Campaign Finance Test Revie

Campaign Finance in U.S. Politics

Importance of Money in Politics

  • Quote from Mark Hanna, Ohio political boss and U.S. Senator (1895):
    "There are two things that are important in politics. The first is money and I can’t remember what the second one is."

Reasons for High Campaign Spending

  • Expansion of the electorate over time and increase in the number of offices determined by popular vote.

  • Increased power of the government in the economy.

  • Rising costs of mass media.

Sources of Campaign Financing

  • Public Financing:

    • Tax dollars appropriated by the government for presidential primary candidates, national conventions, and presidential nominees for the general election.

    • Candidates may opt out of public financing.

  • Private Donations:

    • Individual donors or PACs (Political Action Committees).

    • Super PACs:

    • A type of PAC that indirectly supports campaigns with minimal restrictions from the FEC (Federal Election Commission).

Government Regulation of Campaign Financing

  • Disclosure Laws:

    • Require that campaigns list expenditures and/or contributions from PACs or individuals and the corresponding dollar amounts.

  • Public Financing Laws:

    • Laws that limit or regulate campaign finance through:

    • Contribution limits.

    • Spending/expenditure limits.

Key Legislation and Cases in Campaign Finance

  • 1974 FECA Amendment (Federal Election Campaign Act of 1971):

    • Imposed individual contribution limit of $1,000.

    • PAC contribution limit of $5,000.

    • Required disclosure reports for all contributions and expenditures.

    • Created a voluntary and equitable public financing system for presidential candidates during primaries and general elections (minor parties excluded).

    • Established the Federal Election Commission (FEC) to enforce campaign finance law and provide public financing.

Buckley v. Valeo (1976)

  • Supreme Court Case:

    • Upheld certain portions of the FECA amendment while nullifying others.

    • Nullified expenditure limits and contributions for issue advocacy (Soft Money) as a form of free speech.

    • Terms such as "vote for," "election," "support," "vote against," "defeat," and "reject" are not allowed in issue advocacy.

    • Upheld individual contribution limits, reporting and disclosure requirements, and public election funding.

    • Upheld limits on express advocacy (Soft money) or money directly given to candidates (Hard Money).

    • Confirmed the legality of the Federal Elections Commission (FEC).

Bipartisan Campaign Reform Act (BCRA) or McCain-Feingold Act (2002)

  • Placed significant restrictions/limits on “soft money.”

    • Defined “Soft Money” as money not directly given to a candidate but supporting their campaign.

    • Prohibited electioneering communications by corporations, labor unions, and wealthy individuals within 30 days of the primary and 60 days of the general election.

    • Adjusted “hard money” contributions:

    • Set limits of $2,000 to a candidate per individual/PAC per election.

    • Designed to compel candidates to raise small amounts of money from many different contributors.

Citizens United v. FEC

  • Case Facts:

    • Citizens United produced a film urging people to vote against Hillary Clinton.

    • The FEC did not allow the film to be aired within 30 days of the 2008 primary per BCRA provisions.

  • Arguments:

    • Citizens United:

    • Argued that financial contributions to support a candidate is a form of free speech applicable to individuals and groups.

    • Asserted that spending money on behalf of a candidate does not imply corruption.

    • FEC:

    • Claimed the 1st Amendment does not apply to corporations and warned that it could lead to corruption, undermining the legitimacy of U.S. electoral systems.

  • Decision Holding:

    • Decision was 5-4 in favor of Citizens United.

    • Ruled that campaign-finance limits on corporations violated free speech rights.

    • Nullified portions of McCain-Feingold concerning “soft money.”

    • Established the legality of Super PACs with no expenditure or contribution limits for issue advocacy; conditions included not coordinating with candidates and the obligation to report contributors and expenditures (527 only).

Campaign Finance Entities and Tax Code Implications

  • PACs:

    • Political Action Committees that facilitate contributions to candidates.

  • Super PACs:

    • Register as either 501(c)(4)s or 527s.

    • 501(c)(3): Apolitical tax-exempt organizations (e.g., churches, humanitarian organizations).

    • 501(c)(4): Apolitical tax-exempt organizations promoting social welfare.

    • 527: Exclusively political tax-exempt organizations.

    • Note: 501(c)(4)s do not have to disclose their donors/contributors.

Trends in Campaign Finance

  • Graphical Data:

    • Displays total independent expenditures (in millions) over election cycles, highlighting trends from 1990 to 2012.

    • Notable peaks correlate with significant judicial rulings such as Citizens United v. FEC.

Cartoon Analysis: Citizens United v. FEC

  • The cartoon comments on the implications of Citizens United v. FEC, indicating the overwhelming influence of corporate money in politics is analogous to a NASCAR driver decorated with company logos, suggesting the commodification of political candidates.