Federal Election Campaign Act (1971)

Mark Glazeand Trevor Potter

With the Federal Election Campaign Act (FECA) of 1971, (P.L. 92-225), Congress attempted to establish comprehensive regulations on the way American political campaigns for Congress and the presidency raise money and disclose the amount and sources of contributions. This act, and its subsequent amendments, governs nearly all aspects of federal campaign finance activity, including the four dominant issues: the size of contributions to political campaigns, the source of such contributions, public disclosure of campaign financial information, and public financing of presidential campaigns.

HISTORY OF FECA

Prior to FECA, legislators made many attempts to regulate campaign finance practices, all with the aim of upholding the national principle of "one person, one vote." These attempts sought to guarantee that election results and government policies reflected the public will and national interest rather than the demands of a relatively small group of major campaign contributors. The constitutional basis for campaign finance laws is article I, section 4 of the U.S. Constitution, which allows the federal government to regulate the "time, place and manner" of federal elections.

Public concern over the influence of money on politics stretches back at least to the Civil War era. Congress began to pass major campaign finance regulations, however, only in the late nineteenth century. By that time political contributions by major corporate interests and business leaders dominated campaign fundraising, and this development sparked the first major movement for national reform. Progressive reformers and investigative journalists, called "muckrakers," charged that these business interests were attempting to gain special access and favors, thereby corrupting the democratic process. This reform movement, combined with allegations of financial impropriety in the 1904 presidential election, resulted in a number of important reforms:

• • The 1907 Tillman Act prohibited corporations from using their general treasury funds (as opposed to their political action committees) to contribute to federal campaigns.
• • The Federal Corrupt Practices Acts of 1910 and 1925 required political parties and federal candidates to publicly report their receipts and expenditures.
• • The Taft-Hartley Act of 1947 prohibited labor unions, which had become a major source of campaign money, from using their general treasury funds to make contributions for federal office.

Despite these reforms, the lack of an effective administrative body and enforcement mechanisms, along with serious gaps in the laws, rendered the statutes largely unenforceable. As a result, they were often evaded. Meanwhile, broadcast advertising became a primary means of political campaigning in the mid-twentieth century. The costs of campaigns began to skyrocket, with the accompanying need for even greater fundraising.

Concern over the escalating amount of corporate and labor union money in elections, combined with the campaign finance abuses of the Watergate scandal, set the stage for the Federal Election Campaign Act of 1971 and its 1974 amendments.

FEATURES OF THE 1971 ACT AND THE 1974 AMENDMENTS

In FECA, Congress put the pieces of federal campaign finance legislation together into a single, coherent statute. It also added significant new reforms designed to offset the skyrocketing costs and perceived corruption of American political campaigns in the late twentieth century.

Among the act's major features are the creation of the Federal Election Commission and rules concerning disclosure, public financing, and contribution limits:

• • Federal Election Commission (FEC). The act created an agency solely responsible for administering federal election law. Among its duties, the six-member, full-time commission serves as the repository of all disclosure reports; establishes regulations to implement federal election law; and investigates all complaints of campaign violations, including through the use of its power to subpoena witnesses and information and to seek civil injunctions to ensure compliance.
• • Disclosure. FECA requires every candidate or committee active in a federal campaign to establish a central committee through which all contributions and expenditures must be reported. Among other requirements, such committees must file with the FEC a quarterly report of receipts and expenditures, which must list any contribution or expenditure of $100 or more and must include extensive information about donors. The FEC makes this information available for public inspection.
• • Public financing. The act created a voluntary program of full public financing for presidential general election campaigns, and a voluntary system of public matching subsidies for presidential primary campaigns. Under the program, presidential candidates from the major parties who agree to abide by a voluntary spending limit can receive an equivalent amount from the federal government as long as they agree not to raise additional private money. Minor party or independent candidates may also qualify for a proportional share of the subsidy.
• • Contribution limits. The act continued the preexisting bans on contributions by corporations and labor unions. It also added contribution limits on all other sources of funding, sharply limiting the amount any individual, committee, or group could contribute to candidates or political committees in any election.

The act imposed several other regulations that were soon struck down by the U. S. Supreme Court.

COURT CHALLENGE

The Supreme Court has ruled repeatedly that campaign spending constitutes an essential form of "political speech" that is closely protected by the First Amendment. In order to regulate political spending, therefore, the government's action must be justified by a particularly compelling reason and be narrowly crafted to achieve the law's purpose. The only government interest the Court has found sufficient to justify campaign finance regulations is the prevention of either actual or apparent corruption in the political process.

The Supreme Court applied that analysis in Buckley v. Valeo, a 1976 case that challenged virtually every aspect of FECA. In its ruling, the Court struck down several provisions of the 1974 amendments. Congress had established a number of spending limits on candidates and political groups, including limits on the personal funds candidates could expend on their own elections. The Court held that these were unconstitutional restrictions on political speech. The Court reasoned that such spending limits were acceptable only as voluntary limits agreed to as a condition of public campaign financing.

Similarly, though the Court found disclosure requirements and contribution limits to be constitutional, including the prohibition on corporate and union contributions, the justices narrowed the ban substantially. They held that only participation by those groups amounting to "express advocacy," or expressly calling for the election or defeat of a federal candidate could be forbidden.

The Buckley decision therefore gave Congress authority to craft disclosure requirements and contribution limits, and left prohibitions on corporate and union electioneering spending to elect or defeat a particular candidate in place. However, over the next generation these prohibitions on sources of funding would be radically undermined, leading to the next major cycle of public outrage and legislative reform.

SUBSEQUENT CHANGES IN THE LAW

Congress has substantially revised FECA three times since 1974. In 1976 the law was rewritten to comply with the terms of Buckley. In 1979 Congress acted primarily to ease the administrative burdens that resulted from the law's disclosure requirements. In addition, the 1979 amendments gave state and local political parties an important, limited exemption from the rules that normally limit the amount party organizations can spend on (technically, contribute to) campaigns. This exemption allowed state and local political parties to fund certain grassroots and "party-building" activities, such as voter registration and get-out-the-vote drives, without having those funds count against the parties' normal limits on contributions to individual candidates. The exemption was designed to counter a perceived weakening of influence at the state and local party level.

After the Buckley decision, this 1979 exemption and a number of other factors combined to substantially undermine the ban on corporate and union electioneering. Under Buckley, only corporate and union campaign activity "expressly advocating" the election or defeat of a candidate could constitutionally be prohibited. This part of the Buckley ruling was intended to clarify the specific restrictions of FECA on speech that is on corporate and union groups' ability to participate in a "discussion about political and policy issues." According to a longstanding Supreme Court precedent, such discussion may not be restricted without violating the First Amendment, unless there is some overwhelming justification for that restriction.

Over time, the Court's interpretation of the First Amendment right to discussion of political issues led to outright evasion of the prohibition on corporate and union electioneering. The political parties ultimately determined that they could both solicit and spend campaign funds for grassroots, "party-building" activities. The parties argued that these functions did not constitute "express advocacy" of any particular candidate's election or defeat, and were therefore not subject to the FECA prohibitions.

As a result, unprecedented amounts of so-called soft money began pouring into party accounts. The parties used these funds disproportionately to fund negative attack advertisements on television and radio. This phenomenon reached epidemic proportions in the 1990s. To avoid the ban on using these corporate and union funds to electioneer, the ads carefully avoided use of words such as "vote for" or "support." Still, it was often clear that their purpose was to help elect or defeat particular candidates. The prevalence of these funds grew exponentially through the last part of the twentieth century. More than a half-billion dollars in soft money was spent in the 2000 federal elections.

Once again, public outrage over this evasion of basic campaign finance principles became powerful enough to prompt legislative action. Republican Senator John McCain of Arizona, who campaigned for the Republican presidential nomination in 2000 with campaign finance reform at the center of his platform, helped contribute to the public appetite for reform legislation.

In March 2002 Congress passed the Bipartisan Campaign Reform Act, popularly know as "McCain-Feingold" after its two main sponsors, Senator John McCain and Democratic Senator Russell Feingold of Wisconsin. The act's primary effect was to reinstate the pre-Watergate ban on corporate and union contributions by banning the solicitation or spending of soft money by the national political parties. The bill also supplied a new definition of "express advocacy" designed to allow corporations and unions to engage in legitimate discussion of issues while keeping them out of campaign-related advertising. Under the act's terms, corporate or union funds could not be used to pay for broadcast ads against a clearly identified national candidate, targeted at that candidate's electorate, within thirty days of a primary or sixty days of a general election.

These new provisions banning soft money faced immediate constitutional challenge, and partisans on both sides awaited the U.S. Supreme Court's decision in McConnell v. FEC as of late 2003.

BIBLIOGRAPHY

Corrado, Anthony, Thomas Mann, Daniel Ortiz, Trevor Potter, and Frank Sorauf, eds. Campaign Finance Reform: A Sourcebook. Washington, DC: Brookings Institution Press, 1997.

INTERNET RESOURCE

The Campaign Legal Center. <http://www.campaignlegalcenter.org>.

The Brookings Institution. <http://www.brookings.org/gs/cf/hp.htm>.

Soft Money

By law, individuals are limited to contributing no more than $1,000 to any given candidate for a federal election, and no more than $20,000 per year to a political party. Corporations and labor unions are prohibited from contributing to campaign funds at all. These regulations are intended to prevent individuals and organizations from buying influence by making huge contributions to a candidate, then calling in favors when the candidate is in office. "Soft money" is the term used to describe donations made to circumvent these rules. It is donated to political parties for the ostensible purpose of "party building," which describes activities not directly related to electing candidates. Soft money contributions in the presidential election of 2000 were estimated at approximately $500 million. In 2002 soft money contribu tions were banned with the passage of the Bipartisan Campaign Reform Act (known as McCain-Feingold); however, the ban was ruled unconstitutional in federal court. The Supreme Court was expected to hear the appeal in September 2003.

Watergate

On June 17, 1972, five members of President Richard Nixon's Committee to Re-Elect the President were arrested after they broke into the headquarters of the Democratic National Committee (DNC) in the Watergate residential and office complex in Washington, D.C. The break-in—an attempt to tap the DNC phones—did little damage to Nixon's re-election campaign, and he won in November with an overwhelming majority. However, two Washington Post reporters, Robert Woodward and Carl Bernstein, pursued the story until they had uncovered a wide-reaching scandal. Nixon and his associates—driven by Nixon's obsession with discrediting his "enemies"—tapped phones, stole medical records, and paid off potential witnesses to buy their silence. In 1973, as their illegal activities and attempted cover-up came to light, three key administration officials and Attorney General Richard Kleindienst resigned. The new Attorney General, Elliot Richardson, appointed a special prosecutor, Archibald Cox, to investigate. At the same time, the Senate's Committee on Presidential Campaign Activities began a series of televised hearings which revealed that the president had secretly tape-recorded conversations in the Oval Office. Cox subpoenaed the tapes, but Nixon refused to hand them over and fired Cox. Richardson and his deputy resigned in protest. The Supreme Court ruled that Nixon was obligated to release the tapes, and the House of Representatives voted to begin impeachment proceedings. Nixon surrendered three tapes that clearly implicated him in the cover-up. He had little support, as the public was outraged over what was seen as the administration's attack on democracy, which included committing crimes to subvert the democratic process, suppressing civil liberties, using espionage and sabotage against political enemies, and intimidating members of the news media. In August 1974 Nixon resigned rather than face impeachment. He was pardoned by his successor, Gerald Ford.