1. Campaign Financing

2. Major Issues How much can candidates raise How much can donors contribute How does the government influence campaign spending How has financing CHANGED

3. 2012 election 6 BILLION spent in federal elections (House of Reps, Senate, Pres) 2 BILLION spent in Presidential Campaign

4. Look at Colorado ONE week in September – Romney and Obama spent 2 million dollars in TV ads – 1500 ads – 3% were positive – Colorado Springs - – 2008: 510 ads – 2012: 1445 ads

5. Campaign Finance Reform 1972 – Federal Election Campaign Act (FECA) created – Created rules about disclosing donations but w/ no oversight

6. 1974 – FECA was amended – Created the FEC (Federal Election Commission) GOAL: limit influence of $$ in federal campaigns Disclose campaign finance info – Limited individual and corporate contributions Enforce the law (limits to contributions, etc.) Oversee public funding of elections Provided “full” financing for candidates if they chose to accept it

7. FECA w/ Amendments – most sweeping finance reform in history 1976 – supreme court case Buckley v. Valeo – Limited FECA

8. Campaign Finance Reform and Buckley Original ProvisionEffect of Buckley v. Valeo Contribution limits Individual limits: $1k/candidate/electionAffirmed PAC limits: $5k/candidate/electionAffirmed Party committee limits: $5k/candidate/electionAffirmed Cap on total contributions individual can make to all candidates ($25k) Struck down (freedom of speech) Cap on spending “on behalf of candidates” by parties Affirmed www.mit.edu/~17.251/finance.ppt

9. Campaign Finance Reform and Buckley Original ProvisionEffect of Buckley v. Valeo Expenditure limits Overall spending limits (Congress and president) Struck down partially (freedom of speech) Limits on the use of candidates’ own resourcesStruck down entirely (freedom of speech) Limits on media expendituresStruck down entirely (freedom of speech) Independent expenditure limitsStruck down entirely (freedom of speech) www.mit.edu/~17.251/finance.ppt

10. MAJOR Result of Buckley? Candidates could self finance (Trump) Formation of Political Action Committees (PACs) – 1976 – 1146 PACs – 1986 – 3187 PACs – 2014 – 3664 PACs

11. What is a PAC? Political action committee: supports candidates or specific issues. Created to influence campaigns by giving a voice to the ppl (use lobbyists)

12. PACs…. PACs are usually formed by businesses, labor/ interest groups (more than ½ are sponsored by corporations and businesses) Why do PACs want access to politicians? PACs generally support the incumbent

13. Lobbyists, PACs, and Interest Groups PACs and Interest groups both use Lobbyists. Lobbyists are people that “lobby” – fight for the interests of the people they represent

14. Interest Groups Interest group: organization of people with shared policy goals that enter the political / policy process to try and achieve their goals Political parties fight election battles. Interest groups fight policy battles. Interest groups can be conservative, liberal, or neutral

15. Interest groups are EVERYWHERE 75% of people belong to an interest group – Most belong to at least TWO

16. Today there are 1000s of interest groups Incentive to join an interest group – Social rewards (status or friends) – Material rewards (discounts, legal fees) – Purposeful rewards (serves a cause or principle) Ideological interest groups

17. Free Riders Free-riders: ppl who don’t directly join an interest group but still reap the benefits of one To combat free-riding interest groups: – Only give benefits if you contribute – Government recognition of your occupation

18. What Interest Groups Do Grassroots campaigns work to influence the voters instead (work on the local level) – who are then instructed about how to influence their politicians and elections Litigation: sue to bring about change Direct action: go directly to politicians and demand change

19. *Remember* Pluralist theory & hyperpluralist theory? Interest groups compete vs. interest groups have too much power

20. Connection of Interest Groups to PACs (and thus financing) Interest groups often have their own PACs which they use to persuade the public and fund politicians

21. PACs lead to SOFT MONEY Soft money: unregulated $ raised for party building expenses (voter registration, distribution of campaign material, generic party ads, “issue” ads) Hard money: money raised specifically for campaign financing

22. Typical Necessary Campaign Finances

25. McCain-Feigngold Act (Bi-Partisan Campaign Reform Act (BPRA)) Major Changes to Financing: – Banned soft money in FEDERAL CAMPAIGNS – Candidates must take ownership of their ads – Political communications cannot be used by corporations or unions w/in 30 days of primary or convention, and 60 days of general election – $ ppl can give to a candidate increases w/ inflation

26. Loopholes to Individual Finances Bundling – large donors ask their friends for a maximum individual donation, then give them in a “bundle” to the candidate committee Disclosure requirements differ for “Bundles” – Only have to disclose if they personally touch the checks.

27. Other loopholes 527 groups – Used to influence the nomination, election, appointment, or defeat or candidates for public office – So long as they don’t DIRECTLY advocate for election or defeat of a candidate – they can receive unlimited donations – MUST DISCLOSE DONORS (regulated by FEC)

28. Other loopholes 501 (c) groups (non-profits) – Groups are able to educate individuals about issues or fund research that supports their position Not supposed to directly promote candidates or engage in electoral activities DO NOT DISCLOSE DONORS So long as their ads – Don’t run for 60 days or more before an election – The ads don’t EXPLICTLY advocate for or against a politician

29. 501s have lead to “dark money” Dark money – money raised / spent by nonprofits who don’t have to disclose their donors

30. Final Piece of the Puzzle Citizens United v. Federal Election Committee (2010) WILDLY controversial supreme court case – Previously corporation could not donate vast sums of money to groups like PACs – Court case decided that CORPORATIONS are PEOPLE – THUS – they have the right to FREE SPEECH – which means they can donate as much money as they want, so long as its independent, and not in coordination with a candidate

31. Arguments AGAINST Citizens 1. Corporations could threaten elected officials with negative advertising campaigns to get leverage 2. public’s faith in electoral process would be affected by corporate expenditures 3. qualities unique to corporations give them an unfair advantage in politics 4. corporations can raise VAST amounts of $$ that individuals can’t match

32. Impact of Citizens United SUPER PACs! – PACs on crack – Can raise UNLIMITED contributions from “individuals” so long as they don’t give the money DIRECTLY to the candidates – Candidates now have their own SUPER PACs