Another campaign finance law appears ready to fall

By Marcia Coyle

A key feature of Arizona’s public financing system for elections appeared to be in serious constitutional trouble on Monday at the U.S. Supreme Court. 

The justices heard spirited arguments in two consolidated cases challenging the matching funds trigger in the Arizona Citizens Clean Elections Act. By the end of the hour-long session, the same justices who prevailed in last year’s blockbuster Citizens United v. FEC, striking down a major federal restriction on corporate spending, had voiced strong skepticism about the Arizona provision. 

“Do you think it would be a fair characterization of this law to say that its purpose and its effect are to produce less speech in political campaigns?” asked Justice Anthony Kennedy. 

Representing the law’s challengers, William Maurer of the Institute for Justice, said yes, adding. “The entire motivation of this law was to limit spending in leveling the playing field. Limiting spending indicates that they wanted less political speech in the state of Arizona, and that’s what they’ve got.” 

The two First Amendment challenges are: Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett and McComish v. Bennett. The matching funds provision in the public financing law was upheld by the U.S. Court of Appeals for the 9th Circuit. 

During today’s arguments, Maurer and his opponents — Bradley Phillips of Los Angeles’ Munger, Tolles & Olson, and Assistant to the Solicitor General William Jay — offered dramatically different views of the impact of the matching funds provision on campaign speech. 

Maurer, representing the Freedom Club PAC, told the justices that the provision chills campaign speech by privately financed candidates and groups making independent expenditures. It forces them to refrain from raising or spending campaign-related funds so as not to trigger marching funds to their publicly financed opponents, he argued. 

“The problem here is what triggers the money — my exercise of my speech rights,” he said. “The government provides a direct subsidy [to the publicly financed candidate] based on my act of speaking.” 

Phillips, defending the system, countered that the provision actually increases campaign speech and spending. It allows the publicly funded candidate, he explained, to spend nearly as much as the privately financed candidate (up to three times the initial grant of public money). 

“There is no significant evidence in the record” showing that candidates or groups are refraining from spending because of the matching trigger, he told the justices. “Statistical evidence shows that independent expenditures have gone up since the law was enacted.” 

The Arizona matching funds provision basically works in the following way: a candidate participating in the public financing system receives a lump sum grant for the primary or general election. That candidate gets matching funds if the lump sum grant is exceeded by his or her privately financed opponent’s contributions plus the value of independent expenditures on behalf of the opponent. The match is nearly a dollar-for-dollar matching grant, but those funds are capped at three times the initial lump sum payment. 

The law was the result of a 1998 voter referendum after one of the worst election-related scandals in the state’s history. 

Justices Elena Kagan, Sonia Sotomayor and Ruth Bader Ginsburg pressed Maurer repeatedly on why the matching funds provision burdened speech in violation of the First Amendment. “There’s no restriction at all here,” said a particularly skeptical Kagan. “It’s more speech all around.” 

“What exactly is the burden?” asked Sotomayor. “Is the burden your delaying expenditures because you choose to do so?” 

Maurer replied, “We are coerced into not speaking.” Throughout his argument, Maurer relied heavily on the Supreme Court’s 2008 decision in Davis v. FEC, a case involving the so-called millionaire’s amendment in the bipartisan campaign reform act. A 5-4 Court struck down the provision, which raised the contribution limits on a candidate when a self-financing opponent’s spending exceeded a certain threshold. 

Maurer’s opponent, Phillips, faced tough questioning primarily by Chief Justice John Roberts Jr. and Justice Anthony Kennedy and Samuel Alito. “As a matter of commonsense, if you knew that your independent expenditures were going to trigger matching funds to each of your opponents, wouldn’t you think twice about it?” asked Roberts. 

“I might think twice but that isn’t a sufficient burden,” said Phillips. Candidates, he explained, make a “key choice” at the outset of a campaign: whether the public financing system will benefit them. “Matching funds do not turn on the viewpoint or the identity of the speaker. It turns on the choice made by the candidate at the outset.” 

Roberts noted that the state commission, which administers the public financing system, states on its website that the system equalizes the playing field — a purpose that the Supreme Court has held is impermissible under the First Amendment. “Why isn’t that clear evidence that it’s unconstitutional?” he asked the assistant to the solicitor general. 

Regardless of what the website says, Jay responded, that was not what voters thought in enacting the law and not what the state of Arizona has said is the purpose. 

“This Court has recognized since Buckley [v. Valeo] that public financing serves a valid anti-corruption purpose, and it does so because it eliminates the influence of private contributions on the candidates who take public financing.” 

The matching funds provision, he added, is a way in ensuring that candidates will have enough money to run competitive races. 

At one point, a clearly frustrated Justice Stephen Breyer interjected, “What’s going through my mind is we are deeply into the details of a very complex bill — McCain- Feingold (the federal bipartisan campaign reform law of 2002), and we can’t possibly test each provision. And is it better to say it is all illegal than to subject these things to death by a thousand cuts?” 

Jay said, “The parties agree that public financing is itself not objectionable.” 

After the arguments, Douglas Kendall, head of the Constitutional Accountability Center which supports the state law, said in a statement, “Today, the same bloc of five justices who struck down big parts of the McCain-Feingold campaign finance law last year in Citizens United, appeared inclined to similarly gut an effort by Arizona to expand speech while combating the worst public corruption scandal in the state’s history. Today’s case is a sequel to Buckley, but they treated it as a re-run of Citizens United.”

Systems similar to Arizona’s public financing regime are in effect in 29 states and cities.