From the ratification of the Constitution through the early twentieth century, there were few efforts by Congress to regulate political parties and how they conducted presidential campaigns. By the 1820s, a national political party system was in place, and parties attracted volunteers by rewarding them with government jobs after the election (a practice known as patronage, or more colorfully, the “spoils system”). Parties also financed campaigns by collecting donations from party members who had been placed in government jobs (10% of their salary was not uncommon). In the aftermath of the Civil War, advocates of civil service reform lobbied Congress for federal protections for government employees that would preclude them from being compelled to engage in politicking to keep their jobs. In 1883, in the aftermath of the assassination of President James A. Garfield by the infamous “disappointed office seeker,” Congress passed the Civil Service Reform Act (Pendleton Act), which included a provision prohibiting federal employees from asking their colleagues to make political contributions. This was the first major effort to limit the campaign donations to political parties. This legislation, however, did little to stop political parties from exploiting other sources of campaign revenue.
In the Campaign of 1896, Mark Hanna, who directed Republican nominee William McKinley’s campaign, raised millions of dollars in corporate campaign contributions. This enabled McKinley to mount a successful nationwide campaign against the populist Democratic nominee, William Jennings Bryan. The Republican Party continued to rely on corporate funding in the Campaign of 1900 and the Campaign of 1904. Embarrassed by public disclosures of these practices, in 1905 President Theodore Roosevelt proposed banning corporate contributions to presidential campaigns. Subsequently Congress passed the Tillman Act of 1907 prohibiting corporations from financing federal election campaigns. In the aftermath of the Teapot Dome scandal, the Federal Corrupt Practices Act of 1925 was enacted to eliminate the loopholes in the Tillman Act. It required limited disclosure of political party contributions and placed spending limits on federal campaigns. The Taft-Hartley Act of 1947 expanded restrictions on political contributions by corporations, unions, and federally chartered banks to candidates for federal office. Most political observers agreed that, while helpful, these attempts to limit corporate influence on federal elections were ineffective. Corporations continued to seek out exceptions and loopholes for each new law that was enacted.
In 1971, Congress passed the Federal Election Campaign Act (FECA), which placed strict disclosure requirements on campaign contributions to candidates in federal elections. The disclosure limits applied to donations to campaigns and to contributions to political action committees (PACs). FECA also limited the amount campaigns could spend on political advertising. The original act, however, did not place limits on how much an individual could contribute to a candidate’s campaign, or what corporations and unions could contribute to PACs. In an effort to reduce reliance on special interest contributions, the Revenue Act of 1971 allowed individual $1.00 donations to the presidential campaign fund through an option provided on their federal tax returns, with the money committed to a public financing system funding presidential candidates (to begin with the Campaign of 1976). Among other things, the Watergate scandal revealed that several corporations had made sizable donations to President Richard Nixon’s reelection campaign in exchange for political favors. In 1974, Congress amended the FECA, limiting individual contributions to federal campaigns to $1,000 and requiring that all corporate and union contributions to campaigns be made through PACs. The law placed a spending cap on candidates’ campaign expenditures and limited how much candidates could donate to their own campaigns. The FECA amendments also established the Federal Election Commission (FEC) to enforce these regulations.
Critics on both sides of the aisle argued that the 1974 FECA law went too far in limiting how much candidates could spend at election time. The Supreme Court agreed. In Buckley v. Valeo (1976) the court found unconstitutional limits on total campaign expenditures. The court also struck down limits on independent expenditures by individuals. However, the court upheld the disclosure requirements and the donation limits for both campaigns and PACs, arguing that these served to reduce the appearance of corruption in federal elections. Candidates who voluntarily accepted public financing of their presidential campaigns were still subject to spending limits. The FEC later ruled that political parties could accept unlimited donations (referred to as “soft money”) for the sole purpose of what were termed “party-building activities.” These activities included voter registration and get-out-the-vote efforts, fund-raising activities, and other “voter education” activities.
Political parties took advantage of the soft money exception as a means to evade some contributor limits under FECA. Subsequently both the Democratic and the Republican parties raised tens of millions of dollars in large contributions from wealthy individuals. By the 1990s, these extensive soft money donations funded issue ads, which had every appearance of being an electioneering activity in that they promoted or attacked a political candidate. The parties believed that as long as these ads did not contain the phrases “vote for” or “vote against,” they could be classified as voter education (for which purpose the parties could accept unlimited donations), rather than electioneering (in which case, donations were subject to strict limits). The FEC accepted this interpretation by declining to prosecute the parties for violations.
Alarm over the growing influence of soft money on presidential campaigns eventually led Congress to pass the Bipartisan Campaign Finance Reform Act of 2002 (BCRA). The Abramoff influence-peddling scandal that became public around this time pressured many reluctant legislators to support the bill. This law prohibited national political parties from raising any soft money, and raised the maximum amount of individual contributions from $1,000 to $2,000, with later contributions indexed to inflation (which was not a provision in the original legislation). The BCRA also prevented independent advocacy groups from running campaign ads in close proximity to a primary election (not within thirty days) or a federal general election (not within sixty days). In December 2003, the Supreme Court ruled in McConnell v. FEC that the BCRA’s ban on soft money contributions was constitutional. However, in January 2010, the court, in Citizens United v. FEC, found unconstitutional restrictions on independent expenditures. The decision permitted independent groups to raise and spend unlimited funds from donors. While the court again upheld disclosure requirements, independent groups have found creative ways to evade these, most recently, by forming 501(c) groups. Candidates’ campaigns have also found ways to benefit from independent expenditures, relying on super PACs to help promote their political campaigns. In April 2014, the Supreme Court further modified its position on campaign finance reform in McCutcheon vs. FEC, striking down the cap on the total contributions an individual can make during the course of a campaign, while leaving in place the cap on individual donations for candidates and political parties.
The Campaign of 2016 posed a unique challenge to existing campaign finance laws. While almost all candidates have relied on support from independent groups, the candidacy of Republican Jeb Bush, in particular, appears to have violated the spirit, if not the letter, of laws enacted limiting candidates’ coordination with outside groups. Bush specifically held off officially declaring his candidacy, even as he made campaign appearances, raised funds, and suggested publicly (on numerous occasions) that he was a candidate for president. He argued that this enabled him to coordinate with the super PAC that was raising money on his behalf (and, because it was considered an outside advocacy group, unlike his official campaign organization, it could accept donations of unlimited size), directly soliciting funds for the super PAC from donors and helping to plan the activities of the super PAC. Bush’s plan was to raise $100 million through the super PAC and to assist in planning its strategy, prior to his official announcement of his candidacy, when he would be barred from engaging in such activities and could only raise funds through his campaign (which would be subject to strict donor limits). What was controversial about Bush’s behavior was that while he postponed his official declaration of his candidacy, he was clearly behaving as a candidate during this time. Bush told audiences he was a candidate for president, and he made campaign speeches—behaviors that appeared to preclude his involvement with the super PAC. However, a deeply divided FEC made it clear that they were unwilling and unable to prosecute any candidate for campaign violations, seemingly leaving the door open to candidates’ attempts to challenge the rules. Bush was not the only candidate to coordinate with an outside group during a time period when he or she was already a declared candidate for office, or clearly behaving as such. Rather, Bush’s flouting of the rules illustrated how toothless the current regime was, and the necessity of adopting enforcement practices that reflect the contemporary campaign environment.
See also 527 Group
“Major Provisions of the Bipartisan Campaign Reform Act of 2002.” Campaign Finance Law Quick Reference for Reporters. Federal Elections Commission. http://www.fec.gov/press/bkgnd/bcra_overview.shtml. Accessed September 18, 2015.
Mann, Thomas E. “Bipartisan Campaign Reform Act: Success or Failure?” The Campaign Legal Center. Brookings Institute. April 10, 2007. http://www.brookings.edu/opinions/2007/0410uspolitics_mann.aspx. Accessed September 18, 2015.
Mutch, Robert E. Buying the Vote: A History of Campaign Finance Reform. New York: Oxford University Press, 2014.
Post, Robert C. Citizens Divided: Campaign Finance Reform and the Constitution. Cambridge, MA: Harvard University Press, 2014.
Smith, Melissa M., Glenda C. Williams, Larry Powell, and Gary A. Copeland. Campaign Finance Reform: The Political Shell Game. New York: Lexington Books, 2010.