Election Campaign Financing

The 1996 presidential and congressional elections revealed the growing amount of private money that businesses, unions, and individuals contribute to political campaigns. Congressional hearings in 1997 revealed that the Democratic National Committee had solicited and received contributions from questionable sources. Despite these revelations, many members of Congress did not see any reason to reform federal campaign finance laws. Nevertheless, Congress considered a series of bills proposed by JOHN MCCAIN (R-AZ), a presidential candidate himself in 2000, and Russ Feingold (D-WI) from 1998 through 2002 that finally led to the enactment of the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (2 U.S.C.A. § 431 et seq.), commonly known as the McCain-Feingold bill.

The debate over campaign financing was initially framed by the Supreme Court's decision in Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 912, 46 L. Ed. 2d 659 (1976). The Court ruled that provisions of the Federal Election Campaign Act of 1971 (FECA), 2 U.S.C.A. §§ 431–456, which sets mandatory limits on the amount of money a candidate may spend in a campaign, violated the FIRST AMENDMENT. Though the Court upheld the provisions of FECA that set disclosure requirements, private contribution limits, and public funding of qualified presidential candidates, the elimination of mandatory spending limits meant that campaign costs and the funds to pay for them steadily escalated thereafter.

Soft Money The most troubling issue for reformers has been the growing importance of soft money (money given to a party to further the party rather than a particular candidate). U.S. corporations and unions provided unprecedented amounts of soft-money contributions during the 1996 and 2000 election cycles. At the same time, the FEDERAL ELECTION COMMISSION had its budget cut, making the commission virtually helpless to prevent the parties from skirting existing campaign finance laws. In light of the impact soft money made on elections, reformers believed soft money must either be eliminated or severely limited.

The McCain-Feingold legislation imposed a soft money ban on all federal elections. It also limited the amount of soft money contributors may give to state, district, and local committees. The ban on soft money was one of the highlights in the legislation, but it was expected to come under attack in light of Buckley v. Valeo. Critics of the soft-money ban argue that the contribution of money to political parties is a form of free speech protected by the First Amendment. In December 2003, the U.S. Supreme Court upheld the constitutionality of these limits by a vote of 5–4.

The McCain-Feingold legislation actually increased the amount of "hard" money that individuals and other supporters could contribute. The amount of money individuals might contribute to state parties in federal elections increased from $5000 to $10,000. The total amount these individuals might contribute to federal candidates, parties, and other organizations increased from $25,000 to $30,000.

Campaign Spending Limits Expenditures for advertisements on television and radio have steadily increased. Some reformers believe that government-licensed forms of communications should provide significant amounts of free airtime to candidates. Free airtime, reformers argue, would reduce the cost of campaigns and dramatically ease the need to raise millions of dollars. Televisions and radio stations are adamantly opposed to such a proposal, contending that it would be unfair to place the burden of reform on their industry.

Some reformers believe limiting private campaign contributions or spending is not the best way to improve the political system. These reformers advocate full disclosure of all funding sources. Politicians would have to document on a daily basis the source and size of every contribution, including donated labor and equipment.

Critics of the full disclosure requirements have stated their beliefs that this approach is unrealistic, because it could create a serious record-keeping problem. Documenting all contributions costs time and money and could be particularly hard on smaller groups that cannot afford to hire legal advisors and support staffs to track donations on a daily basis.

PAC Reform Many advocates of reform, including liberal public interest groups and politicians, argue that a ban or strict limitations be placed on money that comes from POLITICAL ACTION COMMITTEES (PACs). One of the reasons for limiting or banning PAC money is that PAC campaign contributions are biased toward incumbents, which has serious implications for competitiveness in elections. PAC contributors are more likely to give to incumbents because they want to preserve an existing relationship or create a new one. Because of the high cost of campaigns, PACs give incumbents a head start over challengers.

Critics of placing more restrictions on PACs, or banning them completely, contend that such "reform" would further concentrate power in the hands of government, particularly those already in office. Campaign contributions can be viewed as "protection" money, according to these observers. Without PAC dollars, politicians would have less incentive to look at issues put forward by individuals and interest groups.

One form of contribution on media outlets began to appear in the form of advertisements paid for by unions and corporations. Many of these advertisements were not covered by the FECA because they did not explicitly endorse a candidate for office. These entities spent large amounts of money on these advertisements without disclosure. The McCain-Feingold legislation placed disclosure requirements on all contributors who spend more than $10,000 on commercials showing the name or likeness of a candidate within a prescribed period of time prior to an election.

Foreign Contributions Reformers also seek better ways to prevent the possible influence of foreign business interests on the federal government. The disclosures about the way foreign contributions were obtained during the 1996 election cycle have led reformers to seek a complete ban on foreign gifts.

Critics of an outright ban on foreign contributions point out that this complex issue was considered and rejected by the Federal Election Commission (FEC) in 1991. The FEC rejected a proposal to prohibit companies that were more than 50 percent foreign owned from establishing corporate PACs. The commission reasoned that with businesses becoming more global, it is difficult to judge whether a company is foreign or domestic. U.S. companies may have ownership in a foreign business, which then has a U.S. subsidiary, making it unclear whether the subsidiary is a foreign or a domestics company. Enforcement would be difficult and a ban would raise a constitutional issue. U.S. citizens working for a foreign subsidiary in the United States are entitled to participate as fully in the U.S. political process as their colleagues working for a company that is completely U.S.-owned. Workers at a U.S. Ford plant should not have more rights than workers at a U.S. Honda plant the FEC concluded.