Campaign finance reform
Table of contents
First attempts at reform
Money has been associated with elections since the inception of the electoral process in the United States. Out of four million citizens during the Revolution, only 800,000 white male property owners were enfranchised. When George Washington ran for the Virginia House of Burgesses in 1758, his election managers provided just under 1/2 gallon of alcoholic beverages per voter at a treat for Freeholders on election day. In 1777 James Madison lost a race for the Virginia legislature, which he claimed was due to his refusal to provide alcohol. Aaron Burr persuaded the New York state assembly to create an anti-Federalist state bank for the purpose of helping citizens buy land in order to gain votes.
By the time of the presidential election of 1828, twenty two of the twenty four states chose presidential electors through the popular vote and most had abandoned the property requirement. Some politicians had been known to buy votes and pay repeat voters. In 1823 the price of a vote in New York City was $5 and for repeat voters, went as high as $30.
In order to gain votes from the recently enfranchised, common white man, Andrew Jackson started an early campaign in 1825 with a reelection committee that enabled support from a network of partisan newspapers across the nation. After his election, Jackson began a political patronage system that rewarded political party operatives, which had a profound effect on future elections. Eventually, appointees were expected to contribute portions of their pay back to the political machine. During the Jacksonian era, some of the first attempts were made by corporations to influence politicians. Jackson claimed that his charter battle against the Second Bank of the United States was one of the great struggles between democracy and the money power.
Simeon Cameron in the 1850's through 1870's was responsible for the "Pennsylvania Idea" of applying the wealth of corporations to help maintain Republican control of the legislature, to include regularly purchasing votes and other vehicles of power. Political machines across the country used squeeze or strike bills to force corporate interests into paying for the defeat of the measures. U.S. Senators of the time were elected not by popular vote, but by state legislatures, whose votes could sometimes be bought. Exposed bribery occurred in Colorado, Kansas, Montana and West Virginia.
Abraham Lincoln's attempt to finance his own 1858 Senate run bankrupted him, even though he had arranged a number of $500 expense accounts from wealthy donors. However, he was able to regain enough money in his law practice to purchase an Illinois newspaper to support him in the presidential election of 1860, for which he gained the financial support of businessmen in Philadelphia and New York City.
After the Civil War, parties increasingly relied on wealthy individuals who had become rich from the war industry, such as Jay Cooke, the Vanderbilts and the Astors. The first federal campaign finance law, passed in 1867, was a Naval Appropriations Bill which prohibited government employees from soliciting contributions from Navy yard workers. As an aftermath of the aforementioned Jacksonian political patronage, a practice of political assessment required officeholders to return an assessed portion of their pay to the machine in order to secure the future of a position. This provoked passage of the Pendleton Act of 1873, extending the prohibition of political contributions to all civil service workers. However, this increased pressure to acquire funding from corporate and individual wealth.
In the campaign of 1872 a group of wealthy New York Democrats pledged $10,000 each to pay for the costs of promoting the election. One Ulysses S. Grant supporter alone contribute 1/4 of the total finances. One historian said that never before was a candidate under such a great obligation to men of wealth. Vote buying and voter coercion were common in this era. After more standardized ballots were introduced, these practices continued, applying methods such as carbon paper under ballots for proof of payment.
Boise Penrose mastered post-Pendleton Act corporate funding through extortionist tactics, such as squeeze bills. During his successful 1896 U.S. Senate campaign he raised 1/4 million dollars within 48 hours. He allegedly told supporters that they send him to Congress to enable them to make more money.
The wealthy Ohio industrialist, shipping magnet and political operative, Mark Hanna assessed banks 1/4 percent of their capital. Corporations were assessed in relation to their stake in the prosperity of the country. He was made chairman of the Republican National Committee after giving $100,000 out of pocket toward the 1896 nomination of William McKinley. He managed to make McKinley's run the prototype of the modern commercial advertising campaign, the most expensive up to post-WWI, issuing the President-to-be's image on buttons, billboards, posters, etc. Supporters explicitly recognized that they were paying for the service of managing the politics of their business interests.
Twentieth century Progressive advocates, muckraker journalists and political satirists made it clear to the general public that the policies of vote buying and excessive corporate and moneyed influence were abandoning the interests of millions of taxpayers. They advocated regulating antitrust laws, restricting corporate lobbying and campaign contributions, as well as greater citizen participation and control, including standardized secret ballots, strict voter registration and women's suffrage.
In his first term, President Theodore Roosevelt, following President McKinley's assassination of 1901, began trust-busting and anti corporate influence activities, but fearing defeat, turned to bankers and industrialists for support in what turned out to be his 1904 landslide campaign. Roosevelt was embarrassed by his corporate financing and was unable to clear a suspicion of a quid pro quo exchange with E.H. Harriman for what was an eventually unfulfilled ambassador nomination. There was a resulting national call for reform, but Roosevelt claimed that it was legitimate to accept large contributions if there were no implied obligation. However, in his 1905 message to Congress following the election, he proposed that "contributions by corporations to any political committee or for any political purpose should be forbidden by law." The proposal, however, included no restrictions on campaign contributions from the private individuals who owned and ran corporations. Roosevelt also called for public financing of federal candidates via their political parties. The movement for a national law to require disclosure of campaign expenditures, begun by the (citizen's lobbying group) National Publicity Law Association, was supported by Roosevelt, but delayed by Congress for a decade.
This first effort at wide-ranging reform resulted in the Tillman Act in 1907 which prohibited corporations and nationally chartered (interstate) banks from making direct financial contributions to federal candidates. However, weak enforcement mechanisms made the Act unenforceable. Disclosure requirements and spending limits for House and Senate candidates followed shortly thereafter. The first contribution limits were enacted in the Federal Corrupt Policies Act (1925). The Smith-Connally Act (1943) and Taft-Hartley Act (1947) extended the corporate ban to labor unions.
FECA and the Watergate amendments
Much of this legislation, however, was full of loopholes and went totally unenforced. Congress passed a comprehensive overhaul of campaign finance regulations in 1971 with the Federal Election Campaign Act (amended 1974) and Revenue Act. The legislation was wide-ranging, attempting to consolidate previous reforms and also enacting a variety of new measures, including the first steps towards public financing of presidential campaigns. Enforcement remained a challenge, though, thanks in part to the lack of a central agency for monitoring compliance.
Public outrage at the Watergate scandal resulted in amendments to FECA which finally resulted in real changes in campaign finance. New provisions included stricter and more comprehensive contribution and expenditure limits for campaigns and other committees, full public financing for presidential general election campaigns, and, for the first time, an independent agency — the Federal Election Commission — to inform campaign finance rules.
The new law was challenged, resulting in a landmark Supreme Court decision, Buckley v. Valeo. The decision upheld contribution limits, disclosure requirements, and voluntary public financing, while striking down most limits on expenditures.
Hard and soft money
Campaign money in the U.S. system comes in two forms: "hard money" and "soft money". Hard money refers to donations made directly to political candidates. These must be declared with the name of the donor, which becomes public knowledge, and are limited by federal caps. Soft money refers to contributions made to political parties, and are largely uncapped. However, they cannot go directly into supporting a candidate, but rather into such elements as what are known as "issue" ads, which are advertisements for a candidate's positions or thinly veiled attacks on the opponent's positions. This is far different from the intended use of soft money, which was to fund "party building activities" such as get-out-the-vote efforts or voter registration drives.
Main article: soft money
However, this money was quickly used to fund advertisements. For example, a wealthy individual could give $5 million in soft money to the Democratic Party. The party could then spend this money on political ads. These ads could not tell you to "Vote for Smith", "Elect Smith", "Send Smith to Congress", "Vote Against Jones", "Defeat Jones", or anything of that sort. However, they could go something like this: "John Smith is an honest man who stands up for the people. Bill Jones is a chronic liar who's taken money from special interests and advocated cutting Social Security. Call Bill Jones and tell him how you feel about this." The use of the phrases "vote for", "elect", "defeat", etc. was ruled illegal in the 1976 U.S. Supreme Court decision Buckley v. Valeo. The decision also held that limitations on donations to candidates were acceptable (to limit the "appearance of corruption"). On the other hand, the Court said, limitations on campaign spending were unconstitutional.
Campaign finance reform had been debated for years without any major changes to campaign finance laws. The Reform Party, founded by Ross Perot, made it a central issue in its platform, and when Perot ran for president in 1992 and 1996 he strongly argued for it. It again became a major issue in the 2000 U.S. presidential election, especially with candidates John McCain and Ralph Nader. Organizations in favor of campaign finance reform include Common Cause, Democracy 21, and Democracy Matters. Organizations directly challenging the Supreme Court's decision to equate spending money to influence elections with constitutionally-protected free speech, include ReclaimDemocracy.org, the National Voting Rights Institute, and U.S. PIRG.
Bipartisan Campaign Reform Act of 2002
In 2002, spurred by (amongst other things) the collapse of Enron, a major contributor to politicians at all levels of the U.S. system, reformers in the U.S. House of Representatives were able to pass the Bipartisan Campaign Reform Act (BCRA), also called the McCain-Feingold bill after its chief sponsors, John McCain and Russ Feingold. The U.S. Senate then gained the requisite 60 votes to shut off debate (in fact, 68) and passed the House version of the bill 60–40 on March 20, 2002. It was signed into law by President Bush on March 27, 2002. He said, in part, "I believe that this legislation, although far from perfect, will improve the current financing system for Federal campaigns... Taken as a whole, this bill improves the current system of financing for Federal campaigns, and therefore I have signed it into law." The bill was the first overhaul of campaign finance laws since the post-Watergate scandal era.
The BCRA was a mixed bag for those who wanted to remove the money from politics. It eliminated all soft money donations to the national party committees--but it also doubled the contribution limit of hard money, from $1,000 to $2,000 per election. (The primary and general are considered separate elections.) In addition, the bill banned the use of corporate or union money to pay for broadcast advertising that identifies a federal candidate within 30 days of a primary or nominating convention, or 60 days of a general election. Any ads within those periods that identify a federal candidate must be paid for with regulated, hard money or with contributions exclusively made by individual donors.
This provision was challenged as unconstitutional by groups and individuals including the California State Democratic Party, the National Rifle Association, and Republican Senator Mitch McConnell (Kentucky), the Senate Majority Whip. After moving through lower courts, the U.S. Supreme Court heard oral arguments in a special session in September 2003. On Wednesday, December 10, 2003, the Supreme Court issued a ruling that upheld the key provisions of McCain-Feingold; the vote on the court was 5 to 4. Justices John Paul Stevens and Sandra Day O'Connor wrote the majority opinion; they were joined by David Souter, Ruth Bader Ginsburg, and Stephen Breyer, and opposed by Chief Justice William Rehnquist, Anthony Kennedy, Clarence Thomas, and Antonin Scalia.
However, this is only one battle in movement for campaign finance reform. Another route some groups are trying is public financing of campaigns. There are several ways of instituting public financing.
One method gives each candidate a certain, set amount of money. In order to qualify for this money, the candidates must have a minimum level of support in opinion polls. The candidates are not allowed to accept outside donations if they receive this money. This procedure is currently in place in races for the state legislature in Maine.
Another method allows the candidates to raise funds from private donors, but provides matching funds for the first chunk of donations. For instance, the government might "match" the first $250 of every donation by giving one dollar for the first $250 by any donor. A system like this is currently in place in the U.S. presidential primaries.
Supporters of public financing claim that it is the only way to truly get money out of politics. In addition, they claim that matching funds provide a necessary encouragement to raise money in small donations. Many critics say that such plans discriminate against smaller candidates, especially in systems with only two political parties. They also claim that government subsidization of political speech is contrary to the spirit of democracy and/or capitalism.
Opponents of public financing claim that public money has no place promoting the partisan political viewpoints of candidates for office. It has also faced criticism from minor parties, who often face restrictions on access to campaign subsidies that don't trouble major-party candidates.
Other opponents of public financing claim that public financing has already corrupted the political process, with big government advocates buying voters' votes with promises of increases in entitlement programs, welfare, and pork barrell spending. Any direct public financing should correct this imbalance by only financing candidates committed to trimming the size of government.
- Open Secrets, a directory describing the disclosed use of money in the U.S. elections.
- President Bush's statement on signing BCRA
- Washington Post Article about Supreme Court Decision