PACs and campaign financing

THE United States Supreme Court made the right decision when it said on March 18 that the First Amendment protects unlimited independent campaign expenditures by political action committees. Direct spending to communicate ideas and opinions is not the same thing as a campaign contribution and should not be treated the same way. Nothing is more fundamental to the freedoms of speech and association than letting people get together to spend their own money to broadcast or publish what they think about politics and public policy. For that reason, political regulation should be compromised to accommodate free and open debate, rather than the other way around. Whether you agree or not with the court, the decision is behind. Now is the time to assess its practical implications. Groups active on both sides of the court case have predicted it would open the proverbial floodgates and destroy the post-Watergate campaign finance laws. This sounds more like hyperbole produced in the middle of a legal battle than serious analysis. The decision will produce some tremors but not a political earthquake.

The effects of the decision will be limited to presidential races -- in which the high visibility of the two major parties' general election candidates makes them least likely to be affected by incremental increases in spending. The court had already held in Buckley v. Valeo (1976) that the First Amendment prohibited Congress from limiting independent expenditures or a candidate's own spending in privately funded races. (Independent expenditures are made without a candidate's cooperation or consent.) The question in this case was about independent spending in a publicly funded race.

The issue has been in the courts since before the 1980 election. Because of lower court rulings, no legal limit existed on independent spending in either 1980 or '84. As a result, we can gain some insight by looking at the past.

Some people think the general election campaigns of the two major party presidential candidates are paid for entirely by federal funds. In fact, the $29.4 million flat grant given to the 1980 campaigns of Presidents Carter and Reagan amounted to only about half the total amount spent by them or on their behalf, according to figures compiled by Herbert Alexander, director of the Citizens' Research Foundation. Final information is not available for 1984, but there is no reason to believe the $40.4 million federal grant to Reagan and Walter F. Mondale represented a significant change in the percentages.

In addition to the flat grant, the campaign law permitted the Democratic and Republican National Committees to spend another $4.5 million in 1980 and $6.9 million in 1984 directly on their candidates' campaigns. Party committees also are allowed to spend unlimited amounts to advertise the party as long as no candidate is mentioned. Republicans put about $9 million into that in 1980 and another $12 million in 1984. Since the law was amended in 1979, state and local parties have also been allowed to raise and spend unlimited amounts in programs that use volunteers to distribute material about slates of candidates or to stimulate voter turnout. Republicans spent about $15 million on this in 1980; Democrats spent about $4 million. Both parties claim the figures are higher for 1984.

Labor unions, corporations, and other organizations may also spend unlimited amounts on communications with their own members to advocate a candidate's defeat or election. This spending is sometimes disclosed. They also may engage in ``nonpartisan'' but targeted registration and get-out-the-vote drives, the cost of which is almost never disclosed. Corporations and trade associations spent about $1.5 million on internal communications to help Reagan in 1980. Labor spent an estimated 10 times that much, $15 million, to help Carter in 1980 and obviously much more than that to help Mondale in 1984. No one is sure how much foundations and other groups may have spent on registration and turnout because most of that spending does not have to be reported under the law. But Democratic National Committee chairman Charles Mannatt estimated before the election that more than $7 million would be spent by groups favorable to Democrats.

These figures help give perspective to the Supreme Court decision. Independent expenditures came to $12.3 million in the 1980 presidential race, mostly for President Reagan. The 1984 figures were $15.3 million for Reagan, more than half by the two PACs in the court case, and $621,000 for Mondale. The numbers are nothing to sneeze at, but they are far from being the only breaches in an otherwise impermeable wall.

One of the groups in the case has said it expects to increase its fund raising and independent spending greatly, now that the legal cloud has been lifted. I am skeptical. The independent spending groups were able to make a strong appeal in 1980, when many people believed the only place they could contribute to help their presidential candidate was to an independent spending PAC. By last year, word of the 1979 amendments began to filter down. The presidential candidates actively raised money for their parties, explaining to potential donors that this was the best financial contribution they could make to their campaigns. It is hard to persuade people to help a candidate by giving to a PAC, when the candidate is saying something else. The presidential candidate is his party's single best fund-raiser, and the law gives the candidate every incentive to go out and raise money. This is one of the best side effects of the post-Watergate reforms: presidential candidates who want to ignore the party apparatus, as Richard Nixon did in 1972, will be throwing away their best chance for spending more money than the basic flat grant from the Treasury. PAC spending undoubtedly will remain part of the general election picture, but it cannot compete with the parties unless Congress tries to limit party activities.

Primaries may be another matter. Most state and local party organizations, and both national party committees, stay out of presidential primaries. That leaves interest groups with a clear shot at being the biggest players on the primary field. Spending limits do not really limit spending, as we just saw; they channel it. In the general election, the party channel is the easiest one for money to take. In primaries, interest groups provide the only channels available: note Mondale's reliance on labor and other groups as he approached his primary spending ceiling. If independent spending cannot be limited, therefore, Congress may want to consider removing or at least raising the spending ceiling for the primaries. Before anyone objects that this would let candidates buy the nomination, it should be noted that Mondale and Gary Hart each won many more states in which they were outspent than the other way around.

Whatever the remedy may be for the presidential primary system, the problem dooms bills that would try to link public financing with expenditure limits for congressional elections. Members of Congress do not want to increase the importance of groups that specialize in taking negative potshots at incumbents. As long as individuals can give freely to candidates, these groups can be contained -- particularly if tax credits are liberalized to increase participation by small donors.

Dire predictions about the impact of the Court's decision seem unlikely to be borne out. The worst will not happen unless Congress inadvertently makes it happen.

Michael J. Malbin is a resident fellow at the American Enterprise Institute in Washington and author of ``Money and Politics in the United States.''