Disclosure v. Anonymity in Campaign Finance, by Ian Ayres

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III. CONSTITUTIONALITY

Mandated anonymity is clearly constitutional. It burdens speech less than mandated disclosure and is more likely to further the government’s compelling interest in deterring corruption. And while the Supreme Court upheld the constitutionality of mandated disclosure, appreciating the possibility of mandated anonymity calls into question whether a disclosure regime constitute the least restrictive alternative required by the First Amendment.

In locating the exact anonymity burden, we should begin by remembering what the proposal does not do. It does not affect how much a donor can contribute, and it does not limit the words a donor might say. the regime would even allow a donor to prove she had given up to $200. The only burden of the anonymity proposal is that donors could not credibly signal that they had given more than $200. The inability to prove a large contribution certainly burdens a donor's ability to communicate. Reducing the "expressive value" of a contribution might deter some large donors from giving.

However, the Supreme Court's jurisprudence suggests that the size of this burden is rather marginal, particularly because donors can prove they contributed $200. In discussing the burden of contribution limits, the Court in Buckley found that:

a limitation upon the amount that any one person or group may contribute to a candidate or political committee entails only a marginal restriction upon the contributor's ability to engage in free communication. A contribution serves as a general expression of support for the candidate and his views, but does not communicate the underlying basis for the support. The quantity of communication by the contributor does not increase perceptibly with the size of his contribution, since the expression rests solely on the undifferentiated, symbolic act of contributing.... A limitation on the amount of money a person may give to a candidate or campaign organization thus involves little direct restraint on his political communication, for it permits the symbolic expression of support evidenced by a contribution but does not in any way infringe the contributor's freedom to discuss candidates and issues.47

This analysis suggests that a donor's burden of proving that she gave Clinton $1000 instead of $200 should be considered only "a marginal restriction upon the contributor's ability to engage in free communication." The quantity of communication involved in proving that a donor gave a larger amount "does not increase perceptibly." And the effect of the restriction is mitigated by the donor's unrestricted ability to speak independently in favor of a particular candidate.

Ackerman's "brute property" argument48 correctly identifies a deeply held impulse in our polity: "It's my property and I have a right to use it to support any candidate I want." The donation booth accommodates this impulse while simultaneously restraining property's influence. The donation booth does not affect how property can be used, nor does it limit the words (or other signals) a donor may employ to describe her use. But because the ability to prove credibly how one uses her property is not a firmly established concomitant of ownership, the donation booth does not directly contradict the "brute property" impulse.

The constitutionality of mandated anonymity can most clearly be demonstrated by comparing the constitutional costs and benefits of the specific proposal to two other free speech restrictions that have passed constitutional scrutiny: mandated voter anonymity and compelled disclosure of donor identity (reporting requirements). By showing that mandated anonymity is less burdensome and more supportive of the government's interest in preventing corruption, these comparisons provide two a fortiori arguments for the constitutionality of anonymity regulation.

First, the constitutionality of the voting booth - i.e., mandated voting anonymity - suggests that mandated donor anonymity is also constitutional. The voting booth also burdens political expression. No matter how much a conservative wants, she can never prove she did not vote for McGovern, nor can a liberal prove he did not vote for Reagan. Since voting is the quintessential act of political expression, denying citizens the right to prove for whom they voted is surely more burdensome than denying citizens the right to prove they gave a candidate more than $200.49

Although the privacy of the voting booth is an innovation of less than 100 years' standing, we cannot conceive that the Supreme Court would strike down this form of mandated anonymity as unduly burdening voters' free speech rights. Opponents of mandated donor anonymity will be hard pressed to explain why a donation booth is unconstitutional, but a voting booth is not.

Second, the Supreme Court's willingness in Buckley to approve compelled disclosure of donor identity suggests that compelled nondisclosure is all the more constitutional. Mandated nonanonymity is more burdensome than mandated anonymity. The Supreme Court has traditionally protected the right to silence or anonymity much more than the the right to speak credibly. Plenty of cases can be found where the Supreme Court has struck down regulations requiring speakers to identify themselves.50 But it's hard to find cases where the First Amendment has been abridged because a statute won't allow a speaker to prove what he says is true. Indeed, the strong antilibel impulse enunciated by Justice Hugo Black and others makes it harder for speakers to signal the truth of their allegations credibly because false statements often do not expose the speaker to monetary damages. Mandated disclosure may deter potential donors from giving to unpopular causes for fear of retaliation or ostracism; in comparison, the chilling effect on those legitimate donors who want to prove they gave more than $200 should be considered only a secondary concern.

Mandated disclosure is also less likely to further the government's interest in preventing corruption. Even though the Supreme Court suggested that mandated disclosure could deter corruption, it has proved exceedingly difficult to prove either quid pro quo or monetary influence corruption from the mere knowledge of identity. As adumbrated in Part I, donor anonymity is more likely to deter corruption because uninformed candidates have less opportunity to peddle influence or change their positions in the hope of garnering greater contributions -- and this effect is likely to be stronger than any voter discipline caused by a mandatory disclosure regime.

Indeed, the possibility of mandated anonymity calls into question the constitutionality of mandated disclosure. The First Amendment requires not only that the effect of furthering the government's compelling interest outweigh the speech burden, but that government choose the least restrictive alternative for achieving its compelling interest.51 Buckley did not discuss this additional "least restrictive alternative" requirement in constitutionalizing mandated disclosure, probably for the simple reason that the Court thought that lawmakers’ only relevant informational regulatory options were mandated disclosure or laissez faire regimes. But as once we appreciate that mandated anonymity can provide a smaller speech burden and more strongly deters corruption -- it becomes difficult to characterize mandated disclosure as the least restrictive alternative.

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CONCLUSION

This article stands against the strong consensus in favor of disclosure, but then again, so does the secret ballot. The strategy of keeping the candidate as well as the public in the dark has a long pedigree. Maimonides long ago extolled the benefits of anonymous charity.52 We should remind ourselves why we chose to make voting a solitary act. Indeed, anyone opposing mandated donor anonymity needs to explain why we shouldn't also jettison mandated voting anonymity.

Mandated anonymity also provides a useful perspective from which to rethink whether mandated disclosure can be defended. In the end, reasonable people might reject the donation booth because of the likely increase in issue advocacy. If mandated anonymity induces even a partial shift of contributions toward this form of reckless and unaccountable speech, we might not want to extend the voting booth rationale to campaign finance. But mandated disclosure regimes - if effective - should give rise to similar hydraulic effects. The visceral sense that mandated disclosure would not create a similar shift probably stems from the sense that few corrupt donations would in fact be deterred by a disclosure requirement. For the CATO institute which favors the move to a pure disclosure regime largely on libertarian grounds, a pure anonymity regime foster arguably even more donor freedom. It is difficult to advance a priori arguments against mandated anonymity while at the same time advancing a priori arguments in favor of mandated disclosure.53 The donation booth is not a panacea, but it keeps faith with the simple and widely held belief that the size of your purse should not determine your access to government.

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Notes:

1. See Pete du Pont, Campaign Finance Defies a Complicated Solution, Tampa Trib., Sept. 7, 1997, at 6.

2. See, e.g., Kathleen M. Sullivan, Political Money and Freedom of Speech, 30 U.C. Davis L. Rev. 663, 688-89 (1997); Campaign Finance: Full Disclosure, More Options Might Help, The Dallas Morning News, col. 1, p.. 2j (Oct. 12, 1997).

3. Bruce Ackerman, Crediting the Voters: A New Beginning for Campaign Finance, 13 Am. Prospect 71, 71 (1993); see also Ashley C. Wall, The Money of Politics: Financing American and British Elections, 5 Tul. J. Int'l & Comp. L. 489, 503 (1997) (commenting that the Ballot Act of 1872 "brought into existence the secret ballot, which had long term effects on curbing bribery").

4. In a earlier article that forms the basis for much of the present analysis, Jeremy Bulow and I argued that mandated anonymity would be a useful complement to the current limitation on contributions. See Ian Ayres & Jeremy Bulow, The Donation Booth: Mandating Donor Anonymity to Disrupt the Market for Political Influence, 50 Stanford L. Rev. 837 (1998). The idea that mandating donor anonymity might deter corruption has been discussed previously by a number of authors. See, e.g., Saul Levmore, The Anonymity Tool, 144 U. Pa. L. Rev. 2191, 2222 (1996) ("It should not be surprising to find a system that made political contributions anonymous by channeling them to candidates through intermediaries ....") and sources cited in Ayres & Bulow at note 4.

5. The commentary to the 1972 Code of Judicial Conduct ("CJC") stated, "[T]he [judicial] candidate should not be informed of the names of his contributors unless he is required by law to file a list of their names." E. Wayne Thode, Reporter's Notes to Code of Judicial Conduct 99 (1973). This provision was subsequently adopted - and, to varying degrees, applied - in ten different states. Stuart Banner, Note, Disqualifying Elected Judges from Cases Involving Campaign Contributors, 40 Stan. L. Rev. 449, 473 n.130 (1988) (identifying the 10 adopting states as Arkansas, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah, Washington, West Virginia, and Wyoming) 470 (1988); see also 1978 N.Y. St. Comm. on Jud. Conduct Ann. Rep. 63 (1979) ("The intent behind keeping a judge from knowing his contributors is obvious: to avoid the impression that, if elected, the judge will administer his office with a bias toward those who supported his candidacy."). See also Ayres & Bulow, supra note 4, at 870 for an assessment of the ultimate effectiveness of these judicial regulations.

6. Wayne Andrews, Voting, in Concise Dictionary of American History 989 (Wayne Andrews ed., 1962). The thesis that the Australian ballot was adopted in order to deter vote buying specifically - and cleanse the political system generally - is hotly contested. An alternative interpretation is that these voting reforms were motivated, at least in part, to dampen mass political activism. The "spectacle" of lines of voters marching to the polls with colored ballots in hand might not have indicated that their votes were bought, but instead that their votes were not for sale - a symbol of the solidarity between voters and labor or other mass political movements. See, e.g., Michael E. McGett, The Decline of Popular Politics: The American North 1865-1928, at 12 (1986); Walter Dean Burnham, The Changing Shape of the American Political Universe, 59 Am. Pol. Sci. Rev. 7 (1965). Even if this alternative reading of the Australian ballot is correct as historical matter, the donation booth (unlike the secret ballot) has the potential to dampen the political power of those with disproportionate wealth and thereby increase the incentives for wider popular politics.

7. John H. Wigmore, The Australian Ballot System As Embodied in the Legislation of Various Countries 1-57 (2d ed. 1889).

8. See Cass R. Sunstein, Political Equality and Unintended Consequences, 94 Colum. L. Rev. 1390, 1391 (1994) (identifying corruption as the "[f]irst and most obvious, perhaps," ground for campaign finance reforms).

9. See Daniel Hays Lowenstein, On Campaign Finance Reform: The Root of All Evil Is Deeply Rooted, 18 Hofstra L. Rev. 301, 302 (1989) ("[P]ayment of money to bias the judgment or sway the loyalty of persons holding positions of public trust is a practice whose condemnation is deeply rooted in our most ancient heritage.").

10. Sunstein, supra note 8, at 1390.

11. Ackerman, supra note 3, at 71.

12. Richard Craswell has also suggested in comments that it might be possible to use a modified version of the donation booth to give candidates information about voters' aggregate preferences, but not voters' identities. If the blind trusts solicited donors' policy preferences and revealed these preferences to the candidates - for example, if the trusts revealed that $300,000 of total donations support NAFTA - the mandated anonymity regime might reveal something more to the candidates about the intensity of the donors' aggregate preferences while still disrupting the market for quid pro quo corruption.

13. Letter from Janet Reno, United States Attorney General, to Rep. Henry J. Hyde, House Judiciary Chairman, reprinted in N.Y. Times, Oct. 4, 1997, at A9.

14. First National Bank of Boston v. Bellotti, 435 U.S. 765 788 n.26 (1978).

15. Op. Off. Gov't Ethics 93x21, at 93 (1993). See generally Kathleen Clark, Paying the Price for Heightened Ethics Scrutiny: Legal Defense Funds and Other Ways That Government Officials Pay Their Lawyers, 50 Stan. L. Rev. 65 (1997).

16. See Fred S. McChesney, Rent Extraction and Rent Creation in the Economic Theory of Regulation, 16 J. Legal Stud. 101, 102 (1987).

17. See Frank J. Sorauf, Inside Campaign Finance: Myths and Realities 60-97 (1992).

18. See Richard J. Mahoney, Letter to the Editor, A Corporate Mood, N.Y. Times, Jan. 30, 1997, A14.

19. See Fred S. McChesney, Rent Extraction and Interest-Group Organization in a Coasean Model of Regulation, 20 J. Legal Stud. 73, 85-89 (1991).

20. See generally Stephen G. Bronars & John R. Lott, Jr., Do Campaign Donations Alter How a Politician Votes? Or, Do Donors Support Candidates Who Value the Same Things That They Do?, 40 J.L. & Econ. 317 (1997); cite Levitt, xxx.

21. See Thomas F. Burke, The Concept of Corruption in Campaign Finance Law, 14 Contst. Commentary 127, 131 (1997)(arguing that Supreme Court decisions have identified "three distinct standards of corruption," which the author labels "quid pro quo," "monetary influence," and "distortion"). Thomas Burke shows how each of these effects has been characterized as a problem of corruption, although the last possibility - "distortion" - is more often described as the problem of inequality. See id.

22. For example, even market-oriented scholars such as James Buchanan and Gordon Tullock have argued that contributions might not accurately measure intensity of preferences because of "market imperfections". James M. Buchanan & Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy 272 (1962).

23. The possibility of rent extraction also militates against using donations to register the preference intensity of voters. Politicians trying to extort donations under threat of harmful laws are likely to pass a retaliatory law from time to time in order to make their threats credible. An uninsulated system of monetary influence might therefore lead to worse policies than one that insulates candidates from the preference intensity of voters.

24. See generally Daniel R. Ortiz, The Democratic Paradox of Campaign Finance Reform, 50 Stan. L. Rev. 893 (1998). Moreover, citizens can credibly signal the intensity of their preferences by engaging in other activities, such as marching on Washington, that are more generally available to a large proportion of the populace. Even if citizens wish to signal the intensity of their preferences by spending money, it is not clear that donating money is superior, literally, to burning the money for a cause. It is one thing for a candidate to change positions because her constituents are willing to part with considerable money. Such behavior is consistent with the idea that politicians should faithfully represent the aggregate preferences of their constituents. But it is another thing to change positions in order to receive this money. Because there is no natural way to aggregate preferences, it is suspect for a candidate to choose an aggregation that self-interestedly increases her chance of election.

25. See Burke, supra note 21, at 148 ("[W]here contributor-influenced representatives predominate, legislative deliberation becomes a sham.").

26. David A. Strauss, Corruption, Equality and Campaign Finance Reform, 94 Colum. L. Rev. 1369, 1375-76 (1994).

27. See generally Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416 (1956).

28. David Donnelly et al. Going Public, 22 The Boston Review (April-May, 1997).

29. Strauss, supra note 26, at 1376 n.18.

30. Similar requirements have been imposed on trusts serving as corporate fiduciaries. See Cal. Fin. Code 1500-1591 (West 1989) (imposing requirements such as security deposits on trust companies); John H. Langbein, The Contractarian Basis of the Law of Trusts, 105 Yale L.J. 625, 638-39 & n.64 (1995) (describing modern-day, institutional trusteeships).

31. See Lawrence Lessig, The Regulation of Social Meaning, 62 U. Chi. L. Rev. 943, 1010-11 & n.225 (1995) (citing Jewish Museum, Kings and Citizens: The History of the Jews in Denmark 1622-1983 (Jorgen H. Barfod, Norman L. Kleebatt & Vivian B. Mann, eds., 1983)).

32. Under a regime of mandated anonymity, candidates are likely to spend less time fundraising because this activity would be less productive and because the candidate would need fewer funds to effectively compete with an opponent who faces similar constraints. There is the theoretical possibility - called an "income effect" - that if anonymity causes less giving generally, then candidates will respond by engaging in more fundraising. As an empirical matter, however, economists typically find that substitution effects dominate income effects - that is, when fundraising becomes more difficult, politicians are likely to spend less time on it (especially when their opponents' fundraising also becomes more difficult).

33. But as the Supreme Court has noted, contributing to yourself does not present the same risks of quid pro quo or monetary influence corruption. See Buckley v. Valeo, 424 U.S. 1, 53 n.59 (1976) (per curiam). Self-contribution, however, often exacerbates problems of inequality.

34. The FEC could be empowered to audit campaigns for compliance with the anonymity regulations. Much like Fair Housing tests, such audits could determine whether campaign officials are willing to conspire with purported donors or trust representatives to learn donor identities.

35. Sunstein, supra note 8 , at 1395 (citation omitted).

36. Both Clinton and Dole orchestrated the use of party soft money to fund coordinated issue campaigns. See Jill Abramson, 1996 Campaign Left Finance Laws in Shreds, N.Y. Times, Nov. 2, 1997, at 1 ("[T]he Democratic committee spent at least $32 million on early issue advertising. The advertisements, which began airing in mid-1995, were created by the Clinton-Gore team and prominently featured the President in patriotic settings."). Labor and business spent millions on independent issue campaigns in the 1996 election cycle. See Eliza Newlin Carney, Campaign Reform Debate Will Linger, 22 Nat'l J. 2026 (1997).

37. See Richard L. Hasen, Clipping Coupons for Democracy: An Egalitarian/Public Choice Defense of Campaign Finance Vouchers, 84 Calif. L. Rev. 1, 19 n.79 (1996).

38. See Colorado Republican Fed. Campaign Comm. v. FEC, 116 S. Ct. 2309, 2317 (1996) (plurality opinion) (indicating that the Court has treated coordinated expenditures as contributions, which Congress may constitutionally regulate).

39. See, e.g., Jill Abramson, Tape Shows Clinton Involvement in Party-Paid Ads: Legal Line Is Unclear, N.Y. Times, Oct. 21, 1997, at A1 (discussing television issue ads that "advanced the Democratic Party's agenda as well as Mr. Clinton's").

40. See Austin v. Michigan State Chamber of Commerce, 494 U.S. 652, 654-55 (1990) (prohibiting independent political expenditures from a corporation's general treasury is constitutional); Buckley v. Valeo, 424 U.S. 1, 80-82 (1976) (per curiam) (mandating disclosure with regard to independent express advocacy is constitutional).

41. For example, Michael R. Goland, "apparently motivated by the pro-Israel policies of Senators Paul Simon and Alan Cranston, funded large independent expenditure campaigns against their opponents." Hasen, supra note 37, at 19 n.79.

42. Buckley, 424 U.S. at 47.

43. An exception to this tendency might occur when the independent expenditure is used for purposes the politician supports, but doesn't want attributed to herself - for example, "going negative" by attacking her opponent. See text accompanying note 37 supra (discussing the Willie Horton ads). Yet the fact that independent expenditures are attributed to another speaker can often be a political liability. An independent ad campaign paid for by, say, Jane Fonda or tobacco interests might alienate as many voters as it persuades. Hence, independent expenditures by well-heeled but unpopular speakers would be much less valuable then direct contributions.

44. See Sullivan, supra note 2, at 690 ("[C]ompelled disclosure avoids a regime of absolute laissez-faire. Even this partial deregulation might have unintended consequences."

45. Buckley v. Valeo, 424 U.S. 1, 67 (1976) (per curiam).

46. Joseph P. Kalt & Mark A. Zupan, Capture and Ideology in the Economic Theory of Politics, 74 Am. Econ. Rev. 279, 283 (1984)

47. Buckley, 424 U.S. at 20-21.

48. See Ackerman, supra note 3, at 78

49. The government's interest in preventing vote as compared to donation corruption cannot easily explain why the voting booth would stand on a firmer constitutional footing than the donation booth. The danger of donation corruption is greater than the danger of voting corruption because wealth is much more concentrated than votes. The transaction costs of vote corruption are much higher because candidates would need to cut deals with many more people for vote corruption to have an effect.

50. See, e.g., McIntyre v. Ohio Elections Comm., 514 U.S. 334, 353 (1995) (striking down an Ohio statute that prohibited the distribution of anonymous campaign literature as a violation of the First Amendment); Talley v. California, 362 U.S. 60, 66 (1960) (striking down a city ordinance that forbade the distribution of anonymous handbills).

51. See Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N.Y., 447 U.S. 557 (1980). See generally Eugene Volokh, Freedom of Speech, Permissible Tailoring and Transcending Strict Scrutiny, 144 U. Pa. L. Rev. 2417 (1996).

52. See Moses Ben Maimon, The Laws of Hebrews Relating to the Poor and the Stranger 67-68 (James W. Peppercorne trans., Pelham Richardson 1840)

53. At a minimum, Congress should change the law to give individual candidates the option of using blind trusts to finance their campaigns. The first question candidates should be asked when they announce their candidacy is whether they will commit to donor anonymity. We hope that candidates would voluntarily comply in order to avoid explaining why they need to know the identity of their donors. But we fear the issue can be demagogued. Opponents of mandated anonymity are likely to respond, "What do the proponents have to hide? Why aren't they willing to reveal who their contributors are?" Of course, these same questions were asked of those early proponents of the secret ballot.