Federal Campaign Finance Law

1. Federal Campaign Finance Law

2. Federal Election Commission • Established by Congress in 1974, the FEC in an independent agency in the executive branch. • All federal election contributions and expenditures are reported to the 6 person FEC. The 6 members are appointed by the President and confirmed by the Senate.

3. FEC Cont… • The FEC: • requires the timely disclosure of campaign finance data; • place limits on campaign contributions; • place limits on campaign expenditures; and • provide public funding for several parts of the presidential election process.

4. Contribution Limits – 2008 Cycle • Individual to any candidate per election (primary and general) • $2,300 • Individual to any national party committee • $28,500 per party committee

5. Contribution Limits Cont… • Individual to any PAC, state/local party committee • $5,000 to each PAC • $10,000 to each state or local party committee

6. Contribution Limits Cont… • Aggregate Total • $108,200 per two-year election cycle as follows: • $42,700 per cycle to candidates; and • $65,500 per cycle to all national party committees and PAC (of which no more than $40,000 per cycle can go to PACs)

7. Hard Money • Disclosed or reported money to the FEC.

8. Soft Money • Funds solicited from individuals, corporations, and unions that were spent on party activities, such as voter registration campaigns and voting drives, rather than on behalf of a specific candidate.

9. Soft Money Cont… • Also these funds could have been used to communicate political endorsements and other information to members. Soft money funds did NOT need to be reported to the FEC.

10. Soft Money Cont… • The Bipartisan Campaign Reform Act (BCRA) signed into law in 2002 banned soft money and prevents special interest groups from spending corporate or labor union money on broadcast ads that mention a candidate just prior to an election.

11. Public Funding of Presidential Campaigns • Funding for presidential campaigns began in 1971 with the passage of the Revenue Act. • The law setup the Presidential Election Campaign Fund. • Every person who files a federal income tax return can “check off” or assign $3 of his/her tax payment to the fund.

12. Public Funding of Presidential Campaigns Cont… • The monies are used every four years to finance: • preconvention campaigns; • National conventions; and • Presidential election campaigns. • The FEC administers the public subsidy process.

13. Presidential Election Campaigns – The Primaries • The federal government provides matching funds for all money raised by individual donors contributing no more than $250. Funds are matched as long as the candidate raises $5,000 in each of 20 states ($100,000 / 20) • Presidential candidates who accept federal matching funds can spend only a set amount of money in the preconvention period. For example, a candidate in 2004 was limited to spend no more than $37.3 million. • Many of the major party candidates in 2004 and 2008 did not take the FEC money.

14. Presidential Elections – General Election • The federal government will pay all campaign costs of the major-party candidates and part of the costs of minor party candidates (those winning between 5-25% of the vote). • Last year McCain opted into the public financing system during the general election ($84 million) • Obama declined public financing and the spending limits that came with it (1st major party candidate to reject taxpayer’s money for the general election).

15. What is a PAC • Political Action Committee (PAC) — A popular term for a political committee organized for the purpose of raising and spending money to elect and defeat candidates. • Most PACs represent business, labor or ideological interests. • PACs can give $5,000 to a candidate committee per election (primary, general or special).

16. PACs Cont.. • They can also give up to $15,000 annually to any national party committee, and $5,000 annually to any other PAC. • PACs may receive up to $5,000 from any one individual, PAC or party committee per calendar year.

17. PACs Cont.. • A PAC must register 6 months in advance, have at least 50 contributors, and give to at least 5 candidates

18. Miscellaneous • Any contribution or loan of more than $200 must be identified by source and date. • Also, any spending over $200 must be identified by name of person or firm, date, and purpose of the expenditure. • No ceiling on amount a presidential candidate can spend – unless he or she accepted federal funding ($50,000 limit)

19. Buckley v. Valeo (1976) • Question • Did the limits placed on electoral expenditures by the Federal Election Campaign Act of 1971, and related provisions of the Internal Revenue Code of 1954, violate the First Amendment's freedom of speech and association clauses?

20. Buckley v. Valeo (1976) Cont… • Conclusion • First, it held that restrictions on individual contributions to political campaigns and candidates did not violate the First Amendment since the limitations of the FECA enhance the "integrity of our system of representative democracy" by guarding against unscrupulous practices.

21. Buckley v. Valeo (1976) Cont… • Second, the Court found that governmental restriction of independent expenditures in campaigns, the limitation on expenditures by candidates from their own personal or family resources, and the limitation on total campaign expenditures did violate the First Amendment. Since these practices do not necessarily enhance the potential for corruption that individual contributions to candidates do, the Court found that restricting them did not serve a government interest great enough to warrant a curtailment on free speech and association.

22. McConnell v. FEC (2003) • Question • Does the "soft money" ban of the Campaign Finance Reform Act of 2002 exceed Congress's authority to regulate elections under Article 1, Section 4 of the United States Constitution and/or violate the First Amendment's protection of the freedom to speak? • Do regulations of the source, content, or timing of political advertising in the Campaign Finance Reform Act of 2002 violate the First Amendment's free speech clause?

23. McConnell v. FEC (2003) • Conclusion • With a few exceptions, the Court answered "no" to both questions in a 5-to-4 decision. • Because the regulations dealt mostly with soft-money contributions that were used to register voters and increase attendance at the polls, not with campaign expenditures (which are more explicitly a statement of political values and therefore deserve more protection), the Court held that the restriction on free speech was minimal. It then found that the restriction was justified by the government's legitimate interest in preventing "both the actual corruption threatened by large financial contributions and... the appearance of corruption" that might result from those contributions.

24. McConnell v. FEC (2003) • In response to challenges that the law was too broad and unnecessarily regulated conduct that had not been shown to cause corruption (such as advertisements paid for by corporations or unions), the Court found that such regulation was necessary to prevent the groups from circumventing the law. Justices O'Connor and Stevens wrote that "money, like water, will always find an outlet" and that the government was therefore justified in taking steps to prevent schemes developed to get around the contribution limits.

25. McConnell v. FEC (2003) • The Court also rejected the argument that Congress had exceeded its authority to regulate elections under Article I, Section 4 of the Constitution. The Court found that the law only affected state elections in which federal candidates were involved and also that it did not prevent states from creating separate election laws for state and local elections.