The Supreme Court
Only two years after the passing of Federal Campaign Regulation Act, the court dissected the Act in the case of Buckley v. Valeo (1976) and invalidated much of it. In a bare majority decision, (5-4) the court laid out the following basic opinion. Using questionable distinctions, the Court "upheld the Constitutionality of the individual contribution limits, the disclosure reporting provisions, and the public financing scheme. The Court invalidated the composition of the Federal Election Commission and the limitations on expenditures." (Constitutional Law, 1310) According to the majority opinion, the expenditure limitation violates First Amendment rights to political association as well as political expression, and that restricting the amount of money one may spend on his campaign restricts his ability to communicate effectively with an audience. These associational freedoms may not be impinged. This is because "virtually every means of communicating ideas in today’s mass society requires the expenditure of money" (Buckley v. Valeo 424 U.S. 1 (1976) Hence, limiting money equals limiting expression.
Somehow the justices make this argument for expenditures by a campaign, but say that the restrictions on contributions to a campaign constitute only a "marginal restriction upon the contributor’s ability to engage in free communication" (Buckley v. Valeo 424 U.S. 1 (1976)) They argue that contributions are but a merely indirect route to obtaining political speech since this money is ultimately spent by someone else. They also mention that the purpose of the contribution limitation - to encourage participation by a wider range of people - is legitimate and therefore may survive the Court’s rigorous standard of review.
The court further states that
No governmental interest that has been suggested is sufficient to justify the restriction on the quantity of political expression imposed by 608c’s campaign expenditure limitations. The major evil associated with rapidly increasing campaign expenditures is the danger of candidate dependence on large contributions. The interest in alleviating the corrupting influence of large contributions is served by the Act’s contribution limitations and disclosure provisions… (Buckley v. Valeo 424 U.S. 1 (1976))
They never state whether or not the interest of the government to remove the evils of candidate dependence on contributions would stand up to the strict scrutiny applied if they stood independent of complementary provisions. They simply argue that since state interest is served by the contribution limitations, there no longer is a legitimate state interest in the expenditure limitations. Another problem here is the gaping loophole slashed open further in the opinion when it states that a candidate’s personal finances may not be restricted (due once again to the 1st Amendment). The Court’s final and perhaps most significant blow to the Act was the invalidation of the restrictions on expenditures of ordinary citizens relative to a clearly identified candidate. They take issue with the Act’s use of "relative to" for the reason stated above. If someone wants to directly spend their money to air an ad supporting a candidate or issue of their choice, they may do so outside the restrictions, as long as they are not coordinating with the candidate. This hole began leaking almost immediately and rose to flood levels soon after. In fact, this issue is at the root of the present controversy over "issue advertising", which we will address at greater length below.
Unsurprisingly, the Court allows the FEC to function because it states that the mere requirement of a candidate to expose large contributions and expenditures to the "light of publicity" will itself serve as a check on him. In addition, it goes without saying that somebody must keep records if limits are to be enforced. Also, to facilitate the FEC's tracking of contributions, gifts larger than $100 may not be given in cash.
To further illustrate the room for debate in this case (both 23 years ago and now), it is interesting to acknowledge the four distinct dissents written on it. First, Justice Burger states that "contributions and expenditures are two sides of the same First Amendment coin". Both parties, in spending money, are doing so to communicate their views.
Second, Justice White eloquently lays out the value conflicts at the root of this issue. We value equality and need to have faith in the legitimacy of our system. These values sometimes conflict sharply with those of individual liberty and freedom of expression espoused in the majority opinion. The issue of campaign finance reform counterpoises these two sets of deeply ingrained American values and we see this played out in these opinions.
He begins by pointing out that this is an area best left to the legislative branch to decide as they are more knowledgeable about and entrenched in the issues. He also argues that there is a problem in the argument that money is speech. Other cases have shown that sometimes money may be controlled in pursuit of greater interests. In addition, he points out that if the purposes of the government are legitimate and substantial, the limits should stand. Here the purpose is to "eradicate the hazard of corruption" as well as "restore public confidence in federal elections". He seeks to stop the problem by controlling it at the source. Finally, he argues that attempting to "equalize access" to the process by setting spending limits on personal wealth is legitimate because it encourages participation by those less wealthy and helps dispel the idea that elections are only affected by money.
Third, Justice Marshall agrees with Justice White’s assessment of the personal wealth question and takes it a bit further to state that he sees a contradiction in the majority opinion. This is that it makes no sense to limit contributions and allow unlimited spending of personal wealth when the less wealthy candidate depends disproportionately on those contributions. This disadvantages the candidate who needs to raise all of his money from outside sources when he can only take donations in small amounts.
Finally, Justice Blackmun brings to light the seeming arbitrariness of the distinction between contribution and expenditure limitation and states that he is not persuaded that the Court makes a "principled constitutional distinction".