Simone Lawson
Political campaigns in the United States are financed through a combination of public funding and private donations, with the latter being the primary source of funding. The cost of elections has been rising, with political campaigns collecting around $8.6 billion for the 2024 House, Senate, and presidential elections. The sources of private donations include individuals, political action committees (PACs), and political parties. On the other hand, public funding for presidential elections comes from taxpayers who voluntarily designate $3 of their taxes for the Presidential Election Campaign Fund. While there are laws and restrictions on campaign donations and spending, concerns have been raised about the influence of large donors and the potential for corruption.
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What You'll Learn
Public funding of presidential elections
Public funding for presidential elections comes from taxpayers who voluntarily designate $3 of their taxes for the Presidential Election Campaign Fund. This is the only source of money for federal public election funding.
To be eligible for public funds, presidential candidates must demonstrate broad-based support by raising more than $5,000 in matchable contributions from individuals in each of 20 different states, for a total of over $100,000. They must agree to limit their spending to the amount of the grant, abide by spending limits in each state, use public funds only for legitimate campaign-related expenses, and keep detailed financial records.
Eligible candidates may receive public funds matching private contributions of up to $250 per individual, up to half of the national spending limit for the primary campaign. The national spending limit for 2024 is $61.79 million, and the limit for each state ranges from $1,236,000 in Wyoming to $30,176,500 in California. Candidates may spend an additional $50,000 from their personal funds, which does not count against the expenditure limit.
In 2008, the last year a major party candidate chose to accept a general election grant, the amount was $84.1 million. The grant for 2024 is $123.5 million. Minor party candidates and new party candidates may be eligible for partial public funding if their candidate received between 5 and 25% of the total popular vote in the preceding presidential election.
Public concern over the influence of large donors in political campaigns has led to calls for campaign finance reform. A 2018 opinion poll found that 74% of Americans believed it was "very" important that large donors not have more political influence, but 72% thought this was "not at all" or "not too much" the case. However, experts on campaign finance are less cynical about the influence of money in politics, and some conservatives argue that restrictions on money in politics are an unjust limitation on free speech.
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Sources of campaign funds
Political campaigns are financed through a variety of sources, including donations from individuals, political action committees (PACs), and political parties. Here is a detailed breakdown of the sources of campaign funds:
Individual Contributions:
- Small Individual Contributions: These are donations from individuals who contribute $200 or less to a campaign. Small donations can add up to significant amounts, and some reformers advocate for "small donor public financing," where public funds are used to match and multiply these contributions.
- Large Individual Contributions: Donations from individuals who contribute more than $200. This category includes wealthy individuals and billionaires, whose donations can comprise a disproportionate share of campaign financing.
Political Action Committees (PACs):
- Traditional PACs: These are committees formed by corporations, labor unions, or membership groups to solicit donations from members and make campaign contributions or fund campaign activities. Funds raised and spent by PACs are subject to federal limits.
- Super PACs: Following the Citizens United v. FEC court decision in 2010, Super PACs can raise unlimited funds from corporations, unions, and other associations to influence federal elections. Super PACs are required to disclose their donors, but some groups function as \"dark money\" outlets, making it difficult to trace the original source of their funding.
Political Party Committees:
Political parties raise funds and donate to candidates, spend on their behalf, and use the money to mobilize voters. The Democratic and Republican parties' combined fundraising has increased significantly over time, from $650 million in 1992 to $2.7 billion in 2020.
Public Funds:
- Presidential Election Campaign Fund: Taxpayers can choose to direct $3 of their taxes to this fund, which provides public financing for presidential campaigns. To be eligible, candidates must agree to spending and fundraising restrictions and not accept private donations.
- Matching Funds: Eligible candidates may receive public funds matching a portion of the national spending limit for the primary campaign.
Candidates' Personal Funds:
Candidates may also contribute their own money to their campaigns, with limits on the amount they can spend from personal funds.
The sources of campaign funds have been a subject of public concern, with many Americans worried about the influence of large donors and the impact of \"big money\" in politics. Various laws and regulations have been enacted to address these concerns, but critics argue that certain Supreme Court decisions have allowed the wealthy to dominate political campaigns.
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Campaign expenditure limits
The FEC sets specific limits on campaign spending for presidential elections. For instance, for the 2024 election cycle, the national spending limit is set at $61.79 million. This includes a limit of $200,000 per state, adjusted for the price index, or a higher amount based on the number of voting-age individuals in the state. Additionally, candidates can spend up to $50,000 from their personal funds, which is exempt from the expenditure limit.
The FEC also allows eligible candidates to receive public funds for their campaigns. These funds can amount to up to half of the national spending limit for the primary campaign. To qualify, candidates must demonstrate broad-based public support by raising more than $5,000 in each of at least 20 states, totalling over $100,000. This ensures that candidates have a certain level of public support before receiving public funding.
Independent expenditures are another aspect of campaign spending. These are expenses incurred by individuals, groups, or political committees without coordination with a specific candidate or party. Independent expenditures must include a disclaimer identifying the source of payment and stating that the communication was not authorized by any candidate or committee. This ensures transparency in campaign spending and allows the public to understand who is funding certain messages or advertisements.
While the FEC enforces these regulations, there are varying opinions on the effectiveness of campaign expenditure limits in reducing the influence of money in politics. Some argue that regulations are necessary to prevent corruption and the disproportionate influence of wealthy individuals and corporations. On the other hand, critics argue that restrictions on campaign spending infringe upon free speech and that the evidence of reduced corruption due to these regulations is meagre.
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Influence of large donors
The influence of large donors in political campaigns has been a significant concern for Americans. A 2018 opinion poll found that 74% of Americans believed it was essential that wealthy donors did not have more political influence than other citizens. However, 72% felt that this was not the case, and new laws were needed to reduce the role of money in politics. This sentiment is echoed by the fact that, in the summer of 2015, fewer than 400 super-wealthy families accounted for nearly half of all publicly disclosed presidential campaign financing.
Wealthy donors and corporations have been able to exert influence through high-level lobbying and campaign contributions. This has resulted in concerns about corruption, with some arguing that it leads to "quid pro quo" corruption or bribery. There is also the perception that it gives powerful entities the ability to reshape policies in their favour, such as advocating for lower taxes and smaller governments while neglecting issues that primarily benefit the general public, like improved policing, environmental protection, and employment opportunities.
The role of Super PACs, or political action committees, has been particularly notable in this regard. These private interest groups can receive unlimited amounts of money from billionaires, which can then be funnelled into political campaigns. This has led to concerns about the voices of ordinary Americans being drowned out and the need for tighter limits on contributions. Additionally, "dark money groups" further complicate the issue by masking the identities of their donors, preventing voters from knowing who is trying to influence them.
While some conservatives argue that restrictions on money in politics are an unjust limitation on free speech, most Americans support limiting campaign spending. This is particularly true for Democrats and Democratic-leaning independents, with 85% favouring spending limits. Furthermore, 53% of those who donated more than $250 to a political candidate or group in the past year believe their representative would help them with a problem, compared to about 37% of all Americans.
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Campaign finance laws
The financing of electoral campaigns in the US comes from individuals, corporations, political action committees (PACs), and sometimes the government. Campaign spending has been steadily increasing since at least 1990, with winning candidates in the Senate, for example, spending on average $3.87 million in 1990 ($9.31 million in 2024 dollars) compared to $28.51 million in 2024. Similarly, in the 2020 election cycle, the Democratic and Republican parties combined raised almost $2.7 billion, compared to $650 million in 1992.
There are several reasons why "big money" in politics should be regulated. Firstly, it can lead to corruption, such as bribery or "quid pro quo" corruption. Secondly, it gives wealthy individuals and corporations undue influence over politicians and the ability to reshape policies in their favour, such as lowering taxes and reducing government spending on public services. A 2022 study found that billionaires are increasingly using their wealth to elect hand-picked candidates who will further their economic interests, particularly regarding tax policies.
However, some critics, particularly conservatives, argue that restrictions on money in politics are an unjust limitation on free speech. They believe that the government is already too large and powerful, and that limiting campaign spending infringes on citizens' freedom of speech and association.
To address concerns about the influence of large donors, some have suggested encouraging "small donor public financing," where public funds are used to match and multiply small donations. Another proposal is to fully disclose all political spending, as disclosure laws currently do not regulate political advertising on the internet, creating the potential for undisclosed online spending to dominate state and local elections.
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Frequently asked questions
Between January 2023 and April 2024, US political campaigns collected around $8.6 billion for the 2024 House, Senate, and presidential elections.
The FEC enforces restrictions on money spent on political campaigns. Candidates may spend an additional $50,000 from their personal funds, which does not count against the expenditure limit.
The money for federal election campaigns comes from federal income tax. The 1040 tax form asks taxpayers whether they would like to designate $3 of their taxes for the Presidential Election Campaign Fund.
The Democrats and their allied super PACs raised about $2.9 billion.
PACs, or Political Action Committees, are private interest groups that raise and spend money to support candidates and influence elections. PACs can represent industry groups, labor unions, or individual companies.
