Who Pays For Campaign Damage? Political Officials' Accountability

Political campaigns are costly, with candidates for the 2020 US presidential cycle drawing $4.1 billion in donations. While there are rules in place to control how money is spent after a campaign concludes, there are still loopholes that allow for soft money political spending, such as stickers, posters, and television and radio spots. This has raised concerns among the public about the influence of large donors, with 74% of Americans believing it is important that those donating large sums of money to political campaigns do not have more political influence than others. There are also rules in place that outline what campaign funds can and cannot be used for, with personal use being prohibited. However, politicians sometimes spend campaign funds for personal purposes, and there are consequences for doing so.

Do political officials pay for campaign damage?

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Campaign fund usage restrictions

Campaign fund usage is a highly regulated area, with rules in place to control how money is spent both during and after a campaign. In the US, the Federal Election Campaign Act (“FECA”) and Federal Election Commission (“FEC”) regulations place restrictions on the use of campaign funds.

FECA and FEC regulations state that campaign funds may be used only for campaign-related expenses, and not for the personal use of a candidate or federal officeholder. The FEC defines 'personal use' as:

> any use of funds in a campaign account... to fulfil a commitment, obligation or expense of any person that would exist irrespective of the candidate's campaign or responsibilities as a federal officeholder.

Permitted uses of campaign funds include charitable donations, donations to other candidates, and saving it for a future campaign. Candidates can also use funds for childcare costs, personal security, and legal expenses related to campaign or officeholder activity.

At the state level, approaches vary on the issue of allowing campaign funds for campaign-related expenses. As of April 2024, 31 states (plus DC) allowed or have allowed campaign funds for childcare. Of these, 9 states also allow candidates to use their campaign funds on broader dependent care, and 12 states allow officeholders to use their campaign funds to pay for childcare costs directly related to official duties.

The FEC also controls how money raised by candidate campaign committees is spent after a candidate bows out or after an election is over. Permitted uses include charitable donations, as long as the candidate does not receive any compensation from the organisation, and donations to other federal, state, or local candidates.

Political action committees (PACs)

Federal law formally allows for two types of PACs: connected and non-connected. Judicial decisions added a third classification, independent expenditure-only committees, which are colloquially known as "super PACs". Most of the 4,600 active, registered PACs, named "connected PACs", are sometimes also called "corporate PACs". These PACs are established by businesses, non-profits, labor unions, trade groups, or health organizations. As of January 2009, there were 1,598 registered corporate PACs, 272 related to labor unions, and 995 to trade organizations. Groups with an ideological mission, single-issue groups, and members of Congress, and other political leaders may form "non-connected PACs".

Super PACs, officially known as "independent expenditure-only political action committees," are unlike traditional PACs in that they may raise unlimited amounts from individuals, corporations, unions, and other groups to spend on, for example, ads overtly advocating for or against political candidates. However, they are not allowed to either coordinate with or contribute directly to candidate campaigns or political parties. Hybrid PACs (sometimes called Carey Committees) are similar to super PACs but can give limited amounts of money directly to campaigns and committees while still making independent expenditures in unlimited amounts.

Leadership PACs are political committees that are directly or indirectly established, financed, maintained, or controlled by a candidate or an individual holding federal office. They are not an authorized committee of the candidate or officeholder and are not affiliated with an authorized committee of a candidate or officeholder. Members of Congress and other political leaders often establish Leadership PACs to support candidates for various federal and non-federal offices.

Public funding of presidential elections

The presidential public funding program, administered by the FEC, provides eligible presidential candidates with federal government funds to cover the qualified expenses of their political campaigns in both the primary and general elections. To be eligible, candidates must demonstrate broad-based public support by raising more than $5,000 in matchable contributions from individuals in each of at least 20 states, amounting to over $100,000. This eligibility criterion ensures that candidates have a significant level of public support before receiving public funding.

Once the FEC certifies a candidate's eligibility, it determines the amount of public funds the candidate is entitled to receive. These funds are then disbursed by the U.S. Treasury, specifically from the Presidential Election Campaign Fund, which is sourced from voluntary taxpayer contributions. Taxpayers can choose to designate $3 of their taxes to this fund without increasing their tax liability or reducing their refund.

The public funding program aims to match the first $250 of each contribution that an eligible presidential candidate receives from individuals during the primary campaign. It also provides funding for the major party nominees' general election campaigns and offers assistance to eligible minor party nominees. This program helps offset the rising costs of running for president and reduces the influence of large donors, which has been a public concern.

However, the effectiveness of the public funding program has been questioned. Since 1976, the cost of running for president has skyrocketed, outpacing the available public funding. Additionally, there has been a decline in taxpayer participation in the funding system, resulting in insufficient funds to cover campaign expenses fully. As a result, candidates may refuse to accept spending limits to qualify for public funds, leading to a significant amount of unused public funding.

To address these challenges, some have proposed modernizing the system to match the current campaign costs better and incentivizing small donors to reduce the influence of mega-donors. Clean Elections reforms have also been suggested, which would encourage limited campaign spending and discourage outside money by requiring candidates to qualify for public funding through a set number of small donations. These reforms aim to reduce the influence of wealthy individuals and corporate interests, ensuring that public funding plays a more significant role in presidential elections.

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Campaign donation laws

The FEC sets contribution limits for individuals and groups, oversees public funding in presidential elections, and audits all campaigns that receive public funds. Candidates for federal office must report their campaign contributions and spending to the FEC. The FEC also determines eligibility for public funding, which is provided by taxpayers who voluntarily designate $3 of their taxes to the Presidential Election Campaign Fund.

There are different types of contributions and rules surrounding them. For example, candidates can spend their own personal funds on their campaigns without limits, but they must report the amount to the FEC. Small individual contributors are defined as those who contribute $200 or less, while large individual contributors give more than $200. Nonconnected PACs are financially independent and must pay their administrative expenses using the contributions they raise. Leadership PACs, on the other hand, are set up by elected officials and political parties to make independent expenditures, and there are no limits on how much they can spend.

Campaigns may not accept contributions from certain sources, such as federal government contractors or foreign nationals. There are also rules dictating how leftover campaign funds can be spent after a campaign concludes. While personal use is prohibited, permitted uses include charitable donations, donations to other candidates, and saving for a future campaign.

Campaign winding-down costs

For federal officeholders, campaign funds can be used to cover "ordinary and necessary expenses" for up to six months after leaving office. This includes moving expenses, such as transporting office furnishings from Washington, D.C., to the former officeholder's home state. It is important to distinguish between "winding down costs" and "ordinary and necessary expenses," as the latter also covers the cost of moving personal household effects, which is not considered a winding-down cost.

Additionally, excess campaign funds can be used for other purposes, such as donations to charitable organizations, transfers to political party committees, and donations to other candidates, as long as they do not benefit the candidate personally. The FEC provides specific guidelines for permissible expenses, such as gifts and payments to campaign staff, and prohibits the use of funds for personal gain.

Presidential candidates who receive public funding through the Presidential Election Campaign Fund must follow specific regulations. To be eligible for this funding, candidates must demonstrate broad-based public support by raising a certain amount of money from a minimum number of contributors in each of at least 20 states. This funding is meant to match individual contributions and support the major party nominees' general election campaigns.

The process of winding down a campaign also involves authorized committees that wish to close down their operations. This includes handling candidate loans, debts, and advances, as well as terminating the committee's reporting obligations. There are rules in place to dictate how remaining campaign funds can be spent, with personal use being prohibited.

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