Money and Elections

Money and Elections Chapter 7 Section 3

Key Terms Political Action Committee (PAC) Subsidy Hard Money Soft Money

Campaign Spending • There are 500,000 elective offices in the United States • Presidential election s consume the largest share of campaign dollars • In 2008, $2.5 billion was spent for all major and minor party presidential efforts • Caucuses and primaries, conventions, general elections and campaigns

Spending has doubled in the last decade Candidate must raise and spend 1 million dollars for a House seat Senate campaigns spent 20 times that amount 1.5 billion was spent on House and Senate contests in 2008

Radio Television Consultants Newspapers Office rent Polls Web sites

Buttons Posters Bumper stickers Data processing Mass mailings Web sites Travel

How much is spent depends on • Office involved • Candidate (incumbent or challenger) • Nature of opposition • Availability of campaign funds

Sources of Funding • Private and Public Sources • Small contributors $5 to $10 dollars • Only 10 percent of voting age people contribute • Wealthy individuals and families • “Fat cats” who make large donations in their best interest • Candidates • Incumbents, challengers • People who want tom hold appointive public offices

Various nonparty groups • Political Action Committees (PAC)- are political arms of special interest groups with a stake in the Election • Temporary organizations • Groups formed for the immediate purpose of the campaign • Hundreds of these are short lived • Hold luncheons, dinners, receptions for a fee • Some reach the $100,000 level

The Internet • State treasuries • Subsidy- is a grant of money usually from a government • Subsidies have been more important at the presidential level • Some state provide some form of public funding for parties and/or candidacies

Why people give • They are a form of political participation • Some make small donations because they believe in the candidate • Many want something in return • Want access to government (friends)

Regulating Finance • First began in 1907 • Became unlawful for any corporation or bank to make money contributions • Congress has passed several laws regulating money in campaigns • 1974 response to Watergate scandal • 2002 closed the “soft money” loophole

Congress can not regulate use of money in state and local elections Every state regulates campaign finance

Federal Election Commission • Set up in 1974 • Handles all federal law dealing with campaign finance • Independent agency in the executive branch • Laws are not well enforced • Agency is underfunded and understaffed • Congress has made it almost impossible for them to do their job

FEC laws cover four areas • Require the timely disclosure of campaign finance data • Place limits on campaign contributions • Place limits on campaign expenditures • Provide public funding for several parts of the presidential election process

Disclosure Requirements • Started reporting in 1910 • Intended to spotlight the place of money in a federal campaign • No one can make a gift in the name of another • Cash gifts over $100.00 are prohibited • All contributions must be made through a single campaign committee

Any spending over $200.00 must be identified by name of the person or the firm who made it. • Any contribution of over $5,000.00 must be reported to the FEC • Any sum over $1,000.00 received in the last 20 days of the campaign

Limits on Contributions • First regulated in 1907 • Outlawed donations by corporations or national banks • Today no person can giver more than $2,300.00 each in a federal primary and in general election • No one can give more than $5,000.oo to a PAC • FED adjusts every two years for inflation

PAC Contributions • Neither corporations and unions can contribute to candidate for a federal office • Their PAC can • There are 4,400 PACs active today

Limits on Expenditures • Began in 1925 • Only to Presidential • Buckley v Valeo held “money is speech” contrary to 1st Amendment • One part held is cap on spending if candidate accepts FEC subsidies

Public Funding for Presidential Campaigns • 1971 Presidential Campaign Revenue Act • Each person could donate $3.00 for individual and $6.00 for joint return • Will match the first $250.00 up to the limit • Fec could give a contender $21 million. • In 2008 John McCain spent $100 million on the GOP nomination • $7million from the FEC

McCain raised $230 million in private contributions • Until 2008 both candidates took public money • Could spend no more than the general subsidy • Could not accept campaign funds from another source • Only McCain took money and could only spend $84.1 million for fall campaign

Barack Obama became the first in 32 years to reject public money • He raised and spent $500 million in the ten week post convention campaign • Many people believe this will lead to the collapse of public funding • $300 million was spent on television advertising

Hard Money, Soft Money • 1970’s placed limits on hard money • Hard money- those contributions that are given directly to candidates for their campaign • Are limited and must be reported

Soft money-funds given to parties or to a political organization in unlimited amounts • Used for party building activities • Voter registration • Against a public policy • Amount of money through soft money loophole rose from $19 million 1980 to $500 million in 2000

McCain-Feingold Rule in 2002 • Bipartisan Campaign Reform Act (BCRA) • Bans soft money contributions • But law does not say that political organizations can not raise and spend these dollars

Special interest groups popped up and $200 million poured through the loophole • Even more for congressional elections in 20008 • Most are know as 527’s • Obama discouraged them and McCain accepted them

Money and Elections