one of the members would be appointed to a ten-year term.

What happens now?

Legal experts are debating the repercussions of Kollar-Kotelly’s ruling since, after throwing out the FEC’s rules, she left campaigns with few guidelines as to how to proceed.

Many say that campaigns should continue following the FEC rules for this election cycle because without regulations, the campaigns will be in chaos in the weeks just before the election. Others argue that campaigns should follow the McCain-Feingold laws along with the FEC rules that were not struck down by Kollar-Kotelly, because the FEC cannot enforce rules that have been deemed unlawful.

What to watch and listen for

As Congress and others debate the regulation of 527 committees, we will likely hear arguments about free speech.

Those against the legislation of 527s claim that such regulations violate the First Amendment, our freedom of speech. Some say that campaign finance regulation amounts to censorship because there is a clear and direct connection between money and speech. They say that free speech is enabled by money, particularly in a campaign.

Others contend that there is a clear distinction between money and speech. They say that arguments that link spending limits with speech limits are abstract. They do not believe that campaign finance regulations violate the constitution; to the contrary, they say it protects the voice of the average citizen.

What do you think?

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Article Posted on: 10/10/2004