Unit II
Election Process
CAMPAIGN FINANCE REFORM
WHAT YOU NEED TO KNOW ABOUT
CAMPAIGN FINANCE
FEC – Federal Election Commission
 BCRA – Bipartisan Campaign Reform Act
 Hard money = Federal money

 Political
donations raised from federally permissible
sources within the limits established by BCRA

Soft money = Nonfederal money
 Political
donations made in such a way as to avoid
federal regulations.
OVERVIEW HISTORY OF CAMPAIGN
FINANCE REGULATION


Beginning of time—Civil War: No regulation
Civil War—1910

Gilded Age

Exceptionally scandalous politicians nationally



1868: 75% of money used in congressional elections through party
assessments
1867: Naval Appropriations Bill




Boss Tweed
First federal effort to regulate campaign finance
Aimed at stopping the political shakedown naval yard workers for
political contributions
Prohibits officers and employees of the fed. gov’t from soliciting
contributions
1883: Civil Service Reform Act (Pendleton Act) prohibits the same
solicitation of all federal workers
www.mit.edu/~17.251/finance.ppt
OVERVIEW HISTORY OF CAMPAIGN
FINANCE REGULATION

Corrupt Practices Acts of 1911 and 1925
 Set
disclosure requirements for House and
Senate Elections
 Spending limits ($25k for Senate; $5k for
House)
 Ridiculously weak and regularly violated
1971 Federal Election Campaign Act (FECA)
 1976: Buckley v. Valeo (1976)

www.mit.edu/~17.251/finance.ppt
BUCKLEY V. VALEO

Buckley v. Valeo, (1976), was a case in which
the Supreme Court of the United States upheld
a federal law which set limits on campaign
contributions, but ruled that spending money to
influence elections is a form of constitutionally
protected free speech, and struck down
portions of the law. The court also stated
candidates can give unlimited amounts of
money to their own campaigns.
CAMPAIGN FINANCE REFORM AND
BUCKLEY I
Original Provision
Effect of Buckley v. Valeo
Expenditure limits
Overall spending limits (Congress and
president)
Struck down partially
(freedom of speech)
Limits on the use of candidates’ own resources
Struck down entirely
(freedom of speech)
Limits on media expenditures
Struck down entirely
(freedom of speech)
Independent expenditure limits
Struck down entirely
(freedom of speech)
www.mit.edu/~17.251/finance.ppt
CAMPAIGN FINANCE REFORM AND BUCKLEY
II
Original Provision
Effect of Buckley v. Valeo
Contribution limits
Individual limits: $1k/candidate/election
Affirmed
PAC limits: $5k/candidate/election
Affirmed
Party committee limits: $5k/candidate/election
Affirmed
Cap on total contributions individual can make to Struck down (freedom of
all candidates ($25k)
speech)
Cap on spending “on behalf of candidates” by
parties
Affirmed
www.mit.edu/~17.251/finance.ppt
FEDERAL ELECTION COMMISSION

Purpose

In 1975, Congress created the Federal Election Commission
(FEC) to administer and enforce the Federal Election
Campaign Act (FECA)


the statute that governs the financing of federal elections.
The duties of the FEC, which is an independent regulatory
agency, are to
disclose campaign finance information
 enforce the provisions of the law such as the limits and prohibitions
on contributions,
 oversee the public funding of Presidential elections.

FEC RULES & REGULATIONS
THE PLAYERS

Government


Campaign Committees





PACs connected to corporations, unions, etc.
Nonconnected Committees


Candidates
National Party Committees
State & Local Party Committees
Separate Segregated Funds


FEC – Federal Election Commission
All other PACs
527s
Individuals
VARIOUS ELECTION LAW


Federal Election
Campaign Act (FECA)
1975
Bipartisan Campaign
Reform Act (BCRA)
2002

Major changes under
BCRA
MCCAIN FEINGOLD 2002

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. ‘Soft money’ also refers
to funds spent by independent organizations that
do not specifically advocate the election or defeat
of candidates, and are not contributed directly to
candidate campaigns.
WHAT DOES FEDERAL ELECTION LAW
REGULATE?

In General


The financing of federal
elections
Specifically


Disclosure of financial
activity
Contributions


Receiving and Giving
Expenditures


Candidate support activities
Federal election activities
TYPES OF MONEY

Federal Funds
 Collected
from permissible sources
 Subject to contribution limits

Levin Funds
 For
state and local party committees only
 Collected from any entity except fed cand.
 Only used for certain types of FEA

Nonfederal Funds
 Subject
to state law only
 May be used to pay for expenses related to not
federal elections
HIERARCHY OF MONEY
STATE PARTIES

Federal Money



Federal
“Hard Money”
Levin
Quasi-Fed $
Levin Money



Fewer limitations
Some Federal election
activities, state and local
State Money


State
“Soft Money”
Most limitations
Federal, state and local
elections
Typically, fewest limitations
State and local elections
only
WHERE DOES MY MONEY GO?

It depends!
 Candidate
 Candidate specific activities
 Contributions to other
candidates, parties or causes
 DNC/RNC
 Federal candidates
 Allocated nationally
 State Party Committees
 Federal, state & local
candidates
 Allocated statewide
 PACs
 Support candidates, parties
that agree on specific issues
 527s
 Separate campaign