In an ideal world elections would be determined by a competition of ideas. But in today’s world, politics in the United States is determined by fundraising, wealth, and access. Regulations stipulating how campaigns can be financed determine who can donate how much in elections and what the money can be used for. Some argue campaign donations should be protected as a form a free speech while others see these donations as giving the wealthy undue political influence. Read on for the history, controversy, and future for campaign finance reforms.

What is campaign finance?

Campaign finance refers to all money raised to support political candidates, organizations, parties, or initiatives in elections. Any successful political campaign typically costs a significant amount of money. Money is needed to cover travel expenses, pay for political consulting, and to communicate with voters. Advertising costs are by far the most significant expense in heated political campaigns.

This fundraising takes a new turn with corporations and wealthy individuals interested in spending as much as possible to support their candidate. At the federal level, campaign finance is regulated by the Federal Election Commission (FEC). At lower levels, it is governed by state and local law. Most campaign spending comes from private groups, but qualifying presidential candidates can opt to use public money.  Regulation typically takes the form of disclosure, contribution limits, and the limits that come with public financing. The strange array of political terms surrounding campaign finance often makes it hard for people to follow the actual debate.

• Political Action Committees (PACs) – the private groups that fundraise from individual contributors to spend money for political purposes. PACs are necessary since corporations and unions cannot directly donate money to a candidate or national party committee.
• Super PACs – emerged more recently due to Supreme Court decisions. These organizations have no legal limit on the amount they can spend so long as they are politically independent of the actual campaign.
• Hard money – includes donations regulated by the FEC that are made directly to political candidates by individuals and corporations. The names of those who contribute and how much they contribute are publicly available.
• Soft money – known as an indirect donation, it is often given to a political party rather than a candidate and thus can avoid certain legal limitations.
• 527 organizations – refers to advocacy groups like traditional PACs and political parties, named after their IRS code and tax-exempt status.

Watch below for more on how campaign finance works:

What is the history of campaign finance?

Numerous laws and Supreme Court cases have attempted to regulate campaign finance. Typically it is not until a political scandal that there is a push for more stringent regulation in financing.

Tillman Act

In 1907 the Tillman Act became the first ever campaign finance law after Theodore Roosevelt faced questions about which corporations funded his campaign in 1904. The Act banned corporate contributions to national campaigns; however, the law lacked any real method of enforcement.

Federal Election Commission Act (FECA)

In 1971 modern campaign finance rules were born. FECA instituted disclosure requirements for federal candidates. The Act was rewritten in 1974 after it surfaced that Richard Nixon used corrupt funds in his re-election campaign. These amendments established a system of regulation and enforcement through the Federal Election Commission. FECA also created new public financing for presidential elections to limit the influence of money. The new law put limits on individual contributions to candidates, contributions to PACs, total campaign expenditures, and spending by individuals or groups to a specific candidate.

The constitutionality of FECA was challenged in the case of Buckley v. Valeo. The Supreme Court upheld the limits on individual donations and disclosure requirements, citing the compelling state interest to prevent corruption. However, the Court stated that the limits on what campaigns and individuals could spend was a violation of the First Amendment. Further, disclosure could only apply to communications expressly advocating for a candidate. There are three key takeaways from the case:

1. Free speech allows individuals to spend unlimited political money.
2. TV or radio ads that expressly advocate for or against a specific candidate, by using words like “elect” or “defeat,” must be financed with regulated money.
3. Corporations, unions, and individuals can contribute unlimited “soft money” to political parties in an effort to influence campaigns. This encouraged many companies to set up PACs to donate.

Bipartisan Campaign Reform Act

In 2002 the Bipartisan Campaign Reform Act, or McCain-Feingold Act, was passed after it came out that wealthy Democratic donors were given special privileges and the Party had illegally accepted foreign money. The Act prohibited corporations and unions from donating directly to candidates. However, it did not regulate 527 organizations. Because of this many soft money activities previously funded by parties were now done by 527 groups.

Watch a musical overview of the history of campaign finance below:

How is campaign finance regulated today?

Rules regarding campaign finance continue to change, making many things fair game that were once illegal.

Citizens United v. Federal Election Commission

In a January 2010 5-4 decision, the Supreme Court ruled that the government cannot prohibit corporations and unions from spending money for political purposes. Essentially this allows corporations and unions to spend as much as they want on campaigns.

In the March 2010 case of Speechnow.org v. Federal Election Commission, the Federal Court of Appeals for the D.C. Circuit unanimously ruled there should be no contribution limit to groups that only make independent, uncoordinated expenditures to a campaign.

These rulings led to the rise of super PACs. Super PACs are known formally as “independent-expenditure only committees” because they cannot make contributions directly to candidates but instead spend on political advocacy independently of campaigns. Unlike regular PACs, these super PACs have no legal limit to the funds they can raise from various groups, provided they are operated correctly.

Watch the story of Citizens United v. FEC below:

McCutcheon v. Federal Election Commission

In April 2014, a 5-4 decision by the Supreme Court struck down caps on what individuals can contribute to federal candidates in any two-year election cycle because they restrict the democratic process and violate the First Amendment.

Public Funding

At the federal level, public funding is available for presidential campaigns. If a candidate agrees to limit his spending according to a formula, the candidate will receive a matching payment for the first $250 of each individual contribution in the primary campaign. Additionally, the candidate receives financing for the national nominating convention and general election campaign. Candidates have to qualify for funding by privately raising $5,000 in at least 20 states. If a candidate refuses matching funds, she is free to spend as much money as she raises privately. In the 2012 election no major candidate opted to take public funds since candidates can typically raise and spend more on their own. The price of a winning election today has made public funding near obsolete.

What are the arguments surrounding campaign finance reform?

Many of the Supreme Court justices who ruled on recent campaign finance cases decided that spending money for political purposes is equivalent to free speech and should be protected by the First Amendment. The same reasoning extends to corporations, in citing that corporations are made up of individuals and should enjoy the same political rights as individuals. Those who argue for fewer donation restrictions cite their rights guaranteed by the First Amendment.

Opponents argue the lack of restrictions gives the wealthiest unfair influence over the government. Senator John McCain (R-AZ) told Retro Report, “If money is free speech, then the wealthiest people in America are those that get to speak the most freely.”

For example, a study by the Sunlight Foundation found that just one percent of the top one percent of the United States population accounted for 28 percent of all disclosed contributions in the 2012 elections. In a statement Senator Mark Udall (D-CO) echoed these findings: “The American people are angry that a billionaire can dole out $3.6 million to influence an election — meanwhile, it would take a full-time minimum wage worker 239 years to make that much money.”

Most take issue with the rapid expansion of dark money to organizations under a 501(c)(4) designation by the IRS. 501(c)(4)s are defined as social welfare organizations and are tax-exempt. However, these organizations are allowed to participate in political campaigns so long as their primary purpose is promoting social welfare. Examples of these organizations include the Sierra Club, NAACP, and National Rifle Association.

These organizations do not have to disclose spending on political activity nor the names of donors unless they donate expressly for political advocacy. The use of these organizations for political advocacy has contributed to a sharp rise in outside spending without disclosure. A 2011 report by the Center for Responsive Politics found that since the 2006 midterms, spending from groups that do not disclose donors rose from one percent to 47 percent. Many cite large donations by these groups as a form of legal bribery, with the expectation of political favors following each donation.

Are there new developments in campaign finance?

Many Democrats in Congress have called for an amendment to undo the Citizens United ruling, but that seems very unlikely to happen. Senator Tom Udall (D-NM) proposed an amendment to undo the Citizens United case and instead allow Congress to regulate political money. Numerous Senate Democrats signed on. Harry Reid vowed to bring the measure to the floor, but most agree it has little chance of passing.

Democrats introduced a DISCLOSE Act in 2010, 2012, and again in 2014, which would require organizations that spend $10,000 or more in an election cycle to disclose their expenditures and major donors. Republicans have opposed such bills from the standpoint that they give an unfair advantage to their Democratic opponents. Learn more about the DISCLOSE Act below:

The amount of money spent in elections continues to grow at an alarming rate. The Center for Responsive Politics predicts almost $4 billion will be spent in the 2014 midterm elections, making it the most expensive midterm ever. While the 2010 midterm cost $3.6 billion, 2014 will run an estimated $333 million beyond that. Candidates and parties will spend roughly $2.7 billion, but the explosion of outside money continues to significantly influence the races. Outside groups like super PACs and 527s are expected to spend $900 million on their own. Overall, conservative candidates and groups are projected to outspend liberal candidates and groups by $1.92 billion to $1.76 billion. Expect even more money, especially from outside groups, to come flowing in to the 2016 presidential election.

While there may not be action at the national level, 16 states and more than 500 municipalities have called for a constitutional amendment on campaign finance reform. Yet both sides agree getting rid of dark money and enacting reform will not happen any time soon. Little change will happen without a large, Watergate-esque scandal to bring true reform to campaign finance.

Resources

Primary

FEC: Campaign Finance Reports and Data

SCOTUS: Buckley v Valeo

SCOTUS: McCutcheon v. Federal Election Commission

FEC: Public Funding of Presidential Elections

Additional

The New York Times: The Cost of Campaigns

Politico: Waiting for the Next Watergate

NCSL: Campaign Finance Reform: An Overview

NPR: A Century of U.S. Campaign Finance Law

Washington Post: Campaign Finance: Special Report

Atlantic: Making Sense of McCain-Feingold and Campaign Finance Reform

Washington Times: No Major Takers for Federal Campaign Funds

Open Secrets: Super PACs

Sunlight Foundation: The Political 1% of the 1% in 2012

The New York Times: Milking the Money Machine

Open Secrets: Citizens United Decision Profoundly Affects Political Landscape

Mass Live: Senate Democrats Pushing Campaign Finance Transparency

Alexandra Stembaugh

Alexandra Stembaugh graduated from the University of Notre Dame studying Economics and English. She plans to go on to law school in the future. Her interests include economic policy, criminal justice, and political dramas. Contact Alexandra at staff@LawStreetMedia.com.

The post Campaign Finance: Free Speech or Unfair Influence? appeared first on Law Street.

Limits on campaign contributions continue to slip away, with high courts ruling against them. First, in the Supreme Court case McCutcheon v. Federal Elections Commission, and then on April 24, U.S. District Judge Paul A. Crotty struck down donation limits in New York. Surprisingly, Crotty acknowledged that there is a link between campaign finance and corruption. Unfortunately, he felt compelled to rule against the measures aimed to prevent this phenomena due to the possibility of infringing on first amendment rights. Many feel that this issue is black and white; namely, that campaign donations are a right of free speech or that they are ruining democracy. Yet, I think it is fair to say that the judicial branch is in a difficult position. A majority of Americans want campaign finance reform, yet, any attempt to do so could be a violation of constitutional rights (so it seems based on recent rulings).

While I would like to see reform, I acknowledge that there is a more concerning problem underlying the push for campaign contribution limits, and it starts with the obvious question, “why exactly do people want to limit contributions in the first place?” The desire to limit campaign contributions arises from the fear of a distorted power distribution. Simply, the people who have the greatest wealth will have the greatest influence in politics.

In order to run a strong campaign, you need a lot of capital, and thus, politicians require significant financial backing. If someone voluntarily provides a politician with large financial donations, then by de facto the politician owes that financial backer, and hence, the corruption referred to by Crotty ensues. The fact that finances are so important in political elections principally gives citizens of wealth more potential value and gives them greater potential access to politicians than regular citizens.

But let’s back up for a minute. We need to ask the next question that naturally follows, “why does it require a lot of money to win elections?” And this question gets us to the root of the problem. Politicians need a substantial amount of campaign finances in order to capitalize on the public’s immediate perception. Unfortunately, Americans are not educated on domestic and international politics and it shows in the polls. As Cato Unbound reports,

numerous polls show that voters grossly underestimate the percentage of federal spending that goes to entitlements such as Social Security and Medicare, while greatly overestimating the amount spent on foreign aid[..] Widespread political ignorance isn’t limited to spending and health care[..] only 42% of Americans can name the three branches of the federal government: executive, legislative and judicial.

American’s knowledge regarding international affairs shows even less promise. So how does the American electorate make political decisions? They rely on heuristics in order to decide whom and what to vote for. A heuristic is essentially a cognitive shortcut that allows us to make decisions quickly, and one of the most commonly employed cognitive shortcuts is the availability heuristic. In the words of Albert Phung, when using this heuristic, people “rely on immediate examples that come to mind. The availability heuristic operates on the notion that if something can be recalled, it must be important.”

Political campaigns know this, and that is why they are constantly trying to get as much attention as possible, which requires a lot of money. Does the term ‘soundbites’ ring a bell? If people hear what a certain candidate is going to do over and over, they begin to think it is important.

The reason we fear unlimited campaign contributions is because the American people do not make educated voting decisions and instead, they are heavily influenced by how many soundbites they are subjected to. If every person were to decide who to vote for based on their own research, it wouldn’t matter how much money politicians raise and spend. But the sad fact remains that American’s do not do the research. My favorite example of this is the Associated Press Report Homer Simpson, Yes — 1st Amendment ‘Doh,’ survey results. According to the AP, “the new McCormick Tribune Freedom Museum found that 22 percent of Americans could name all five Simpson family members, compared to just 1 in 1,000 people who could name all five First Amendment freedoms.”

[ThinkProgress] [Investopedia] [Gallup] [SupremeCourt.Gov]

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Bo Donoghue

Featured image courtesy of [Wonderlane via Flickr]

Bo Donoghue

Bo Donoghue is a student at The George Washington University. Contact Bo at staff@LawStreetMedia.com.

The post Campaign Donation Limits: Why We Really Need Them appeared first on Law Street.

Money has always been a big part of politics, and campaign finance laws have been put in place to curb potential corruption. But the Supreme Court continues to rule on parts of campaign finance laws- most recently allowing individuals to give money to more campaigns in the case McCutcheon v. Federal Elections Commission. Is this one more way to allow big money into politics, or a protection of free speech?

Campaign contributions are protected as free speech under the First Amendment, but with restrictions in order to prevent corruption. Since 1976 in Buckley v. Valeo, the Court has ruled that campaign contribution limits can be enforced as “primary weapons against the reality or appearance of improper influence stemming from the dependence of candidates on large campaign contributions.” Basically, it’s fine to limit contributions from individuals to avoid corruption. And understandably so- it isn’t unreasonable to think donating huge sums of money from an individual to a campaign could lead to some kind of favoritism toward that person.

So to combat that potential, the government set a cap for the amount of money an individual can contribute to campaigns, and it’s been like this since 1976. Currently, that limit is $5,200 to each campaign over a two-year period. As time has gone on, the courts have continued to rule more on the side of campaign contributions as free speech, making those laws less restrictive, and continuing to hold them as protected free speech under the First Amendment.

One of the most recent examples was in the case Citizens United v. Federal Election Commission, where the Court ruled restrictions on how much money unions and corporations could donate weren’t legal. Liberals saw this as a way to equate corporations to people, and conservatives saw it as an expansion of First Amendment rights.

So McCutcheon tackled another part of the campaign finance puzzle: caps on individual donations… kind of.

Prior to this ruling, there was a limit on how much money an individual could donate to one campaign, as well as a cap on how much an individual could donate to campaigns total. Individuals could give up to $5,200 to any one candidate, but no more than $123,200 total during a two-year election cycle. And of that $123,200, only $48,600 could go to individual campaigns. The Supreme Court held on Wednesday that that total limit, the $123,200, was unconstitutional, while the caps on donations to individual campaigns still stand.

So, what does this mean in practice? Basically, wealthy people can give money to more candidates… but they can’t give more money to one candidate. Again, liberals have gotten upset-worried that increasing the amount of money individuals can donate to campaigns will somehow unhinge a balance of power, or make a system already centered on money even more uneven. But to be frank- this decision doesn’t change a whole lot of anything, and it’s constitutionally sound.

If the goal of campaign finance limits is to combat corruption (legitimate corruption, not just speculative or hypothetical corruption), then giving a limited amount of money to a few more candidates really isn’t a huge problem.  Individuals won’t be able to wield more influence over one candidate because to individual caps are still in place.

Still, there is concern that this ruling only helps the wealthy, as they’re the only ones who would be able to give this much money to campaigns in the first place. But more important than worrying about rich people giving money to campaigns is worrying about what the First Amendment protects. The First Amendment, time and again, has protected campaign contributions as free speech. Arbitrary limits on one kind of free speech are no better than arbitrary limits on another.

Though it’s easy to get caught up in thinking allowing the wealthy to give more money to a campaign isn’t fair, the McCutcheon decision by the Supreme Court upholds rights guaranteed by the First Amendment. The only restrictions the courts should impose on campaign limits are ones that protect against corruption and limiting the amount of campaigns individuals can donate to do not protect against corruption.

[Supreme Court] [Oyez] [Washington Times] [Citizens United]

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Molly Hogan (@molly_hogan13)

Featured Image Courtesy of [Flickr/Tracy Olson]

Molly Hogan

Molly Hogan is a student at The George Washington University and formerly an intern at Law Street Media. Contact Molly at staff@LawStreetMedia.com.

The post More Money, More Problems? Supreme Court Rules on Campaign Finance Laws appeared first on Law Street.

The new Supreme Court term has begun! Over the past few years, the nation’s highest court has dealt with many historic cases, including the Affordable Care Act, the Voting Rights Act, Proposition 8, and the Defense of Marriage Act.  Many of these decisions were closely split, contentious, and received a poignant mix of outright disgust and frantic applause from various political factions. This upcoming term promises an equally exciting set of decisions. On the docket in upcoming weeks are cases that include campaign contribution limits, abortion rights, affirmative action, public prayer, and the ability of the president to make recess appointments.

Here are some of the upcoming cases that could be important to keep an eye on:

Already in progress is McCutcheon v. FEC. Under current law, there is an aggregate limit on how much an individual can give to campaigns over two years: $123,200. McCutcheon, backed by the RNC, alleges that these caps are unconstitutional because they limit freedom of speech. This case can be seen as a follow up to the controversial Citizens United case that allowed corporations and groups to levy free speech through making unlimited campaign donations.

In an upcoming case, NLRB v. Noel Canning, the high court will address the constitutionality of recess appointments. A recess appointment is exactly what it sounds like—an appointment to a position that normally requires Senate approval made unilaterally by the President during a Senatorial recess. This case specifically deals with whether or not recess appointments can be made during a recess that occurs in the middle of a Senate session, and whether or not recess appointments can be made to vacancies that existed before the appointment. There is no precedent on which the Supreme Court will be influenced, meaning the outcome of this case is a total tossup.

Town of Greece v. Galloway asks whether starting a town council meeting with a prayer violates the separation of church and state. Greece, a small town in Rochester starts each meeting with an (usually) overtly Christian prayer. A few non-Christian members complained that they felt coerced to participate.

Schuette v. Coalition to Defend Affirmative Action will deal with the of question of whether by amending their state constitution to prohibit race and sex based discrimination in public college admissions—meaning affirmative action—Michigan has violated the Equal Protections Act.

McCullen v. Coakley  deals with a Massachusetts law creating a 35-foot buffer zone around abortion clinics so that protesters urging women to make different choices are not allowed to protest within 35 feet of an abortion clinic. The plaintiffs believe that this buffer zone violates their freedom of speech rights.

Bond v. US is a truly interesting case in which a woman attacked her husband’s pregnant girlfriend with a potent mix of chemicals to attempt to kill her. She was charged by the government with being in possession of chemical weapons, and violating the Chemical Weapons Convention that was ratified by the United States. This case will offer an interesting view on the intersection between domestic courts and international law.

These are obviously not the only cases to watch in the current term. Other cases such as Kansas v. Cheever deals with the issue of self-incrimination. The Affordable Care Act Contraception mandate is being challenged in a number of cases. Limits on abortion-inducing drugs will be questioned in Cline v. Oklahoma Coalition for Reproductive Justice. All of these cases promise that the 2013-2014 season of Supreme Court decisions will be as revolutionary and exciting as the last few have been.

[Christian Science Monitor]

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Featured image courtesy of [Wally Gobetz via Flickr]

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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