Campaign finance laws protect incumbents

Last night marks the end of another big quarterly campaign finance reporting period in the 2020 presidential race. The reason we hear about this is because of laws that require the financial reporting and impose severe penalties for lack of compliance.

The idea behind these transparency laws is to first shed light on the financial happenings of campaigns. There has been a long-standing principle of following the money to trace a person's otherwise unexplained motivations for actions they take, especially if they are against interests of the public. Some want to then use this information to “get money out of politics” altogether.

There are two side-effects of campaign finance laws.

The first is the observer effect: that which is observed behaves differently than when it is not observed. In one sense this is the desired outcome of campaign finance reform advocates—don't be influenced by that of which you would be ashamed if others knew about it. The problem is this cuts both ways. Contributors also become wary of how they could be publicly associated with a candidate if he turns out different than they expected. This makes contributors more risk-averse and hesitant to contribute to newer candidates.

Newer candidates who are not as well known have a much harder time raising money. Contributors are more likely to keep their donations below, for instance, a $100 reporting threshold, even if they could contribute a lot more, in order to avoid possible negative repercussions. If newer candidates have a harder time establishing a financial base on which to build a campaign, the net effect is an easier fundraising path for incumbents.

Campaign finance laws may give the impression it's easier to see how things are. They also make it difficult to see how things could change.

The second side-effect is their danger to free speech. Some of us oppose campaign finance laws on the grounds that they inhibit free speech. Advocates counter that “money isn't speech.” That's true. Money can buy a lot of things, the amplification of speech being among them. While not all money is speech-related, all speech and related expenses can be assigned a monetary value. All of those values are governed by campaign finance laws. No speech of any kind is unaffected by campaign finance law. “In-kind contributions” can have a broadly sweeping effect that can keep smaller less established entities out of the public square.

Any cost incurred as part of exercising a right to free speech could be a considered a campaign contribution. If one includes any indirect costs that could be tripped while exercising free speech rights—such as internet access costs, gas used to get to an event, etc.—one can see how overreaching these laws quickly become. There is no speech without money or at least some monetary value assigned to that speech.

This is why in the Citizens United case, the Supreme Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofit corporations, labor unions, and other associations.

The supposed intent of campaign finance law is to reduce someone's influence. If one is successful at that, the only way that influence stays suppressed is by maintaining power. As every bad idea contains the seeds of its own destruction, herein lies the fundamental problem. Why, once people have power and must maintain power, should we assume they would then reduce their own influence? You cannot both suppress the free speech rights of others and give up power at the same time. These laws shift influence and power more than they reduce it.

Campaign finance laws are a violation of the First Amendment, and the Court is right to strike them down as unconstitutional. It is better to have transparency from a competitive market in the press than with a constrictive political environment imposed by the government.