Federal Election Campaign Act 1971

• Background

• Campaign costs soared in 1970s

• The Watergate Scandal (Nixon) exposed illegal campaign contributions

• Sparked a drive to reform campaign finance laws.

• Purpose of the Act

• To make campaign finances open to the public in order to prevent corruption

• Act

• All candidates for federal office have to disclose who contributes to their campaign

• And how those contributions were spent.

• In 1974 the Act was amended

• To impose contribution and spending limits on campaigns

• Because wealthy people had contributed $1 million to Nixon's 1972 campaign

• Individual contributors to presidential and congressional candidates limited to $1000/election (up to $2000 in 2002 and $2500 in 2012)

• Candidates can choose between receiving federal, taxpayer funds or independent money.

• And established the Federal Election Commission to administer the law.

Federal Election Commission (FEC) 1974

• Three spots for Democrats, three for Republicans

• Need four votes for any action - so often locked in stalemate

• Candidates have to file detailed contribution and spending reports

• FEC posts them on www.fec.gov.

Buckley v. Valeo 1976

• Supreme Court ruled that campaign spending limits were unconstitutional

• Supreme Court struck down a part of the 1971 FEC Act that limited the amount individual could contribute to their own campaigns

• Ross Perot spent over $60 million on his own campaign

• Trump spent $66 million of his own money

Hard money v. Soft Money

• Hard money - money directed toward a candidate, restricted by FEC

• Soft money - money donated to political parties (not candidates)

527 Groups 1976

• Named after section of IRS code designated for nonprofit organizations.

• Background

• Established after Buckley decision which ruled that the First Amendment protected individuals' right to spend unlimited amounts on political speech.

• Definition

• 527 groups are non-profit organizations (like political party committees [PACS]) that operate primarily to influence elections

• Rules

• They can attack or support candidates

• No limits on spending

• Have to disclose the donors.

• But cannot coordinate their activities with any campaign

• Examples

• Republican Governors Association

• Citizens United (to reassert traditional American values, limit government etc.)

• Emily's List (helping pro-choice Democratic female candidates)

• Swift Boat Veterans for Truth (against John Kerry)

• MoveOn.org (against George W. Bush)

• 2002 McCain-Feingold Act (see below)

• Expenditures partially restricted

• Prohibited corporations and unions from using their general treasury to pay for election communication 30 days before primaries and 60 days before general election

• 2004 FEC didn't impose contribution limits on 527 groups as long as they didn't explicitly endorse candidates (Example: Vote for..., vote agaisnt...)

• People who had given to soft money to parties now gave 527 groups

• 2010 Citizens United v. FEC (see below)

• Supreme Court ruled

Amendment to Federal Election Campaign Act 1979

• Soft money not subject to contribution limits.

• Caused huge flow of money to national parties from wealthy individuals and corporations (like ATT)

Citizens United 1988

• A Political Action Committee (PAC) founded 1988 by Floyd Brown

• With major funding from the Koch brothers

• Promotes corporate interests

• Goals

• Social conservative

• Limited governemtn

• Freedom of enterprise

• Strong families

McCain-Feingold Act/Bipartisan Campaign Reform Act (BCRA) (2002)

• Purpose

• To remove loopholes by banning soft money contributions from wealthy people and corporations

• Proposed by Senator John McCain (R) and Russell Feingold (D)

• Act

• Barred corporations and unions from paying for media that mentioned any candidate immediately before elections (30 days before primaries, 60 days before general elections)

• Limited contributions to political parties to $25,000 (with inflation rise)

McConnell v. Federal Election Commission 2003

• Supreme Court ruled 5-4 in favor of McCain-Feingold ban on unlimited contributions directly to political parties.

SpeechNow.org v. FEC 2008 (District Court Case)

• Background

• PACs could accept donations of no more than $5,000/year from each individual

• Could donate no more than $5,000 per election to a candidate

• SpeechNow.org sued FEC

• Claiming the $5,000 federal limit on how much individuals can give to a political committee was a violation of the First Amendment

• District Court ruled in favor of SpeechNow.org

• The FEC could not enforce contribution limits to independent groups

Citizens United v. Federal Election Committee (2010)

• Background

• In 2008 Citizens United made a documentary, Hillary: The Movie, that criticized Democratic candidate Hillary Clinton during primary election against Barack Obama (D)

• There was already a rule that non-profits could spend what they liked

• As long as they didn't take money from corporations

• Citizens United wanted to challenge the rule by deliberately taking donations from corporations

• When FEC tried to stop them, they sued the FEC

• Court Case decision

• Supreme Court ruled 5 to 4 that governemtn restrictions on "independent" political spending by corporations and unions was unconstitutional.

• Therefore, the anti-Clinton broadcast should have been allowed.

• Legal Consequence

• This overthrew precedents that allowed the government to regulate this kind of spending.

• Majority argument (Kennedy, Alito, Scalia, Thomas)

• Barring independent political spending was a violation of Free Speech

• First Amendment protects not just a person's right to speak but the act of speech itself, regardless of the speaker

• Therefore the First Amendment protects the speech of corporations and unions

• Although the government has the authority to prevent corruption

• It has no place in determining whether large expenditures are corrupt

• So it may not impose spending limits on that basis.

• Public has the right to hear all available information

• Spending limits prevent information from reaching the public

• Minority argument (Stevens, Ginsburg, Breyer, Sotomayor)

• The first Amendment protects only individual speech

• Governments may prevent corruption and campaign spending

• Therefore government may impose spending limits on corporations and unions

• The public does have the right to hear all available information

• But when corporations can spend more than individuals, their message drowns out others

• Critics

• Like Barack Obama

• Argued that the decision would open floodgates to special interest money (especially corporation money) to corrupt the electoral process

• Consequence

• Campaign spending skyrocketed

• There was twice the political spending in 2012 than other elections

• Resulted in the creation of super PACS

501 (c) groups

• Emerged as place for unlimited donations that would remain anonymous.

• Regulated by IRS, not FEC

• Donations don't have to be reported unless donor gives money specifically for a political ad.

• Corporations and unions can give big amounts to 501 (c) groups without publicly disclosing their names.

• Only restriction

• 501 (c) groups cannot spend more than 1/2 their money on political activities