AP US Government & Politics Campaign Finance AP US Government & Politics

$795 M $403.1 M $413.7 million $166.3 million Hillary Clinton campaign Party and joint fundraising committees $141.3 million Super PACs $403.1 M $166.3 million Donald Trump campaign $219.2 million Party and joint fundraising committees $17.5 million Super PACs 2016

Goals For Today 1. Congress’ attempt to limit campaign contributions over the past 40 years (FECA and BCRA) 2. The effect of Congress’ attempt to limit campaign contributions on behavior of recipients and contributors (Super PACs, 527s) 3. The constitutional restrictions and challenges faced by Congress during this reform attempt (Buckley v. Valeo, McConnell v. FEC, Citizens United v. FEC, McCutcheon v. FEC)

State of the Union 2010

Over 100 Years of Campaign Finance Laws... President Theodore Roosevelt called for a law to ban political donations from corporations: Tillman Act (1907): “An Act to prohibit corporations from making money contributions in connection with political elections. Be it enacted, that it shall be unlawful for any national bank, or any corporation organized by authority of any laws of Congress, to make a money contribution in connection with any election to any political office. It shall also be unlawful for any corporation whatever to make a money contribution in connection with any election at which Presidential and Vice-Presidential electors or a Representative in Congress is to be voted for or any election by any State legislature of a United States Senator. Every corporation which shall make any contribution in violation of the foregoing provisions shall be subject to a fine not exceeding five thousand dollars, and every officer or director of any corporation who shall consent to any contribution by the corporation in violation of the foregoing provisions shall upon conviction be punished by a fine of not exceeding one thousand and not less than two hundred and fifty dollars, or by imprisonment for a term of not more than one year, or both such fine and imprisonment in the discretion of the court.” Note: There was no FEC to regulate this law.

A Guide for Donors

Federal Election Campaign Act FECA (1971) Campaign contribution disclosures

FECA Amendments 1974 Amendments to FECA: 1. Created the Federal Election Commission 2. Required disclosure of donor information 3. Placed limits on the amount of money that individuals and political action committees could make directly to candidates 4. Created a system of public financing for presidential elections 5. Placed limits on the amount of money that individuals could spend on their own presidential campaigns All presidential candidates accepted money until Obama in 2008

Buckley v. Valeo (1976) Money = Speech Constitutional Questions on the First Amendment: • Can FECA limit the amount that individuals and PACs could contribute as hard money? • Can FECA limit the amount an individual could spend on their own campaign? The Supreme Court held that donations to political campaigns did amount to political speech. However, not all First Amendment rights are absolute. The limits placed on contributions met the governmental purpose, which was to preserve the sanctity of the ballot box and avoid the appearance that elections were being “bought by big donors.” The court agreed with Buckley that Congress exceeded its authority to regulate speech when it prohibited citizens from spending their own money on their campaigns. Money = Speech

Mo’ Money, Mo’ Problems Large monetary donations soon found their way back into the American political system. Political action committees (PACs) grew and increased the amount of hard money that was contributed to all federal candidates. But more astoundingly, huge increases were seen in the amount of money contributed to the two major political parties. Even greater, donations made directly to the parties, known as soft money, were not regulated by FECA. Soft money could be used for: (1) party-building activities (2) voter education and (3) get-out-the-vote efforts. A whole new set of problems arose in the 1990s as donations to the parties increased exponentially. The appearance of the parties being beholden to corporate interests again damaged the political efficacy of Americans.

Bipartisan Campaign Reform Act BCRA (2002) Eliminated soft money Raised hard money limits to individuals, parties, and PACs Undisclosed and uncoordinated money could not be spent for or against candidates within 30 days of a primary and 60 days of the general election (“Stand by your ad”)

McConnell v. FEC (2003) The Bipartisan Campaign Reform Act was also challenged on the basis of First Amendment speech by Republican senator Mitch McConnell. McConnell argued that the restrictions of the act presented unreasonable restrictions on the right of speech to both the contributors and the recipients (political parties). McConnell also argued that restricting actions of uncoordinated committees within 60 days of the general election amounted to a gag on citizens’ rights to political speech. The United States Supreme Court held that the Bipartisan Campaign Reform Act was constitutional, because: of the unprecedented amounts of money that had been contributed to the parties and the appearance of corruption that came with such amounts of money. it was a legitimate governmental interest—limiting the appearance of corruption in the electoral process—and that the act found the least-restrictive means to accomplish that purpose.

Money Keeps Flowing A new way to contribute money: the 527s. These independent groups set up under section 527 of the Internal Revenue Code could receive and spend unlimited amounts of uncoordinated money, as long as it was not used to directly favor or oppose specific candidates. Individuals, PACs, and corporations again found a method to avoid the reforms that Congress had devised.

Swiftboating: 527s Even though both President Bush and Senator Kerry denounced 527s, supporters of both candidates used this vehicle to influence the outcome of the 2004 election. Groups such as Moveon.org and Swift Boat Veterans for Truth became major players in the 2004 election.

FEC v. WI Right to Life (2007) So, no more swiftboating... The FEC clearly sees what is going on and starts to enforce BCRA differently: WRTL, a nonprofit advocacy group, sought to run ads asking voters to contact their Senators and urge them to oppose filibusters of judicial nominees. WRTL sought to run its ads within the 30 and 60 day blackout provisions of BCRA. However, because WRTL was itself incorporated and also because it accepted corporate contributions, it was prohibited from doing so by the FEC. WRTL argued that the proposed ads addressed a current issue pending in Congress and did not advocate the election or defeat of a candidate. As such, the government had no compelling interest in prohibiting them from airing even during the election session. The USSC (5-4) created a major exception to 30/60 day limitations by saying: Unless an ad could not reasonably be interpreted as anything other than an ad urging the support or defeat of a candidate (in other words, unless an ad expressly urges support or defeat of a candidate), it was eligible for an exception to the McCain-Feingold limits on issue ads close to an election. So, no more swiftboating...

Hillary: The Movie

Citizens United v. FEC (2010) Question: Is it constitutional to limit unions/corporations and not-for-profit organizations from broadcasting within the 30 days of a primary and 60 days of a general election? The USSC said: corporate funding of independent political broadcasts in candidate elections CANNOT be limited under the First Amendment Overturned McConnell and WI Right to Life Court not only overturned time limit restrictions, but also said funding from corporations could not be limited because it is their free speech rights As a result, corporations can now give money to organizations that directly support or oppose political candidates A flood of anonymous donations to groups has taken place

Super Pacs and 501(c)4 Groups 501(c)4: a tax exempt, nonprofit organization, unlike 501(c)3’s, this group can lobby for political purposes and do not need to disclose their donors publicly Super PACs: Technically known as independent expenditure-only committees, may raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against political candidates. Super PACs must, however, report their donors to the Federal Election Commission, as a traditional PAC would. Unlike traditional PACs, Super PACs are prohibited from donating money directly to political candidates. There cannot be a connection from a campaign to a Super PAC.

A Guide to Donations A Donor’s Guide 2016

McCutcheon v. FEC (2014) McCutcheon challenged FECA’s two year contribution limits The USSC said: aggregate contribution limits are unconstitutional, overturning Buckley -FECA set four year, hard money limits -BCRA changed limits from four years to two - In 2012, this meant: $48,600 for federal candidates $74,600 for national and state parties $123,200 total donations McCutcheon believed it was his constitutional right to give to as many candidates as he wanted The USSC said: cannot be limited to how many people you can donate to, overturning BCRA (except the $2,600 limit is still in place) and continuing the “deregulation of political campaigns.” Note: 0.04% of Americans, less than 2,000 people, contribute up to the limits However, this makes up ⅔ of all contributions

The Rise of Anonymous Donations Super Pac Donors 2016 Money Race

Walker’s Exit Shows Limits to Super PAC Money Model Scott Walker announcing the suspension of his presidential campaign

Where are we today?

FRQ a. Compare hard money contributions and soft money contributions. b. Describe two reasons efforts at restricting contributions have failed. c. Explain at least one reason some insist that campaign-funding restrictions should fail.