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«The State of Campaign Finance Policy: Recent Developments and Issues for Congress R. Sam Garrett Specialist in American National Government April 29, ...»

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The State of Campaign Finance Policy: Recent

Developments and Issues for Congress

R. Sam Garrett

Specialist in American National Government

April 29, 2011

Congressional Research Service




CRS Report for Congress

Prepared for Members and Committees of Congress

The State of Campaign Finance Policy: Recent Developments and Issues for Congress


Campaign finance policy is arguably at a crossroads. For decades, Congress, regulatory agencies,

and courts have emphasized the need to reduce potential corruption by providing public disclosure of information about campaign contributions and expenditures. Preventing corruption and enhancing transparency remain prominent themes in campaign finance policy, but what those goals mean and how they should be accomplished appears to be in flux.

Both minor and major changes have occurred in campaign finance policy since 2002, when Congress last substantially amended campaign finance law via the Bipartisan Campaign Reform Act (BCRA). More recently, the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission and a related lower-court decision, SpeechNow.org v. Federal Election Commission, arguably represent the most fundamental changes to campaign finance law in decades. During the 111th Congress, the House responded by enacting the DISCLOSE Act (H.R.

5175; S. 3295; S. 3628). The Senate declined to do so.

Campaign finance issues continue developing in Congress, at regulatory agencies, and in the courts. In January 2011, the House passed legislation (H.R. 359) that would repeal the presidential public financing program. The House and Senate have held hearings on two bills. S.

750 (see also S. 749 and H.R. 1404) is the latest version of the Fair Elections Now Act (FENA), which would publicly finance Senate campaigns. The Senate Judiciary Subcommittee on the Constitution, Civil Rights, and Human Rights held a hearing on the bill in April 2011. The Committee on House Administration, Subcommittee on Elections, held an April 2011 hearing on H.R. 672. That measure, which is not primarily a campaign finance bill, proposes to eliminate the Election Assistance Commission (EAC) and transfer some functions to the Federal Election Commission (FEC). In addition, in March 2011, the Supreme Court of the United States heard arguments in Arizona Free Enterprise, et al. v. Bennett and McComish v. Bennett. That case addresses state-level public financing issues, but may also be relevant for federal policymaking.

Fundraising and spending in the 2010 election cycle suggest that previously prohibited sources and amounts of funds will continue to be a factor in federal elections. Activities by independentexpenditure-only political action committees (commonly called super PACs) and tax-exempt organizations that are typically not political committees (e.g., many Internal Revenue Code 501(c) and 527 organizations) may be particularly prominent.

Despite recent changes, some traditional aspects of campaign finance policy, such as disclosure requirements and most contribution limits, remain unchanged. Issues such as the presidential public financing program and the FEC may require congressional attention regardless of more recent developments. As Congress decides how or whether to revisit law surrounding political campaigns, it may be appropriate to take stock of the current landscape and to examine what has changed, what has not, and what policy options might be relevant. This report provides a starting point for doing so. It includes an overview of selected historical and recent developments. It also provides comments on how those events might affect future policy considerations.

This report will be updated as events warrant.

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Contents Introduction

Development of Modern Campaign Finance Law

Policy Background

The Federal Election Campaign Act (FECA)

The Bipartisan Campaign Reform Act (BCRA) and Beyond

What Has Changed Most Recently and What Has Not?

What Has Changed

What Has Not Changed

Potential Policy Considerations for Congress

Recent Fundraising, Spending, and Assessing the Need for Policy Changes

Congressional Campaign Fundraising and Spending Continue to Increase

Party Funding Generally Remains Robust

Citizens United and SpeechNow Appear to Have Encouraged Additional Fundraising and Spending

What Recent Financial Developments Might Mean for the Future

Revisiting Disclosure Requirements

The Current Disclosure Process: How Reporting and Data Could Affect Policy Options and Considerations

Revisiting Contribution Limits

Public Financing Issues

FEC Issues


Figures Figure 1. U.S. House and Senate Campaigns: Total Receipts and Disbursements, 1992Figure 2. National Party Committees: Receipts and Disbursements, 1992-2010

Tables Table 1. Federal Contribution Limits, 2011-2012

Table 2. Current Members of the Federal Election Commission

Contacts Author Contact Information

Congressional Research Service The State of Campaign Finance Policy: Recent Developments and Issues for Congress Introduction Federal law has regulated money in elections for more than a century.1 Concerns about limiting the potential for corruption and informing voters have been at the heart of that law and related regulations and judicial decisions. Restrictions on private money in campaigns, particularly large contributions, has been a common theme throughout the history of federal campaign finance law.

The roles of corporations, unions, interest groups, and private funding from individuals have attracted consistent regulatory attention. Congress has also required that certain information about campaigns’ financial transactions be made public. Collectively, three principles embodied in this regulatory tradition—limits on sources of funds, limits on contributions, and disclosure of information about these funds—constitute ongoing themes in federal campaign finance policy.

Throughout most of the 20th century, campaign finance policy was marked by broad legislation enacted sporadically. Major legislative action on campaign finance issues remains rare. Since the 1990s, however, momentum on federal campaign finance policy, including regulatory and judicial action, has arguably increased. Congress last enacted major campaign finance legislation in 2002.

The Bipartisan Campaign Reform Act (BCRA) largely banned unregulated soft money2 in federal elections and restricted funding sources for pre-election broadcast advertising known as electioneering communications. As BCRA was implemented, regulatory developments at the Federal Election Commission (FEC), and some court cases, stirred controversy and renewed popular and congressional attention to campaign finance issues. Since BCRA, Congress has also continued to explore legislative options and has made comparatively minor amendments to the nation’s campaign finance law.

In one of the most recent major developments, on January 21, 2010, the Supreme Court of the United States issued its decision in Citizens United v. Federal Election Commission.3 Arguably The 1907 Tillman Act (34 Stat. 864), which prohibited federal contributions from nationally chartered banks and corporations, is generally regarded as the first major federal campaign finance law. The 1925 Federal Corrupt Practices Act (43 Stat. 1070) was arguably the first federal statue combining multiple campaign finance provisions, particularly disclosure requirements first enacted in 1910 and 1911 (36 Stat. 822 and 37 Stat. 25). An 1867 statute barred requiring political contributions from naval yard workers (14 Stat. 489 (March 2, 1867)). This appears to be the first federal law concerning campaign finance. The Pendleton Act (22 Stat. 403), which created the civil service system is also sometimes cited as an early campaign finance measure because it banned receiving a public office in exchange for a political contributions (see 22 Stat. 404). For additional historical discussion of the evolution of campaign finance law and policy, see Anthony Corrado et al., The New Campaign Finance Sourcebook (Washington, DC: Brookings Institution Press, 2005), pp. 7-47. See also, for example, Kurt Hohenstein, Coining Corruption: The Making of the American Campaign Finance System (DeKalb, IL: Northern Illinois University Press, 2007), Robert E. Mutch, Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law (New York: Praeger, 1988),

Raymond J. La Raja, Small Change: Money, Political Parties, and Campaign Finance Reform (Ann Arbor, MI:

University of Michigan Press, 2008), pp. 43-80, and Money and Politic$, ed. Paula Baker (University Park, PA: The Pennsylvania State University Press, 2002).

Soft money is a term of art referring to funds generally believed to influence federal elections but not regulated under federal election law. Soft money stands in contrast to hard money. The latter is a term of art referring to funds that are generally subject to regulation under federal election law, such as restrictions on funding sources and contribution amounts. These terms are not defined in federal election law. For an overview, see, for example, David B. Magleby, “Outside Money in the 2002 Congressional Elections,” in The Last Hurrah? Soft Money and Issue Advocacy in the 2002 Congressional Elections, ed. David B. Magleby and J. Quin Monson (Washington: Brookings Institution Press, 2004), pp. 10-13.

130 S. Ct. 876 (2010). For legal analyses of the case, see CRS Report R41045, The Constitutionality of Regulating Corporate Expenditures: A Brief Analysis of the Supreme Court Ruling in Citizens United v. FEC, by L. Paige Whitaker; and CRS Report R41096, Legislative Options After Citizens United v. FEC: Constitutional and Legal Issues, (continued...)

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one of the most highly anticipated decisions from the Court on campaign finance since the 1970s, the ruling, among other things, lifted the long-standing Federal Election Campaign Act (FECA) prohibition on corporations—and, implicitly, unions—using their general treasury funds for political advertisements known as independent expenditures and electioneering communications.

Independent expenditures explicitly call for election or defeat of political candidates (known as express advocacy), may occur at any time, and are usually (but not always) broadcast advertisements. They must also be uncoordinated with the campaign in question.4 Electioneering communications are defined only as broadcast advertising, are aired during specific pre-election windows, and might discuss a candidate, but do not explicitly call for election or defeat (known as issue advocacy).5 Additional discussion appears later in this report.

The Citizens United ruling was the most prominent campaign finance issue of 2010, spurring substantial legislative action during the 111th Congress.6 The ruling was, however, only the latest—albeit perhaps the most monumental—shift in federal campaign finance policy to occur in recent years. In another 2010 decision, SpeechNow.org v. Federal Election Commission, the U.S.

Court of Appeals for the District of Columbia held that contributions to political action committees (PACs) that make only independent expenditures cannot be limited. 7 Campaigns, parties, and other groups must adapt to these new realities, just as Congress, federal agencies, and the courts must decide how or whether to respond. In addition, courts, including the Supreme Court in a state-level public financing case; the FEC; and other administrative agencies, continue to examine campaign finance policy.

As Congress considers how to proceed, it may be appropriate to take stock of the current landscape and to examine what has changed, what has not, and which policy issues and options might be relevant. This report provides a resource for beginning that discussion. It includes an overview of selected recent events in campaign finance policy and comments on how those events might affect future policy considerations. The most prominent issues are directly related to Citizens United and SpeechNow. Others, such as public financing and FEC matters, would be timely regardless of recent litigation. Historical themes of limiting potential corruption and promoting transparency underlie the debate on each of these issues and on campaign finance policy as a whole.

Before proceeding, explaining the report’s boundaries may help readers. This report is intended to provide an accessible overview of major policy issues facing Congress. Citations to other CRS products, which provide additional information, appear where relevant. The report discusses selected litigation to demonstrate how those events have changed the campaign finance landscape and affected the policy issues that may confront Congress, but it is not a constitutional or legal analysis. Finally, campaign finance data appear throughout the report. The data were collected and analyzed as described in the text.

(...continued) by L. Paige Whitaker et al.

On the definition of independent expenditures, see 2 U.S.C. 431 § 17.

On the definition of electioneering communications, see 2 U.S.C. 434 § (f)(3).

For additional discussion, see CRS Report R41054, Campaign Finance Policy After Citizens United v. Federal Election Commission: Issues and Options for Congress, by R. Sam Garrett; and CRS Report R41264, The DISCLOSE Act: Overview and Analysis, by R. Sam Garrett, L. Paige Whitaker, and Erika K. Lunder.

For additional discussion of SpeechNow, see CRS Report RS22895, 527 Groups and Campaign Activity: Analysis Under Campaign Finance and Tax Laws, by L. Paige Whitaker and Erika K. Lunder.

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