As you read… Annotate the text. Be Prepared to Discuss: What did you find most shocking about campaign finance? How are interest groups connected to or.

As you read…• Annotate the text.

Be Prepared to Discuss:• What did you find most shocking about campaign

finance?• How are interest groups connected to or impacted

by campaign finance regulations?• Can the average American successfully run for

federal office? • Can a candidate “buy” an office?• Are campaign contributions an act of free speech?

Campaign Finance Reform• Campaign financing has been a

hotly contested topic in American politics for more than a century.

• Political campaigns are VERY expensive, and successful campaigns generally require A LOT of money!

• Today campaigns acquire money from a variety of public and private sources.

Campaign Finance Reform• The federal government (under the

terms of BCRA) regulates money that flows into the political arena.

• The goal is to “prevent any single group or individual from gaining too much influence over elected officials, who might actually feel indebted to campaign contributors.”

• Campaign finance laws, however, continue to change. The impact of these effects remains to be seen.

Federal Election Campaign Act of 1971 (FECA)

• In 1971, the U.S. Congress passed The Federal Election Campaign Act (FECA), which was further amended in 1974 following the Watergate scandal.

• It has been amended several times since by Supreme Court decisions, but ultimately places limits on certain political contributions and expenditures, required public disclosure of contributions and expenditures above certain levels, created a system of public funding of Presidential campaign activities under the Internal Revenue Code, and established the Federal Election Commission (FEC).

Federal Election Campaign Act of 1971 (FECA)

The 1974 version of FECA contained the following provisions:

• The limit on individual donations is $1,000 per candidate per election.

• The previous ban on corporate and union donation was reaffirmed, but PACs can be created to raise money instead.

• PACs have to consist of at least fifty volunteer members, give to at least five federal candidates, and limit their donations to $5,000per election per candidate and $15,000 per year to any political party.

• Primary and general elections count separately for donations.

• Public funding for presidential campaigns includes matching funds for primary candidates who meet certain criteria; full funding for presidential general campaigns for major party candidates; and partial funding for minor party candidates that had at least 5% of the vote in the previous election

Campaign Finance

Primary Matching FundsGovernment matches all contributions $250 or less if candidate meets the following criteria:

• show broad-based support by receiving at least $5,000 in contributions of $250 or less in 20+ states

• candidate must agree to national limit on campaign spending for all primary elections (2008 amount = $42,050,000)

Campaign Finance

General Election FundsCandidates are eligible for public funding of allcampaign costs associated with the general election if they agree to:

• limit spending to the amount received by the federal government (this $ is the sole source of your election funds)

• not receive private contributions if accepting public funding (2008 = $84 million)

Campaign Finance

Third Party CandidatesCandidates are eligible for matching public funds…

• if in the last election, the candidate received 5% or more of the popular vote

• if no candidate ran in the last election, the candidate may receive public funding after the election is over if he/she receives 5% or more of the popular vote

• if the candidate does not receive 5% of the popular vote, the amount received is based on the proportion of the popular vote he/she receives

Party Building Activities?

PRIOR to 2002 (passage of BCRA), political parties were allowed to spend as much money as they wanted as long as the money goes to “party-building” activities, such as voter registration drives, issues ads--that is, ads that support party positions on issues. This spending of soft money, unlike hard money spent promoting specific candidates, was largely unregulated.

Soft money was often viewed as a king-sized loophole in campaign finance law.It was mainly comprised of “gifts” to political parties from corporations, laborunions, and wealthy individuals. Six-figure donations were not uncommon!

Soft money was increasingly used to pay for media advertising…and it is usedto get around legal limits on campaign contributions.

Soft $$ vs. Hard $$

Candidate

Donor

Political Party

Regulated & limited

Unregulated & unlimited

Hard $

Soft $

PAC

If donor is an IG

Bipartisan Campaign Reform Actaka the McCain-Feingold Act of 2002

“BCRA” passed in 2002 to update FECA

BANS the use of soft money

Limits individual and political action committee funds

Political parties become larger players

Allows donations from “leadership PACs”

Does not regulate use of personal money

Regulates the use of public and matching funds

2008: Expenditures by PACs

* 4,000 PACs are currently registered with the FEC

Contribution Limits

The 527 Loophole

Advocacy may only be paid for with hard money

Soft money is banned under BCRA

527 political committees emerge to fill void

Cannot advocate for candidates, only causes and policy

501(c)3 committees also can educate voters

Soft Money Contributions to…

Republicans Democrats

1992 $49.8 million $36.3 million

1996 $138.2 million $123.9 million

Who were the big soft money donors (1996)?

To Democrats To Republicans

Seagram & Sons Philip Morris$1.71 million $2.538 million

Comm. Workers of America RJR Nabisco $1.13 million $1.189 Million

Walt Disney Co. Union Pacific Corp.$997,000 $707,393

Revlon Seagram & Sons$673,000 $685,145

MCI Worldcom Bell Atlantic$650,203 $649,854

527 Groups