Millionaire's Amendment Case Next Week

The Supreme Court will hear the millionaire's amendment case next week, and in advance, MSNBC has a pretty good article on the subject. What is ironic about the millionaire's amendment is how closely it is tied to McCain-Fiengold and it was not an amendment that McCain authored. But leaving aside that quirk, Davis v. FEC will focus on the Millionaire's amendment as it applies to House candidates only, but a successful challenge to the House portion will spell the imminent doom to the Senate provisions (which are a bit more complex).

Davis’ appeal raised two questions: whether the “Millionaire’s Amendment” violates the First or Fifth Amendment in attempting to “equalize resources” between House candidates, and whether, if that goal is a valid one, the specific financing provisions achieve that goal. In responding to the appeal, the Federal Election Commission told the Court that the case involves a third critical issue: did Davis have “standing” to bring his lawsuit? FEC contended that he did not, because he had identified no actual or imminent harm to his candidacy. Rep. Reynolds, it noted, did not receive any increased contributions or coordinated party spending under the Amendment, so there was no injury to Davis’ campaign. The FEC also suggested that the case may be moot – another factor that could deny the Court jurisdiction.

The Supreme Court on Jan. 11 took on the case, but noted explicitly that it would not decide whether it had jurisdiction until it held a hearing on the merits.

In law school I wrote a paper on the Millionaire's Amendment that focused on potential treatment of the provision based upon the Court's previous jurisprudence regarding contribution limits and the prevention of corruption or the appearance of corruption.

As for previous cases regarding limits, I don't think the Court would be concerned. The Millionaire's Amendment increased contribution limits and the Court had previously ruled that it would not interfere with a legislatures determination of a contribution limit unless that limit was so low as to prevent a candidate from being able to raise funds to run a viable campaign. (This was pre-Sorrell that I wrote the paper). With more money available, striking down the increased limits on that ground wouldn't fly.

But the Court had also noted that it would not probe the legislatures decisions on different limits unless the limits amounted to a difference in kind. Here there would be more punch to an argument against the Amendment since it would be readily apparent that one candidate would be operating under one limit and another under a limit three times the size of the first. Even a candidate who is self-funding is permitted to raise money from other contributors.

There is a rather obvious equal protection argument present in the different limits matter, but I didn't make that argument due to a lack of space (we had a pretty strict page limit to deal with). But it seems patently obvious that forcing one candidate to operate under different rules simply because he exercises a personally protected right while permitting another to operate under different rules presents a parity question.

The primary, indeed only reason, the Court has upheld contribution limits is to prevent corruption or the appearance of corruption of the candidate due to large campaign contributions. Whether the reasoning of Buckley still applies is a matter of some dispute. In 1976, the average cost of a House of Representatives campaign was about $80,000. The maximum contribution from an individual at that time was $1,000 per person per election or $5,000 from a PAC. Thus a person could "max out" at $2,000 or about 2.5 percent of a campaign cost and a PAC could max out at $10,000 or 12.5 percent of a total campaign. Those are sufficiently high enough amounts that the appearance of corruption could be present (I don't but it completely, but at least statistically I can see it.). Today a political campaign for a House seat will run about $1 million. A maxed out individual contributor can give $4,600 or about 0.46 percent. A PAC can give about 1 percent.

Under the increased limits for candidates facing millionaires, the max limit is $6,900 for an election. (If a candidate faces a millionaire in the general, he can only raise increased funds for the general election, not the primary and general). Not only is there a difference in kind, but it seems to increase the appearance of corruption by the simple operation of a higher limit.

More fundamentally though, the Millionaire's Amendment treats personal wealth and political wealth differently. Under the campaign finance law, a candidate, usually and incumbent can raise money at any time and they usually do, building massive war chests which are used to scare off opponents. The Millionaire's amendment does nothing to offset that advantage. But even these politically rich candidates can raise money under increased limits if their self-funded candidate outspends them. (The amendment limits the increased contribution limits fundraising until the non-self-funded candidate achieves parity with the millionaire). Thus a candidate who is not self-funded facing an incumbent with a $5 million war chest must raise money at the standard limit--putting them at a severe disadvantage.

Davis is focusing on a slightly different provision. Under the Millionaire's amendment, each time the self-funded candidate spends over a certain amount, he or she must make an initial disclosure of exceeding certain thresholds. For the House candidate, the threshold is $350,000 for the initial disclosure. Then when the candidate spends another $10,000 or more, he/she must make an additional disclosure within 24 hours. Davis has argued that the additional reporting requirements force him to disclose strategic and financial information before his opponent was required to do so. For example, if Davis spent $50,000 of his own money, he would have to disclose that. But if his opponent spent $50,000 out of his campaign war chest, he would not be required to report that until the regularly scheduled reporting time.

The increased reporting requirement is a pretty good argument since I think it would encompass as least a real injury and it sufficiently raises the equal protection argument. However, it is rather limited and might be grounds for the Court to simply strike the increased reporting requirement and leave the limits question for another time and another case.

However, in the Sorrell aftermath, there may be sufficient support among the Justices to put an end to the non-sense of such increased regulation of political spending. In general, I think a strict and relatively immediate disclosure law would be sufficient. Absent that, I have had other thoughts, which can be read here that would serve to limit the pre-occupation fundraising, including treating personal and political wealth in the same manner.