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Pivotal campaign finance case on U.S. high court docket

Shaun McCutcheon is shown in front of the United States Supreme Court in Washington, D.C. on September 13, 2013.REUTERS/Gary Cameron
Shaun McCutcheon is shown in front of the United States Supreme Court in Washington, D.C. on September 13, 2013.REUTERS/Gary Cameron

By Lawrence Hurley and Gabriel Debenedetti

WASHINGTON (Reuters) - The U.S. Supreme Court will this week step into the politically charged debate over campaign finance for the first time since its controversial ruling three years ago paved the way for corporations and unions to spend more on political candidates and causes.

The case has the potential to weaken a key element of the federal campaign finance regulations remaining after the 2010 ruling, and it could pave the way for challenges to the restrictions on contributions that remain. Supporters say those laws are key to preventing wealthy donors from exerting an undue and potentially corrupting influence on the political process, while opponents say the laws choke free speech.

In the 2010 case, Citizens United v. Federal Election Commission, the high court, split 5-4, lifted limits on independent expenditures, not coordinated with individual politicians or parties, by corporations and unions during federal election campaigns.

This time, in a case to be argued on Tuesday, the nine justices will consider a challenge by Republican donor Shaun McCutcheon, an Alabama businessman, and the Republican National Committee to the overall limit on campaign contributions that donors can make to individual candidates and committees over a two-year federal election cycle.

That the court has agreed to hear the case, and the court's boldness in the Citizens United ruling, have prompted some legal experts to say there is a good chance the court will strike down the cap.

Oral arguments will proceed on Tuesday regardless of whether the federal government remains shut down, the court has said.

McCutcheon, the owner of an electrical engineering firm outside Birmingham, Alabama, wanted to donate to multiple candidates and political committees but was frustrated when he realized the aggregate cap limited his ability to do so.

In the current two-year election cycle (2013-14), an individual can give $2,600 to a candidate or committee and $32,400 to a political party. But donors cannot exceed the $123,200 overall limit during that period. There is also a $48,600 cap on total donations to candidates and a $74,600 cap on donations to political action committees and parties.

McCutcheon argues that the limits are unconstitutional because they violate the free speech protections of the U.S. Constitution's First Amendment. The Supreme Court has long held that spending money in the political context is a form of free speech expression, meaning restrictions are subject to careful legal scrutiny.

"It's a fundamental free speech issue about your constitutional right to spend your money however you choose in this great, free country," McCutcheon said in an interview.

McCutcheon is only challenging the overall caps, not the "base limits" on how much a donor can give to each candidate.

The Obama administration, which is defending the federal campaign finance laws that the Federal Election Commission implements and enforces, argues that the court already upheld similar limits in a landmark 1976 decision, Buckley v. Valeo. "Its reasoning remains sound," Solicitor General Donald Verrilli said of the Buckley ruling in a brief filed in the current case.

McCutcheon's lawyers say he can win without the court needing to undermine the 1976 precedent - in part because Congress has since amended campaign finance laws and the concerns that justified the need for an overall cap are no longer warranted. In Buckley, the court said a ceiling on contributions was needed because it was too easy for the base limit regulations at the time to be circumvented.

If the court accepts that argument, it could be more likely that the five justices in the majority in Citizens United would feel comfortable ruling in McCutcheon's favor, legal experts say.

FIRST AMENDMENT

The Citizens United ruling prompted howls of outrage from liberals because of what they viewed as the court's alignment with corporate interests. President Barack Obama criticized it in his State of the Union speech just weeks after the ruling. Then, as now, the court was led by Republican-appointed Chief Justice John Roberts and was split 5-4 between justices appointed by Republican and Democratic presidents.

Under the ruling, corporations and unions can now spend as much as they want on independent expenditures, such as TV ads, during the campaign season. In the McCutcheon case, which has no bearing on corporate spending, the court's ruling could allow politicians and the parties to receive more money directly from wealthy donors and spend it as they wish.

The concern among McCutcheon's opponents is that a ruling in his favor would allow individuals to "game the system," as Tara Malloy, a lawyer with the Campaign Legal Center, which supports limits on donations, put it.

That's because there would be nothing to stop candidates and parties from funneling donations from the same individual donor from one candidate's committee to other political committees, as a way of circumventing the base limit caps, Malloy and others say.

Dan Backer, one of McCutcheon's lawyers, said the notion that donors, candidates and parties would do that for the sake of a few thousand dollars is "utter nonsense."

It is possible that the court could reach a much broader conclusion and issue a ruling that would enable future challenges to campaign finance laws, including the base limits. But few legal observers think the court will take that step, largely because McCutcheon has not asked the court to do so.

POLITICAL IMPACT

Senator Mitch McConnell, the Republican minority leader in the U.S. Senate, has, along with the RNC, joined McCutcheon's side in the case. The court has granted McConnell's attorney permission to take part in the one-hour oral argument. This is not the first time the Kentucky senator has challenged campaign finance laws, and his involvement has led to accusations that a ruling against the limits could create a fundraising bonanza for Republicans and constitute a defeat for Democrats.

Most donors who contributed up to the existing aggregate limit in the 2012 election cycle - and would be likely to give more if they could - are aligned with the GOP, according to a study published on Tuesday by Public Campaign, a Washington campaign finance reform group.

But some McCutcheon supporters, such as Brad Smith, a former Republican chairman of the FEC, think the partisan divide is overstated.

"We don't see any basis for predicting that one side or the other is going to come out ahead," he said.

(Reporting by Lawrence Hurley and Gabriel DeBenedetti; Editing by Howard Goller, Peter Henderson and Douglas Royalty)

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