It is understandable that the D.C. Circuit’s Wagner decision upholding the federal contractor ban would attract a good bit of attention.  The federal courts are suspected of harboring animus toward the campaign finance laws and here is a major decision going the other way and on fairly broad grounds.  So it has been described as having the potential to be highly significant.

The decision was notable for the clarity and thoroughness of its presentation.  The Court also deftly reinforces the available authority by use of case law stressing the particular dangers presented by political pressure on, or from, government employees.  A strength, perhaps also a surprise, was the unanimity of the opinion.

It was also a relief to the decision’s admirers that the Court left open the question of whether federal contractors barred from contributing could make independent expenditures, or contribute to a Super PAC.  So this fight is for another day. Hopes have been raised within the reform community that the Court’s emphasis on the special threats posed by federal contractors’ direct giving might justify limits on their independent spending.

This is one impression the case leaves – that without dissent, and for this class of contributors, the Court was prepared to affirm unambiguously affirm the government’s regulatory authority.  But then, after a step back, Wagner also illustrates how much excitement in this day and age of declining expectations about the campaign finance reform laws can develop around a case with limited practical effect that exposes problematic features of the current regulatory regime and its defense.

In its analysis of the challenge to underinclusiveness, the Court was prepared to concede that the law was full of holes. Yes, individual contractors like those before the Court are barred from using their personal funds to make contributions. But the executives and managers of corporate contractors are free to sprinkle their political largesse on government decision-makers, as are the political action committees affiliated with their corporations.  And as are corporate subsidiaries of federal contractors, or partners of a federal contracting partnership. The Court also grappled with and then left open the question of whether an individual federal contractor can sidestep the restriction altogether by becoming an employees of an LLC she organizes to conduct her very individual business.

Williams – Yulee figures prominently in this aspect of the opinion.  The Supreme Court in that case sustained relatively minor restrictions on the fundraising activity of judicial candidates.  States can bar them from asking for money directly, while permitting them to appoint and supervise fundraising committees, including reviewing and approving fundraising appeals, and then thanking the givers.  Wagner draws heavily on Williams-Yulee in in arguing that the state is not required to do everything it can, only as much as it might, to achieve its regulatory objectives.

But considering the overall state of campaign finance, this application of doctrine may only aggravate the damaged standing of the current legal system.  The law and rules are already seen to be a patchwork affair, easy pickings for lawyers and political operatives.  Those who have been worried about this won’t take much comfort from the description of the law in Wagner.

Moreover, as the fight over campaign finance has continued, it has been a major concern that the strongest fare best.   Wagner upholds restrictions on individuals who are sole proprietor – federal contractors, while the bigger actors, among them major corporations and their leadership, can, if so disposed, commit significant resources to accomplish their political aims.  And the advantage in any system with various exceptions and complexities goes to those with the resources, including money for lawyers.

There is here the intersection of two charges commonly made against the campaign finance laws in this time – – that they are largely ineffective and that the system is most easily navigated by the major players and most vexing to the average citizen.

Wagner notes that underinclusiveness doctrine turns on questions about the seriousness of legislative purpose.  It then concludes that that there is nothing about drawing narrowly the affected class of contractors that undermines the government’s larger objective of safeguarding the integrity of public administration.  But is that correct in a case like this?  If the ways around the restriction are so many and so significant, doesn’t the singling out of the individual proprietors making contributions out of their own pockets warrants skepticism about the sufficiency of the government‘s reform objective?   It is a fair question, increasingly raised, of how much importance can be attached to the incremental gain from regulation limited in scope and practical effect.

One answer is that the government still has a legitimate concern with the appearance of corruption, in this instance measured by public confidence in the integrity of the contracting process.  This position seems to require strong faith and somewhat averted eyes.  The question of appearances has a number of sides to it, depending on the standpoint of the observer.  One is the appearance of a campaign finance regulatory scheme laden with loopholes and exceptions, its proscriptions easily evaded, which is primarily hospitable to the lawmakers who wrote it and to that segment of the regulated community that has the wherewithal to manage it.

The kind of complaint may be overstated, but it is heard within the reform community itself, and it is standard copy in press coverage of the field.  So a reasonable question is: does a case like Wagner make things better, or just show that decisions like this to bolster the system do so only by making it more complicated and less credible?

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