Campaign finance in the United States

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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. These regulated donations are often referred to as hard money. Corporations and trade unions are prohibited from contributing directly to a candidate's campaign. Soft money is funds spent by organizations (such as 527 groups) that are not contributed directly to candidate campaigns, and which do not "expressly advocate" the election or defeat of a candidate. There is a limit to how much soft money can be donated under the recent McCain Feingold Campaign Finance Reform Bill. Bundling is the practice of one donor gathering donations from many different individuals in an organization or community and presenting the sum to a campaign.

Public financing is available for Democratic or Republican candidates for President of the United States during the election campaigns during both the primaries and the general election. Eligibility requirements must be fulfilled in order to qualify for public funding and those that do accept public funding are subject to spending limits.

Races for non-federal offices are governed by separate jurisdictions. State offices operate under state law, while races for local offices operate under state law and local ordinances. Over half the states allow some level of corporate contributions. Some states have limits on contributions from individuals that are lower than the national limits, while others 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.

[edit] Hard money and soft money

'Hard' money is contributed directly to a candidate. It is regulated by law and monitored by the Federal Election Commission.

'Soft' money is contributed to the Republican and Democratic National Committees, and to the party committees in each state. 'Soft' contributions are not as heavily regulated. The parties may use such money to promote candidates or finance party projects, such as political conventions.

Prior to the 2002 passage of the Bipartisan Campaign Reform Act (also known as "McCain-Feingold," after its lead sponsors, Republican John McCain of Arizona and Democrat Russ Feingold of Wisconsin), political parties and other 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." As it was not actually received or spent by the candidate's campaign, and did not expressly advocate the election or defeat of a candidate, there were no legal limits. McCain-Feingold prohibited national political parties from raising or spending "soft money," but other organizations may still do so.

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.

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 ("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."^{[citation needed]})

Campaign finance reform had been debated for years without any major changes to campaign finance laws. The Reform Party, founded by Ross Perot, made it a central issue in its platform, and when Perot ran for president in 1992 and 1996 he strongly argued for it. 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 (which argued that campaign finance reform would harm free speech) and the National Rifle Association, National Right to Life Committee, and other interest groups.

The Bipartisan Campaign Reform Act 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 reversed.

Many of the soft money-funded activities previously undertaken by political parties have been 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(c) 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. ([1]).

[edit] Bundling

Another consequence of the limitation upon personal contributions from any one individual ($2300 for each election, with a total of $4600 for a primary and general election as of 2007) 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 then elevate and publicise these bundlers to an elite level. Bundlers became especially important after the 2002 revision to campaign finance law made unrestricted soft money more difficult to get through corporations and other big organizations.^[1]

Bundling had existed in various forms since limits on contributions were enacted at the federal level and in most states in the 1970s. ^[2] EMILY's List, for example, was involved in early bundling-like activities.

However, 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.^[1] 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. Bundlers are a worry to campaigns who desire the money they raise but fear revelations about them.^[3]

During the 2008 campaign the six leading primary candidates (three Democratic, three Republican) had listed a total of nearly two thousand bundlers.^[1]

[edit] Current provisions of federal campaign finance laws

[edit] 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 committeees 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.

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." This rule was added by the Bipartisan Campaign Reform Act so that candidates could not engage in negative campaign advertising without the source of the ads being clear. Although as of 2007 little empirical research had been done on its effects, the general perception appears to be that it has not had a noticeable effect on the tone of campaigning.

[edit] 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.

[edit] Corporate and Union Activity

Even though corporations and labor organizations may not make contributions or expenditures in connection with federal elections, they may establish PACs. Corporate and labor PACs raise voluntary contributions from a restricted class of individuals. In the case of unions, this consist 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 $5000 to a candidate committee.

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.

[edit] 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 federal 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.

[edit] Table of Donation Limits

Table Footnotes