Campaign
finance in the United
States
is the financing of electoral campaigns at the
federal,
state, and local
levels.
At the federal level, the primary source of campaign funds is
individuals;
political action
committees are a distant second. Contributions from both are
limited, and contributions from corporations and labor unions are
prohibited. The
Federal
Election Commission (FEC) is an independent federal agency
created in 1975 by amendments to the
Federal Election Campaign Act
(FECA) to enforce FECA.
Public financing is available for
qualifying candidates for President during both the
primaries and the
general election. Eligibility requirements
must be fulfilled to qualify for a government subsidy and those
that do accept government funding are usually subject to
spending limits. The system is designed so
that the
Democratic
or
Republican
candidates for
President
of the United States routinely qualify for funds, while
excluding most other party candidates.
Races for non-federal offices are governed by state and local law.
Over half the states allow some level of corporate and union
contributions. Some states have limits on contributions from
individuals that are lower than the national limits, while five
states have no limits at all.
Campaign finance is a controversial issue, pitting concerns about
free speech against concerns about
corruption and inequality on
the part of those who favor existing or further restrictions.
Background to federal campaign finance reform
For most of the history of the United States, federal election
campaigns were relatively unregulated. Laws such as the
Pendleton Act and the
Hatch Act attempted to limit participation by
government employees in funding campaigns. The
Tillman Act and
Federal Corrupt Practices Act
sought to limit more broadly the influence of money on the
campaigns, but these were largely ignored.
After the
Watergate affair,
Congress took action to better regulate federal campaigns.
Amendments to the
Federal
Election Campaign Act(FECA) in 1974 created an
independent
agency, the
Federal
Elections Commission (FEC), to monitor donations and spending
on federal campaigns. FECA also placed limits on campaign
contributions and expenditures, the latter of which were
invalidated on First Amendment grounds in the Supreme Court
decision of
Buckley v Valeo. In
2002, Congress further attempted to reform federal campaign finance
reform with the
Bipartisan Campaign Reform
Act. This law was also challenged in the Supreme Court, but its
core provisions, including restrictions on "soft money" donations
to political parties and restrictions on "electioneering
communications" (broadcast ads mentioning a candidate within 30
days of a primary or 60 days of a general election) were upheld by
the Supreme Court in
McConnell v.
Federal
Election Commission.
Hard money and soft money
Political money in the United States is often divided into two
categories, "hard" money and "soft" money.
"Hard" money is contributed directly to a
candidate of a political party. It is regulated by law in both
source and amount, and monitored by the Federal Election
Commission.
"Soft" money is contributed to the political party
as a whole. Historically, "soft money" referred to contributions
made to political parties for purposes of party building and other
activities not directly related to the election of specific
candidates. Because these contributions were not used for specific
candidate advocacy, they were not regulated by the Federal Election
Campaign Act, as interpreted by the Supreme Court in Buckley v.
Valeo. The Bipartisan Campaign Reform Act of 2002 (also known as
McCain-Feingold) prohibited unregulated contributions to national
party committees. "Soft money" also refers to unlimited
contributions to organizations and committees other than candidate
campaigns and political parties (except, where legal, to state and
local parties for use solely in state and local races).
Organizations which receive "Soft money" contributions are often
called "
527s", for the section of the tax
code under which they operate. Such organizations can legally
engage in political activity, but funds from "soft money"
contributions may not be spent on ads promoting the election or
defeat of a specific candidate.
The
U.S.
Supreme Court decision Buckley
v. Valeo
(1976) held that limitations on donations to candidates were
constitutional (because of the
compelling state interest
in preventing corruption or the appearance of corruption), but
limitations on the amount campaigns could spend (spending limits or
caps) were an unconstitutional abridgment of
free speech under the
First
Amendment.
Buckley v. Valeo also held that
only speech that expressly advocated the election or defeat of a
candidate could be regulated. Thus organizations could spend
unregulated "soft money" for a variety of activities, including
"
issue advertising," a broad term that
included any advertising that stopped short of expressly advocating
the election or defeat of a candidate through words and phrases
such as "vote for," "vote against," "support," "defeat," or
"elect".
Beginning in the late 1970s, parties successfully petitioned the
Federal Election
Commission to be allowed to spend soft money on non-federal
party building and administrative costs. Soon, this use of soft
money expanded to
voter
registration,
get out the vote,
and issue advertising. For example, a wealthy individual could give
a large contribution in soft money to a political party. The party
could then spend this money on political ads. These ads could not
explicitly or expressly advocate the election or defeat of a
candidate (such as "Vote for Smith," "Elect Smith," "Send Smith to
Congress," "Vote Against Jones," or "Defeat Jones"), but they could
use the names of candidates ("John Smith is an honest man who
stands up for the people; Bill Jones is a chronic liar who's taken
money from
special interests and
advocated cutting
Social
Security. Call Bill Jones and tell him how you feel about
this." )
The
Reform Party, founded
by
Ross Perot, made campaign finance
reform a central issue in its
platform, and when Perot ran for president in
1992 and
1996 he
strongly argued for it. Oddly enough, most political scientists
believe that campaign finance laws hindered Perot's efforts to
establish the Reform Party on a permanent basis. It again became a
major issue in the
2000 U.S. presidential
election, especially with candidates
John McCain and
Ralph
Nader. Organizations in favor of campaign finance reform
included many
public interest
groups, such as
Common Cause,
Democracy 21, the
Campaign Legal Center, and
Democracy Matters.
Opposition came from a
coalition of organizations such as the American Civil Liberties
Union and the Center
for Competitive Politics (both of which argue that campaign
finance reform would harm free speech) and the National Rifle
Association
, National Right to Life
Committee, and other grassroots organizations.
The Bipartisan Campaign Reform Act of 2002, sometimes called
McCain-Feingold, amended the
Federal Election Campaign
Act (1971) to ban
national
political party committees (most prominently the
Democratic National Committee
and
Republican National
Committee) from accepting or spending soft money contributions.
It also included a
"stand by your
ad" provision requiring candidates to appear in campaign
advertisements and claim responsibility for the ad (most commonly
with a phrase similar to "I'm John Smith and I approve this
message.")
The legislation was challenged in
McConnell v.
Federal
Election Commission (2003), but most of the act was upheld
by the Supreme Court. However, a further challenge in
Federal
Election Commission v. Wisconsin
Right to Life, Inc. (2007), with new justices on the
Supreme Court, resulted in parts of
McConnell being
effectively, though not formally, reversed.
After the passage of the Bipartisan Campaign Reform Act, many of
the soft money-funded activities previously undertaken by political
parties were taken over by various
527
groups, which funded many issue ads in the
2004 presidential
election. In 2006 the
Campaign Finance Institute issued
a study on 527 groups. The study shows that many advocacy groups
deploy three different types of organization—
political action committees
(PACs), 527 groups, and
501 advocacy
entities—in their efforts to influence federal elections and public
policy. These cumulative, coordinated efforts increase the groups'
financial influence in elections. The CFI analysis presents much
new information about the major role played by 501(c)(4) social
welfare, (c)(5) labor union and (c)(6)
trade association organizations in
elections, and the different ways in which they and related 527
organizations are used by Republican and Democratic-oriented
groups. (
[156145]).
Bundling
Another consequence of the limitation upon personal contributions
from any one individual ($2400 for each election, with a total of
$4800 for a
primary and
general election as of 2009 ) is that
campaigns seek out "bundlers," people who can gather contributions
from many individuals in an organization or community, and present
the sum to the campaign. Campaigns often recognize these bundlers
with honorary titles and, in some cases, exclusive events featuring
the candidate.
Bundling has always existed in various forms, but has become more
important with the enactment of limits on contributions at the
federal level and in most states in the 1970s.
EMILY's List, for example, was involved in
early bundling-like activities. Bundlers grew in importance again
after the Bipartisan Campaign Reform Act of 2002 prohibited soft
money contributions to political parties.
Bundling became organized in a more structured way in the 2000s,
spearheaded by the "
Bush Pioneers" for
George W. Bush's 2000 and
2004 presidential
campaigns. One infamous former "bundler" was Democratic Party
supporter and
apparel manufacturer
Norman Hsu, who achieved a prominent role
as one of
Hillary Rodham
Clinton's "
HillRaisers" for her 2008
presidential campaign. Hsu was then found to be a fugitive from an
early 1990s fraud charge; in such cases, campaigns usually return
or donate to charity the contributions that the person in question
gave, but are left with the thorny question of whether to return
all the other contributions that bundler gave. In some cases,
including Hsu's, bundlers are suspected of having donated their own
money under others' names (to circumvent the individual
contribution limit) or of having
coerced
employees or others to make contributions with their own money,
both of which are illegal. But most bundlers operate legally and
help to reduce the time and cost of fundraising for the candidates
and their campaigns.
During the
2008 campaign the
six leading primary candidates (three Democratic, three Republican)
had listed a total of nearly two thousand bundlers.
Current provisions of federal campaign finance laws
Disclosure
Current campaign finance law at the federal level requires
candidate committees, party committees and PACs to file periodic
reports disclosing the money they raise and spend. Federal
candidate committees must identify, for example, all PACs and party
committees that give them contributions, and they must provide the
names, occupations, employers and addresses of all individuals who
give them more than $200 in an election cycle. Additionally, they
must disclose expenditures to any individual or vendor. The Federal
Election Commission maintains this database and publishes the
information about campaigns and donors on its web site.
Similar reporting requirements exist in many states for state and
local candidates and for PACs and party committees.
Increasingly, political committees on all levels are required to
electronically file campaign finance statements.
Most political advertising, including all advertising that
specifically advocates the election or defeat of a candidate for
federal office, is required to identify the source of its funding.
In elections for national office (Congress and
president/vice-president), television ads from a candidate must
feature a shot of the candidate's face and have the candidate
personally identify himself/herself, saying, "I approved this
message." The
Bipartisan
Campaign Reform Act added this rule in the belief that
candidates would not engage in negative campaign advertising if
they had to personally claim responsibility for the ad's content.
As of 2007, little empirical research has been done on its effects,
but no one has reported a noticeable effect on the tone of
campaigning.
Independent Expenditures
The Supreme Court's ruling in
Buckley
v. Valeo (1976) held that
expenditures made
independently of a candidate's campaign could not be limited under
the Constitution. If expenditures are made in "coordination" with a
campaign, however, they may be regulated as contributions.
Corporate and Union Activity
Even though corporations and labor organizations may not make
contributions or expenditures in connection with federal elections,
they may establish Political Action Committees, or PACs. Corporate
and labor PACs raise voluntary contributions from a restricted
class of individuals. In the case of unions, this consists of union
members and their families. For corporations, the restricted class
consists of managerial employees and stockholders and their
families. These funds may be used to support federal candidates and
political committees, either through independent expenditures or
through contributions to candidates. A PAC is limited to a maximum
contribution of $5,000 to a candidate committee per election.
Although prohibited from using their resources to "expressly
advocate" the election or defeat of federal candidates, or to make
contributions directly to candidates or parties, corporations and
labor organizations may conduct a variety of activities related to
federal elections, in addition to those conducted through a PAC.
Though they may not use general treasury funds to pay for
"electioneering communications" - broadcast ads referring to
candidates for federal election without expressly advocating their
election or defeat in the 60 days prior to a general election, or
30 days prior to a primary election, they may advocate for
political issues and mention federal candidates while doing so, if
outside the 30/60 day time frame for "electioneering
communications," or at any time through non-broadcast media. They
may also engage in certain non-partisan voter registration and
get-out-the-vote campaigns.
Additionally, over half the states allow some level of direct
corporate contributions or spending in state and local races.
Political Party Activity
Political parties are active in federal elections at the local,
state and national levels. Most party committees organized at the
state and national levels as well as some committees organized at
the local level are required to register with the FEC and file
reports disclosing their federal campaign activities.
Party committees may contribute funds directly to candidates,
subject to the contribution limits. National and state party
committees may make additional "coordinated expenditures," subject
to limits, to help their nominees in general elections. National
party committees may also make unlimited "independent expenditures"
to support or oppose federal candidates. However, since 2002,
national parties have been prohibited from accepting any funds
outside the limits established for elections in the
Federal Election Campaign Act.
State party and local committees are also subject to restrictions
on the funds they may spend in connection with an election in which
a federal candidate is on the ballot.
Party committees must report with the FEC once their federal
election activities exceed certain dollar thresholds specified in
the law.
Table of Federal Donation Limits
It is a federal crime to evade the following donation limits
through a
straw donor scheme.
|
To each candidate1 |
To national party committee2 |
To state, district & local party committee2 |
To any other political committee2 |
Special Limits |
| Individual may give |
$2,400 |
$30,400 |
$10,000 |
$5,000 |
$115,000 overall biennial limit;
- $42,700 to all candidates
- $65,500 to all PACs and parties
|
| National Party Committee may give |
$5,000 |
No limit |
No limit |
$5,000 |
$42,600 to Senate candidate per campaign |
| State, District and Local Party Committee may give |
$5,000 |
No limit |
No limit |
$5,000 |
No limit |
| PAC (multicandidate) may give |
$5,000 |
$15,000 |
$5,000 |
$5,000 |
No limit |
| PAC (not multicandidate) may give |
$2,400 |
$30,400 |
$10,000 |
$5,000 |
No limit |
| Authorized Campaign Committee may give |
$2,000 |
No limit |
No limit |
$5,000 |
No limit |
Table Footnotes
per election
per calendar year
indexed for inflation
combined limit
This limit is shared by the national committee and by the national Senate campaign committee
A multicandidate committee is a political committee with more than 50 contributors which has been registered for at least 6 months and, with the exception of state party committees, has made contributions to 5 or more candidates for federal office.
A federal candidate's authorized committee(s) may contribute no more than $2,000 per election to another federal candidate's authorized committee(s).
(Table taken from the
FEC website on 9 January 2008.)
Public financing of campaigns
At the federal level, public funding is limited to subsidies for
presidential candidates. To receive subsidies in the primary,
candidates must qualify by privately raising $5000 each in at least
20 states. For qualified candidates, the government provides a
dollar for dollar "match" from the government for each contribution
to the campaign, up to a limit of $250 per contribution. In return,
the candidate agrees to limit his or her spending according to a
statutory formula.
From the inception of this program in 1976 through 1992, almost all
candidates who could qualify accepted matching funds in the
primary. However, in 1996 Republican
Steve
Forbes opted out of the program. In 2000, Forbes and
George W. Bush
opted out. In 2004 Bush and Democrats
John
Kerry and
Howard Dean chose not to
take matching funds in the primary.
In 2008, Democrats
Hillary Clinton
and
Barack Obama, and Republicans
Rudy Giuliani,
Mitt Romney and
Ron Paul
decided not to take matching funds. Republicans
Tom Tancredo and
John
McCain and Democrats
Chris Dodd,
Joe Biden and
John
Edwards elected to take public financing.
By refusing matching funds, candidates are free to spend as much
money as they can raise privately.
In addition to primary matching funds, the federal government
subsidizes the
presidential
nominating conventions of the major parties (the
Democratic National
Convention and
Republican National
Convention). Based on the performance of their party in past
elections, candidates may be offered the opportunity to accept
government funds for the general election. If they accept the
government funds, they agree not to raise or spend private funds or
to spend more than $50,000 of their personal resources. No major
party nominee turned down government funds for the general election
from 1976, when the program was launched, until
Barack Obama did so in 2008, or for General
Election Legal and Accounting Compliance Funds (GELACs), which pay
for attorneys and closeout costs but are not supposed to pay for
campaigning or advertising. The only party other than the
Republicans and Democrats to receive government funding in a
general election was the Reform Party, which qualified for
government subsidies in 1996 and 2000 on the basis of Ross Perot's
strong showing in the 1992 and 1996 elections.
The presidential public financing system is funded by a
$3 tax
check-off on individual tax returns (the check off does not
increase the filer's taxes, but merely directs $3 to the
presidential fund). The number of taxpayers who use the check off
has fallen steadily since the early 1980s, until by 2006 fewer than
8 percent of taxpayers were directing money to the fund, leaving
the fund chronically short of cash.
A small number of states and cities have started to use broader
programs for public financing of campaigns. One method, which its
supporters call
Clean Money, Clean
Elections, gives each candidate who chooses to participate a
fixed amount of money. To qualify for this subsidy, the candidates
must collect a specified number of signatures and small (usually
$5) contributions. The candidates are not allowed to accept outside
donations or to use their own personal money if they receive this
public funding. Candidates who choose to raise money privately
rather than accept the government subsidy are subject to
significant administrative burdens and legal restrictions, with the
result that most candidates accept the subsidy.
This procedure has
been in place in races for all statewide and legislative offices in
Arizona
and Maine
since 2000,
where a majority of officials were elected without spending any
private contributions on their campaigns. Connecticut
passed a Clean Elections law in 2005, along with
the cities of Portland,
Oregon
and Albuquerque, New Mexico
.
A 2003 study by the GAO found that "It is too soon to determine the
extent to which the goals of Maine’s and Arizona’s public financing
programs are being met."
In recent years, the movement for "Clean Elections" appears to have
stalled.
Proposition
89, a
California
ballot proposition in November 2006, sponsored by the
California Nurses Union, that would have provided for public
financing of political campaigns and strict contribution limits on
corporations, was defeated. In 2008, the non-partisan California
Fair Elections Act passed the legislature and Governor
Schwarzenegger signed it, but the law does not take effect unless
approved by voters in a referendum in 2010. A proposal to implement
Clean Elections in Alaska was voted down by a two-to-one margin in
2008., and a pilot program in New Jersey was terminated in 2008
amid concern about its constitutionality and that the law was
ineffective in accoomplishing its goals. In 2006, in
Randall v. Sorrell, the Supreme Court held that
large parts of Vermont's Clean Elections law were unconstitutional.
In 2008, the Supreme Court's decision in
Davis v. Federal Election
Commission suggested that a key part of most Clean Election
laws - a provision granting extra money (or "rescue funds") to
participating candidates who are being outspent by
non-participating candidates - is unconstitutional. On the basis of
Davis v. Federal Election Commission, in late 2008 a federal court
in Arizona found the "rescue funds" prosivions of Arizona's Clean
Elections law unconstitutional in McCommish v. Brewer.In a suit
brought by the Green Party of Connecticut, a federal court ruled
Connecticut's law was unconstitutional in August 2009. An appeal is
pending as of October 2009.
See also
References
Notes
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