Jonah Patel
Political campaigns are expensive affairs, with money flowing in from various sources such as donations, fundraising, and public funding. The cost of elections has been rising faster than inflation over time, with an estimated $16.7 billion spent on the 2021 and 2022 election cycles combined. This includes money spent by presidential and congressional candidates, political parties, and independent interest groups. Political action committees, or PACs, play a significant role in campaign financing, raising and spending billions of dollars. While some argue that campaign spending does not guarantee victory, others believe that reducing the role of money in politics is crucial to counter concerns about the influence of large donors and potential corruption. The complex interplay of campaign finances and electoral success continues to shape the political landscape.
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What You'll Learn
Public funding of presidential campaigns
Public funding for presidential campaigns has been available since 1971, when the Federal Election Campaign Act was passed. This legislation provided public funding for presidential campaigns, requiring candidates to disclose their funders and set limits on their spending. The public funds were sourced from voluntary contributions by taxpayers who designated a small donation to public campaign funding on their income tax returns.
Under the presidential public funding program, eligible presidential candidates can receive federal government funds to cover the expenses of their political campaigns in both the primary and general elections. To be eligible for public funds, 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. Only the first $250 of each individual contribution is counted towards the $5,000 threshold per state. This means that a minimum of 20 contributors per state is required to establish eligibility for primary matching funds.
Nominees who accept public funds must agree to limit their campaign spending to the amount of the grant and not accept private contributions, except from certain exceptions. They are permitted to spend an additional $50,000 of their personal funds, which does not count against the expenditure limit. The public funding program provides a basic grant of $20 million, adjusted for inflation each presidential election year. For the 2024 election, the grant amount is $123.5 million.
Public funding for presidential campaigns has faced challenges in recent years due to the increasing cost of running for president, outpacing the available public funding. Additionally, there has been a decline in taxpayer participation in funding the system, resulting in a shortfall of funds available for campaigns. Despite these challenges, public funding programs have achieved successes at the state and city levels, with notable examples in Arizona, Connecticut, Maine, Minnesota, Los Angeles, and New York.
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Presidential candidates' spending
Presidential campaigns are costly affairs, with candidates raising and spending millions, even billions, of dollars. This money is sourced from personal and business donations, as well as political action committees (PACs) established in their name. The Federal Election Commission (FEC) enforces restrictions on campaign spending and requires diligent record-keeping of all expenses and their sources.
In the 2020 election cycle, campaigns raised over $9 billion between January 2019 and April 2020, which is approximately $10.6 billion when adjusted for inflation. By the end of the election cycle, expenditures topped $15.4 billion, or $18.2 billion when adjusted for inflation. During this period, candidates spent roughly $1.1 billion directly, while party committees contributed the remaining $545.8 million.
In the 2024 election cycle, US political campaigns collected around $8.6 billion for the House, Senate, and presidential elections as of April 2024. Over 65% of this money, approximately $5.6 billion, came from PACs, with individual candidates drawing over $2 billion. As of May 9, 2024, Joe Biden had raised the most money, with $170.6 million, followed by Donald Trump at $114.8 million, and Nikki Haley at $57.2 million.
The Presidential Election Campaign Fund, sourced from taxpayers who opt to contribute $3 of their taxes to the fund, provides financial support to eligible presidential candidates. To qualify for this funding, candidates must limit spending to the amount of the grant and cannot accept private contributions. Presidential candidates may receive public funds to match contributions from individual contributors up to $250 per person.
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Political Action Committees (PACs)
Political Action Committees, or PACs, are committees organized for the purpose of raising and spending money to support or oppose candidates, ballot initiatives, or legislation. PACs are a popular feature of the political landscape in the United States, with thousands of active, registered PACs. They have been around since 1944, when the Congress of Industrial Organizations (CIO) formed the first one to raise money for the re-election of President Franklin D. Roosevelt.
There are two main types of PACs: connected and non-connected. Connected PACs, sometimes called 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 the case of a corporation. Non-connected PACs, on the other hand, are formed by groups with an ideological mission, single-issue groups, and members of Congress and other political leaders. These committees are not sponsored by or connected to any specific entity and can solicit contributions from the general public.
A third type of PAC, known as a Super PAC or independent expenditure-only political committee, emerged after the Citizens United v. FEC Supreme Court case in 2010. This decision overturned parts of the McCain-Feingold Act, allowing corporations and unions to spend money from their general treasuries to promote candidates and contribute to PACs. Super PACs can receive unlimited contributions from individuals, corporations, unions, and other groups, but they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties.
PACs play a significant role in political campaigns, with the ability to give up to $5,000 to a candidate committee per election and up to $15,000 annually to a national party committee. In the 2023-2024 election cycle, PACs raised and spent billions of dollars, according to reports filed with the Federal Election Commission.
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Influence of large donors
Political campaigns in the US are dominated by big money, with wealthy donors and corporations exerting significant influence. The Supreme Court's Citizens United decision allowed unlimited independent spending by groups, enabling them to spend hundreds of millions without disclosing their sources of funding. This has led to a perception that the super-wealthy have a disproportionate influence on politics, drowning out the voices of ordinary Americans.
The influence of large donors is evident in various aspects of political campaigns. Super PACs, for instance, allow billionaires to contribute unlimited amounts to campaigns. Dark money groups further obscure the identity of donors, preventing voters from knowing who is trying to influence them. Large donors can also contribute to political parties, independent expenditure-only political committees, and leadership PACs.
The impact of large donors is not limited to financial contributions. They can also exert influence through coordinated activities with candidates and Super PACs. This has led to concerns about improper influence on candidates and elected officials. Additionally, large donors may have greater access to their representatives in Congress and are perceived as having a stronger ability to influence government decisions.
To address these concerns, various reforms have been proposed. These include passing the DISCLOSE Act to require all groups engaged in political spending to disclose their donors, curbing coordinated activities between candidates and Super PACs, and overhauling the campaign finance regulator to improve enforcement of campaign finance laws. Some have also proposed small donor matching programs to amplify the voices of small donors and reduce the dependence on large donors.
While there is a general consensus that large donors have a significant influence on political campaigns, the impact of small donors should not be overlooked. Small donors contributed more than $4 billion in the 2020 federal elections, indicating increased engagement in politics through campaign finance. Well-designed matching programs can further amplify the voices of small donors and mitigate political polarization and fragmentation.
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Campaign finance laws
The Federal Election Campaign Act of 1971 (FECA) is a key piece of legislation enforced by the Federal Election Commission (FEC). FECA limits the amount of money individuals and political organizations can contribute to candidates running for federal office, such as the president and Congress. It also prohibits corporations and labor unions from making direct contributions or expenditures in connection with federal elections.
To address the issue of "soft money," which refers to contributions made to parties and committees for general party-building rather than specific candidates, the FEC has implemented regulations. Soft money political spending was previously exempt from federal limits after court decisions in 2010, but now there are restrictions in place.
Public funding is another aspect of campaign finance. The Presidential Election Campaign Fund, financed by taxpayers who voluntarily designate $3 of their taxes to the fund, provides public funding for major party presidential nominees in the form of a grant. This grant is meant to limit the influence of private contributions and level the playing field for candidates. Minor party and new party candidates may also be eligible for partial public funding.
In addition to federal regulations, campaign finance laws also operate at the state and local levels. These laws vary by state and may include additional restrictions or requirements for disclosure and contribution limits.
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Frequently asked questions
Presidential candidates can receive up to up to $20 million plus the difference in the price index from public funding. This funding is in the form of a grant and candidates must agree not to accept private contributions for their campaign.
The amount of money spent on political campaigns has been increasing over time. In the 2021 and 2022 election cycle, an estimated $16.7 billion was spent, exceeding the amount spent on the previous mid-term election.
PACs are groups that spend money to influence elections. In the 2023-2024 election cycle, PACs raised $3.7 billion and spent $3.1 billion.
