Arlington, Va.—What is the proper role of government in America when it comes to political campaigns?  A lawsuit to be argued before the U.S. Supreme Court on March 28, 2011, seeks to answer just that question.

Must government remain neutral when it comes to advancing one candidate over another?

Or may government put its thumb on the scale in favor of certain candidates by funding their campaigns and creating such financial disincentives to speak that opponents of government-backed candidates remain silent rather than trigger more funds to their rivals?

The latter is what is taking place in Arizona and that is why the Institute for Justice and the Goldwater Institute filed federal lawsuits seeking to strike down a key portion of Arizona’s “Clean Elections” Act, which unconstitutionally expands government involvement in American elections.

At issue in Arizona Free Enterprise Club’s Freedom Club PAC  v. Bennett, a case litigated by the Institute for Justice (and the similar case of McComish v. Bennett, litigated by the Goldwater Institute that was consolidated by the High Court), is whether the First Amendment forbids Arizona from giving government subsidies to publicly financed candidates based on the speech and spending of traditionally funded candidates—those who raise campaign funds through voluntary private contributions rather than through Arizona’s program of welfare for politicians—and their supporters.  The “Clean Elections” Act cancels out the free speech of opponents to government-funded candidates when these traditionally funded candidates and their supporters spend an amount higher than an artificial government-set limit.

In its brief filed yesterday (www.ij.org/AZFreedomClubBrief.pdf), the Institute for Justice is asking the High Court to reverse a Ninth U.S. Circuit Court of Appeals decision, which upheld Arizona’s law.  (A detailed backgrounder on this case is available at:  http://www.ij.org/1228.  A short video explaining the “Clean Election” system may be viewed at: www.ij.org/AZCleanElectionsVideo.)

Bill Maurer, lead attorney for the Institute for Justice, said, “The central question in this case is whether the government may coerce independent expenditure groups and privately financed candidates in Arizona into limiting their speech during political campaigns.  The Court’s decision on this matter will determine whether the government may—in order to promote its publicly financed campaigns—burden the speech of those who do not, or cannot, use public money to fund their political speech.  It will decide whether the government may ‘level the playing field’ among political actors by creating various disincentives for speakers to fully and unreservedly exercise their First Amendment rights.”

Chip Mellor, president of the Institute for Justice, said, “The Clean Elections Act creates an abbreviated Miranda Right for traditionally funded candidates:  They have the right to remain silent, any speech they may undertake can and will be countered by government funding.”

Here is how Arizona’s “Clean Elections” Act works once an independent group supporting a traditionally funded candidate or the candidate herself spends enough to trigger matching funds for government-funded candidates.  When an independent group or candidate spends an additional $10,000 on behalf of a privately financed candidate or against a publicly financed candidate, that spending results in an almost $10,000 governmental subsidy to each publicly financed candidate in the race.  (If more than one taxpayer-funded candidate is running against the traditional candidate, each of those government-funded candidates cashes in, so a single traditional candidate running against three government-funded candidates could see a $10,000 media buy turned into nearly $30,000 for her opponents.)  In contrast, a $10,000 independent expenditure on behalf of a publicly financed candidate results in no government money going to any privately financed candidates in that race, but would trigger matching funds to any other publicly financed candidates in the race.

These burdens aren’t theoretical.  In 2002, for example, when Matt Salmon ran as a privately financed Republican candidate for governor, the Democratic Party spent $1 million on independent expenditures against Salmon.  Those expenditures did not count toward the publicly financed Democratic candidate’s spending limit and did not trigger matching funds to Salmon.  In contrast, when the Republican Party spent $330,000 to promote Salmon’s campaign, the government gave each of Salmon’s publicly funded opponents $330,000 in matching funds.  Salmon also held a fundraiser with President Bush that raised $750,000.  After expenses, including meals and costs for Air Force One, his campaign netted only $500,000.  Nonetheless, the Matching Funds Provision triggered $750,000 to each of his two opponents.  A spokesperson for the Democratic campaign stated, “I’m not sure the president realizes he’s raising money for both candidates,” and referred to the event as a “dual fundraiser.”  Consequently, Club for Growth director Steve Moore told Salmon during the campaign that because of matching funds, the Club would not spend any money supporting his candidacy.

Even when traditionally financed candidates stop speaking to avoid sending matching funds to their opponents, Arizona’s law still penalizes their decision to reject government financing.  It does this by sending matching funds to government-funded candidates when groups that operate completely independently of a candidate support the traditionally funded candidate by spending money to speak out.  In his 2008 primary election for the House of Representatives, Rick Murphy did not send out any mail pieces in order to conserve his resources for the general election—where he accurately anticipated being massively outspent by his three government-financed opponents.  Although Murphy did not fundraise during the 2008 general election—because doing so would have triggered almost $3 in matching funds for every $1 he raised—he could not prevent groups from spending money to support him.  Accordingly, when a group made an independent expenditure of $3,627 to support his candidacy, each of his publicly funded opponents received a check for nearly the same amount.  As a result, the independent group’s small expenditure triggered more than $10,000 used to oppose Murphy’s election.

The “Clean Elections” scheme also alters the timing of speech because candidates delay political activity until matching funds can be of little use to opponents—that is, they must speak more towards the end of the campaign so that matching funds arrive too late to be used by the publicly financed candidate.  Dr. David Primo of the Political Science Department of the University of Rochester confirmed the experience of participating candidates delaying speech, finding that the Matching Funds Provision alters the timing of speech especially in competitive races where matching funds matter most.  Dr. Primo found that in races where matching funds are triggered, candidates change the timing of their fundraising activities and their expenditures.  In Arizona, fundraising and campaign spending on political speech by privately financed candidates tends to occur during the very end of the campaign and, in the general election, even after the campaign so that matching funds cannot affect the outcome.  (Primo’s research brief is available at:  http://www.ij.org/3466.)

“This law allows the government to place its thumb on the scale in favor of politicians who receive government subsidies,” said Maurer.  “The government can’t give a fundraising advantage to one candidate at the expense of his or her opponents.  The point of the Clean Elections Act is to limit spending on speech—and thus limit political speech—and that is exactly what it does.”

The Ninth Circuit’s decision was so inconsistent with protections for free speech in campaigns that since the decision came out on May 21, 2010, two federal appellate courts—the Second Circuit and the Eleventh Circuit—have refused to follow it.  In those cases, the courts struck down matching funds systems in Connecticut and Florida, respectively.

The issue of whether these kinds of matching funds systems are constitutional is one of national importance.  In addition to Arizona, Maine also provides public financing and matching funds for all state offices.  Seven other states provide public financing and matching funds for some state offices.  Many more states have considered adding such a system.  Moreover, the expansion of these systems is a top priority for well-funded, politically influential special interest groups who want more government involvement in elections.  Such systems, which seek to replace America’s traditional system of private support for politicians with a new system that is government directed and funded, are becoming more commonplace and proponents seek to make it the norm in all U.S. elections.

Arizona’s system suppresses political activity while providing none of the grandiose benefits promised by its proponents.  Paul Avelar, staff attorney at the IJ Arizona Chapter, noted, “For a decade, this Act has warped Arizona’s politics and produced a system where our elections are more partisan and dirtier than ever.  Half of Arizona’s voters don’t know the system exists, and those who are aware of it don’t understand it.  Rather than ‘cleaning up’ Arizona’s elections, all the system has done is create complex rules to regulate political activity, suppress speech, and further distance politicians from the people they are supposed to represent.”

The Institute for Justice defends First Amendment freedoms and challenges burdensome campaign finance laws nationwide.  IJ recently won a landmark victory for free speech in federal court on behalf of SpeechNow.org, an independent group that opposes or supports candidates on the basis of their stand on free speech.  IJ also won recent victories for free speech in Florida when a federal judge struck down the state’s broadest-in-the-nation “electioneering communications” law and in Washington when it stopped an attempt to use the state’s campaign finance laws to regulate talk-radio commentary about a ballot issue.