Presidential Campaign Financing Since 1972

The issue of limiting spending in general election campaigns has been prevalent ever since the 1972 Presidential election in which Democrat George McGovern ran against Republican Richard M. Nixon. Together, these two major party candidates spent approximately $91.4 million in their race for the Presidency without declaring the source of the money and where they spent it.

The American public began to worry that spending would continue to increase to unnecessarily high levels and that candidates would receive too much money from private enterprises and other unregulated sources with specific interests in mind that are usually completely unrelated to the federal election. A consequence of candidates accepting "donations" from private enterprises is that these donations are usually a payment in exchange for the government's endorsement of a particular view or standpoint, and therefore represent a corrupt bargain.

These concerns led to the creation of the Federal Election Campaign Act of 1971, an attempt to regulate the influx of "soft money," which is defined as money acquired outside the boundaries of federal law and spent in ways such that it would affect federal elections directly. The act forced Presidential candidates to disclose campaign contributions they received as well as where they were spending any incoming money, among several other limitations.

The Federal Election Campaign Act was amended in 1974 as a result of the Watergate scandal. Under its new provisions, it imposed regulations on who could contribute to general election campaigns and how much they were allowed to contribute, and when. New York Senator Samuel Buckley filed a lawsuit against Secretary of the Senate Francis Valeo to attempt to strike down these new impositions, but he failed.

After the Buckley v. Valeo case, which preceded the 1976 Presidential election battle between Jimmy Carter and Gerald Ford, the Federal Election Campaign Act was revised again, enforcing even stricter limits on Presidential campaign spending. Over the next thirty years the act continued to be revamped and the issue stayed afloat in the political arena.

In 2002, the Bipartisan Campaign Reform Act was developed and changed the contribution regulations once again. It is important to note that although there have been many revisions to the campaign finance laws since 1972, not much has changed since then. Presidential campaign spending continues to increase more rapidly with every general election that passes and will continue to do so unabated unless the federal government can find a way to curb the tendency of major party candidates to expose and take advantage of loopholes in the laws, with little or no consequence.

The creation of the Federal Election Campaign Act of 1971 introduced four primary restrictions on general election funding. The first required candidates and political committees to submit an expense report every three months with the Comptroller General, who is in charge of the Government Accountability Office, an institution of the federal government designed to oversee the acquisition of public funds.

The report had to include a detailed list containing all expenses exceeding $100 and also demanded that contributions in excess of $5,000 be reported within two days, regardless of when the next report was due. Federal candidates also had to succumb to advertising spending limits, which permitted them to have $50,000, or 10 cents per eligible voter, whichever was greatest. Radio and television broadcasters were required to sell airtime to candidates at the lowest rate they would offer to anyone else as early as two months before the general election.

Finally, personal and family contributions were allowed to be as high as $50,000. This last point is the one that triggered Senator Samuel Buckley to file suit against Secretary of the Senate Francis Valeo, and was subsequently nixed after the Supreme Court decision in the case Buckley v. Valeo, on the grounds that it was in violation of the constitutional principle of freedom of expression to place a restriction on the amount of money individuals could donate.

The abolition of this section of the act engenders a problem in terms of the fact that the rich are dealt an unfair advantage because they can amass as much of their own money as they want and direct it toward their campaigns without the need for the small contributions, while the poor struggle to even get their feet in the door and have their voices heard.

The immense level of distrust that the Watergate scandal provoked in the early 1970s led to an amendment to the Federal Election Campaign Act in 1974 which included several new impositions. They included a $1,000 limit for individuals to Presidential candidates and a $25,000 limit to candidates and their committees combined. Cash contributions greater than $100 were strictly prohibited.

Limits on total expenditure for candidates were also enacted and took effect during the 1976 general election. They included $10 million each for candidates running in primaries as well as $2 million for major party conventions plus a cost-of-living adjustment, and $20 million each for the candidates that made it to the general election race. A $1,000 cap was placed on interest groups that desired to contribute independently to candidates they supported and the other candidates they were trying to criticize.

By far the most important change induced by the Federal Election Campaign Act of 1974 was the creation of the Federal Election Commission. This institution was set up as a means of creating and enforcing the Federal Election Campaign Acts and all other campaign finance legislation. The Federal Election Commission had the ability to handle civil cases, while criminal cases were under the jurisdiction of the Justice Department.

Two members of the Federal Election Commission were appointed by the President, two by the Speaker of the House, and two by the President pro tempore of the Senate. The Clerk of the House and Secretary of the Senate also became members of the Federal Election Commission by right of office. The creation of the Federal Election Commission represented the first serious step toward the enforcement of the new campaign finance regulations and demonstrated to the American public that the government was determined to rectify and eliminate the issues of overspending and spending money in deceptive and harmful manners.

Another goal of the Federal Election Commission was to facilitate the disclosure process outlined in the Federal Election Campaign Act of 1971, which would ensure more compliance than a more complicated and unclearly defined process. The Federal Election Commission was this process itself because it gave candidates a direct entity with whom to disclose their expenditures. The Federal Election Campaign Act of 1974 was also contested in the 1976 Buckley v. Valeo case.

Contribution limits to federal office candidates were upheld, as well as the stipulation that federal candidates disclose all of their incoming sources of money and expenditures, and the public financing of the general elections, the first of which was the Presidential election of 1976, between Jimmy Carter and Gerald Ford. Several other provisions of the earlier Federal Campaign Finance laws were declared unconstitutional in the Buckley v. Valeo case, including the independent expenditure limit of $1,000, the expenditure limits from the candidates' own money.

The manner in which six of the eight members of the Federal Election Commission were appointed created controversy in the Buckley v. Valeo case as well. These were the members appointed by the Speaker of the House, President pro tempore of the Senate, as well as the Secretary of the Senate and Clerk of the House themselves. As members of Congress, these six people were either a part of the legislative branch of our government or appointed by someone in the legislative branch of the government, whereas the Federal Election Commission represented the functions of the executive branch, resulting in a conflict of interest and violation of the Constitution.

The striking down of the provision of the 1974 Act led Congress to craft the Federal Election Campaign Act of 1976, which remedied the appointment confliction by required that the President appoint all members of the Federal Election Commission, as both the President and the Federal Election Commission are a part of the executive branch of government, a situation with which the Constitution can derive no conflict of interest.

In addition, individuals were permitted to give no more than $5,000 to a political action committee, which is defined by the federal government to be any organization that collects more than $1,000 to be used to influence a federal election in any method. $20,000 was set as the maximum that individuals were allowed to contribute to national party committees, who in turn could receive no more than $15,000 from the aforementioned political action committees.

Money spent in compliance with the Federal Election Campaign finance laws was deemed exempt from expenditure limits in publicly financed Presidential elections. The powers of the Federal Election Commission also received an augmentation, under which they specified penalties for violations of the campaign finance laws, and increased their authority to prosecute violations of the laws. The Federal Election Commission also determined the guidelines it would be required to follow when conducting investigations for violations that were thought to have occurred as well as attempting to reach an agreement with violators before taking them to court and actually prosecuting them on a criminal level.

Despite all of the changed that had occurred thus far with the Federal Election Campaign Act since its institution in 1971, many desired for the laws to be made less restrictive, which resulted in another reform in 1979. Groups in charge of registration drives for the purpose of inspiring the American public to vote were permitted under the new laws to spend as much money as they could collect as long as they were not directing their funds toward any activities that supported specific Presidential candidates.

The minimum amount that a federal candidate was required to report was also increased from $100 to $200, meaning that a larger number of smaller expenses would now be able to slip under the radar without any questions asked. Independent expenditures were also increased from $100, but to a higher $250. The $2 million that major parties were initially given for their national conventions was increased to $3 million, and the cost-of-living adjustment remained intact.

The Federal Election Commission decreed that parties could spend as much soft money as they wanted to drum up support for their party if spent non-federally. State and local parties were also allowed to spend an unlimited amount of money on campaign propaganda such as bumper stickers and yard signs, and many other forms of advertising, including television.

Television advertisements fell under stringent regulations whereby certain phrases-called the Eight Magic Words-could not be used, such as "vote for candidate X," "support candidate Y," "defeat candidate Z," "reject," "elect," etc. Because the federal candidates were not directly spending money on this type of advertising, no financial limits were imposed on this so called "issue advertising." A loophole in issue advertising existed though, insofar that candidates could rip each other to shreds in such a way that were they allowed to use the Eight Magic Words, they wouldn't even need them.

Federal candidates could get away with statements like "Candidate X is a flagrant liar and supports taking money away from children to fund burlesque houses." This is obviously an overstatement, though not very far from the unfortunate truth. Candidate bashing was permitted, and even ran unabated in the years following these amendments to the Federal Election Campaign Act.

Issue advertising became synonymous with candidate bashing and represented a serious problem because no longer were people being informed about the issues that would affect them in the upcoming Presidential election and the years following, rather they were suffering through exposure to useless attacks and counterattacks that continued ad nauseam.

Perhaps one of the most interesting modifications to the Federal Election Campaign Act of 1979 was the inclusion of a ban on the use of personal money as a supplement to public campaign funding, which represented a major leveling of the playing field. No longer would the rich enjoy the advantage they had over the poor by virtue of their excess millions upon millions of dollars.

National party nominating conventions received another break in 1984 when their $3 million limit was increased to $4 million with no alteration to the cost-of-living adjustment, but experienced a setback when a section of the 1979 Federal Election Campaign Act was repealed as a part of the Ethics Reform Act of 1989. This section was the one that banned use of excess personal money to fund a federal election campaign. With this constraint eradicated, the poor were no longer a part of a playing field, rather they were the ball that was continuously being kicked around on the field's ground.

This seemingly innocent modification signified a considerable hindrance of the voices of the less affluent, and did more to upset the balance rather than restore and control it. The Ethics Reform Act also set up a more streamlined mode for the disclosure of confidential financial transactions regarding federal election campaign expenditures. It also created the Office of Government Ethics, which outlined a rigid code of ethics for all members of the executive branch of the United States government to obey, and also required ethics training for these executive employees.

An important proviso of the code of ethics was that executive members of office were required to act "impartially and not give preferential treatment to any private organization or individual." Whether this is possible when organizations are able to provide federal candidates money with which to fund their campaigns is debatable, though it is most certainly not incorrect to surmise that any group donating money to a federal candidate will likely desire something in exchange for their contribution.

In fact, it is often the case that candidates make promises to the groups from whom they receive these incomes, and are therefore may be persuaded by monetary means, a reflection of the corrupt bargain mentioned earlier. The Federal Election Campaign Act was revised one final time in 1995. This amendment was particularly less revolutionizing than those that had occurred over the span of the previous two decades, though it was still significant in terms of campaign finance. The 1995 act required the Federal Election Commission to keep electronic records of all campaign expenditure disclosures, an activity that symbolized the passage of the issue of campaign finance into the modern era, by adapting its provisions to the technological world, thereby making the entire process wholly more tenable and efficient.

The Treasury and General Government Appropriations Act was defined in 1999 and extended in 2000 to invoke the following: members of the Federal Election Commission were restricted to serving no longer than a single six-year term, unless they were already in the position when the acts were created, which resulted in one of the constituents, Danny L. McDonald, serving from December 1981 to January 2006, just over twenty-four years.

For someone to be in control of any part of the federal government for any period as long as that can be a dangerous situation because people become accustomed to the position and when the attain seniority can often bend rules without anyone noticing. McDonald, as far as anyone knows, never did anything of the sort, though it is definitely comforting to have the preventative measures already in place to prohibit any possibility of occurrence in the future.

The new act also required the Federal Election Commission to file electronically any transactions by federal candidates above a specific value, in addition to setting up a system of fines to be paid when minor disclosure violations occurred. However, this was not the end of campaign finance legislation.

The issue of campaign finance continued to rear its head in the new millennium, with the establishment of the Bipartisan Campaign Reform Act of 2002. One of the primary objectives of this new piece of legislation was to completely obliterate the presence of soft money in federal election campaigns. It sought to do this by expressly prohibiting the raising and spending of nonfederal funds by national political parties and by insisting that nonfederal organizations like state and local governments fund the activities of the general election such as voter registration and public communication of views for or against specific candidates, rather than the parties amassing this money themselves and using it at their own discretion.

Another provision of the law specified that labor organizations and businesses were no longer allowed to fund issue advertisements. The only source of payment for these advertisements, individuals and other groups, were to report whatever they spent and where they received the money to provide these advertisements if the costs passed $10,000 to produce and air the issue advertisements.

New contribution limits for individuals were also instituted under the Bipartisan Campaign Reform Act of 2002. Contributions to candidates were increased to $2,000 from $1,000 and contributions to state, district, and local party committees increased to $10,000 from $5,000. Contributions to national party committees saw an increase to $25,000 from $20,000. It is important to note that contributions to both national party committees and candidates themselves are adjusted for inflation every two years.

Foreign nationals are also prohibited from donating money or anything of value with regard to federal elections in the United States, including donations to political party committees and organizations responsible for the creation and dissemination of issue advertisements. The Bipartisan Campaign Reform Act of 2002 is the last piece of legislation to surface in an attempt to curb the dramatic increases in campaign spending over the past few decades and eliminate the dominance of soft money in the federal election scene. However, as stated earlier, not much has changed since the first Federal Election Campaign Act in 1971, and the future is likely to be no different than the past three decades.

Since the creation of the Federal Election Campaign Act of 1971 limits have been imposed on federal candidates in regards to from whom they can accept donations and in what amount. They have also been required to disclose these amounts to a federal agency known as the Federal Election Commission. For slightly more than the past thirty years, the Federal Election Commission has been overseeing these federal candidates and keeping a very close eye on all expenditures, ensuring that they are in fact being reported.

This is just as true today as it was back then. In addition to that, the only significant changes to the campaign finance laws that have occurred over the years are numerical in value, meaning that the limits on campaign contributions are continuously increased so as to allow candidates to have more money available at their expense. Both the Federal Election Campaign Act of 1971 and the Bipartisan Campaign Reform Act of 2002 set out to put an end to the effect that soft money was beginning to have in terms of influencing federal elections, thought both appear to have failed.

Obviously, candidates continue to find loopholes through which extreme sums of money can be passed, and people that desire to contribute this money continue to find ways to get their money to the candidates. This has been an unending battle for the past several decades and will continue to be described as such unless the government elaborates a more cut and dry set of rules, perhaps allowing candidates to spend a lump sum of money that the government doles out to them, and completely obliterating funding of campaigns by third-party organizations such as corporations and interest groups. However, it is unlikely that any changes of this magnitude will occur given the lack of innovative change in the area of campaign finance since it became a major issue in American politics.

Sources

Adamany, David W., Agree, George E. Political Money. Baltimore, MD: The Johns Hopkins University Press, 1975.

Buckley v. Valeo. Hoover Institution Public Policy Inquiry: Campaign Finance. Updated 2005. Accessed 12 April 2007. .

Corrado, Anthony. Paying For Presidents: Public Financing In National Elections. New York, New York: The Twentieth Century Fund Press, 1993.

Delmer D. Dunn. Financing Presidential Campaigns. Washington, D.C.: The Brookings Institution, 1972.

Donnelly, David; Fine, Janice; Miller, Ellen S. Are Elections For Sale? Boston, Massachusetts: Beacon Press, 2001.

Major Provisions of the Bipartisan Campaign Finance Act of 2002. United States Government. Updated 2007. Accessed 13 April 2007.

Public Funding of Presidential Elections. United States Government. Updated 2007. Accessed 12 April 2007.