Campaign finance (U.S.)

Campaign finance refers to the financing of electoral campaigns. Candidates for Congress must raise money (or self-finance) to finance their campaign and are required by federal law to disclose to the public their campaign finance records. Candidates file quarterly reports with the Federal Election Commission detailing the names and address of contributors and the amount they contributed to the candidates' election committee.

Background of campaign finance laws
While money has been associated with democratic politics from the outset of the United States of America reform of campaign finance only came into fashion in the 20th century. The origins of modern campaign finance begin in the 1896 Presidential campaign where Republican National Committee Chairman Gov. Mark Hanna (R-OH) managed to raise between $6 to $7 million for the Republican candidate William McKinley. Hanna began the process of soliciting campaign contributions from business leaders, bankers, and industrialists, assuring them that their interests would be taken care of. The money raised was used to buy what amounted to advertising at the time: paid speakers, press releases, buttons, posters, and campaign fliers. McKinley's campaign spending in 1896 would dwarf future presidential campaigns for the next quarter century.

Tillman Act
In the wake of McKinley's assassination President Teddy Roosevelt (R-NY) took on corporate influence in the election process. In a 1905 message to Congress Roosevelt issued the one of first calls for campaign finance reform, "(a)ll contributions by corporations to any political committee or for any political purpose should be forbidden by law." This forceful statement was backed up when Congress passed and Roosevelt signed the Tillman Act of 1907. The Tillman Act forbade corporations and nationally chartered banks to directly contribute to federal candidates. However, no effective enforcement mechanism was created so the Act went largely unenforced.

Federal Corrupt Practices Act
The following attempt to reform campaign finance included the first attempts at requiring disclosure of campaign contributions by party committees. In 1910 the Federal Corrupt Practices Act established campaign spending limits for political parties in House general elections and required the national committees of political parties to file post-election reports regarding their contributions to individual candidates and their own individual expenditures. Yet again, active enforcement mechanisms were not created and the Act was rarely enforced. In 1911 the Act was extended to Senate candidates and established limits on the amount of money candidates were allowed to spend on their campaigns. (These limits would later be struck down by the Supreme Court in Newberry v. U.S. )

In 1925 the FCPA was revised by extending the it's coverage to multi-state parties and election committees, and required that financial disclosure reports be made quarterly. It also established a requirement that any contribution over $100 be reported. The amendments also raised Senate campaign spending limits to $25,000. The revision did not, however, create an effective enforcement mechanism and the FCPA, which served as the basic federal campaign finance law for nearly 50 years, went largely unenforced.

The Hatch Act and subsequent amendments began the effort to allow for greater enforcement by asserting the right of Congress to regulate its own elections.

Smith-Connally and Taft-Hartley
In 1944 the Congress of Industrial Organizations (CIO), one of the two largest labor union organizations, created the first Political Action Committee (PAC) to distribute money to candidates for elected office. In the 1944 presidential election the CIO PAC gave approximately half-a-million dollars to President Franklin Roosevelt.

Both the Smith-Connally Act (1943) and the Taft-Hartley Act (1947) moved to limit union campaign contributions by extending the corporate ban on money enacted in the Tillman Act to unions.

Federal Election Campaign Act of 1971
The Federal Election Campaign Act of 1971 (FECA) is the bedrock of America's modern campaign finance law. FECA repealed the Corrupt Practices Act, which had been an ineffective source of campaign finance law for decades, and created an entire new regime to govern campaign finance.

FECA instituted the current system of quarterly disclosure reports of campaign contributions and expenditures; set ceilings on media advertising; established limits on contributions from candidates and their families; and permitted unions and corporations to solicit voluntary contributions from members, employees, and stockholders, and allowed union and corporate treasury money to be used for overhead in operating Political Action Committees.

In 1974, after the shock of Watergate and the campaign finance violations committed by President Richard Nixon's 1972 campaign, Congress passed a series of amendments to FECA. These amendments strengthened the original FECA and created a number of policies and an oversight body that are essential in the current system of campaign financing. The amendments included:


 * Individual contributions limits to candidates ($1,000 from an individual to a candidate, $5,000 from a PAC to a candidate) and limited aggregate individual contributions to $25,000 per year
 * The option of public financing of Presidential elections, matching funds for presidential primaries, and public funds for presidential nominating conventions
 * Spending limits for presidential primaries and general elections, and for House and Senate primaries
 * Limits on candidates' personal contributions to their own campaigns and limited independent expenditures on behalf of a candidate to $1,000 per election.
 * Ending the 1940 ban on contributions from individuals and groups working on government contracts.
 * Abolished limits on media advertising.
 * Created Federal Election Commission (FEC) to administer campaign law, with Congress to appoint four of six commissioners.

Buckley v. Valeo
On January 2, 1975 a lawsuit was filed by Sen. James L. Buckley (R-NY) and Sen. Eugene McCarthy (D-MN) directed against Francis Valeo, then-Secretary of the Senate and ex officio member of the Federal Election Commission for declaratory and injunctive relief. Valeo represented the US Government in the lawsuit.

Buckley and McCarthy charged that certain amendments to FECA - including limits on campaign expenditures, limits on candidate's personal contributions to their campaign, the disclosure of political contributions, public funding of Presidential elections, and the seating process for commissioners on the FEC - were in violation of the 1st and 5th Amendment rights to freedom of expression and due process, respectively.

On January 30, 1976, the court sustained the Act's limits on individual contributions, as well as the disclosure and reporting provisions and the public financing scheme. However, the limitations on campaign expenditures, on independent expenditures by individuals and groups, and on expenditures by a candidate from his personal funds were found to be constitutionally infirm in that they placed severe restrictions on protected expression and association, yet lacked any compelling countervailing government interest necessary to sustain them. The Court also held that the method for appointments to the Federal Election Commission was an unconstitutional violation of Separation of Powers.

Post-Buckley Amendments
After the Buckley ruling in 1976 Congress moved to make FECA in compliance with the Supreme Court's decision. Previously FECA measures eliminated in these amendments were limits on candidate expenditures (unless candidate accepts public financing), limits on contributions by candidates and their families to their own campaigns, limits on "independent expenditures," and revised the provision governing the appointment of Commissioners.

The amendments also included provisions that limited the scope of PAC fundraising by corporations and labor organizations.

In 1979 FECA was amended yet again, this time to loosen some restrictions. These amendments simplified reporting requirements, increased amount volunteers could contribute in-kind (use of home, food, vehicle) from $500 to $1,000, and allowed state and local parties to promote federal candidates by spending unlimited amounts on campaign materials (signs, bumper stickers, etc.) used by volunteers and on voter registration and get-out-the-vote drives.

Bipartisan Campaign Reform Act of 2002
The Bipartisan Campaign Reform Act of 2002, better known as McCain-Feingold, was signed into law on March 27, 2002. The bill, which had gone through many forms since its introduction in 1997, aimed to solve three major problems that had arisen in the ensuing years since the last time FECA was seriously amended. These problems included:


 * The proliferation of issue ads.
 * The increased role of "soft money" in elections.
 * Alleged campaign finance abuses in the 1996 Presidential election.

To combat these problems McCain-Feingold banned federal officeholders and candidates and national parties from raising or spending "soft money" - unlimited money that could be raised by parties and then transferred to state parties for federal or non-federal campaigning and advertising. McCain-Feingold also changed the definition of issue advertising and campaign advertising by making subject to federal election law any add which depicts a candidate for office. (Prior to this change only advertisements using "magic words" including "vote for", "elect", or "vote against" were deemed subject to federal election laws.)

Related SourceWatch articles

 * 501(c)(3)
 * 501(c)(4)
 * 527 committees
 * Bipartisan Campaign Reform Act of 2002 (McCain-Feingold)
 * Bundling
 * Campaign Finance Institute
 * Soft money
 * U.S. federal ethics, transparency, and campaign finance legislation, 110th Congress