Election Campaign Financing

AuthorJeffrey Lehman, Shirelle Phelps

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Election campaigns for public office are expensive. Candidates need funding for support staff, advertising, traveling, and public appearances. Unless they are independently wealthy, most must finance their campaigns with contributions from individuals and from businesses and other organizations. Today, state and federal laws set limits on campaign contributions; create contribution disclosure requirements; and impose record-keeping requirements for candidates seeking elective office.

Before 1974, most election campaigns were financed by corporations and small groups of wealthy donors. In 1972, for example, insurance executive W. Clement Stone contributed approximately $2.8 million directly to the re-election campaign committee of President RICHARD M. NIXON. Such contributions raised concerns of UNDUE INFLUENCE on the selection of available candidates and on subsequent legislation. Many in Congress felt the need to limit the influence of money in political campaigns in order to regain the confidence of the public in the wake of the WATERGATE scandal, a series of events that ultimately led to charges of abuse of power and OBSTRUCTION OF JUSTICE involving Nixon's campaign activities.

In 1974, Congress made radical changes to the Federal Election Campaign Act of 1971 (FECA) (2 U.S.C.A. §§ 431?456 [1996]). In its amended form, FECA limited contributions to individual candidates and political parties; personal spending by candidates; overall campaign spending for federal office; and independent spending by groups not directly associated with a candidate's campaign. The act also created a check-off box on federal tax forms, allowing taxpayers to contribute a dollar to a presidential campaign fund, and it devised a formula for payments from the fund.

James L. Buckley, who was running for the U.S. Senate from New York, and other candidates for federal office challenged FECA in federal court. In 1976, the Supreme Court struck down the act's spending limits in Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976). According to the high court, setting mandatory limits on the amount of money a candidate may spend in a campaign violated the FIRST AMENDMENT. However, the Court upheld the act's disclosure requirements, private contribution limits, and provision for the public funding of qualified presidential candidates.

FECA has been the subject of additional litigation. The U.S. Supreme Court, in Colorado Republican Federal Campaign Committee v. Federal Election Commission, 518 U.S. 604, 116 S. Ct. 2309, 135 L. Ed. 2d 795 (1996), struck down spending limits under the FECA imposed on political parties that were deemed independent expenditures?in other words, spending that was not coordinated with a candidate's congressional campaign. The 1996 case did not resolve the issue of whether the federal provision that limited expenditures by

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political parties for spending done in coordination with a candidate's campaign violated the First Amendment.


The 1996 presidential and congressional elections revealed the growing amount of private money that businesses, unions, and individuals contribute to political campaigns. Congressional hearings in 1997 revealed that the Democratic National Committee had solicited and received contributions from questionable sources. Despite these revelations, many members of Congress did not see any reason to reform federal campaign finance laws. Nevertheless, Congress considered a series of bills proposed by JOHN MCCAIN (R-AZ), a presidential candidate himself in 2000, and Russ Feingold (D-WI) from 1998 through 2002 that finally led to the enactment of the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (2 U.S.C.A. § 431 et seq.), commonly known as the McCain-Feingold bill.

The debate over campaign financing was initially framed by the Supreme Court's decision in Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 912, 46 L. Ed. 2d 659 (1976). The Court ruled that provisions of the Federal Election Campaign Act of 1971 (FECA), 2 U.S.C.A. §§ 431?456, which sets mandatory limits on the amount of money a candidate may spend in a campaign, violated the FIRST AMENDMENT. Though the Court upheld the provisions of FECA that set disclosure requirements, private contribution limits, and public funding of qualified presidential candidates, the elimination of mandatory spending limits meant that campaign costs and the funds to pay for them steadily escalated thereafter.

Soft Money The most troubling issue for reformers has been the growing importance of soft money (money given to a party to further the party rather than a particular candidate). U.S. corporations and unions provided unprecedented amounts of soft-money contributions during the 1996 and 2000 election cycles. At the same time, the FEDERAL ELECTION COMMISSION had its budget cut, making the commission virtually helpless to prevent the parties from skirting existing campaign finance laws. In light of the impact soft money made on elections, reformers believed soft money must either be eliminated or severely limited.

The McCain-Feingold legislation imposed a soft money ban on all federal elections. It also limited the amount of soft money contributors may give to state, district, and local committees. The ban on soft money was one of the highlights in the legislation, but it was expected to come under attack in light of Buckley v. Valeo. Critics of the soft-money ban argue that the contribution of money to political parties is a form of free speech protected by the First Amendment. In December 2003, the U.S. Supreme Court upheld the constitutionality of these limits by a vote of 5?4.

The McCain-Feingold legislation actually increased the...

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