If a 5-4 Supreme Court majority was right on Monday, governments across the country can put up public funds to try to reduce the potentially corrupting effect of large private donations to political candidates.  But if the dissenters were right, that kind of system may well fail as a practical matter, and thus the anti-corruption goal will elude everyone’s grasp.  The two sides came to those opposing conclusions because the majority, though insisting that it accepted the idea of public financing, has struck down the one means that the dissenters say will make such subsidies actually work.  The dissenters, though, lacked one vote to approve that mechanism, which they favor.

The Court’s latest foray into the complex legal and political universe of public financing of candidates’ campaign very likely will turn out to be its most important since 1976, when the Court upheld a scheme of taxpayer-funded subsidies for presidential campaigns — a scheme that was specifically aimed at curbing the influence of large private donors.  A candidate taking a public subsidy had to depend on that.  But even that scheme no longer attracts potential occupants of the White House, as Barack Obama demonstrated in 2008.  If he had accepted public subsidies, the most he could draw was $104.5 million.  He opted for private financing, and raised $745.7 million — more than seven times as much.  And, of course, he won.

But among many lawmakers across the country, and among groups that insist they are working for campaign reform, there is a growing complaint that private influence on election outcomes is steadily advancing, not waning, and that it makes candidates increasingly beholden to the biggest donors.   What many of those legislators and advocates want to try is exactly what Arizona voters opted to try in 1998 — and what the 5-4 decision on Monday explicitly found unconstitutional in the case of Arizona Free Enterprise Club v. Bennett (10-238), and a companion case.

The Arizona voters approved a system which provides subsidies to candidates in state races who are willing to forgo private donations — so far, the same as the presidential scheme that was first adopted in 1971 and upheld by the Court in 1976.   But Arizonans added something else: if a subsidized candidate started to be out-spent by a candidate relying on his or her own money, that triggered some added subsidy money for the subsidized politician.   The more the self-financed candidate spent, the more subsidy would be provided to the candidate relying solely on those funds.  The “matching” would stop when the subsidized candidate had received two infusions of public funds — an initial payment, plus two triggered payments.   Any unspent subsidy funds had to be handed in to the state treasury.

Chief Justice John G. Roberts, Jr., writing for the majority in nullifying that trigger-and-match system, declared that “we do not today call into question the wisdom of public financing as a means of funding political candidacy.  That is not our business.”

But, the majority opinion concluded, the effect of Arizona’s “matching” approach would be to cause self-financed candidates to curb their own campaigning.  If they began to out-spend their subsidized opponents, every dollar they spent would be matched by a subsidy dollar dropped into their opponents’ coffers.  They, in effect, would be raising money for the opponent, and some of them, at least, would rather cut back their campaigning than help their rival.  And if an outside group, operating independently of a privately financed candidate but still supporting that candidate, had contributed to the out-spending of the subsidized candidate, that, too, would add to the subsidy flow.  The end result: there would be less campaign speech, not more, so issues would get discussed less, the Court concluded.

The majority concluded that this put an unconstitutional burden on the self-financed candidates, and on the independent groups that favored their candidacy.  If such a burden were to withstand the First Amendment, Roberts wrote, it would have to be justified by a strong interest for the state.  The system, the Chief Justice said, does not actually work to reduce the corrupting influence of private funds in election campaigns, and it is a system that has been defended, some of the time, as a way to “level the playing field.”  Both of those rationales were found wanting.

Justice Elena Kagan, writing for the dissenters, argued that so-called “lump-sum” subsidy payments — simply passing out a set amount of money, up to a ceiling, to a candidate — simply have not worked.   She said that legislators began a search for what she called “the Goldilocks solution” — devising a subsidy scheme that was “not too large, not too small, but just right.”

If the amount of subsidy available is too large, it may be too expensive for a state to pay for, given the many demands on state treasuries, she said.  But, if the subsidy is too small, candidates will not be able to wage what they consider to be competitive campaigns, so they won’t sign up and will turn, instead, to private donors.  If the amount is “just right,” then, supposedly more candidates will join up, the flow of large private donations into campaigns will have fewer places to go, and the threat of corrupting influence will at least be diminished.

Since political campaigning has grown much more expensive, especially with very high-priced TV advertising an absolute essential, Kagan’s opinion noted that it can be very difficult to know in advance how big to make a lump-sum subsidy.  All of the variables in estimating how much money a candidate will need. the dissenters said, create an ever-changing puzzle for campaign treasurers.  One of the variables is what a self-financed opponent, when there is one, might spend.

The “Goldilocks solution,” at least as envisioned by Arizonans, was the trigger-and-match mechanism.  According to the dissenters, it enticed more candidates into state races, because they could get an up-front subsidy and then, if they found themselves being out-spent by self-financed candidates and outside groups supporting those opponents, they qualified for a second, and then a third (and final), subsidy.   The total amount of subsidy available was the “lump-sum” amount, just divided in thirds.

That, the dissenters argued, was “just a fine-tuning of the lump-sum” approach, but it is one that “can make the difference between a wholly ineffectual program and one that removes corruption from the political system.”   Arizonans were right, the Kagan opinion said, in concluding that “the success of [their] public financing system depends on the matching funds mechanism…[it] spells the difference between success and failure.”

The Court’s decision will now play out as lower courts examine the variations in state public financing cases.   The Arizona case had been watched anxiously by groups that favor public financing as the ultimate answer to the influence of large private contributors.  And it had been watched with equal anxiety by groups that believe the First Amendment should stand for the removal of more restrictions on campaign financing — a view that increasingly commands a majority of the Court.

Posted in AZ Free Ent. Club v. Bennett, Analysis, Merits Cases

Recommended Citation: Lyle Denniston, Opinion analysis: Campaign subsidies in peril?, SCOTUSblog (Jun. 27, 2011, 6:02 PM),