Campaign Financing

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Hard Money
Free speech
Issue Advocacy
Special Interests Advertising
Where are we in 2003?
Is it My Money or Our Election?
Who is wary of shutting off soft money?
Who is wary of restricting issue ads?

Hard Money

The Federal election law states that its regulations apply to "express advocacy," that is, any communication that says, "vote for x", or "reelect y", or "defeat z". If the context of the message "can have no other meaning than to urge the election or defeat of one or more clearly identified candidates."

At issue, and up for debate, is money that is outside the candidate's control, an independent expenditure. Federal law defines this as money spent by any person that "is made without cooperation and consultation with any candidate, or any authorized committee or agent of a candidate or at the request or suggestion of the candidate."

Independent expenditures in which non-candidates actually pay for something are known as hard money. Since this is express advocacy, hard money is required, the activity must be disclosed, and the funds must come from sources and in amounts that are federally okay. In 1996, the Supreme Court ruled that political parties, like PACs and other groups, may spend money in this way.

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Free speech is also an issue. Many of the current attempts at reform, and the efforts to stop reform, are based on a 1976 Supreme Court decision, in the case Buckley v. Valeo. The Court made a distinction between the freedom to spend money in a campaign (by candidates and parties) as a way to speak out, and the desire of givers to contribute to a campaign.

The Court said it is all right to put limits on contributions on the grounds that such contributions could corrupt a candidate or look like corruption. But, the Court said, it was wrong to put limits on what a candidate or party could spend. The Court, therefore, struck down all previous laws limiting expenditures by campaigns and candidates, or independent groups that push a particular point of view.

The only limits the Court would allow are voluntary limits, such as a candidate for President agreeing to spending limits that match public taxpayer funds. Some candidates (such as George W. Bush) refuse taxpayer funds in order to raise more money than the matching limit permits.

Labor unions and corporations found ways to influence elections by giving to state and local parties, non-partisan get-out-the-vote and registration drives, and internal communications to union members, corporate officers, stockholders, and families. This is activity outside federal regulation, or soft money.

Internal communications can be express advocacy without disclosure of who gave and how much, unless it exceeds $2000. 41 states allow union money and 30 states allow corporate money. Clearly, giving locally is a way around the federal election rules.

Party soft money is raised by national parties from any source and given to state parties within the rules of each state. In this way, individuals who have "maxxed out" of the federal system at $25,000 can give more, as can corporations and unions. These soft money contributions are kept in non-federal bank accounts. In the election of 2000, $243.1 million of soft money was spent for Democrats and $244.4 million for Republicans, more that a 100% increase over 1996.

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How to influence voters other than through direct cash contributions? As our population increases, reaching the voters is dramatically different from what our Founding Fathers had in mind. Madison made it clear in Federalist paper #10 that the way to keep any one group from dominating was to be sure that factions compete for votes. Enlightened self-interest for the public good was the best we could expect from anyone.

Messages that present candidates' positions on issues positively or negatively certainly influence elections, but because they do not explicitly urge the defeat or election of a particular candidate, they are free from the Federal Election Commission's rulings.

While an individual or group that spends money to help a candidate is an "independent expenditure" and subject to federal law, an individual or group that spends money to promote clean air, reproductive choice, right to own guns, religious values, etc. is currently free to do so under the laws of campaign spending.

Today, technology makes it easier to reach masses of people, especially through direct mail and television. In addition to broadcast ads, groups distribute voter guides that present candidates' stands on issues that aim to affect voters' views of specific candidates. Groups and individuals can use those means to try to influence voters to support candidates and pressure representatives on specific issues.

Today, it is possible to influence people across state borders. All it takes is organization and money.

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In the last three elections, politically interested groups have become more active. The Annenberg Public Policy Center estimates that $135 million was spent on broadcast issue advocacy in 1996, between $275 and $340 million in 1998, and $509 million in 2000. Under current law there is no need to disclose amounts to the public.

Additional concern is raised by tax-exempt organizations (section 501 of the IRS Code) that buy issue ads and send out issue mailings, although they are not allowed to lobby or otherwise become involved in political campaigns.

Section 527 permits activity by "political organizations," without disclosure or limits. National political parties also paid for issue ads, making it difficult to distinguish campaign expenditures from those advocating a particular issue.

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Congress passed the Bipartisan Campaign Reform Act in 2001 under the leadership of members of both parties - McCain, Feingold, and Cochran in the Senate and Shays and Meehan in the House. The Republican leadership did not initially want these restrictions on campaign spending, but in the wake of the business scandals, they eased their resistance. The Republican leadership, spearheaded by Senator Mitch McConnell of Kentucky, has since challenged the law and was granted access to the Supreme Court, bypassing the lower courts.

On December 10, 2003, The Supreme Court upheld most of the new campaign finance laws passed by Congress. The decision was 5-4, with David Souter, Ruth Bader Ginsburg, Steven Breyer, John Paul Stevens, and swing-vote Sandra Day O’Connor voting to uphold the reforms. Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Chief Justice William H. Rehnquist voted against them.

BCRA is long, complex, and took six years to generate. But there are two main provisions that were upheld by the court:

• The re-regulation of "soft money."
• The ban on corporate, union, and special-interest sponsorship of televised campaign ads known as "issue ads" or "attack ads."

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Another court case may be making its way to the Supreme Court, giving it a chance to revisit and possible revise its 1976 Buckley v. Valeo decision equating money with free speech in a campaign.

This case stems from a decision by a New Mexico federal district judge who upheld a law that limits campaign spending in the City of Albuquerque. The law limits all candidates for mayor to expenditures no more than twice the salary of the mayor.

A rich candidate brought the case to court, arguing that the Supreme Court allows him to spend his own money without limits as a matter of free speech. The judge said that spending limits met a, "compelling governmental interest ö preserving the public faith in democracy and reducing the appearance of corruption."

The Appeals Court, however, reversed the district court on free speech grounds, citing the Buckley case. Many states and cities have spending limits in their campaigns. These were upheld in the Buckley case.

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 Some political party leaders, including Senator Mitch McConnell, Republican of Kentucky, believe that without soft money the parties will be weakened. Parties are already feeling weakened because increasingly candidates are more concerned about independent voters than party loyalists. Parties are very important in the Congress, because party membership and loyalty determines who gets Congressional leadership jobs and key committee assignments.

Some members of the Black Caucus have expressed concern that if parties have less money to spend, they will give less to voter registration and getting out the vote, which are more of a problem for minorities. Not all Black legislators agree.

President Bush has expressed concern over union PACs and whether union leadership should speak for all its members without their specific approval each time.

Other political organizations that really want public financing of elections, where all candidates get equal amounts of taxpayer funding, are wary of cutting off potential funding for challengers in the present system. In most elections the current officeholders, the incumbents, get easily reelected, using party funds. Therefore, the next best thing to public financing for those who don't like the present system is funneling private campaign funds to challengers. Will reform make that harder?

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As the debate heats up, it will be interesting to see if the Sierra Club, the Christian Coalition, the National Organization of Women, and other groups are willing to accept the limit on issue ads in the last 60 days of a federal campaign.

(Data from Congressional Research Service, kindness of the office of Senator Arlen Spector.)

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