14.3 Campaign finance and political contributions

Campaign finance laws shape the flow of money in politics, regulating how funds are raised and spent in elections. From the Federal Election Campaign Act to Citizens United, these laws have evolved, balancing free speech with efforts to prevent corruption and undue influence.

Political contributions come in various forms, including hard money, soft money, and dark money. Each type faces different regulations and disclosure requirements, impacting how candidates and groups fund their campaigns and political activities. Understanding these distinctions is crucial for grasping the complexities of money in politics.

Campaign Finance Laws

Federal Election Campaign Act and Its Amendments

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• Federal Election Campaign Act (FECA) enacted in 1971 to regulate campaign financing
• FECA established disclosure requirements for federal candidates, political parties, and PACs
• 1974 amendments created the Federal Election Commission (FEC) to enforce campaign finance laws
• Amendments set limits on individual contributions to candidates and political committees
• Established public funding system for presidential elections

Bipartisan Campaign Reform Act and Its Impact

• Bipartisan Campaign Reform Act (BCRA) passed in 2002, also known as McCain-Feingold Act
• BCRA banned soft money contributions to national political parties
• Prohibited corporations and unions from using general treasury funds for electioneering communications
• Increased hard money contribution limits for individuals
• Restricted issue advocacy ads close to elections

Citizens United v. FEC and Contribution Limits

• Citizens United v. FEC (2010) landmark Supreme Court case
• Ruled that government cannot restrict independent political expenditures by corporations, unions, and other groups
• Decision based on First Amendment free speech protections
• Overturned parts of BCRA related to corporate and union spending
• Contribution limits still apply to direct donations to candidates and political parties
• Current individual contribution limits adjust for inflation (2023-2024 cycle: $3,300 per candidate per election)

Public Financing System

• Presidential Election Campaign Fund established by 1971 FECA
• Allows taxpayers to designate $3 on tax returns for presidential campaign financing
• Primary election matching funds system matches small donations up to a certain amount
• General election grants provide a lump sum to major party nominees who agree to limit spending
• System participation declined in recent elections due to increased private fundraising capabilities

Types of Political Contributions

Hard Money: Direct and Regulated Contributions

• Hard money refers to funds given directly to federal candidates, parties, or PACs
• Subject to strict contribution limits and disclosure requirements
• Individuals can contribute up to $3,300 per candidate per election (primary and general counted separately)
• Contributions to national party committees limited to $41,300 per year
• PACs can contribute up to $5,000 per candidate per election
• Corporations and labor unions prohibited from making hard money contributions

Soft Money: Indirect and Less Regulated Funds

• Soft money traditionally referred to funds raised outside federal limits for party-building activities
• Used for voter registration drives, get-out-the-vote efforts, and issue advocacy
• BCRA banned national parties from raising or spending soft money
• State and local parties can still use soft money for certain activities
• Corporations and unions can now make unlimited independent expenditures following Citizens United

Dark Money: Undisclosed Political Spending

• Dark money refers to political spending by groups not required to disclose their donors
• Often channeled through 501(c)(4) social welfare organizations or 501(c)(6) trade associations
• These groups can engage in political activities without revealing funding sources
• Increased significantly after Citizens United decision
• Criticisms include lack of transparency and potential for foreign influence in elections

Independent Political Spending

Super PACs: Unlimited Independent Expenditures

• Super PACs emerged after 2010 SpeechNow.org v. FEC decision
• Can raise and spend unlimited sums on independent expenditures
• Prohibited from coordinating directly with candidates or political parties
• Must disclose their donors to the FEC
• Often run by former staff or allies of candidates, raising coordination concerns
• Frequently used for large-scale advertising campaigns in support of or opposition to candidates

Independent Expenditures and Electioneering Communications

• Independent expenditures advocate for election or defeat of specific candidates
• Can be made by individuals, corporations, unions, and other groups without limits
• Must be reported to FEC when exceeding $250
• Electioneering communications refer to broadcast ads mentioning candidates close to elections
• Electioneering communications face stricter disclosure requirements
• Both types of spending prohibited from coordinating with candidates or parties
• Critics argue these allow wealthy individuals and groups to have outsized influence on elections