MONEY AND CAMPAIGNING

Sources of Funds • Private Sources• Candidates fund campaign from their own pockets• Private individuals donate to campaigns (limit of $2500 per person)

• Corporations and Unions • Donate funds to campaigns through PACs (limit - $ 5000 per candidate) • Give money to SuperPACs (unlimited)

• Most often given to incumbents and candidates who already agree with them

Public sources• Public funding of presidential elections

(Public funding, Federal monies, Public monies, Federal funding, Federal matching funds)

• Presidential candidates receive federal government funds to pay for the valid expenses of their political campaigns in both the primary and general elections.

• National political parties also receive federal money for their national nominating conventions. • In 2008, each major party received $16.3 million in public funds for their

conventions, and the parties

Public Funding

• Primary Matching Funds • The federal government

will match up to $250 of an individual's total contributions to an eligible candidate.

• To be eligible a candidate must raise $5,000 in at least 20 states

• General Election • Fund the major party

nominees' general election campaigns • and assist eligible minor party

nominees, they had to receive 5% of the vote in previous election

• In 2008 the parties' general election nominees were eligible to receive $84.1 million in public funds

REFORM LAWS Congress has debated a variety of campaign finance reforms over the last decades in a way to control the amount of money being spent. However, Congressmen are reluctant to adopt new laws since they benefit from the money given to them

Federal Campaign Reform Law• Adopted in 1974 as a result of illegal donations during the

Nixon Campaign.

• Created Federal Election Commission (FEC), charged with overseeing campaigns for all federal elections

Federal Election Campaign Act (FECA), 1974

A. Limit on individual and PAC donations per candidate per election• PAC = political action committee created by interest groups

B. Provided partial public financing for presidential primaries.

C. Provided full public funding for presidential general campaigns for major party candidates; and partial funding for minor party candidates

D. All candidates must file financial disclosure reports.

E. No cash contributions may exceed $200

F. No foreign contributions

Hard Money

• Is strictly regulated by FEC

• Money given… • directly to candidates for

federal elective office

• directly to political parties for the purpose of supporting candidates for federal office

As a result …• Campaign spending increased dramatically due to the

existence of several loopholes in the law

• Loopholes are found in every reform law. As soon as a law is adopted, people are immediately finding other ways to spend political money.

Buckley v. Valeo (1976)• The Supreme Court struck down a portion of

the FECA that limited the amount individuals could contribute to their own campaigns

• WHY? • Restrictions on individual contributions

violates free speech in the First Amendment

• As a result, • Ross Perot spent over $ 60 million of his own

fortune on his independent presidential candidacy in 1992

Ran as an independent in

1992 and for the Reform Party in

1996

Meg Whitman, former eBay CEO, spent $160 million of her own $ (about $50/vote) to finance unsuccessful campaign for Governor of CA in 2010

Amendment to the FECA, 1979• This amendment allowed soft money contributions

• What is soft money? • Money NOT regulated by federal law• Hard money is regulated by the FEC

• Given to political parties for general party building and advertising expenses such as voter-registration campaigns, voter mobilization etc. • Can’t be tied to supporting or opposing a particular candidate.

• No contribution limit

McCain-Feingold Act (2002) - also called Bipartisan Campaign Reform Act (BCRA)

1. Banned soft money

2. Increased limits of “hard money” donations• Money given directly to candidates for federal elective office or to

political parties for the purpose of supporting candidates for federal office. Regulated by the FEC.

3. Prohibited corporations and unions from running “issue ads” if they refer to a federal candidate

• within 30 days before a primary• 60 days before a general election

Issue Ads • Ads intended to educate the public on broader issues,

they can’t use words such as “vote for”, “support” etc. • supposed to discuss broad political issues rather than

specific candidates

As a result….• The BCRA led to the creation of 527 organizations

• Tax-exempt organizations created to raise money for political activities

• Not regulated by FEC

• Can raise unlimited amounts of money and can spend unlimited money on issue ads • as long as they do not coordinate their spending with any candidate or

advocate for specific candidates • they influence how you look at the candidates. • they will try to shape your opinion of a political candidate or party in the

context of a specific issue.

Example of 527s – Swift Boat Veterans for Truth

More examples: • American Crossroads • The Media Fund

McConnell v. FEC (2003)• Supreme Court ruling that upheld BCRA or McCain-Feingold

ACT of 2002

• Money is property, NOT speech

• Money can be regulated

Citizen United v. FEC (2010) Overturned important aspects of McCain-Feingold (02)

A. Political spending can’t be restricted by the government • It is protected speech under the 1st Amendment • Money = speech

B. Corporations, and unions may now spend unlimited amounts of money in supporting or denouncing candidates in elections

C. No limits on issue ads by corporations prior to elections

Spending increased ($ 6 billion spent in 2012 election cycle) Paved way for SuperPACs

Super PACSWhat is a Super PAC? • A non-profit group that can raise, and then spend, unlimited

amounts money from corporations, unions, and individuals on political advertisements (openly advocate for or against political candidates)

• They do have to report their donors to the FEC

• Unlike traditional PACs, Super PACs are prohibited from donating money directly to political candidates.

Stephen Colbert’s SuperPAC

Source: http://www.youtube.com/watch?v=AuqSELPyNSo

Impact of Super PACs on the 2012 Election

Over $1.3 billion spent by 629 outside groups

Only 32% of money spent yielded intended result

Build your own SuperPAC

Super PACs

Other organizations • 501(c)(4)• Non-profit, tax exempt interest group that can engage in varying

levels of political activity

• Many corporations donate money for advertising through these organizations

• Don’t have to disclose their donors

• Example: Crossroad America GPS, Priorities USA

Who is giving

Who is getting it Where is it going

Corporations and Unions

Unlimited to 527 

Unlimited to Super PACs 

Unlimited and anonymous to Nonprofit groups

Unlimited to Ads 

Unlimited to ads 

Unlimited to ads

Who is giving Who is getting it Where is it goingIndividuals Unlimited to 527

Unlimited to Super PACs

Unlimited and anonymous to Nonprofit groups

  $ 5000/year to PACs

$ 2500

$ 30,800 to national party committee

 

Unlimited to ads  Unlimited to ads

   Unlimited to ads 

$5000/election to candidates

Candidates and their committees

$ 5000 for House/ $ 42, 600 for Senate