As the Supreme Court heard a First Amendment challenge to Arizona’s rules for public financing of political candidates on Monday morning, it became clear that the state’s Clean Elections system was doomed. Justice Anthony Kennedy, who is expected to provide the decisive vote, telegraphed his position by plainly describing the system’s essence, albeit in the form of a question.

“Do you think it would be a fair characterization of this law,” Kennedy asked Institute for Justice attorney William Maurer, “to say that its purpose and its effect are to produce less speech in political campaigns?” It is difficult to conclude otherwise after considering how Arizona’s Citizens Clean Elections Act works and how its supporters justified it.

The law gives each publicly financed candidate an initial allocation, plus additional money if people who oppose his election, including independent groups as well as other candidates, spend more than that threshold. The Clean Elections system therefore penalizes a nonparticipating candidate not only for his own speech, but for the speech of organizations over which he has no control.

If a privately financed candidate faces multiple publicly funded opponents, the penalty for speech in his favor is compounded. Suppose he has three taxpayer-financed opponents. Should an independent group spend $10,000 on ads praising him or criticizing his opponents, those candidates will receive a total of $30,000 in “matching funds” to spend against him.

As Kennedy noted during oral arguments, the knowledge that your spending will trigger subsidies to your opponents is apt to make you “think twice” before speaking. The plaintiffs challenging this system, including several politicians and two independent groups, say it has had a chilling effect on their speech, leading them to reduce or delay their campaign spending.

Such self-censorship was an explicit goal of the activists who campaigned for the Clean Elections Act, which voters narrowly approved in 1998. The measure was sold to the public as a way to reduce campaign spending and “level the playing field” (an aim that is still proclaimed on the website of the Citizens Clean Elections Commission, the agency charged with enforcing the law). The initiative campaign noted that “candidates who chose to raise money by continuing to use the old system … would be faced with various disincentives to raise more money than a Clean Elections opponent.”

After the initiative passed, the Clean Elections Institute, an organization devoted to defending it, explained the importance of these “disincentives” in an internal document. “A traditional candidate may think twice about raising additional funds in a race against a Clean Elections candidate,” it said, since “for every dollar raised above the base amount, the CE candidate is matched. … With the Clean Elections matching funds system, it can be argued that millions of dollars in spending never takes place.”

Unfortunately for the law’s supporters, the Supreme Court has rejected both limits on spending and manipulation of the candidate mix as rationales for campaign finance regulation. The one rationale it has accepted – preventing corruption – cannot justify the Clean Elections scheme, which provides countervailing subsidies in response to spending by self-financed candidates and independent groups as well as spending funded by donations. In any case, Arizona has strict limits on campaign contributions.

The goals and essential features of Arizona’s Clean Elections system are similar to those of the so-called Millionaire’s Amendment, a provision of federal law that raised contribution limits for congressional candidates facing wealthy, self-financed opponents. The Supreme Court overturned that rule in 2008, concluding that it imposed an unjustified burden on freedom of speech. If anything, Arizona’s system – which provides actual money, not just permission to take more of it from each donor – is even more objectionable.

The likely demise of Arizona’s law does not mean that public financing in general is unconstitutional. But at a time of fiscal reckoning, the last thing the government should be doing with taxpayer money is funding candidates who prefer forcibly extracting subsidies from their fellow citizens to seeking their voluntary support.

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