aftershockThe Supreme Court yesterday struck down the limit on the total amount an individual may contribute to federal candidates, PACs and political parties in a two-year election cycle. The 5-4 ruling is unlikely to have a major impact on political giving this year, but casts serious doubt on the constitutionality of similar state contribution schemes and paves the way for further challenges to federal campaign finance laws.

The case has sparked heated comment, not least by the four dissenting justices who charge that yesterday’s ruling “eviscerates our Nation’s campaign finance laws.” We do expect the ruling to prompt more donors to give the maximum contributions to the national committees of the Democratic and Republican parties (DNC, RNC, and their House and Senate committees), which the aggregate limits precluded donors from doing. Beyond that, the impact on federal elections will probably not be great. Few individuals come close to maxing out under the two-year election cycle limit, which in the current cycle allows individuals to give up to $123,200, of which $48,600 could be given to federal candidates. On top of that, the Federal Election Commission has never bothered to monitor or enforce this limit.

Also worth noting is that corporations are still barred from contributing in federal elections, and individuals interested in supporting candidates at these higher levels have better options available, such as Super PACs and 501(c) groups.

State Laws in Jeopardy

The more immediate and potentially significant impact of the ruling will be on state laws that apply calendar year or election cycle limits on political contributions. As we have previously written, at least 12 states have such limits, almost all of which are much lower than the overturned federal limit. In fact, Massachusetts wasted no time in announcing that based on the Supreme Court’s ruling, it will no longer enforce the state’s $12,500 limit on the total contributions an individual can make in a calendar year. We expect other states will follow suit.

Likely Reaction

While these state aggregate limits will likely fall, we expect states to propose new laws to bolster disclosure and limit the impact of the ruling. In yesterday’s ruling, as in the Citizens United case, the Supreme Court touted Internet disclosure as a potent protection against corruption. This favorable view of disclosure is likely to fuel efforts to force more groups involved in election activity to publicly reveal their donors and detail their spending. In addition, the Court suggested potentially acceptable ways that Congress could address concerns about donors funneling contributions through multiple PACs and party committees to support a particular candidate. While none of these ideas is likely to get traction in Congress, some states are sure to jump at the Court’s invitation to restrict the transfer of funds among candidates and political committees, or bar contributions to PACs that have indicated they will support candidates to whom the donor has already contributed.

Future Challenges

Finally, the parade of lawsuits seeking to dismantle federal campaign finance restrictions is likely to continue. The Supreme Court held on Wednesday that any regulation of campaign finance activity must satisfy a very high bar — namely, it must target quid pro quo corruption or its appearance. This places in the crosshairs such current restrictions as the ban on state party use of funds raised under state law to support or oppose federal candidates, the soft money ban that applies to the national parties, and the ban on contributions from contractors and corporations.