Presidential Campaign Finance Reform

Federal Election Campaign Act of 1971 (FECA)

The Federal Election Campaign Act of 1971 (FECA) and as  amended in 1974, placed limits on certain political contributions and expenditures, required public disclosure of contributions and expenditures above certain levels, created a system of public funding of Presidential campaign activities under the Internal Revenue Code, and established the Federal Election Commission (FEC).

Buckley v. Valeo (1976)

Buckley v. Valeo, (1976), is a landmark case in election law. In Buckley, the Supreme Court interpreted and ruled on the constitutionality of the Federal Election Campaign Act of 1971 (FECA).

The Court upheld FECA’s campaign disclosure requirements and contribution limits, finding that the accompanying restriction on political free speech was justified by “serv[ing] the basic governmental interest in safeguarding the integrity of the electoral process without directly impinging upon the rights of individual citizens and candidates to engage in political debate and discussion.” Also upheld were the provisions for public financing of the president’s campaigns.

For communications to qualify as “express advocacy” and, thus, be regulated, it must contain the so-called “magic words” which are “explicit words of advocacy of election or defeat.” Examples of such “magic words” are provided in famous footnote 52 of Buckley v. Valeo, and include “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject.”

Other provisions of FECA were struck down. The Court ruled that FECA’s limits on independent expenditures, a candidate’s personal expenditures, and overall campaign expenditures violated the First Amendment by placing “substantial and direct restrictions on the ability of candidates, citizens, and associations to engage in protected political expression.”

The Bipartisan Campaign Reform Act of 2002  (also known as McCain-Feingold)

Soft Money Ban

The chief component of the bill is its ban on soft money—the term for donations made to national political party committees (e.g., the Democratic National Committee, Republican National Committee, and the Senatorial and Congressional campaign committees) in amounts and from sources (corporations and unions) not permitted in federal elections. Under previous law, parties could raise unlimited amounts of soft money, which they were using not only for party-building activities such as get-out-the-vote efforts, candidate recruitment, and administrative expenses, but also for candidate-specific broadcast advertising. Under BCRA the parties can no longer raise soft money.

Hard Money increases under BCRA (using amounts for 2009-10 election season – contribution limits are increased for inflation in odd-numbered years)

• Increases from $1,000 to $2,400 per candidate per election
• Remains $5,000 per year to a political action committee (“PAC”);
• Increases from $20,000 to $$30,400 per national party committee (e.g., Democratic National Committee, Republican National Committee) per year;
• Increases from $5,000 to $10,000 per state or local party committee per year; and
• Increases the aggregate limit on individual contributions from $25,000 per year to $115,500 per two-year election cycle, of which only $45,600 may be contributed to candidates over the two years and $69,900 to all PACs and parties. The two-year election cycle starts on January 1 of odd-numbered years and extends to December 31 of even-numbered years.

Restrictions on Electioneering Communications

The bill prohibited corporations, trade associations, and labor organizations from financing “electioneering communications” within 60 days of a general election and 30 days of a primary election using “treasury money.” An electioneering communication is one that refers to a clearly identified federal candidate and is targeted to the candidate’s state or district. (A corporation’s, trade association’s or union’s PAC may still run or finance such ads because its funds are, by definition, hard money). This provision also would require non-corporate or non-union persons or entities that spend in excess of $10,000 on electioneering communications during a calendar year to file disclosure reports listing the person(s) making or controlling the disbursements and the custodian of the records, all contributors who gave more than $1,000 to finance the communications, and those to whom disbursements of more than $200 have been made.

Primary Candidates
For primary candidates there is a voluntary system of partial public financing.

After a candidate qualifies by meeting the $100,000 threshold–raising $5000 in 20 states in contributions of $250 or less–his or her campaign becomes eligible to receive matching funds.  Contributions from individuals of up to $250 are matched dollar for dollar with payments from the Presidential Election Campaign Fund.  They must agree to comply with spending limits, based on the 1974 figure of $10 million, adjusted for inflation (in 2008 the limit was $42,050,000)

A candidate who chooses not to participate in the matching funds program can spend as much as he or she wants, but contributions from individuals still may not exceed $2,400.  There is no limit to how much a candidate can spend of his or her own money.  In the 2000 Republican primary campaign then Gov. George W. Bush declined matching funds and brought in more than $90 million in individual contributions, a record.  In 2004 President Bush again declined matching funds and there were suggestions that he could raise upwards of $200 million although he faced no credible Republican challenger.  Faced with this prospect, two of the Democratic candidates, former Gov. Howard Dean (on Nov. 8, 2003) and Sen. John Kerry (on Nov. 14, 2003), opted out of the public financing system as well.

In 2008 John McCain, Tom Tancredo, John Edwards, Chris Dodd, and Joe Biden qualified for and accepted public funds throughout the primary process.  Hillary Clinton and Barack Obama decided not to participate in the public financing system.

Conventions
The major parties receive public funds to put on their national nominating conventions, based on the 1974 figure of $4 million, adjusted for inflation.  In 2008, the two major parties each received $16,820,000 .(Third parties whose presidential nominees received at least five percent of the vote in the previous election also can receive funds toward their conventions; none meet this criterion for 2008).  Additionally, non-profit host committees are formed to defray expenses connected with hosting conventions, and these can accept direct and in-kind contributions from local businesses, unions and individuals.

General Election
The Democratic and Republican nominees receive grants to cover all expenses in the general election campaign, based on the 1974 figure of $20 million, adjusted for inflation.  In 2008, John McCain accepted public funds of $84 million.  Barack Obama declined public financing and ultimately raised $778,642,047.

527s

BCRA stemmed the flow of soft money to the parties, but those monies quickly found a new channel in the so called “Section 527” political organizations.  527s can engage in voter mobilization efforts, issue advocacy and other activity short of expressly advocating the election or defeat of a federal candidate.  There are no limits to how much they can raise.

In Spring 2004 liberal groups such as America Coming Together (ACT) (“mobilizing voters to defeat George W. Bush”), The Media Fund (“media buying organization supporting a progressive message and defending Democrats from attack ads”) and MoveOn.org Voter Fund, drawing backing from billionaire George Soros and others, engaged in a major campaign that paralleled that of the presumptive Democratic nominee Sen. John Kerry.  Republicans protested, but the FEC declined to stop such expenditures.  According to the Center for Public Integrity, 53 committees that focused “largely or exclusively on the presidential election” raised $246 million in the 2003-4 cycle.  All told “527” committees raised and spent just over a half-billion dollars during the 2003-4 election cycle.”

Supreme Court and BCRA

McConnell v. FEC – Summary of the Supreme Court’s decision

December 10, 2003 McConnell v. Federal Election Commission is the landmark legal case challenging the constitutionality of the new McCain-Feingold campaign finance law, formally known as the Bipartisan Campaign Reform Act of 2002 (“BCRA”).

The table below summarizes the Court’s decisions on the constitutionality of the major components of BCRA.

Federal Election Commission v. Wisconsin Right to Life, Inc. 2007

The Court created an exception to the limits on broadcast ads within 30 days of a primary or 60 days of a general election.  Now an ad can run in that time period unless it explicitly urges the election or defeat of a candidate.  The Court expressed its skepticism for limitations on campaign speech concluding “Enough is enough.”

Davis v. Federal Election Commission  2008

The Court struck down the “millionaire’s amendment” to BCRA that allowed candidates to exceed federal limits on fund-raising if they were running against a candidate who spent $350,000 or more of his or her own money on the campaign.

Citizens United v. Federal Election Commission (Argued Sept. 9, 2009)

This case concerns the issue of whether the documentary Hillary: The Movie could be banned from being shown on TV before the 2008 Democratic convention or whether the ban on corporate spending on “electioneering communications” 30 days before primaries and 60 days before a general election should be lifted.