The forgotten court case that let billionaires spend big on elections

Six days after the Supreme Court’s decision in Citizens United v. Federal Election Commission, President Barack Obama broke from the norms of polite deference and rebuked the justicessitting before him in the front row during his 2010 State of the Union speech.

Over the next 15 years, the left increasingly demonized Citizens United for all that ails American politics. Last year, as Elon Musk spent $294 million to return Donald Trump to the White House and elect other Republicans, Sen. Bernie Sanders (I-Vermont) repeatedly condemned the “disastrous” ruling.

But the intense focus on Citizens United has obscured a less-recognized campaign finance case, one that never made it to the Supreme Court. SpeechNow.org v. FEC actually paved the way for the super PACs frequently used by billionaires like Musk for election-year spending sprees.

While Citizens United abolished the ban on independent expenditures by corporations and unions, SpeechNow went one step further. It erased limits on contributions to political committees that make independent expenditures and don’t give money directly to candidates or parties. These entities took on the catchier name of super PACs.

The liberal outcry over that Supreme Court decision drowned out the SpeechNow opinion when it landed just two months later. And though SpeechNow was also expected to reach the Supreme Court, then-Attorney General Eric H. Holder Jr. did not pursue a review of the 2010 decision by the U.S. Court of Appeals for the District of Columbia Circuit, predicting at the time that it “will affect only a small subset of federally regulated contributions.”

He was mistaken. In the 2008 cycle, before super PACs, political nonprofits and other groups spent $140 million on independent expenditures. By 2012, independent expenditures in federal races had reached $1 billion, driven by over $600 million in super PAC spending. Over the next dozen years, independent expenditures soared by more than 300 percent to $4.2 billion, mostly due to super PACs, according to data compiled by OpenSecrets, a nonprofit that tracks federal election spending.

To understand how the SpeechNow decision unfurled is to understand the origin story of the runaway spending by the wealthiest Americans in today’s elections.

“SpeechNow, building upon the terrible flaws of Citizens United, has created a road map for billionaires and wealthy special interests to spend unlimited amounts of money to drown out the voices of ordinary citizens,” attorney David Kolker, who unsuccessfully argued the SpeechNow case on behalf of the FEC, told The Post in an interview. “This distorts our democratic process.”

But to the libertarian-leaning SpeechNow plaintiffs and lawyers, money is speech. They argue that unshackling limitations on donations is essential for fulfilling the ideals of the First Amendment.

“The goal was to free up people to spend as much on speech as they want, and that’s what we did,” said attorney Steve Simpson, who argued in court on behalf of SpeechNow.

“I guess Elon can give me a car if he wants to thank me,” quipped SpeechNow plaintiff Ed Crane. “It shouldn’t be against the law to be a billionaire.”

Fifteen years after SpeechNow, super PAC spending continues unabated in federal and state elections. In one of the only statewide campaign finance questions on the 2024 ballot, Maine voters overwhelmingly approved capping individual donations to super PACS at $5,000. Two political committees with ties to Leonard Leo, the conservative power broker with a billion-dollar war chest, argued in federal court that the Maine measure was unconstitutional under Citizens United and SpeechNow. A federal magistrate judge agreed in July and barred Maine officials from enforcing the limit on super PACs, though state officials and campaign finance activists are appealing the decision.

“We’ve discovered in the last 15 years how extraordinarily super PACs corrupt the political process,” said Harvard Law School professor Lawrence Lessig, whose Equal Citizens nonprofit helped get the Maine referendum on the ballot and is intervening in the case. “So if you believe as I do and as most Americans do that these issues are existential to our democracy, you fight.”

In 2007, David Keating was the executive director of the Club for Growth, an influential group whose political arm backed fiscally conservative candidates. The organization had built a reputation as a heavy hitter, yet Keating felt hamstrung. Every time he wanted to issue a fundraising appeal or political ad, the group had to consult with high-priced lawyers schooled in the byzantine world of campaign finance.

“I remember thinking, ‘We live in a free country. We have the First Amendment. We can say whatever we want, right?’” Keating said. “And the answer was, ‘No, no you can’t.’”

In fact, the Club for Growth was one of several tax-exempt organizations that paid civil penalties in 2007 for failing to register with the FEC as political committees.

So Keating threw himself into the case law. In the wake of the Watergate scandal, Congress amended the Federal Election Campaign Act in 1974, setting contribution and spending limits and creating the FEC. But a landmark Supreme Court ruling just two years later chipped away at some of those new standards. In Buckley v. Valeo, the justices struck down spending limits as infringing on free speech but affirmed limits on contributions, citing the government’s compelling interest in curbing political corruption.

Keating didn’t buy the distinction. Wasn’t a cap on the amount individuals could donate also a restraint on their speech?

He homed in on another case, in which the California Medical Association sued the FEC over the $5,000 annual limit on donations to political committees backing multiple candidates. The Supreme Court in 1981 upheld the limit, arguing it served “to protect the integrity of the political process.”

But in Justice Harry Blackmun’s concurring opinion with the majority, he laid out a scenario in which he would have reached a different conclusion — that is, if the medical group was donating to a political committee that made independent expenditures instead of direct contributions to candidates. While donations to committees that give to candidates “pose a perceived threat of actual or potential corruption,” he wrote, “contributions to a committee that makes only independent expenditures pose no such threat.”

This, Keating said, was “a lightbulb moment.” In 2007, he created a political organization that would make only independent expenditures in order to challenge the FEC’s $5,000 contribution limit.

He called the group SpeechNow.

In a press release in the fall of 2007, SpeechNow touted “a new form of organizational charter believed to be the only one of its kind in the nation.” It would not accept money from companies or unions. It would not coordinate with candidates or parties. Donations would come from half a dozen individuals who wanted to give more than $5,000 per year. “I wanted to tee this up with the best set of facts,” Keating said.

For legal counsel, Keating turned to Brad Smith, a Harvard-trained lawyer, former FEC chairman and author of “Unfree Speech: The Folly of Campaign Finance Reform.” A few years earlier, Smith had co-founded a nonprofit called the Center for Competitive Politics to push for deregulation of campaign finance laws.

“We had been kicking this idea around, about challenging the donation limits,” Smith recalled. “David came in to see me and as soon as he started speaking I said, ‘I’ve been looking for you!’”

Smith’s organization rented office space from the Institute for Justice, a better-funded conservative group in Arlington, Virginia. Billionaire industrialists Charles and David Koch, whose opposition to campaign finance regulations dated back to David’s unsuccessful bid for vice president in 1980, were the institute’s early benefactors. While the center’s lawyers were schooled in campaign finance, the institute’s lawyers touted litigation experience.

Lawyers from both offices would go to a bar across the street to drink, play pool and debate free speech issues. “It was a work-hard, play-hard bunch of lawyers who wanted to change the world,” Simpson said.

Simpson remembers exactly where he was in December of 2003 when the Supreme Court upheld the Bipartisan Campaign Reform Act, the campaign finance legislation commonly known as McCain-Feingold. He was vacationing in the Turks and Caicos Islands and using a resort computer to check his email. He had been enjoying the island sunshine, but the ruling felt like a dark cloud. It was one of the last major decisions of the court under Chief Justice William Rehnquist.

The best opportunity to challenge the federal campaign finance laws didn’t arise until four years later. In January of 2008, the FEC issued a draft opinion rejecting SpeechNow’s objection to the $5,000 donation limit. Now, SpeechNow would take the FEC to court.

Just one month earlier, a conservative nonprofit called Citizens United had sued the FEC in an effort to broadcast a documentary attacking then-Democratic presidential candidate Hillary Clinton shortly before the 2008 primaries.

The two cases would move along parallel tracks.

SpeechNow filed its 27-page complaint in D.C. District Court on Valentine’s Day 2008; one lawyer sent a cheeky, heart-themed email around the Institute for Justice office. The lawsuit condemned the “burdensome” rules imposed on political committees to register and disclose their donations, and it said the $5,000 cap would “make it virtually impossible for SpeechNow.org to carry out its mission.”

Some opinion pages threw their support behind SpeechNow. “Letting regular folks put their small-time cash together to support a cause, or defeat candidates, seems as reasonable as the freedom enjoyed by wealthier voters,” mused the Wall Street Journal. “A victory for the group would restore some sanity to the campaign finance regulatory structure,” the Los Angeles Times wrote.

Simpson and Smith were closely following Citizens United, and both lawyers attended the first set of oral arguments at the Supreme Court in March 2009. By this time, John G. Roberts Jr. had succeeded Rehnquist as chief justice, and Samuel A. Alito Jr. had replaced Justice Sandra Day O’Connor. The court was moving to the right.

Alito, a savvy interrogator, asked Deputy Solicitor General Malcolm Stewart: If election law banned “electioneering communications” such as the Clinton documentary right before an election, could the government also regulate the publication of a book?

Stewart surprised the courtroom when he reluctantly answered in the affirmative. Alito kept pressing, and Roberts and Justice Anthony M. Kennedy jumped into the fraught discussion.

“It was one of those moments in a courtroom where everyone gasped,” Simpson said. He left to retrieve his cellphone and alert his colleagues. “This is going to be earth-shattering,” he told them.

In late June 2009, on the last day of the high court’s term, it ordered a second set of arguments on Citizens United, requesting legal briefs from both sides on overturning major tenets of campaign finance law. This meant a busy summer for Kolker, the FEC’s chief of litigation, who was also working on SpeechNow. “We knew we were in deep trouble,” he said.

Kolker had graduated from Harvard Law School, like Smith, but came away with a very different view of campaign donations. To Kolker, money does not equal speech, it only amplifies it.

“We do this all the time, leveling the playing field,” Kolker said. “Senators each have five minutes on the floor. We take turns at town council meetings. There’s nothing wrong with having certain limits so that we can all be heard, because otherwise one rich person hogs up all the megaphones. That’s not democracy.”

Kolker knew SpeechNow was a carefully designed test case. He tried to build a persuasive argument that independent expenditures could lead to political corruption. “If somebody spends $5 million to help you get elected, don’t you think you’re going to be much more open to listening to what they have to say?” he asked.

By September 2009, Elena Kagan had been confirmed as solicitor general and was representing the FEC in the second set of Citizens United arguments. She tried to unwind the book-banning scenario that bedeviled the government a few months earlier, but there was no going back.

On Jan. 21, 2010, Simpson paced outside the clerk’s office, waiting for a copy of the Citizens United opinion. It did not disappoint: The court decreed that the government has no anti-corruption interest in restricting independent expenditures. This was a huge boost for SpeechNow.

Just a few hours later, Simpson and his colleagues hunkered down to unpack the 176-page ruling. They quickly penned a letter highlighting potentially helpful passages in the Citizens United opinion and submitted it to the D.C. Circuit Court clerk before the close of business. “This new authority is directly relevant to the First Amendment issues involved in SpeechNow.org v. FEC,” they wrote.

In a conference call with reporters that day, Smith was prescient — and candid — about SpeechNow’s potential consequences. “This case will lead to more spending, I think, in political elections,” he said. “… All of us here on this call think that’s a good thing.”

Six days later, a rare hearing at the D.C. Circuit Court featured all nine judges on the bench, including future Supreme Court justice Brett M. Kavanaugh and future U.S. attorney general Merrick Garland. The chief judge was David B. Sentelle, a Republican nominated by President Reagan.

The first words out of Sentelle’s mouth signaled that the hearing was over before it even began. “What can you add to what Justice Kennedy said?” he asked Simpson in a booming voice, clearly referring to Kennedy’s recent majority opinion in Citizens United.

Simpson chuckled. “Your honor,” he said, “I’m not sure I can add a lot.”

Kolker inhaled. “Most of the people in the audience viewed me as DOA at that point.”

Later in the hearing, Sentelle chided Kolker, saying “You don’t seem to value First Amendment values very highly.” In another moment that suggested the FEC’s argument was faltering, Kavanaugh said to Kolker: “On the logic of your theory, if one person spends a million dollars to take out an ad, that’s constitutionally protected. … But if five people get together and contribute $6,000 each to a nonprofit to support an ad, that is corrupting,” Kavanaugh said, adding, “What sense does that make?”

The SpeechNow team celebrated over lunch at a downtown Washington steakhouse. One of the institute’s lawyers, Paul Sherman, recalled ordering one of the most expensive entrées on the menu: the cowboy steak.

The court’s March 26, 2010, opinion was unanimous: Limiting contributions to independent expenditure committees violated the First Amendment. Sentelle said the FEC’s argument, that big donations led to preferential treatment and undue influence, had no merit after Citizens United. SpeechNow essentially wrote super PACs into the law.

The decision was a disaster as far as the FEC was concerned. The only consolation prize was that the court upheld the registration and disclosure requirements for political committees that raise or spend at least $1,000. By the end of 2010, 83 super PACS had popped up. SpeechNow spent more than $135,000 that year to oppose Sen. Russ Feingold (D-Wisconsin), who had co-authored the last major campaign finance law and would lose his Senate seat that year.

The government could have appealed the SpeechNow decision, but in a letter to then-House Speaker Nancy Pelosi, Holder wrote: “Because the particularly limited nature of SpeechNow’s contribution and expenditure practices means that the court of appeals’ decision will affect only a small subset of federally regulated contributions … and because the court of appeals’ decision does not conflict with any other circuit court decision, the Department has decided not to seek Supreme Court review at this time.”

Holder declined a request for comment.

In an interview with The Post, Pelosi said Holder made the right call in light of the decision by a “rogue” Supreme Court in Citizens United. “The damage was done … and it could have gotten worse,” Pelosi said. Campaign finance activist and Democracy 21 President Fred Wertheimer agreed, saying, “It didn’t make sense to appeal at that time, and it left open the potential somewhere down the road to challenge it.”

Other activists see Holder’s decision as a misstep. Perhaps after opening the door so wide in Citizens United, the court would have welcomed a chance to set some boundaries, said attorney Jeff Clements, who leads American Promise, a nonprofit promoting a constitutional amendment to allow lawmakers to regulate campaign contributions and spending.

“It’s pretty hard not to conclude that Holder made a massive mistake in judgment about the implications of the case, though hindsight is easy,” Clements said. “The courts invented a new First Amendment right for billionaires.”

Wertheimer, who at 86 years old is considered a godfather of the campaign finance reform movement, has white tufts of hair on either side of his bald head. His office is decorated with framed articles about his advocacy work since the early 1970s, including scathing takedowns from former House Majority Leader Tom DeLay (R-Texas), former Senate Majority Leader Mitch McConnell (R-Kentucky) and the Wall Street Journal editorial board. “Badges of honor,” said Wertheimer.

He points to another widely overlooked court ruling responsible for Musk’s lavish spending in the 2024 campaign. The Supreme Court decision in McCutcheon v. FEC in 2014 struck down the limit on what an individual can give during an election cycle to all federal candidates, political parties and political action committees combined. “So when you correctly point out that people don’t pay attention to SpeechNow,” he said, “you ought to correctly point that they don’t really pay attention to McCutcheon either.”

The huge splash by the world’s richest man into the 2024 campaign agitated a flagging campaign finance reform movement that argues more fervently than ever that the super PAC spending unleashed by SpeechNow is poisoning American politics. After Musk’s America PAC spent more than $150 million to reelect Trump, the president handed him sweeping powers over policy and personnel through the newly created Department of Government Efficiency.

“If anybody thinks Elon Musk would have been able to do what he did had he not spent so much money on Trump’s campaign, they’re living in a fantasy world,” said Kolker, who currently works as senior counsel at the Campaign Legal Center, a nonpartisan organization that backs campaign finance regulations.

Super PACs now dominate American elections, taking on many of the campaign tasks traditionally handled by candidates and parties. In the 2024 election, independent expenditures made up over a quarter of total spending — up from just 3 percent in 2008 — driven by super PACs such as the pro-Trump MAGA Inc., according to a Post analysis of OpenSecrets data.

As super PACS have spread, the lines between these supposedly independent groups and the candidates they support have increasingly blurred. Candidates make personal appearancesat super PAC fundraisers organized on their behalf, only to head for the exits just before the hosts direct guests to take out their checkbooks to comply with campaign finance rules. Candidates use their own campaign websites to communicate with super PAC allies about preferred messaging and tactics. Last year, the Trump campaign took advantage of loosened FEC guidelines and supplemented a bare-bones field program with turnout efforts bankrolled by super PAC megadonors.

As super PACs play an increasingly central role in campaigns, courts have been uninterested in reining them in. Earlier this year, opponents of Maine’s $5,000 cap on super PACs won a sweeping victory. Two conservative political committees with ties to Leo, who helped build the Supreme Court’s conservative supermajority, challenged the Maine referendum in court, arguing that the measure would infringe on free speech rights by hampering the groups’ ability to raise money and communicate their views.

The committees were represented by Charles Miller, a lawyer with the Institute for Free Speech — the organization formerly known as the Center for Competitive Politics that helped argue the SpeechNow case. At a May hearing before Magistrate Judge Karen Frink Wolf, Miller said that, since the Citizens United decision in 2010, more than 30 federal appeals judges across the political spectrum have rebuffed efforts to restrict contributions to groups that spend independently of candidates, such as super PACs.

Wolf’s like-minded decision striking down Maine’s super PAC limit essentially overturns the will of 75 percent of the state’s voters in 2024 — more than 600,000 people, the largest vote total in favor of a ballot measure or candidate in Maine history.

The case is now before the U.S. Court of Appeals for the First Circuit, which just days before Wolf’s ruling blocked another campaign finance measure overwhelmingly approved by Maine voters.

“There’s no reason to believe that the First Circuit will do anything different in our case,” Miller said. “Hopefully we have permanently resolved this question.”

Read the Billionaire Nation series

About this story

Reporting by Beth Reinhard and Clara Ence Morse. Design and illustration by Tucker Harris. Illustrations contain prop paper money.

Design editing by Betty Chavarria. Photo editing by Christine T. Nguyen. Editing by Nick Baumann, Patrick Caldwell, Wendy Galietta and Anu Narayanswamy. Copy-editing by Christopher Rickett.

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