Political Campaign Donations: 1970S Style

Political donations and campaign financing have long been a feature of American politics, with the country's first president, George Washington, known to offer free whiskey to encourage votes. In the 1970s, public concern over large donations and government corruption led to significant reforms in campaign financing. This decade saw the introduction of partial public-funding programs, which matched private contributions with public funds, and full public-funding programs, which provided funding to candidates who could demonstrate support from smaller donors. The 1970s also witnessed the enactment of the Political Reform Act in California, which aimed to increase transparency and minimize corruption in campaign financing. While these reforms aimed to reduce the influence of money in politics, their effectiveness is debated, and the role of dark money groups spending millions without revealing their sources remains a concern in modern elections.

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Political patronage system

In the 1970s, political donations were transformed by the passing of the Federal Election Campaign Act (FECA), which created the modern framework for regulating campaign contributions and reporting. This Act also established the Federal Elections Commission (FEC), tasked with overseeing and enforcing campaign finance laws.

Prior to these reforms, the political landscape was markedly different. During the Jackson presidency and much of the 19th century, a political patronage system prevailed, where federal jobs and favours were exchanged for donations. This system was not without its issues, and pressure for change intensified after an assassination attempt on President Garfield in 1881 by a prospective administrator whose expectations of a government position were denied. Subsequent legislation, such as the Pendleton Civil Service Reform Act of 1883, made it illegal for government officials to solicit contributions from civil service workers or award positions based on anything but merit.

In the late 19th and early 20th centuries, the focus shifted to protecting employees and union members from being coerced into contributing to political campaigns to retain their jobs. This culminated in the Smith-Connally Act of 1943, which prohibited unions from contributing to federal candidates, and the Taft-Hartley Act of 1947, which banned corporations and unions from making independent expenditures in federal campaigns.

Despite these efforts, large donations continued to play a significant role in politics. For instance, in 1972, a $2 million political donation by insurance magnate W. Clement Stone to Richard M. Nixon caused public outrage and contributed to post-Watergate reforms in campaign financing.

Public funding

The 1970s also saw the introduction of partial public-funding programs, sometimes called 'matching funds' programs. These programs, implemented in several states including Wisconsin, Minnesota, Hawaii, and Florida, allow candidates who meet certain eligibility requirements and agree to limit their expenses to receive public funds that match their private contributions. The ratio of private-to-public matching funds varies across jurisdictions.

Full public-funding programs, also known as 'clean elections' programs, provide a certain level of public funding to candidates who can demonstrate support from a particular number of small donors, on the condition that they agree to limits on fundraising and spending.

Evidence suggests that public funding can reduce the financial and electoral advantages of incumbency and may allow politicians to spend less time on fundraising activities. However, there is limited empirical evidence on the overall impact of public funding on policy and economic outcomes, as well as the incentives of elected officials.

While public funding of political campaigns was introduced in the 1970s, the debate around campaign finance reform continues to evolve. In the 1980s, for example, there were efforts to impose stricter controls on campaign fundraising, but these were blocked by bipartisan maneuvers in the US Senate. More recently, in 2002, the Bipartisan Campaign Reform Act was signed into law, explicitly prohibiting party soft money and imposing disclosure requirements on "electioneering communications".

Private donations

The 1970s saw significant changes to campaign finance laws and regulations, with the passing of the Federal Election Campaign Act (FECA) in 1971 and the Revenue Act of 1971. These laws brought about fundamental changes and created the framework for current regulations on contribution limits and reporting. The 1974 amendments to FECA provided for partial Federal funding in the form of matching funds for presidential primary candidates, with strict limits on contributions and expenditures for federal candidates and committees involved in federal elections.

The 1970s also saw the implementation of public-funding programs for campaigns, which are still used today in some states. These programs match private contributions with public funds, with varying ratios of private-to-public funding across jurisdictions.

While most campaign spending is privately financed, there are rules and limits in place regarding private donations. For example, individuals can contribute to candidates, parties, and political organizations, but there are limits to the amount they can give directly to a specific candidate. There are also rules prohibiting certain types of organizations and individuals from donating, and requirements for the disclosure of significant contributions, which then become public record.

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Federal Election Campaign Act

The Federal Election Campaign Act of 1971 (FECA) is the primary federal law in the United States that regulates political campaign fundraising and spending. The law was enacted on February 7, 1972, and signed by President Richard Nixon.

The Federal Election Campaign Act was first introduced to the Senate Subcommittee on Communications of the Committee on Commerce on March 2, 1971, by Senator John Pastore. The Act was passed by the Senate Committee on Commerce by a vote of 18-0, and subsequently by the Senate floor on August 5, 1971, by a vote of 88-2.

The Federal Election Campaign Act originally focused on creating limits for campaign spending on communication media, adding penalties to the criminal code for election law violations, and imposing disclosure requirements for federal political campaigns. The Act limited campaign expenditures for broadcast media, newspaper advertisements, and telephone calls to $0.10 per voter in the district they were running in, when adjusted for inflation using the consumer price index. It also limited the amount that campaigns could spend on broadcast media to 60% of their total campaign spending limitation.

In 1974, the Federal Election Campaign Act was amended to create the Federal Election Commission (FEC) and to further regulate campaign spending. The FEC is an independent regulatory agency charged with administering and enforcing the federal campaign finance law. The 1974 amendments also set limits on contributions by individuals, political parties, and Political Action Committees (PACs). The FEC commenced operations in 1975 and administered the first publicly funded presidential election in 1976.

The Federal Election Campaign Act was amended again in 1976, in response to the provisions ruled unconstitutional by Buckley v. Valeo, including the structure of the FEC and the limits on campaign expenditures. In 1979, the FEC ruled that political parties could spend unregulated or "soft" money for non-federal administrative and party-building activities. This led to a substantial increase in soft money contributions and expenditures in elections, and the passage of the Bipartisan Campaign Reform Act of 2002 ("BCRA"), which banned soft money expenditures by parties.

Political Action Committees (PACs)

There are several types of PACs, including connected PACs, non-connected PACs, and super PACs. Connected PACs, also known as corporate PACs, are established by businesses, non-profits, labor unions, trade groups, or health organizations. They receive and raise money from a restricted class, such as managers and shareholders in a corporation or members in the case of a non-profit organization. Non-connected PACs, on the other hand, are independent of corporations, unions, and political parties, and they make contributions and expenditures to support a particular ideology or issue. They are the fastest-growing category of PACs.

Super PACs, officially known as independent expenditure-only political action committees, are unique in that they can raise unlimited amounts from individuals, corporations, unions, and other groups. However, they are prohibited from coordinating with or contributing directly to candidate campaigns or political parties. Hybrid PACs, a variation of super PACs, can give limited amounts of money directly to campaigns while still making independent expenditures in unlimited amounts.

Leadership PACs are another type of PAC often formed by politicians aspiring to higher office or seeking more influence within their political party. They raise funds and disburse them to the campaigns of other candidates. Members of Congress and other political leaders often establish these PACs to support candidates for various federal and non-federal offices.

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