Campaign finance regulation in the United States is complex, and judges have begun to complain about it. Most famously, Justice Kennedy spoke about the proliferating and abstruse rules in his opinion for the Court in Citizens United. At oral argument in a recent case, Justice Scalia suggested that no one really understood the law. The complexity of campaign finance rules is not just the handiwork of the regulators: the Court’s own doctrine can be hard to fathom. Once there was supposedly a clear distinction between “contributions” and “expenditures,” but this is no longer quite the case. And the line that once separated legal, clean “hard money” from illegal “soft money” may soon be harder to discern, after the Court has decided the pending case of McCutcheon v. Federal Election Commission. The hard money/soft money distinction became the central focus of the campaign finance discussion in the 1990s. Hard money was understood to mean funds raised and spent within election law requirements—funds “subject to the [Federal Election Campaign] Act’s disclosure requirements and source and amount limitations.” McConnell v. Federal Election Commission, 540 U.S. 93, 122 (2003). Soft money was the unregulated funding, “beyond [federal law’s] reach” that parties and groups used to influence federal election campaigns. McConnell at 128. According to critics, soft money was imported into federal races through ingeniously devised loopholes, or simply disregard of the law. Hard money limits offered protections against corruption; soft money was effectively unlimited and overwhelmed those protections.
In the early fights over soft money, the parties and groups defending its use denied that they were influencing federal elections—their spending, they argued, was for other purposes, like “grassroots lobbying” on issues or the support of state (i.e., non-federal) candidates. Any effects on federal elections, they claimed, were incidental. In 2002, after a sustained struggle, Congress amended the law to stop the practices it deemed most egregious. For example, lawmakers concluded that national parties could no longer accept soft money at all, regardless of its intended use, because the candidates so closely associated with them would be corrupted by the flow of unlimited money. Outside groups were subjected to limits on the receipt and use of soft money, mainly from corporations and unions, for “issue advertising” before elections. Labels would not count anymore: the question was intent and effect, and Congress developed a record of election-influencing intent and effect to support these restrictions on party and outside advertising.
At issue in both cases was money raised “outside the system” of rules for federal campaign finance. The Court has been hard on some of these reforms, beginning with a case that limited the restrictions on issue advertising in Wisconsin Right to Life, and accelerating the path toward deregulation in Citizens United. Now, in McCutcheon, the Court is considering a case that may move the boundary between hard and soft money. McCutcheon is a hard money case that the government is defending in significant part on a soft money theory.