Transcript

IN THE SUPREME COURT OF THE UNITED STATES

FEDERAL ELECTION COMMISSION, Petitioner, v. COLORADO REPUBLICAN FEDERAL CAMPAIGN COMMITTEE.

No. 00-191

February 28, 2001

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:16 a.m.

APPEARANCES: BARBARA D. UNDERWOOD, ESQ., Acting Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Petitioner.

JAN W. BARAN, ESQ., Washington, D.C.; on behalf of the Respondent.

PROCEEDINGS

(11:16 a.m.)

CHIEF JUSTICE REHNQUIST: We'll hear argument next in No. 00-191, Federal Election Commission v. Colorado Republican Federal Campaign Committee.

General Underwood, I'm sorry, I called you General Greenwood before.

MS. UNDERWOOD: Thank you.

QUESTION: I now recognize you by your true name.

ORAL ARGUMENT OF BARBARA D. UNDERWOOD

ON BEHALF OF THE PETITIONER

MS. UNDERWOOD: Mr. Chief Justice, and may it please the Court:

Twenty-five years ago in Buckley this Court held that limits on campaign contributions can be more easily justified under the First Amendment than limits on campaign expenditures, and noted that a coordinated expenditure, such as one made at the candidate's request, is treated as a contribution for this purpose.

Nothing in the First Amendment requires an exemption from these rules for political parties. Congress recognized that parties are different from other political actors and gave them somewhat higher contribution limits and much higher limits on coordinated expenditures.

QUESTION: I think that you do have a problem in sustaining this part of the congressional act because the basis for sustaining the limits on contributions is the corruption rationale that has been in our cases for, you know, 50, 60 years. But it's very difficult, at least for me to see how receiving a contribution would corrupt a political party.

MS. UNDERWOOD: Political parties present the risk -- a risk of the corruption that justifies limits on contributions and coordinated expenditures in two ways. First, because they can receive contributions in much larger amounts than other actors and then redistribute them to candidates, they provide a conduit for other actors to circumvent the contribution limits of the act. Other donors can make large contributions to the party which, though not technically, literally earmarked, and therefore not in violation of the specific earmarking provision of the statute, nevertheless through informal and well understood arrangements find their way through the party to the candidate and create the same risk or appearance of corruption as a direct contribution to the candidate.

QUESTION: Well, if those informal arrangements are that actually this money is given to the party but we know you're going to give it to candidate X, certainly the Congress can prohibit that. Perhaps it already has.

MS. UNDERWOOD: Congress has prohibited earmarking, but the Court recognized in Buckley itself that a prohibition on earmarking cannot reach, cannot be effective to reach the whole problem of, in effect, using an intermediary to exceed the limits, and the reason is for one thing an earmarking arrangement requires something more rigid than what would usually happen. I mean, it's not earmarking, for example, if -- within the meaning of the statute, if a contributor understands that there is a good likelihood that the money will be passed by the party to the candidate, although there might be reasons why it would not. In that case it's not earmarking, but it still has the prospect of being regarded by the candidate and by the donor as virtually a contribution.

QUESTION: Let me get this straight. I can understand why there's, you know, corruption if the donor gives the candidate money and there's a quid pro quo, the candidate says I'll vote for your bill. But you allow individuals to spend $100,000 in their own advertising for this candidate, and it says at the bottom of the ad, you know, paid for by Schwartz, and the candidate knows Schwartz has bought hundreds of thousands of dollars of television advertising, that is perfectly okay, right?

MS. UNDERWOOD: That's the distinction between --

QUESTION: But if Schwartz gives $100,000 to the Democratic Party, we're suddenly worried that the candidate is going to be corrupted because Schwartz gave $100,000? I can't understand that. That seems to me so fanciful to think that the one situation presents, you know, an opportunity for corruption and the other doesn't. You're much better off if you want to corrupt Schwartz, spending the money on an advertisement that says presented, you know, presented by XYZ Corporation.

MS. UNDERWOOD: Well, the Court in Buckley had to balance a number of different concerns in arriving at its distinction between independent expenditures, which will certainly often please the candidate, but which it regarded as sufficiently important in First Amendment terms so that limiting them to protect against possible indirect corruption was not permissible on the one hand, and contributions, direct contributions to the candidate, which the Court saw as having a lesser First Amendment component on -- importance on one side --

QUESTION: Right.

MS. UNDERWOOD: -- and a greater potential for corruption on the other. That distinction having been made, coordinated expenditures are the functional equivalent of contributions. When you pay somebody's bills, it's no different from handing them a check, and that's what we have here.

Now, the additional point that I was addressing was the use of an intermediary to make the, that is, if we, if we have a prohibition on contributions and coordinated -- not a prohibition, a limitation on contributions and coordinated expenditures to protect against corruption, then it can be easily circumvented through intermediaries, and there are only a few ways to solve the intermediary problem. One of them is to limit contributions to the intermediary, in this case the party. Another is to limit contributions by the intermediary to the candidate. That would be from the party to the candidate. And the third is to try to prevent earmarking directly. Each has its pros and cons, and the statute uses each of them to some degree to complement the other.

This Court recognized in Buckley that it's impossible to police earmarking sufficiently because of informal and nonrigid arrangements. The approach of limiting contributions to the party so that it can't operate as a pass-through, would starve the party of needed funds. It has disadvantages of that sort. There is a limitation, but it's a high limitation.

QUESTION: But what does the party use its limited funds for? I mean, the whole purpose of a party is to support candidates, and to say that the party can't use its funds for candidates is to say that you know, parties don't -- cannot play a significant part in American politics.

MS. UNDERWOOD: The section --

QUESTION: And you talk about the significant First Amendment value of an individual being able to spend his money on an ad for the candidate, there is significant First Amendment value in that. It is not clear to me that there is any less First Amendment value in people being able to band together in political parties and in unison support political candidates. That's a very important First Amendment value, too, and you're saying they can't do that.

MS. UNDERWOOD: Well, no.

QUESTION: Well, you're saying they can do it to a very limited degree, although rich individuals can take out their own television ads, a party which gets contributions from Joe Sixpack in five and ten dollar amounts cannot do that to support a candidate. I mean --

MS. UNDERWOOD: No, the party can do it in unlimited amounts when it is making the same kind of independent expenditure that the Court held was entirely protected in Buckley and in --

QUESTION: I mean, we're only talking here about the coordinated hard money, so to speak, party expenditures on behalf of candidates.

MS. UNDERWOOD: That's correct. That's correct.

QUESTION: That's such a tiny segment of the problem. We're not talking about soft money here, right?

MS. UNDERWOOD: That's right.

QUESTION: Not talking about general limits on contributions?

MS. UNDERWOOD: That's right. This is a small segment of the problem.

QUESTION: Okay.

MS. UNDERWOOD: It is a segment --

QUESTION: Given that it's a small segment of the problem, what showing is there that there are enough problems with this small segment of corruption that justifies the limit? I mean, it's a little --

MS. UNDERWOOD: Well --

QUESTION: I don't know quite how to deal with it. It's such a small segment of the problem. Now what's the justification here for this limit?

MS. UNDERWOOD: Well, the evidence that there is a risk of intermediaries, parties in particular, but intermediaries in general, aiding donors to circumvent statutory limits is found in several places.

First of all, in the Senate debate in 1973, and we discuss this at pages 28 and 29 of our brief, several Senators made -- expressly observed that a party can act as a conduit for an individual who has reached his contribution limit.

QUESTION: So the danger is that contributors to political parties are using those contributions to somehow corrupt the candidates?

MS. UNDERWOOD: Correct.

QUESTION: And that's kind of an indirect sort of a thing?

MS. UNDERWOOD: That's right. That the anti-earmarking provision itself is evidence of Congress' concern about that, about the evasion of the limits on donors.

QUESTION: And you say the earmarking provision isn't sufficient?

MS. UNDERWOOD: That's correct.

QUESTION: And where do we look for this evidence of concern? To stray remarks by some Members of Congress or is there anything else?

MS. UNDERWOOD: Well, there are remarks by Members of Congress. There is, better perhaps even than anything congressional -- anything that was said, the fact that Congress enacted an anti-earmarking provision which shows that it was concerned about the danger that donor A would avoid his -- the limit that he could contribute to candidate C by passing it through B.

QUESTION: But you think that's not sufficient?

MS. UNDERWOOD: That's correct. And this Court said it wasn't sufficient in Buckley, and observed that that's part of why -- part of what justifies the limit on individual contributions in a campaign, the total limit, not --

QUESTION: Is the argument, General Underwood, it is not that the party is corrupted, I take it, because that would seem just fatuous, but the party is kind of a means to corrupting the candidate himself?

MS. UNDERWOOD: Yes. There are two arguments about the risk of corruption. At the moment the argument that I'm talking bout is that the party is a means -- that the contribution limits on individual donors are justified as a means of preventing corruption and the risk of corruption donor to candidate, and that the party, as an intermediary, can facilitate, can essentially undermine that mechanism that the individuals can exceed their contribution limits.

QUESTION: So it's a prophylactic rule, kind of?

MS. UNDERWOOD: Well, I would say -- I wouldn't call it a prophylactic rule. I would call it an amplification or a support or a backup to the anti-earmarking provision. It's addressed at the same problem that the earmarking provision is addressed at.

QUESTION: But it covers much more than earmarked funds.

MS. UNDERWOOD: But it covered --

QUESTION: It covers any funds that the party has, so it is prophylactic. It's excluding the party from doing many things that wouldn't be corrupting, right?

MS. UNDERWOOD: Well, no more thing that the contribution --

QUESTION: Because this is the fear that some of them might be.

MS. UNDERWOOD: Than the direct contribution limit.

QUESTION: Sure, but that's prophylactic, too, I suppose.

MS. UNDERWOOD: Well --

QUESTION: Do you agree with --

MS. UNDERWOOD: Yes, it is not the case -- I'm sorry, Justice Stevens.

QUESTION: I was just going to ask you, do you agree with the proposition, or to what extent do you disagree with the proposition that the basic function of the party is to elect candidates and therefore a limitation on the ability of the party to give money to candidates pretty well disables the party from doing what it was created to do?

MS. UNDERWOOD: I don't think it disables it. I would agree that it -- that the function of the party is in large part to elect candidates, and that a limitation -- I guess any limitation on it -- but I -- if it were prohibited from making any contributions to candidates and if it were prohibited from making independent expenditures, it couldn't accomplish its purposes.

There is no limit on its independent expenditures. There is no limit on a large variety of party building and get-out-the-vote and message-communicating activities, and there is a not -- there is a not -- there is a limit, the limit on contributions to candidates, and the limit on coordinated expenditures which are a form of contributions is not disabling. It's quite a bit higher than the limit on any other contributor, recognizing the role of the party, but just attempting to put a ceiling on it. It's a limit that's adjusted. It's basically --

QUESTION: So it serves free speech for the party to spend money on behalf of a candidate without discussing with that candidate the candidate's views and to make sure that the candidate's campaign is the same as the party. It serves free speech if the party doesn't coordinate with the person that it's backing.

MS. UNDERWOOD: Coordinated expenditures have --

QUESTION: It's a very strange, very strange calculus.

MS. UNDERWOOD: Coordinated expenditure has a technical meaning here, and it doesn't violate the prohibition on coordinated expenditure for the party to do something that is consistent with the candidate's campaign.

What the coordinated expenditure prohibition was designed to prohibit was the candidate essentially paying the media bills for the candidate, and the record contains evidence that the over -- that the predominant forum that coordinated expenditures take is exactly that.

QUESTION: What if, what if the party consults the candidate and says, you know, we're thinking of running a series of issue ads, and we're going to say you're a big supporter of gun control? Now you that will help you or hurt you? We don't want to do it if you think it will hurt you. What about it? And he says, you know, one or the other, it doesn't matter. Would that not be a coordinated expenditure?

MS. UNDERWOOD: I'm not at all sure that it would be, Justice Scalia. There may be difficult cases at the margin, as the donor takes more initiative and the candidate less.

QUESTION: But that's a pretty fundamental question. I don't think that's a marginal question. This question has to come up all the time. Can the party consult the candidate at least on what issues the candidate wants the party to address in its advertising? It sounds like coordination to me.

MS. UNDERWOOD: Coordination isn't even a statutory term, but the Federal Election Commission has been developing regulations to try and make more precise exactly what is prohibited here. It is clear, it has been clear from the outset of the statute that the purpose of the prohibition here, it's a permission for independent expenditures. The limitation on coordinated expenditures is to prevent the candidate, prevent anyone -- party or anyone else -- from making contributions in the form of paying the candidate's bills.

QUESTION: All right. Let's say that this is not a coordinated expense. Are the parties allowed to do it? Which would mean that a fat cat industrialist bent on corrupting the candidate could write to the candidate a letter and say, you know, I'm giving $100,000 to the Democratic National Committee to spend on gun control issue advertising, which I am sure will help your campaign.

MS. UNDERWOOD: Well, that's a feature of any independent expenditure. It is so --

QUESTION: No, but what I'm saying is, once you allow that, doesn't that have the same corruptive effect as what you're trying to prohibit?

MS. UNDERWOOD: No. Although these things are all a matter of degree, it is the case, I mean, it's -- it is the case that Congress thought that contributions over a certain limit created a potential for corruption, and that to make that enforceable, it had to prohibit as well or limit as well things that are the functional equivalent of contributions, such as --

QUESTION: But it's also the case that the Congress under the statute that you're defending forces exactly the type of indirect support that Justice Scalia has just described instead of having it out in the open where everybody knows who is supporting who and who is paying money for whom. That seems to me just completely contrary to the whole idea of the truth that the First Amendment is designed to vindicate.

MS. UNDERWOOD: It may be that a narrower definition of coordinated expenditures, then, seems to be sort of in the air at the moment is what would serve this method, this problem best, and the Federal Election Commission at the moment has under advisement, is considering rewriting its -- considering new regulations regarding the definition.

QUESTION: No, we're assuming -- I think we were assuming a narrow definition of coordinated expenses. We were assuming that the parties spending money on gun control advertising, after consulting with the candidate about that, is not a coordinated expense, so the party would be able to do it. We were assuming a narrow definition. And the narrower the definition is, the more it raises the same problems of flow-through to the candidate from identified malefactors of great wealth that, that you're trying to prohibit.

MS. UNDERWOOD: Well, Congress was trying to strike a balance here in the light of what this Court said it could and couldn't do in respect of, on the one hand, protecting the speech interests of contributors, of spenders, of independent spending and on the other hand attempting to guard against the risk, the reality and the appearance of corruption which at its narrowest is quid pro quo and moving out from that is implicit, excessive compliance that is like a quid pro quo.

QUESTION: Did Congress, having made the -- drawn the line where it did to whatever expertise that branch of government has with political campaigns and campaign spending?

MS. UNDERWOOD: Yes. It has been observed before that Congress perhaps -- well, that Congress is fully familiar with the practices of campaign expenditures and campaign fund-raising and with the risks and benefits that various forms of fund-raising have and that having evaluated all of those risks and benefits and taken guidance from these courts, the distinctions that this Court has drawn, its effort to, to make those judgments is entitled at least to some, some credit.

QUESTION: Do we owe any deference to common sense in recognizing that when Congress draws up campaign funding legislation, it is more likely to draw up a system that favors incumbents and is it not true that this rule of course favors incumbents because the one who suffers the most when he can't get significant funding from the party is the new candidate, the unknown face who is running against an incumbent? And that's what happens.

MS. UNDERWOOD: I think if we -- I think if we --

QUESTION: It doesn't surprise me that Congress would not be terribly upset by this restriction. It favors incumbents all the time.

MS. UNDERWOOD: Well, common sense points in several directions. I think that the most basic common sense proposition here is that so long as there's a limit on what donors can give to a candidate, they will be trying to find ways to get around it, and one good way is to use intermediaries that are not subject to the same limits and that Congress recognized that and attempted to address it without crippling other important functions by putting a limit on the contributions, by not prohibiting, but putting a limit on the contributions and coordinated expenditures that parties can make to candidates.

There is a second corruption concern, and that is the concern, not that the party would act as a conduit, but that the party leaders in charge of dispensing funds would, in effect, exact -- pay for votes, would themselves tie money to legislative actions. There is no direct evidence in the record of that happening, but it is the case that if a candidate's own family can be subject to a prohibition on contributions in order to protect corruption, there is no such thing as being too close to corrupt, and --

QUESTION: How does the record on the potential for corruption differ here than what was before the Court in Nixon against, what, Shrink?

MS. UNDERWOOD: Well, in Nixon against Shrink -- Shrink, Missouri Political Action Committee, the question was whether the corruption, the potential for corruption that justified the Federal statute also justified the State statute, and the court said that it wasn't necessary to develop new evidence of essentially the same, essentially the same problem.

QUESTION: That was -- Shrink, Missouri, involved contribution limits, did it not?

MS. UNDERWOOD: Yes, it does. But so, in fact, does this case, in that coordinated expenditures are, in effect, contributions or if this Court were to conclude that they are not, then it would be decided --

QUESTION: But your corruption rationale is much less if you're talking about a big wheel or, you know, a fat cat donating a lot of money to a candidate, the idea is the fat cat is going to get something in return, but the idea that a political party donating to a candidate is going to get something in return just doesn't have the same ring to it.

MS. UNDERWOOD: Well, as I suggested, it does, however, I think, have the same ring to say that a political party can facilitate the very transaction that you were just describing; that is, the fat cat now not giving money directly to the candidate because he's barred from doing so, but giving it to the party to transmit to the candidate with everybody understanding exactly what's going on.

QUESTION: But that's a form of a prophylactic rule which we have never sustained in the First Amendment context, I don't think.

MS. UNDERWOOD: Well I don't think it's any more prophylactic than the prohibition on contributions in the first place. Not every contribution, in fact, is corrupt, but a limit -- it's not a prohibition. A limit on contributions is designed to minimize the risk of --

QUESTION: But it depends on how much you're hurting the person that's being prohibited. I just don't agree with you that, my goodness, if we can do it to families we can certainly do it to political parties. I mean, with few exceptions, the whole reason for being of a family is not to get the father or mother elected to office, and that is the whole -- that is the whole reason for being of a political party, and to say that it can't do that in the most and perhaps the only effective way, by coordinating its expenditures with the very candidate is a really great impingement upon the functioning of the party, unlike the family.

MS. UNDERWOOD: Well, I think the function of the family is to advance the interests of its members, but I would like to reserve the rest of my time for rebuttal.

QUESTION: Thank you, General Greenwood. In my elementary school there was a girl named Barbara Greenwood.

MS. UNDERWOOD: Well, I hope you held her in high regard.

QUESTION: Mr. Baran.

QUESTION: Chief, I'm Scalia.

ORAL ARGUMENT OF JAN W. BARAN

ON BEHALF OF THE RESPONDENT

MR. BARAN: Thank you, Mr. Chief Justice, and may it please the Court, the statute before you makes it a crime for a political party to send one letter to every voter in the State if the candidate requested that letter or collaborated in its preparation.

The issue before the Court is whether this clear, direct, and substantial infringement on political parties' First Amendment rights is justified, and based on this Court's precedent, the legislative record, and the factual record developed in this lengthy case, the answer must be no.

The record demonstrates that this limit directly and substantially suppresses political party speech and does not prevent any discernible form of corruption. Moreover, this particular Federal limit stands in contrast to the majority of State laws which may restrict contributions to political parties, and contributions to candidates do not restrict the amount of party support that can be received by candidates themselves with State elections.

The money that the party can spend for the prohibition --

QUESTION: Excuse me. You say the majority of State laws. How many states have a prohibition of this sort, do you know?

MR. BARAN: According to the amicus brief of the attorneys general, there are 17 current states that have such a restriction of some form. There used to be 20 states. Three have repealed these restrictions, most recently Colorado last year and also our largest State, the State of California in November of 2000 had a referendum and over 60 percent of the voters of California supported that proposition, which was number 34, and that proposition placed numerous restrictions on contributions to candidates, contributions to political parties, but at the same time repealed a short-lived restriction that the State of California had on the amount of contributions or expenditures that parties could make in support of candidates for office in the State of California.

The money that the parties can use to support their candidates for the House and the Senate and even for President has to be the so-called hard money. The District Court noted in its opinion that the majority of this so-called hard money that the national parties raise comes in sums of less than $100.

It is true that there are contribution limits that are somewhat higher for parties and for candidates. For my client, the Colorado Republican Party, that limit is $5,000 per year. And for national party committees the limit on individuals is a maximum of $20,000 a year.

I believe the record shows that there are very few $20,000 contributions --

QUESTION: Now, if you win, and I guess this is their main rationale, what they're saying, if you win, to give a practical example, if you have a family of four, I guess candidate X who is running for the Senate, can take $4,000. And then if you win, instead of $4,000, he could take $80,000 through the party.

All right,so if you assume a Senate race that costs $4 million, let's say, the difference would be between whether you had to find 50 willing donors with families or a thousand. So couldn't Congress conclude that where a Senator is dependent upon 50 families with $80,000 each, the appearance, anyway, that the Senator will be quite beholden to those 50 is far greater than where he must, in fact, get that $4 million from at least a thousand? Now, that it seems to me is what the government's argument boils down to, and they're saying we never know about these corruption things or the appearance, but the difference between fifty families and a thousand families is as good as any.

MR. BARAN: Yes, Justice Breyer, that is my understanding of their argument. I would point out that everything you just described, assuming it was lawful and did not violate the antiearmarking provisions of the current statute, would be permissible under the current system with these limits, with these spending limits.

QUESTION: Because they limit the spending, as you just pointed out, to the party, to the candidate directly to a hundred and some odd thousand dollars. So it's a kind of compromise. But if you win this, the limitation's gone, and therefore the first thing a candidate does is he says to the 50 people who know him the best, thank you for the four. Now I'll tell you how you give me $76,000 more. Just write the check to the party, and I'll keep a tally, and so do they. And believe me, I'll know where it comes from.

MR. BARAN: I stand by my earlier answer, Justice Breyer, that that is possible under the existing system, that a candidate, taking your hypothetical, could say I don't want to raise contributions from a thousand people. I will simply go and collect the contributions you just described from a large family and direct it towards the party.

QUESTION: Isn't there then a limit on what the party can give him?

MR. BARAN: Yes, there is a limit. But they can do it within these spending limits.

QUESTION: Well, within that limit, right, but the different --

MR. BARAN: Within the spending limits. And if this practice is actually plausible, which I don't believe it is, surely there would be a single instance of this type of contribution practice that would have occurred in the last 25 years under these limits including in states with very sizable spending limitations on parties.

QUESTION: Well, I presume --

MR. BARAN: And there is none.

QUESTION: -- there are -- are there not instances in the record in which individuals who have contributed their maximum directly to the candidate have then made contributions to the political party? I mean, I assume that. There's no dispute that that has happened.

MR. BARAN: That is correct. Contributors do contribute to the party who have also contributed to candidates.

QUESTION: If that has happened, then exactly what Justice Breyer is describing can occur, but it occurs in comparatively piddling amounts as against what would be possible if you win this case.

MR. BARAN: I disagree, Justice Souter. The hypothetical that has been advanced here is that there is an incentive for candidates to go to individual contributors and urge them to donate money through the party without violating the anti-earmarking provisions in large sums of $5,000 or $20,000 in Justice Breyer's hypothetical.

QUESTION: That is the assumption --

MR. BARAN: There is no --

QUESTION: Why is that implausible?

MR. BARAN: I believe it's implausible because there is not a single instance of that having happened in the 25 years of the --

QUESTION: Well, I think we may be playing with words. There are instances of contributors to individuals who are also contributors to the party, and I suppose those instances do not stand out as outrageously obvious examples of, you know, something close to quid pro quo because the amounts are small. We're not able to interpret the things more finely than that, but it seems to me that the suggestion of the question is intuitively sound, and I don't know why it isn't intuitively sound. You're saying, well, it's not intuitively sound because we have no examples of what would go on if I won the case. And we don't have those examples because we have the current law in place.

MR. BARAN: No, Your Honor, I believe we have no examples because after 15 years of litigation in this case, including five-and-a-half years of discovery, including depositions of numerous party officials and elected officials, there's not a single instance of any contributor, any contributor giving any amount of money that is designated for a specific candidate.

QUESTION: I'm sorry, I knew that, but I may have read the newspapers with a cynical eye, but it seems what I read in the papers says that some candidates, anyway, write letters to their friends and say, now, write checks for X to me personally, then you max out. Now here's what you do next, write some checks to the party. Now at this level you max out again. Now here's what you do after that. You write some soft money checks, and there is no max.

Now, have I read the newspapers wrong or is that possibly practice in respect to some political candidates?

MR. BARAN: I think the newspapers also reflect that there are people who are pleading guilty and actually going to jail --

QUESTION: No, no, no, but --

MR. BARAN: -- for making earmarked or straw contributions.

QUESTION: No, I --

MR. BARAN: The record in this case, Justice Breyer, does not have an instance of that type of circumstance. It does support the proposition that when candidates are involved in helping their parties raise money, which they are involved in, they do so without such designations, without such promises that the money will be spent for them, and the record is very consistent that the political parties maintain control over whether to spend that money, how to spend it, and on whose behalf.

QUESTION: I see why we're -- is this the point of what I consider our miscommunication.

MR. BARAN: Okay.

QUESTION: I have not specified something. You're turning your answers on the fact that you can't earmark the, the circuitous route, and so for my assumptions to be correct, I have to be assuming a fact that's debatable, and that is that the tally system works approximately similar to earmarking, but on my assumption that that's factually true, we get to my questions, but on the assumption it's not factually true, then your answers are -- is that the point of disagreement?

MR. BARAN: I believe that is true.

QUESTION: Thank you.

MR. BARAN: I do think that is an assumption of a fact that I believe the record does not support.

QUESTION: Well, of course, unless there's earmarking, I suppose the opportunity of corruption is very little greater under what the regime would be without this prohibition than it is what the regime would be with it. I suppose any candidate would feel sympathetic to someone who was agreed to give $80,000 to the State party, which he knows will be used to support him even though not in coordination with him. Isn't there -- don't you think your candidates generally feel sympathetic to people who give a lot of money to the State committee, even under the current regime?

MR. BARAN: Yes, that they are --

QUESTION: Knowing that the State regime will spend a lot of money to help them in one way or another, coordinated or not?

MR. BARAN: Well, the record reflects that many candidates, primarily incumbent office holders, are very active in raising money for their parties. The record also shows that political parties are the only source of financial support in our system that do not primarily support incumbents. In fact, this past election we have experienced the phenomenon that more money is being donated to political parties from excess funds of incumbents who face virtually no competition in their reelection efforts than the amount of money that is actually being spent by political parties to support other incumbents who are in danger of losing reelection.

So we have a possibility here that the people that candidates should really be indebted to are incumbents who are relinquishing large sums of their own money to help their party elect challengers and open-seat candidates to join incumbents in the House or the Senate. And that is what this record shows. This record also shows that the money, the hard money that's being spent is being spent on party speech. Over 90 percent of the money that's subject to these spending limits is for direct mail and television and radio. Now, that's as of 1997. I believe that percentage has increased since we took all of those facts back in 1997. The record also shows that the political parties like to control how they are going to spend their money. They don't like to just give a pot of money over to the candidates. The record shows in the testimony of Donald Dane, Colorado Republican Chairman, that we don't want to do that. We don't know how our money is going to be spent. We have so much difficulty raising this money, why would we want to do that. We want to decide how it's going to be spent, for what purpose and whether or not this was a good use of our limited resources, and that is actually what the practical effect is of striking down this spending limit is, I think there is a misconception --

QUESTION: What is the practical effect of striking it down? Is it significant or not? I'm trying to figure it out.

MR. BARAN: I think it is significant in the following two respects, Justice O'Connor. Number one, it takes away from the Government and places back to the political parties the discretion as to how best to use these limited resources in the form of hard money. It doesn't do a party any good to have a right to spend $3 million under this limit in California if there isn't a competitive race there for the Senate and at the same time, there might be an extremely competitive race in the State of Colorado where the limit is 200 or $300,000, depending on the formula, so the party has whatever money has been voluntarily contributed to it under all of those other restrictions. It's hard money. They decide well, we want to spend perhaps $500,000 in Colorado, or we want to spend a greater amount of money in California if we did have a competitive race.

QUESTION: You can do it as long as it's not coordinated. What is the -- why does the restriction on coordination give you a problem?

MR. BARAN: Well, the record that we developed after this Court's consideration in 1996 deals with the exercise of political parties of making independent expenditures in the '96 election, and what they experienced were occasions where, by spending their money without consultation with their own candidates, they made some mistakes, political mistakes. They contradicted their candidates. They may have mischaracterized their position, and the result is, that in order for them to exercise their full First Amendment rights by spending their money independently and ripping themselves away from their indispensable candidates, they actually run the risk of harming the candidates who are so important to their own electoral success.

Now, with respect to any other independent expenditure, of course, the jurisprudence here says that that's a risk that any individual or political committee runs by --

QUESTION: I'm not sure how important this is, but what you just said suggests this to me, that there sometimes is a difference of approach to an election between the candidate and the party and if you allow this statute to be held unconstitutional, you would allow the party to exercise its influence to cause the candidate to shift its views to accept those of the party. Isn't that one of the -- one of the factors that's involved here?

MR. BARAN: Well, there is a fundamental, a fundamental question of what is the right of a political party in terms of placing conditions on how they are going to spend their money or support candidates. There is no reason why a party could not say we will only financially support candidates who agree with our party platform to cut taxes. And if they decide not to support a candidate who doesn't adhere to that platform plank, then presumably that is their right to do so. It's not corrupt.

QUESTION: Mr. Baran, you were going to give two responses to Justice O'Connor. You said there were two reasons. I was waiting for the second one but just before we get too far away from it, what was the second?

MR. BARAN: The practical effect of striking down these limits in addition to giving parties their discretion as to how best to spend their limited resources is that I believe the other practical effect is that it will provide an incentive for political parties to raise more hard money, which is presumably the beneficial money that we have in our process.

Right now, there is actually a perverse effect of these limits, rather than preventing corruption, arguably, they are promoting corruption because the limits tell a party chairman or fund-raiser it really doesn't matter how much hard money you raise. You are not going to be able to spend more than this amount to promote your candidates. So a party leader says, well, why should I devote my limited resources and time and energy on raising more hard money that I cannot spend, as opposed to going out and raising more of the soft money, which cannot be spent for perhaps the same purposes, and can't be as politically effective, but I'm going to raise more soft money and the statistics that are in the record show that soft money has increased at triple digit rates from '92 to '96, '96 to 2000, and yet hard money fund-raising has essentially plateaued.

QUESTION: Okay but that's, I mean, that may be a very good argument to Congress, maybe a dangerous argument because the soft money opponents may find something to run with there, but I'm not sure that it's an argument, and I realize you were asked to get into this, but I'm not sure that it's an argument that's going to help us decide this case.

MR. BARAN: No.

QUESTION: I take it so much of the -- the other side's position here depends on the relationship between the coordinated expenditures and the individual contribution limits to the candidates themselves. Do you, do you contest the, I guess, intuitive assumption that if a candidate had the choice of retaining the present limits on contributions directly to that candidate, and on the other hand, having a system in which there were no contribution limits, he could accept any amount from anybody, do you, do you contest the intuitive judgment that he would probably accept the latter system and say, sure, let me accept any amount of money?

MR. BARAN: From anybody.

QUESTION: Yes.

MR. BARAN: In lieu of what? I'm sorry.

QUESTION: In lieu of the current system of limitations on contributions to make.

MR. BARAN: I don't know the answer to that because it requires me to try and read the minds of many, many politicians. I believe that there would be a division of opinion. On the one hand, there would be politicians who would say, yes, I would like to scrap this system and be able to take unlimited amounts of money from individuals or political committees and I'm prepared to hold myself accountable to the public and the voters for that decision.

On the other hand, I think there would be politicians and incumbents who say, no, I really don't want that because I think it would present a political problem or it may open the doors to some undue influence and pressures from large --

QUESTION: Won't the first group, the group that says, yes, I would like to replace the present system and be able to take as much as anyone wants to give me, wouldn't that first group prefer a system in which there was no limitation upon coordinated expenditures by the party because that first group could achieve very much the same result in that way, isn't that so?

MR. BARAN: No. I believe that there is a very substantive and historical difference. One of the distinguishing features of the legislative record going back to Congress' consideration of campaign finance reform in the early 1970s is that while there is a great deal of concern expressed regarding individuals and political committees supporting candidates of political parties, the utterances from Congress regarding political parties are uniformly laudatory. I mean, they say, well, this is important institutions, they're unique. We've got to give them lots of room to operate.

QUESTION: Well, sure. But now we're, now we're -- what I'm positing is a system in which the political party, which everybody esteems for different reasons, perhaps, but everybody supports, now, on your theory the political party can simply be given another useful task and the useful task, in effect, would be to eliminate the need of the candidate to be scrambling for the $100 contributions if it could accept, in effect, through the party, contributions in the amounts that Justice Breyer was talking about in his hypo a while ago.

MR. BARAN: But I believe Congress has perceived that to be a benefit, not only to them, but to the entire democratic process.

QUESTION: Well, if it perceives it as a benefit, why does it have the restriction on coordinated expenditures? Apparently, it does not perceive it as a total benefit?

MR. BARAN: Well, there is a very interesting reason for that, which goes back to when Congress devised the campaign finance system that this Court reviewed in the Buckley decision. And the genesis of this particular limit was introduced in the United States Senate back in 1973 or 1974 at a time they were considering a bill which provided for no private contributions in general elections for the Senate or the House and that there was going to be completely publicly-financed and when they got to this public financing proposition, somebody got up and said, well, what about the parties? I mean, we have got to let them operate and they said, well, that's great, we're going to let them operate, but of course, our principal concern in addition to corruption is we want to equalize resources and we want to make sure that there is not excessive spending so we're going to devise this formula, which is more generous than we are providing to anyone. In fact, it's generous exponentially because we're telling individuals and political committees they cannot contribute to these candidates at all, and that's the genesis of this limitation.

We discussed that in 1996 before this Court that shows that historically this was a limit imposed to prevent excessive spending. This court noted it in the decision of FEC vs. Democratic Senatorial Campaign Committee and the plurality decision noted that congressional purpose.

QUESTION: Well, that is certainly a rationale that supports spending limits generally, but I don't know that it is, it is or was meant to be the exhaustive rationale for a distinction between coordinated and uncoordinated because if that were the only issue there wouldn't have been any distinction.

MR. BARAN: Well --

QUESTION: A spending limit is a spending limit. And if you're distinguishing between coordinated and uncoordinated, presumably you have a different policy in mind, and I presume, and I haven't heard anything to the contrary, that the policy is exactly the intuitive judgment that was behind the original hypo of Justice Breyer's.

MR. BARAN: I believe that if that were the policy surely one Senator or one Congressman, at some point, in the consideration of campaign finance over a period of literally decades would have gotten up and said you know what --

QUESTION: Did they do it for no reason at all?

MR. BARAN: Surely one Senator or one Congressman at some point in the consideration of campaign finance over a period of literally decades would have gotten up and said, you know what --

QUESTION: Did they do it for no reason at all?

MR. BARAN: No. They did it to limit spending.

QUESTION: They don't need to distinguish between coordinated and uncoordinated if that's what they're concerned with?

MR. BARAN: No. Because, and this may explain a little bit of that dichotomy in the statute today that we have that contribution limit of $5,000 to candidates from a political party and yet we have this special provision in Section 441a(d). Well, back when they introduced this original statute, there weren't going to be any contributions by anybody to candidates for the Senate and the House in general elections.

QUESTION: Now there are. Are you saying that the rationale for what happened here was just inadvertence. Nobody thought about it? Nobody went back and said, hey, we don't need this now?

MR. BARAN: I believe that the rationale for this provision today is the original rationale, the entire statute, this provision was transferred verbatim after this Court's decision in Buckley from the criminal code of Title 18 into the existing statutory provision of Title 2. And other than the report language that was noted in the Government's brief regarding the effect of this provision after Buckley, there is no other congressional utterance that I'm aware of regarding the purpose of the statute. This really is a relic from Congress' effort to basically control spending in the entire political process.

There is one final point I would like to bring to the Court's attention. There has been discussion about Congress' treatment of family members and there is an intimation that perhaps there was no record or legislative record regarding Congress' actions in that regard. We noted in our reply brief in 1996 that there is legislative record of concern back in 1974 about wealthy family individuals contributing to candidates of their family. There was even the example noted of concern that Nelson Rockefeller's mother had contributed one and a half million dollars to his campaign in 1968, and there are some floor statements by legislators as well. So it is not accurate to say that Congress did not have any expression of concern about family members, as opposed to political parties, and that record was presented to this Court in Buckley when it considered all of those statutes at that time.

I would also like to address the question about what is the definition of coordination. That is in the statute, Section 441A. It does prohibit or it does turn an expenditure into a contribution if there has been a request or a suggestion, if there has been consultation with the candidate and I don't believe it's at all clear whether the Government would not restrict a political party's spending if they simply went to a candidate as suggested by Justice Scalia and said, well, will this help you or will this hurt you? There is some history of FEC enforcement that suggests that at least as far as the commission is concerned that would constitute coordination and therefore would be either subject to our limit or somehow barred under the contribution limits. If there are no further questions, I have covered everything I intended to cover.

QUESTION: Thank you, Mr. Baran. General Underwood, you have four minutes remaining.

REBUTTAL ARGUMENT OF BARBARA D. UNDERWOOD

ON BEHALF OF PETITIONER

MS. UNDERWOOD: Thank you. I just want to make a few points. The rationale for the party expenditure provision has always been a conduit theory. The structure of the statute has changed, and so just exactly how the party could act as a conduit to evade whatever limits existed has changed, but right from the beginning, the concern was that the party could act to enable another donor to evade the limits by --

QUESTION: Well, you just said there is nothing in the legislative history, not one Senator, not one Congressman ever said anything like that.

MS. UNDERWOOD: Well, at pages 28 and 29 of our brief, we quote some legislative history. I think my colleague discounts it because it was at a time when the structure of the statute was somewhat different so the evasion and the conduit that was possible was somewhat different but it was nevertheless then, and is now, aimed at preventing parties from enabling individuals to avoid their limits. I mean, at page 28, Senator Matthias says that the point of this is to prevent an indirect contribution by a candidate -- by a contributor to a candidate going through the party. That was why the provision was in the statute.

The coordinated expenditures are like contributions and it was the premise of Buckley, over some objection to be sure, that they have a greater potential for corruption than independent expenditures. That's true for parties and for political action committees, as well as for individuals, and it's true for fat cat contributors, as well as for small contributors, so the right that's being claimed here, the constitutional right here to unlimited coordinated expenditures is, in effect, a claim of right to unlimited contributions.

The Colorado Republican Party isn't making that argument, but it seems to follow from their argument because parties -- and the reason why, although parties are different from other kinds of actors in the system, they nevertheless need to be subjected to some limits, is precisely because, as intermediaries, they can serve to defeat the other limits of the statute.

A party has no more -- that was a judgment Congress was entitled to make, not compelled to make, but entitled to make. It solves a part of the problem but not the whole problem. Political parties, though, have no more a constitutional right to exemption from limits on contributions than do political action committees and, in fact, Congress gave them much higher limits.

CHIEF JUSTICE REHNQUIST: Thank you, General Underwood. The case is submitted.

(Whereupon, at 12:14 p.m., the case in the above-entitled matter was submitted.)