Campaign Finance 101

1. Campaign Finance 101 What is the difference between hard money and soft money? What is FECA? What is the BCRA? Why is campaign finance so controversial?

2. Campaign finance “slang” • FEC – Federal Election Commission • BCRA – Bipartisan Campaign Reform Act (2002) • Hard money = Federal (regulated) money • Political donations contributed directly to a candidate of a political party, SUBJECT TO LIMITS (legal under BCRA) • EXAMPLE: money for an ad that educates voters about issues, with a specific candidate endorsement (EXPRESSED ADVOCACY) • Soft money = Nonfederal money • Political donations and campaign contributions to parties or “party building” activities; SUBJECT TO STATE LAW • EXAMPLE: money for ads that educate voters about issues, as long as the ads don't take the crucial step of telling voters which candidates to vote for (PUBLIC COMMUNICATION LANGUAGE)

3. Federal Election Activities • GOTV • Voter ID • Generic Campaign Activity • Voter Registration • Public Communication

4. Candidate X runs an ad that says, "I am a good person. Candidate Y is a bad person. Vote for me on election day." Because of the "Vote for me..." portion, this is a political ad, which must be paid for with "hard money." Candidate Y runs an ad that says, "Candidate X has a record that includes awful things. If these awful things continue, people will come to your house, steal your money and shoot your dog. Be sure to vote on election day.“ Because the ad "educates" people on an issue and doesn't tell them to vote for a particular candidate, it's party building, and can be paid for by soft money. Which of the following is an example of Public Communication? Express Advocacy?

5. Overview History of Campaign Finance Regulation • Beginning of time—Civil War: No regulation • Civil War—1910 • Gilded Age • Exceptionally scandalous politicians (Boss Tweed) • 1867: Naval Appropriations Bill • First federal effort to regulate campaign finance • Prohibits officers and employees of the fed. gov’t from soliciting contributions • 1883: Civil Service Reform Act (Pendleton Act) prohibits the same solicitation of all federal workers

6. Overview History of Campaign Finance Regulation • Corrupt Practices Acts of 1911 and 1925 • Set disclosure requirements for House and Senate Elections • Spending limits ($25k for Senate; $5k for House) • Ridiculously weak and regularly violated • 1971: Federal Election Campaign Act (FECA) • 1976: Buckley v. Valeo (1976) www.mit.edu/~17.251/finance.ppt

7. Federal Election Commission • Purpose • In 1975, Congress created the Federal Election Commission (FEC) to administer and enforce the FECA • Federal Election Campaign Act (FECA)—the statute that governs the financing of federal elections. • The duties of the FEC, which is an independent regulatory agency, are to • disclose campaign finance information • enforce the provisions of the law such as the limits and prohibitions on contributions, • oversee the public funding of Presidential elections.

8. FEC Rules & RegulationsThe Players • Government • FEC – Federal Election Commission • Campaign Committees • Candidates • National Party Committees • State & Local Party Committees • Separate Segregated Funds • PACs connected to corporations, unions, etc. • Nonconnected Committees • All other PACs • 527s • Individuals

9. Buckley v. Valeo (1976) • upheld FECA, which set limits on campaign contributions, but ruled that spending money to influence elections is a form of constitutionally protected free speech, and struck down portions of the law. The court also ruled candidates can give unlimited amounts of money to their own campaigns. • the case remains the starting point for judicial analysis of the constitutionality of campaign finance restrictions (precedent)

10. Strikes down: Overall spending limits of Congress & President (partially) Limits on candidates’ use of own funds Limits on media expenditures Independent expenditure limits Allows: Individual contributions ($1k/candidate/election) PAC limits ($5k/candidate/election) Party committee limits ($5k/candidate/election) Cap on total contributions individual can make to all candidates ($25k) Cap on spending “on behalf of candidates” by parties Buckley v. Valeo (1976)--

11. Designed to address: The increased role of soft money in campaign financing, by prohibiting national political party committees from raising or spending any funds not subject to federal limits, even for state and local races or issue discussion Define the proliferation of issue advocacy ads, by defining as "electioneering communications" broadcast ads that name a federal candidate within 30 days of a primary or caucus or 60 days of a general election Prohibiting any such ad paid for by a corporation (including non-profit issue organizations such as Right to Life or the Environmental Defense Fund) or paid for by an unincorporated entity using any corporate or union general treasury funds. all campaign advertisements included a verbal statement to the effect of "I'm [insert candidate's name] and I approve this message." The BCRA (McCain-Feingold Act, 2002)

12. What does Federal Election Law Regulate? • In General • The financing of federal elections • Specifically • Disclosure of financial activity • Contributions • Receiving and Giving • Expenditures • Candidate support activities • Federal election activities

13. Disclosure: “The costs of democracy” • The FEC oversees the campaign disclosure filings of candidate, political party, political action, and individual contributions. • Campaign disclosure documents filed should reflect both the source of funding and purpose of expenditures made. • However, there is reporting complexity, dishonesty, and even loopholes. • Each campaign (for federal office) has to run a PAC that reports revenue and expenses to the FEC. • cost of travel, • advice on topics like message and voter turnout • direct costs of communicating with voters • The types and purposes of campaign spending will change with the legal and social landscape.

14. Who can contribute? In-kind contributions-donations that are done in goods and services rather than money Anyone Independent expenditure--advocates the election or defeat of another candidate NOT made in cooperation, with a candidate, candidate’s committee or party Anyone Coordinated Expenditures-- advocates the election or defeat of another candidate MADE in cooperation, with a candidate, candidate’s committee or party Issues SC overruled provision in BCRA prohibiting IEs after CE in same month (1st amend. violated) Special methods Joint fundraising committees (JFC)--two or more groups to join forces and fund-raise together (subject to FEC rules) Earmarking--a legislative (especially congressional) provision that directs approved funds to be spent on specific projects, or that directs specific exemptions from taxes or mandated fees Other Ways to Support Candidates

15. Issue Ads – a type of independent expenditure Second Amendment Ad (Anti Obama) http://www.youtube.com/watch?v=NUuuh98PM4M Swift Boat Veterans (Anti Kerry) http://www.youtube.com/watch?v=phqOuEhg9yE Non issue Ad: www.livingroomcandidate.com

16. Upcoming Federal Campaign Finance Issues • 527 groups—tax-exempt organizations that may raise unlimited funds for their voter mobilization and issue advocacy • only required to file regular disclosure reports on activities expressly advocating the election or defeat of a federal candidate or electioneering communications • Should they be regulated by the FEC? • Internet • Currently not considered political advocacy • Not regulated by FEC

17. Where does my money go? • It depends! • Candidate • Candidate specific activities • Contributions to other candidates, parties or causes • DNC/RNC • Federal candidates • Allocated nationally • State Party Committees • Federal, state & local candidates • Allocated statewide • PACs • Support candidates, parties that agree on specific issues • 527s • Separate campaign