After McConnell: Candidate Advertising and Campaign Reform

Clifford A. Jones and Lynda Lee Kaid

On December 10, 2003, the U.S. Supreme Court (McConnell, 2003) upheld by a 5-4 decision most of the provisions of the Bipartisan Campaign Reform Act (BCRA, 2002) against constitutional challenges. The BCRA contained the most significant changes in campaign finance law since the Supreme Court’s decision in Buckley v. Valeo (1976) had declared various provisions of the 1974 Amendments to the Federal Election Campaign Act (FECA 1974) unconstitutional. The McConnell decision insured that the BCRA rules for the most part would be in effect for the 2004 election. The constitutional framework established in Buckley allowed contributions to be limited, but expenditures (including political advertising) were not limited in order to protect political expression under the First Amendment. Several of the provisions of BCRA treated in McConnell (2003) have substantial implications, directly and indirectly, for the timing, management, and conduct of political advertising by candidates, political parties, independent groups, and political action committees (PACs).

Increased Contribution Limits

One straightforward impact of the BCRA on campaign advertising is that an increase in contribution limits should facilitate building campaign war chests to fund advertising. Until the passage of BCRA, contribution limits regulated by FECA had remained unchanged since 1974 without any adjustment for inflation. Individuals could donate up to $1,000 per election to a candidate, or $2,000 including both the primary and general elections. BCRA (2002) doubles this to $2,000 per election, or $4,000 in the typical campaign cycle, plus these amounts are now indexed for inflation. The aggregate limit on contributions by individuals to all types of political animals is $95,000 for a two-year cycle, almost double the previous aggregate limit of $25,000 per year, or $50,000 for two years. Separate sub-limits on annual donations to national party committees and PACs rose from $20,000 per year to $57,500 in the aggregate in a two-year election cycle, with an aggregate limit per two-year election cycle on contributions to candidates of $37,500. Limits on PAC contributions remain at $5,000 per year to candidates and $15,000 per year to political parties. Direct contributions by corporations and labor unions remain illegal. Proponents hope that these larger contribution limits, indexed for inflation, will make it easier for candidates to fund their own commercials and provide less incentive to evade limits by relying on "soft money."

Millionaire's Amendment

Who wants to run against a millionaire? No one in Congress aspires to do so, but if a federal candidate finds himself/herself in such a situation, the BCRA has provided a means to raise more funds to pay for the necessary campaign advertising. The BCRA contains an underappreciated provision best known as the “Millionaire’s Amendment,” triggered when a millionaire candidate self-funds his campaign beyond a certain level. Once the level is exceeded, self-funded candidates who make personal loans to their campaigns are barred from repaying over $250,000 of those loans with funds raised after the election. Such candidates cannot raise additional campaign funds after election day to repay themselves. Meanwhile, the opponent of such a candidate (usually an incumbent facing a millionaire challenger) is allowed to accept contributions of up to $12,000 instead of $2,000, plus the party is then free to spend unlimited amounts on coordinated efforts with the candidate facing a self-funded opponent. Moreover, the aggregate contribution limit for individuals also increases, so that a donor who befriends opponents of millionaire self-funders could potentially give up to $285,000 legally. The intent no doubt is to discourage self-funders from running at all, but it does set up a whole new series of issues. One of the most curious is that Congress has created a situation where, in order to combat the presumed evil/corruption of money in politics, the opponent is encouraged to become more beholden to larger and larger contributors whose contributions were illegal and presumed to be a corrupt influence before the law triggered the increased contribution limits. Thus, the remedy for combating the money advantage of rich candidates is to risk the possible corrupting influence of larger contributions from individuals and special interests that are illegal in all other situations.   The validity of this provision was not decided by the court in McConnell.

Disclaimers on Campaign Broadcast Ads

The most visible of the BCRA requirements are the more elaborate disclaimers that must be attached to broadcast ads. Whereas previous FCC regulations required disclaimers, BCRA goes much further by requiring the candidate to appear visually in the ad, state his/her identity, and state that s/he approved the ad. If the candidate is not sponsoring the ad, the payor must be identified, and the ad must state that the ad is not approved by the candidate. The apparent purpose of this requirement is to compel the candidate to be associated clearly with his/her ads. Proponents of this aspect of the new law believe that this provision will reduce the amount of negative advertising, since many candidates prefer not to be involved overtly with negative attacks. In McConnell (2003), this expanded disclaimer requirement was upheld against constitutional attack in a summary fashion, despite the fact that it appears to conflict with earlier Supreme Court decisions (e.g., McIntyre, 1995), as noted by the U.S. Court of Appeals for the Seventh Circuit (Majors v. Abell, March 15, 2004).

It is important to understand the limited application of this new disclaimer provision for candidate advertising. First, the specialized approval disclaimer provisions, like most other aspects of the BCRA, apply only to federal candidates, and consequently, only candidates for President, Senate, and Congress must comply. No expanded visual disclaimer is required on political advertising for state and local candidates, unless such a candidate refers to one or more Federal candidates. Second, the new disclaimer requirements are only required for candidate advertising that is considered to be public communication (defined by the BCRA as broadcast, cable, satellite, newspaper, magazine, outdoor advertising, mass mailings, telephone banks, or public political advertising). Candidate advertisements distributed on the Internet/Web are exempt from the special approval disclaimer requirement. The expectation that this new disclaimer requirement will decrease negative advertising is probably doomed to failure. Viewers will soon become so accustomed to hearing it that it may become "background noise" that is easily tuned out.

Disclosure of and Ban on Electioneering Communications

The more purposeful attempt to reduce negative advertising lies in the BCRA's specific ban on “electioneering communications” by corporations and labor unions from their general treasury funds (but not ads aired by political action committees—PACs—associated with labor unions and corporations). Banned electioneering communications (broadcast, cable, or satellite communications, but NOT Internet, mail, or telephone) are those that (1) refer to a clearly identified (name or picture will do) candidate for Federal office, and are made (aired) (2) within 60 days of a general election (or special or runoff) or 30 days of a primary election (including preference, convention, or caucus) for the office sought by the candidate.

Electioneering communication expenditures by non-corporate or nonunion groups are not banned, but they must be reported, unless they are news stories, commentaries, or editorials by the media, and candidates need not report them if these candidates (or their registered campaign committees) are already obligated to report them as campaign expenditures. Unincorporated groups, such as many tax exempt or so-called “527” organizations. are not banned from making electioneering communications (at any time) so long as they do not rely on corporate or union contributions to fund the organization or ads. Even some types of incorporated nonprofit political advocacy groups may make electioneering communications if they qualify as non-economic corporations under the Supreme Court’s decision in Federal Election Commission v. Massachusetts Citizens For Life (MCFL, 1986).

Party Advertising and the Ban on Soft Money

A primary purpose of the BCRA was to eliminate the use of so-called "soft money" to fund the explosion of advertising by political parties on behalf of their candidates. Pre-BCRA, money was “hard” if it was raised in accordance with the limits concerning sources and amounts specified by FECA (1974), e.g., maximum of $1,000 per election and no contributions by corporations or unions. However, because state campaign finance rules differed from the Federal rules, many states allowed corporations and unions to donate and to do so in larger, sometime unlimited, amounts. These “soft” money expenditures were allowed by the FEC because Federal and state and local candidates all appeared on the ballot in the same election year, and the funds paid for advertising that benefited Federal candidates such as generic “get out the vote” (GOTV) drives and, most notably in the 1996 and 2000 elections, party-financed Presidential campaign ads.

In BCRA, Congress sought to force political parties to choose between making potentially unlimited advertising expenditures independently of its candidates or making coordinated expenditures which could be treated as contributions and limited in amount. However, the Court in McConnell (2003) struck down these provisions, thus leaving party committees free to make both limited coordinated expenditures and unlimited independent expenditures.

However, the BCRA's more direct bans on soft money have so far survived constitutional scrutiny. With limited exceptions, Federal candidates, parties, officeholders, and their agents are now prohibited from soliciting, receiving, or directing soft money to another person or organization. There is currently a lively debate in the legal community on whether other types of groups, such as “527” organizations, may collect and spend soft money which is not coordinated with candidates or parties. At this writing, the FEC has not ruled on it, although it may do so before the 2004 election. In the meantime, 527’s such as American Coming Together (ACT), funded in the millions by George Soros with the avowed purpose of defeating President George W. Bush, and Emily’s List, a Democratic-leaning political group are raising and spending soft money to support their political aims. Senator Russ Feingold has labeled this a soft money loophole and called for Congress to pass another law expressly to prohibit it. Stay tuned to find out whether the FEC and the courts will treat this as protected political expression or, as Senator Mitch McConnell once called it under BCRA, the “crime of political communication.”

At the University of Florida, Clifford A. Jones teaches Election and Campaign Finance law in the Levin College of Law, and Lynda Lee Kaid is Professor and Senior Associate Dean of the College of Journalism and Communications.

References

Bipartisan Campaign Reform Act of 2002 (BCRA), 116 Stat. 81

Buckley v. Valeo, 424 U.S. 1 (1976)

Federal Election Campaign Act Amendments of 1974 (FECA), 88 Stat. 1263.

Federal Election Commission v. Massachusetts Citizens For Life, 479 U.S. 238 (1986)

Jones, C.A. (2000). Soft Money and Hard Choices: The Influence of Finance Rules on Campaign Communication Strategy, in R. Denton, Ed., Political Communication Ethics, (Westport, CT: Praeger), pp. 179-201.

McConnell v. Federal Election Commission, 540 U.S. __ (December 10, 2003).

McIntyre v. Ohio Elections Comm’n, 514 U.S. 334 (1995).

Majors v. Abell, No. 02-2204 (7th Cir. March 15, 2004).