Campaign FinanceUnit 4: The Electoral Process

Some terms to start

• FECA – Federal Election Commission• BCRA – Bipartisan Campaign Reform Act•Hard money = Federal money• Political donations raised from federally permissible

sources within the limits established by BCRA • Soft money = Nonfederal money• Political donations made in such a way as to avoid

federal regulations.

1971 Federal Election Campaign Act (FECA)

• Attempt to regulate Campaign Finance in FEDERAL ELECTIONS• Sidenote: The most illegal part of Watergate was Nixon’s

campaign committee violating these rules• Provisions• Restricted the amount of money that can be spent on advertising• Required disclosure of campaign contributions and expenditures• Limited the amount of personal money a candidate and his/her

family could spend• Taxpayers allowed to designate a donation to major political

party candidates on their tax forms

1974: FECA Amended

• After Watergate, Congress further amended the FECA• FEC (Federal Election Commission) created to monitor and

enforce FECA• Established public (government) financing in primaries and

the general election (provided the candidate follow rules)• Restricted contributions from foreign donors• Established limits on individual contributions• Banned direct contributions by Unions and Corporations

Political Action Committees (PACs)

• Organizations formed by special interest groups to donate money to political campaigns for candidates they support• Reaction to FECA’s ban on direct contributions from Unions

and Corporations• Subject to spending limits and activities

1976: Buckley v. Valeo

• Challenge to FECAOriginal Provision Impact of Buckley

Expenditure LimitsOverall Spending (Congressional and

Presidential)Partially Struck Down (Freedom of Speech)

Limits on Candidate’s Personal Spending Entirely Struck Down(Freedom of Speech)

Limits on Overall Spending Entirely Struck Down(Freedom of Speech)

Limits on Independent Spending Entirely Struck Down(Freedom of Speech)

1976: Buckley v. ValeoOriginal Provision Impact of Buckley

Contribution Limits

Individual Limits: $1k/candidate/election Affirmed

PAC Limits: $5k/candidate/election AffirmedParty Committee Limits: $5k/candidate/election Affirmed

Individual Cap per election: $25k Struck Down(Freedom of Speech)

Cap on spending “on behalf of the candidate” by parties Affirmed

1996: The Problem With Soft Money

• “Soft Money” Questions Arise• Original intent of money was to be used for voter

registration drives, national party conventions, and issue ads.• Because the money wasn’t going to be used for

campaigning, it was not limited• Ultimately the money would be used to help individual

candidates• By 2000 soft money donations exceeded $400 million

between the two major parties.

2002: Bipartisan Campaign Finance Reform Act (BCRA)

• Also referred to a McCain-Fiengold• Banned the use of “soft money” in federal campaigns• Increased the 1974 limits on individual and group

contributions to candidates

Citizens United v. FEC

2010: Citizens United v. FECAn advocacy group excepted money to make a move about Hilary Clinton. It was ruled an “attack funded by an outside group” and the FEC ruled it could not be shown 90 days prior to elections.

Courts ruled that corporations have speech rights too.

Result: lifted the prohibition on corporations, unions, trade/membership associations, and other entities from engaging in independent expenditures and electioneering communications, and from doing so with unlimited dollars

Impact of Citizens United

• SuperPACs: A Political Action Committee that is an “independent-expenditure only” PAC. Meaning they do not donate money directly to candidates and campaigns. Because of Citizens United, these SuperPACs now have no limits on amount they can raise and spend, although they are required to disclose their donor list

• 527s: Refers to a IRS code number. Issue advocacy groups that, by law, does NOT have to reveal their donor list. Before however they could not “endorse” a candidate. After Citizens United that restriction was thrown out. 527s can donate to SuperPACs but the individuals who donated to the 527 do not have to be named (only the 527’s name is disclosed)