Election Campaign Financing

FECA illustrates the way that election-campaign-finance laws work. FECA requires that candidates for federal office form a campaign committee and a campaign fund, and that they disclose campaign contributions to the FEDERAL ELECTION COMMISSION. A candidate is subject to these requirements if the candidate or his or her authorized agent has received campaign contributions totaling more than $5,000 or has made campaign expenditures totaling more than $5,000. Most campaigns for federal office cost considerably more than $5,000, so most candidates are subject to the financial-reporting requirements set by the act.

FECA places dollar limits on campaign contributions. No person may contribute more than $1,000 a year to a candidate's campaign committee. No person may contribute more than $20,000 in one calendar year to a candidate through the candidate's national political committee, and no more than $5,000 may be contributed to other political committees (§ 441a(2)(3)). The act also places special limits on contributions by national banks, corporations, labor organizations, and government contractors (§§ 441b, 441c).

A person may contribute unlimited sums of money to the state and national committees of a political party, but only if those sums are for the benefit of the party in general. If a contribution is intended to fund a candidate's campaign directly, the contribution will be subject to the limits set by the act.

FECA makes several exceptions to the limits on contributions made directly to a candidate's campaign committee. It excludes from the definition of contribution assistance such as the donation of real property, of services, and of funds to buy promotional materials like bumper stickers, handbills, and posters (§ 431(8)(B)).

The act also creates a limited exception to limits for contributions to state and national committees of a political party. Under § 441a (d)(1)(2), the national committee of a political party may contribute to its presidential candidate an amount equal to two cents multiplied by the number of people of voting age in the United States. The national and state committees of a political party may contribute to a Senate candidate an amount equal to two cents multiplied by the number of people of voting age in the candidate's home state, or at least $20,000. A House of Representatives candidate may receive $10,000 from the national and state committees of his or her political party.

Critics argue that FECA strengthens the domination of the two major political parties. By limiting an individual's direct contributions to a candidate, the act prevents minor parties from amassing enough funds to gain ground on the two major parties. The Democratic and Republican parties can survive such limitations because they have large numbers of contributors. According to some critics, they have large numbers of contributors because they have the power to give political favors. Minor parties, by definition, begin their missions with fewer supporters and have no political favors to bestow. With contribution limits on their few supporters, minor parties have few opportunities to mount serious challenges to the major-party candidates.

Other critics of FECA focus on the reporting and bookkeeping responsibilities required by the act and the sheer complexity of the law. Minor parties, with their meager funds, have difficulty in managing the detailed records and reporting requirements, and in paying for the legal assistance that they need in order to comply with the law. By comparison, major parties possess enough experience and support staff to surmount the demands of the act.

"Soft" money is another concern for critics of FECA. In the context of political campaigns, soft money is cash that is given to a political party, not directly to a candidate. There is no limit to the amount that a person or organization may give to a political party. Political parties may use the contributions that they receive to benefit themselves generally; they may not use those contributions to benefit one particular candidate. There are, however, effective detours around this roadblock. For example, a party may run a television advertisement that criticizes the opponent of a particular candidate. The money spent by the party on such a commercial will not be listed as a direct contribution to the party's candidate if the advertisement does not mention the party's own candidate. Major-party candidates, with this kind of help from the national and state committees of their party, benefit from this practice more frequently than do minor-party candidates.

Defenders of FECA note that the major parties are subjected to the same requirements as are the minor parties. They also point out that nothing in the act prevents the large numbers of people who contribute to the major parties from switching and contributing to minor parties.