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

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The State of Campaign Finance Policy:

Recent Developments and Issues for Congress

R. Sam Garrett

Specialist in American National Government

January 9, 2014

Congressional Research Service




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


Minor and major changes have occurred in campaign finance policy since 2002, when Congress

substantially amended campaign finance law via the Bipartisan Campaign Reform Act (BCRA).

The Supreme Court’s 2010 ruling in Citizens United v. FEC and a related lower-court decision, SpeechNow.org v. FEC, arguably represent the most fundamental changes to campaign finance law in decades. Citizens United lifted a previous ban on corporate (and union) independent expenditures advocating election or defeat of candidates. SpeechNow permitted unlimited contributions to such expenditures and facilitated the advent of super PACs. Although campaign finance policy remains the subject of intense debate and public interest, there have been few legislative or regulatory changes to respond to the 2010 court rulings. This report considers these and other developments in campaign finance policy and comments on areas of potential conflict and consensus.

Legislative activity to respond to the rulings has focused on the DISCLOSE Act, which passed the House during the 111th Congress, and was reintroduced during the 112th and 113th Congresses (H.R. 148). Recent alternatives, which include some elements of DISCLOSE, include 113th Congress bills such as Senators Wyden and Murkowski’s S. 791, or proposals that would require additional disclosure from certain 501(c) groups.

As of this writing, one campaign finance bill has become law during the 113th Congress. On December 26, 2013, President Obama signed H.R. 3487. The law extends Federal Election Commission (FEC) authority to conduct the Administrative Fine Program. Also in December 2013, the House passed legislation (H.R. 2019) that would terminate public financing of presidential nominating conventions. Other bills have been the subject of hearings, markups, or both in the House or Senate. H.R. 94 and H.R. 95 would repeal part or all of the presidential public financing program. H.R. 1994 would repeal the Election Assistance Commission and return some functions to the FEC. S. 375 would require Senate political committees to electronically file campaign finance reports with the FEC. Two Financial Services appropriations measures contain provisions related to campaign finance. H.R. 2786 would prohibit disclosure of certain political spending as a condition of the government-contracting process. S. 1371 would require electronic filing of Senate campaign finance reports. In addition, on September 23, 2013, the Senate confirmed two nominees to the Federal Election Commission.

Debate has also continued at federal agencies and in the courts. Debate in Congress and elsewhere has continued over the FEC’s enforcement practices. The commission also has yet to issue anticipated rules implementing Citizens United and some other litigation. Amid apparent stalemate at the FEC, some observers have called for an increased role for federal agencies, such as the Federal Communications Commission, Internal Revenue Service, or Securities and Exchange Commission in policy areas related to campaign finance policy—a topic that remains controversial. The Supreme Court is also considering a challenge to aggregate individual contribution limits (McCutcheon v. FEC).

This version of the report includes updated material that emphasizes the issues most prominently before the 113th Congress. It also discusses foundational information about major elements of campaign finance policy. Some issues discussed in previous versions of the report, which appear to be less timely than they were in the past, have been excluded from this version. This report will be updated occasionally to reflect major developments.

Congressional Research Service The State of Campaign Finance Policy: Recent Developments and Issues for Congress 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 and Emerging Issues for Congress

Activity Thus Far During the 113th Congress

112th Congress

Emerging or Ongoing Policy Issues in Brief

Disclosure to Agencies Other than the FEC

Revisiting Disclosure Requirements

Revisiting Contribution Limits

FEC Issues

Public Financing Issues

IRS Notice of Proposed Rulemaking Concerning Certain 501(c) Entities


Tables Table 1. Federal Contribution Limits, 2013-2014

Table 2. Legislation Related to Campaign Finance that Has Advanced Beyond Introduction, 113th Congress

Table 3. Current Members of the Federal Election Commission

Contacts Author Contact Information

–  –  –

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, have 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 statute 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...)

–  –  –

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 spurred substantial legislative action during the 111th Congress and continued interest during the 112th and 113th Congresses.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—a development that led to formation of “super PACs.”7 Campaigns, parties, and other groups must adapt to these new realities, just as Congress and federal agencies must decide how or whether to respond. In addition, Congress, courts, the FEC, and other administrative agencies continue to examine various other campaign finance policy matters.

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 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, this version of the report contains both additions of new material and deletions (...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 of activity during the 111th Congress, 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.


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. On super PACs, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by R. Sam Garrett.

–  –  –

of old material compared with previous versions. This update emphasizes those topics that appear to be most relevant for the 113th Congress, while also providing historical background that is more broadly applicable.

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