Campaign Finance 101

1
Campaign Finance 101

• What is the difference between hard money and
  soft money?
• What is FECA?
• What is the BCRA?
• Why is campaign finance so controversial?

2
Campaign finance slang

• FEC Federal Election Commission
• BCRA Bipartisan Campaign Reform Act (2002)
• Hard money Federal (regulated) money
• Political donations contributed directly to a
  candidate of a political party, SUBJECT TO LIMITS
  (legal under BCRA)
• EXAMPLE money for an ad that educates voters
  about issues, with a specific candidate
  endorsement (EXPRESSED ADVOCACY)
• Soft money Nonfederal money
• Political donations and campaign contributions to
  parties or party building activities SUBJECT
  TO STATE LAW
• EXAMPLE money for ads that educate voters about
  issues, as long as the ads don't take the crucial
  step of telling voters which candidates to vote
  for (PUBLIC COMMUNICATION LANGUAGE)

3
Federal Election Activities

• GOTV
• Voter ID
• Generic Campaign Activity
• Voter Registration
• Public Communication

4
Which of the following is an example of Public
Communication? Express Advocacy?

• Candidate X runs an ad that says, "I am a good
  person. Candidate Y is a bad person. Vote for me
  on election day."
• Because of the "Vote for me..." portion, this is
  a political ad, which must be paid for with "hard
  money."

• Candidate Y runs an ad that says, "Candidate X
  has a record that includes awful things. If these
  awful things continue, people will come to your
  house, steal your money and shoot your dog. Be
  sure to vote on election day.
• Because the ad "educates" people on an issue and
  doesn't tell them to vote for a particular
  candidate, it's party building, and can be paid
  for by soft money.

5
Overview History of Campaign Finance Regulation

• Beginning of timeCivil War No regulation
• Civil War1910
• Gilded Age
• Exceptionally scandalous politicians (Boss Tweed)
• 1867 Naval Appropriations Bill
• First federal effort to regulate campaign finance
• Prohibits officers and employees of the fed.
  govt from soliciting contributions
• 1883 Civil Service Reform Act (Pendleton Act)
  prohibits the same solicitation of all federal
  workers

6
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

7
Federal Election Commission

• Purpose
• In 1975, Congress created the Federal Election
  Commission (FEC) to administer and enforce the
  FECA
• 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.

8
FEC Rules RegulationsThe Players

• Government
• FEC Federal Election Commission
• Campaign Committees
• Candidates
• National Party Committees
• State Local Party Committees
• Separate Segregated Funds
• PACs connected to corporations, unions, etc.
• Nonconnected Committees
• All other PACs
• 527s
• Individuals

9
Buckley v. Valeo (1976)

• upheld FECA, 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 ruled candidates can
  give unlimited amounts of money to their own
  campaigns.
• the case remains the starting point for judicial
  analysis of the constitutionality of campaign
  finance restrictions (precedent)

10
Buckley v. Valeo (1976)--

• Strikes down
• Overall spending limits of Congress President
  (partially)
• Limits on candidates use of own funds
• Limits on media expenditures
• Independent expenditure limits

• Allows
• Individual contributions (1k/candidate/election)
• PAC limits (5k/candidate/election)
• Party committee limits (5k/candidate/election)
• Cap on total contributions individual can make to
  all candidates (25k)
• Cap on spending on behalf of candidates by
  parties

11
The BCRA (McCain-Feingold Act, 2002)

• Designed to address
• The increased role of soft money in campaign
  financing, by prohibiting national political
  party committees from raising or spending any
  funds not subject to federal limits, even for
  state and local races or issue discussion
• Define the proliferation of issue advocacy ads,
  by defining as "electioneering communications"
  broadcast ads that name a federal candidate
  within 30 days of a primary or caucus or 60 days
  of a general election

• Prohibiting any such ad paid for by a corporation
  (including non-profit issue organizations such as
  Right to Life or the Environmental Defense Fund)
  or paid for by an unincorporated entity using any
  corporate or union general treasury funds.
• all campaign advertisements included a verbal
  statement to the effect of "I'm insert
  candidate's name and I approve this message."

12
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

13
Disclosure The costs of democracy

• The FEC oversees the campaign disclosure filings
  of candidate, political party, political action,
  and individual contributions.
• Campaign disclosure documents filed should
  reflect both the source of funding and purpose of
  expenditures made.
• However, there is reporting complexity,
  dishonesty, and even loopholes.

• Each campaign (for federal office) has to run a
  PAC that reports revenue and expenses to the FEC.
• cost of travel,
• advice on topics like message and voter turnout
• direct costs of communicating with voters
• The types and purposes of campaign spending will
  change with the legal and social landscape.

14
Other Ways to Support Candidates

• Who can contribute?
• In-kind contributions-donations that are done in
  goods and services rather than money
• Anyone
• Independent expenditure--advocates the election
  or defeat of another candidate NOT made in
  cooperation, with a candidate, candidates
  committee or party
• Anyone
• Coordinated Expenditures-- advocates the election
  or defeat of another candidate MADE in
  cooperation, with a candidate, candidates
  committee or party
• Issues
• SC overruled provision in BCRA prohibiting IEs
  after CE in same month (1st amend. violated)

• Special methods
• Joint fundraising committees (JFC)--two or more
  groups to join forces and fund-raise together
  (subject to FEC rules)
• Earmarking--a legislative (especially
  congressional) provision that directs approved
  funds to be spent on specific projects, or that
  directs specific exemptions from taxes or
  mandated fees

15
Issue Ads a type of independent expenditure

• Second Amendment Ad (Anti Obama)
• http//www.youtube.com/watch?vNUuuh98PM4M
• Swift Boat Veterans (Anti Kerry)
• http//www.youtube.com/watch?vphqOuEhg9yE
• Non issue Ad
• www.livingroomcandidate.com

16
Upcoming Federal Campaign Finance Issues

• 527 groupstax-exempt organizations that may
  raise unlimited funds for their voter
  mobilization and issue advocacy
• only required to file regular disclosure reports
  on activities expressly advocating the election
  or defeat of a federal candidate or
  electioneering communications
• Should they be regulated by the FEC?
• Internet
• Currently not considered political advocacy
• Not regulated by FEC

17
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