5.11 Campaign Finance

Campaign Finance Legislation & Court Decisions

Modern political campaigns are more expensive than ever, as candidates at all levels of government need money for everything from cheaply manufactured campaign apparel to costly TV and Internet advertisements. At the heart of campaign finance is the debate over the role of money in politics and free speech Since the 1970s, a recurring theme has presented itself in federal elections: Congress and the Courts’ efforts to regulate money in elections have been countered with repeated loopholes around campaign finance legislation and court decisions.  

In 1971, Congress passed the Federal Election Campaign Act (FECA), and amended the law in 1974 with more specific limitations on individual and political action committee (PACs) donations. The 1974 law created the Federal Election Commission (FEC) to implement the law. In Buckley v. Valeo (1975), the Supreme Court upheld most of the FECA regulations, but also ruled that Congress can’t limit a candidate’s donations to his or her own campaign. In the Buckley decision, the Court basically agreed with Congress with the idea that unlimited monetary donations in elections do more harm than good.

Despite Congress’ and the Court’s best efforts to regulate excessive campaign donations, many politicians and interest groups immediately found ways to get around the regulations. Hard money 💲 (funds given directly to a candidate) was regulated by the 1970s legislation, and court rulings, however, soft money 💲 (donations to political parties and/or interest groups) was not. Soft money became the vehicle for skyrocketing campaign spending in elections throughout the last quarter of the 20th century.

Bipartisan Campaign Reform Act

The Bipartisan Campaign Reform Act of 2002, also known as McCain-Feingold, is a federal law that aimed to regulate campaign finance and improve transparency in the political process. The act was passed in response to concerns about the increasing role of large corporations and wealthy individuals in financing political campaigns. The law imposed restrictions on the amount of money that could be contributed to political candidates, parties, and outside groups, and required the disclosure of the identity of donors.

One of the key provisions of the law was the ban on "soft money" contributions to political parties. The act also prohibited corporations and labor unions from using their general funds to make direct contributions to federal candidates and banned the use of corporate and union treasury funds for electioneering communications within 60 days of a general election or 30 days of a primary election.

The law also established new disclosure requirements for political advertisements and increased penalties for violating campaign finance laws. Additionally, it created a new system for public financing of presidential campaigns and required political parties to disclose their campaign finance activities to the Federal Election Commission.

While the Bipartisan Campaign Reform Act was meant to reduce the influence of money in politics and increase transparency, it has faced criticism for not fully achieving these goals. Some argue that the law has been circumvented through the creation of political action committees (PACs) and independent expenditure groups, which can accept unlimited contributions from individuals and corporations.

Despite these criticisms, the Bipartisan Campaign Reform Act remains an important piece of legislation that has shaped the regulation of campaign finance in the United States. Its provisions have been upheld by the Supreme Court, and it continues to play a role in limiting the influence of money in politics and promoting transparency in the political process. It is also the reason why it is required that candidates state the famous, “I’m [candidate’s name], and I approve this message,” to prevent confusion as to who or what organization was funding an ad. 

Citizens United v. FEC

Citizens United v. Federal Election Commission (2010) was a landmark Supreme Court case that dealt with the regulation of political campaign spending by corporations and labor unions. The case challenged the constitutionality of certain provisions of the Bipartisan Campaign Reform Act that prohibited corporations and unions from making independent expenditures in support of, or in opposition to, a candidate for federal office.

Citizens United, a non-profit corporation, sought to air a documentary critical of then-Senator Hillary Clinton during the 2008 Democratic presidential primaries. The Federal Election Commission (FEC) ruled that airing the film was in violation of the McCain-Feingold Act, as it constituted an illegal corporate expenditure. Citizens United challenged the FEC’s ruling, arguing that the ban on corporate expenditures violated its First Amendment rights to free speech and political expression.

The Supreme Court, in a 5-4 decision, agreed with Citizens United and held that the ban on corporate expenditures was unconstitutional. The Court held that corporations have the same First Amendment rights as individuals, and that the government could not restrict political speech based on the speaker's corporate identity. The Court also struck down provisions of the McCain-Feingold Act that required disclosure and disclaimer requirements for corporate and union political expenditures.

The decision in Citizens United v. Federal Election Commission has had a significant impact on the regulation of campaign finance in the United States. The ruling has led to a significant increase in corporate and union spending in elections and has been criticized for allowing corporations to have undue influence in the political process.

Political Action Committees (PACs)

There are several types of PACs that play an integral role in federal, state, and local elections. Most PACs can accept donations from the general public, and then donate funds directly into the accounts of their preferred candidates (up to $5,000 per candidate). The Citizens United ruling led to the creation of Super PACs—political action committees that can legally collect unlimited donations to use on electioneering communications as long as the group remains independent from the candidates. There are some key differences between the two PACs:

1. Contribution Limits: Normal PACs are subject to contribution limits set by the Federal Election Commission (FEC), which limits the amount of money that individuals, corporations, and labor unions can donate to a PAC. Super PACs, on the other hand, are not subject to these contribution limits and can accept unlimited amounts of money from individuals, corporations, and labor unions.

2. Independence: Normal PACs are required to operate independently of candidates and political parties, and are limited in the amount of money they can contribute to candidates or parties. Super PACs, however, are not subject to these independence requirements and can spend unlimited amounts of money to support or oppose political candidates.

3. Disclosures: Normal PACs are required to disclose their donors to the FEC, and these disclosures are made available to the public. Super PACs are also required to disclose their donors, but the disclosure requirements are less stringent, and there have been instances where the identity of the donor is not immediately known.

4. Activities: Normal PACs can engage in a wide range of activities, including contributing to candidates and political parties, making independent expenditures, and conducting issue advocacy. Super PACs, on the other hand, are primarily focused on making independent expenditures to support or oppose political candidates.

Some of the differences can also be summarized in this table: