The Bipartisan Campaign Reform Act (BCRA) of 2002,1 also known as the McCain-Feingold or Shays-Meehan bill for its congressional sponsors, is the most aggressive and controversial federal law governing campaign finance in 30 years.2 Whether it constitutes a vindication of the democratic ideal, or a gross usurpation of First and Tenth Amendment rights, may be an issue of some dispute among this magazine's readership. Regardless, its potential effect on the conduct of Republicans and Democrats alike is substantial, if still uncertain. A lawsuit challenging the constitutionality of the statute is scheduled to commence this month, with direct, fast-track appeal to the U.S. Supreme Court. The stakes are high, both for candidates intent on soliciting contributions, and for citizens and special interests inclined to give them.

IT'S LIKE DÉJÀ VU ALL OVER AGAIN
Efforts to regulate financial contributions to federal candidates date back to the Tillman Act of 1907. Congress continued through the 1940s to pass legislation ostensibly aimed at curbing contributions. Whether the effort was in good faith is unclear; the statutes were hopelessly vague, thus having little measurable impact on campaign practices. The wave of reform reached what was at that time an historic high mark in the 1970s. President Nixon's reelection campaign compiled a then-staggering war chest of $60 million dollars. When the public learned that some of this money was diverted to finance the Watergate break-in, pressure mounted on Congress to get serious.3 It did, and passed the Federal Elections Campaign Act (FECA). The act imposed new restrictions on both campaigns and expenditures, and created the Federal Elections Commission (FEC) to interpret and enforce the statute.

The statute was challenged under the First Amendment in the seminal Supreme Court case of Buckley v. Valeo.4 Weighing the right to financially support a candidate against the threat of corruption "or the appearance of corruption" posed by an unusually large donation, the Court struck down the limits on candidate's expenditures, but upheld the limits on contributions. Since that time, the limit on individual contributions has been $1,000 to an individual candidate for the primary and the runoff or general election with a maximum of $25,000 total per year to all candidates, plus $20,000 to a national party and $5,000 to a state party. Contributions subject to these limitations are now widely referred to as "hard money."

NECESSITY IS THE MOTHER OF INVENTION
Opponents of reform will liken campaign money to a river - they see the desire to financially support a candidate as an irresistible force of nature that can be diverted but never stopped. To them, post-Buckley developments in campaign finance practices were predictable and unavoidable using good 'ole ingenuity. Officials and activists alike devised methods to donate unlimited amounts of money without exceeding the hard money caps. These funds -- arguably spent to help particular candidates, but nonetheless contributed outside the limits of the FEC - came to be known as "soft money." Two particular kinds of soft money became especially popular, and especially notorious.

The first was made possible by the U.S. Supreme Court's holding in Buckley. There, the Court permitted limitations on campaign contributions that directly advocated the election or defeat of a candidate. In what may be the second most famous footnote in Supreme Court history (second, perhaps, to the Carolene Products footnote that initiated half a century of civil rights jurisprudence) the Court listed certain words that would render a publication subject to the FEC limitations. The footnote specifically included the words vote for, elect, support, cast your ballot, Smith for Congress, vote against, defeat, and reject; these came to be known as the "magic words." Whether this list was exhaustive or merely representative has been a topic of disagreement among the circuit courts. But on any given day this Fall, any registered voter's mailbox was stuffed full of the fallout. Known by the euphemism "issue advocacy," publications that mentioned a candidate, and whose only apparent purpose was to advocate for or against a candidate, proliferated. That no one could argue any alternative purpose with a straight face was legally irrelevant. Provided that the publication contained none of the "magic words," it was treated differently under the law and thus could be financed with "soft money." The consequences of such subtle semantic distinctions were quickly apparent. Publicly distributed videotapes of White House coffee meetings caught then-President Clinton explicitly soliciting money to finance "issue ads" in furtherance of his reelection.

The hope that the FECA restrictions would insulate federal officials from wealthy contributors proved illusory.

The second well-trafficked loophole in the FECA was Section 527 of the tax code. Certain political action committees (pacs) successfully evaded the contribution restrictions by attaining tax-exempt status. Most famous was then-Speaker Newt Gingrich's GOPAC. Organizing under Section 527 and disguised as a conservative think tank, Gingrich gave face time with himself and other Republican leaders to donors willing to contribute at least $10,000. Hundreds of thousands of dollars were distributed through this channel to state and local political candidates of Gingrich's choosing. Similarly, Congressman Tom DeLay's Republican Majority Issues Committee promised face time to those who donated between half a million and three million dollars. This money was then spent on grassroots activities. Known as stealth pacs or 527 pacs, these groups became enormously powerful in state and local politics. Local examples include Sen. Harry Reid's Searchlight pac and Sen. John Ensign's Battle Born pac. Another mutation of the political action committee was the "leadership pac," whereby congressional leaders would solicit money to be spent on other candidates' campaigns. Senator Trent Lott proved especially adroit in using this technique to gain influence. Together, these strategies effectively subverted the purpose of the FECA. Though intended to serve as a shield between the candidate and the source of the contributions, federally elected officials solicited extraordinary amounts of money in direct return for access. Far from ending the direct flow of money to candidates, the reforms merely diverted that flow through new channels.5

IF AT FIRST YOU DON'T SUCCEED . . .
The BCRA directly addresses these practices. While many claim that the act "eliminates soft money," this phrase may be misleading. Rather than prohibiting the contributions described above, the BCRA simply regulates them. That is, the contributions are permitted, but they are subject to the limits imposed by the FECA - "soft money" becomes "hard money." The act affects this metamorphosis through three specific provisions.

First and most simply, the act requires that all money solicited by federal candidates or elected officials be subject to the contribution limits of the FECA. This provision is designed to address the problem of the stealth or leadership pac. Now, any time a candidate solicits money for another candidate, whether that money goes directly to a candidate, to the party, or to a pac of any sort, it will be subject to the limits that otherwise apply to contributions of that kind (certain special exceptions remain for nonprofit organizations where the money is not spent on federal election activity).

Second, the act expands the definition of "federal election activity." Newly included in that category of activities that must be funded with hard dollars are voter registration drives within 120 days of an election, get out the vote drives conducted in connection with a federal election, and any work by state or local campaign employees who spend more than 25 percent of their time on federal campaign activity. These activities, whether conducted by national parties, state and local parties, or pacs, must be financed with regulated dollars. Again, exceptions exist. Here, a special account called a Levin account may be set up by state and local parties to fund generic get out the vote and voter registration activities provided that no single source donates more than $10,000. Despite this exception, a vast domain of political activity once supported by unlimited funds will now be regulated.

Third, the statute displaces Buckley's "magic words" test as a far broader formula. Any publication or broadcast - now called an "electioneering communication" - that "refers to" a federal candidate, is run within 30 days of a primary election and 60 days of a general election, and that can be received by 50,000 or more persons in the election district, must be financed with hard money. Under this provision, the innumerable fliers and ads that mentioned a candidate in our last election but conspicuously avoided any of the "magic words" would be subject to the new caps.

To accommodate the newly enlarged domain of regulated contributions, the bill also increases the limits. Individuals can now give $10,000 per year to a state party, and $25,000 to the national parties. Contributions to individual candidates may be as high as $2,000 per cycle, for a total of $4,000, to a single candidate, and $37,500 per year to all candidates. The total contribution limit is now $37,500 per year to all candidates and $57,500 per year to all parties, for an aggregate limit of $95,000.

POLITICS MAKE ODD BEDFELLOWS
As before, the statute will be challenged under various provisions of the U.S. Constitution. The plaintiffs to the consolidated suit are as numerous as they are politically diverse, including the Christian Coalition and the ACLU; the Chamber of Commerce and the AFL-CIO; the National Rifle Association and the U.S. Public Interest Research Group; the National Right to Life Committee and the Center for Individual Freedom; the California Republican Party and the California Democratic Party; Congressman Bennie G. Thompson, an African-American Democrat, and Senator Mitch McConnell, a high-profile Republican Senator from Kentucky and chair of the Republican Senatorial Campaign Committee.6

According to our state executive officer charged with enforcing campaign laws, Secretary of State Dean Heller, recent experience is telling. In 1995 as a Republican Assemblyman, Heller sponsored state legislation of a similar tenor. It held all contributions to parties and pacs to the same limits and disclosure requirements that previously applied to direct contributions. The legislation passed, and reformers heralded a new era of fiscally constrained campaigns. The result? The 1998 gubernatorial race was the most expensive in state history. According to Secretary Heller, this result in no way discredits the legislation or the movement of which it is a part. The object of campaign finance reform, in his view, is not to decrease expenditures, but to increase accountability through disclosure requirements. "The goal of the political class," says the Secretary, "is to raise money and not tell you where it comes from." This explains, in his view, the curious alliance of plaintiffs in the lawsuit challenging the BCRA. Prior to the state legislation, roughly 60 percent of all campaign contributions in Nevada were disclosed to the Secretary of State's office. Today, that figure is nearly 90 percent. And while the ordinary citizen may not be inclined to investigate the source of a candidate's funds, the press will certainly do so.

The benefits of requiring public disclosure reports, according to the Secretary, are two-fold. First, any unusual trend in campaign contributions is likely to be publicized - a dynamic that was unmistakably present in the recent statewide campaigns. The press can thus serve as a watchdog and keep suspect contributors in check. Second, contribution sources are a powerful predictor of an official's decision making. In forcing an official to disclose her contributors, she discloses her political influences. Herein lies, in the mind of Secretary Heller, the "moral victory" of campaign finance reform. Political influence is no longer covert; the doors of the smoke-filled room are opened wide . . . supposedly.

At least, the view that such legislation will do nothing to decrease contribution totals appears to be universal. Terry Care, Chairman of the Nevada Democratic Party, agrees with Secretary Heller that the costs of campaigns will not go down after the BCRA takes effect. But put two and two together: campaign expenses will remain the same, though previously unlimited contributions will be capped. According to Care, those who raise money will become "more of a pest." The demand for campaign funds will be the same, but the sources become more dispersed. Keith Davis of Huckaby, Davis, and Associates, a political accounting firm in Washington D.C. specializing in FEC compliance, sees irony in this likely outcome. While claiming to take money out of politics, the legislation places an even greater burden on candidates and their supporters to raise money. Fundraising becomes even more time consuming than under the current regime. While reformers often cite the amount of time officials spend fundraising as a distraction from the real work of politics and a reason for change, Davis believes that the BCRA will only exacerbate the distraction, not to mention the burden.

Some find this distraction to be simply the cost of democracy. Pam Egan, Executive Director of the Nevada Democratic Party, speaks in surprisingly glowing terms of the cumbersome task awaiting her. "We're never afraid of anything that means a little hard work, we'll just work harder and smarter." In her view, the burden is not without justification. She feels the legislation will encourage "grass roots" fundraising and require greater participation on the part of the average voter. Of the latter claim's truth there can be no doubt, and one can imagine the following conversation:

"Hello, Mr. Average Voter, on behalf of your elected federal official we would like to thank you for your support in the last election. Now that your representative is up for reelection, can we count on your continued support?"

"I'm happy to do what I can. I contributed $2,000 last time to the campaign, as has been my practice for many years. Where should I send the check?"

"Well, Mr. Average Voter, I'll give you that address in a moment. But you will no doubt be glad to know that election law has changed. Big money has been taken out of politics. Now, you are allowed to contribute double last year's amount!"

"Double? But I don't understand. I contributed $2,000, which seems to me like a hefty chunk of change. Isn't this ironic? The BCRA was suppose to lower contributions. We won last year's election, and reelection should be easier yet. I think I'll give the same amount."

"Please don't misunderstand us. We appreciate your support, and we will look forward to receiving your continued support in the future."

Mr. Average Voter can rest assured that the solicitor will prove true to her promise, for the future may be sooner than he thought. Before that election is over, he will receive a follow-up call . . . and another . . . and another . . .

As for the outcome of the legal challenge, stay tuned.
NL

Joe W. Brown is a partner in Jones Vargas, Legal Counsel to the Nevada Republican National Party and Republican National Committeeman. Andrew Spalding is an Instructor in Political Science at UNLV with a doctorate from the University of Wisconsin, Madison. He is also a third-year student at the William S. Boyd School of Law and a law clerk at Jones Vargas.

ENDNOTES
1. Public Law No. 107-155 (2002).
2. For the bill's complete text, as well as an impressive collection of articles and legal documents related to the statute and the lawsuit challenging its constitutionality, go to http://lawschool.stanford. edu/library/campaignfinance.
3. WILLIAM N. ESKRIDGE, JR., PHILIP P. FRICKEY, ELIZABETH GARRETT, CASES AND MATERIALS ON LEGISLATION (3rd ed. 2001) ch. 2.
4. 424 U.S. 1 (1976).
5. Supra note 3.
6. Supra note 1.