Election Law site search:
Money and Politics 2004: New Rules, New Practices
September 15, 2004
On Wednesday, September 15, Chairman Bradley Smith of the Federal Election Commission was the featured speaker at a discussion on campaign finance sponsored by Election Law @ Moritz. This discussion was the first of four election-related events to be held at the Moritz College of Law before Election Day, November 2. The other events include the conference on Thursday, September 22, on computerized voting machines. Last Wednesday's discussion, which addressed current issues in campaign finance regulation, also included commentary by Professor Donald Tobin and was moderated by Professor Edward Foley.
Chairman Smith's remarks called for a rethinking of longstanding limits that federal law imposes on campaign activities undertaken by corporations using corporate funds. Observing that these limits were initially adopted almost a century ago, in 1907, Smith argued that the role of corporations in America is very different today from what it was then. While a greater percentage of corporate activity at the height of the Industrial Revolution might have involved large-scaled business enterprise, like "Big Railroads," today many activities undertaken by corporations involve not only small enterpreneurs, but also nonprofit corporations like environmental groups and pro-life or pro-choice organizations. Smith suggested that a one-size-fits-all approach to limiting corporate involvement in election campaigns makes little sense given the great variety of corporations and corporate activities that exist in America today.
Smith focused specific attention on the so-called "press" exemption that Congress has written into its rules limiting corporate funding of campaign messages. This exemption permits CBS or Fox News to finance electioneering messages about candidates, but not corporations lacking press credentials—and perhaps not even corporations that distribute movies or publish books if the press exemption is limited to "periodical" journalism (newspapers, magazines, TV nightly news, etc.), as Congress's chosen language for the exemption would appear to have it. Smith offered that it was anomalous, given the original animating purpose of the limits on corporate involvement in elections, that large-scale institutional corporations like CBS and Fox were exempt from regulation, while small-scale advocacy organizations were restrained.
Towards the end of his remarks, Smith turned to the topic of tax-exempt organizations and the circumstances in which they should be regulated as "political action committees," subject to limits on the contributions they receive, including a prohibition on any contributions from corporations. Smith indicated that he found the "major purpose" test for determining when a group is to be regulated as PAC, articulated only briefly in two Supreme Court opinions, both imprecise and incomplete. In the absence of new congressional legislation, Smith believes that groups should not be classified as PACs if they refrain from engaging in "express advocacy" (that is, messages that explicitly say "vote for" or "vote against" a candidate).
On this last point, Professor Tobin took issue with Chairman Smith. Drawing upon his previous scholarship on the topic, Tobin argued that the "major purpose" test was capable of implementation through administrative regulations and that, without such rules, groups that clearly were functioning as PACs were escaping the limits that Congress intended to apply to PACs. Professor Tobin also asserted that Chairman Smith's approach would mean that the evils that campaign finance rules are designed to address—corruption, inequity, and deception—would go unattended.
After initial remarks, there were numerous questions from the audience, which gave both Chairman Smith and Professor Tobin (as well as Professor Foley) an opportunity for further reflections. Many members of the audience remarked afterwards that the stimulating and insightful nature of the discussion made the event a successful start to the four-part series that Election Law @ Moritz is sponsoring this fall.