Back to document

Political nonprofit has tough road ahead in challenging new disclosure rules

By Douglas Lee
Special to freedomforum.org

09.13.00

"Free speech," it seems, is becoming as much an oxymoron as "old news" and "plastic glasses."

Even in a marketplace of ideas that, thanks to the Internet, features more speakers than ever before, the speakers most likely to be heard still are those who speak the loudest. And, at least in the political arena, a speaker's volume is directly related to how much he or she is willing to spend.

Recognizing that the right to freely speak in politics is not necessarily the right to speak freely, Congress has passed several campaign-finance laws designed to prevent the loudest speakers from dominating the debate. Invariably, however, these laws raise troubling First Amendment questions. The most recent law is no exception.

Enacted July 1, this most recent attempt to cleanse political speech nullified a provision of the tax code that had allowed tax-exempt groups to pay for advertising with funds raised from undisclosed donors. One such political nonprofit was Citizens for Better Medicare, which was singled out by President Clinton when he signed the legislation. According to Clinton, this group sponsored an advertising blitz against a Clinton plan to provide Medicare prescription benefits, without disclosing that the majority of its funds came from the pharmaceutical industry.

Under the new law, these groups, if they raise at least $25,000 a year, must report contributions of $200 or more and spending of $500 or more. Their reports are due quarterly, plus immediately before an election.

Concerned that these reporting requirements will infringe upon the rights of speakers who wish to remain anonymous, a Republican group in Mobile, Ala., recently challenged the bill in federal court. The group, the National Federation of Republican Assemblies, claims that the Internal Revenue Service will use the law to invade the privacy of tax-exempt groups and the donors who support them.

"They'll come after organizations, demand records, put liens on funds and put you out of business," NFRA President Steve Frank told the Associated Press. "If you hold a PAC, then every one of your other committees are now open to the eyes of the IRS. That's what the danger is. The problem is when you try to use government to fix a problem, you create a bigger one."

NFRA and other groups are right to be concerned about the new legislation's chilling effect on speakers who prefer to remain anonymous. In McIntyre v. Ohio Elections Commission, the U.S. Supreme Court recognized that, absent speech that is false or misleading, speakers have a right to remain anonymous. The court also noted that anonymous speakers have played important roles in local and national political debates.

Nevertheless, the NFRA challenge to the new law likely will fail. Since its 1976 decision in Buckley v. Valeo, the court has permitted Congress to tread upon First Amendment rights when regulating campaign finances. In Buckley and California Medical Association v. FEC, for example, the court has upheld limits on contributions to candidates and political action committees. These limits are constitutional, the court has said, because the government has a compelling interest in preventing corruption and the appearance of corruption.

In challenging the new law, NFRA undoubtedly will cite the court's 1999 decision in Buckley v. American Constitutional Law Foundation, in which the court struck down several provisions of a Colorado law that required people circulating petitions to wear name badges and file detailed reports about themselves and their salaries. The court in that case held that regulations like these "drastically reduce" the number of people willing to circulate petitions and therefore unconstitutionally discourage political speech. The new disclosure law, NFRA likely will argue, is similarly unconstitutional because it requires people to surrender their anonymity in order to contribute to political causes.

Traditionally, however, the court has not been troubled by campaign-finance laws that require disclosure of contributors. Indeed, in Buckley in 1976, the court upheld disclosure rules, saying that disclosure was vital to the government's interest in preventing corruption. Five years later, in Citizens Against Rent Control v. Berkeley, the court relied on disclosure rules in striking down a California law that limited contributions to committees formed to support or oppose ballot measures. These contribution limits were not justified, the court said, because the disclosure requirements eliminated any "risk that the voters will be in doubt as to the identity of those whose money supports or opposes a given ballot measure."

Under this analysis, disclosure requirements are an important safeguard which reduce the need for more stifling campaign-finance regulation. While these requirements surely discourage some participation in the political process, the alternative — a system that limits both contributions and spending — would more directly threaten the First Amendment. Given this choice, courts will sacrifice the interests of anonymous speakers every time.