What you need to know about campaign finance

1. What you need to know about campaign finance • FEC – Federal Election Commission • BCRA – Bipartisan Campaign Reform Act • Hard money = Federal money • Political donations raised from federally permissible sources within the limits established by BCRA • Soft money = Nonfederal money • Political donations made in such a way as to avoid federal regulations.

2. Overview History of Campaign Finance Regulation • Beginning of time—Civil War: No regulation • Civil War—1910 • Gilded Age • Exceptionally scandalous politicians nationally • Boss Tweed • 1868: 75% of money used in congressional elections through party assessments • 1867: Naval Appropriations Bill • First federal effort to regulate campaign finance • Aimed at stopping the political shakedown naval yard workers for political contributions • Prohibits officers and employees of the fed. gov’t from soliciting contributions • 1883: Civil Service Reform Act (Pendleton Act) prohibits the same solicitation of all federal workers www.mit.edu/~17.251/finance.ppt

3. 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

4. Campaign Finance Reform and Buckley I www.mit.edu/~17.251/finance.ppt

5. Campaign Finance Reform and Buckley II www.mit.edu/~17.251/finance.ppt

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

7. 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

8. Various Election Law • Federal Election Campaign Act (FECA) 1975 • Bipartisan Campaign Reform Act (BCRA) 2003 • Major changes under BCRA

9. 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

10. Disclosure • What is required? • Reporting complexity • Honor • Problem/loophole?

11. Types of Money • Federal Funds • Collected from permissible sources • Subject to contribution limits • Levin Funds • For state and local party committees only • Collected from any entity except fed cand. • Only used for certain types of FEA • Nonfederal Funds • Subject to state law only • May be used to pay for expenses related to not federal elections

12. Fundraising & Making Contributions • Who can contribute? • How much can they contribute? • Special methods • Joint fundraising • Earmarking

13. Special Rules for Candidates • Only federal funds • Same restrictions on fundraising • Restrictions on spending • Millionaire’s Amendment

14. Other Ways to Support Candidates • In-kind contributions • Anyone • Independent expenditures • Anyone • Coordinated Expenditures • Issues • SC overruled provision in BCRA prohibiting IEs after CE in same month • Violation of 1st Amendment

15. Federal Election Activities • GOTV • Voter ID • Generic Campaign Activity • Voter Registration • Public Communication

16. Content of Communications • Express Advocacy • Direct Candidate Support • Contribution, IE or CE • Public Communication Language • Promote, oppose, support, attack • Not direct candidate support • Must be paid for with federal funds • What is the difference?

17. Effects of BCRA on National Parties • RNC • Almost $40,000,000 • DNC • Slightly over $10,000,000 • Hilary Clinton • Over $20,000,000 • Where did all the money go? • Surge in dem affiliated 527s post BCRA

18. Upcoming Federal Campaign Finance Issues • 527s • Should they be regulated by the FEC? • Internet • Currently not considered political advocacy • Not regulated by FEC

19. Who raises What? • Federal candidate comm • Only federal money • State candidate comm • Only state money • National Parties • Only federal money • State/Local parties • Federal • Levin • State • PACs • Federal • State • 527s • Neither fed nor state money

20. Hierarchy of MONEYState Parties Federal “Hard Money” Levin Quasi-Fed $ State “Soft Money” • Federal Money • Most limitations • Federal, state and local elections • Levin Money • Fewer limitations • Some Federal election activities, state and local • State Money • Typically, fewest limitations • State and local elections only

21. Example State Party Regulations • Virginia State Contribution Regulations • Rule 1 – Unlimited contributions from any type of entity (except foreign nationals) are permitted • Rule 2 – If in doubt, see Rule 1 • TN State Party Contribution Regulations • Unlimited contributions from individuals • Contributions from foreign nationals, corporations and some LLCs are prohibited

22. 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

23. Loopholes/Issues of BCRAPurpose: To outlaw the use of soft money in federal elections • 527s • Continuous re-writing of FEC regulations • Unlimited State to State transfers • Honor system vs. realistic expectations • Constitutional Violations • Internet

24. Campaign Structure

25. “Working Together” • Federal Candidate Committee (FEC) –Nicolosi for President Campaign Committee • National Party (FEC) – Democratic National Committee • State Parties (FEC & State Election Comm) – Democratic Party of Virginia • Local Parties (FEC & State Election Comm) • PACs • Leadership PACs – Forward Together • Union PACs • Corporate PACs • Individual contributors

26. Working ‘Together’ • ACT/Swift Boat Veterans for Truth • Section 527 • File reports with IRS • Not subject to FEC contribution/expenditure restrictions • Not permitted to coordinate with candidates and campaigns for candidates • Separate GOTV plan • Separate message – but no “expressed advocacy” • Nicolosi rocks because he loves puppy dogs NOT Vote for Nicolosi • FEC REGULATIONS APPLICABLE if: • Mention federal candidate AND • Aired within 60 days of federal election

27. Citizens United Case: Changing the game? Or Not? Case: Conservative advocacy group – -Accepted corporate money to make a movie about Hillary Clinton - Was it an attack ad funded by an outside group? Prohibited by FEC/ BCRA - Court looks at Speech during an election year Decision 5-4 – Corporations have First Amendment Rights too! SUPER PACs – must disclose donors, 527s GENERALLY do not. Still can’t coordinate with the campaign. Must be independent, but does it leave you, the candidate, in less control of your campaign and its message? Effects? Huge amounts of Money Spent – see next slide. Does it matter.