W. B. Brooks AP Governement
So You Want To Buy A President?
Campaign Finance Reform:
The desire to limit the amounts candidate’s spend on elections and the amount Americans donate to the
candidates for elections. The impetus for this reform is to take money out of politics and bring
integrity back in. To make everyone’s vote count the same so that money does not have undue influence
on politicians and their policies.
First Major Precedent Regarding Campaign Finance Reform:
FECA- The Federal Election Campaign Act is the 1971 law enacted by Congress which created modern
campaign finance rules and reform. The law was intended to replace the old and widely ineffective and
ignored Federal Corrupt Practices Act of 1925.
Agency Created to Monitor FECA Guidelines
Federal Election Commission- The agency created by Congress in 1974 to monitor compliance with
federal election laws. The law which created the FEC, the Federal Election Campaigns Act has been
subjected to three major changes by Congress. The first one in 1974, the second in 1979 and the third
in 2002. The FEC’s power has also been shaped and influenced by the US Supreme Court in Buckley vs.
Valeo. All candidates running for office and PACs (Political Action Committees) are required to disclose
their contributions and expenditures to the FEC. Those records are public documents which can be
examined by anyone. The records are not great indicators of contributions because each entry contains
only a name, date, and an amount. In the case of big donors, that usually tells little about how much has
been given. Because they are listed under the names of individual givers, for instance, large ―bundled‖
contributions will appear in FEC files as many apparently unrelated small contributions. The FEC has
often been criticized, sometimes by its own members, for being ineffectual. Some campaigns have
ignored its regulations knowing that by the time the FEC catches up to it, the election will be long past.
The six FEC commissioners are appointed by the President and have traditionally been split 3-3
between Republicans and Democrats. The arrangement has virtually guaranteed gridlock on tough
issues.
Reforms Created by FECA-
1. Contribution Limits- The FEC’s limits on who can give how much in Presidential races are fairly
complex but basically it comes down to this: an individual can give a candidate a maximum of $2,400
during the entire primary season and another $2,400 for the general election. Corporations, labor
unions, and foreign nationals may not give at all. There are of course a number of perfectly legal
loopholes which make it possible to give far more than these limits allow (i.e. soft money, bundling).
2. Hard Money- Individual (private) contributions to the party and candidates subject to limits
regulated by the government and FEC
- Individual contributions to the candidate—-- The maximin $2,400 for an individual per election up
to a total of $25,000 per year for all candidates.
-- A Presidential candidate must give the FEC the name, occupation, and address of every person or
group who gives him a contribution of $200 or more.
--ads paid for by this money – are ads paid for by the candidate directly.
--Individual (private) contributions to the party-- -Caps on soft money (as a result of Bipartisan
Campaign Reform Act of 2002)
- $25, 000 to national party $15,000 to state/local party
-ads paid for by this money—paid for by the Democrat National Party
-- Money for the party used for ―party-building‖ activities such as get-out-the-vote drives, bumper
stickers, and voter registration efforts as long as that money is not spent on behalf of a specific
candidate for federal office. However, it may be used to buy commercial television time that smears
that opposing candidate, thus indirectly assisting the candidate (this is where the soft money
controversy arises).
Bipartisan Campaign Finance Act- 2002
1). Caps on soft money (to the parties)
- $25, 000 to national party $15,000 to state/local party
Soft Money- unregulated and unreported monies going to the party, capped as a result of BCRA
2. Independent expenditure -groups such as 527 committees and 501 c 3s (Money spent on behalf
of a candidate by its citizens not affiliated with his campaign. Under current law, you can give as much
as you want to a political group as long as that group’s spending is not officially coordinated with a
campaign.)
-soft money used to be money given to political parties but BCRA changed it to hard money when it
became subject to limitations
- Outgrowth of many 527 Committees and other independent expenditure groups
Major Supreme Court Precedent Regarding Campaign Finance Reform
Buckley vs. Valeo- A 1976 US Supreme Court decision which eliminated many federal funding
restrictions and established the basic ground rules of current Presidential campaign financing. Following
the revelations of corrupt campaign finance practices and ―dirty tricks‖ which emerged from the
Watergate scandal, Congress sharply tightened federal election law in 1974. The amounts that
contributors could give and that candidates could spend were limited for all federal races. The new law
also provided for public financing of Presidential elections but not of Congressional races. Two years
later, the US Supreme Court ruled in Buckley vs. Valeo, a lawsuit brought by an ideologically diverse
group headed by conservative New York Senator James Buckley, that many of the new restrictions
were unconstitutional. While the Court upheld the law’s limits on contributions to all races, it ruled that
limits on Congressional campaign spending violated the First Amendment’s ―free speech‖ guarantee. If a
candidate needed to spend money to get his message out, the justices reasoned, limiting the amount he
could spend also restricted the amount he could say. As for Presidential races, the Court ruled,
candidates could be held to spending limits but only if they had agreed to accept public funding. A
wealthy candidate who bankrolls his own campaign and doesn’t take public funding can spend as much as
he wants.
McConnell v. Federal Election Commission (2003)
- Upheld most aspects of the Bipartisan Campaign Reform Law
-upheld soft and hard money limits and the ban of electioneering not subject to the cap within the 90
day window before a federal election
F.E.C. v. Wisconsin Right to Life & McCain v. Wisconsin Right to Life (2006)
- The Supreme Court loosened restrictions on corporate and union-funded television ads that air close
to elections, weakening a key provision of a landmark campaign finance law.
-The court heard the same case a year ago, shortly before Justice Samuel A. Alito Jr. took his seat
last January. Faced with the prospect of a 4-to-4 deadlock in the absence of Justice Sandra Day
O'Connor, who was days away from retirement and would not have been able to participate in a decision,
the court then sent the case back to the lower court. While that move postponed the court's encounter
with the Bipartisan Campaign Reform Act, as the McCain-Feingold law is formally known, an eventual
encounter was inevitable because Congress, in passing the law, made Supreme Court review mandatory.
Campaign Finance Reform Loopholes
1. Bundling- The practice of combining several small contributions into one large contribution. Under
current federal law, it is illegal for an individual to give more than $2,000 to a Presidential candidate
per election. Since that limit was first introduced in the 1970s, however, fund-raisers have tried to
overcome it by the completely legal and widespread practice of ―bundling.‖ Broadly it works like this:
several $2,000 maximum contributions are solicited from, say, a corporation’s executives and their
families, and the checks are sent to a candidate, all together in a large ―bundle‖ to give the same impact
as one big check. While no individual has given more than the law allows, a lot of money has come from
one place.
2. Inaugural Committee- While contributions to campaigns are subject to federal limits, donations to
pay for a winner’s inaugural are not. Inaugural committees do not have to publicly identify their
contributors. President Clinton’s 1992 inaugural committee raised large sums from corporate sponsors.
Beer makers Anheuser-Busch, for example, donated products to the event as well as contributing
$100,000 more. The $32 million inaugural was such a fund-raising success that its bank account still has
a $9.7 million surplus.
3. Independent Expenditures- Money spent on behalf of a candidate by its citizens not affiliated with
his campaign. Under current law, you can give as much as you want to a political group as long as that
group’s spending is not officially coordinated with a campaign. In 1988, the television ad which tied
Democratic nominee Michael Dukakis to the parole of convicted murderer and rapist Wille Horton-- one
of the most effective and memorable of the campaign-- was financed by an $8.5 million independent
expenditure by a group of Republican consultants. Examples today would be 527s and 501c3’s.
4. Legal Defense Funds- Some politicians have established funds to help raise money to pay for their
legal expenses. Supporters of President Clinton, for instance, contributed to a fund paying for his
defense of a sexual harassment suit brought against him by Paula Jones, a former Arkansas state
employee. The fund also paid the legal bills of President and Mrs. Clinton arising from the various
Whitewater investigations. Although it is not required by law, the Clinton fund publicly identified its
donors and accepted no contributions larger than $1,000.
5. PACs (Political Action Committees)- Groups which raise money to donate to political candidates.
PACs have been a political fact of life since 1943 when the Congress of Industrial Organizations (a
forerunner of the AFL-CIO) formed a PAC to get around the ban on contributions from labor unions.
They have only become important, however, since the campaign reforms of the 1970s which put limits
on individual contributions to federal candidates. Under current federal law, a PAC may give no more
than $5,000 to a federal candidate during the primaries, and another $5,000 during the general
election.
6. Leadership PACs- Several politicians have found ostensibly independent PACs which have been
criticized as fronts from their own campaign fund-raising. In 1995, Senator Bob Dole disbanded his
―Better America Foundation‖. Critics said BAF was a way for donors to give to Dole free of FEC limits
or reporting regulations. Although Dole closed BAF and made a list of its donors public, he has always
maintained the foundation was a completely legitimate conservative think tank. Hillary Clinton
immediately after being elected as Senator set up her controversial PAC called HILLPAC.
Funding of Public Campaigns
1. IRS Checkoff- The box on federal income tax returns which may be marked in order to make a
voluntary contribution to the Presidential Election Campaign Fund. Since 1973, federal elections have
been partly funded by the public through the IRS check-off. The original voluntary contribution was $1.
In 1994, it was raised to $3. The contribution-- which does not affect the amount you may owe in
income tax-- has never been very popular with the public. Lately the fund has been so starved for
money that it has only been able to make partial payments of matching funds to candidates.
2. Matching Funds- Public money given to Presidential candidates to pay for their campaigns. The
federal government will match the first $250 of each contribution to a campaign. But candidates who
want matching funds-- and all but the richest do-- must observe spending limits imposed by the FEC.
Candidates who do not take matching funds may spend as much as they like.
Terms
1. Fat Cat- An all purpose term, usually derogatory, used to describe any big political contributor,
especially one who seeks to influence in exchange for his money.
2. Public Funds- money given by the federal gov’t such as presidential election fund, only to
presidential candidates, not enough money to fund Congressional races
3. Private Funds- money from individuals to candidates, parties and independent expenditure groups
4. 527 Committees- Named after the section of the IRS code that gives them tax-exempt status, places
no limits on fundraising or spending for issue-oriented ads & voter registration, avoids the gift tax
that applies to large corporations, applies to any group that expresses views on political issues and
candidates through TV ads or other means, now required to reveal donors names
5. 501 (c) s- Named after the section of the IRS tax code- Not required to reveal donors name and
remain totally anonymous
6. Soft Money- The legislation prohibits the large, unlimited contributions by corporations, unions, and
individuals to national political parties. unregulated and unreported monies going to campaign
activities
7. Hard Money (Direct contributions to candidates/campaigns)- The legislation increases contributions
individuals can make each two-year cycle to all federal candidates, political parties, and political
action committee to a total $95,000 from $50,000. Also raises the amount individuals may
contribute directly to candidates to $2,300 each election, from $1,000
8. Issue Advertising- The legislation prohibits unions, corporations, and nonprofit groups from paying
for broadcast advertisements if the ads refer to a specific candidate and run within 60 days of a
general election or 30 days before a primary. These ads may only be financed by hard money.