Watergate, Buckley v. Valeo, and the Day the Court Capped the Input but Left the Output Open Bug Report At the end of Part 5, I left you with a loose thread: if insiders picking the nominee was a problem, who has been picking the insiders? This episode is that thread. Start with the version of the system that was supposed to fix it. After Watergate, Congress rewrote the Federal Election Campaign Act in 1974, and the rewrite was a real piece of engineering. Individuals could give no more than $1,000 to a candidate per election, and no more than $25,000 a year in total. Political committees were capped at $5,000 per candidate. Candidates had overall spending ceilings, and the presidential system got public funding. Disclosure rules were tightened, and a new agency, the Federal Election Commission, was created to enforce all of it. Rate limit on the input, audit log on the transactions, an enforcement body to read the log. That is a sound architecture. Then, on January 30, 1976, the Supreme Court decided Buckley v. Valeo and kept about half of it. The Court upheld the contribution limits. It upheld disclosure. It upheld voluntary public financing with a spending cap for candidates who chose to take the money. And it struck down the spending ceilings, the $1,000 limit on independent expenditures, and the cap on a candidate’s own money. It also struck down how the FEC itself was built, because Congress had appointed four of its six commissioners, and the Court ruled that the people enforcing federal law have to be appointed by the President and confirmed by the Senate. So the system that came out the other side had a throttle on one side of the pipe and nothing on the other. That is the bug. Root Cause The Court’s logic was not stupid, and it’s worth stating fairly. Its reasoning was that a large contribution handed to a candidate carries the risk of a quid pro quo, “corruption and the appearance of corruption,” in the Court’s words. Spending money on your own political communication, on the other hand, is closer to speech itself. In the opinion’s own phrasing, a restriction on how much a person or group can spend “necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached.” And independent expenditures, made without coordinating with a campaign, were judged to carry “diminished potential for abuse.” Each of those is a defensible reading by itself. The problem is what happens when you run them together as a system. Anyone who has run a network knows what happens when you throttle one ingress point and leave the others open. The demand doesn’t go away. It reroutes to whatever path isn’t metered. And the demand here was never going to go away, because the thing being bought is access and influence over decisions worth billions of dollars. You can cap the size of any single transaction, but if you leave the total volume unmetered somewhere else, the traffic simply finds the unmetered path. Nobody planned that. The Court was answering the question in front of it: is this particular restriction constitutional? Nobody was asking the systems question, which is what the whole architecture does once the constraint is in place. A rate limiter on one endpoint, with no limit on the next one, is not half a solution. It’s a routing instruction. Patch Stack Rate-limit the input — the contribution caps The 1974 limits capped how much any one person could hand a candidate directly, which closed the most obvious quid pro quo channel, the briefcase. This is the piece that survived Buckley intact. It’s also the piece that sat at $1,000 per election, never adjusted, for twenty-eight years, until Congress finally doubled it in 2002. Add an audit log — disclosure and the FEC The 1971 law had already put the first disclosure thresholds in place, and the 1974 amendments added an enforcement agency to go with them. The Court preserved the disclosure requirements, narrowing them to contributions earmarked for political purposes and to communications that expressly advocate a candidate’s election or defeat. Of everything in the original design, disclosure is the piece that has held up best, and I’d flag that for later in the post. Make compliance opt-in — public financing with a spending cap For presidential campaigns, the trade was straightforward: take public money, accept a spending limit, and in return, don’t spend your time chasing donors. Because the Court would not allow mandatory spending caps, the only way to keep a cap in the system was to make it voluntary, a deal the candidate could accept or refuse. Close the bypass — the 2002 soft money ban By the late 1990s, the unmetered path had a name, soft money, and the Bipartisan Campaign Reform Act of 2002 was the patch aimed squarely at it. Signed March 26, 2002, it banned national party committees from raising or spending soft money, and it barred corporations and unions from paying for broadcast ads that named a federal candidate within 30 days of a primary or 60 days of a general election. In December 2003, in McConnell v. FEC, the Court upheld the core of the law, 5–4. That’s four patches, and every one of them was a reasonable response to the problem in front of it. The trouble is what each one did next. Honest Limits Every patch got routed around. Take the PACs first, because that story has a twist. In 1975, the FEC ruled 4–2, in what became known as the SunPAC opinion, that a corporation could use its own treasury funds to set up and run a political action committee and solicit its own stockholders and employees. In the six months after the ruling, more than 150 corporations created PACs, bringing the number of corporate PACs to nearly 300. The count of all registered PACs went from 608 in 1974 to 2,551 in 1980 to 4,268 in 1988. Here is the twist, and it matters for how we keep this non-partisan. It was organized labor, not business, that wrote the key PAC provisions into the law, in each of the three legislative rounds, expecting that business wouldn’t use them. Business used them far more effectively. The PAC was a channel built by one side and scaled by the other, which is about as clean an illustration as you’ll get that this was never a story about a villain. It was a story about a channel nobody had metered. Then soft money. Starting with a series of FEC advisory opinions in the late 1970s, parties were allowed to spend money that didn’t have to fit under the federal limits on “mixed-purpose” activity: get-out-the-vote drives, generic party advertising. Once allocation rules for splitting costs between federal and non-federal accounts took hold in the late 1980s, the volume exploded. In the 1991–92 cycle, the two national parties raised $86.1 million in soft money. By 1999–2000, it was $495.1 million, with Republicans at $249.9 million and Democrats at $245.2 million. That is nearly even, and it should tell you that both parties found the same path with the same enthusiasm. BCRA closed that. And then the money moved again. After McConnell, soft money activity migrated to tax-exempt 527 organizations, groups that operated outside FEC contribution limits as long as they didn’t expressly advocate for or against a candidate. And in 2010, two decisions finished the job. In January, Citizens United v. FEC struck down the restriction on corporate and union spending on electioneering communications, 5–4. Two months later, on March 26, 2010, the D.C. Circuit decided SpeechNow.org v. FEC and held that contribution limits can’t apply to groups that make only independent expenditures, which is the legal foundation for the super PAC. I covered the corporate-speech side of this in the Citizens United post, so I won’t rebuild it here. The point for this series is the sequence. Cap one path, the volume reroutes, cap the next path, the volume reroutes again, and eventually a court dismantles the cap. The enforcement layer was built to stall. Here’s the p… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ctrlaltdeldemocracy.substack.com
