One Year Later: The Consequences of Arizona Free Enterprise Club v. Bennett

A year ago, during oral arguments in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett, the conservative justices on the Supreme Court were candidly skeptical of the “matching funds” provision in Arizona’s campaign finance law that Freedom Club PAC was challenging. That provision allowed a publicly-funded candidate in Arizona to match and spend the same dollar amount as a privately-funded opponent up to a certain limit. Justice Antonin Scalia, for example, feared that a wealthy donor might refuse to contribute $10 million to a campaign if a publicly financed opponent would then receive the same amount.

The conservative majority on the Supreme Court saw the matching funds provision as placing a “substantial” burden on donors and privately-funded candidates. Burden or not, the Court’s decision certainly made it easier for big donors to influence elections in states like North Carolina and New Mexico, where a total of three public campaign financing systems – two municipal and one for state-wide judicial elections – have come under scrutiny throughout the past year.

In her Bennett dissent, Justice Elena Kagan eloquently described the requisite chutzpah of a political action committee (or PAC) seeking to reduce the amount of money in elections only when it benefits the other candidate. After all, the public funding provided under Arizona’s campaign finance law was equally available to all candidates. A matching funds provision would level the playing field and create more speech, providing voters with better and more information in an election.

But the majority opinion dismissed those goals, arguing that leveling the playing field is not a good enough reason to curtail the influence of money in politics. One year after the Court struck down Arizona’s matching funds provision, the damage to our democracy is clear.

In North Carolina, super PACs are buying state supreme court seats and a federal district court says there is nothing it can do about it. Although unlimited corporate expenditures in elections are a direct result of the Court's decision in Citizens United v. FEC, a matching funds provision in North Carolina could have countered the effect of these corporate expenditures were it not for Bennett.

A similar challenge in New Mexico threatens to dismantle Albuquerque’s excellent public campaign financing system. New Mexico Turn Around, a conservative PAC, brought an action in federal court to enjoin the city of Albuquerque from enforcing its matching funds provision.

Last December, in Western Tradition Partnership v. Bullock, the Montana Supreme Court upheld a state ban on corporate contributions, citing specific circumstances that make Montana particularly vulnerable to the influence of special interests and big corporations in its elections. North Carolina has joined over 20 states and the District of Columbia in asking the U.S. Supreme Court to deny cert in the Montana case. These states hope to establish among lower courts that there are legitimate state interests at stake in campaign finance reform.

Although the Supreme Court temporarily blocked the Montana ruling, it is has not yet decided whether it will hear oral arguments or issue a summary reversal.

Other courts have also sided with states and cities that hope to prevent corruption through creative provisions in their campaign finance reform laws. The Fourth Circuit Court of Appeals distinguished Citizens United and Bennett when upholding North Carolina’s ban on lobbyists’ campaign contributions.

Similarly, the Second Circuit gave hope to reform supporters when it upheld certain provisions from New York City’s campaign finance reform laws. The Second Circuit affirmed a lower court’s finding that neither Bennett nor Citizens United prevented the City from imposing restrictions on corporate contributions and the matching public funds that would be disbursed as a result. The court distinguished independent expenditures from contributions, finding that the latter could be limited under Citizens United and that the City had a legitimate interest in capping those contributions to prevent actual and apparent corruption.

While there is no doubt that the Bennett decision has been detrimental to our democracy, the Second Circuit’s recent ruling suggests a way to create incentives for smaller contributions and to limit the influence of corporate interests without violating the controlling precedent of Bennett.

Worst Decisions #4: Arizona Free Enterprise v. Bennett

AFJ is counting down the 10 worst decisions of the Corporate Court's 2010-11 term. Yesterday at #5, we talked about Connick v. Thompson, which makes it easier for prosecutors to hide evidence.

Worst Decisions of the 2010-11 Corporate Court Term: #4 Arizona Free Enterprise Club’s Freedom PAC v. Bennett 
Protecting the Power of Wealthy Special Interests to Buy Elections

In a 5-4 vote, the Supreme Court overturned an inventive policy that Arizona implemented in 1998 to combat corruption by reducing the influence of powerful special interests in elections. 

Arizona voters passed the Citizens Clean Election Act in 1998 in response to a state political culture that the New York Times called “an open sewer of corruption.”  Prior to the Act, two consecutive governors were removed for corruption and almost 10% of the state legislature was charged with misconduct, including a chairman of the House Judiciary Committee who was caught stuffing a gym bag with $55,000 in cash.  The Act allowed candidates who abide by strict spending limits to receive public funds for their campaigns and to receive increases in those funds to match spending by well-funded independent groups supporting their opponents or wealthy self-financing candidates.

The Supreme Court overturned the Act in an ironic interpretation of First Amendment free speech law.  The Court’s conservative majority examined a law that increased speech by providing candidates with more resources to communicate with voters and determined that it violated the First Amendment by substantially burdening privately funded candidates. 

In her dissent, Justice Kagan stated that preventing corruption following a political scandal should be deemed a compelling government interest that passes constitutional muster.

She added that the law applies equally to candidates of all viewpoints, and that what the Act’s opponents seek “is essentially a right to quash others’ speech through the prohibition of a (universally available) subsidy program.”

Arizona Free Enterprise Club’s Freedom PAC v. Bennett is number four on AFJ’s Worst Decisions of the 2010-11 Corporate Court term because the Court has closed off another avenue of reform designed to reduce the undue influence of corporate interests and wealthy candidates in political races.

Wealthy Special Interest Groups Can More Easily Influence State Elections

Yesterday the Supreme Court handed down its decision in Arizona Free Enterprise Club’s Freedom Club PAC v. Bennet (consolidated with McComish v. Bennett). At stake was States’ ability to combat the influence of wealthy special interests in elections. The Court decided in favor of the Arizona Free Enterprise Club.

Arizona voters passed the Citizens Clean Election Act in 1998. The Act created a detailed scheme under which candidates were required to demonstrate a certain level of support and abide by a strict set of fundraising and spending restrictions in order to receive public funds for a campaign. The Act allowed a candidate to receive additional funding if the candidate faced attacks from well-financed independent expenditure groups who spent a certain amount of money or if the candidate’s opponent refused public funds and spent over a certain amount. The Act was designed to combat government corruption, as Arizona had recently had a scandal involving bribery. The Act also leveled the playing field when a publicly-funded candidate faced a wealthy, self-financed opponent.

The petitioners claimed that the law was prohibited by the First Amendment, citing a host of “burdens” that discouraged them from outspending publicly-financed candidates.

The Court held that the matching funds system “substantially burdens protected political speech without serving a compelling state interest and therefore violates the First Amendment.” In order for the challenged legislation to stand, the State must show that the law furthers a compelling government interest and that it is narrowly tailored to accomplish that interest. Drawing from case law, the majority reasoned that the fund-matching scheme “plainly forces the privately financed candidate to ‘shoulder a special and potentially significant burden’ when choosing to exercise his First Amendment right to spend funds on behalf of his candidacy.” The majority pointed out that private contributions to a candidate’s campaign would result in each publicly funded candidate receiving public funds, producing a “multiplier effect.”

In addition, the majority argued that the assertion that the law combats corruption is illegitimate because it could keep candidates from spending their own money on their campaigns (and self-funding reduces corruption). The majority also stated that independent spending is a form of speech that “is not coordinated with a candidate” and thus does not encourage corruption. According to the majority, simply limiting the amount of money an organization or individual can contribute to a campaign sufficiently serves to combat corruption.

The four dissenting Justices, led by Justice Kagan, countered that the statute does not hinder free speech but encourages it by producing more speech. Justice Kagan also noted that Arizona enacted its campaign funding scheme to prevent corruption following a political scandal and that this goal is a compelling government interest. She pointed out that the law applies equally to candidates of all viewpoints, so given the controlling case law, it should pass First Amendment muster. “[W]hat petitioners demand,” she continued, “is essentially a right to quash others’ speech through the prohibition of a (universally available) subsidy program.”

By overturning Arizona’s election reform, the Court has closed off another avenue of reform designed to reduce the undue influence of corporate interests and wealthy candidates in political races.

New York Times Slams Corporate Court for Backing Wealthy Special Interests Over Campaign Finance Reforms

A New York Times editorial criticized the Supreme Court’s conservative members yesterday for protecting the right of wealthy individuals and special interests to financially overwhelm opponents in political campaigns. The constitutionality of a campaign finance provision in Arizona came before the Court on March 28, 2011 in the consolidated cases of Arizona Free Enterprise Club’s Freedom PAC v. Bennett and McComish v. Bennett. Under the challenged law, candidates in Arizona who accepted public financing could receive increased public funding for their campaigns if they faced attacks from well-financed independent expenditure groups that spent more than statutory limits or if the candidate’s opponent refused public funds and overspent the law’s limits.

The editorial called this reform “one of the most compelling innovations in the country.” Opponents claim that it burdens the free speech of wealthy special interests. For example, during oral arguments, Chief Justice Roberts strongly suggested that he “sees triggered matching public funds as a limit on the privately financed candidate’s speech.” This is counterintuitive, as the law does not in any way limit the spending or speech of privately-financed candidates; it simply provides matching funds for candidates that accept public financing. The Times added that under Arizona's law, “more candidates — not just the wealthy — will be able to run in elections,” which will result in “more political speech, not less.”

If the Court sides with those who want Arizona's public-financing elections system struck down, it will become another in a series of decisions siding with wealthy special interests in election-law disputes. In a 2008 decision, Davis v. Federal Election Commission, the conservative majority of the Supreme Court struck down a federal rule that increased the cap on campaign contributions for candidates outspent by wealthy and self-financing opponents. The majority held that the rule harmed the free speech rights of wealthy candidates by diminishing “the effectiveness” of their spending and speech. The 2010 Citizens United case also unleashed a torrent of corporate money into federal elections. The Times lamented that “money already has far too much sway everywhere in politics,” adding that if the Court continues to strike down laws that facilitate more campaign speech for candidates being drowned out by wealthy opponents, “the damage and corruption will be enormous.”

Click here to read the full editorial.

Supreme Court Hears Campaign Finance Cases

The Supreme Court heard oral arguments today in the consolidated cases of Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett and McComish v. Bennett. At stake in these cases is the ability of states to combat the influence of wealthy special interests in elections.

Arizona voters passed the Citizens Clean Election Act in 1998 following a set of major corruption scandals in the state legislature. The Act creates a detailed scheme under which candidates must demonstrate a certain level of support and abide by a strict set of fundraising and spending restrictions in order to receive public funds for a campaign. The Act allows a candidate to receive additional funding if the candidate faces attacks from well-financed independent expenditure groups who spend over a certain amount of money or if the candidate’s opponent refuses public funds and spends over a certain amount. The Act is designed to level the playing field when a publicly-funded candidate faces a wealthy, self-financed opponent.

The petitioners claim that the law is prohibited by the First Amendment, citing a host of “burdens” that discourage them from outspending publicly-financed candidates. If the Supreme Court overturns Arizona’s election law, it will close off another avenue of reform designed to reduce the undue influence of corporate interests and wealthy candidates in political races.

Click here for coverage of oral arguments.