Election Campaign Financing

Election campaigns for public office are expensive. Candidates need funding for support staff, advertising, traveling, and public appearances. Unless they are independently wealthy, most must finance their campaigns with contributions from individuals and from businesses and other organizations. Today, state and federal laws set limits on campaign contributions; create contribution disclosure requirements; and impose record-keeping requirements for candidates seeking elective office.

Before 1974, most election campaigns were financed by corporations and small groups of wealthy donors. In 1972, for example, insurance executive W. Clement Stone contributed approximately $2.8 million directly to the re-election campaign committee of President RICHARD M. NIXON. Such contributions raised concerns of UNDUE INFLUENCE on the selection of available candidates and on subsequent legislation. Many in Congress felt the need to limit the influence of money in political campaigns in order to regain the confidence of the public in the wake of the WATERGATE scandal, a series of events that ultimately led to charges of abuse of power and OBSTRUCTION OF JUSTICE involving Nixon's campaign activities.

In 1974, Congress made radical changes to the Federal Election Campaign Act of 1971 (FECA) (2 U.S.C.A. §§ 431–456 [1996]). In its amended form, FECA limited contributions to individual candidates and political parties; personal spending by candidates; overall campaign spending for federal office; and independent spending by groups not directly associated with a candidate's campaign. The act also created a check-off box on federal tax forms, allowing taxpayers to contribute a dollar to a presidential campaign fund, and it devised a formula for payments from the fund.

James L. Buckley, who was running for the U.S. Senate from New York, and other candidates for federal office challenged FECA in federal court. In 1976, the Supreme Court struck down the act's spending limits in Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976). According to the high court, setting mandatory limits on the amount of money a candidate may spend in a campaign violated the FIRST AMENDMENT. However, the Court upheld the act's disclosure requirements, private contribution limits, and provision for the public funding of qualified presidential candidates.

FECA has been the subject of additional litigation. The U.S. Supreme Court, in Colorado Republican Federal Campaign Committee v. Federal Election Commission, 518 U.S. 604, 116 S. Ct. 2309, 135 L. Ed. 2d 795 (1996), struck down spending limits under the FECA imposed on political parties that were deemed independent expenditures—in other words, spending that was not coordinated with a candidate's congressional campaign. The 1996 case did not resolve the issue of whether the federal provision that limited expenditures by political parties for spending done in coordination with a candidate's campaign violated the First Amendment.

After more litigation in the lower courts, the Court again considered the case in Federal Election Commission v. Colorado Republican Federal Campaign Committee, 533 U.S. 431, 121 S. Ct. 2351, 150 L. Ed. 2d 461 (2001). The second case concerned whether the FECA's restrictions on coordinated expenditures by political parties violated the First Amendment. The Court characterized coordinated expenditures by political parties as the functional equivalent of campaign contributions by individuals and non-party groups, ruling against arguments by the Colorado Republican Federal Campaign Committee that such expenditures were essential to its support of a candidate. The Court, in an opinion written by Justice DAVID H. SOUTER, found that the limitations on coordinated expenditures comported with First Amendment free speech and associational guarantees.

Congress has not given up on its efforts to reform campaign finance law. From 1998 through 2002, JOHN MCCAIN (R.-Az.) and Russ Feingold (D.-Wisc.) introduced a series of bills, each referred to McCain-Feingold bills. These efforts were finally successful when, in 2002, Congress approved the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (2 U.S.C.A. §§ 431 et seq.). The new statute amends the FECA by adding new restrictions and regulations on soft money donated to a political party; independent and coordinated expenditures; hard-money contributions; and communications that take place during elections.

Litigation attacking the constitutionality of the new statute commenced shortly after its enactment. In May 2003, the U.S. District Court for the District of Columbia found that some of the new restrictions under the statute were unconstitutional under the First Amendment to the U.S. Constitution. McConnell v. FEC, 251 F. Supp. 2d 176 (D.D.C. 2003). In September 2003, the U.S. Supreme Court heard oral arguments in the case of McConnell v. FEC (02-1674).