Sens. McCain and Feingold (foreground) and reform advocate Fred Wertheimer (middle) have seen campaign rules crumble. Campaign finance reform: R.I.P.?

For four decades, advocates for stricter campaign finance rules have been on a long, slow march to make big money in politics less important and more transparent.

Now, in 2010, they are seeing the results: Never in modern political history has there been so much secret money gushing into an American election.


By Election Day, independent groups will have aired more than $200 million worth of campaign ads using cash that can’t be traced back to its original source, predicts Fred Wertheimer, president of the nonprofit group Democracy 21.

“And this is just the beginning,” Wertheimer said. “Unless we get some changes here to mitigate this problem, I would expect we will see $500 million or more in 2012.”

For Wertheimer, and the other lobbyists, lawyers and academics who push for tougher campaign cash restrictions and often refer to themselves as “the reform community,” this year’s election is not merely a disappointment.

There have been plenty of those in the years since their movement took off amid the abuses of the Nixon era. But always in the past, reformers have been able to keep faith that, whatever setbacks they faced, their cause was on a gradual path to victory.

This year feels more like a repudiation of their life's work. And it has raised two basic questions that strike at the very core of the ethos of the campaign finance reform effort: Can the flow of money into elections be limited if the courts have deemed political giving and spending a First Amendment right? Can any system of rules to make money more transparent ever keep up with the legal devices that powerful interests use to keep their influence hidden?

“This is a low point for the campaign finance reform movement — I’ve never seen it lower,” said Craig Holman, a leading campaign finance lobbyist for Public Citizen, a nonprofit group that has played a role in most major legal and legislative fights on the issue since the Watergate scandal of the mid-1970s.

“We’re not faring well today. At this point, we’re looking to monitor the level of chaos and scandal that is going to happen in the 2010 general election to try to bring life back into the reform movement going into 2012.”

For their antagonists, conservatives such as columnist George Will who have long derided campaign finance restrictions as unnecessary meddling in the political process, it’s a heady time in which their side is winning the day in the courts, regulatory agencies and even Congress.

“It’s no secret that the reformers are on the run — they’ve gotten pounded in the courts and also have not been very successful legislatively,” said Brad Smith, chairman of the Center for Competitive Politics, a nonprofit that opposes many campaign regulations and that has had a hand in several recent important court cases striking down such rules.

Only a decade ago, the campaign finance movement achieved one of its greatest victories: the 2002 Bipartisan Campaign Reform Act, which reformers saw as a foundation they would build upon in the years ahead.

The act, which came to be known as McCain-Feingold for its Senate sponsors, Republican John McCain of Arizona and Democrat Russ Feingold of Wisconsin, was the most sweeping overhaul of campaign finance rules since a suite of reforms enacted after Watergate.

McCain-Feingold prohibited national party committees from accepting huge so-called soft-money donations, set new rules barring coordination of big-money advertising campaigns between candidates and outside groups, enacted a so-called millionaire’s amendment granting special fundraising privileges to candidates running against self-funders, and barred corporations and unions from airing hard-hitting, issue-based ads known as electioneering communications in close proximity to Election Day.

The law — and major pieces of the precedent upon which it was based — is now in shambles, with reformers left clinging to its last remaining major pillar, the ban on soft money, which was upheld by a lower court this year but is expected to be the subject of future challenges.

The electioneering communication provision and millionaire’s amendment have been wiped away by a Supreme Court that became reliably skeptical of campaign finance regulation with former President George W. Bush’s appointments of John Roberts and Samuel Alito to the court.

The reconstituted court also struck down some significant older case law that was the foundation not only for parts of McCain-Feingold but for the broader campaign finance reform movement.

Meanwhile, the Federal Election Commission, which has been gripped by partisan deadlock, has — in the opinion of reformers — woefully failed to enforce the remaining pieces of McCain-Feingold and other campaign finance laws.

And McCain and Feingold, once hailed as post-partisan saviors of the political system, have struggled just to stay in the Senate.

Feingold faces an uphill battle against a novice opponent, who, perhaps ironically, has been the beneficiary of hundreds of thousands of dollars in ads attacking Feingold that would have been prohibited had McCain-Feingold remained intact.

McCain was able to ward off a primary challenger but only after spending more than $20 million in the process, and he has largely turned his back on the campaign finance reform movement.

In fact, what McCain-Feingold may best be remembered for was the way it kick-started the opposition.

“Our side — the pro-speech side — has had a good run over the last five or six years, and a big part of that was that we got more serious after McCain-Feingold,” said Smith, a former Republican appointee to the FEC.

Smith formed his group to support legal, legislative and regulatory challenges to campaign finance rules, while two existing groups — the Institute for Justice and Indiana attorney James Bopp’s James Madison Center for Free Speech — stepped up their fights on the issue.

Their basic argument: that some restrictions on political giving and spending impede the flow of ideas in public debates and unconstitutionally infringe on free-speech rights.

And though the three groups still have far less cash at their disposal than their adversaries in the reform community, they have seen their budgets rise over the past few years as major conservative funders have gotten behind their movement. They reported a combined $17 million in grants last year, including backing from the deep-pocketed Lynde and Henry Bradley Foundation, which gave them $815,000 from 2006 to 2009.

The foundation intends to fund further legal challenges to campaign finance laws, its president, Mike Grebe, told POLITICO this summer, explaining “We’re beginning to see some really good developments in that area, so we’re making progress.”

While the Supreme Court’s sweeping January ruling in Citizens United v. Federal Election Commission has gotten most of the attention in media accounts seeking to explain the new Wild West-like campaign finance environment, Smith and his allies have been on the march for years, racking up a series of lower-profile victories that set the stage for the momentum swing in their battle with reformers.

In 2007, the Supreme Court — in a 5-4 ruling in a case won by Bopp on behalf of a Wisconsin nonprofit group that opposes abortion rights — took a chunk out of McCain-Feingold’s electioneering communications restrictions.

In March of this year, Smith’s group and the Institute for Justice won a unanimous decision from a federal appeals court striking down limits on individual contributions to independent groups that want to explicitly urge a vote for or against a candidate.

The ruling, which fleshed out the impact of the Citizens United decision and paved the way for a new breed of political group dubbed Super PACs, was buttressed by a pair of opinions from the FEC, where Smith’s side also has increasingly gotten its way.

But by far their biggest victory — and the most devastating loss for reformers — was the high court’s 5-4 decision in Citizens United, which overturned as unconstitutional previous rulings upholding laws prohibiting corporations and, by extension, unions from spending their general funds on campaign ads.

The rulings cleared corporations and unions to launch expensive ad campaigns boosting or attacking candidates. While Democratic-leaning Big Labor has adjusted its election strategy to take advantage of the new rules, it hasn’t invested substantially more money in its campaign efforts — certainly not when compared with the raft of GOP-allied nonprofit groups that have rushed to action post- Citizens United.

Among those groups taking advantage of the new landscape have been American Crossroads and Crossroads Grassroots Policy Strategies (Crossroads GPS, for short), linked groups that were conceived in part by uber-GOP operative Karl Rove and are set up as a Super PAC and a nonprofit incorporated under Section 501(c)(4) of the tax code, respectively.

Reformers and top Democrats have increasingly complained that groups registered under Section 501(c) — most notably Crossroads GPS and the U.S. Chamber of Commerce, which is registered under Section 501(c)(6) — are either violating the tax code, nefariously hiding their donors or both.

“What’s happening right before our eyes is a blatant attempt by outside interest groups using secret money to buy a Congress that will serve their interests at the expense of the American people,” Rep. Chris Van Hollen (D-Md.) told POLITICO.

Van Hollen sponsored a White House-backed bill intended to blunt the impact of Citizens United, which passed the House but failed last month in the Senate. Reformers, who have complained that Obama hasn’t done enough to salvage the campaign finance regime, are pushing for another try in the lame-duck session, but the bill’s prospects appear dim.

David Magleby, a Brigham Young University political science professor who has studied independent political ads and efforts to regulate them, sees this year’s escalated ad war as part of an often-repeated pattern.

In reaction to new rules, new avenues for steering money into politics are developed, which in turn prompt legal challenges from the industry and sometimes new rules from Congress and regulators. And the process starts over again.

Political scandals occasionally punctuate the cycle, prompting more significant reforms, according to Magleby, who said “it took the Watergate scandal to kind of get the attention of the public and Congress.”

In response, Congress in 1974 created the FEC and a system for publicly financing presidential campaigns and enacted strict limits on campaign contributions and expenditures, the latter of which were quickly struck down as unconstitutional by the Supreme Court.

McCain-Feingold got boosts from both the Clinton fundraising controversies of the 1990s and the Enron scandal and accompanying public scrutiny of corporate relationships with government.

And, most recently, Congress, in 2007, motivated partly by the Jack Abramoff scandal, enacted a suite of lobbying and campaign finance reforms, including a bundling disclosure provision that Obama has cited as the top achievement of his brief Senate career.

Activists like Wertheimer, who worked on the post-Watergate reforms and is considered the dean of the reform community, believe it will take another scandal to once again change the political climate, given that the FEC and the Supreme Court seem stacked against reform's side, and Congress, which hasn’t demonstrated the political will necessary to tighten campaign finance laws, could become even less eager to consider reforms if Republicans retake one or both chambers.

But, Wertheimer added, he has no doubt that “we’re headed into a period of major national scandal based on a sea change in the way our elections are being funded and influenced that is going to set the stage for new battles over reform.”

But even if that happens, said former FEC Chairman Trevor Potter, who heads a reform group called the Campaign Legal Center, heightened corporate spending is likely a permanent development in the campaign landscape.

“This election is showing that (anonymously contributed) money can in fact be spent, and thus it will become the norm,” said Potter, a former McCain adviser who — along with Wertheimer — helped craft McCain-Feingold. “People who, going into this cycle, weren’t sure about it will now know that they can spend it and will start to raise it earlier, have higher targets. This is a road map to the future.”