Simone Lawson
Campaign finance laws in the United States have been a contentious issue for a long time, with opponents arguing that they do not go far enough to mitigate corruption and the influence of special interests, while proponents of fewer laws claim that strict disclosure requirements and donation limits impede free expression. These laws restrict political activist groups by limiting the amount of money they can contribute to candidates, parties, or political committees, and by imposing disclosure requirements on election spending. The Federal Election Campaign Act of 1971 established contribution and spending limits for federal campaigns, and the Bipartisan Campaign Reform Act of 2002 prohibited unregulated soft money contributions to national political parties. The influence of money in politics has been a significant issue, with proposals for reform including full disclosure of all political spending and closing fundraising loopholes for candidates.
| Characteristics | Values |
|---|---|
| Federal campaign finance laws | Apply only to candidates and groups participating in federal elections (congressional and presidential) |
| State campaign finance laws | Enacted and enforced by states for state and local elections |
| Disclosure laws | Fail to regulate political advertising on the internet, creating the potential for undisclosed online spending |
| Fundraising loopholes | Super PACs can raise and spend unlimited amounts of money in support of candidates, but are supposed to be independent of them |
| Super PACs | Can raise unlimited sums of money from corporations, unions, associations and individuals, and spend unlimited sums to overtly advocate for or against political candidates |
| 527 groups | Tax-exempt organizations that are not regulated under state or federal campaign finance laws because they do not expressly advocate for the election or defeat of a candidate or party |
| 527 groups | No upper limits on contributions, no restrictions on who may contribute, and no spending limits |
| 527 groups | Must register with the IRS, publicly disclose donors, and file periodic reports of contributions and expenditures |
| Federal Election Campaign Act (FECA) | Established limits on candidate spending, contributions of individuals and PACs to candidates, parties, or political committees, and the amount of money candidates could spend on their own campaigns |
| FECA | Created the Federal Election Commission (FEC) to enforce and clarify campaign finance laws |
| FECA | Reduced the reliance of candidates on individual donors or organizations |
| Bipartisan Campaign Reform Act (BCRA) | Prohibited unregulated contributions (soft money) to national political parties and limited the use of corporate and union money to fund ads discussing political issues within 60 days of a general election or 30 days of a primary election |
| BCRA | Banned soft-money contributions to national parties and severely restricted electioneering communications (political advertising) by advocacy groups |
| The Political Reform Act (California) | Requires candidates and committees to file campaign statements by specified deadlines disclosing contributions received and expenditures made |
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What You'll Learn
Limits on donations from individuals and organisations
Campaign finance laws in the United States have been a contentious issue for a long time. The Federal Election Campaign Act of 1971 (FECA) established limits on candidate spending and the contributions of individuals and groups to candidates, parties, or political committees. The Federal Election Commission (FEC) enforces these laws and sets campaign contribution limits for individuals and groups.
The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as "McCain-Feingold", prohibited unregulated contributions (or "soft money") to national political parties and restricted the use of corporate and union money to fund ads discussing political issues within a certain timeframe of an election. However, the Supreme Court overturned provisions of BCRA that limited corporate and union expenditures for issue advertising in Federal Election Commission v. Wisconsin Right to Life.
At the state level, each state enacts and enforces its own campaign finance laws for state and local elections. For example, California's Political Reform Act of 1974 mandates spending limits for candidates running for state office and requires candidates and committees to disclose contributions received and expenditures made.
In terms of organizations, trade associations and not-for-profit corporations can raise and spend unlimited amounts from corporations and individuals. Super PACs, formally known as independent expenditure-only committees, can also raise and spend unlimited sums of money from various sources to advocate for or against political candidates. However, they must file regular reports with the FEC.
On the other hand, traditional PACs, which are connected to corporations and labour unions, are prohibited from making direct contributions or expenditures in connection with federal elections. These PACs can only receive funds from a "restricted class", such as managers and shareholders in corporations or members in unions.
While campaign finance laws aim to restrict and regulate donations, there are still loopholes and workarounds that allow for significant financial influence in politics.
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Restrictions on spending and self-financing
Campaign finance laws in the United States have been a contentious issue, with proponents and opponents of stricter regulation making various arguments. While proponents of stricter laws argue that they promote transparency and reduce corruption, opponents claim that they infringe upon privacy and free expression rights, hindering political participation.
The Federal Election Campaign Act (FECA) of 1971 established limits on candidate spending, contributions from individuals and PACs (Political Action Committees), and the amount of money candidates could spend on their campaigns. The FECA also created the Federal Election Commission (FEC) to enforce and clarify campaign finance laws. The FEC sets campaign contribution limits for individuals and groups and oversees public funding used in presidential elections.
In 1976, the Supreme Court ruled in Buckley v. Valeo that restrictions on candidate spending and self-financing violated the First Amendment's guarantee of freedom of speech. The court, however, allowed limits on spending in presidential campaigns, as they were contingent on receiving public funds. The ruling also upheld contribution limits from individuals or PACs, with individuals and groups limited to contributing no more than $1,000 to a candidate, up to a total of $25,000, and PACs limited to $5,000 per candidate.
The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as "McCain-Feingold," banned unregulated "soft money" contributions to national political parties and restricted corporate and union money funding ads discussing political issues within specific time frames before elections. However, the Supreme Court overturned provisions of the BCRA, citing free speech rights.
At the state level, California's Political Reform Act of 1974 mandates spending limits for candidates running for state office and ballot measure committees. This Act aims to increase transparency and reduce corruption in campaign financing.
While federal law restricts campaign contributions for presidential and congressional candidates, it does not limit candidates from spending their personal funds on their campaigns. However, they must report the amount spent to the FEC.
Super PACs, which are independent expenditure-only committees, can raise and spend unlimited sums of money from various sources to advocate for or against political candidates. They are required to file regular reports with the FEC, disclosing their donors and expenditures.
Trade association groups and not-for-profit corporations can also raise and spend unlimited amounts of money in any way they choose, including through independent expenditures, which has led to a significant increase in "dark money" spending in recent years.
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Disclosure requirements and donation limits
Campaign finance laws in the United States have been a contentious issue for a long time. The Federal Election Campaign Act of 1971 (FECA) established limits on candidate spending and contributions from individuals and groups to candidates, parties, or political committees. The Federal Election Commission (FEC) enforces these laws and sets campaign contribution limits.
The FEC also oversees public funding used in presidential elections and requires candidates to report their spending. The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as "McCain-Feingold", prohibited unregulated "soft money" contributions to national parties and restricted "electioneering communications" by advocacy groups.
At the state level, the Political Reform Act (1974) in California mandates spending limits for candidates running for state office and requires the disclosure of contributions and expenditures. This Act has been instrumental in increasing transparency and reducing corruption in campaign financing within the state. Many cities and counties have also implemented local campaign ordinances with additional restrictions and requirements.
Proponents of stricter disclosure requirements and donation limits argue that these measures are necessary to mitigate corruption and the influence of special interests. On the other hand, critics claim that such regulations impinge upon privacy and free expression rights, hindering participation in the political process.
It is worth noting that federal campaign finance laws only apply to candidates and groups participating in federal elections, with states enforcing their own laws for state and local elections. The Supreme Court has also played a significant role in shaping campaign finance law, with rulings like Citizens United v. Federal Election Commission, which held that the government cannot restrict political spending by corporations, and Buckley v. Valeo, which found that spending limits violate the First Amendment.
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State and local campaign laws
State and local elections are particularly susceptible to the influence of special interest groups due to the relatively low costs involved. Dark money expenditures, which are not properly disclosed, can easily sway these elections. To address this, reform groups have proposed closing fundraising loopholes for candidates and officeholders, as well as imposing stricter regulations on Super PACs, which can currently raise and spend unlimited amounts of money in support of candidates with whom they are supposed to remain "independent".
In addition, federal law prohibits corporations and labor unions from making direct contributions to candidates or national party committees. However, they are permitted to sponsor separate segregated funds (SSFs), or "connected PACs", which can receive and raise money from a restricted group of individuals, such as managers and shareholders.
Some states have also implemented their own measures to address the influence of money in politics. For instance, Arizona and Maine have introduced public financing for statewide and legislative offices, while Connecticut passed a Clean Elections law in 2005.
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Political action committees (PACs)
At the federal level, an organization becomes a PAC when it receives or spends more than $1,000 to influence a federal election and registers with the Federal Election Commission (FEC). Federal law allows for two types of PACs: connected and non-connected. Connected PACs are established by businesses, non-profits, labor unions, trade groups, or health organizations. They receive and raise money from a "restricted class", generally consisting of managers and shareholders in the case of a corporation or members in the case of a non-profit organization, labor union, or other interest group. Non-connected PACs are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders.
A third type of PAC, created by judicial decisions, is the independent expenditure-only committee, colloquially known as "super PACs." Super PACs 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 coordinate with or contribute directly to candidate campaigns or political parties. Super PACs are subject to the same organizational, reporting, and public disclosure requirements as traditional PACs.
Other types of PACs include hybrid PACs, which can make independent expenditures in unlimited amounts while still giving limited amounts of money directly to campaigns and committees; and Leadership PACs, which are established by candidates or individuals holding federal office to support candidates for various federal and non-federal offices.
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Frequently asked questions
Campaign finance laws restrict political activist groups by limiting the amount of money they can contribute to a candidate or political party. These laws also define who is eligible to make political contributions and what sorts of activities constitute in-kind contributions.
A super PAC, or independent expenditure-only committee, can raise and spend unlimited sums of money from corporations, unions, associations and individuals to overtly advocate for or against political candidates. They are supposed to be independent of the candidates they support, but in reality, many are run by the candidates' close associates.
A 527 group is a type of American tax-exempt organisation. The term usually applies to groups that are not regulated under state or federal campaign finance laws because they do not expressly advocate for the election or defeat of a candidate or party. There are no upper limits on contributions to 527s, but they must register with the IRS and publicly disclose their donors.
Some proposals include fully disclosing all political spending, closing fundraising loopholes for candidates, and imposing stricter contribution limits.
