If the U.S. Supreme Court Overturns Political Contribution Limits Next Year, Will Your Campaign Be Ready?

by Snell & Wilmer

The U.S. Supreme Court, which heard oral argument in McCutcheon vs. FEC this week, may overturn the aggregate contribution caps that have governed federal elections since 1974. If so, candidates should prepare now for the political landscape that will exist come June.

The question posed by Shaun McCutcheon, a wealthy Alabama businessman who sought to step up his political contributions to federal candidates, was this: how can it be constitutional, under the guise of preventing corruption, to permit a donor like him to give maximum contributions to nine federal candidates but not 10? After all, that is the effect of a $48,600 aggregate contribution limit imposed by federal law. There are similar caps restricting aggregate contributions to parties and PACs ($74,600), and an overall limit ($123,600) as well. (These caps are indexed for inflation every two years). The law’s defenders counter that wealthy donors should not exert undue influence on the political process and that aggregate limits are necessary to prevent circumvention of the base limits, currently set at $2,600 per candidate per election. In fact, these aggregate contribution caps passed constitutional muster before the Supreme Court nearly 40 years ago.

Based on the oral argument, most observers predict a divided court will strike down one or more of these aggregate limits. (For example, the court may strike down the contribution cap applicable to candidates but uphold the cap applicable to parties and PACs). A decision may not come until June, but if candidates wait to adjust, it will likely be too late. Your playbook should be amended now.

The reality is that, if the aggregate caps are struck down, certain existing laws will become less restrictive and money will more easily flow through lawful channels. Here are two potential examples.

First Super-PACs, Now Super-JFCs. Joint fundraising committees typically sponsor star-studded events where donors write one big check. In April 2012, for example, a ticket to President Obama’s “Women’s Issues Conference” cost top donors $75,800. (Romney Victory was no different). That amount represented the maximum possible contribution under 2012 limits. Without aggregate caps, JFCs could have raised over $500,000 per person.

The advantage for candidates could come in the form of coordinated party expenditures. As a hypothetical example in a post-McCutcheon world, a donor might contribute $200,000 to a JFC, having four specific Arizona representatives in mind. Those funds are distributed among various state parties but eventually make their way to a state party in Arizona to conduct coordinated expenditures. This is how a party pays for goods/services to benefit a candidate’s general election (for example by paying campaign bills or coordinating campaign advertising) without triggering an “in-kind” contribution. Thus, while direct and in-kind contributions by parties are limited to $5,000, parties may spend up to $46,600 (in 2013 dollars) in coordinated expenditures per House race. This is nothing new. However, our hypothetical JFC donor—who would normally bump up against aggregate limits—now could see that all four preferred candidates receive the full benefit of coordinated expenditures.

The lower court worried that “the candidate who knows the coordinated expenditure funding derives from that single large check … will know precisely where to lay the wreath of gratitude.” But the Supreme Court might decide, notwithstanding these concerns, that the caps are unconstitutional under the First Amendment.

Candidates regularly jockey for coordinated money. It is unclear how that process will change, but it will change if the Court strikes down the limits. Candidates therefore should have a plan in place to tap any new resources that become available.

Candidate-Specific PACs. Candidates cannot establish multiple committees to receive multiple $2,600 contributions. Nor can donors earmark a PAC contribution for a particular candidate if the donor has already maxed out contributions to that candidate. However, nothing prevents a donor from making $5,000 contributions to various PACs that the donor hopes will contribute to his/her preferred candidates. Regulations merely prevent contributions given “with the knowledge that a substantial portion will be contributed to that candidate.”

With aggregate limits, it does not make much sense to test that boundary or attempt to maximize the multiplication effect of PACs. For example, it would probably not be worth the time or effort to establish only a handful of PACs and keep track of various donors’ contribution capacities. In particular, it would be cumbersome to track what amounts donors gave to what federal candidates, evaluate how much “cap room” they have left, and strategically direct their remaining contribution amounts to a handful of candidate-friendly PACs.

But without any caps whatsoever, it may be tempting to establish potentially dozens of PACs that can be expected to support certain candidates. Lawyers will then be asked by clients—likely to be donors or past aides of those candidates who are suddenly interested in forming an array of innocuous-sounding organizations—how much distance they must maintain from a particular campaign. The implicit goal would be to create a network of PACs, “independently” run by unaffiliated volunteers but who can reliably be counted upon to support a particular candidate. The effect, defenders of the aggregate caps worry, will be that donors circumvent the base contribution limits by exponentially making PACs contributions in a way not previously possible.

These are just two examples of what a post-McCutcheon world might look like. While some may think the sky is falling, take solace: myriad prophylactic measures will survive this ruling. Earmarking prohibitions, enforced by the FEC, will still be in place. Contributions and expenditures will be disclosed. And watchdogs can still be expected to shine a light on suspicious activity.

Whether the sea change brought about by McCutcheon will undermine the campaign finance system is ultimately for Congress to decide. In the meantime, however, candidates may want to prepare for this potential change now or risk being at a competitive disadvantage when the Supreme Court’s decision is rendered next year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Snell & Wilmer | Attorney Advertising

Written by:

Snell & Wilmer

Snell & Wilmer on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.