Self-funded candidate rule brings campaign finance to court

– The US Supreme Court is set to consider the constitutionality of a provision of the 2002 McCain-Feingold campaign-finance law designed to "level the playing field" between candidates spending their own money to win political office and candidates relying primarily on contributions from others.

In oral argument Tuesday, the high court will examine whether the so-called "millionaires' amendment" violates the free-speech and equal-protection rights of self-funded candidates trying to win a seat in Congress.

The amendment applies only to candidates for the US Senate and House of Representatives. Different rules govern presidential campaigns.

The measure, also known as Section 319 of the McCain-Feingold law, requires candidates who are self-financing their campaigns to abide by stringent finance reporting requirements that don't apply to other candidates. In addition, once a candidate's personal spending in a House race crosses a $350,000 threshold, contribution limits are relaxed for all other candidates in the same race.

The other candidates may then accept three times the usual $2,300 limit from individual contributors and receive unlimited coordinated expenditures from political parties. The self-financing candidate, meanwhile, must continue to abide by the lower contribution limits.

Section 319 is designed to undercut the advantages of using personal wealth to wage a political campaign and to prevent wealthy candidates from monopolizing a race.

"Sometimes a self-financer is able to use their money to swamp an opponent and dominate the discussion – really make the campaign dialogue more of a monologue," says Jennifer Steen, a political scientist at Boston College and author of the 2006 book "Self-Financed Candidates in Congressional Elections."

The law is also aimed at countering a perception that anyone wealthy enough can buy a seat in Congress.

Opponents of Section 319 say it is an incumbent protection scheme passed by members of Congress to insulate themselves from challenges by wealthy opponents.

Supporters say tripling contribution limits is necessary to "level the playing field" in congressional campaigns, but campaign-reform laws do not offer similar benefits to candidates of modest means seeking to unseat incumbent members of Congress who have amassed sizable campaign war chests.

"Congress elected to go after the personal millionaires as opposed to the incumbent millionaires," says Andrew Herman, who is arguing the case at the high court on behalf of a wealthy businessman from upstate New York who is running for Congress.

Jack Davis twice ran unsuccessful campaigns to represent New York's 26th Congressional District. On April 15, he announced he is running again in 2008.

Mr. Davis, a Democrat, has pledged to pay his own campaign bills rather than seek support from special-interest groups. In 2004, he spent $1.26 million of his own money. In 2006, he lost by four percentage points after spending $2.27 million.

In contrast, Davis's opponent in 2006, Thomas Reynolds, a four-term Republican on the influential House Ways and Means Committee, spent $5.1 million. That total included a $1.15 million war chest that existed at the start of the 2006 campaign cycle. At the time, Representative Reynolds was chairman of the National Republican Congressional Committee (NRCC), the party's campaign organization.

Despite these advantages, incumbent Reynolds is the one who qualified under the millionaires' amendment for campaign-finance law exemptions that could have yielded him an additional $1.46 million in multiple contributions. In addition, he could have received unlimited help from the NRCC, which he chaired.

Reynolds did not exercise his right to seek the extra funds. He didn't need to. Plenty of donors were willing to help him win reelection. But Davis's lawyer cites the episode as evidence of how the law is designed to benefit incumbents at the expense of self-financed candidates who do not enjoy similar access to a network of campaign donors.

"Section 319 is directly designed to discourage people from spending their own money, and if they do spend their own money it is designed to punish them for it," Mr. Herman said in a phone interview.

"The statute authorized the incumbent to receive over $1.4 million in extra-limit funds in the 2006 election, even though he had already outspent Mr. Davis by more than $3 million," Herman writes in his brief to the court.

Herman says the law is not aimed at creating a level playing field. Instead, he says, it is aimed at protecting incumbents in ways that violate core political-speech and equal-protection rights of self-financed candidates.

Government lawyers defend the measure as a "modest and constitutionally appropriate" attempt to decrease the influence of personal wealth in congressional elections.

Section 319 in no way burdens political speech, Solicitor General Paul Clement writes in his brief on behalf of the Federal Election Commission (FEC). It places "no restrictions whatever on a candidate's ability to spend personal funds in support of his own campaign," Mr. Clement says.

The measure's relaxation of an opponent's contribution limits does not unconstitutionally penalize a candidate's decision to fund his or her own election, Clement writes.

A panel of federal judges ruled earlier in the Davis case that because Section 319 does not limit a candidate's ability to use personal wealth to win an election, there is no unconstitutional burden on free speech. The provision merely provides benefits to opponents to correct a potential imbalance in resources among candidates in the same political race, the court said.

But offering a windfall to one's political opponents when a candidate spends more than $350,000 creates an incentive not to spend more than that amount, critics of Section 319 say. That is a government incentive that chills free speech, they say.

"Section 319 operates solely as a stick deterring protected self-financed expenditures rather than as a carrot encouraging participation in an alternative campaign finance scheme," writes Benjamin Wood in a friend-of-the-court brief filed for the Cato Institute.

He says the measure burdens political speech in a way similar to a direct limit on campaign spending. Campaign spending limits were declared unconstitutional by the high court in a landmark 1976 campaign-finance case.

The primary rationale for campaign-finance laws is to prevent corruption or the appearance of corruption by reducing the political influence of wealthy special interests. But opponents of Section 319 say there is no corruptive taint when a candidate uses his or her own money to run for office.

Supporters of the law say corruption isn't Congress's only concern.

"Congress carefully balanced its interests in preventing corruption with its concern that non-wealthy candidates were being driven from the political process," writes Seth Waxman in a friend-of-the-court brief on behalf of four campaign-reform advocacy groups.

The public perception is that wealthy candidates are unstoppable. But political scientists say just because someone knows how to make money doesn't mean they can convince people to vote for them.

"Self-financers tend not to be very successful," says Professor Steen, who worked as a paid consultant to the FEC on the Section 319 issue.

She says the millionaires' amendment, rather than protecting incumbents, has been most useful to nonincumbents in primary elections. It helps them get noticed in a crowded field brimming with money, she says.

In 2004, in the Democratic primary for a US Senate seat, a young state senator in Illinois faced a wealthy opponent who poured $28 million of his own money into the contest. Under provisions of the millionaires' amendment, the state senator received $1.86 million in supplemental fundraising. He went on to win the primary and the general election to become the junior US senator from Illinois. Now he's in an even bigger race. His name: Barack Obama.