CAMPAIGN FINANCE This document contains information from previous classes I've taught with major segments on campaign finance, as well as some background information on campaign finance. Some of it may be helpful. * * * * * * * * * Total campaign spending in 1996 by presidential, House and Senate candidates, national party conventions, and national party organizations was more than $2 billion, an increase of $650 million over the 1992 of approximately $1.35 billion -- an increase of nearly 50%. This doesn't even include spending from a whole range of other sources. The national Democratic and Republican parties raised a record $881 million for the 1996 election, a 73 percent increase over just four years ago, when the various committees of the two parties brought in $508 million. Eight years earlier, when George Bush was elected president, the two parties' total was $207 million -- one-fourth of the 1996 figure. The Republicans far out-raised and outspent the Democrats. Republican committees, including those devoted to congressional fund-raising, brought in $549 million. Democratic committees raised $332 million. The most dramatic increase came in controversial "soft money" -- gifts in unlimited amounts from corporations, unions and wealthy individuals that fall outside the federal law regulating fund-raising. The Republicans took in $141 million in soft money, almost three times the $50 million they reported in 1992. The Democratic Party was competitive with the GOP in soft money, pulling in $122 million, up from $37 million in the last presidential season. Some more of the larger components: Presidential Primaries: $234 million Senate Races: $220 million (general election only) House Races: $406 million (general election only) ($275 million to incumbents; $99 million to challengers) Independent expenditures: Nobody knows III. Laws and other regulations of Campaign Finance Reform (You only definitely need to know about the ones listed in the in-class handout, included directly below this section.) The Pendleton (Civil Service) Act (1883) -- in addition to creating the civil service system and banning the spoils system for most federal jobs, it did 2 other important things for our purposes. (1) It protected covered federal workers from being forced to contribute to their employers' political campaigns; (2) It banned covered federal workers from engaging in overtly political activity, including campaigning. The Tillman Act (1907) -- banned campaign contributions from corporations and banks The Publicity Act (1910) -- required national party organizations to disclose their receipts and expenditures after the election Amendments to the P.A. (1911) -- required reporting both before and after the elections; extended reporting to cover House and Senate candidates; placed spending limits on House and Senate campaigns. Federal Corrupt Practices Act (1925) -- didn't change much; deleted regulation of primaries banned by the 1921 S.C. case, Newberry v. U.S.; increased the spending limits, and mandated quarterly reporting. -- No effective regulatory control was established to this point. The Hatch "Clean Politics" Act (1939): -- the Pendleton Act only applied to around 10% of Federal workers; this extended coverage to the large majority of others. Amendments to the Hatch Act (1940): -- limited individual contributions to federal candidates to $5,000 per year, and total contributions to federal candidates and national party committees to $3 million per year. The Smith-Connally Act (1943): -- prohibited labor unions from using their treasury funds to make political contributions to candidates for federal office. (Passed over Roosevelt's veto; because it was adopted as a war measure, it automatically expired 6 months after the end of the war.) The Taft-Hartley Act (1947): -- made that ban permanent. It matches the ban on corporate donations from the Tillman Act of 1907. Federal Election Campaign Act (FECA) (1971): -- (1) established contribution limits for candidate's contributions to their own campaigns; set ceilings on media spending on media advertising; (2) imposed strict public disclosure procedures. Revenue Act of 1971: -- created a $1 check-off box on income tax forms to create a fund for Presidential elections. It also created tax credits and tax deductions for small campaign contributions. This was repealed by the Tax Reform Act of 1986. 1974 FECA Amendments: -- because spending still increased tremendously between 1968 and 1972, Congress took much stronger action in 1974. It strengthened the disclosure requirements, enacted tough limits on contributions and expenditures. It set specific limits on contributions by individuals, political committees and party organizations. It replaced the media spending ceilings with total spending limits for candidates for all federal offices. It limited the amount that party organizations could spend for federal candidates. It created the Federal Election Commission, as a fully independent regulatory agency -- this was one of the most important provisions. Finally, it established full federal funding for presidential elections and a voluntary system of mathing funds for presidential primaries. Buckley v. Valeo (1976): -- The Supreme Court, ruling that money is speech, struck down the limit on candidate's contributions to their own campaigns. It also struck down the limits on independent expenditures. In response, Congress had to pass revisions to the FECA in 1976. 1979 FECA Amendments: -- Revised reporting, disclosure and paperwork requirement to make compliance easier. "It also sought to address the concerns raised by state and local party officials regarding the diminished role of local party organizations in national elections. To this end, the 1979 law granted party organizations a limited exemption from the spending provisions of the 1976 Act and allowed them to spend 'federal' funds on certain grass-roots volunteer activities and on traditional activities such as voter registration and get-out-the-vote programs." It didn't create "soft money" which refers to the parties' "non-federal" funds, but it did allow federal funds to be used for very broad purposes above and beyond the spending limits imposed by the 1974 law. McCain-Feingold (did not pass in 1998): -- would have banned soft money, and limited PACs and independent expenditures. Colorado Republican Federal Campaign Committee v. FEC (1996) A string of earlier court cases in the 1970s-1990 made it easier for organizations independent of candidates' campaigns to finance their own campaigns in support or opposition to candidates or ballot measures without restrictions. This Supreme Court Case ruling found that even a state's party organization could be considered "independent" of its own candidates for office and can thus run independent expenditure campaigns using "soft money". Various FEC regulations State finance laws Campaign Finance Video: Terms to Know The Tillman Act (1907) -- banned corporate and bank contributions in federal campaigns. The Hatch "Clean Politics" Act (1939) and its Amendments (1940) -- banned federal employees from engaging in overtly political activity; limited campaign contributions in federal campaigns. The Taft-Hartley Act (1947) -- banned labor union contributions in federal campaigns. The Federal Election Campaign Act (FECA, 1971) -- limited candidate contributions to their own campaigns; set ceilings on spending on media; required strict public disclosure. FECA Amendments (1974) -- created the FEC; strengthened limits on spending and contributions; established full federal funding for presidential elections and matching funds for primaries; created the $1,000 per person per election contribution still in effect today despite inflation. The Federal Election Commission -- created by the 1974 Amendments as an independent regulatory body. In practice, it has allowed just about anything. Buckley v. Valeo (1976) -- a Supreme Court case that ruled that limits on campaign spending are unconstitutional limits on speech, while limits on campaign contributions are permissible; also allowed unlimited candidate contributions to their own campaigns and independent expenditures on "issue advocacy" advertisements. Hard ("Federal") Money -- money that is subject to the FECA contribution limits; literally money used directly to aid in the campaigns of candidates for federal office. Soft ("Non-Federal) Money -- money allegedly used to help state or local parties engage in "party-building" activities, and thus not subject to federal regulation; in practice, this money is used by parties to purchase "issue advocacy" advertisements as "independent expenditures" for their candidates. Political Action Committees (PACs) -- groups that pool together campaign contributions and make contributions as a group to candidates, used to get around the bans on corporate and labor union contributions. "Leadership" PACs -- PACs formed by politicians to increase their political influence with their peers. Issue Advocacy Advertisements -- advertisements by political parties or interest groups to promote or oppose candidates, without being directly linked to any candidate's campaign or saying "vote for or against" anyone. Campaign Finance Video: Terms to Know The Tillman Act (1907) -- banned corporate and bank contributions in federal campaigns. The Hatch "Clean Politics" Act (1939) and its Amendments (1940) -- banned federal employees from engaging in overtly political activity; limited campaign contributions in federal campaigns. The Taft-Hartley Act (1947) -- banned labor union contributions in federal campaigns. The Federal Election Campaign Act (FECA, 1971) -- limited candidate contributions to their own campaigns; set ceilings on spending on media; required strict public disclosure. FECA Amendments (1974) -- created the FEC; strengthened limits on spending and contributions; established full federal funding for presidential elections and matching funds for primaries; created the $1,000 per person per election contribution still in effect today despite inflation. The Federal Election Commission -- created by the 1974 Amendments as an independent regulatory body. In practice, it has allowed just about anything. Buckley v. Valeo (1976) -- a Supreme Court case that ruled that limits on campaign spending are unconstitutional limits on speech, while limits on campaign contributions are permissible; also allowed unlimited candidate contributions to their own campaigns and independent expenditures on "issue advocacy" advertisements. Hard ("Federal") Money -- money that is subject to the FECA contribution limits; literally money used directly to aid in the campaigns of candidates for federal office. Soft ("Non-Federal) Money -- money allegedly used to help state or local parties engage in "party-building" activities, and thus not subject to federal regulation; in practice, this money is used by parties to purchase "issue advocacy" advertisements as "independent expenditures" for their candidates. Political Action Committees (PACs) -- groups that pool together campaign contributions and make contributions as a group to candidates, used to get around the bans on corporate and labor union contributions. "Leadership" PACs -- PACs formed by politicians to increase their political influence with their peers. Issue Advocacy Advertisements -- advertisements by political parties or interest groups to promote or oppose candidates, without being directly linked to any candidate's campaign or saying "vote for or against" anyone. Here is some additional info if you're interested. (The tables are below) Contributions: 1) Individual, general election/primaries ($1,000 per person per election -- not inflation adjusted.) 2) Political Committees, or PACs, general election/primaries ($5,000 for candidates, $15,000 for national party committees and $5,000 for state/local party committees. 3) Leadership PACs (same as above, but can pay for travel, other expenses) 4) Party Committees (direct support, coordinated campaigns, party building) Expenditures: Party Committees (coordinated campaigns) Independent Expenditures (no limit) Prohibited Categories National Banks, Corporations & Labor Orgs. (can't contribute, but can do independent expends -- exemptions: nonprofit issue advocacy groups; press exemption; internal communication; Foreign Contributions Federal Contractors Contributions in the name of another Enforcement: FEC -- civil violations (fines) Justice Department -- criminal violation (jail) In general, though, courts have been unwilling to enforce most provisions of the various laws and regulations. That's why organizations that are obviously partisan are allowed to retain their tax-exempt status, and why money spent on advertisements that are obviously direct advocacy are allowed to claim to be issue advocacy. Presidential Elections Primaries -- matching funds up to $250 of individual contributions if they qualify. Limit spending to a total of $31 million in 1996. Conventions -- public funding, $12.4 million each in 1996. General Election --Major Parties receive public funds -- can't spend beyone that amount if they accept them. Perot didn't accept them in 1992, so had no limit. He did accept them in 1996, so he had a limit. ($61.8 million each in 1996 -- and half as much to Perot; but Perot was allowed to raise and spend up to the full amount spent by the major parties.) Other important issues: SOFT MONEY -- technically not "Federal" ISSUE ADVOCACY -- as long as you don't say "Vote for Bill/Bob" INDEPENDENT EXPENDITURES Other Players: Unions Corporations 501(c)(4) Orgs -- "social welfare organizations" eg., The Christian Coalition, The National Policy Forum, the Democratic Leadership Council 501(c)(3) Orgs -- tax-exempt entities organized for charitable purposes TABLES National Party Receipts, by Year & Category Democrats 1996 1992 1988 Federal $210.0 $121.1 $155.5 Non-federal 122.3 49.1 36.3 _______________________________________________ Total 332.3 170.2 191.8 Republicans 1996 1992 1988 Federal 407.5 223.7 266.3 Non-federal 141.2 52.5 49.8 _______________________________________________ Total 548.7 276.2 316.1 1995-1996 Independent Expenditures For Against Senate Dems $314,689 $5,498,204 House Dems $808,327 $181,599 Total Dems $3,663,257 $5,679,803 Senate Reps $7,697,442 $2,254,670 House Reps $2,540,241 $1,655,766 Total Reps $10,237,683 $3,910,436 Total Pro-Dem.+ Anti-Rep. $7,573,693 Total Pro-Rep. + Anti-Dem. $15,917,486 Total "Soft Money" Party Disbursments 1992 1994 1996 Democrats $32,878,310 $50,383,546 $121,826,562 Republicans $46,176,476 $48,387,091 $149,658,099 Total PAC contributions to House and Senate Campaigns, 1995-6* Corporate & Health Labor Total Democrats $38,840,703 $43,366,849 $93,931,979 Republicans $86,748,834 $2,951,913 $106,733,137