The Money Game: Changing the Rules

Like skaters racing over thin ice, the candidates competing for their party's presidential nomination have never known when, without warning, they might be plunged into icy water. All were concerned that the U.S. Supreme Court would invalidate the Federal Election Campaign Act of 1974, which not only defined the rules for raising and spending money, but for the first time made available sizable federal subsidies.

Last week, in a complex 227-page opinion, the court assured the candidates that the ice was solid. The key contribution and disclosure provisions of the law were upheld as constitutional. So were those handsome subsidies. At the same time, most ceilings on spending were removed, allowing significant advantages to very rich candidates. In short, the court held that money still talks--but it must talk openly and, with important exceptions, in limited quantities.

Technically, the court's vote was unanimous: 8 to 0 (the newest Justice, John Paul Stevens, did not participate in the decision). Actually, it was anything but. In a case involving nine major questions and 19 subquestions of constitutional law, there were five partial dissents. Nonetheless, the court under Chief Justice Warren Burger managed to reach decisions that will influence American politics, and the campaign ahead, in numerous ways. Items:

SPENDING LIMITS. The law's basic rule limiting to $1,000 the campaign contributions from individuals to a single candidate in a single election was left intact. In addition, "political committees" can still give up to only $5,000 to any candidate. Contrary to the claims of the law's opponents, the court argued that these restrictions were only "marginal" infringements of the First Amendment's free speech and freedom of association provisions. But, on the ground that they were "substantial" restraints of First Amendment rights, the court eliminated the ceilings on campaign spending. During the general election, for instance, a presidential candidate was allowed by the 1974 law to spend a maximum of $20 million. In removing such ceilings, the court noted that "virtually every means of communicating ideas in today's mass society requires the expenditure of money."

In theory, the court's ruling gave every candidate a choice. If he could raise enormous sums of money legally, he could spend as much as he wanted, not only in the general election but in the primaries. Under the rules that the court knocked out, a presidential candidate could spend no more in any one primary than the greater of two figures: $200,000, or the product of multiplying the number of eligible voters in the state by 8-c-.

But if a candidate qualified for federal subsidies and chose to accept them, he would be limited; in such a case, the spending ceilings in the law would still apply. In fact, for most candidates, there will be little choice. Under the new rules, it is hard enough to raise a million dollars, $1,000 at a time, let alone $20 million. President Gerald Ford and Senator Henry Jackson announced that they would conform to the spending levels established originally by the act. Ford said that he would ask the Attorney General about "what steps, if any, should be taken to ensure that our elections remain free from any abuse [caused by lifting spending ceilings]."

THEIR OWN MONEY. In another ruling, which will give the very rich a boost, the court abolished the section of the law forbidding any candidate or his family from giving more than $50,000 to his presidential campaign. The Justices held that such a curb violated an individual's rights of expression under the First Amendment. Nelson Rockefeller and his family spent an estimated $4.1 million on his unsuccessful fight for the Republican presidential nomination in 1968.

"INDIRECT EXPENDITURES." The most baffling--and probably the most disturbing--decision by the court was to put no restrictions on "independent expenditures" by individuals on behalf of a candidate. The court held that such a limitation "impermissibly burdens the constitutional right of free expression." Thus as long as a candidate did not authorize or know about such spending, an individual could put up a billboard, take out a newspaper ad, buy TV time, hire doorbell ringers or mail out leaflets to help. Considering the history of politicians and politics in the U.S., the ruling seems extremely naive--leaving a mile-wide loophole for the return of the "fat cat" to the campaign scene.

Associate Justice Byron White, who wrote a partial dissent opposing this part of the court's ruling, raised an intriguing question. "Let us suppose that each of two brothers spends one million dollars on TV spot announcements ... urging the election of the same candidate in identical words," said White. "One brother has sought and obtained approval of the candidate; the other has not. The former may validly be prosecuted ... under the court's view, the latter may not, even though the candidate could scarcely help knowing about and appreciating the expensive favor."

One person who quickly saw the implications of the "indirect" contribution was Stewart Mott, 38, the wealthy General Motors heir who gave $725,000 to Democratic Candidate George McGovern in 1972. Mott said that he might spend $50,000 or $100,000 in support of certain congressional candidates, and that he might start a massive media campaign for former Senator Eugene McCarthy, who is running as an independent. As it happens, McCarthy was a party to the suit that prompted last week's ruling by the court.

THE COMMISSION. Under the 1974 law, an eight-member Federal Election Commission was set up to oversee and enforce its provisions. The court ordered that the commission be dissolved in 30 days unless all of its members were appointed by the President, instead of just two under the present stat ute. The other six are four members appointed by Congress, plus the Secretary of the Senate and the clerk of the House. There was the rub. According to the court, Congress may not appoint a body with enforcement powers; only the Executive can set up such a commission. A number of Senators, including Edward Kennedy, quickly said that they would introduce bills this week to conform to the ruling and preserve the commission's watchdog status over campaign spending.

The creation of the 1974 campaign finance law--and the Supreme Court's careful weighing of its merits--were both attempts to grapple with two basic questions that have always plagued the political process in the U.S.: How can every political candidate, whatever his wealth or influence, get a fair and equal chance to run for office? And what role should the Government play in setting out--and enforcing--the ground rules?

For the nation's first 90 years, there were virtually no ground rules. Wealthy candidates were free to spend as much as they pleased, and the less well off could, if they were clever enough, raise any amount of money and promise their benefactors anonymity. In 1907, Congress enacted a ban on corporate giving, but this proscription was often blithely and safely ignored. The Federal Corrupt Practices Act of 1925 continued to outlaw corporate contributions, tried to make candidates report what they had spent and started a feeble attempt to set up some spending limitations. One fact reveals the law's in effectiveness: no member of Congress was ever punished for breaking it.

Illegal Fund. The financial free-for-all continued through 1971, when an other federal law tried to tighten the rules a notch by requiring that a candidate disclose the name of anyone giving him $100 or more. That measure did not go into effect until April 7, 1972. By that time the most successful, ruthless, unethical and in some ways illegal fund raising campaign on record was already cresting. In all, Richard Nixon was estimated to have raised a staggering $70 million for his successful race for re-election against the challenge of George McGovern, who managed to accumulate nearly $50 million.

Then the disclosures of Watergate and the other scandals of the Nixon Administration showed just how tawdry and outrageous the system had become. As it turned out, some of the money that was ostensibly given to elect Nixon ended up being spent to finance the break-in of the Democratic headquarters in the Watergate apartments in Washington. Campaign financing had become a cynical charade.

As millions of Americans expressed disgust with politicians of every stripe and party, Congress at last was forced to try to make the elections clean--or at least cleaner. The result was the ambitious, complicated, confusing and inconsistent compromise that was signed into law on Oct. 15, 1974 by President Ford.

One of the most important elements of the bill was that it provided a system for subsidizing the campaign expenses of candidates for the presidency. The first requirement for a candidate was to show that he had widespread support. He had to raise at least $5,000 in amounts of $250 or less in each of 20 states. That accomplished, he could apply for public funds, which would match the first $250 of each contribution he received. In all, if he got enough private contributions, he could get up to $5 million in matching funds for the primary races. Once nominated by one of the two major parties, a candidate would be home free: without his raising any more money on his own, the Government would give him $20 million for the general election. Minor-party and independent candidates would be eligible to receive partial financing under a complicated formula based on their showings in the previous election.

One of the anomalies--and weaknesses--of the act is that Congress refused to approve a comparable system for candidates running for the Senate or the House. Spending ceilings were established, but no subsidies were offered. The court's ruling does away with the ceilings. The Congressmen's cold-eyed theory in rejecting subsidies was that they--as incumbents--enjoyed a natural advantage as fund raisers. Why help their challengers?

The omnibus law went into effect on Jan. 1, 1975. The very next day, critics of the measure filed the protests that led to last week's decision by the Supreme Court. The critics were an oddly assorted group. They were led by New York's Senator James L. Buckley, one of the most conservative men in politics, and former Senator McCarthy, one of the most liberal. Other plaintiffs: the New York Civil Liberties Union; Human Events, a conservative magazine; and Stewart Mott.

What irritated Buckley was that the act clamped a lid on spending, which he saw as giving incumbents an unfair advantage. Said he: "To offer this bill in the name of reform is an act of cynicism." Buckley also argued that the $1,000 limitation on contributions was too low, acknowledging that without substantially higher gifts--which he dubbed "seed money"--he would never have been elected in 1970.

Two Choices. McCarthy objected particularly to the short shrift that the act gave the heads of minority parties or potential independent candidates, such as himself, while giving such full support to Democrats and Republicans. He called the process "political repression" and likened it to "telling people we're going to give you freedom of religion, and then saying, you have two choices: Episcopal or Anglican."

Last August the U.S. Court of Appeals for the District of Columbia--a panel known for its liberal leanings--decided by a 6-to-2 vote that the campaign financing law was constitutional. Referring to the squalors of Watergate, the judges said that "the present situation cannot be tolerated by a government that professes to be a democracy." Declared the court: "The corrosive influence of money blights our democratic processes."

When the case reached the Supreme Court, the Justice Department was joined in support of the bill by Common Cause, whose chairman, John Gardner, had been one of its most active supporters from the start; the League of Women Voters; Senate Minority Leader Hugh Scott; and Senator Edward Kennedy, who felt that while the act was a "half-a-loaf" approach to reform, it was better than nothing at all. After hearing the case in November, the court delayed its ruling for twelve weeks--a sure sign of an intense debate among the Justices.

Major Blow. Taken as a whole, the politicians who benefited most from the court's decision last week were the Nelson Rockefellers and the Ted Kennedys (see following story). With restrictions removed on how much a candidate could spend on himself, they could enter the race at the last minute and still mount a TV, radio and newspaper blitz. There is one limiting factor: they, too, would have to declare how much money they were spending. The disclosure that one candidate was throwing around millions on his own behalf would not be likely to endear him to voters in an antipolitician era. Tapping one's own coffers might have its most significant effect in races for the Senate and, more likely, the House--where a few hundred thousand dollars might make a considerable difference.

Perhaps the chief characteristic of the court's ruling was that it managed to please everyone a little--if not completely--on all sides of the complicated issues. James Buckley declared that the provision knocking out compulsory spending limits "struck a major blow for the forces of freedom." Politicians talk that way in election years, but even Common Cause's Gardner, a zealous defender of the law, was expansive. Said he: "It's an overwhelming victory for all those who have worked so hard to clean up politics in this country. We are never, never going back to old corrupt ways of doing things. That's settled." More likely, that is overly optimistic. But at least the nation now has a campaign financing law that is a considerable improvement on the past, has been tested in the courts, and is ready to govern the 1976 elections.

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