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In all likelihood, I'm misunderstanding something greatly here, so I'm hoping for some clear correction:

It seems to me like the Republican and Democratic parties in the USA are private-ish entities. Private in the sense that they aren't directly government-funded, they run themselves, they're basically just a political "club", if you will.

Very loosely speaking, one club is organized to decide who most left-leaning people will be voting for, one club is organized to decide who most right-leaning people will be voting for.

Now, if I've understood that correctly (which I possibly haven't), it seems odd to me that the government of Colorado could tell this private club how to operate their internal affairs. Telling them "Trump can't be in your Primary" seems, on the surface, similar to telling a golf club "You can't vote for Trump to be your Golf Club Member of the Week". It seems absurd to me that a government would control such a thing for a golf club, and so it seems intuitively similarly absurd for me to see it happen in the Republican primary.

It would make sense, I think, to exclude Trump from the ACTUAL election, since the actual election is in fact a government-organized event - but the primary doesn't seem like government business, it seems like the business of a private club to me.

Am I wrong about that? Are the democratic and republican primaries considered Public affairs, and not just private votes within private clubs?

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In the United States, both primary elections and general elections are government-organized events. These elections are primarily established and regulated by statutes passed by state legislatures. Therefore, when a party has a primary election in a state, it is subject to all Constitutionally valid state election law.

Parties have First Amendment association rights that states must not infringe, e.g. it has been ruled unconstitutional for states to have a 'blanket primary' against the will of the parties involved (California Democratic Party v. Jones, 2000). However, there are various other constitutional issues that can come into play, so First Amendment association rights are not a trump card in this context.

Depending on state laws, political parties may have the option of choosing not to participate in a state primary election. ("Caucuses" are a well-known alternative used by the parties of some states. But sometimes, a state party may even just decide to have neither a primary or caucus; for discussion of this in the context of the 2020 election cycle, see "Republicans to scrap primaries and caucuses as Trump challengers cry foul", Politico, Alex Isenstadt, 09/06/2019. However, it seems some states, such as Michigan, may have election laws that do not allow parties to opt out of participating in a state primary: see CDJB♦'s answer to What steps could the US GOP take to block primary challenges to Trump in 2024 should he run again, and which of these were also taken in 2020?)

In fact, it seems the Colorado Republican party has expressed intent to cancel its primary for the 2024 election if Trump is not on the ballot, and have a caucus instead, but it is apparently disputed whether the party is legally allowed to withdraw from the primary process at this point: the Colorado Department of State made a statement that withdrawal is not allowed by Colorado law. ("Colorado GOP threatens to shift to caucus system over Trump ruling", The Hill, SARAH FORTINSKY - 12/20/23 12:20)

I wrote a longer post with more details as an answer to a broader past question here: How do parties really choose candidates in the US?

I found another question that has some information that may be of interest on the legal status of political parties in the United States: What type of organization is an American political party?

See also In the US, why does the government have the right to regulate how political parties hold their primaries? which might really be a prior answer to your question (I didn't see it before writing this one).

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    the primary election [is a] government-organized event - oh, that's something I did not know. I totally thought it was just an internal affair for people within the club to vote on. Thank you.
    – TKoL
    Jan 5 at 11:41
  • fair, I'll wait. I appreciate your attention here.
    – TKoL
    Jan 5 at 11:44
  • I suppose the Republican convention could declare the Colorado primary tampered and refuse to seat the delegates.
    – Joshua
    Jan 6 at 16:33
  • So, is it a primary election between all candidates that will select two candidates to remain for the general election ? Or is it a Republican primary ; and in that case, how could the republican party withdraw from the Republican primary ? Still if the latter, are any and all political parties in Colorado allowed to have their own public-funded and organized primaries, or is it just a privilege for the two bullies in the class ? Jan 8 at 22:16
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    @Gouvernathor: "each party has to first volunteer to participate in it, right ?" I'm not sure that's actually necessary: again, it may depend on what the state legislation says. Apparently in Michigan, there is some complicated process that at one step involves the secretary of state issuing "a list of the individuals generally advocated by the national news media to be potential presidential candidates for each party's nomination" and notifying those individuals. This is complicated so I can't confirm, but I don't think states necessarily need approval from party officials to hold a primary
    – sumelic
    Jan 8 at 22:48
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The more burning question I have is, What business does a "private" national party have controlling the candidates visible to within-State electors on ballots or gaining de facto government sponsorship through nominations? Regarding presidential elections, the Constitution says,

Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors (Article II, Section 1, Clause 2)

No power is vested in parties by the governments per the Constitution (nor are popular elections or bound delegates at the national level allowed, but that is another matter). No political clout is allowable for parties other than the natural and organic assembly of the people to organize their minds to campaign and raise public awareness of certain candidates. Legally, they cannot be recognized as being invested with any power whatsoever beyond the rights of their individual subscribers. But how does the reverse relationship work?

To answer your question,

On what legal basis do state governments regulate party primaries?

Under false doctrines of modernity that the "electoral college" somehow permits national parties to hamstring State legislatures into a narrow list of options (and to gain State sponsorship through published ballots and practically monopolizing official government communication channels and resources), it is merely assumed that the parties are a legitimate and practically public political entity with authority vested in them by each State, deserving of sponsorship and preferential treatment. Under this incestuous presumption, it then becomes possible for governments to regulate the parties as though they were subsidiaries falling within their oversight of Public Affairs, rather than being private organizations run only by the rules of their constituents.

You are right that concerns akin to protectionism of businesses apply. Most of this control stems from unwritten rules and the de facto usurpation of the American polity by a two-party system, but no matter what legality is claimed, it cannot be with the support of the Constitution, since limitations of public assembly and representation as well as deviations from the Constitutionally appointed mechanism for choosing electors and for counting their votes are expressly unconstitutional. The Constitution as originally written prohibited any kind of public power from being vested in parties, and therefore specifically precluded the formation of effective controlling national parties or their regulation or empowerment as though they were official arms of the government itself, and yet here we are.

The Twelfth Amendment partially abolished Constitutional protections against party tyranny by obliterating the runner-up condition of the original two-seat race. As it functioned under the original Constitution, presidential elections would have most commonly functioned in a multi-party environment by having the president elected from one major party and the vice president from a different party, preventing the highly contentious power swings we are accustomed to today, and eliminating the monopoly of the two major parties. (This would incidentally also completely change the dynamic of the news cycle, since it would not predictably and obsessively focus only on two major parties and their contentions, and the powers that be weren't having that.) Today, we do not even follow the amended Constitution--but who can be made to care these days what our written Constitution actually says?

In short there is no Constitutionally allowable basis for the promotion or regulation of--or investiture of government power in--political parties. Political parties ought to be limited to and exclusively governed by private organization, per the Constitution itself, which grants them no power out of the prerogatives and public oversight granted exclusively to public servants and officers of a bona fide, Constitutional government.

Once parties are no longer granted a privileged or controlling status over State legislatures in their oversight of elections, State legislatures will correspondingly have no grounds for intervention in the private rules of said parties (unless someone's Constitutional rights are infringed thereby), and the controlling and divisive national two-party system will have been abolished, the only alternative being a genuine grassroots system for organization of numerous local political parties, each having considerable and real clout and self-governance, rather than being under the regulatory thumb of State or national interests.

Of course this will require states to adopt resolutions sustaining the United States Constitution and abolishing the special privileges granted to parties, and to return to the actual electoral methods enjoined by the Constitution, rather than the faux partisan-controlled electoral college of today.

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