Campaign Finance and Rules

Background

The landscape of campaign finance changed dramatically as a result of court decisions and regulatory interpretations. New types of political action committees (PACs) and other independent groups not directly tied to political parties or candidates play an increasingly dominant role in the funding of election campaigns.

The decision in Citizens United v. Federal Election Commission repealed the federal ban on unions and corporations financing “independent expenditures” that are not a part of a candidate’s campaign but expressly advocate for the election or defeat of a candidate. The Citizens United decision also struck down similar laws in 24 states.

Along with a ruling by the US Court of Appeals for the District of Columbia in SpeechNow.org v. Federal Election Commission and related Federal Election Commission (FEC) opinions, the Citizens Uniteddecision set the stage for the formation of “independent expenditure-only committees,” also known as “super PACs,” along with a major influx of campaign funds mostly from a relatively few large donors.

Unlike PACs, which give directly to candidates and have reporting requirements and aggregate limits, super PACs have no limits on how much money they can raise or spend. These Supreme Court decisions also made it easier for nonprofit groups to spend money related to federal elections without disclosing those expenditures. Super PACs have spent more than $1 billion since Citizens United was decided, according to a recent study by the Brennan Center for Justice at New York University School of Law. Almost 60 percent of those funds, some $600 million, were provided by just 195 donors and their spouses. In addition, looking at the most competitive 2014 US Senate races, the study found that less than 1 percent of the contributions going to the ten highest-spending super PACs came from small donors of $200 or less. The average contributions to these super PACs were tens or hundreds of thousands of dollars. Significantly, super PACs and other outside groups facilitated by Citizens United provided a greater share of funds (47 percent) in these races than did candidates (41 percent) or parties (12 percent).

One concern in the wake of the Citizens United decision is that a few wealthy individuals and institutions can use super PACs and other independent groups to dominate the political process. According to an analysis by the New York Times, in the first half of 2015, only 158 families provided more than half of all money raised for the 2016 presidential campaigns. Similarly, in the 2014 midterm elections, a Politicoanalysis of data from the nonpartisan Center for Responsive Politics found that the 100 largest donors gave almost as much ($323 million) as the 4.75 million people who gave $200 or less ($356 million).

Critics also fear that because rules governing super PACs have so many loopholes, fund-raising by super PACs undermines the limit on direct contributions to a federal candidate and could lead to government corruption. For example, former associates of candidates and campaign aides often run super PACs, despite the committees’ supposed independence. In addition, candidates frequently appear at super PAC fund-raisers. The Supreme Court’s 2014 decision in McCutcheon v. FEC further heightened these concerns when it struck down long-standing aggregate limits on contributions to candidates, allowing a single donor to contribute more than $3.5 million in a two-year election cycle, compared with $123,200 previously.

The public appears to be concerned about the changes in campaign finance law. Surveys show a large majority of AARP members and the public support campaign finance regulation and believe large donations undermine democracy by giving big donors inordinate influence on elected officials. Further, a recent Pew Research Center poll found that 62 percent of Americans thought that new laws could be written to effectively reduce the role of money in politics.

Although the Supreme Court, by a vote of eight to one, upheld the electioneering communications disclosure requirements of McCain-Feingold, nonprofit social welfare and trade associations, unlike super PACs, are allowed to spend “dark” money in federal, state, and local elections without disclosing donor identities or contribution amounts. Making the problem worse is the growth in “gray money” spent by organizations like super PACs that are legally required to disclose their donors but get their funding from other PACs. This compounds the difficulty of identifying original donors without looking through multiple layers of PAC disclosures.

The impact of these practices is particularly felt at the state level where a relatively small contribution can have a major impact on an issue where a donor may have a direct economic stake in the outcome.  A Brennan Center for Justice analysis of election advertising that is independent of candidates in Alaska, Arizona, California, Colorado, Maine, and Massachusetts found that only 29 percent of such “outside spending” was fully transparent in 2014, compared with 76 percent in 2006. “Gray money” accounted for nearly 60 percent of all outside spending in 2014.

In response to these trends, several states have enacted or are considering disclosure requirements that extend to organizations that donate to spender organizations. Although the Citizens United decision approved the use of disclaimers in advertisements to inform the voting public, advertisements currently include misleading or benign-sounding names. To combat that vagueness, some states, such as Connecticut, have required disclaimers to list the top five funders of each political ad. At the federal level, however, legislation to modernize disclosure rules has stalled in Congress and attempts to enforce still-standing rules has left the FEC largely deadlocked.

One encouraging trend in campaign finance is the success of public financing systems at the state and local levels. In McCormish v. Bennett, the Supreme Court reiterated its ruling in Buckley v. Valeo that public funding can “further ‘significant governmental interest[s],’ such as the state interest in preventing corruption.” Further, small-donor matching programs and clean election systems have a number of other benefits. A study found that New York City’s matching funds program increases the proportion, number, and demographic/class diversity of small donors. The study also found that small donations stimulate campaign volunteering in legislative districts. Connecticut’s public campaign financing program also has been found to increase the number and diversity of donors, lower barriers to running for office for candidates who are not independently wealthy, allow legislators to spend more time engaging with citizens, and help align policies more closely with public preferences.

 

 

Campaign Finance and Rules: Policy

Greater reliance on public funding

In this policy: FederalLocalState

Congress should enact an updated and comprehensive public-financing system for presidential and congressional elections that maximizes citizen participation through improvements in matching public funds and the existing tax check-off for presidential elections.

Campaign funding for state and local elections, including judicial elections, should rely more on small donations matched with public funds at a multiple ratio and less on large private donations by individuals or organizations. States and localities should consider a variety of approaches to fund their campaign public-financing systems, including tax check-off programs. Public-financing systems should provide viable and attractive options that would allow qualified candidates to run for office.

Media and advertising

In this policy: FederalState

Qualified candidates should receive free or significantly discounted media spots and postage for mailings. Providing airtime should be a condition for renewal of broadcasters’ television and radio licenses.

Federal and state regulations should ensure clarity and honesty in all election advertising, in part by requiring more meaningful disclaimers that reveal the identity of an ad’s sponsor, including the names of top donors, and establishing strict punishments for false advertising.

To increase transparency of spending on ads, states should, at a minimum, adopt a definition of “electioneering communications” that is at least as broad as the federal definition

Campaign contributions

In this policy: FederalState

Limits on individual contributions and contributions to and by PACs, including aggregate limits, should be maintained and strictly enforced.

Increased public matching funds should be provided for small donations.

Strict limits and disclosure requirements should be imposed on joint fund-raising and bundled campaign contributions.

There should be regulations limiting the buildup and carryover of candidates’ “war chests.”

Enforcing campaign finance laws

In this policy: FederalLocalState

The FEC, on a more non-partisan basis, should have greater authority to conduct audits, adjudicate and sanction cases, file injunctions and litigate independently.

Independent, nonpartisan state commissions charged with enforcing state campaign finance and election laws should have greater funding and authority.

Congress and the FEC should tighten and enforce rules prohibiting coordination between candidates and super PACs.

Procedures to ensure timely action on complaints about campaign finance violations should be improved.

Governments should enact tough penalties for campaign finance law violations.

Disclosure requirements

In this policy: FederalLocalState

Government should increase disclosure requirements for all funds spent to influence elections or ballot initiatives, including identification of funders and the amounts they provide. Disclosure requirements should be extended to organizations that donate to spender organizations, including nonprofits.

All campaign funding and financing entities should provide timely and full disclosure of contributions prior to the election, enabling the electorate to make informed decisions and give proper weight to different speakers and messages.

Corporations, unions, and other outside groups should disclose their campaign-related expenditures to shareholders and members. They should also be required to make their political spending records available in a timely manner to the public, through a hyper-link to the FEC, on their websites.

States should require disclosure of independent expenditures in state elections.