Lesson Objectives:- The Hatch Act
- The Federal Elections Campaign Act
- Political Action Committees
- Soft Money
- The current campaign finance environment
- Public funding for campaigns
At one time, there were no laws governing campaign donations. No records were required for who was donating and how much was being donated. That changed with the passage of the Hatch Act.
The Hatch Act was passed in 1939 and restricted the political activities of government employees. It also prohibited a political group from spending more than $3 million in any campaign and limited individual contributions to a campaign committee to $5,000.
Little changed, however, as contributors got around the new restrictions simply by creating new organizations.
In 1972, FECA (The Federal Elections Campaign Act) was passed, taking the place of any campaign laws already in existence. Amendments to FECA brought about the existence of the FEC.
The FEC (the Federal Election Commission) is the federal regulatory agency tasked with enforcing federal campaign laws. As a practical matter, the FEC's role is largely limited to collecting data on campaign contributions.
FECA and the creation of the FEC ended up being fairly ineffective due to one major flaw – the FEC had no way of knowing if a campaign had violated any rules until it was completely over. Then in 1976, Buckley v. Valeo even overturned the provision that limited the amount a candidate could spend on their own campaign.
A Political Action Committee (PAC) is a committee set up by and representing a corporation, labor union, or special interest group. PACs raise funds for campaign donations.
PACs went on the rise as there was no limit to the number of PACs that could contribute -- only a limit on *how much* they could contribute, $5000. Political Action Committees gave corporations and interest groups a chance to significantly impact elections.
They also found other ways to make an impact.
One way was through Issue Advocacy Advertising. That is advertising paid for by interest groups that support or oppose a candidate's position on an issue without mentioning the candidate, voting, or elections.
Corporations and interest groups can indirectly promote a candidate by promoting the issues, and the funds used for those advertising efforts do not have to be reported as donations to a campaign.
Soft Money refers to campaign contributions unregulated by federal or state law, usually given to parties and party committees to help fund general party activities.
Since it is not given directly to the candidate and the money is not used to promote a campaign, it is legal to use the money to educate voters and promote voter-registration.
In an attempt to regulate these new campaign strategies, The Bipartisan Campaign Reform Act of 2002 banned the use of soft money at the federal level, but not state and local. It also put a stop to Issue Advocacy Advertising.
The Supreme Court upheld the Bipartisan Campaign Reform Act for the most part. Issue Advocacy Ads, however, seemed protected by the First Amendment, so the Court only allowed the prohibition of such ads when the ad was clearly promoting a candidate.
With the current state of campaign laws, campaigns are funded in two different ways. The first is through donations directly to the candidate, limited to $2500 from each individual.
The other way is through Independent Expenditures, which are unregulated political expenditures by PACs, organizations, and individuals that are not coordinated with candidate campaigns or political parties.
Independent Expenditures were made possible as a result of Citizens United v. FEC in 2010. The Court ruled that there was no way independent expenditures could be legally limited.
A Super PAC is a political organization that aggregates unlimited contributions by individuals and organizations to be spent independently of candidate committees.
A Super PAC is the combination of traditional PACs and independent expenditures. They can accept an unlimited amount of funds from individuals and use them for political activities that are not coordinated with campaign candidates.
527s are organizations that have tax-exempt status and are able to raise funds with no limits for the purpose of pushing issue advocacy ads and getting voters to vote. They have been replaced for the most part by Super PACs, but they are still active.
Like 527s, 501(c)(4) organizations are tax exempt and have no limits on how much funds they can raise for independent expenditures. Their advantage is that they do not have to report how they spend their money to the FEC. Plus, they can keep donor identities anonymous.
Issues did arise in the way 501(c)(4)s were able to independently promote a candidate. But, the FEC has yet to rule on any question concerning the legality of their operations.
For candidate committees, even though there are limitations on contributions, the total funds that these organizations can collect is not limited and can get quite high. Mitt Romney versus Barack Obama saw campaign funds reach over $1 billion for each candidate.
That is because, while an individual can only donate a maximum of $2600 to each candidate, they can contribute to as many candidates as they want. Plus, they can contribute to the party.
Public funding is supplied from tax dollars when people file their taxes and choose to contribute. A candidate can use public funding and raise funds during the primary that the system would match. The downside is, candidates then have to rely solely on public funding in the general election and there are spending limits.
Candidates can raise more on their own if they opt out of the public funding system and President Obama was the first to do so. He raised more money on his own and candidates after him have followed suit.