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FEDERAL CLEAN ELECTIONS TAKE ACTION PACKET

 

A Brief History of Campaign Finance Reform

Recent Campaign Finance Reform

--- Key Provisions of Original McCain-Feingold Bill

--- Voluntary Spending Limits

--- BANs on soft-money, PACs, state political party money

--- Bill introduced by Nebraska Sen. Chuck Hagel

Bipartisan Campaign Reform Act (BCFR, or McCain-Feingold)

2002 Legislation Proposed by McCain-Feingold

Overview of Different Campaign Finance Reform Proposals Considered

U.S Supreme Court on the Constitutionality of Campaign Finance Reform

A Brief History of Campaign Finance Reform:

 

Money and American politics have a long and checkered history together. Congress has tried to pass legislation to regulate the ways people may give or spend money during campaigns since the 1840's, with only sporadic success. One of the most revered reformers of the American presidency, Teddy Roosevelt, openly solicited two of the country's riches men, E.H. Harriman and Harry C. Frick, for campaign donations before a State of the Union address. To avoid the ensuing political maelstrom, Roosevelt helped spearhead the Tillman Act, which banned corporations from making contributions to any candidates for federal political office, a law that still stands. Later, the Hatch Act of 1939 closed a lucrative loophole by prohibiting federal employees from engaging in political activity, as federal employees had for many years solicited campaign contributions from those they regulated.

Trade and labor unions, like corporations, were banned from contributing to federal political campaigns in 1943. Unions responded by forming political committees to support federal candidates supported by money paid into a separate fund by their members. These committees, which came to be known as "political action committees" or PACs, based on the name given the original funds formed for this purpose, became quite powerful, and corporations immediately copied their structure and formed their own PACs.

The rise of television, and more importantly, television advertising, made the demands for political money skyrocket in the next 20 years. In the 1956 elections, total campaign spending was approximately $155 million, while in 1968 overall spending jumped to $300 million, with a six fold increase on television advertisement spending. The rising costs of the '68 campaign led to Federal Election Campaign Act of 1971 or FECA. FECA was composed of two parts, the first set imposed contribution limits on the amount a candidate could give to his or her own campaign and set ceilings on the amount a candidate could spend in the media. The second part set strict public disclosure procedures on federal candidates and political committees. The 1971 reform reflected the view that media costs were to blame for the rising costs of campaigns. Despite these reforms, the amount spent on federal elections in 1972 increased to $425 million. These spending patterns suggested that more extensive expenditure limits were needed, but before the new law could be tested in another election, the Watergate scandal broke and a more comprehensive set of regulations was adopted.

The FECA Amendments of 1974 represent the most comprehensive campaign finance reform package ever adopted by Congress. In response to the political scandal unleashed by Watergate, the Act set stringent limits on contributions, limited the amounts individuals can contribute to campaigns, replaced the media spending ceilings with aggregate spending limits for all federal campaigns, and restricted party expenditures made on behalf of candidates. It created a new federal agency, the Federal Election Commission, or FEC, to administer and enforce the law. The 1974 law also created an optional program of full public financing for presidential general election campaigns and voluntary system of public matching subsidies for presidential primary campaigns. Funding for this program came from a voluntary tax check-off on federal income tax forms.

Opponents of the 1974 law immediately challenged the law in court. In 1976, the Supreme Court handed down the bedrock decision regarding campaign finance reform, Buckley v. Valeo. The Supreme Court struck down spending limits established for House and Senate candidates as well as the contribution limits for independent expenditures, which was a limit on the amount a candidate or an individual could contribute from their personal funds to support a campaign. The court ruled that general limits on the amount a candidate could spend were only constitutional if voluntary.

In response to Buckley, Congress acted quickly to impose new constitutional regulations. In 1976 Congress restored the limit on the amount presidential candidates could contribute to their campaigns from their own personal funds, but only if the candidate accepted public funds. New restrictions were placed on the amount an individual could give to a PAC ($5,000 a year) and PAC contributions were subject to an aggregate ceiling of $25,000 a year, the same limit imposed on individual donors under the 1974 reforms. The amount a PAC could donate to a political party was also limited ($15,000 a year). A third wave of amendments to the FECA in 1979 prohibited candidates or officeholders from using excess campaign funds for personal use.

The 1979 amendments were the last to pass on the federal level until the Bipartisan Campaign Regulation Act, or BCRA, in 2002. The 1979 amendments limited some contributions, but spawned exponential growth in PACs, and new FEC interpretations of the law and rulemaking opened the door for soft-money. Under FEC advisory opinions, party committees were allowed to accept and spend monies not raised under federal contribution limits to pay administrative costs and finance other allegedly nonfederal election-related activities. This new development-soft money-became a major component of political fundraising in the 1980's and exploded in the 1990's, from $86 million spent on soft-money in 1992 to more than $600 million in 2002.

Beginning in the 1996 election cycle, the national party committees began sponsoring candidate-specific issue advertisements that were designed to promote their presidential nominees and, in subsequent elections, their House and Senate candidates. These ads, because they did not "expressly advocate" the election and defeat of a federal candidate, were not regulated under the FECA and thus could be financed with soft-money. They provided party committees with an unlimited means of supporting candidates without having to be concerned with the contribution ceilings or coordinated spending limits imposed by the FECA. Party Committees took advantage of the loophole to raise unlimited amounts of money to finance political campaigns. The BCRA enacts provisions designed to curb some of these "issue advocacy" ads, and reign in the exploitation of the express advocacy loophole.

Recent Campaign Finance Reform:

Congress, in March of 2002, passed the McCain-Feingold campaign finance reform bill, entitled the Bipartisan Campaign Reform Act, or BCRA. Senators John McCain of Arizona and Russ Feingold of Wisconsin, who spearheaded the legislation, fought for over seven years to pass a version of their original bill. Along the way, other politicians sent forth their own campaign finance bills, designed to undermine McCain and Feingold's struggle for meaningful campaign finance reform. Finally, after a long and bitter struggle, President Bush, despite his threatened veto, signed the BCRA.

The principal target of the BCRA is soft-money. In theory, soft-money is money contributed to the national political parties for "general party building". Soft-money in practice, however, is used to directly fund campaigns for federal office, allowing candidates to access millions of dollars that would otherwise be restricted. Soft-money is the driving force behind an unprecedented amount of donations to political parties, allowing special interests to buy influence and engendering massive amounts of political favors and government corruption.

Below you will find the key provisions from the recently passed federal legislation on campaign finance, the BCRA, provisions from the McCain-Feingold bill as originally introduced in the Senate, as well as an alternative offered by Republican Senator Chuck Hagel of Nebraska. Immediately after the BCRA was signed into law, it was challenged as unconstitutional in the federal court system. The critics of the BCRA charge that the legislation violates the Constitution's First Amendment. The Citizen Advocacy Center has compiled a non-exhaustive guide outlining what types of campaign finance regulation the Supreme Court has found constitutional and unconstitutional.

Key Provisions of Original McCain-Feingold Bill:

Below are the key provisions from the original McCain-Feingold bill, introduced in the Senate in 1995. That bill would have set up voluntary limits on campaign spending in exchange for up to 30 minutes of free air time. The bill would also have banned soft-money, PAC money, limited "issue advocacy ads", and banned candidates from using campaign funds for personal use.

Voluntary Spending Limits:

1. Voluntary limits on Senate spending for races, up to 5.5 million;
2. Voluntary limits on Senate spending for primaries, up to 2.75 million;
3. Voluntary limits on personal spending up to $250,000;
4. Voluntary limit to take in at least 60% of contributions from the home state;
5. If another candidate spends 10% more than allowed, the candidate that agreed to the spending limit can spend 20% more;
6. In return to the candidate for accepting these voluntary limits, the candidate receives 30 minutes of TV time in prime time;
7. Minor party (defined as a party with less than 25% of the vote in the last election) candidates are limited to a share of one hour of TV time per state, depending on their vote in the Senate race during the last election, if they got over 5% of the vote, otherwise, they must get 5% of the signatures of the registered voters;
8. Reduced postage rates for those who comply;
9. If a complying candidate's opponent spends over 10%, that complying candidate can raise his hard money contribution to 2,000;

Bans on soft-money, PACs, state political party money, etc.

1. BAN on political committees (PACs);
2. BAN on soft-money;
3. BAN on state political parties from expending funds to influence federal campaigns;
4. State parties cannot solicit funds or donate to non-profits;
5. New reporting requirements for candidate contributions;
6. BAN on any candidate using campaign funds for personal use;
7. Limiting issue advocacy ads;
8. Random audits to assure voluntary compliance;

Bill introduced by Nebraska Senator Chuck Hagel:

Nebraska Senator Chuck Hagel introduced a bill to compete with the BCRA in order to undermine McCain and Feingold's efforts to achieve a real measure of reform.

Limits Soft money contributions to $60,000 per year;

BUT Raises:

1. The amount an individual can give to $3,000 from $1,000;
2. The amount given to national political parties committees which are authorized political committees of candidates to $60,000 from $20,000;
3. The amount that can be given to PACs to $15,000 from $5,000;
4. The amount an individual can contribute in a year to $75,000 from $25,000;
5. The amount political committee can make to another candidate to $7500 from $5000;
6. The amount national political parties can give to candidates from $15,000 to $30,000;
7. Limits only the solicitation of political party soft money in federal buildings;

Bipartisan Campaign Reform Act (BCRA) OR McCain-Feingold:

The BCRA was adopted after much political maneuvering when McCain and Feingold compromised on their original proposal, free air time in exchange for voluntary spending limits, and instead adopted provisions designed to eliminate soft money, ban "sham" issue advocacy ads, and require full disclosure of the financing of issue advocacy ads. In return for these concessions, the BCRA raises the amount an individual may contribute from $1000 to $2000. Many reformers fear that because of FEC interpretations of the BCRA, soft-money fundraising will simply be funneled to state political parties instead of eliminated.

1. BAN on soft-money (money given to a national political party). (Challenged as unconstitutional);
2. BANS labor Unions or Corporations from financing "electioneering communications" of greater than $10,000 (sham issue ads that mention the names of candidates, but do not say vote for or against a certain candidate) within 60 days of a general election and 30 days of a primary election using "treasury money" (a corporation's or union's PAC can still do this however, because that is "hard money"). Corporations and Labor Unions can still run actual issue advocacy ads to their hearts content. (Challenged as unconstitutional);
3. Disclosure of sources of funding for "issue advocacy" ads. Anyone who pays for producing or airing "electioneering communications" in aggregate in excess of 10,000 must disclose the identification of the person making the disbursement, the persons contributing more than $200 to fund, the elections the communication pertains to, names of candidates identified. (Challenged as unconstitutional);
4. Raises the individual contribution limit from $1000 to $2000;
5. Candidates may not use contributions for personal use;
6. BANS officers or employees of the US government from soliciting or receiving a donation of money connected with an election while on federal property;
7. BANS Foreign Nationals from contributing to federal campaigns;
8. State, district, and local party committees must comply with the act for federal election activities. They may spend money on get out the vote activities, etc. But no one may donate more than $10,000;
9. National, state, local, and district committees of political parties may not solicit any funds for or make any direct donations to non-profits;
10. Federal candidates may, however, make a general solicitation of funds for non-profits. Individual solicitations are allowed from individuals, and cannot exceed 20,000;
11. No individual may make contributions to a state political committee of a political party which aggregately exceed $10,000 in an election cycle;
12. New reporting requirements for national and congressional political committees;
13. Reporting for individuals or political committees giving contributions of $1000 or greater to campaigns;
14. If a candidate for Senate spends more than 150,000 plus .04 X voting age state population, the other candidate may increase the amount of hard money contributions up to 6 times, and may receive soft money contributions if their opponent spends over 10 times the above amount;
15. There is a limitation on repayment of personal loans with campaign contributions of greater than 250,000;
16. A provision that enforces a guarantee on the amount a broadcaster may charge a politician if he does not make any direct reference to another candidate for the same office, and identifies himself. Labor unions and corporations cannot give money to any candidate, campaign committee, or political party or organization, for ads 30 days prior to the primary and 60 days prior to the general election (unless out of a segregated fund).

 

2002 Legislation Proposed by McCain and Feingold:

Senators McCain and Feingold have proposed legislation to renew their original desire to partially fund advertising time for candidates for federal office. The proposed legislation would:

1. Require TV and radio to devote two hours a week in the period prior to elections to candidate centered and issue oriented programming, half of the required programs must air in or near prime time;
2. Institute a voucher system that will enable qualifying candidates and political parties to place a reasonable number of ads on TV and radio. Candidates will qualify by raising a threshold level of small dollar donations.

Overview of the Different Campaign Finance Reform Proposals Considered:

The US Supreme on the Constitutionality of Campaign Finance Reform:

The seminal modern decision on the constitutionality of campaign finance reform is Buckley v. Valeo. In response to the Federal Election Campaign Act amendments, outlined above, the Court ruled that:

1. No limits may be placed on the amount an individual or candidate individually expends to further a particular candidacy. These "individual expenditures" are pure free speech.
2. Limits may be put on the amount an individual or PAC donates to a candidate, as direct contributions may further a perception of corruption or actually corrupt the political process, and they are merely speech by proxy, signaling to a candidate and other supporters that the contributor supports the candidate's views.

In other major cases the Court decided these issues:

Corporations cannot be barred from spending money to influence a state referendum. (First National Bank of Boston v. Bellotti)

Money spent on individual issues or "issue advocacy ads" cannot be limited because they do not have a corrupting influence and because they allow citizens to contribute anonymously. Only express advocacy can be regulated. The Court gave examples of words that would make an ad fall under the definition of express advocacy: vote for or against, oppose or elect. (Buckley v. Valeo & Massachusetts Citizens for Life, Inc. v. FEC)

The government cannot prohibit ideological corporations, defined as existing for the purpose of promoting their members' views on particular issues, from making independent expenditures. Non-ideological corporations and unions are barred. (Massachusetts Citizens for Life, Inc. v. FEC and Austin v. Michigan State Chamber of Commerce)

The government can prohibit non-ideologically based corporations, unions, and non-profits from making contributions to a candidate. They must contribute through a PAC set up by a separate segregated fund, drawn from the donations of their members. Because union members, as well as corporate shareholders and employees are not members of the organization for political purposes, the size of a their general funds do not accurately reflect the indication of member's support for their political ideas, and therefore their speech (in the form of the money they would contribute from the general fund) would bias politics because it does not reflect popular support. This decision is at odds with the Court's original rationale in Buckley, where the decided that individual expenditures could not be limited even though the amounts contributed did not reflect popular support of the public. (Massachusetts Citizens for Life, Inc. v. FEC and Austin v. Michigan State Chamber of Commerce)

Congress cannot limit party expenditures completely uncoordinated from candidates, but may limit party expenditures coordinated with candidates. (Colorado Republican Federal Campaign Committee v. FEC I and II)

The Citizen Advocacy Center, a non-partisan, 501(c)(3), non-profit organization, is dedicated to building democracy for the 21st century by strengthening the public's capacities, resources, and institutions for self-government. If you are interested in more information, becoming a volunteer, or making a tax-deductible contribution to the Center, please contact us. Citizen Advocacy Center Phone: (630) 833-4080 PO Box 420 Fax: (630) 833-4083 Elmhurst, IL 60126-0420

© Copyright 2002 Citizen Advocacy Center. All rights reserved. No part of this pamphlet may be reproduced in any form or by any means without prior, written permission of the Citizen Advocacy Center.