2 Sources of Funds Private Sources Candidates fund campaign from their own pocketsPrivate individuals donate to campaigns (limit of $2500 per person)Corporations and UnionsDonate funds to campaigns through PACs (limit - $ 5000 per candidate)Give money to SuperPACs (unlimited)Most often given to incumbents and candidates who already agree with them
3 Public sources Public funding of presidential elections (Public funding, Federal monies, Public monies, Federal funding, Federal matching funds)Presidential candidates receive federal government funds to pay for the valid expenses of their political campaigns in both the primary and general elections.National political parties also receive federal money for their national nominating conventions.In 2008, each major party received $16.3 million in public funds for their conventions, and the parties
4 Public Funding Primary Matching Funds General Election The federal government will match up to $250 of an individual's total contributions to an eligible candidate.To be eligible a candidate must raise $5,000 in at least 20 statesGeneral ElectionFund the major party nominees' general election campaignsand assist eligible minor party nominees, they had to receive 5% of the vote in previous electionIn 2008 the parties' general election nominees were eligible to receive $84.1 million in public funds
5 Reform LawsCongress has debated a variety of campaign finance reforms over the last decades in a way to control the amount of money being spent. However, Congressmen are reluctant to adopt new laws since they benefit from the money given to them
6 Federal Campaign Reform Law Adopted in 1974 as a result of illegal donations during the Nixon Campaign.Created Federal Election Commission (FEC), charged with overseeing campaigns for all federal elections
7 Federal Election Campaign Act (FECA), 1974 Limit on individual and PAC donations per candidate per electionPAC = political action committee created by interest groupsProvided partial public financing for presidential primaries.Provided full public funding for presidential general campaigns for major party candidates; and partial funding for minor party candidatesAll candidates must file financial disclosure reports.No cash contributions may exceed $200No foreign contributions
8 Hard Money Is strictly regulated by FEC Money given… directly to candidates for federal elective officedirectly to political parties for the purpose of supporting candidates for federal office
9 As a result …Campaign spending increased dramatically due to the existence of several loopholes in the lawLoopholes are found in every reform law. As soon as a law is adopted, people are immediately finding other ways to spend political money.
10 Ran as an independent in 1992 and for the Reform Party in 1996 Buckley v. Valeo (1976)The Supreme Court struck down a portion of the FECA that limited the amount individuals could contribute to their own campaignsWHY?Restrictions on individual contributions violates free speech in the First AmendmentAs a result,Ross Perot spent over $ 60 million of his own fortune on his independent presidential candidacy in 1992Ran as an independent in 1992 and for the Reform Party in 1996
11 Meg Whitman, former eBay CEO, spent $160 million of her own $ (about $50/vote) to finance unsuccessful campaign for Governor of CA in 2010
12 Amendment to the FECA, 1979This amendment allowed soft money contributionsWhat is soft money?Money NOT regulated by federal lawHard money is regulated by the FECGiven to political parties for general party building and advertising expenses such as voter-registration campaigns, voter mobilization etc.Can’t be tied to supporting or opposing a particular candidate.No contribution limit
13 McCain-Feingold Act (2002) - also called Bipartisan Campaign Reform Act (BCRA) Banned soft moneyIncreased limits of “hard money” donationsMoney given directly to candidates for federal elective office or to political parties for the purpose of supporting candidates for federal office. Regulated by the FEC.Prohibited corporations and unions from running “issue ads” if they refer to a federal candidatewithin 30 days before a primary60 days before a general election
15 Issue AdsAds intended to educate the public on broader issues, they can’t use words such as “vote for”, “support” etc.supposed to discuss broad political issues rather than specific candidates
16 As a result….The BCRA led to the creation of 527 organizationsTax-exempt organizations created to raise money for political activitiesNot regulated by FECCan raise unlimited amounts of money and can spend unlimited money on issue adsas long as they do not coordinate their spending with any candidate or advocate for specific candidatesthey influence how you look at the candidates.they will try to shape your opinion of a political candidate or party in the context of a specific issue.
17 Example of 527s – Swift Boat Veterans for Truth More examples:American CrossroadsThe Media Fund
19 McConnell v. FEC (2003) Money is property, NOT speech Supreme Court ruling that upheld BCRA or McCain-Feingold ACT of 2002Money is property, NOT speechMoney can be regulated
20 Citizen United v. FEC (2010)Overturned important aspects of McCain-Feingold (02)Political spending can’t be restricted by the governmentIt is protected speech under the 1st AmendmentMoney = speechCorporations, and unions may now spend unlimited amounts of money in supporting or denouncing candidates in electionsNo limits on issue ads by corporations prior to elections
21 Spending increased ($ 6 billion spent in 2012 election cycle) Paved way for SuperPACs
22 Super PACS What is a Super PAC? A non-profit group that can raise, and then spend, unlimited amounts money from corporations, unions, and individuals on political advertisements (openly advocate for or against political candidates)They do have to report their donors to the FECUnlike traditional PACs, Super PACs are prohibited from donating money directly to political candidates.
28 Other organizations 501(c)(4) Non-profit, tax exempt interest group that can engage in varying levels of political activityMany corporations donate money for advertising through these organizationsDon’t have to disclose their donorsExample: Crossroad America GPS, Priorities USA
29 Unlimited to Super PACs Who is givingWho is getting itWhere is it goingCorporations and UnionsUnlimited to 527Unlimited to Super PACsUnlimited and anonymous to Nonprofit groupsUnlimited to AdsUnlimited to ads
30 Who is givingWho is getting itWhere is it goingIndividualsUnlimited to 527Unlimited to Super PACsUnlimited and anonymous to Nonprofit groups$ 5000/year to PACs$ 2500$ 30,800 to national party committeeUnlimited to ads$5000/election to candidatesCandidates and their committees$ 5000 for House/ $ 42, 600 for Senate