Campaign Finance Reform in America
Tocqueville cited the “shameful methods often used by candidates” and the “personal abuse spread by their enemies” during campaigning in his work Democracy in America. Furthermore, he cautioned that the negative aspects of elections would only increase in the future stating that “these evils are doubtless great, but they do not last long, whereas the accompanying advantages remain.” Although candidates antagonize each other with a great intensity throughout the course of campaigning through devices like attack ads, this purposeful aggression dissipates into a strange calm post-election. However, the side that wins the office through aggression retains the advantages of this position long after the dust settles.
In delving into recent reform efforts along with the evidence and statistics of election year cycles and fundraising efforts by parties and candidates, much can be learned about the realities of campaign financing. Laws intended to stem the flow of money and identify where the money was coming from were passed periodically throughout the 20th century and oftentimes with unintended consequence. Specifically, when the Smith-Connally Act of 1943 barred labor unions from contributing to federal candidates the precursors to the AFL-CIO, Congress of Industrial Organizations, formed the first political action committee in 1944 to help reelect President Franklin D. Roosevelt. Even since that moment, PAC’s have been a constant force in the American political landscape by evolving into a prime source of soft money. Furthermore, access to clients’ PAC money has become “an indispensable tool for many of the lobbyists who work Capitol Hill”.
Many people consider the seemingly inevitable link between money and politics as a flaw allowing the rich to purchase immoral favors at the expense of the American public. However, some view it differently, arguing that “equating money with speech reflects the peculiarly American commitment to liberty at almost all costs, and a very pragmatic reading of politics that acknowledges not just that power is money but the power of money, in almost any society.” This uniquely democratic dilemma exist because “like it or not, rich people also have the freedom to throw their money around just as the masses have the freedom to throw their collective power around.”
A major problem facing effective reform of campaign financing is that all groups appear to think that it is possible for to produce predictable political change through these reforms. In practice, “altering the rules governing the financing of campaigns usually works to accelerate whatever trends are already taking place in the political system: ascendant demographic groups, ideologies and special interests are usually best positioned to capitalize on new rules, while forces in decline often depend on existing institutions for survival”.
For example, the 2002 enactment of the McCain-Feingold bill, or the Bipartisan Campaign Finance Reform Act, served as an attempt to close the soft money loophole by prohibiting the national parties from raising any soft money, requiring the state parties to spend only “hard” money on activities that affect federal elections, and prohibiting federal officeholders and candidates from soliciting or spending any soft money. The second part of the act is aimed at the problem of so-called “sham” issue ads by creating a new category of “electioneering communications”, defined as ads that refer to federal candidates and are broadcast to the electorate of that candidate within 30 days of a primary election or 60 days of a general election. Such ads are not banned, but they must “comply with the rules that apply generally to campaign ads, money used for such ads must be disclosed, and such ads cannot be funded with corporate or labor treasury funds but must instead be funded out of a corporate or union PAC”.
However, in December of 2003, the Supreme Court upheld nearly all parts of the reform act by agreeing that unlimited contributions to the political parties “can corrupt or, at the very least, create the appearance of corruption of federal candidates and office holders” in a closely divided decision. On the two key questions in the case, addressing the soft money ban and the regulation of sham issue ads, the law was upheld by a 5-4 majority. Specifically, the court upheld the ban on national parties and officeholders raising and spending soft money and the limit on state parties spending soft money that affects federal elections. The “electioneering communications” ads timeframe requirements were also upheld in addition to the specifications concerning funding and disclosure of these ads. Moreover, the court supported the mandate that broadcast stations compile a public record of political ads and who paid for them.
The Supreme Court invalidated only two provisions of the law: the ban on campaign contributions from minors, and the requirement that parties choose between making either independent expenditures or coordinated expenditures on behalf of candidates. The court affirmed most other aspects of campaign finance regulation and disclosure, and even admonished the Federal Election Commission for letting money in politics get so out of hand. Also noted was that FEC regulations created the problem of soft money. In the words of the Justices, “the FEC regulations permitted more than Congress, in enacting FECA (the original campaign finance law), had ever intended”.
Just as importantly, the court rejected the very narrow justification for campaign finance laws used by opponents of regulating money in politics that campaign finance regulations are only justifiable to curtail the type of corruption that causes a change in legislative votes. The court illustrated the fact that soft money leads not only to a possible change in legislative votes, but also to “manipulations of the legislative calendar, leading to Congress’ failure to enact, among other things generic drug legislation, tort reform, and tobacco legislation” The court stated that to claim that such legislative scheduling actions do not change legislative outcomes “surely misunderstands the legislative process”. As such, campaign finance regulation need not be based on such a narrow interpretation of corruption.
Overall, this decision is a victory for the cause of campaign finance reform and need for deterring corruption within the election system. The opinion by Justices Stevens and O’Connor concluded the reality of this effort:
We are under no illusion that BCRA will be the last congressional statement on the matter. Money, like water, will always find an outlet. What problems arise, and how Congress will respond, are concerns for another day. In the main, we uphold BCRA’s two principal, complementary features: the control of soft money and the regulation of electioneering communications.
In the fight for effective campaign finance reforms, there are several leading opponents to efforts like the Bipartisan Campaign Reform Act. Within a month of passage of the new campaign finance law, “more than 80 plaintiffs-ranging from Sen. Mitch McConnell (R-KY) to the AFL-CIO to the Republican party-filed 11 different lawsuits challenging every provision of the Act”. The U.S. Department of Justice and the FEC were the lead defendants in the suits, supported in their defense of BCRA by the principal congressional sponsors of the law, Republican Senator John McCain, Democrat Senator Russ Feingold, Republican Representative Chris Shays and Democratic Representative Marty Meehan, who intervened in the case. All the lawsuits were consolidated into one case, McConnell v. FEC in which “Senator Mitch McConnell claimed that Congress’s efforts to control campaign spending by special interest groups violate the Constitution, particularly the 1st Amendment”. In addition, an alliance formed between the U.S. Chamber of Commerce, the National Association of Manufacturers, the Christian Coalition and the National Right to Life Committee as well as the left-leaning American Civil Liberties Union in an effort to dispel this legislation.
Supporters of the campaign finance reform include many Democrats, unions, media organizations as well as the sponsors of the Reform Act. These legislators retained former Clinton era U.S. Solicitor General Seth Waxman and a former legal director of the ACLU, Burt Neuborne, to defend the constitutionality of the act. In addition, there are many powerful non-profit organizations that have supported campaign finance reform from the outset such as Common Cause, People for the American Way and the Center for Responsive Politics. These groups contend that large contributions buy undue access to politicians for individuals, corporations, and special interests. They also argue that wealthy candidates can “buy” elections and that the large amounts of money involved in campaign finance invite corruption. Finally, proponents of reform hold that politicians waste too much time raising money and that campaign financing as it exists currently gives incumbents have unfair advantages.
Opponents claim that soft money raised by political parties is not related to federal elections and therefore conclude that it should not be regulated because to do so would violate the First Amendment. Thusly, opponents of campaign finance reform argue that restrictions on political free speech are unconstitutional and that many campaign finance proposals do not clean up unfair and corrupt union contributions and practices that disproportionately benefit Democrats. Additionally, anti-reformers contend that “biased major media outlets will gain even more power and influence over elections because their slanted news reports are not restricted”. Moreover, these groups feel that current campaign finance laws are not enforced and that incumbents will actually benefit from many campaign finance reform proposals.
In a more inflammatory stance, opponents of campaign finance reform liken the Supreme Court ruling upholding the reform act to “Dred Scott, upholding slavery in 1858, and Plessy v. Ferguson’s 1896 approval of separate-but-equal schools”. Groups such as the Heritage Foundation maintain that the ruling “encourages elected officials, bureaucrats and judges at all levels of government to seek more curbs on political speech” predicting future efforts to lengthen the ban on ads from 60 days to 90 days and so on. According to Mark Tapscott of the Heritage Foundation: “the nature of government is to seek to expand its power, and as government regulation of political speech increases, our freedom is decreased.” Moreover, they argue that not only is the stage thus set for a vast expansion of the FEC and further bureaucracy, but the range of media in which government silences political speech will grow.
Thus far, the consequences of recent reforms efforts have appeared to be strongly in favor of the Republican Party and particularly beneficial for the presidential campaign of George W. Bush. The major thrust of the BRCA was to prohibit the national, senatorial and congressional parties from raising and spending soft money which would, in theory, work against the interests of the Republican Party. In fact, the “single area of campaign finance where the Democrats have achieved parity with the Republicans has been in the now-banned mega-dollar, soft-money competition”. In 2000 and 2002, the Democratic Party organizations raised, respectively, $245.2 million and $245.9 million in soft money, almost exactly what the Republican Party raised ($249.9 million and $250 million).
In June of 2003, The Center for Responsive Politics conducted a study of the partisan split of campaign contributions of all sizes in the 2001-2002 election cycle. A significant finding of this study was that during this cycle, the lower the level of contribution studied, the better Republicans did. Among donors of $1 million or more, Democrats had a 12-to-1 advantage, $48 million raised compared with $4 million by Republicans. Among those giving between $100,000 to $999,999, the parties were nearly even, with Democrats raising $40 million, and Republicans raising $39 million. In other words, the large soft-money contributions now banned by the BRCA had in fact served to lessen the financial advantage of the Republican Party.
In broader terms, Presidential campaign contributions and spending have both reached record highs with each coming election cycle. As shown in Appendix 4, contributions jumped from $171 million in 1976 to $528.9 million in 2000. By comparison, contributions for the 1996 Presidential race were $425.7 million, an increase of over $100 million. Campaign spending increased from $66.9 million in 1976 to $343.1 million in 2000. Similarly, spending from 1996 to 2004 also increased by over $100 million (Appendix 4).
In reviewing the financial categories of spending, contribution and cash in hand amounts for each candidate running in the 2004 Presidential campaign, a great disparity can be seen between the incumbent, George Bush, and the remainder of the contenders. As of April 20, 2004, all categories were nearly double for Bush in comparison to the next financially strongest candidate, John Kerry (Appendix 5). An especially significant discrepancy is seen within the “cash on hand” category, with Bush at $108 million and Kerry at $32 million. In contrast, the candidate with the least cash on hand, Al Sharpton, had only $5,046 available.
Moreover, there are further differences between the main party candidates in regards to the amounts of contributions they receive from their donors. As of March 29, 2004, 60% of donations for Bush were in the amount of $2,000 and above, whereas only 39% of Kerry’s donations were of these amounts (Appendix 2). This is contrasted by fellow Democratic candidate Howard Dean at 61% of donations at $200 or less and merely 12% at the $2,000+ level (Appendix 2).
The political parties are similarly raising record amounts of money, collecting hundreds of millions of dollars each election cycle. By April 26, 2004, Democrats raised over $44 million for the 2004 Presidential campaign and Republicans raised over $115 million (Appendix 3). By this same date, the Democratic Party spent over $30 million and the Republican Party spent over $89 million (Appendix 3).
Appendix 1 shows how donations by sector to each party are highly partisan. For example, labor devoted over 85% of its spending to the Democrats and only 15% to the Republicans. The biggest donating sector with more than $136 million in funding, Finance/Insurance/Real Estate, funneled 38% of this amount to Democrats and 62% to Republicans. The next largest group, Lawyers and Lobbyists at over $81 million, devoted 66% of these funds to the Democratic Party and 34% to the Republican Party. These results show how central ideological beliefs can be in funding decisions related to electoral politics.
Clearly, there has been a profound shift in the character of the money used to finance political campaigns and in the institution of campaign fundraising itself. One of the most significant trends in campaign finance has been the “steady abandonment of the Democratic Party and its candidates by major segments of corporate America, especially in House and Senate elections”. Part of this trend results from the fact that the Democrats are currently out of power, but just as important is the reality that the Republican Party has become aggressively pro-business, “welcoming votes on workplace deregulation, tort reform, energy policy and a host of other issues that demonstrate virtual unanimity on the Republican side of the aisle”.
In conclusion, campaigning and fundraising for public office in the U.S. is a complicated and often scrutinized institution. Inherent in the democratic system is the need for politicians to acquire votes; likewise is the struggle to control the influence of monetary interests on voting, elections and politics in general. Despite recent efforts such as the Bipartisan Campaign Finance Reform Act, the issue of the immense sums of money involved in campaigning has yet to be fully resolved. However, there is much left to be learned about the realities of campaign financing so that future reforms can garner even more equitable results for the American public.
