Political Campaigns: Fundraising and Finance Laws
Overview
Political Campaigns: Fundraising and Finance Laws
Learning Objective
By the end of this section, you will be able to:
- Describe the relevant fundraising and campaign finance laws in Texas
Introduction
Political campaigns are eﬀorts of the candidates to win support of the voters. The goal of the campaign is to attain suﬃcient support to win the primary election in March and the general election in November. Campaigns involve attempts to reach potential voters through print and electronic media, mail, door-to-door campaigning, speeches to small and large groups, and text and telephone solicitation. The cost is enormous. And money is critical for candidate success in Texas.
Fundraising
Early in the 2016 election season, several candidates had fundraised well ahead of their opponents. Hillary Clinton, Jeb Bush, and Ted Cruz were the top fundraisers by July 2015. Clinton reported $47 million, Cruz with $14 million, and Bush with $11 million in contributions. In comparison, Bobby Jindal and George Pataki (who both dropped out relatively early) each reported less than $1 million in contributions during the same period. Bush later reported over $100 million in contributions, while the other Republican candidates continued to report lower contributions. Media stories about Bush’s fundraising discussed his powerful financial networking, while coverage of the other candidates focused on their lack of money. Donald Trump, the eventual Republican nominee and president, showed a comparatively low fundraising amount in the primary phase as he enjoyed much free press coverage because of his notoriety. He also flirted with the idea of being an entirely self-funded candidate.
Even with a carefully planned and orchestrated presidential run, early fundraising is vital for candidates. Money helps them win, and the ability to raise money identifies those who are viable. In fact, the more money a candidate raises, the more he or she will continue to raise. EMILY’s List, a political action group, was founded on this principle; its name is an acronym for “Early Money Is Like Yeast” (it makes the dough rise). This group helps progressive women candidates gain early campaign contributions, which in turn helps them get further donations (Figure 8.11).
Many potential candidates may decline to run if their opponent has a lot of money in a campaign war chest. War chests are campaign accounts registered with the Federal Election Commission (FEC), and candidates are allowed to keep earlier donations if they intend to run for oﬃce again. Incumbents and candidates trying to move from one oﬃce to another very often have money in their war chests. Those with early money are hard to beat because they have an easier time showing they are a viable candidate (one likely to win). They can woo potential donors, which brings in more donations and strengthens the campaign. A challenger who does not have money, name recognition, or another way to appear viable will have fewer campaign donations and will be less competitive against the incumbent.
Campaign Finance Laws
In the 2012 presidential election cycle, candidates for all parties raised a total of over $1.3 billion dollars for campaigns. Congressional candidates running in the 2014 Senate elections raised $634 million, while candidates running for the House of Representatives raised $1.03 billion. This, however, pales in comparison to the amounts raised by political action committees (PACs), which are organizations created to raise and spend money to influence politics and contribute to candidates’ campaigns. In the 2014 congressional elections, PACs raised over $1.7 billion to help candidates and political parties. How does the government monitor the vast amounts of money that are now a part of the election process?
The history of campaign finance monitoring has its roots in a federal law written in 1867, which prohibited government employees from asking Naval Yard employees for donations. In 1896, the Republican Party spent about $16 million overall, which includes William McKinley’s $6–7 million campaign expenses. This raised enough eyebrows that several key politicians, including Theodore Roosevelt, took note. After becoming president in 1901, Roosevelt pushed Congress to look for political corruption and influence in government and elections. Shortly after, the Tillman Act (1907) was passed by Congress, which prohibited corporations from contributing money to candidates running in federal elections. Other congressional acts followed, limiting how much money individuals could contribute to candidates, how candidates could spend contributions, and what information would be disclosed to the public.
While these laws intended to create transparency in campaign funding, the government did not have the power to stop the high levels of money entering elections, and little was done to enforce the laws. In 1971, Congress again tried to fix the situation by passing the Federal Election Campaign Act (FECA), which outlined how candidates would report all contributions and expenditures related to their campaigns. The FECA also created rules governing the way organizations and companies could contribute to federal campaigns, which allowed for the creation of political action committees. Finally, a 1974 amendment to the act created the Federal Election Commission (FEC), which operates independently of government and enforces the elections laws.
While some portions of the FECA were ruled unconstitutional by the courts in Buckley v. Valeo (1976), such as limits on personal spending on campaigns by candidates not using federal money, the FEC began enforcing campaign finance laws in 1976. Even with the new laws and the FEC, money continued to flow into elections. By using loopholes in the laws, political parties and political action committees donated large sums of money to candidates, and new reforms were soon needed.
Senators John McCain (R-AZ) and Russ Feingold (former D-WI) cosponsored the Bipartisan Campaign Reform Act of 2002 (BCRA), also referred to as the McCain–Feingold Act. McCain–Feingold restricts the amount of money given to political parties, which had become a way for companies and PACs to exert influence. It placed limits on total contributions to political parties, prohibited coordination between candidates and PAC campaigns, and required candidates to include personal endorsements on their political ads. It also limited advertisements run by unions and corporations thirty days before a primary election and sixty days before a general election.
Soon after the passage of the McCain–Feingold Act, the FEC’s enforcement of the law spurred court cases challenging it. The first, McConnell v. Federal Election Commission (2003), resulted in the Supreme Court’s upholding the act’s restrictions on how candidates and parties could spend campaign contributions. But later court challenges led to the removal of limits on personal spending and ended the ban on ads run by interest groups in the days leading up to an election. In 2010, the Supreme Court’s ruling on Citizens United v. Federal Election Commission led to the removal of spending limits on corporations funding independent political broadcasts. Justices in the majority argued that the BCRA violated a corporation’s free speech rights.
The court ruling also allowed corporations to place unlimited money into super PACs, or Independent Expenditure-Only Committees. These organizations cannot contribute directly to a candidate, nor can they strategize with a candidate’s campaign. They can, however, raise and spend as much money as they please to support or attack a candidate, including running advertisements and hosting events. In 2012, the super PAC “Restore Our Future” raised $153 million and spent $142 million supporting conservative candidates, including Mitt Romney. “Priorities USA Action” raised $79 million and spent $65 million supporting liberal candidates, including Barack Obama. The total expenditure by super PACs alone was $609 million in the 2012 election and $345 million in the 2014 congressional elections.
Several limits on campaign contributions have been upheld by the courts and remain in place. Individuals may contribute up to $2,700 per candidate per election. This means a teacher living in Nebraska may contribute $2,700 to Bernie Sanders for his campaign to become to the Democratic presidential nominee, and if Sanders becomes the nominee, the teacher may contribute another
$2,700 to his general election campaign. Individuals may also give $5,000 to political action committees and $33,400 to a national party committee. PACs that contribute to more than one candidate are permitted to contribute $5,000 per candidate per election and up to $15,000 to a national party. PACs created to give money to only one candidate are limited to only $2,700 per candidate, however. The amounts are adjusted every two years, based on inflation. These limits are intended to create a more equal playing field for the candidates so that candidates must raise their campaign funds from a broad pool of contributors.
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References and Further Reading
"2012 Presidential Campaign Finance." (November 10, 2015).
"2014 House and Senate Campaign Finance." (November 12, 2015).
"Political Action Committees. ”(November 12, 2015).
Scott and Mullen, "Thirty Year Report."
Buckley v. Valeo, 424 U.S. 1 (1976).
S.27 - Bipartisan Campaign Reform Act of 2001
Citizens United v. FEC, 558 U.S. 310 (2010).
"Citizens United v. Federal Election Commission" (November 11, 2015).
"Independent Expenditure-Only Committees." (November 11, 2015).
"2012 Outside Spending, by Super PAC." (May 15, 2016).
"Contribution Limits for the 2015–2016 Federal Elections [PDF]." (November 11, 2015).
"The Cost of Winning a House and Senate Seat, 1986–2014." (May 15, 2016).
Political Fundraisers: What You Need to Know. A Guide for Candidates, Oﬃcers, and Political Committees [PDF]. Texas Ethics Commission. September 20, 2018.
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Adaption and Remix, and Original Content. Authored by: Deborah Smith Hoag. Provided by: Austin Community College. Located at: http://austincc.edu Project: Achieving the Dream Grant. License: CC BY: Attribution
Adaptation and Remix: Political Campaigns: Fundraising and Finance Laws Authored by: John Osterman. License: CC BY: Attribution