Campaign finance reform is the common term for the political effort in the United
States to change the involvement of money in politics, primarily in political campaigns.
Although attempts to regulate campaign finance by legislation date back to 1867, the first
successful attempts nationally to regulate and enforce campaign finance originated in the 1970s. The Federal Election Campaign Act (FECA) of 1971 required
candidates to disclose sources of campaign contributions and campaign expenditure. It was amended in 1974 with the introduction
of legal limits on contributions, and creation of the Federal Election
Commission (FEC). The Bipartisan Campaign Reform Act (BCRA) of
2002, also known as "McCain-Feingold," after its sponsors, is the most recent major federal law on
campaign finance, which revised some of the legal limits of expenditure set in 1974, and prohibited
unregulated contributions (called "soft money") to national political parties.
History
First attempts
Money has been associated with elections since the inception of the electoral process in the United States. Out of four
million citizens during the Revolution, only 800,000 property owners were enfranchised. In 1777 James Madison lost a race for the Virginia legislature, which he claimed was due to his refusal to provide
alcohol. Aaron Burr persuaded the New York state assembly to create an anti-Federalist state
bank for the purpose of helping citizens buy land in order to gain votes.
By the time of the presidential election of 1828, 22 two of the 24 states chose presidential electors through the popular vote
and most had abandoned the property requirement. Some politicians had been known to buy votes and pay repeat voters. In 1823 the
price of a vote in New York City was $5 and for repeat voters, went as high as $30.
In order to gain votes from recently enfranchised, unpropertied voters, Andrew Jackson
launched his campaign for the 1828 election through a network of partisan newspapers across the nation. After his election,
Jackson began a political patronage system that rewarded political party operatives, which had a profound effect on future
elections. Eventually, appointees were expected to contribute portions of their pay back to the political machine. During the
Jacksonian era, some of the first attempts were made by corporations to influence politicians. Jackson claimed that his charter
battle against the Second Bank of the United States was one of the
great struggles between democracy and the money power. The Bank of the United States in turn spent over $40,000 from 1830 to 1832
in an effort to stop Jackson's re-election.[citation needed]
In the 1850s Pennsylvania Republican Simon Cameron began to develop what became known as the "Pennsylvania Idea" of applying the wealth of corporations to help maintain Republican control of the
legislature. Political machines across the country used the threat of hostile legislation to force corporate interests into
paying for the defeat of the measures. U.S. Senators of the time were elected not by popular vote, but by state legislatures,
whose votes could sometimes be bought. Exposed bribery occurred in Colorado, Kansas, Montana and West Virginia.
Abraham Lincoln's attempt to finance his own 1858 Senate run bankrupted him, even
though he had arranged a number of $500 expense accounts from wealthy donors. However, he was able to regain enough money in his
law practice to purchase an Illinois newspaper to support him in the presidential election of 1860, for which he gained the
financial support of businessmen in Philadelphia and New York City.
After the Civil War, parties increasingly relied on wealthy individuals for
support, including Jay Cooke, the Vanderbilts and the Astors. In the absence of a civil service system, parties also continued to
rely heavily on financial support from government employees, including assessments of a portion of their federal pay. The first
federal campaign finance law, passed in 1867, was a Naval Appropriations Bill which prohibited
government employees from soliciting contributions from Navy yard workers. Later, the Pendleton Act of 1883 established the civil
service and ended the practice of assessments at the Federal level. However, this loss of a major funding source increased
pressure on parties to solicit funding from corporate and individual wealth.
In the campaign of 1872 a group of wealthy New York Democrats pledged $10,000 each to pay for the costs of promoting the
election. On the Republican side, one Ulysses S. Grant supporter alone contributed one
fourth of the total finances. One historian said that never before was a candidate under such a great obligation to men of
wealth. Vote buying and voter coercion were common in this era. After more standardized ballots were introduced, these practices
continued, applying methods such as carbon paper under ballots for proof of payment.
Boise Penrose mastered post-Pendleton Act corporate funding through extortionist tactics, such as squeeze bills (legislation
threatening to tax or regulate business unless funds were contributed.) During his successful 1896 U.S. Senate campaign he raised
a quarter million dollars within 48 hours. He allegedly told supporters that they send him to Congress to enable them to make
more money.
In 1896 a wealthy Ohio industrialist, shipping magnate and political operative, Mark Hanna became Chairman of the Republican
National Committee. Hanna directly contributed $100,000 to the nomination campaign of fellow Ohioan William McKinley, but recognized that more would be needed to fund the general election campaign. Hanna
systemized fund-raising from the business community. He assessed banks 0.25% of their capital, and corporations were assessed in
relation to their profitability and perceived stake in the prosperity of the country. McKinley's run became the prototype of the
modern commercial advertising campaign, putting the President-to-be's image on buttons, billboards, posters, etc. Business
supporters, determined to defeat the Democratic-populist William Jennings Bryan, were more than happy to give, and Hanna actually
refunded or turned down what he considered to be "excessive" contributions that exceeded a business's "assessment.[citation needed]
Twentieth century Progressive advocates, muckraker journalists and political
satirists argued to the general public that the policies of vote buying and excessive corporate
and moneyed influence were abandoning the interests of millions of taxpayers. They advocated strong antitrust laws, restricting
corporate lobbying and campaign contributions, and greater citizen participation and control, including standardized secret
ballots, strict voter registration and women's suffrage.
In his first term, President Theodore Roosevelt, following President McKinley's
assassination of 1901, began trust-busting and anti corporate influence activities, but fearing defeat, turned to bankers and
industrialists for support in what turned out to be his 1904 landslide campaign. Roosevelt was embarrassed by his corporate
financing and was unable to clear a suspicion of a quid pro quo exchange with E.H. Harriman for what was an eventually
unfulfilled ambassador nomination. There was a resulting national call for reform, but Roosevelt claimed that it was legitimate
to accept large contributions if there were no implied obligation. However, in his 1905 message to Congress following the
election, he proposed that "contributions by corporations to any political committee or for
any political purpose should be forbidden by law." The proposal, however, included no restrictions on campaign contributions from
the private individuals who owned and ran corporations. Roosevelt also called for public financing of federal candidates via
their political parties. The movement for a national law to require disclosure of campaign expenditures, begun by the National
Publicity Law Association, was supported by Roosevelt but delayed by Congress for a decade.
This first effort at wide-ranging reform resulted in the Tillman Act in 1907. Named for its sponsor, South Carolina Senator Ben Tillman, the
Tillman Act prohibited corporations and nationally chartered (interstate) banks from making direct financial contributions to
federal candidates. However, weak enforcement mechanisms made the Act ineffective. Disclosure requirements and spending limits
for House and Senate candidates followed in 1910 and 1911. General contribution limits were enacted in the
Federal Corrupt Practices Act (1925). An
amendment to the Hatch Act of 1939 set an annual ceiling of $3 million for political
parties' campaign expenditures and $5,000 for individual campaign contributions. The Smith-Connally Act (1943) and Taft-Hartley Act (1947) extended the corporate ban to labor unions. ***
FECA and the Watergate amendments
All of these efforts were largely ineffective, easily circumvented and rarely enforced. In 1971, however, Congress passed the
Federal Election Campaign Act, requiring broad disclosure of campaign
finance. In 1974, fueled by public reaction to the Watergate Scandal, Congress passed
amendments to the Act establishing a comprehensive system of regulation and enforcement, including public financing of
presidential campaigns and creation of a central enforcement agency, the Federal
Election Commission. Other provisions included strict limits on contributions to campaigns and expenditures by campaigns,
individuals, and other political groups.
The new law was immediately challenged on First
Amendment grounds in Federal Court, resulting in a landmark Supreme
Court decision, Buckley v. Valeo. The Buckley decision recognized that
regulation burdened the rights of free speech and assembly, but held that the
compelling government interest in preventing corruption or its appearance justified some restrictions on free speech. The
resulting decision upheld contribution limits, so long as they were not so low as to prevent campaigns from amassing the
resources necessary to communicate effectively with the public, disclosure requirements, and voluntary public financing. It found
limits on expenditures to be unconstitutional infringements on free speech. It also restricted the reach of the law to speech by
candidates and parties, that is, groups established for the purpose of electing candidates, and to communications that expressly
advocated the election or defeat of a candidate, using phrases such as "vote for," "vote against," "support," or "defeat."
Bipartisan Campaign Reform Act of 2002
John McCain is the politician most recently associated with
campaign finance reform
In 2002, spurred by the 1996
campaign finance scandal which involved illegal donations to the Democratic Party from overseas sources and, later, the collapse of Enron, a major contributor to politicians at all levels of the U.S. system, the Congress passed the
Bipartisan Campaign Reform Act (BCRA), also called the McCain-Feingold
bill after its chief sponsors, John McCain and Russ
Feingold. Final passage in the Senate came after supporters mustered the
bare minimum of 60 votes needed to shut off debate. The bill passed the Senate, 60-40 on March
20, 2002, and was signed into law by President Bush
on March 27, 2002. In signing the law, Bush expressed concerns
about the constitutionality of parts of the legislation but concluded, "I believe that this legislation, although far from
perfect, will improve the current financing system for Federal campaigns... Taken as a whole, this bill improves the current
system of financing for Federal campaigns, and therefore I have signed it into law." The bill was the first significant overhaul
of federal campaign finance laws since the post-Watergate scandal era.
The BCRA was a mixed bag for those who wanted to remove the money from politics. It eliminated all soft money donations to the national party committees--but it also doubled the
contribution limit of hard money, from $1,000 to $2,000 per election cycle, with a built-in increase for inflation. In addition,
the bill aimed to curtail ads by non-party organizations by banning the use of corporate or union money to pay for
'electioneering communications,' a term defined as broadcast advertising that identifies a federal candidate within 30 days of a
primary or nominating convention, or 60 days of a general election. This provision of McCain-Feingold, sponsored by Maine
Republican Olympia Snowe and Vermont Independent James Jeffords, as introduced applied only to for-profit corporations, but was
extended to incorporated, non-profit issue organizations, such as the Environmental Defense Fund or the National Rifle
Association, as part of the 'Wellstone Amendment', sponsored by Senator Paul Wellstone.
The law was challenged as unconstitutional by groups and individuals including the California State Democratic Party, the National
Rifle Association, and Republican Senator Mitch McConnell (Kentucky), the Senate Majority Whip. After moving through lower
courts, in September 2003, the U.S. Supreme Court heard oral arguments in the case,
McConnell v. FEC. On Wednesday, December 10, 2003, the Supreme Court issued a ruling that upheld the key
provisions of McCain-Feingold; the vote on the court was 5 to 4. Justices John Paul
Stevens and Sandra Day O'Connor wrote the majority opinion; they were joined
by David Souter, Ruth Bader Ginsburg,
and Stephen Breyer, and opposed by Chief Justice
William Rehnquist, Anthony Kennedy,
Clarence Thomas, and Antonin Scalia.
Since then campaign finance limitations continue to be regulated in the Courts. In an interesting case, in 2005 in Washington
State, Thurston County Judge Christopher Wickham ruled that media articles and segments were considered in-kind contributions
under state law. The heart of the matter focused on the I-912 campaign to repeal a fuel tax, and specifically two broadcasters
for Seattle conservative talker KVI. Judge Wickham's ruling was eventually overturned on appeal in April of 2007, with the
Washington Supreme Court holding that on-air commentary was not covered by the State's campaign finance laws. (No New Gas Tax v.
San Juan County).
In 2006, the United States Supreme Court issued two decisions on campaign finance. In Wisconsin Right to Life v. Federal
Election Commission, it held that certain advertisements might be constitutionally entitled to an exception from the
'electioneering communications' provisions of McCain-Feingold limiting broadcast ads that merely mention a federal candidate
within 60 days of an election. On remand, a lower court then held that certain ads aired by Wisconsin Right to Life in fact
merited such an exception. The Federal Election Commission appealed that decision, and in June 2007, the Supreme Court held in
favor of Wisconsin Right to Life. In an opinion by Chief Justice John Roberts, the Court declined to overturn the electioneering
communications limits in their entirety, but established a broad exemption for any ad that could have a reasonable interpretation
as an ad about legislative issues. Indicating the new Court majority's temperament, Roberts' opinion declares flatly, "Enough is
enough."
Also in 2006, the Supreme Court held that a Vermont law imposing mandatory limits on spending was unconstitutional, under the
precedent of Buckley v. Valeo. In that case, Randall v. Sorrell, the Court also struck down Vermont's contribution limits as
unconstitutionally low, the first time that the Court had ever struck down a contribution limit.
Criticisms of campaign finance reform
In addition to criticisms grounded in the First Amendment, campaign finance reform is often criticized for its unintended
consequences, including less competitive elections, the propagation of extremely complicated instructions, and the discouragment
of political giving.
Most opponents claim that CFR infringes on free speech and violates the
First Amendment rights. The argument states that the
purpose of the free speech clause of the First Amendment is the guarantee that people have the right to publish their political
views. Under this view, when the laws prohibit people from advocating for or against political candidates by restricting the
content of political advertising, the laws are in conflict with the constitutional guarantee of freedom of political speech.
Many opponents have charged that changes to campaign finance laws can produce unintended harmful consequences. For example,
many political scientists say that the rise of PACs helped hasten the weakening of
political parties in the United States, as candidates grew more entrepreneurial in their
fundraising and gained access to campaign finance outside of party channels; opponents have noted (and decried) this unexpected
change which has resulted in unusually long periods of fundraising and proportionally less time for campaigning. Another example
is that disclosure requirements may lead individuals to avoid giving to challengers, and increase giving to incumbents, as individual large donors might wish to avoid angering the current office-holder. Restrictions on
giving and spending also seem to benefit incumbents, further entrenching them from effective challenge.
Others argue that money can never be separated from political influence. This has become painfully true with the influence and
power exhibited in the 2004 elections by 527s such as Swift Boat Veterans for Truth and Moveon.org. These
two groups, among others, spent nearly $400 million on influencing the most recent elections, namely by heavily criticizing,
respectively Sen. John Kerry and Pres. George W.
Bush.
Critics of CFR form a broad coalition, as both conservative interest groups (such as the
National Rifle Association and the Christian Coalition) and liberal
interest groups (AFL-CIO and American Civil
Liberties Union) are vehemenently opposed to CFR.
In addition, many opponents point out that campaign finance regulations are excessively complicated. This, they say, prevents
ordinary citizens from participating in the election process (especially from running for office) and limits participation to a
wealthy elite who can afford the legal apparatus necessary to run. In modern campaigns, legal and accounting expenses are
significant percentage of the overall budget. Opponents also claim that excessively complicated rules discourage participation
more generally by dissuading people from even attempting political work or activism.
Many others argue that public financing of campaigns would be a financial albatross to the greater public, causing excessively big government. However this is easily refuted
by comparing the low cost of the recent federal elections (around $5B in 2004 [1]) with current
government programs, for example the military budget of the United
States at around $500B.
Still, others point to the lack of systematic evidence that campaign contributions affect legislators' votes. In this regard,
studies by political scientists have found that contributions are generally motivated by ideology and social connections.
Concerns about public financing
Supporters of public financing argue that US democracy lacks fairness because wealthy individuals and special interests have
far greater political speech because of the contributions far larger than those of ordinary citizens that they can afford to
make. They say that the only way to end the corruptive effects of large private contributions from politics is to either ban all
private donations, or remove the possibility of quid pro quo.
Supporters of private donations argue that this is an unrealistic goal and say that these are one of the most common means for
ordinary citizens to participate in politics. They also say that government subsidization of political speech is contrary to the
spirit of democracy and/or capitalism.
Opponents of public financing claim that the government should not spend taxpayer money to promote the partisan political
viewpoints of candidates for office. Supporters respond that voters shouldn't have to only hear from mostly one partisan side
because that side is better at raising money from special interests that would like to influence policy at the taxpayer's
expense.
In some places in which the laws were designed to favor the major parties, such as Connecticut, it has also faced criticism
from minor parties, who often face large hurdles on access to public funds that don't trouble major-party candidates. Other laws,
such as those in Arizona and Maine, are carefully designed so that the strongest candidates can qualify for funds regardless of
party, while still assuring that fringe candidates won't receive public funds. The proposed Clean Money law in California,
defeated at the polls in 2006, ( pro,con) would have treated major and minor parties differently
but not to the same extent as Connecticut.
Some claim that public financing has already corrupted the political process, with big government advocates buying voters'
votes with promises of increases in entitlement programs, welfare, and pork barrel spending. Supporters say that when there's a
level playing field, as they claim public funding provides, American voters can be trusted to make the "right" choices, and that
elected officials will be accountable only to the voters, because the public paid for their campaigns, not big money special
interests.
Current proposals for reform
Despite the passage of McCain Feingold, reformers continue to promote a large number of new reforms, including restrictions on
independent citizens' groups, creation of a more powerful enforcement agency, and government or public financing of
campaigns.
Matching Funds
One method allows the candidates to raise funds from private donors, but provides matching funds for the first chunk of
donations. For instance, the government might "match" the first $250 of every donation. A system like this is currently in place
in the U.S. presidential primaries.
Clean Elections
Another method, which supporters call Clean Money, Clean Elections, gives each
candidate who chooses to participate a certain, set amount of money. In order to qualify for this money, the candidates must
collect a specified number of signatures and small (usually $5) contributions. The candidates are NOT allowed to accept outside
donations or to use their own personal money if they receive this public funding. This procedure has been in place in races for
all statewide and legislative offices in Arizona and Maine since
2000. Connecticut passed a Clean Elections law in 2005, along with the cities of Portland,
Oregon and Albuquerque, New Mexico. 69% of the voters in Albuquerque
voted Yes to Clean Elections. However, a Clean Elections initiative in California was defeated by a wide margin at the November,
2006 election, with just 25.7% in favor, 74.3% opposed (results).
Many other states (such as New Jersey) have some form of limited financial assistance for
candidates. Wisconsin and Minnesota have had partial public funding since the 1970s, but the systems have largely fallen into
desuetude.
A clause in the Bipartisan Campaign Reform Act of 2002
("McCain-Feingold") required the nonpartisan General Accounting Office to conduct a study of Clean Elections programs in Arizona
and Maine. Although the ensuing report, issued in May of 2003, cautioned that "it is too early to precisely draw causal linkages
to resulting changes, if any, involving voter choice, electoral competition, interest group influence, campaign spending, and
voter participation," in none of these categories did the study GAO find positive results from Clean Elections systems. ([2])
Voting with Dollars
A third proposed reform, outlined by Yale Law School professors Bruce Ackerman and
Ian Ayres in their 2004 book Voting with Dollars: A new paradigm for campaign
finance[3], would establish a system of modified public financing coupled with an
anonymous campaign contribution process. This scheme has two parts: patriot dollars and the secret donation booth. All voters
would be given a $50 publicly funded voucher (Patriot dollars) to donate to federal political campaigns. All donations including
both the $50 voucher and additional private contributions, must be made anonymously through the FEC. The strength of this system
is that it 'marketizes' public finance, avoiding centralized eligibility decisions while putting a lenient, high limit on private
campaign donations, while at the same time removing the possibility of quid pro quo contributions. Ackerman and Ayres include
model legislation in their book in addition to detailed discussion as to how such a system could be achieved and its legal
basis.
Of the Patriot dollars (eg $50 per voter) given to voters to allocate, they propose $25 going to presidential campaigns, $15
to Senate campaigns, and $10 to House campaigns. Within those restrictions the voucher can be split among any number of
candidates for any federal race and between the primary and general elections. At the end of the current election cycle any
unspent portions of this voucher would expire and could not be rolled over to subsequent elections for that voter. In the context
of the 2004 election cycle $50 multiplied by the approximately 120 million people who voted would have yielded about $6 billion
in “public financing” compared to the approximate $4 billion spent in 2004 for all federal elections (House, Senate and
Presidential races) combined [4]. Ackerman and Ayers argue that this system would pool voter money and force
candidates to address issues of importance to a broad spectrum of voters. Additionally they argue this public finance scheme
would address taxpayers' concerns that they have "no say" in where public financing monies are spent, as in the Ackerman and
Ayers system each taxpayer who votes has discretion over their contribution.
The second aspect of the system significantly increases private donation limits, but all contributions must be made
anonymously through the FEC. In this system, when a contributor make a donation to a campaign they send their money to the FEC
indicating which campaign they want it to go to. The FEC masks the money and distributes it directly to the campaigns in
randomized chunks over a number of days. Ackerman and Ayres compare this system to the reforms adopted in the late 19th century
aimed to prevent vote buying, which led to our current secret ballot process. Prior to that time voting was conducted openly,
allowing campaigns to confirm that voters cast ballots for the candidates they had been paid to support. Ackerman and Ayres
contend that if candidates do not know for sure who is contributing to their campaigns they are unlikely to take unpopular
stances to court large donors which could jeopardize donations flowing from voter vouchers. Conversely, large potential donors
will not be guaranteed political access or favorable legislation in return for their contributions since they cannot prove to
candidates the supposed extent of their financial support.
See also
References
- Smith, Bradley (2001). Unfree
Speech: The Folly of Campaign Finance Reform. Princeton University Press. ISBN 0-691-11369-6.
- Green, Mark (2002). Selling Out, How
Big Corporate Money Buys Elections, Rams Through Legislation, and Betrays Our Democracy. Regan Books (Harper Collins). ISBN
0-06-052392-1.
- Eds. Anthony Corrado, David B. Magleby, and Kelly
Patterson (2006). Financing the 2004 Election. The Brookings Institution. ISBN 0-8157-5439-6.
- Public Funding of
Presidential Elections. Federal Election Commission. Retrieved on August 3, 2005.
- The Federal Election Campaign Laws:A Short
History. Federal Election Commission. Retrieved on August 3, 2005.
- Bipartisan Campaign Reform Act.
The Campaign Finance Institute. Retrieved on August 3, 2005.
- "BP stops
paying political parties", March 2002
External links
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