their dependence on governmental decisions by public officials or their representatives; some individuals give seemingly inordinate amounts; finally, continued allegations seem to have generated considerable skepticism about the financing of campaigns and to have eroded confidence in the political process.

Given all this, the case for regulation cannot be summarily dismissed, and the roles played by private campaign money must be carefully weighed. Certain functions are undesirable. Some donors doubtless make contributions hoping to obtain personal favors ranging from the trivial, for example, dinner invitations, to the malevolent. Awarding ambassadorships in return for large contributions is not the most desirable method of choosing American representatives to foreign nations. To exercise administrative discretion in favor of larger political contributors, for example, in awarding a government contract, is not only undesirable but in most cases illegal. Where the contribution follows a pointed reminder from a public official, governmental power is misused. Similarly, we feel uneasy when an otherwise undistinguished individual makes a serious stab at high office by expending a family fortune.

Horror stories illustrating the misuses of campaign money abound; but precisely because they horrify, they may obscure more than they illuminate. Many of the roles played by private campaign money are desirable, indeed, indispensable to a free and stable society.

Our threshold question must be whether money ought to play any role in politics. If we value freedom, the question can safely be answered affirmatively. All political activities make claims on society's resources. Speeches, advertisements, broadcasts, canvassing, and so on, all consume labor, newsprint, buildings, electrical equipment, transportation, and other resources. Money is a medium of exchange by which individuals employ resources to put to personal use, to work for others, or to devote to political purposes. If political activities are left to private financing, individuals are free to choose which activities to engage in, on behalf of which causes, or whether to do so at all. When the individual is deprived of this choice, either because government limits or prohibits his using money for political purposes or takes his money in taxes and subsidizes the political activities it chooses, his freedom is impaired.

The argument generally advanced in response is that money is so maldistributed that the political process is undesirably skewed. To foreshadow the conclusions below, it may briefly be said: first, because access to the resources most suitable for political use may be even more unevenly distributed than wealth, limitations solely on the

use of money may aggravate rather than diminish the distortion;
and second, money performs many valuable functions which far
outweigh whatever harm it may do.

Candidates seeking change, for example, may have far greater
need for, and make better use of, campaign money than those with
established images or those defending the existing system. Money
is, after all, subject to the law of diminishing returns and is of less
use to the well known than to the newcomer. The existence of "seed
money" may thus be an important agent of change. Both the Wallace
campaigns and the antiwar candidacies achieved the significance
they did largely because they raised and used "new" political money.

The solicitation and contribution of money also allow citizens
who have little, or desire more, opportunity to participate meaning-
fully in the political process the chance to do so. Because of the
obsession with horror stories, we forget that persons without much
free time have few alternatives to contributions other than inaction.

Campaign contributions are also vehicles of expression for donors
seeking to persuade other citizens on public issues. A contribution to
a candidate holding convictions similar to the donor's employs the
candidate as a surrogate for the expression of those ideas. Contrib-
uting to a candidate permits individuals to pool their resources and
voice their message far more effectively than if each spoke singly.
This is critically important because it permits citizens to join a potent
organization and propagate their views beyond their voting districts.
Persons who feel strongly about appointments to the Supreme Court,
for example, can demonstrate their convictions by contributing to the
campaigns of sympathetic congressmen. Those who give money to
Mr. John Gardner's Common Cause and conceive of that act as a
form of free association and expression should not automatically deny
the same status to those who give to political campaigns.

Nor is there anything inherently wrong with contributing to
candidates who agree with one's views on broad social and economic
policies, even where those policies may benefit the donor. Obviously,
groups pursue their self-interests and seek to persuade others to
support them. That is a salient characteristic of a free political
system. Persons who seek to regulate that kind of contribution can
stand with those who would deny the vote to welfare recipients to
prevent that vote from being "bought" by promises of higher benefits.

Many such contributions also represent broad interests that
might otherwise be underrepresented. Suppose land developers mount
a campaign against proposals to restrict the use of large undeveloped
areas. Certainly they represent their own economic interests, but they

Ralph K. Winter, Jr., is professor of law, Yale Law School, and an
adjunct scholar at the American Enterprise Institute.

John R. Bolton is a member of the Yale Law School class of 1974
and an editor of the Yale Law Journal.

Domestic Affairs Study 19, October 1973

ISBN 0-8447-3118-8

Library of Congress Catalog Card No. L.C. 73-90059

1973 by American Enterprise Institute for Public Policy Research, 1150 Seven-
teenth Street, N.W., Washington, D. C. 20036. Permission to quote from or to
reproduce materials in this publication is granted when due acknowledgment
is made.

Printed in United States of America

CONTENTS

1. Campaign Money in Perspective

The Functions of Private Campaign Money 2

Private Campaign Money: Where Is the Balance? 6

2. Campaign Financing and the Law

Limitations on Expenditures and Contributions:

Price Controls in the Marketplace of Ideas 17

Reporting and Disclosure Legislation 20

The Case against Public Financing 21

3. Summary

2

13

27

CAMPAIGN FINANCING AND POLITICAL FREEDOM

The conviction that something has gone awry in our political process is again growing stronger in the United States Congress. In particular, the view that wealth has excessive influence on election results and that election campaigns are too costly seems almost a routine assumption. These claims come on the heels of the Federal Election Campaign Act of 1971, a restrictive law regulating the contribution and use of campaign money. That act has been greeted by constitutional authorities with comments ranging from "would seem to violate the First Amendment" to "flatly unconstitutional" 2 and has been challenged by lawyers for the New York Times as "shot through with constitutional deficiencies." 3 Hence considerable caution would seem warranted before federal regulation of campaign financing is expanded. Nevertheless, the Congress is seriously considering even more drastic legislation.

1

The principal proposals now under debate are relatively old and deceptively simple. In general outline they include a substantial subsidy from public funds to be given to federal candidates to pay all or part of their campaign costs. This subsidy would be complemented by legal limits on (1) the amount spent by a candidate or those furthering a candidacy and (2) the size of individual financial contributions to a candidate's campaign.

1 A. Rosenthal, Federal Regulation of Campaign Finance: Some Constitutional Questions (Princeton, N. J.: Citizens' Research Foundation (ed.), 1972), p. 63. 2 Statement of Alexander Bickel, ibid., p. 66.

3 Brief for New York Times as amicus curiae, p. 16, American Civil Liberties Union v. Jennings, Civil No. 1967-72 (D.D.C., 1972).

4 See, for example, S. 1103, 93d Congress, 1st session (1973); hereinafter referred to as the Hart bill, after its author, Senator Hart.