malone pol 296n lecture 2

8/4/2019 Malone POL 296N Lecture 2

1/24

LECTURE IICAMPAIGN FINANCE

DR. CHRISTOPHER MALONE


2/24

I. Introduction

The Cost of campaigning: The cost of campaigning in Americanpolitics has risen drastically in the World War II period, andespecially since the 1960s and 1970s which coincides with theimportance of the primary in presidential elections. Not

surprisingly, candidates must begin campaigning earlier and mustdo it for the most part through paid advertisements. See Table 2-2on page 34 of the Wayne book: with the increase in the number ofprimaries across the country and the need to advertise ontelevision in the general election, the cost of presidentialnominations has increased drastically. In 2000, the candidates

spent about $600 million; in 2004 the amount spent on thepresidential campaign was about $1 billion. In 2008, the combinedamount of spending on the presidential campaign by candidateswas $1.32 billion. When outside spending is factored it, the totalwas about $2.4 billion.


3/24

II. Costs and Presidential

Nominations Before the changes in the primary system in

the early 1970s, candidates spent little moneyon the primaries. Today, however, moremoney is spent during the primary seasonthan during the general election. This begsthe question: why are elections so expensive

today? Three reasons:


4/24

Mass Media:

Campaigns that were once waged in the printed press -and hence virtually free for the candidates - are now

waged in the electronic media. Newspapers before theCivil War were partisan, i.e., they were printed bypolitical parties and did not even claim to be objective.Campaigns were thus financed by advertisements andthe paying customer. By the early 20th century,campaign costs started to rise with each newinvention: the first radio campaign was waged in 1924.1952 saw the first television advertisement in apresidential campaign and the first time a presidential

convention was aired. In 1960, the candidates forpresident (Kennedy and Nixon) debated on televisionfor the first time, as we saw earlier this semester. In2000, the parties and candidates had spent about$205 million on television ads. In 2004 and 2008, thatfigure was over $600 million.


5/24

Polling/Staffing:

The use of polling and all of the consultants in a modernpresidential campaign have also increased the costs of

campaigns over the last 30 years. Why has the staff ofthe candidates become so important? Again, we have tounderstand the impact of the expanded and extendedprimary system. In order to capture the nomination, youneed to win in the primaries; in order to win in the

primaries, you need name recognition; in order to havename recognition, you need a ton of money. Butcandidates also need to take the pulse of more of theAmerican public because voters now decide in the

primary, and they need to take the pulse much longer.And then they need to hone their message. Think aboutit: in September/October 2011 (as I write this) we areover a year away from the next presidential election, andpolling has already been used extensively.


6/24

Fund-raising:

The way candidates raise money today is quitedifferent than in the past. We will get to the

finance system in a minute: for now, let us say thatin the past candidates could count on a largeamount of money from a small amount ofcontributors - such as the Vanderbilts, theCarnegies, the Rockefellers. Today, presidentsmust get a large number of contributors giving asmall amount of money. They must cast their netswider, and to do so they need a whole fundraisingarmy. Direct mailings have been the most costly,

but this method has also become quite beneficial.Email solicitations have cut down the cost ofraising money, but studies have shown that theresponse rates on email fundraising is very low.


7/24

III. Sources of Support: Who Pays, How

much do they Pay, and What do they get

for their money?

We want to know three questions about campaignfinance: who pays? How much do they pay? And whatdo they get for their money?

Throughout most of electoral history, campaigns werefunded by large contributions from a small number ofvery wealthy Americans. This system of campaignfinancing lasted up to the early 1970s. Richard Nixon's

campaigns were financed with large contributions, say,$10,000 or more. In fact, in 1972 the Nixon-McGoverncampaigns raised a combined $27 million from fewerthan 200 donors. Thats an average of $135,000 per

campaign contribution!


8/24

This began to raise serious questions aboutthe democratic character of presidentialelections. In short, how could a candidatewho claims to speak for all the people beresponsive to both the public at large andindividual benefactors? Put another way, is

the principle of one man, one vote violatedwith large campaign contributions fromwealthy donors?


9/24

IV. Finance Legislation:

FECA In the early 1970s, Congress enacted campaign

finance reform designed to do three things: 1)reduce this dependence on large donors andencourage a broad base of public support forpresidential candidates; 2) equalize the playingfield for Democrats and Republicans; and 3)

strengthen the two-party system.


10/24

a. Congress passed the Federal ElectionCampaign Act of 1971 (FECA). It

1. set ceilings on the amount of money

presidential and vice presidential candidates(and their families) could spend on theircampaigns.

2. It allowed for the creation of PAC's - politicalaction committees - which consisted of a group

who solicited voluntary contributions to be givento a party or a candidate.

3. FECA also established procedures for publicdisclosure of funds.


11/24

b. The Revenue Act of 1971. This piece oflegislation created tax credits and deductionsin order to encourage private contributions,and it also set up a public presidentialelection campaign fund - initially $1, butraised to $3 in recent years (1993).


12/24

V. Watergate

These laws were not set to go into effect until 1976.However, in the 1972 presidential campaign one ofthe biggest political scandals in American history

occurred - Watergate. While Watergate involved anintricate affair of break-ins, cover ups and pay-offs,it also led to reforms in campaign finance laws. ForNixon's reelection committee (CREEP) had wads of

cash in safes from individual and corporate donors,most of whom were anonymous. This cash wasused to pay off those involved in the break in, andalso led to Nixon's resignation in 1974.


13/24

VI. FECA Amendments of 1974

The FECA Amendments of 1974: 1. Set public disclosure provisions,

2. contribution ceilings for both individuals and groups,

3. spending limits for the campaigns,

4. federal subsidies for the major party candidates inthe nomination process and

5. complete funding for the general election.

6. limited the amount candidates could contribute totheir own campaigns, and

7. set up a six person Federal Election Commission

(FEC).


14/24

VII. Buckley v. Valeo (1976):

Money Equals Free Speech

Immediately the Amendments of 1974 to FECA were challengedin court on the grounds that limiting personal spending in acampaign is a violation of the First Amendment right to thefreedom of Speech. The Supreme Court did two things in theruling: first, it upheld in principle the notion that Congress canregulate campaign spending, but second, it struck down the limitsplaced on the amount of personal or organizational spending on acampaign. In other words, it set up the voluntary system wehave today for presidential elections, which states that anypresidential candidate that accepts public matching funds is

limited on the amount of money he or she can spend on his or herown campaign. If a person does not accept public matching funds,he or she can spend as much as they want. The decision did notapply to Congressional races, which is why you see manycandidates spending their vast fortunes for runs for Congress.


15/24

VIII. Subsequent FECA

Amendments

After Buckley v. Valeo, Congress was forced to amend FECA onceagain. It set a voluntary limit of $10 million on presidentialcampaigns, adjusted for inflation pegged to 1974. Candidates didnot have to accept public matching funds, but if they did they wereto stay beneath the spending cap.

In 1979, the law was amended once again and raised theminimum amount of a contribution which had to be reported tothe Federal Election Commission (known as the FEC, a six personcommittee comprised of 3 Democrats and 3 Republicans). Moreimportantly, the 1979 amendments allowed political parties to

raise unlimited amounts of money for party building activities suchas voter registration and voter turnout. Alas, the concept ofsoftmoney was born. While seemingly unimportant at the time, thisprovision created a gigantic loophole for the parties to essentiallyraise unlimited and unreported amounts of money. In fact, partiesdid not have to disclose contributors until 1992.


16/24

IX. Campaign Finance Legislation

ProvisionsBefore and after McCain

Feingold Law

In 2002 Congress passed the Bipartisan CampaignReform Act (BRCA), more popularly known as McCain-Feingold (named after the Senate co-sponsors) whichwent into effect on midnight, November 6th, 2002.BCRA prohibited soft money fundraising by nationalparty committees, federal candidates and federalofficeholders, and required state and local partycommittees to use hard money to pay for many kinds

of federal election activity. BCRA also limited theability of corporations, including many advocacyorganizations, to pay for broadcast ads that mentionfederal candidates during the time periods just beforean election.

The law was immediately brought to court In December 2003 the


17/24

The law was immediately brought to court, In December 2003 theSupreme Court ruled on the constitutionality of BCRA in the caseMcConnell v. FEC. The Court held the following:

The Court upheld the BCRAs most contested provisions, theregulation of "soft money" and "electioneering communications,"

as well as the "coordination" provision. The Court also held that regulation of "electioneering

communications"broadcast ads that refer to a federal candidate30 days before a primary or 60 days before a general electionwasnot precluded by the prior holding in Buckley v. Valeo which limited

regulation of political speech to that which employed expresswords of electoral advocacy. The Court also determined that the"electioneering communication" provision did not restrict muchotherwise permissible speech. Therefore, the 30/60 day provisionwas not unconstitutionally overbroad in scope.

Finally, the Court held that political activity coordinated withpolitical candidates and parties can be regulated even in theabsence of agreement to coordinate or formal collaboration. Forexample, spending at the "request" or "suggestion" of a candidateor party may establish coordination. However, the Court struckdown the BCRAs requirement that national parties choose

between coordinating with candidates and making independentexpenditures.


18/24

XI. Citizens United (2010):

Corporations are People Too

In 2010, the Supreme Court revisited BCRA (McCain-Feingold) andoverturned an important part of the law regulating political activityof corporations and unions. In the case Citizens United v. FederalElections Commission (2010), the Court overturned a provision ofthe Bipartisan Campaign Reform Act prohibiting unions,corporations and not-for-profit organizations from broadcastingelectioneering communications within 60 days of a generalelection or 30 days of a primary election violates the free speechclause of the First Amendment to the United States Constitution.United States District Court for the District of Columbia reversed.

In his majority opinion, Justice Kennedy wrote: "If the FirstAmendment has any force, it prohibits Congress from fining or

jailing citizens, or associations of citizens, for simply engaging inpolitical speech." Kennedy went on to suggest that corporationsact or should be seen as acting like a political associations orclubs with political viewpoints.


19/24

XII. Contribution Limits

http://www.fec.gov/press/20110203newlimits.

shtml
http://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtmlhttp://www.fec.gov/press/20110203newlimits.shtml


20/24

XIII. Primary Matching Funds See page 48 in Wayne book for the amount of public matching funds.

Partial public funding is available to Presidential primary candidates inthe form of matching payments. The federal government will match up

to $250 of an individual's total contributions to an eligible candidate. Only candidates seeking nomination by a political party to the office of

President are eligible to receive primary matching funds. In addition, acandidate must establish eligibility by showing broad-based publicsupport. He or she must raise in excess of $5,000 in each of at least 20states (i.e., over $100,000). Although an individual may contribute up to

$2,500 to a primary candidate, only a maximum of $250 per individualapplies toward the $5,000 threshold in each state.

Candidates also must agree to:

Limit campaign spending for all primary elections to $10 million plus acost-of-living adjustment (COLA).This is called the national spendinglimit.

Limit campaign spending in each state to $200,000 plus COLA, or to aspecified amount based on the number of voting age individuals in thestate (plus COLA), whichever is greater.

Limit spending from personal funds to $50,000.


21/24

XIV. General Election

Funding The Presidential nominee of each major party may become

eligible for a public grant of $20 million (plus a cost-of-livingadjustment) for campaigning in the general election. To beeligible to receive the public funds, the candidate must limit

spending to the amount of the grant and may not acceptprivate contributions for the campaign. Privatecontributions may, however, be accepted for a specialaccount maintained exclusively to pay for legal andaccounting expenses associated with complying with the

campaign finance law. These legal and accounting expensesare not subject to the expenditure limit.

In addition, candidates may spend up to $50,000 from theirown personal funds. Such spending does not count against

the expenditure limit.


22/24

XV. Presidential Spending Limits

"If the Election Were Held in 2011"

As one of the conditions for receiving publicfunding, Presidential candidates must agreeto abide by certain spending limitations. Thelimits applicable to publicly fundedcandidates running in 2012 will not beavailable until early in 2012. In the meantime,

"if the election were held in 2011:" General Election Limit: $88.45 million

Overall Primary Limit: $44.22 million


23/24

XVI. Sources of Revenue for

Presidential ContendersThere are four ways candidates raise money for the presidency:

a. Individual contributors: $2,500 limit is placed on individuals. $50,000limit on candidate and members of family,

b. Non-party committees/groups: PACs can donate up to $5,000 to acandidates campaign.

c. Matching Funds: Candidates can choose to receive matching funds ifthey abide by FEC rules and spending limits. (See pages 47-48 of Waynebook). The total spending limit in 2008 was $56.7 million. In 2012, thatwill increase to about $60 million. If they abide by the rules, candidateswill receive public matching funds. In 2000, the matching funds were setat $61 million for each major party candidate. In 2004, that figureincreased to $73 million. The matching figure for 2008 was $85 millionand for 2012 it will in a likelihood be over $88 million.

d. Soft Money: McCain Feingold placed a limit on the amount ofmoney that can be given to political parties, but 527s stepped into thislurch in 2004. Campaign finance experts predict that the Citizens Unitedcase will lead to a flood of corporate money in the 2012 election.


24/24

XVII. Money and Electoral

Success

The question of how money affects the outcomes of campaigns isvital to not only the issue of campaign finance, but to the questionof democracy itself. Again, one person one vote is the principle ofAmerican elections. The problem comes after the election, wherepossibly big donors have more influence. In America in other words,we are all equal only on election day. In between elections, some

are more equal than others. Who has or gets the money? Two types of candidates one is the

personally rich, the other is the frontrunner who can raise moneyfor various reasons, one of which is electability.

Does Money make the difference? As Wayne points out on page 66,

21 of 29 winners between 1860 and 1972 (before campaign financelegislation) outspent his opponent. Republicans outspentDemocrats 25 out of 29 times, and the Democrats won the 4 timesthat they outspent the Republican. Obama outspent his opponentby nearly 2-1 in 2008. But there are other factors: incumbency,message, the economy, world affairs. While money matters, wehave to consider these other variables in electoral outcomes as well.

malone pol 296n lecture 2

Documents