Appearance Is Everything: Why Imposing Expenditure Limits on Hybrid PACs without Functional Separation Is Essential to Democracy

By Bushelle, Nicholas G. | Iowa Law Review, November 2019 | Go to article overview

Appearance Is Everything: Why Imposing Expenditure Limits on Hybrid PACs without Functional Separation Is Essential to Democracy


Bushelle, Nicholas G., Iowa Law Review


I. Introduction

Campaign finance law shapes which candidates have a chance of getting elected and has significant influence on public policy that affects the lives of all United States citizens. Despite what young children are told, not anyone can be president; only candidates that have a network of political connections and the support of large corporations, special interest groups, and political parties have a real shot at elected office. Even without actual quid pro quo corruption, candidates are very limited in what positions they may take, fearing loss of corporate, special interest, and party funding, and such considerations substantially influence their policy decisions once elected. Although the government no longer prohibits women, racial minorities, and the poor from voting or functionally prohibits them from voting through literacy tests, purposely poor-quality polling facilities, poll taxes, or property-ownership requirements, modern campaign finance law gives a disproportionate voice to the wealthy at the expense of such disadvantaged groups.

Campaign finance was an important issue in the 2016 presidential election cycle. Populist candidates Donald Trump and Bernie Sanders spoke out against political action committees ("PAC(s)"), specifically super PACs, and the Citizens United decision.1 Jeb Bush, who had substantial super PAC support, dropped out of the race.2 Hillary Clinton's super PAC support and corporate supporters gave her an advantage and helped her secure the Democratic party nomination, but many individual Democrats supported Bernie Sanders instead because of his stance against the influence of the wealthy on political elections.3

Special interest groups influence campaign financing through PACs, super PACs, and hybrid PACs. Standard PACs make contributions to political campaigns or spend in coordination with campaigns and are generally subject to limits.4 Super PACs make uncoordinated independent expenditures and are generally not subject to limits.5 Hybrid PACs combine these two types of PACs, with an arm making contributions and an arm making expenditures.6 A circuit split has arisen about how separate the arms of a hybrid PAC must be to prevent the application of contribution limits to the expenditure arm of a hybrid PAC.7

This Note argues that judges should resolve the circuit split by requiring the arms of hybrid PACs to be sufficiently separate under a totality of the circumstances test that focuses on the appearance of corruption to avoid the application of contribution limits to their expenditures. This will reduce the appearance of corruption in American elections and preserve the democratic process. Part II discusses the early history of United States campaign finance regulation, basic First Amendment speech doctrine, the background framework for judicial review of campaign finance laws that limit spending, the rise of hybrid PACs within this framework, and the different approaches of the circuit courts in analyzing the constitutionality of statutes applying limits to the expenditure arms of hybrid PACs. Part III explains the implications of the appearance of corruption in hybrid PACs. Part IV argues that laws limiting expenditures of hybrid PACs are constitutional when hybrid PACs fail to pass a totality of the circumstances test that emphasizes the appearance of corruption regarding the separation of their contribution and expenditure arms. It proposes analyzing the appearance of corruption factor through a reasonable person test by looking at surveys, testimony, and a court's own intuition. It argues that reducing the appearance of corruption will help maintain democracy by slowing the decline in political participation, reducing political fractionalization, and preventing the rise of authoritarian regimes.

II. Background

Congress began regulating campaign finance over a century ago, but it was not until the 1970s that it became a contentious issue that received judicial review of its constitutionality. …

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