The First Amendment and Restrictions on Citizen Participation

Testimony of the James Madison Center for Free Speech
by James Bopp, Jr., General Counsel⁽¹⁾

April 26, 2000

Before the United States Senate Committee on Rules and Administration

INTRODUCTION

I am James Bopp, Jr., attorney at law, and I thank you for the opportunity to testify before this Committee. A substantial part of my law practice involves defending clients from governmental incursions against constitutionally-protected freedom of speech and expression. I have defended the rights of citizens to participate in the electoral process through litigation, amicus curiae briefs, scholarly literature, and testimony before legislative and administrative bodies. The appended summary of my professional résumé summarizes my work in this area. In addition, I serve as General Counsel for the James Madison Center for Free Speech,⁽²⁾ and it is in that capacity that I was asked to testify today.

In this testimony I will first give a brief background of the First Amendment and its purposes because I believe that unless Members of Congress start with a proper understanding of our First Amendment and its designs, they cannot adequately uphold their oath to uphold the Constitution. Second, I will briefly discuss the First Amendment's role in our Founding Father's vision of democracy because too many of today's reformers have twisted ideas of what democracy should look like. Third, I will address current proposals, chiefly McCain-Feingold, and their effects on citizens' participation in our democracy. Fourth, I will discuss another timely topic, § 527 organizations. Because any discussion of this issue is most always begun from a faulty understanding of the Internal Revenue Code and the Federal Election Campaign Act, I will briefly discuss both and their interplay before analyzing current proposed amendments to the Internal Revenue Code. Lastly, I will provide two constitutional options that would enhance, rather than inhibit, citizen participation.

I. Background of the First Amendment

The First Amendment is a very special kind of law because it is addressed not to the general public, but to lawmakers. Therefore, Members of Congress need to have a proper understanding of what the First Amendment prohibits and allows because it essentially determines what kinds of laws and regulations government may enact. Through the First Amendment, our Founding Fathers established certain fundamental protections for the right of self-government, expressed as limitations on the power of the government.

At first blush, it seems as if the First Amendment prohibits all laws and regulations that restrict speech. After all, "Congress shall make no law . . . abridging the freedom of speech." ⁽³⁾ The First Amendment, however, does not proscribe all government restrictions on speech, but proscribes those restrictions on speech that are inconsistent with the purposes of the First Amendment.⁽⁴⁾ Therefore, it is the conflict of the First Amendment's purposes and its protected fundamental rights with positive restrictions that gives rise to many constitutional issues in campaign finance law.

A. The Purposes Behind the First Amendment

The Supreme Court has stated that the purpose of the First Amendment is to further our "profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open."⁽⁵⁾ On another occasion, the Court explained that "there is practically universal agreement that a major purpose of [the First] Amendment was to protect the free discussion of governmental affairs."⁽⁶⁾ The reason for the protection of political speech was the Framers' understanding that it is "integral to the operation of the system of government established by our Constitution."⁽⁷⁾ Continuing, the Supreme Court stated that, in a republic where the people are sovereign, the ability of the citizenry to make informed choices among candidates for office is essential, for the identities of those who are elected will inevitably shape the course that we follow as a nation.⁽⁸⁾

Indeed, "public discussion" is not only a political right, it "is a political duty."⁽⁹⁾ This stems from the fact that the "opportunity for free political discussion" is vital to assuring "that government may be responsive to the will of the people and that changes may be obtained by lawful means."⁽¹⁰⁾

Therefore, freedom of speech is a condition of our exercise of political liberty. "The First Amendment does not protect a 'freedom to speak.' It protects the freedom of those activities of thought and communication by which we 'govern.'"⁽¹¹⁾ Therefore, our commitment to freedom of expression is anchored in promoting a framework of discourse in which unrestricted deliberation on matters of public concern is secure from the intrusion of government power. The outcome in this secured "marketplace of ideas" will be determined by the persuasiveness of the speakers' reasons used in support of their values and beliefs, not by the dictates of the government.

As Justice Brandeis eloquently stated, democratic society must value free speech "both as an end and as a means."⁽¹²⁾ Free speech is a valuable goal because it is a manifestation of the ultimate purpose of government: to free its citizens so that they may pursue self-fulfillment.⁽¹³⁾ As a means, free speech is an indispensable check on political truth.⁽¹⁴⁾

As embodied in our Constitution, the people have chosen to submit to a system of government in which they retain the ultimate basis of authority. Therefore, government cannot deny the people the right to express and hear political ideas, attitudes, or beliefs, because to do so would interfere with their responsibility as citizens to govern themselves. The people's assumption of this ultimate authority necessarily requires that they be able to express in a manner unrestricted by government, whatever ideas, viewpoints, or information may prove necessary for self-governance. Public opinion mediates between the particular wills of individual citizens and the general will of the government by allowing all citizens to participate in an ongoing debate. If government restricts the speech of a citizen within public discourse, government prevents that citizen from participating in collective self-governance.

Under Article One, section six, the Constitution affords "absolute protection" to the speech of Members of Congress, our political representatives. As you, our representatives, derive your governing power from citizens, the latter must enjoy at least as much protection as you, their elected servants.⁽¹⁵⁾ For how is the public to self-govern, and serve as a check on their elected servants, if the people are not also absolutely protected in their praise and criticism of the actions of these elected servants?

Therefore, to the extent that this country has a government "of the people, by the people, and for the people," the public is the government. But what protections are offered by regulations that limit the participation of citizens in this process? For government to abide by the spirit of the First Amendment, it must value speech and protect free speech as a right, rather than as a privilege.

As a practical matter, unless citizens may exercise their right to speak freely on political matters - including discussions of candidates and their qualifications - self-government is impossible. In order to make good decisions regarding who will represent us and to hold our representatives accountable for their actions, citizens must have access to ideas and information concerning the positions candidates take on issues and their fitness to hold office. In order for those ideas and that information to be available to the electorate, there must be free commerce in the marketplace of ideas. If the marketplace of ideas is compromised by governmental restrictions on speech, then self-governance will suffer and so too will all of the other freedoms guaranteed by the Constitution.

The effect of placing government restrictions only on political speech cannot be easily compartmentalized. The aim of the First Amendment is not only the protection of discourse from the intrusion of governmental authority to secure self-governance, but also the independence of citizens as rulers of themselves.⁽¹⁶⁾ That is, it leaves to individuals the independence to deliberately define for themselves their beliefs, morals, and ideas.⁽¹⁷⁾ As Justice Brandeis stated in his famous concurrence in Whitney v. California:⁽¹⁸⁾

Those who won our independence believed that the final end of the State was to make men free to develop their faculties; and that in its government the deliberative forces should prevail over the arbitrary . . . . They believed that freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth . . .that public discussion is a political duty; and that this should be a fundamental principle of the American government . . . . Believing in the power of reason as applied through public discussion, they eschewed silence coerced by law - the argument of force in its worst form. Recognizing the occasional tyrannies of governing majorities, they amended the Constitution so that free speech and assembly should be guaranteed.

Free speech on political matters, then, is the key to the preservation of self-government and concomitant personal liberties. The Supreme Court's decisions have been unanimous in upholding this principle. Therefore, political free speech is strictly guarded by the Constitution for at least three inextricably interwoven reasons: (1) because it was the Framer's intention to preserve free speech (which is obvious on the face of the First Amendment); (2) because political speech has an indispensable role in the preservation of self-government; and (3) because, given its role in preserving self-government, free political speech undergirds all other civil liberties protected by the Constitution. Thus, the Court reiterated almost sixty years later that "[t]hose who won our independence believed that the final end of the State was to make men free to develop their faculties . . . . They valued liberty both as an end and as a means."⁽¹⁹⁾

B. The First Amendment's Role in the Founding Fathers' Vision of Democracy

The United States has witnessed in the last half-century a truly functioning marketplace of ideas. Yet, the reformers often cry out for the need of "compelled speech" to correct market flaws in the "marketplace of ideas" and further the First Amendment's goal of maximizing the discovery of truth. They want to refocus the speech protections afforded to individual citizens by aligning the government, from which the First Amendment protects citizens, as a buffer between the individual and the intolerant and hostile majority.

The reformers' notion of democracy is synonymous with equality. However, their democratic doctrine threatens the essential perception that all known advanced societies are inherently pluralistic and diverse, which is the seed and the root of politics. Few have understood more clearly than Alexis De Tocqueville the importance of group loyalties to mediate between "society" and the government. Thus he wrote in his Democracy in America that there were diversifying institutions in American society which could mitigate the danger of a "tyranny of the majority." And in his L'Ancien Régime et law Revolution he states:

No gradations in society, no distinctions of classes, no fixed ranks - a people composed of individuals nearly alike and entirely equal - this confused mass being recognised as the only legitimate sovereign, but carefully deprived of all the faculties which could enable it either to direct or even superintend its own government. Above this mass, a single officer, charged to do everything in its name without consulting it. To control this officer, public opinion, deprived of its organs; to arrest him, revolutions, but no laws. In principle a subordinate agent; in fact, a master.

Thus, the heart of the reformers' doctrine is that because men are equal in some things, they should be equal in all. One group of reformers, the Brennan Center For Justice, even brought suit last year claiming that their clients, "as nonwealthy voters and candidates, are excluded from meaningful participation in the electoral process."⁽²⁰⁾ In order to achieve this "equality," reformers seek far-reaching obliteration of constitutional rights - the federal control of issue advocacy.

However, the reformers' idea of how democracy ought to function is completely at odds with the Founding Fathers' vision and the Supreme Court's application of this vision. The Court has been almost exclusively concerned with protecting the transmission of information from speaker to listener. Without this protection, the participation of citizens is chilled and their self-governing rights are diminished. Yet, the reformers view the protection of the individual's application of the information received to individual decisions of self-governance to be paramount.

"Democracy," as Mr. Justice Holmes once said sarcastically, "is what the crowd wants." "Populist" direct democracy is one of the great animating myths of American politics for both left and right.⁽²¹⁾ We have provisions in our state constitutions for popular initiative, referendum and recall. However, Congress must not forget that the first business of government is to govern - which may at times, even in America, call for the deliberate endurance of unpopularity.⁽²²⁾

"So if democracy is best understood as one element in free government, not as a characteristic of the whole system, then it will always be possible to argue that more or less democratic institutions or democratic spirit is needed in any particular circumstance."⁽²³⁾ To Aristotle, the best form of government combined the aristocratic principle and the democratic - good government is a matter of experience, skill and knowledge, but is subject to the consent of the governed. Democracy then, is to be appreciated not as a principle of government on its own, but as a political principle, or an element within politics.⁽²⁴⁾ The belief that because men are equal in some things they are equal in all can be disastrous to the skill and judgment needed to preserve any order at all.⁽²⁵⁾

Democracy then, is but one form of politics, not something to be hoped for at every stage of a country's development or in every circumstance.⁽²⁶⁾ So while democracy can be compatible with politics, indeed politics can scarcely hope to exist without it, politics does need defending against the exclusive claims of many concepts of democracy which can lead to the despotism of the People's democracy.⁽²⁷⁾

But perhaps it needs most of all that most unpopular of defences: historical analysis applied against the vagueness of popular rhetoric. Democracy is one element in politics; if it seeks to be everything, it destroys politics, turning "harmony into mere unison," reducing "a theme to a single beat."⁽²⁸⁾

Therefore, what the Founding Fathers did not propose to do, because they thought it impossible, was to change the nature of man to conform with a more ideal system. They were inordinately confident that they knew what man always had been - an atom of self-interest - and what he always would be, because "[i]f men were angels, no government would be necessary."⁽²⁹⁾ Therefore, ambition must be made to counteract ambition because "what is government itself, but the greatest of all reflections on human nature?"⁽³⁰⁾

The reformers wish the government to protect America from its present-day factions - special interest groups, the wealthy, unions and corporations - by removing their liberties to level the playing field. The answer to this proposal lies in James Madison's Federalist Paper 10,

[t]here are two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controlling its effects. There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests. It could never be more truly said than of the first remedy that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be a less folly to abolish liberty, which is essential to political life, because it nourishes faction . . . .⁽³¹⁾

James Madison concluded that the causes of faction cannot be removed and that "relief is only to be sought in the means of controlling its effects."⁽³²⁾ Mr. Madison was adamant that the answer to controlling the effects of factions did not lie in "reducing mankind to a perfect equality in their political rights" whereby "they would at the same time be perfectly equalized and assimilated in their possessions, their opinions, and their passions."⁽³³⁾ Rather, a republican form of government, in which citizens retain self-governance, is the proper cure.

C. Uninhibited Political Speech is Also Consistent With the Supreme Court's Absolute Protection of the Freedom of the Press

The suggestion that the media has become too powerful, either because of its size or because of its pervasiveness, is antithetical to the First Amendment's spirit and purpose. The printing press had been licensed in Europe precisely because it was a powerful medium of mass communication. Its freedom was enshrined in the First Amendment for that very reason.

No one would deny that journalists, editors, and pundits influence elections through their reporting and choice of topics. But why does the press have the opportunity to influence the political debate without restriction while ordinary American citizens are restricted, or excluded, because they choose a career other than the media?⁽³⁴⁾

The Supreme Court has not permitted government to infringe upon the freedom of the press even to prevent distortion of the political process.⁽³⁵⁾ So why has the Supreme Court not restricted the speech of the press in the area of campaign finance law and why has Congress exempted the media from the FECA's provisions? The answer lies in the history of the First Amendment.

At the time of the founding of the United States, free speech was identified most often particularly with freedom of the press.⁽³⁶⁾ There was no conception of an "institutional press" apart from ongoing political debates amongst citizens. Citizens wrote and distributed their own pamphlets criticizing the government and attempting to change public opinion. Newspapers and pamphlets were partisan political tools, and thus the Founders' declarations about the absolute necessity of freedom of the press can (and should be) extended to today's debates over campaign finance laws.⁽³⁷⁾

Nor were there any illusions about abuses of press freedoms, for as Thomas Jefferson stated, "I deplore . . . the putrid state into which our newspapers have passed and the malignity, the vulgarity, and the mendacious spirit of those who write for them," and that these evils were "produced by the violence and malignity of party spirit."⁽³⁸⁾

That there should be no difference between protection of the media's freedom to speak and citizens' freedom has been recognized by the Supreme Court. As Chief Justice Burger stated in dicta in National Bank of Boston v. Bellotti, a case invalidating restrictions on corporate expenditures to influence votes in a state referendum campaign, "[b]ecause the First Amendment was meant to guarantee the freedom to express and to communicate ideas, I can see no difference between the right of those who seek to disseminate ideas by way of a newspaper and those who give lectures or speeches that seek to enlarge the audience by publication and wide dissemination."⁽³⁹⁾ Indeed, most pre-First Amendment commentators "who employed the term 'freedom of speech' with great frequency used it synonymously with freedom of the press.'"⁽⁴⁰⁾

"To conclude that the Framers did not intend to limit the freedom of the press to one select group is not necessarily to suggest that the Press Clause is redundant. . . . The liberty encompassed by the Press Clause, although complementary to and a natural extension of Speech Clause liberty, merited special mention simply because it had been more often the object of official restraints."⁽⁴¹⁾ "The very task of including some entities within the 'institutional press' while excluding others, whether undertaken by legislature, court or administrative agency, is reminiscent of the abhorred licensing system of Tudor and Stuart England - a system the First Amendment was intended to ban from this country. Further, the officials undertaking that task would be required to distinguish the protected from the unprotected on the basis of such variables as content of expression, frequency or fervor of expression, or ownership of the technological means of dissemination."⁽⁴²⁾ "[In short], the First Amendment does not 'belong' to any definable category of persons or entities: it belongs to all who exercise its freedoms."⁽⁴³⁾

Therefore, the Founding Fathers did not envision a First Amendment that would permit the abridgment of citizens' rights but at all costs avoids restricting the press, for the rights of speech, press, assembly, and petition were protected in the same amendment in the same way. As Jefferson stated, "[o]ne of the amendments to the Constitution . . . expressly declares that 'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech, or of the press,' thereby guarding in the same sentence and under the same words, the freedom of religion, of speech, and of the press; insomuch that whatever violates either throws down the sanctuary which covers the others."⁽⁴⁴⁾

II. The Biggest Obstacle to Citizen Participation Is Low Contribution Limits

The biggest current problem, in terms of the regulation of citizen participation, is low federal and state contribution limits. The effects of low limits are three-fold. First, they limit citizen participation. The purpose of a contribution is to help a candidate get elected. When limits are too low, a donor cannot accomplish his purpose. The purpose of those donors that can participate only through the giving of their resources because of incapacities or lack of time is almost completely frustrated.

Second, low limits deprive candidates of resources necessary for effective campaigns by reducing the amount of contributions available. Reducing the amount of money that candidates may accept decreases their voices and contributes to an uninformed electorate.

Third, low limits artificially spawn alternate avenues of participation, e.g., issue advocacy, independent expenditures, and soft money contributions to parties. Although these alternate avenues of participation are all constitutionally protected and legitimate, they are not as desirable as direct contributions because they reduce the accountability of candidates for their campaigns. Therefore, these other avenues of participation would not occur in the current volume if there were higher limits.

III. Rather Than Address Current Problems and Their Deleterious Effects on Citizen Participation, the Proposed Regulations By McCain-Feingold, Shays-Meehan and Others Actually Further Restrict Citizens' Participation Both Directly and Indirectly

"[The First Amendment] reflects our 'profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide open.' In a republic where the people [and not their legislators] are sovereign, the ability of the citizenry to make informed choices among candidates for office is essential, for the identities of those who are elected will inevitably shape the course we follow as a nation."⁽⁴⁵⁾

While others have attempted to restrict citizen participation in various ways, the Supreme Court has unwaveringly striven to protect citizen participation in its application of the First Amendment. For example, in Buckley, the Court developed the "express advocacy" standard to create a bright-line test to protect the speaker and prevent the chill of his speech. Because the close relationship between candidates and issues makes the distinction between issue advocacy and electoral advocacy problematic for the speaker; he is placed in a position of doubt, not knowing whether to censor his own speech. As the Court explained,

[n]o speaker, in such circumstances, safely could assume that anything he might say upon the general subject would not be understood by some as an invitation. In short, the supposedly clear-cut distinction between discussion, laudation, general advocacy, and solicitation puts the speaker in these circumstances wholly at the mercy of the varied understanding of his hearers and consequently of whatever inference may be drawn as to his intent and meaning.

Such a distinction offers no security for free discussion. In these conditions it blankets with uncertainty whatever may be said. It compels the speaker to hedge and trim.⁽⁴⁶⁾

Therefore, to obviate the danger that "fear of incurring [criminal] sanctions may deter those who seek to exercise protected First Amendment speech," thereby allowing as much speech as possible and permitting the government to regulate only as much speech as absolutely necessary, the Court insisted that mere "advocacy" was not enough to bring a communication within the purview of the statutory limitation; rather, the advocacy must be express or explicit.

Significantly, in both portions of the opinion in which the Buckley Court applied the "express advocacy" test, it noted the importance of precision and specificity where the regulation of speech is concerned. Thus, it is clear that the express advocacy test is a highly speech-protective judicial instrument employed to protect citizens' rights to participate in the electoral process.

A second example of the Supreme Court's endeavor to protect citizen participation, also found in Buckley, is the Court's establishment of the bright-line "major purpose" test. In practical application, this test prohibits government from requiring organizations which make contributions and independent expenditures to register and report as political committees unless the "major purpose" of the organization is the election or defeat of candidates for political office.⁽⁴⁷⁾ "In considering this provision," the Court wrote that it "must apply the same strict standard of scrutiny, for the right of associational privacy developed in NAACP v. Alabama derives from the rights of the organization's members to advocate their personal points of view in the most effective way."⁽⁴⁸⁾ The Court in FEC v. Massachusetts Citizens for Life,⁽⁴⁹⁾ again sought to protect participation in the democratic process by holding that the express advocacy rationale must be extended to restrictions on expenditures by corporations. Thus, the Court protected the rights of corporations and labor unions to participate in the electoral process so long as they avoided communications that expressly advocate the election or defeat of a clearly identified candidate.

The protection of citizen speech is first and foremost at the heart of the Supreme Court's decisions. The speech which the Court has protected - political speech - lies at the core of the First Amendment. Thus, the express advocacy test and the major purpose test were clearly intended to protect citizens' rights to participate by limiting government encroachment to the smallest amount necessary because the "[d]iscussion of public issues and the qualifications of candidates for public office is integral to a system of government in which the people elect their leaders."⁽⁵⁰⁾ Not only is the freedom of speech, particularly political speech, necessary to the functioning of a representative democracy, it is also "the matrix, the indispensable condition of every other form of freedom."⁽⁵¹⁾

Ignoring the Supreme Court's reaffirmance of our nation's commitment to an "uninhibited, robust, and wide open" debate, reformers contend that speech itself, in the form of issue advocacy, has contributed to the "sickness" of our democracy. Such speech, they say, is a pollutant. Therefore, reformers advocate prohibiting speech in the form of issue ads by any citizen or organization within sixty days of an election - the time period when speech is most critical to citizens' participation and self-governance.

Reformers also decry the need to limit more speech to prevent citizens from providing anything that could be "of value" to a candidate. Limiting contributions is not enough; any constitutionally protected activity, such as engaging in a two-way discussion on public policy matters or purchasing professional services from a common vendor, might provide a benefit to a candidate and lead to corruption and therefore must be prohibited. To reach this constitutionally protected speech, the reformers have re-defined "coordination" to include as many classes of relationships as they can dream up - direct, indirect, imputed, or assumed - between a citizen or organization and a candidate, and any communication that could in any way be "of value" to a candidate, whether actually coordinated or not.

The pretext of the reformers' speech restrictions is a concern about the perceived corrupting influence of money. But what really lies at the heart of their attempts to limit citizens' speech? It is their unending quest to level the playing field by prohibiting wealthy citizens from participating through the form of independent expenditures, held by the Supreme Court to be absolutely protected. However, time and again, courts have rejected any attempt to level the playing field because "one man, one vote" "do[es] not recognize the right to equal influence in the overall electoral process."⁽⁵²⁾

The supposed problems with the current campaign finance system that have been identified by reformers and repeated by the media are not problems from the standpoint of American citizens who want a greater say in who is elected and which policies public officials will pursue. Considering the enormous power and influence of government, there may be too little, rather than too much, money spent during political campaigns.⁽⁵³⁾ Congress should not try through regulations to reduce the amount of money spent in political campaigns. Rather, it should concentrate on reforming or eliminating the current campaign finances laws that distort the ways in which citizens can participate in the electoral process.

In so doing, Congress must be careful that its proposed "cure is not worse than the "disease." Many of the so-called reform proposals are nothing more than incumbent protection acts that would make entrenched politicians even less responsive to citizen input.⁽⁵⁴⁾ Any law that attempts to further limit citizens' freedom of speech and association is not worth the price. Political speech and associational expression are the people's exclusive domain:

The First Amendment denies government the power to determine that spending to promote one's political views is wasteful, excessive, or unwise. In the free society ordained by our Constitution it is not the government, but the people - individually as citizens and candidates and collectively as associations and political committees - who must retain control over the quantity and range of debate on public issues in a political campaign.⁽⁵⁵⁾

Any effort by the reformers to take this power from the people is both wrong and doomed to fail because it is unconstitutional under the First Amendment.

The dangerous effect of the current "culture of regulation"⁽⁵⁶⁾ on citizen participation is vastly evident in the reformers' proposals. Chief among proposals that would take this power from the people is the Bipartisan Campaign Finance Reform Act of 1999, sponsored in the Senate (S. 26) by Senators John McCain (R-AZ) and Russell Feingold (D-WI) and in the House (H.R. 417) by Representatives Christopher Shays (R-CT) and Martin Meehan (D-MA). These bills taunt the First Amendment and, if passed, would restrict citizens' participation both directly and indirectly in the electoral process.

It is obvious that the proposals directly limit citizens' speech, and therefore participation, in various ways. However, the Bipartisan Campaign Finance Reform Act also indirectly limits citizens' participation in the electoral process. Although perhaps not immediately apparent, this proposal would result in increased government oversight, increased government investigations, and a necessary increase in the level of knowledge and expertise needed by citizens in order to comply with complex regulations.⁽⁵⁷⁾ Campaign finance laws are already so complex that many citizens fear FEC investigations. Without a cadre of lawyers and accountants to ensure compliance with campaign finance laws, citizens simply drop out of the public debate altogether rather than risk penalties for noncompliance. Furthermore, complex campaign finance laws also cause inadvertent violations of law. For example, of the more than 60 contributors whose reported annual donations exceeded $25,000 in 1990, elderly persons "with little grasp of the federal campaign laws," made up 25% of this group.⁽⁵⁸⁾

As the amount of regulation grows, ordinary citizens and those of modest means withdraw from the public debate. Deprived of their faculties which would enable them to participate, they cease self-governing. Those that are left in the debate are wealthy individuals and organizations, candidates, parties, and the media. The end result of government regulation is that only the wealthy and elite are able to participate in the political process. This result however, is in the interest of incumbent politicians as the primary beneficiaries of increased government regulation. To the extent incumbents can limit accountability and the information available, they can control the debate and advance their own elections. Thus, we have come to Tocqueville's "tyranny of the majority" with "public opinion, deprived of its organs" and government, "[i]n principle a subordinate agent; in fact, a master."

Specifically, how do current proposals directly and indirectly limit citizen participation? First, they attempt to alter or obliterate the constitutional distinction between express advocacy and issue advocacy by mere statutory definitions. The proposals' aim is to expand the category of speech that government can regulate - speech that would no longer be free. Although Congress generally enjoys wide latitude to define most terms for statutory purposes, it cannot convert a category of constitutionally protected speech into speech subject to regulation by artificial definitions. Second, they use labels rather than facts, to turn a constitutionally protected category of speech - coordinated expenditures - into citizen speech that may be regulated and prohibited.

A. The Obliteration of the Distinction Between Protected Issue Advocacy and Express Advocacy

Under the McCain-Feingold bill's restrictions on "electioneering communications," the freedom to engage in unregulated issue advocacy that Americans have enjoyed would be gone. Non-corporate and labor organizations that spent more than $10,000 in the aggregate on issue advocacy during the pre-election periods specified in the bill (which would be very easy to do) would become subject to strict reporting requirements.⁽⁵⁹⁾ Expenditures on issue advocacy during the pre-election periods that are deemed "coordinated" with a candidate, under a new expansive and unconstitutional definition, would be regarded as contributions to candidates and thus subject to FECA's contribution limits.⁽⁶⁰⁾ Corporations and labor unions alike would be banned from engaging in issue advocacy during the pre-election periods.⁽⁶¹⁾

With respect to "federal election activity," any person that expended more than $50,000 in the aggregate would become subject to the same reporting requirements now imposed on political action committees.⁽⁶²⁾ If these disbursements were made within 20 days of an election, they would have to be reported within 24 hours of making the expenditure on issue advocacy.⁽⁶³⁾

This first proposal flies in the face of the First Amendment's broad protection of issue advocacy. Campaign finance statutes regulating more than explicit words of advocacy of the election or defeat of clearly identified candidates are "impermissibly broad" under the First Amendment.⁽⁶⁴⁾ And, such a proposal drastically limits the participation of citizens in the political process.

This approach has already been tried and rebuffed by the federal courts. The weight of authority is so heavy because the express advocacy test means exactly what it says, and issue advocacy is completely protected from regulation. In Michigan, the Secretary of State promulgated a rule that banned corporate and labor union communications made within 45 days of an election that contained merely the "name or likeness of a candidate." Two traditional adversaries, Right to Life of Michigan and Planned Parenthood, challenged the rule in separate federal courts.⁽⁶⁵⁾ Both courts struck it down as unconstitutional.

B. Efforts to Redefine Coordination to Encompass Protected Speech

Under the FECA, an express advocacy expenditure that is made "in cooperation, consultation, or concert, with, or at the request or suggestion of a candidate . . . shall be considered to be a contribution to such candidate."⁽⁶⁶⁾ If it is coordinated with the candidate, an explicit endorsement to vote for the candidate by an otherwise independent group, is arguably tantamount to a contribution to the candidate because it implicates the same potential for quid pro quo corruption. This type of pre-arrangement with a candidate is referred to in shorthand as a "coordinated" expenditure. An ad or expenditure that is not coordinated with a candidate is termed an "independent expenditure" and cannot be constitutionally limited at all.

However, such proposals as McCain-Feingold and Shays-Meehan provide for a sweeping and unconstitutional definition of "coordination" that by mere label would drastically limit true independent expenditures. It would do this by presuming, without proving, the existence of coordination under certain factual scenarios in which it did not necessarily exist.

Under these leading proposals, independent expenditures would be deemed to be "coordinated" with a candidate, thus prohibiting corporations from making them, and limiting individuals to spending $1,000 on them because the communication would be subject to the $1,000 contribution limit to candidates.⁽⁶⁷⁾ This redefinition of coordination with labels violates the First Amendment because if the Constitution forbids Congress from limiting independent expenditures, a fortiori, Congress certainly cannot limit these disbursements by simply attaching a new label to them.

Both proposals provide 10 different factual instances in which "coordination" is presumed. For example, if during an election cycle, a person making an independent expenditure and a candidate employ a common vendor, coordination would be presumed. Indeed, unilateral action by the vendor, that is, providing services to a candidate after an independent expenditure had been made could convert the independent expenditure into a "contribution."

Another instance of presumed coordination would occur if the person making the independent expenditure in the same election cycle merely discussed strategy or policy with the candidate concerning his decision to seek elective office, or discussed any matter related to the candidate's campaign with the candidate. The same is true for the person making an independent expenditure if he also helped to raise funds for the candidate who benefitted from his expenditure.

These presumptions would be invalid because the Supreme Court has held that coordination must be actually proved. In Colorado Republican Federal Campaign Comm. v. FEC,⁽⁶⁸⁾ the FEC took the position that party expenditures were presumed to be coordinated with their candidates as a matter of law. The Supreme Court rejected this view:

An agency's simply calling an independent expenditure a "coordinated expenditure" cannot (for constitutional purposes) make it one . . . . [T]he government cannot foreclose the exercise of constitutional rights by mere labels.

The Supreme Court held that there must be "actual coordination as a matter of fact."⁽⁶⁹⁾ Congress therefore, cannot recite some factual scenarios in which it might be possible, or even probable, that coordination with candidates takes place, and then presume as a matter of law that it has occurred in such instances. To do so would allow the government to curtail independent expenditures and issue advocacy, which it constitutionally cannot limit, by mere labels.

Reformers are also attempting to limit many real independent expenditures by eliminating the express advocacy requirement from the definition of "coordination." The definition of "coordinated activity" in the leading reform bills allows coordinated expenditures based upon issue advocacy.

However, the Supreme Court has declared that only expenditures for express advocacy can be regulated; that is, communications that in "explicit words" or by "express terms advocates the election or defeat of a clearly identified candidate."⁽⁷⁰⁾ Issue advocacy is the antithesis of "express advocacy," that is, the discussion of issues and candidates' positions on them without express words of advocacy. These reform proposals aim to eliminate this critical distinction in the area of "coordinated activity":

"Coordinated activity" means anything of value provided by a person in coordination with a candidate . . . for the purpose of influencing a federal election (regardless of whether the value being provided is a communication that is express advocacy) . . . .⁽⁷¹⁾

Under this definition, the publication of any voting record or voter guide would be deemed an in-kind contribution to a candidate if "coordinated" newly defined. Under this expansive definition, no citizen would even need to mention a candidate to fall under the law. Merely making an expenditure that weighed in on a public policy debate that was also a campaign issue would be considered something "of value for the purpose of influencing a federal election."

Therefore, it is clear from the above discussion of just two of the provisions in McCain-Feingold, that if such provisions were enacted, Congress would essentially be telling American citizens that it does not value their speech or their participation, that there is no commitment to "uninhibited, robust" debate, and that the purposes of the First Amendment have been extremely compromised for the sake of a misguided idea of what democracy ought to look like. If Congress enacts these, or similar provisions, citizens will have lost yet other avenue of self-governance. These proposals will only increase citizen apathy and place our democracy on the brink of the slippery slope of the "tyranny of the majority."

IV. The Reformers' Attack on Issue Advocacy Has Another Front -- Section 527 of the Internal Revenue Code

There is another bill that I want to discuss today that is also part of the unrelenting attack on citizens' ability to participate in public discourse. Not content with a frontal assault on the FECA, reformers have turned their attention to the Internal Revenue Code. This resolution⁽⁷²⁾ proposes to amend the Internal Revenue Code of 1986 to require that federal election rules apply to groups formed under § 527 of the Internal Revenue Code.

Before I talk about the specific effects of House Resolution 4168, some clarifying background information about § 527 and the FECA is necessary. Section 527 was added to the Internal Revenue Code in 1974 to resolve long-standing issues relating to inclusion of political contributions in the gross income of candidates.⁽⁷³⁾ Drafters were concerned that candidates would use their campaign committees to earn investment income free of tax, and so a tax on investment earnings became the major limitation on the exemption available under § 527.

Section 527 of the Internal Revenue Code provides an exemption from corporate income taxes for political organizations that are organized primarily for an exempt function.⁽⁷⁴⁾ Thus, to qualify for the tax exemption, the organization must be a "political organization" that meets both the organizational and operational tests under § 527.

A "political organization" is a party, committee, association, fund, or other organization organized primarily for the purpose of directly or indirectly accepting contributions or making expenditures for an exempt function activity. A "political organization" meets the organizational test if its articles of incorporation provide that the primary purpose of the organization is to carry on one or more exempt functions. Under the operational test, a "political organization" does not have to engage exclusively in activities that are an exempt function.

Whether an organization is a "political organization" and meets the organizational and operational tests hinges on whether its activities are primarily exempt function activities. Section 527(e)(1) of the Code defines the term "exempt function" to mean, in relevant part, the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or electors are selected, nominated, elected or appointed.

The IRS has issued no precedential guidance in this area, but it has issued private letter rulings which provide an indication of what constitutes evidence of political influence for purposes of § 527. Activities that are intended to influence, or attempt to influence, the election of individuals to federal office may include encouraging support among the general public for certain issues, policies and programs being advocated by candidates and Members of Congress.

The IRS has found that expenditures for issue advocacy could qualify as exempt function expenditures within the meaning of § 527(e)(2).⁽⁷⁵⁾ Moreover, the distinction between issue advocacy activities that were educational within the meaning of § 501(c)(3) and issue advocacy activities that were not educational and therefore qualified as § 527(e)(2) exempt function expenditures intended to influence the outcome of elections, was not based on major differences in the nature of conduct of the activities.⁽⁷⁶⁾ The IRS instead pointed to the targeting of the activities to particular areas, the timing of them to coincide with the election, and the selection of issues based on an agenda.⁽⁷⁷⁾ As will be discussed in a moment, these factors have been rejected by the courts as irrelevant to any determination of whether an organization's speech, regardless of its tax status, is express advocacy.

In a recent private letter ruling⁽⁷⁸⁾ to an organization under § 527, made public on June 25, 1999, the IRS determined that a wide range of programs qualified as "exempt functions" for a § 527 political organization. The IRS found a political nexus even though some of the materials to be distributed, and techniques to be used, resembled issue advocacy and other materials and techniques often used by charitable organizations without violating section 501(c)(3) of the Internal Revenue Code. However, because the materials and techniques were designed to serve a primarily political purpose and would be inextricably linked to the political process, the political nexus was substantiated.

80. See North Carolina Right to Life, Inc. v. Bartlett, 168 F.3d 705 (4th Cir. 1999); Iowa Right to Life Comm., Inc. v. Williams, 187 F.3d 963, 969-70 (8th Cir. 1999); Virginia Society for Human Life v. Caldwell, 152 F.3d 268, 274 (4th Cir. 1998); Brownsburg Area Patrons Affecting Change v. Baldwin, 137 F.3d 503, 506 (7th Cir. 1998); FEC v. Christian Action Network, 110 F.3d 1049 (4th Cir. 1997); Maine Right To Life Comm., Inc. v. FEC, 914 F. Supp. 8, 12 (D.Maine 1996), aff'd per curiam, 98 F.3d 1 (1st Cir. 1996); Faucher v. FEC, 928 F.2d 468, 472 (1st Cir. 1991); FEC v. Furgatch, 807 F.2d 857 (9th Cir. 1987); FEC v. Central Long Island Tax Reform Immediately Comm., 616 F.2d 45, 53 (2d Cir. 1980)(en banc); Kansans for Life, Inc. v. Gaede, 38 F. Supp.2d 928, 935-37 (D.Kan. 1999); Right to Life of Mich., Inc. v. Miller, 23 F. Supp.2d 766 (W.D.Mich. 1998); Planned Parenthood Affiliates of Mich., Inc. v. Miller, 21 F. Supp.2d 740 (E.D. Mich. 1998)(same); Right to Life of Dutchess County, Inc. v. FEC, 6 F. Supp.2d 248 (S.D.N.Y. 1998); Clifton v. FEC, 927 F. Supp. 493, 496 (D. Maine 1996), aff'd on other grounds, 114 F.3d 1309 (1st Cir. 1997); West Virginians for Life, Inc. v. Smith, 919 F. Supp. 954, 959 (S.D.W.Va. 1996); FEC v. Christian Action Network, 894 F. Supp. 946, 958 (W.D.Va. 1995), aff'd per curiam, 92 F.3d 1178 (4th Cir. 1996); FEC v. Survival Educ. Fund, Inc., 1994 WL 9658, at *3 (S.D.N.Y. Jan. 12, 1994), aff'd in part and rev'd in part on other grounds, 65 F.3d 285 (2d Cir. 1995) ; FEC v. Colorado Republican Fed. Campaign Comm., 839 F. Supp. 1448, 1456 (D. Colo. 1993), rev'd, 59 F.3d 1015 (10th Cir. 1995), vacated and remanded on other grounds, 116 S. Ct. 2309 (1996); FEC v. NOW, 713 F. Supp. 428 (D.D.C. 1989); FEC v. AFSCME, 471 F. Supp. 315, 317 (D.D.C. 1979); Elections Bd. of State of Wis. v. Wisconsin Mfrs. & Commerce, 597 N.W.2d 721, 731 (Wis. 1999).

81. 2 U.S.C. § 431(4)(A).

82. 424 U.S. 1, 79 (1976).

83. FEC v. GOPAC, Inc., 917 F. Supp. 851, 859 (D.D.C. 1996).

84. Id.

85. See North Carolina Right to Life, Inc. v. Bartlett, 168 F.3d 705, 712-13 (4th Cir. 1999).

86. Id.

87. Buckley, 424 U.S. at 76-82.

88. GOPAC, 917 F. Supp. at 861-62.

89. Id. at 862.

90. Id. at 866.

91. The Christian Coalition International v. U.S., No. 2:00cv136 (E.D. Va. filed Feb. 25, 2000).

92. See American-Arab Anti-Discrimination Comm. v. Reno, 70 F.3d 1045, 1065 (9th Cir. 1995) (citing New York Times v. Sullivan, 376 U.S. 254, 277 (1964) ("What a State may not constitutionally bring about by means of a criminal statute is likewise beyond the reach of its civil law of libel.")).

93. Buckley, 424 U.S. at 45 (emphasis added).

94. Id. at 80 (emphasis added).

95. Staff of Joint Committee on Taxation, 106th Cong., Study of Present-Law Taxpayer Confidentiality and Disclosure Provisions as Required by Section 3802 of the Internal Revenue Service Restructuring and Reform Act of 1998, Vol. II at 95 (January 28, 2000).

96. See Concerning Limits to Candidates in Federal Elections: Hearings before the Senate Committee on Rules and Adminsitration, 106th Cong., 1st Sess., May 24, 1999 (testimony of former Senator Dan Coats and Exhibit 6, quoting Senators John Kerry (D-MA), Frank Lautenberg (D-NJ), Wendell Ford (D-TN), and Dennis DeConcini (D-AZ) and former Senator Paul Simon (D-IL), most announcing their intention to retire but all expressing dismay at the inordinate amount of time necessarily devoted to raising campaign contributions).

97. In fact, H.R. 4224, introduced this Session, calls for an amendment of the Internal Revenue Code of 1986 to allow a tax credit in an amount equal to one-half of all political contributions, and all newsletter fund contributions, paid by the taxpayer during the taxable year, not to exceed $100 ($200 in the case of a joint return).